Contemporary and International Issues in Business Ethics - Literature review Example

Contemporary and International Issues in Business Ethics In today’s business world, the path to success entails more thanjust good products, practical knowledge and technical skills. Business ethics is realizing and sustaining success. Chen (2009), Jones, Comfort, and Hillier (2008) define business ethics as written and unwritten values and principles, which govern different decisions and actions in the company. Branigan (2008) affirms that the cultures of an organization set the standards that determine the differences between making good and bad decisions and behavior. The public of today demands high transparency, up-to-date information, reliable market and financial data, and accountability from all the stakeholders in the business (McDonald 2008). Business ethics involves the responsibility of transparent and fair competition both within and outside the company, for example, provision of fair promotion chances. According to Li and Zhang (2010), Song (2009), and Zhou (2007) corporates are responsible for protecting our natural environment with an aim to prevent or reduce the rate of pollutions, and also they have to ensure the safety of their employees and their customers. In the case study of Sanlu Group, the dairy Group failed to maintain business ethics (Hill, Ainscough, Shank, Manullang 2007). Various researches by Ko (2010) and Donming (2012) proved that the company did not maintain business ethics by producing melamine contaminated milk. This paper will discuss the contemporary and international issues in business ethics that were evident in Sanlu Group, impacts of the scandal, measures that were taken and recommendations. Introduction Hill et al. (2007), confirm that the milk production chain involves various parties such as the milk suppliers, intermediaries, and producers or the manufactures. The process of milk production is complicated and involves different production steps. The Sanlu Group incidence became public in August 2008. Ko (2010) and Li and Zhang (2010) disclosed that the milk company produced baby formula that was contaminated with melamine. This caused kidney failure in many children resulting to the deaths of many children. According to Donming (2012) the government investigations found out that other twenty one Chinese dairy companies produced various products that were contaminated with melamine. After the Sanlu Group negative news had become public, the Government of China took firm steps that affected dairy farmers (Song 2009). The collection of milk stopped making farmers incur huge losses in terms of income and their finances. Although the milk scandal originated at Sanlu Dairy Group, it affected dairy industries in the Republic of China (Chen 2009). According to Li and Zhang (2010) and Song (2009) contamination occurred at the supplier level, and Yili and Mengniu were heavily affected. This is evident as they are the largest milk suppliers in China. The unsafe milk heavily affected milk exportation to foreign countries, and it damaged “Made in China” milk image (Ko 2010). According to Virtue theory, Sanlu Group ought to keep their commitments and virtue clearly laid down to guarantee their customers provision of quality, informing their clients of the ingredients that are in their products and uphold safety of both their products and their consumers (Hill et al. 2007). The character and virtue of an individual embodies for evaluating or determining an ethical behavior. The characters of all the stakeholders in a company must evaluate and determine their ethical responses (Chen 2009). An individual who has good characters and virtues will automatically have good ethical behavior. However, according to Song (2009), the milk suppliers did not maintain good character in supplying milk. This is because it confirmed that the contamination occurred at the suppliers’ level. However, it is evident in the Theory of Reasonable Care that the seller and the buyer share unequal rights (Zhou 2007). Enterprises that take the advantageous position regardless of the product design, information or production supply must provide care for their clients by assuring them of their safety (Jones, Comfort, and Hillier 2008). According to the Utilitarianism Theory, a proper course of action is defined by maximizing happiness and reducing rates of suffering (Hill et al. 2007). In Sanlu Group case, the middlemen and suppliers diluted the milk by adding melamine to the milk (Jones, Comfort, and Hillier 2008). The massive competitions in the dairy industry lead to the company not checking on issues related to quality. According to Donming (2012) the Sanlu Group was not adequately equipped with facilities that ensured production of quality milk. This is because there were a huge number of middlemen wanting to have a share in the dairy industry, making Sanlu not adequately invest in equipment (Ko 2010). Sanlu group failed to maintain quality standards such as the Hazard Analysis and Critical Control Points, HACCP, and this led to the outburst of the scandal (Li and Zhang 2010). The rule that stopped the production of milk steered insecurities concerning the future prospects of over six hundred thousand dairy farmers that supplied Sanlu with milk (Donming 2010). The scandal started at Sanlu, and it severely affected other huge milk suppliers and this damaged China’s reputation. According to the Food and Drug Administration, FDA, HACCP is a management framework that addresses food safety through controlling and analyzing of chemical, physical, and