Kitchen Best Case Summary

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KITCHEN BEST: ETHICS WHEN DOING CROSS-BROUNDARY BUSINESS IN SOUTHERN CHINA CASE SUMMARY
* Brief background and context
Henry Chan, inherited Kitchen Best Appliance Co. Ltd---a home electrical appliance company from his father Chan Dong-hwa, is facing the challenge of establishing a more efficient internal control mechanisms of the company to ensure its future success. Kitchen Best Appliance Co. Ltd belongs to small- and medium-sized enterprises and is based in Hong Kong with its own manufacturing plant in Guangdong province. As a chief executive, Henry Chan is more aggressive than his father. He focused on expanding the company’s reach in the European and American markets and brought a more western and less paternalistic management style. However, he relied heavily on the expertise of his senior management, who are not reliable. He faced the crises results from the unethical behaviors conducted by them such as accepting bribes to buy low-quality products, accepting misleading safety reports, using kickbacks to establish business relationship, and creating fake invoices for personal gain. He found that he has to implement a more systematic style of management. * Who are the key players involved in the case

i. Chan Dong-hwa: Founder and Chairman
ii. Henry Chan: Chief executive
iii. Ma Luk: Operations Director and Head of Greater China Business; reported to Henry Chan and Chan Dong-hwa. iv. Horatio Sze: Purchasing and Production Manager; reported to Ma v. Macy Wei: Quality Control Manager; had close relationship with Sze and saw him as her mentor; reported to Ma * What are the main issues/allegations?

i. Crises results from the inefficient internal control mechanism: a. The Shago Incident
Sze, who was Kitchen Best’s purchasing and production manager and sourced some products with low quality, had awarded the contract to a factory that was owned by his brother-in-law. In return, Sze and his wife got a free package tour to...
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