Management Issues of Kitchen Best and Recommendations Report

This report, prepared for Kitchen Best Appliance Company Ltd, addresses critical management issues within the organization. The report begins with an introduction to business ethics and the importance of adhering to ethical principles. It then delves into specific findings, including the 'Shago incident' involving a breach of contract due to unethical sourcing practices and issues related to testing and certification where bribery was involved. The analysis section highlights violations of Hong Kong and Chinese laws, emphasizing the lack of internal controls and ethical guidelines. The report recommends communicating ethical standards to all stakeholders, preventing bribery, and ensuring compliance with legal regulations. The conclusion summarizes the need for the company to establish and enforce a strong code of business ethics and to provide training to employees on governance policies to prevent future misconduct.

Report on the management issues of Kitchen Best and
recommendations to address the issues
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Contents
Report on the management issues of Kitchen Best and recommendations to address the issues........1
Introduction...........................................................................................................................................3
Findings.................................................................................................................................................4
Shago incident...................................................................................................................................4
Issues related to the testing and certification...................................................................................4
Analysis..............................................................................................................................................5
Recommendations.................................................................................................................................5
Conclusion.............................................................................................................................................6
Bibliography...........................................................................................................................................7
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From
K C Lam
Senior Consultant
Deloitte Consulting
Date: XXXXXXX
To
Henry Chan
CEO,
Kitchen Best Appliance Company Ltd
Subject: Report on the management issues of Kitchen Best and recommendations to
address the issues
Dear Sir,
This is with the reference to your request for the identification of the management issues of
Kitchen Best and recommendations to address the issues. Please find the complete report for
your kind perusal and necessary actions.
Introduction
A business organisation follows a code of principles for the smooth functioning of the
organisation. The code of principles is called business ethics. The business ethics highlight
the duties and responsibilities of the individual employee and management of the
organisation to follow so that no corruption & unethical activities are conducted ( Goo &
Loo, 2011). The serious incidents that occurred in the Kitchen Best have made Henry Clan to
realise that the expansion policy will not be effective without a systematic style of
management. The business ethics have to be followed and the organisation should also know
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that the rules that are to be followed by the organisation. The offerings and accepting
kickbacks have to be avoided by the organisation.
Findings
The major issues that Kitchen Best Appliance co. Ltd has faced show that the personal gains
have been made by the employees of the organisation. The instances of the misconduct of the
employees show that internal control mechanisms are not functioning properly and Henry has
to take stringent actions in order to ensure that no such actions are committed by an employee
of the organisation in the future (ccac.org.mo, 2012).
Shago incident
Kitchen Best was given production order for the anniversary collection appliances of Shago.
A special gift set of microwavable tableware was given with some of these appliances.
Kitchen Best was asked by Shago to source these gifts and also to package these items
together with the appliance.
The complaint was made by the customers that the bowls and plates given to them were not
microwavable. Shago demanded compensation from Kitchen Best for the breach of the
conduct. The fault was made by Sze, the purchasing and production manager of Kitchen Best
who awarded the contract to his brother-in-law. In return, he was given free package tour to
Europe. Wei ignored the fact and kept silent for the personal relationship of Sze with the
factory owner. Sze told that he would manage the issues and he did not take any remedial
action ( Goo & Loo, 2011).
Issues related to the testing and certification
Henry received a letter related to the failure in meeting the safety requirements of the
company. Henry found that Qinghua made a deal with Keemark, the team leader of the
testing team, to pass the test. He deposited bribe money in the bank account of the wife of
team leader. The issue was not made public by Henry as he did not want to lose the
customers.
Kitchen Best did not have any guidelines for the expenditure made for winning and dining
offered to suppliers and customers. Ma was preparing fake invoices which were booked as
the expenses for entertainment. Chan avoided such practices as Ma was instrumental in
generating the new business relationship. Due to own cultural barriers, Ma was given the
chance.