biological hazards from production of raw materials, procurement and handling, manufacturing to supply and consumption of the product (McDonald 2008). If Sanlu had an HACCP plan, then it would have prevented the negative effects and enjoy the various benefits that are related to HACCP (Ko 2010). These benefits include reduced potential of injury or illness, reduced adverse publicity, and reduced consumer complaints. According to Branigan (2008), McDonald (2008) and Zhou (2007) negative effects are not the recommended ways to market and sell a given program to a company. Positive benefits are those factors that could reflect enhanced efficiencies, show cost saving, and increased revenues. The positive benefits a business gets include becoming a desirable supplier or co-worker, enhanced quality of products, improved morale of the employees, reduced waste production, and reduced liability in production and insurance (Chen 2009). According to Hill et al. (2010) confirm that if Sanlu pursued some of the international standards such as the HACCP, it would have prevented the risks of its milk being contaminated, and it would not have led to the increased number of children with kidney failure and deaths. Article 39 of Food Hygiene Rules and Regulation of China say that anyone confirmed to be producing market foods that do not meet hygiene standards will be ordered to stop and close such productions because the food can lead to food poisoning, diseases, and even death (Song 2009). The contaminated food will be confiscated and destroyed, and the culprit may face a penalty of between 1000yuan and 50000 yuan. Sanlu Group Measures Li and Zang (2010) and Song (2009) affirm that Sanlu Group recalled approximately 10000 tons of distributed milk powder, and it sealed over 2,176 tons and withdrew 700 tons from the Chinese market. Ko (2010) indicates that 109 Walmart stores and 118 Caffefour stores stopped selling Sanlu products when the Health Authorities and Sanlu confirmed that the milk powder was contaminated. Various researches by Song (2009) say that Sanlu knew of this contamination in December 2007 because they had started receiving complaints from their customers. It is evident that Sanlu was hesitant to conduct a thorough food safety investigation on this matter. Ko (2009) affirms that the company did not raise any alarm that would warn or prevent their customers from consuming contaminated products. When Fornterra, one of Sanlu’s shareholders, advised the company to withdraw its products from the market, Sanlu’s executives and Health Authorities ignored this directive (Li and Zhang 2010). Sanlu affirmed that they did not produce products that had melamine and that those products are not the original Sanlu products (Ko 2010). The company knew that they would have damaged their reputation and be treated as bad news when they recall their products. The disclosed scandal made various dealers pull off their products from the market, and Sanlu was not able to reimburse all the dealers for their withdrawal (Song 2009). Sanlu’s 800000000 yuan fund was used to compensate the affected customers (Ko 2010). The dairy group promised to pay medical expenses of all the babies that were affected from the contamination. They did this to regain its goodwill. Branigan (2008) affirm that Sanlu paid 200000 yuan to the family of the first child who died from drinking the contaminated milk. The company and the twenty one other affected companies offered 30000 yuan to the severe cases of kidney failure and kidney stones (Jones, Comfort, and Hillier 2008). Measures by the Government Previous regulations affirmed that any Chinese company could apply for to be exempted from inspection. This would apply if the company would maintain a record of quality implemented standards above national and international levels, and had a large market share (Hill et al. 2007). The products that passed province or state-level inspection on three successive times were given the qualifications. Zhou (2007) emphasizes that producers must report to the inspection- free and checks on the quality regularly. State Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) organized various spot checks on the products annually. Li and Zhang (2010) and Song (2009) AQSIQ cancelled the exemption qualification that Sanlu was awarded. The company products were subjected to thorough quality tests that would allow for testing of poisonous substances in milk products such as melamine (Chen 2009). Donming (2012) confirms that melamine tests were not conducted in the past. According to Article 48, anyone violating this law, who causes food poisoning, or endangering peoples’ lives or going against this law will adhere to liability compensation according to the provisions in the law. Bibliography Branigan, T 2008, Chinese figures show fivefold rise in babies sick from contaminated milk. Food Health, vol. 56, no. 6, 242-256. Chen, S 2009, Sham or shame: Rethinking the China’s milk powder scandal from a legal perspective. Journal of Risk Research, vol. 12, no. 8, 724-756. Donming, K. (2012). Does corporate social responsibility matter in the food industry? Evidence. Food Policy, vol. 37, no. 2, 322-332. Hill, R. P., Ainscough, T., Shank, T., & Manullang, D. (2007). Corporate social responsibility and socially responsible investing: a global perspective. Journal of Business Ethics, vol. 70, no. 56, 256-278. Jones, P., Comfort, D., & Hillier, D 2008, Corporate social responsibility and marketing communications within stores: a case study of UK food retailers. 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