Engm 652 - Kitchenbest Case Study

Case Study #2 Kitchen Best

Shiv Patel

November 3, 2018

ENGM 652

UMBC

Introduction:

Kitchen best appliance is a appliances company based in Hong Kong. The company was founded by Mr. Chan and specialized in manufacturing of kitchen appliances. Kitchen best grew fast and served not only in Asian market but also in Europe and US. Although the company expanded from 80 to over 1000 employees and with 30 staff in management there was a lot of misuse from the executive positions and bribery amongst other companies.

Challenges:

Some of the challenges that occurred within the company are as follows:

• Conflict of Interest - Complaints regarding the appliances were given by the customers of Shago, and he then demanded for refund and compensation for kitchen best. Henry received the complaint and yet to take any actions. It was found that Mr.Sze had awarded the contract for supply of gift sets by his brother-in-law. Ms Wei, a quality manager found out that the sets were faulty, but because of the relationships and due to favoritism, tend not to report the gift sets as faulty.

• Testing and certificate issues – Kitchen best received an anonymous letter saying that the shipment did not meet the company’s safety requirements, they had sub-contractors due to having their own production lines fully occupied. Kitchen best arranged for Keemark to conduct product testing. To pass the inspection Qinghua made a deal with the leader who allowed to interfere with the sample drawing and substitute the random samples with some pre-selected ones for testing. In return the Qinghua’s proprietor deposited a financial bribe into the leader’s wife’s account. Henry was fully aware, yet he remained silent.

• Poor management: From the Honghua’s revenues, kitchen best’s revenue is 5 percent from that sales that were generated. Through dining and having kickbacks Mr. Ma had built relationships with the general managers at Honghua’s and from that they paid into their personal account to direct Honghua’s to place orders of supplies with Kitchen Best and therefore under the table usage was happening.

Root Cause:

With the end goal to recognize root cause of these challenges, the contributing variables distinguished above were figured to check whether there were possible causes in like manner. Surely, most of the contributing components can be followed back to one of the following two underlying root cause.

• 1: Executives not fulfilling their roles in their position and moving forward with Bribery.
• 2: Personal relationships within company leading to bad management.

As per how the company was built already had personal relationships with the executives, and even though Henry knew everything and was aware that non-professional activities were happening, he decided not to act. All this time Kitchen Best had no clear guidelines and having no records for expenses occurred from dining and kickbacks. All the expenses were reimbursed to Mr. Ma through fake invoices booked as entertainment expenses. All this activates were Mr. Chan was not aware of, but he cared less if they maintained new businesses and relationships with them.