Introduction
While being very basic, the case of the Sanlu Company became infamous quite quickly. Founded in 1995, Sanlu has been providing the Chinese people with dairy products regularly. In 2007, however, the company attempted at raising the protein rates in their product by adding a specific chemical (melamine) to a batch of powdered milk. The results were drastic: about 290,000 babies suffered food poisoning; 51,900 of them were hospitalized, with 11 cases of suspected death and three lethal outcomes (Richard Ivey School of Business, 2009).
After the issue was researched and the results were published, a range of states terminated their cooperation with not only Sanlu but also other Chinese companies somehow related to the food industry; more to the point, EFSA (European Food Safety Authority) declared that the products with “high milk content” (Richard Ivey School of Business, 2009, p. 8) include three times as more melamine than the EU safety limits prescribe (Richard Ivey School of Business, 2009).
Critical Ethical Issues: Health as the Top Priority
The organizational ethical issues in the Sanlu Company are quite easy to nail down. First and most obvious, the fact that the well-being of the customers was disregarded in the Sanlu Company needs addressing. This is a serious flaw in the moral fabric of the company, which raises a concern for the adequacy of the company’s ethical code.
In other words, on the managerial level, the system of checks and audits has not been developed, and on the employee level, the concept of corporate responsibility has not been implanted into the organizational behavior principles. Finally, the company may need to consider customer well-being as its top priority and, therefore, alter its mission and vision by adding an ethical prospect to them.
Herein the individual ethical issues lie. The people employed in the company knew what purposes the milk powder was created, as well as who the target consumers would be. More to the point, the employees knew that the new addition to the milk formula had not been tested and, therefore, might trigger major health issues. However, none of them questioned the dubious orders or prevented the milk from being delivered to the customers. Therefore, the principles of individual responsibility must be introduced into the company’s code of ethics.
At this point, however, one must refer to the ethical principles that society is based on. It would be wrong to assume that society is governed by the ethical concepts that it promotes; while manifesting honesty and transparency as the most valuable qualities, a range of businessmen resort to unfair strategies for increasing their income.
Hence, the aforementioned idea of individual responsibility would have worked fine if the employees had not feared being dismissed for their honesty. The further investigation and the search for the people responsible for the mistake in the milk powder formula would have ultimately led to financial penalties and termination of the employment contract, which the staff was afraid of.
Ethical Frameworks and Their Relation to the Case
As far as the ethical issues of the case in point are concerned, the Sanlu scandal can be viewed through the lens of several key ethical theories. From the Utilitarianism perspective (e. i., maximizing the positive outcome under the condition of the lack of certainty), the possible cost-benefit (i.e., the maximization of the company’s net profit) was not worth the major negative outcomes (i.e., the damage to the health of the people consuming the product) (Koch, 2010).
As far as the ethics of individual rights are concerned, the breach of the customers’ rights can be traced in the fact that the Sanlu Company never tested the quality of the milk and, therefore, did not warn the buyers of the possible negative outcomes (Sora & Aydin, 2011). The ethics of justice in the specified scenario also shows that running a test with several participants would have been more appropriate instead of endangering thousands of people and triggering several instances of death (Simola, 2003).
Naturally, informed consent would have been crucial in the scenario with testing the newly developed milk powder recipe, yet the victims would have been considerably fewer. The basic concepts of the virtue of ethics can also be used to address the infamous Sanlu scandal. Seeing that the company claimed the provision of healthy food to its customers as its key mission, Sanlu has broken the principles of virtue ethics as well by harming its customers beyond repair (Morrison & Driggs, 2007).
Finally, the ethics of care should be brought up as the last, though not the least, ethical philosophy that Sanlu has neglected. By disregarding an extremely high level of vulnerability of one of its target consumers and allowing newborn babies to be fed tainted milk, the company violated one of the basic ethical concepts that any organization must comply with, especially the one, whose actions may affect the health state of its customers. Thus, every ethical framework specified above is related to the case, most of them having a direct connection to the actions that the Sanlu Company carried out.
Relevant Law and Company Policy: Behavior Issues
The specified problem with Sanlu’s milk powder could have been regulated with the help of the Food Hygiene law (Richard Ivey School of Business, 2009, p. 10), which would have led to pulling the hazardous milk powders out of the market. Another possible method of legal regulation of the issue, the application of the Product Quality Law should be mentioned (McDougall & Popat, 2010, p. 661). In addition, the Civil Law, the Tort Law, and the Consumer Protection Law could have been applied to charge the Sanlu for neglect towards the production process, the customers’ health, etc. (McDougall & Popat, 2010, p. 661).
Company’s Solution: A Three-Part Model Analysis
The issue can be resolved by addressing the ethical, legal, and economic aspects of the case. Sanlu needed a stronger ethical code for the staff to comply with. Therefore, the company policy should have been switched to the customer satisfaction principle and introduced better ethical standards, as well as reinvented the moral implications behind the principles of organizational behavior in Sanlu.
Speaking of the conclusions regarding the company’s policies, Sanlu should have considered audits as the key tool for identifying the possible concerns for the product quality. Eventually, a lawsuit with a charge for the people that have suffered because of Sanlu can be viewed as the legal solution that should have been applied to the specified case, since the RMB49.4 mln or $7.3 mln (Richard Ivey School of Business, 2009, p. 1) may have been not enough for delivering the healthcare services of the best quality to the 290,000 patients.
Reference List
Koch, C. (2010). An ethical justification of profit maximization. Society and Business Review, 5(3), 270–280.
McDougall, A. & Popat, P. (2010). International Product Law manual. The Netherlands, NL: Kluwer Law International.
Morrison, R. N. & Driggs, T. D. (2007). Virtue ethic and the sustainability policies. Drake Journal of Agricultural Law, 12(1), 147–162.
Richard Ivey School of Business. (2009). Sanlu Group and the tainted milk crisis. Ontario, CA: Richard Ivey School of Business Press.
Simola, S. (2003). Ethics of justice and care in corporate crisis management. Journal of Business Ethics, 46(4), 351–361.
Sora, M. & Aydin, E. (2011). Ethical approach to fast food product contents and their advertisement strategies. International Journal of Business and Social Science, 2(24), 158–167.