Business Ethics Case Study: Kitchen Best Appliances

Though Kitchen Best Appliances (KBA) has grown steadily, it has faced a series of crises involving cases of bribery and document fraud. Such cases have been a product of using a relationship style approach of doing business, or guanxi. This underlying culture should be transformed to avoid problems such as favoritism, nepotism and complicity, which have the potential of diminishing the firm’s financial standing and its moral reputation. The purpose of this report is to examine and analyze the problems arising out of guanxi and propose possible recommendations to overcome them.

Cultural problems include the issue of favoritism and nepotism. Favoritism refers to giving unfair preferential treatment, and nepotism refers to favoring a relative

Bribery is prohibited by law and has serious consequences for the individual as well as the business involved. In Chinese culture, it is generally in the form of kickbacks, paid trips, and expensive dinners. Such undertakings are considered essential to networking, but their illegal and immoral nature, makes them a liability to the firm. Kitchen Best has a lack of clearly stated guidelines for entertainment expenses provided to its partners and customers. These enterprises have also not been assessed for their ethical standing. Research shows that partners as well as employees have indulged in such practices. The independent testing contractor hired by the business, Keemark testing, had accepted a bribe from a partner factory in exchange for biased results. Employees have also regularly paid and received kickbacks to maintain relationships. For instance, a KBA employee received a paid trip to Europe in exchange for a contract. The contract with Honghua was tendered for years by paying of its managers to retain a profitable relationship. Unfortunately, due to guanxi based business culture, the top management failed to respond to such misconduct. Bribery practices are taken lightly due to under supervision, and absence of clearly stated punishments. To change such an approach, the following recommendations have been

An instance of this could be adopting a zero tolerance policy towards bribery and corruption, and overtly declaring the consequences of such actions. Leading by example is important so all employees know that lawfulness, integrity and honesty are the cornerstones of the organization.
• Actively monitor and identify areas where the organization faces the risk of bribery and corruption . This will help Kitchen Best mitigate such practices and supplement the integrity based system.
• Draft an anti-corruption handbook , with airtight regulations specifying aspects such as entertainment expenses, gifts and donations. Regulations will prevent any circumvention from the system.

By following these proposals, Kitchen best can help abolish the practice of bribery from its framework, which will lead to elevated performance and a higher competitive edge in the long