Anglo-American PLC in South Africa: what do you

do when costs reach epidemic proportions

PRESENTED BY:Aishwarya Singh

Ankur Gupta

Deepti Tripathi

Honey Shukla

Case facts

AIDS In South Africa:-

• Sub-Saharan Africa is home to just over 10percent of the world’s population and to 60percent of all people infected with HIV

• Every day 1,000 South Africans contract HIV and another 800 die

• AIDS has also had a devastating effect on the country’s economy

• •Between 1992 and 2002, the South African economy lost $7billion annually—around 2percent of GDP—as a result of AIDS-related worker deaths

CASE FACTS

Anglo American Operations In South Africa :-

• Anglo American PLC is a mining conglomerate operating in 61 countries

• Founded in 1917 as the Anglo American Corporation of South Africa, it was South Africa’s first home-based public limited company

• Anglo American employs 80,000 people in its main operations and another 44,000 at regional subsidiaries

• Anglo American controls over 25percent of all shares traded on the South African stock market

CASE FACTS Anglo American And Art :-

• Anglo American was one of the first corporations to develop a comprehensive, proactive strategy to combat the destruction of the disease on its workforce

• The incentive for Anglo American’s ART program largely came from the failure of its AIDS-prevention efforts to make much headway in stemming the spread of the disease

• Anglo American had to bear the costs entailed by high levels of absenteeism, the constant retraining of replacement workers, and burgeoning pay outs in health, hospitalization, and death benefits

Continued…

• Anglo American also faces the problem of spiralling costs for the program itself

• The biggest challenges facing Anglo American is encouraging participation among a migrant and largely ignorant workforce labouring under harsh conditions in an unstable environment

Constituencies and Critics

• National Union of Mineworkers has been citing Anglo American limitations on health-insurance benefits and lack of cooperation with national agencies

• The Union has also accused Anglo American of helping to foster working conditions that exacerbate the problem

• Anglo American outright opposition from political leaders

QUESTION 1

What are the pros and cons of Anglo American’s adoption of

an aggressive strategy in combating HIV/AIDS among its

South African workforce? What recommendations would you

give the company concerning its HIV/AIDS policy?

ANSWER 1 Pros:

It became   a trend setter for other major companies operating in South Africa, thus gaining a goodwill among other companies , which can be   helpful in partnering   with other major companies not only in South Africa but also in other part of the world .

It got good response form WHO , Global Business   Council for HIV / AIDS   and other   NGOs, thus making it as a socially responsible   organization   in Global business .

The early adoption strategy helped it to prevent further loss in operating expenses by   providing awareness and ART to its employee   in   earlier stage .

Continued… It also prevented   the possible higher loss to the company  

i.e.   if   in case   the worker were   left untreated then losses would have been higher than providing ART .

The future of Anglo American’s initiative is bright as there has been change in the governments views towards   fighting HIV / AIDS ,   this change in government thinking’s   can help Anglo American to gain political support in long run.

Cons: Company’s   medical bill saw a steep rise increasing it

overall wage bill.

QUESTION 2

Because such a large percentage of its workforce consists of

migrant workers who are more likely to acquire and spread

HIV/AIDS, should Anglo American adopt the policy of not

hiring migrant workers? Should the South African government

close the doors to migrant workers?

ANSWER 2

• No, the Anglo American shouldn't adopt such policy as migrant workers constitute large percentage of workforce

• Instead more active participation should be encouraged from other companies as well as from government side in spreading awareness and educating the workforce regarding precautionary measures against the disease and regular survey and counseling should be done to stop the climbing figure of the disease.

QUESTION 3

What role do pharmaceutical companies play in responding to

the HIV/AIDS epidemic in South Africa? What policies or

courses of action would you recommend to a company that

produces HIV/AIDS drugs?

ANSWER 3• The pharmaceutical companies are the source of the drugs

with which to combat this plague

• On the one hand utter lack of resources, one could easily conclude that there is relatively little that can be done to alleviate the suffering and stop the spread of the disease

• Still in all, the pharmaceutical companies can seek to partner with aid agencies, international organizations, governments, and the private sector in their search for acceptable and effective solutions.

Continued….

• Pharmaceutical firms will most surely be concerned about the issue of patent protection and generic drugs, as well as the prospect of tiered pricing and significantly lower profit margins.

• Governments, other members of the private sector, and other stakeholders will all need to be mindful of the tremendous costs and risks that are borne by pharmaceutical firms.

• Further, given the extent and the seriousness of the problem, a lack of commitment on the part of any stakeholder will be a serious setback in the march toward a community solution. 

QUESTION 4

Elsewhere in the chapter, we described the more aggressive

policies of the Brazilian and Thai governments in the battle

against HIV/AIDS. Should the South African government

adopt a similarly aggressive approach? Why or why not?

ANSWER 4

No, South Africa government should not adopt a similar aggressive approach because:

To permit local companies to make unlicensed generics which is unethical

The companies take advantages of a TRIPs clause that allows them to avoid paying royalties.