Sanlu Milk Research Report

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  • Topic: Milk, Dairy product, Powdered milk
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Assignment Two

Business Background Research Report
-To be or Not to be Ethical in Business?

Research Target: Sanlu Group
Student Name: Lin Li
Student Number: 3266036

Date: 18/4/2011

Executive Summary
Sanlu Group was one of the oldest and most popular brands of dairy product company in China, August 2008, the outbreak of melamine contaminated infant milk powder, a sharp decline in corporate reputation occurred. December 2008, Sanlu Group declared bankrupt by the court.

Although the shocked "Sanlu milk powder “incident has been settled, the milk powder incident has hazed to the Chinese people psychologically, and physically. The root causes of these problems, in addition to the interests of suppliers of raw materials smoked heart, should also be considered on a deeper level, business ethical.

Apart from unethical product processing, after the milk scandal happened, Sanlu Group also used unethical way tried to cover their mistake. It terms out a big business ethical issues in China.

In the case of avoiding the same thing happens again and protect the social peaceful, it is important to know what went wrong in the enterprise and how to put it right.

Contents

Introduction4
Business Ethical4
Background4
Methodology6
Introduction to the Methodology6
Data-collection Methods 7
Data Analyze Methods7
Results and Foundlings8
Introduction of Sanlu enterprise group 8
What is Melamine?9
Why is Melamine Have been Added in the Milk Powder?10
Sanlu Group Supply Chain 11
China dairy products processing chain problem 13
Who’s Fault16
How did They Face This Crisis18
Conclusion and Recommendation22
References24

Introduction
1. Business Ethical

Business social responsibility and ethical issue has been a major concert for many years. It breaks the rules and peace of the society. In order to earn more profit, some unethical business companies ignore morality and social responsibility, doing everything to make more money, which can cause national level or even international level chaos. Some of these companies bankrupted, such as Enron and Lehman Brothers. However, there are still a lot of unethical companies exist today. This report will discuss how the ethical issue that Sanlu group (one of the biggest Chinese dairy products company) causes it bankrupted and conclude what others companies can learn from this case.

2. Background

From the Survey done by a Chinese local journal Xiao Kang and Qinghua University media research center shows that, approximately 70% Chinese people feel insecurity about the safety of Chinese food industry. (Ouyang Hai Yan 2011) In the meanwhile, Liu Peizhi, The deputy director of China State Council Food Safety Committee office claim that, in 2009, the import of dairy products has increased from 126,000 ton (2008) to 597,000 ton. The increase was over 90 percent. Latest General Administration of Customs (GAC) figures showed that only 1,036 tons of dairy products were exported in October, down 92 percent year-on-year. From January to September, the monthly average export of dairy products was 12,000 tons. (Zhu Zhe 2008) The main reason of this is the “Sanlu milk scandal” happened by using the milk powder that produced by Sanlu Group, which was one of the large enterprise group setting dairy, dairy products processing, scientific research and development. More than 300,000 babies suffered from kidney stones after drinking Sanlu milk powder, 50,000 babies be hospitalized and some of them died from this (Tu Chonghang 2011). The Melamine in their milk powder is the reason that makes babies get kidney stones.

Methodology
1. Introduction to the Methodology

In order to reach the goal of discuss the ethical problem of business and social responsibility, in order to conclude methods should be used to prevent unethical business events happened again. The author conduct this research from 13 April 2010 to 16 April 2010 by...
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