Snowflake Potato Division Review the Case below Make a Choice; Infringe or Not Infringe? Support it! Review others posts. What Should Ed do? Infringe or Not Infringe? Why? Justify your Actions based on the stakeholder and organizational Analysis (You may want to write this after you have performed your Stakeholderand Organizational analysis. Identify any assumptions you are making) Perform a Stakeholder Analysis - Look beyond the facts Whose interests are being served? Are there conflicts among the interests of the various stakeholders? What interest issociety trying to protect in passing patent, copyright, trademark, trade secret, and intellectual property protection laws? Demonstrate insight into the potential expectations of the variousstakeholders andthe actions needed to address those expectations Perform an Organizational Analysis Look beyond the facts What are the organizational implications of this dilemma? Would you recommend that corporate level executives establish some sort of policy? What impact does an organizations reward system have on a members decision when confronted by ethical dilemmas? What are the rights and responsibilities of the Research & Development (R&D personnel)? Demonstrate insight into the potential harm or benefit of actions recommended. The Snowflake Potato Division Case Study The Snowflake Potato Division is a major division of a large national and international food products company. Snowflake manufactures a variety of processed potato products, but its two principal products are frozen french fries and instant whipped potatoes. French fries make up about 50 percent of sales while the whipped potatoes account for approximately 30 percent of sales. The remainder sales are divided among several other processed potato products. Sales are primarily to the consumer market under its own brand. A small part of the divisions sales is in the institutional market (hospitals, schools, etc.) and to other businesses for sale under private labels (such as a private grocery chain label). The Snowflake label is generally regarded as one of the high-quality products in the market, and the divisions products have always excelled in consumer preference tests. Costs that are somewhat higher than competitors prevent Snowflake producers from taking a larger share of the institutional and private label markets. The management style or culture of the firm isto give division managers broad discretion in decision making with the headquarters monitoring bottom line performance (profits and return on investment) and market share very closely. The public image presented by the company is that of a socially responsible firm. The company has a formal code of ethics that explicitly calls for management not to engage in unethical business practices; however, the sanctions that would be imposed on a manager who violates the code are unclear. The internal environment is made more ambiguous because considerable pressure is placed on division managers to improve performance each year. Failure to meet performance goals reduces a managers overall compensation and most certainly damages a division managers career opportunities within the company. Consistent failure to meet performance goals will likely lead to outright dismissal. Ed Smith, division manager for the Snowflake division, is confronted with a major problem. A primary competitor in the instant whipped potato market (also a division of a large food company) has made a significant technical breakthrough in process technology that will result in a dramatic improvement in the quality of its whipped potatoes. Market research has indicated that consumers feel that instant whipped potatoes lack the texture and flavor of real mashed potatoes. This factor, more than any other, influences consumer purchases. The competitor has perfected changes in its manufacturing processes that have yielded a whipped potato product that is better in both taste and texture than current products on the market. This breakthrough appears to solve one of the principal problems in marketing whipped potatoes and will have a major impact on sales for the Snowflake division. Unfortunately for Snowflake, the competitors process changes are protected by a patent. Ed hired a consulting firm to monitor the test marketing of the new product by his competitor, and the results are not good for his division. The consultant concluded that when the new product is introduced, market share for the Snowflake division will decrease from about 30 percent of the current market to less than 5 percent. In response to queries from Ed, the divisions R&D people indicated that to develop a comparable product and bring it to the market would take at least two years. Regaining significant market share at that time would be difficult and expensive, if not impossible. Snowflakes researchers understand the process changes instituted by their competitor, and these could be replicated quickly and easily. The problem is to develop changes that will not infringe upon the competitors patent and to do this in a timely fashion. In a nutshell, Eds division is going to take a major hit in sales and profits over the next several years unless something is done now. Ed feels the net effect of this threat is that his division would be forced to withdraw from the instant mashed potato market. Without question, there would be major layoffs in the division, and even possibly plant closures, and his job would likely be on the line as well. The management consultants have recommended a course of action to counter the adverse effects of the new product on Eds division. Their recommendation is to go ahead and infringe upon the competitors patent while Snowflakes R&D department develops an alternative process that would yield the same quality product but would not infringe upon the patent. The competitor would undoubtedly bring a lawsuit, but the suit could easily be delayed for the two years that Snowflake needs to develop its own process. Settlement of the suit would be expensive but not anything closetothe damages the company will incur if it does not undertake this action. This course of action would also protect Snowflakes market share and allow the division to continue operations with little disruption. Even better is the fact that the cost of the legal action would be charged to Snowflakes corporate headquarters since that group would handle the defense of the lawsuit. Ed has stalled making this decision as long as he can. If he goes ahead with the course of action recommended by the consultant and chooses to infringe upon the patent, then he needs to give his R&D people the authority to proceed. He also needs to decide whether to tell corporate management about his plan of action. Should he inform them immediately or delay any such communication, assuming that they would be just as happy not knowing until after the fact? Last, he must deal with his own conscience.