Case: Kitchen Best Summary

a. Brief background and context

Henry Chan, who is the CEO of Kitchen Best, has set some ambitious targets for the business in 2008. However, his plan suffered a setback when a series of crises happened in 2010. These incidents involved in serious management problems such as personal gains made at the expense of the company and kickbacks offered and accepted between Kitchen Best and its partners.

Henry Chan is the son of Chan Dong-Hwa, who is the funder and chairman of Kitchen Best. He was educated in the US and had already worked for an electrical and electronic appliance company as a marketing executive before he joined Kitchen Best. After he took over the management of the company, he focused on the expansion the business to Europe and US and ignored the management aspects of the business. Now he must adopt some activities to improve the management to achieve his high growth target.

b. Who are the key players involved in the case?

1. Chan Dong-hwa: Founder and chairman; 75% equity stake

2. Li Qingyang: Silent partner; Chan Dong-hwa's aunt; 25% equity stake

3. Henry Chan: CEO; Chan Dong-hwa's son

4. Ma Luk: Operations Director and Head of Greater China Business

5. Horatio Sze: Purchasing and Production Manager; Grandson of Li Qingyang

6. Macy Wei: Quality Control Manager

c. What are the main issues/ allegations

1. What kind of internal control mechanisms did Henry need to put in place?

2. How could Henry monitor the business operations across the border?

3. How could Henry conduct the staff with different backgrounds and cultural values?

d. What is/ are the ethical issues?

1. If the company continue to practice of offering and accepting kickbacks, how much risk should Henry run:

a) Legal risk

b) Probability of being found out so that the company will lose its customers

c) Reputation of Kitchen Best

d) Henry himself thinks such practices should be avoided

e. What happened in the case?

Besides above, the case also introduces the SMEs in Hong Kong , the Kitchen appliances industry and the Kitchen Best Appliance Company.

1. SMEs

SMEs is the main business units in Hong Kong and provides almost half employment in the private sector. And since