Case Analysis
Part 1: Rational Decision Making ---- Ethical Dilemma
Obligations to Shareholders (Investment Banking)
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Thought Catalog.com
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Introduction & Problem Identification
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| ManageEngine.com |
Introduction
The case goes with Henrietta Bluefish, an Investment banker at Tremper and Company. She is highly educated and her background is in biomechanical engineering, that makes her an ideal choice for launching an IPO (Initial Public Offering) for Pump It Up, a manufacturer of infusion pumps. After meeting with all the agreements from the CEO of Pump It Up (Mr. John Peoples), the IPO was set to launch on 13th of June. Mr. Peoples made all the arrangements for the successful launch of IPO and the clinical trial of the pumps were approved by FDA.
Apparently, Vision pump was considered their most successful line of fusion pumps, as it can monitor up to 20 pumps at the same time. This product could have made their share in the market for the pump supplies at top until a problem came out two days before the IPO launch.
Problem Identification
On 11 th of June, while Henrietta was attending a party at her friend's place, she happened to have a conversation with one of the doctors who used these pumps and according to his explanation the vision pumps took away the lives of two of his patients. This was absolutely shocking for her as the company's management did not report any instances occured through their product and the IPO launch was just a day ahead . Afterwards, she came to find that this was the doctor's fault and due to his negligence in using the pumps incorrectly, the patients died. She was highly frustrated by this mishappening and was fumbling to take a further action......
Decision Criteria
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John Mattone Global Inc.
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Since, this is a big issue that could result in a failed IPO launch, because, the subject matter has now been revolving around the safety concern of using the Vision pumps and the death of two patients. Because, investors and shareholders rely on the current standing, positive outcomes and affects of company's offering in the market (plays a big role in market value and pricing of the shares), being an Investment banker Henrietta would have certain objections in her mind :
- If the news leaks out in the media about the death of patients through Vision pumps, would this result in an IPO failure and long term concern to company's financials and reputation?
- How likely the investors and shareholders would invest in the company?
- Since, doctors are highly educated and are most responsible professionals in the world, how could he get mistaken towards its use, is it just negligence or a real fault in company's product ?
- The company's management refrained themselves from sharing this news with Henrietta, what impact this would have on her investment banking career and overall on Tremper and Co.?
Weighted Criteria
I would say all these factors mentioned above could be the potential threats for the future of both the companies because, some would say that strong financials, positive outcomes and company's future projections are the only things relevant in the stock market but the investors and shareholders always rely on current happenings and monitor smallest to smallest of the steps a company takes or the risks that are associated with them. So, certainly these all are possible threats toward the issuance of the IPO and are of high importance.
Evaluate the alternatives
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ThoughtCo.com
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Certainly, here are some of the equally important alternatives that would be best for both of the companies:
- Delay the date for the issuance of IPO for next month or two and Pump it up (the company) should try to modify the product or render some more research before the IPO launch. (Moderately to least effective)
- Filing a lawsuit against the doctor, for his negligence and suspending his license or ordering him to compensate the families of the dead. (Effective solution)
- Since, the product has been clinically approved by FDA, Pump it up should not be convicted of any charges and Henrietta should resume with issuing the IPO on 13th. (Most Effective solution)
Select the best alternative
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Mailbird.com
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I believe the third and second bullet are highly prevalent in the order of effectiveness, because the most effective solution (the third one) has to be executed right away due to all the arrangements and the expenditure incurred on the IPO launch and apart from it (the second bullet) is highly important as well because, FDA can never be wrong and approval for licensing requires a product to pass through various phases. Perhaps, due to overwork or fatigue the doctor could have been mistaken on the use of vision cups which resulted in the death of the workers, saying of which the doctor should be the most responsible for it.
While, the first bullet point is least effective, as delaying it would be the waste of time, money and resources.
Hi, so I have a bit of positive and negative/constructive feedback regarding your blog. Before I get to the particulars of the positive and negative, I found that your blog was insightful and a really fun read. I thought you had some creative solutions/alternatives, although I do take note about the 2nd alternative in the later paragraph, they were logical and rational. I think another alternative could have been to re-encourage or reinforce the proper usage of infusion pumps with medical personnel. You can argue that this alternative presents the fact that it wasn’t the company’s fault for the improper use of the infusion pumps if the case were to arise. This alternative could help encourage investment into the IPO by showing that the company ensures and cares that any medical personnel are properly using the devices.
ReplyDeleteSo here’s my positive feedback about your blog. I thought you had well-thought-out decision criteria. The questions within the criteria take into consideration the likely outcomes and most critical issues at hand regarding the IPO. You do a very successful job at identifying the issue and laying out the summary of the case. I thought you did well in implementing the decision-making process, the problem was well-identified, the decision criteria meet the needs of the company and the issue at hand, a sufficient amount of alternatives were created and evaluated, and you did choose the best solution to the dilemma (the one you labelled the most effective solution.) I agree that it would be the most effective as well.
Now for my negative/constructive feedback. I do think the criteria are correct for the dilemma as it’s happening, but there’s no weight to it. I would’ve liked to see one question ranked as more important, such as the “leaked news” criteria, maybe it could have weighed 60 points out of a possible total of 100. With the others splitting the other 40 points. Although they are all important, one had to be taken into consideration more than the others. My last comment is on the 2nd alternative considered the effective solution in brackets. Because I’m unsure if pharmaceutical or investment companies can sue doctors for improper use on a patient, I don’t think filing a lawsuit is a viable or feasible solution to the dilemma for the companies. My thinking for this relies on Purdue Pharma not suing doctors for overprescribing opioids to patients. I’m sure there is a legal formality protecting doctors and companies from lawsuits between each other as they procure and sell medical equipment approved by the FDA.