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Analysis
As per the law of Hong Kong Cap 201 about the prevention of bribery ordinance, no
employees can accept the bribe. Section 9 ( 1&2) of the law states that no employee of the
private sector can neither accept the bribe nor offer the bribe to any employee of
the private sector. ( Goo & Loo, 2011). Section 9(3) states that the employees cannot use
false documents for getting benefits.
Article 387 of the criminal law of the people’s republic of China talks about the acceptance of
the bribe. The article states that the employee or the organisation cannot offer the bribe or
involve in the illegal activities. Article 393 states that any company cannot offer the bribe to
get illegitimate benefits. Article 163 states that the employee of a company cannot take any
advantage of his or her position. The law strictly states that no person can demand benefits
for the service he or she provides. Article 164 states that offering the bribe to any person for
seeking illegal profits are not allowed as per the law. Article 229(1) and 229 (2) state that the
individual cannot show false testimony ( Goo & Loo, 2011).
The incidents which occurred in Kitchen Best show that they are violating the laws of both
the lands of Hong Kong and China. The employees have not followed the individual ethics
and they do not follow the business ethics as well. These incidents show that there has been a
breach of conduct and the management has failed to steer people in the correct direction
(academia.edu, 2017).
Recommendations
The organisation should communicate the law to all the stakeholders of it (Heskett, 2011).
The employees should be intimated that they cannot solicit or accept any benefits for his or
her work without the prior permission of the owner.
The business organisation should also communicate to other related organisation that prior
permission of the owner is required to offer any bribe or advantage to the employee of the
private sector. Under the act of PBO, use of forged documents to cheat the authority is a
crime.
The law of China states that the employee should not follow the illegal advice of the
intermediaries. The employees should be communicated that on the Mainland it is an offence
to bribe an employee of a company.
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Conclusion
The report finds that there have been misconducts in the organisation. The leader of the
organisation should establish business ethics and the employees are required to be trained
about the governance policies. The management should see that the employees of Kitchen
Best follow the rules and regulations of the company.
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Bibliography
Goo, S., & Loo, G. (2011, 06 21). Kitchen Best: Ethics When Doing Cross-Boundary Business in
Southern China. Retrieved from https://hbr.org/product/kitchen-best-ethics-when-doing-
cross-boundary-business-in-southern-china/HKU948-PDF-ENG
academia.edu. (2017). ETHICAL ORIENTATION AND PERSONAL BENEFIT IN INSIDER ... Retrieved 11
01, 2017, from
www.academia.edu/.../ETHICAL_ORIENTATION_AND_PERSONAL_BENEFIT_IN.
ccac.org.mo. (2012). Case Study. Retrieved from
www.ccac.org.mo/PrivSec/en/poster/gl2012/ch7.pdf
cqpress.com. (2011, 05 06). Business Ethics: CQR. Retrieved 11 01, 2017, from
library.cqpress.com/cqresearcher/document.php?id=cqresrre2011050600
Heskett, J. (2011, 05 05). How Ethical Can We Be? - HBS Working Knowledge - Harvard ... Retrieved
11 01, 2017, from hbswk.hbs.edu/item/how-ethical-can-we-be
icsi.edu. (2014, 06 18). ethics, governance and sustainability - ICSI. Retrieved 11 01, 2017, from
https://www.icsi.edu/docs/webmodules/Publications/EGAS_04_Sep_14%20pdf.pdf
icsi.in. (2010, 02 16). ethics, governance and sustainability sustainability - ICSI. Retrieved 11 01,
2017, from www.icsi.in/Study%20Material%20Professional/NewSyllabus/EGAS.pdf
justice.gc.ca. (2017). Youth Risk/Need Assessment: An Overview of Issues and Practices. Retrieved 11
01, 2017, from www.justice.gc.ca/eng/rp-pr/cj-jp/yj-jj/rr03_yj4-rr03_jj4/rr03_yj4.pdf
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