Ethical Leadership

Introduction (Ethical Issues)

AccuForm is a joint venture company, which specializes in the production of high-tech coating for use in wrinkle-free fabrics and clothes. Mr. Raymond Kim, the general manager has discovered extensive questionable corrupt practices in the company. These corrupt practices were discovered during investigations into reports that, eight Chinese children had developed severe allergic reactions after wearing clothes made from the company’s coating material. An unauthorized manufacturer had not only illegally obtained AccuForm’s experimental coating material but had also gone on to use the company’s trademark to promote their product. This has brought about a lot of negative media attention to the company and also threatens its credibility as a producer of high quality coating material. Mr. Kim needs to devise a corporate strategy to deal with the public relations crisis at-hand and a formal long-term plan that deals with the fundamental problems that caused the crisis in the first place.

This case raises a number of ethical issues which include; Human resource issues (hiring, favoritism, bullying, occupational work and safety and work-life balance), Consumer confidence issues (product safety), Use of corporate resources issues (use of corporate resources, use of corporate reputation, reports and reporting practices, providing honest information, employee theft, fraud and employee loyalty to company), Conflict of interest issues (subtle bribe, use of privileged information, company-vendor relations), Corporate Social Responsibility Issues (public health and safety and environmental issues).

Facts of the Case

The first fact that we need to consider in analyzing this case is that the joint venture company, AccuForm, was formed by two firms; DynaCoat, a German company and CreaseFree, a Hong Kong company. These two companies operate in different business environments. Hence their corporate cultures vary in many ways. Whereas DynaCoat has in place strict quality assurance systems that ensure that they maintain consistency and is communicated to safety and environmental protection, CreaseFree operates informal control systems and depends on guanxi- a term which describes the use of connections and the exchange of favors to form relationships- to do business. CreaseFree only does what it has to do in order to meet legal requirements and nothing more. These conflicting corporate cultural differences have not been reconciled.

The second most important fact in the case is that as a result of the relaxed method of operations