The third class Business Ethics reminded me of the Sanlu milk powder,which cause the most serious food safety issue in China in 2008. In order to cut cost of production, Sanlu added industrial chemical melamine, which would form kidney stones, into the milk powder to make it appear to be protein-rich. As a result, 300,000 babies were ill and six babies was killed. Finally, Sanlu went bankrupt and be taken over by a state-owned business.

However, things was not over. Sanlu’s unethical behavior not only destroyed its own brand and also caused a crisis of confidence in domestic dairy industry. Consequently, the market share of national dairy companies shrank as customers rely more and more on foreign brands. For babies’ health, most of high-income people purchased a large chunk of milk powder from HongKong. It even forced  HonKong to publish restriction policy on buying milk powder in order to protect its own customers.

Therefore, Ethics are significantly essential for companies. Unethical behavior of companies is self-destruction, especially famous companies. Additionally, these unethical action can not only influence a certain company but also make customer feel disappointed in the whole industry. If the reputation of businesses is damaged, it will be difficult to be recovered. That’s why foreign brands such as  Fonterra announces have occupied a large part of Chinese milk market.

Reference:

http://www.bbc.com/news/business-28948102

http://news.bbc.co.uk/2/hi/asia-pacific/7616346.stm

 

Ethics are moral values to measure companies’ behavior. Since these values are from public’s point of view, they are changeable with the changing time. For example, plastic bags were regarded as one of the greatest invention in the 20^th century, but now, they become one of the worst because of the white pollution. However, if companies neglect current rules, they will sink into emergences, such as the Nike case in the article.

Most of people treat corporate success and social welfare as a ‘zero-sum game’，because companies aim to make profit rather than devoting to the wellbeing of society, (except the non-profit organizations). However, I tend to think that they can coexist sometimes. For example, many companies simplify products’ packaging they cut cost and achieve environmental friendly objectives; companies can win reputation and customer loyalty, although they cost more on their ethical behaviors. Actually, the harvest will be more than the cost when companies obtain the public’s support.

Companies may also face limitations of ethical behavior, such as stakeholders’ conflicts and not enough profits. In these situations, I think that companies producing harmless products and ensuring qualities match prices are ethical behavior.

The public should supervise companies’ behavior but they should not use fixed rules to constrain their’ ethical behaviors. Probably, companies can find the way which most appropriate to their strategy.

 

References:

http://hbr.org/2006/12/strategy-and-society-the-link-between-competitive-advantage-and-corporate-social-responsibility/ar/1

Business and Management, author: Paul Hoang, 2nd Edition