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Kitchen Best Ethics when Doing Cross-Boundary Business is Southern China Case Solution

Solution Id Length Case Author Case Publisher
1026 1271 Words (6 Pages) Say Goo, Grace Loo University of Hong Kong : HKU948
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Some of the typical integrity management challenges faced by SMEs include the practice of unethical business practices. These practices include bribery, providing entertainment and private benefits to the business personals.

In certain situations, it becomes extremely difficult for the company's top management to investigate and regulate unethical practicing. It is due to the differences in cultures and business practicing in different regions. Furthermore, if some of the top management is doing unethical business work, then investigating also becomes difficult. Additionally, in SME, personal ties among owners and top management also prevent other managers of the company from taking any action against the unethical practice. This example also exists in the case study where Sze was involved in personal benefits and gain but prevented Wei from taking this matter further.

Following questions are answered in this case study solution

  1. Typical Integrity Management Challenges Faced by an SME

  2. Legal Risks Pose to the Company in a Cross-Border Setting

  3. Shortcomings of the Management, Governance Systems and Mechanisms should Kitchen Best put in Place

  4. Where has the company gone wrong in managing its staff? 

  5. Why is it important for SMEs to practice ethical management? 

Case Analysis for Kitchen Best Ethics when Doing Cross-Boundary Business is Southern China

Moreover, in cross-border business, identification and prevention of certain business practices become extremely difficult because of the differences that exist between the two cultures and their respective business practices. These differences also result in the non-implementation of a common set of rules on the employees of the organization.

Therefore, considering the differences in culture believes, practices, it becomes difficult for the SME to have integrity management.

2. Legal Risks Pose to the Company in a Cross-Border Setting

There are severe laws on the prevention and suppression of bribery in the private sector. There are preventive laws are implemented in Macao specially administered region, Hong Kong and China. These laws are almost the same stating that the person in the private sector holding any administered position would be punished with one year or two years imprisonment in case of gaining any benefit or bribery. The same provision is written for the person involved in giving benefits or bribery to the person in the private sector. Moreover, these laws give more severe punishment if the bribery results in the distortion of the competitive environment in the market.

As mentioned in the case study, operations director and head of business in China Ma Luk tried to bribe its customers, which could result in the distortion of the competitive environment. That action was highly unethical and illegal that could result in the termination of Kitchen Best sales in those shops together with the imprisonment of Ma Luk.  

These laws are very straight forward and could prove very detrimental for Kitchen Best in its cross-border setting. It would not only reduce the customers of the company but also the reputation of the company in the market.

These laws are also posing legal risks to the company. The company's license can be terminated, or a heavy fine can be imposed on the company. These actions would have serious repercussions as not only they would reduce the revenues of the company but also the reputation.

3. Shortcomings of the Management, Governance Systems and Mechanisms should Kitchen best put in Place

There are many shortcomings in the functioning of the Kitchen Best. One of the shortcomings is the placing of high trust among the core team members without having a proper system of check and balance.

As mentioned in the case study, the company's production unit on the mainland was directly looked at by the trusted employees, with very little overlooked by the owners.

Moreover, some of the core team members are working in the company only due to their relationship and their personal recommendation from the shareholders of the company. This practice is one of the main hindrances in the good performing of the company. Instead of hiring people through personal recommendations, the company should have its proper human resource department with competitive working in it to hire skilled and desirable people for the company through a proper screening process.

Furthermore, as showed in the case study, the chief executive of the company got to know many things after certain actions have already been taken by the other people of the company. This also shows some sort of lack of cooperation within the organization. People holding keys offices within the organization are taking certain decisions only keeping in their own benefits and relations.

Therefore, the company should formulate a clear organization policy regarding unethical and malpractice and also formulate a system where large and important decisions can only be finalized through the chief executive of the company. Besides this, there should be a yearly evaluation process where each employee should be evaluated by their subordinates and colleagues, anonymously. This would be helpful in retaining the ethical performance within the organization.

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