How should Raja think about the situation? What are the most important considerations for him to weigh? How should they factor into his course of action?
This is a difficult problem. Raja should consider the national policy against using ultrasound machines for sex selection. The most important consideration for him to weigh is compliance with the law. Raja should strictly comply with the law without exception. In the pending criminal case, GE and Wipro are alleged to have knowingly supplied ultrasound machines to clinics that were not registered with the government and were illegally performing sex-selection tests. One option would be to quit selling ultrasound machines but that is not going to happen. It would have too large an impact on shareholders and profits. Raja cannot dictate public sentiment favoring male children over women, but it can strictly and in good faith comply with the law. It might also consider actions that ensure its sales people do not turn a blind eye towards the practice of using ultrasound for sex selection.
Who are the key stakeholder groups, and how would you characterize their various perspectives? What would each stakeholder like to see GE do in this case?
The first group are the shareholders. They earn profits from selling machines. They would probably like GE to maximize profits.
Employees and sales people would like to earn money and probably have an interest in maximizing sales and income. They might view the problem of favoring females over males as a social problem that is beyond their control.
The government is a stakeholder and they have an interest in GE obeying the law for obvious reasons.
The public at large is a stakeholder but this is a mixed bag. A large segment of the public wants the ability to determine sex. Other members of public oppose the practice. GE should follow the law and not satisfy those elements of the public that favor use of ultrasound for sex selection.
There are also public interest groups and international agencies that advocate against the practice of sex selection using ultrasound. There interests and influence on GE should be considered.
From a large perspective, the public might be effected due to an unnaturally large percentage of females to males. This might have negative social consequences like a shortage of available wives and other effects that might come up years later. This should also be considered.
From a product economics perspective, what course of action would you recommend, if you were Raja?
I think that it is in GE’s interests to obey the law. If they do not, the government might take more extreme action to limit sales of ultrasound machines. There might be negative consequences to GE if the problem becomes more severe. On the other hand, it is likely that the problem is larger than GE. If GE limits or restricts sales, other unethical suppliers might fill the void. I still think that GE is so large and its reputation so valuable, the it should comply with the law. It might reduce short term profits, but would probably be in the best interests of the company long term.
From a customer economics perspective, what course of action would you recommend, if you were Raja?
If the customer is viewed as the doctors and clinics, they appear to demand ultrasound machines without regard to the law. For clinics that comply with the law, they have an interest in having ultrasound available. I think that compliance with law satisfies the interests of customers and GE. Disregarding the law is not an option even though it might satisfy customers. The problem is larger that GE.
From a network economics perspective, what course of action would you recommend, if you were Raja?
There is a strong interest in expanding network effects through maximizing sales of GE ultrasound equipment in the expectation that it will lead to the use of other GE medical equipment sales and products that compliment ultrasound devices. If GE liberally sells ultrasound devices while turning a blind eye to registration and reporting requirements, it would probably promote network effects. The obligation to comply the law is more important than improving network effects though.
From a business eco-system perspective, what course of action would you recommend, if you were Raja?
The eco-system perspective is similar to the network economics perspective. There are undoubtedly linkages and synergies between the sale of ultrasound devices and other GE medical devices. They might be used together with other products and connect through software designed to be used with other GE products. All this is great, but I still think that GE should comply with the law and that is in their long term interests.