Then the article will describe and evaluate the methods by the company to solve the issues. In addition, better ways for settle the problems and reasons for that will be involved as well. Last but not least, there will be some implications for companies and managers if they suffer from a similar condition in international business activities. Overall, the report will indicates the failure of Fomenter associated with contamination and primarily analysis how to deal with such issues in international business environment.
International business environment contains various kinds of aspects such as society, economy, politics, regulations and technology. The significance of international business environment for firms is obviously that the environment can affect how a business operates, can have prominent effects on a firm’s success and productivity (The Environmental Factors That Affect a Business). Trading across national boundaries creates jobs, increases sales, balances periodic fluctuations and provides products and services at the same time (The Importance of the International Business Environment).
As for the case of Fomenter incident happened in 2013 because of the colostomies botulism, which had a seriously negative impact on Fomenter. The intended learning outcomes of the report from Fomenter we can obtain the importance of corporation social responsibility and ethnic behavior and ready to know how to deal with such problems in the similar situation. Additionally, other implications for the firms will be mentioned about in this report. 2. Case presentation 2-1.
Fomenter and the case for analysis Fomenter is a global, co-operatively-owned company with its roots firmly planted n headquarters Auckland, New Sealant’s rich land, which annual sales up to 8 billion dollars. It is the biggest company in New Zealand, the sixth dairy producer all over the world as well (Company Overview). In August 2, 2013, Fomenter said that one factory detected colostomies botulism in the dairy products, which affected many companies over the world. On that night, State Quality Inspection Administration requested that all importers recall contaminated products immediately.
It had an enormous splash in dairy industry by globalization countries and even around the world. But finally Fomenter products were proved to be safe (2013 Fomenter recall, 2014). 2-2. Reasons of case is B related The reason why the case is international business related is because there is a close connection between international business and national enterprises. Fomenter is a famous multinational corporation of dairy industry, it is the biggest dairy exporter over the world and hold 1/3 in the global dairy trade. Moreover, there are approximately 85% of dairy products export to other countries such as China, America and Japan.
In 2006, Fomenter Co-operative Group was capital injection Asana Group 8. 4 billion ARM, which subscribed to Sandal’s 43% share and began to operate joint venture company. Fomenter Cooperative Group markets and distributes milk products not only for industrial, but consumer use as well. The firm principally operates Auckland headquarters in New Zealand and employing about 15,600 staffs over the world. Therefore, on account of the New Zealand market’s limited potential and the firm’s character, it is necessary to promote international activities (Calculator & Dooley, 2010, p. 32).
Under the impact of rapid growth in trade and investment, Fomenter, it has a long business placement about 30 years in China, which provides all kinds of nutritious dairy products for Chinese consumers. On account of high-speed development of dairy industry, now China has become the biggest market of Fomenter (Fomenter Co-operative Group). Definitely the world is seen as becoming increasingly interconnected as a consequence of political, economic, political, sociological and cultural forces (Wall & Reese, 2001, p. 9). Multinational enterprise as Fomenter play a very critical role in international business activity.
Fomenter may promote New Sealant’s economic development and also can interactions the relationship teen countries and people. For instance, Fomenter bring their high quality dairy products and advanced technology to many countries, so it make a great contribution for the world economic development.
The Key Problems in Fomenter
The key problems are how to ensure the quality of Offender’s dairy products and how to rebuild the consumer confidence. Although it was just a false alarm, there still existed potential quality hazard in Fomenter. However, Fomenter have paid a heavy price for this incident.
For instance, some executives resigned, the criteria or food quality has risen and they have had a crisis of confidence (Fomenter Colostomies Botulism Incident).
The approaches undertaken by Fomenter to address the issues The approaches undertaken by the company to address the issues mainly focus on the quality and reputation. Fomenter held a press conference on August 5 in Beijing, which made an explanation and apologized for the incident of colostomies botulism. Offender’s chief executive officer Thee Sweepings claimed that they will recall all the related products in 48 hours.
Fomenter indicated that the true ‘crime culprit’ in this incident is a plastic dropped into pipes. Even though the foreign matter was found, the handling of details exposed the loopholes in Fomenter (Fomenter Apologize For Milk Powder Contamination Incident). In order to solve these problems, Fomenter emphasized on production quality control, detection to ensure that every dairy product reached the standard. Additionally, Fomenter strengthened the whole supply chain for quality and safety control, enhanced the communication efficiency between internal and external environments.
