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Elice Chung

on 18 September 2012

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Transcript of KB

Kitchen Best Case Study By: Ameka, Elaine and Elice KITCHEN BEST:
Ethics when doing
Cross boundary business
in Southern China Case study summary
Key Cultural Learning’s
Recommendations and alternative solutions for other companies Contents New investment to partner company Honghua led to management change in that company
Honghua comprised of 5% of Kitchen Best Revenue
Eddie Lau- friend of general manager was contact in Honghua and had been ‘wined and dined and given kickbacks’ regularly
No longer allowed to receive ‘gifts and benefits’
Risks losing business as Kitchen Best was not as competitive as other companies in product development capacity and delivery times. Honghua Appliances: New Management To celebrate 40th anniversary, Kitchen Best placed appliance orders that came with microwavable tableware gift set
Outsourced work to factory- contract was given to Sze’s brother in law in return for European holiday
Product was faulty
Required to refund and compensate
No remedial action taken by middle and senior management when in house testing showed faulty equipment Shago Incident Guanxi: Has varied meaning but is of great importance in China.
Practice of connections/social relations and “exchanging of gifts, favors and banquets”
VIDEO- Guanxi Key Cultural Learnings Anonymous letter to Henry Chan
Appliances failed safety inspection- toxic paint
Safety inspection conducted
Bribery payment to safety inspector’s wife- allowed to swap samples that passed safety test
Henry Chan did not pursue case to keep issue quiet Haus de Metro: Certification Issues http://www.youtube.com/watch?v=JKKsRc5O5eo By: Ameka, Elaine and Elice Kitchen Best: Ethics When Doing Cross Boundary Business in Southern China Analysis- Hofstede’s Cultural Dimensions Summary Hong Kong based company
Founded by Chan Dong- Hwa
His son, Henry took over in 2008
Made Kitchen products
Factory located at Foshan border Stakeholders Nepotism
Faulty products
Questionable gifts and bribes
Tampering with safety inspections
Misuse of company finances
Lack of management Issues/Problems Orders with microwavable tableware
Contract given to Sze's brother-in-law
Product was faulty
No remedial action taken Shago Incident Appliances failed safety inspection
Bribery payment to safety inspector's wife
Henry Chan did not pursue case Haus de Metro:
Certification Issues Management change in Honghua Appliances
No longer allowed to receive 'gifts and benefits'
Kitchen Best risks losing business Honghua:
New Management Hofstede's Cultural Dimensions
Trompenaar's Value Dimensions Analysis Hofstede's
Cultural Dimensions Trompenaar's
Value Dimensions Diffuse, ascriptive, neutral and communitarianistic
In-group collectivism Guanxi
Practice of connections/social relations and 'exchanging of gifts, favors and banquets' Key Cultural
Learnings Bribery &
Corruption Most Chinese businesses are family owned/run
Highly collectivist and diffuse nature
Less injection of foreign investment due to lack of transparency Nepotism Internal
External Alternative
Solutions Set up and regulate company policies
Lead by example
Don't tamper with safety inspections/other documents
Open communication Internal External Comply with laws
Check all safety standards and guidelines
Build business rather than personal relationships
Provide company guidelines Fang, T., 2003, ‘A Critique of Hofstede’s Fifth National Culture Dimension’, International Journal of Cross Cultural Management, vol. 3, no. 3, pp. 347-368

Gold, T. Guthrie, D. Wank, D. 2002, ‘Social Connections in China: Institutions, Culture, and the Changing Nature of Guanxi’ Cambridge University Press, [online], [accessed on 5 September 2012] on <http://catdir.loc.gov/catdir/samples/cam031/2001037922.pdf >

Guthrie, D. 1998, ‘The Declining Significance of Guanxi in China’s Economic Transition’, The China Quarterly, No. 154, pp. 254-282

Hofstede, G. and Bond, M.H. (1988) ‘The Confucius Connection: From Cultural Roots to Economic Growth’, Organizational Dynamics 16(4): 5–21.

Hofstede, G. (1991) Cultures and Organizations: Software of the Mind. London: McGraw-Hill.

Javidan, M. & House, R. 2001, ‘Cultural Acumen for the Global Manager: Lessons from Project GLOBE’, Organizational Dynamics, Vol. 29, No. 4, pp. 289-305

McGregor, J. (2005), One Billion Customers: Lessons from the Front Lines of Doing Business in China. Free Press, [online], [accessed on 4 September 2012] on <http://www.economist.com/media/globalexecutive/one_billion_customers_e.pdf>

Transparency International: the global coalition against corruption, 2011 ‘Corruption index’, [online], [accessed 6 September 2012] on <http://cpi.transparency.org/cpi2011/results/>

Trompenaars, F. (1994). Riding the waves of culture. London: Nicholas Brealey.

Tsui, AS. & Farh J.L, 1997 ‘Where Guanxi Matters: Relational Demography and Guanxi in the Chinese Context’ Work and Occupations vol. 24, no. 56

Verhezen, P (2012), ‘The prevalence of networking or Guanxi in Asian [family] business’, Vlerick Leuven Gent Management School, Leuven & Gent Campus, Belgium, [online], [accessed on 4 September 2012] on <http://www.eu-asiacentre.eu/documents/uploads/pub_34_networking_in_chin_fam_busin_v01.pdf>

Xin, KR. & Pearce, JL., 1996, ‘Guanxi: Connections as Substitutes for Formal Institutional Support’, Academy of Management Journal, Vol. 39. No. 6 pp. 1641-1656 Reference List Expand into Europe and United States
Double revenue over 4 years
Neglected management duties Henry's Vision "I believe you need to set big goals that challenge people to get big results" Henry Chan, chief executive, Kitchen Best In groups, come up with possible internal and external strategies that you would do if you were in Henry Chan's position. What would you do?
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