Human Relations in Organizations: Applications and Skill Building 8th Edition by Robert Lussier

Exercise 28

Was Going to China the Right Medicine for Novartis AG or a Formula for Disaster
Daniel Vasella, chairman and chief executive officer of Novartis AG, would like to feel confident that the firm's decision to open a major research center in China was a good one. Novartis is one of the world's largest pharmaceutical companies in terms of market value. It is among a number of multinationals that are turning to China to conduct more research and development, partly with the aim of leveraging the country's cheaper labor, but mostly in response to the growing importance of the Chinese market. As the Chinese middle class expands, the nation is spending over $100 billion a year on health care.
This growing market comes with increasing problems, however, that may leave CEO Vasella regretting the firm's decision. The Chinese medical market, like the old Wild West, does offer potential rewards for those who can find a rich vein, but its lawless nature regarding intellectual-property theft can lead to a situation akin to claim jumping. Insufficient protection has long been the stumbling block to pharmaceutical-research investment in China, and it is not yet sufficiently enforced. However, authorities are doing a better job of enforcing protections.
Use the five-step decision-making model to outline and answer the following questions.
If you were CEO Vasella, would you open a research facility in China?