Fomenter went on customer cooperation to reinforce product tracing and establish the recall system. Thee Sweepings said that Fomenter set up a chief inspector of global food security and quality, which reported to the chief executive officer directly. Furthermore, Fomenter enlarged control limit and authority of Food Security Council. In addition, in order to save their reputation, Thee Sweepings said that Fomenter will communicate with China government sectors and Chinese consumers and will let them knew which products still have problems.
At present, Fomenter has completed the computer system upgrade and related training (Fomenter: Series Accidental Factors ‘Detonate’ Raw Material Polluted).
Evaluate Offender’s approaches It is clear that negative effects is hard to eliminate in a short time. Even though there is no colostomies botulism in Fomenter related products, consumers will still have a bad impression of Fomenter. However, Fomenter did not detect the outcome that there was no colostomies botulism in Fomenter products in several months but it just took one month for New Zealand government to find out there was no colostomies botulism in milk powder.
From the case we can know corporate social responsibility (CARS) has a close relationship with corporate crisis management. The definition of crisis management is “the application of strategies designed to help an organization deal with a sudden and significant negative event” (Crisis Management). The dairy company like Fomenter strengthened their social responsibility by themselves and had a positive teamwork with the government to survey the incident. Meanwhile, Fomenter made proactive initiatives to disclosure information to the public to ensure the test results were accurate, objective and fair.
As a result, Fomenter did not shut down. Firstly, what Fomenter should pay attention is goal setting. Setting goals alps people work towards their own targets. Fomenter provides dairy product material to well-known dairy companies in the worldwide. Group management layer ought to adopt appropriate routine to make a target. Therefore, the management level must recognize how the potential issue will influence the main part. Fomenter did it. Additionally, risk assessment can to be ignored.
The definition of risk assessment is that “it is not about creating huge amounts of paperwork, but rather about identifying sensible measures to control the risks in the workplace “(Risk Assessment). Not only company should evaluate inherent risk, but also should know the residual risk simultaneously. In this case, Fomenter has strong sense of responsibility and moral value. When they found the dairy products may be affected by colostomies botulism, they announced to the public at once, recall all the related products and compensation to the consumers.
From this point we could see Fomenter has enough assessment to the risk and prepare of inherent risk in food industry. However, Fomenter is too fast to publish the result but do not do a detection in the authority organization, finally the test result make a mistake. On the basis of possibility to recognize the analysis and rank of risk, firms should confirm highlight the attention and priority control, then combine with risk tolerance to balance risks and benefits. Furthermore, Fomenter did insufficient for evaluation of residual risk, they do not put China’s national condition, China policy and Chinese media into the risk.
After Asana milk powder incident happened in China, it was a similar situation with Fomenter, from government to the public, everyone had a ‘suspicion’ to the dairy products, the report of Chinese media became the forceful pusher in the whole event. Going forward, when they find the problem, Offender’s inner control making a solution. There are great ideas for risk management and inner control inside, right integrity and values in Fomenter. However, there still exist some problems in food safety control standard and food safe mass detection, communication is crucial as well (For Fomenter).
Suggest Better Solutions and Reasons
During the incident days, the biggest opposition New Zealand Labor Party made a statement that this event serious injured New Zealand reputation of ‘clean and green’. If New Zealand want to be the top world of exporting country of airy, Fomenter still has dominant in dairy industry, they have to set up a high quality detection system in order to avoid similar things happen again (New Zealand: Fomenter Products Not Polluted By Colostomies Botulism).
I hold an opinion of Quality Inspection Administration should provide an examining report or multiple agencies to provide an examining report as well. Because different level of supervision departments lack of the talents for dairy processing and regulation, including insufficient food security research in dairy industry, so as for the government aspect, they should improve the ability of dairy rodents, carry out more standardized recall system and modify administrative regulation of infant formula.
With reference to Fomenter, firstly, they should guarantee justice of what Fomenter does and how Fomenter behaves. From the case we can find that Fomenter public all the information about this accident. To some extent, it may save their image. So it is really necessary for information disclosure automatically. Next, Fomenter must observe disciplines and obey laws due to the necessity of enterprise development. In addition, Fomenter need persist in sustainable development, particularly for the relationship between Rene initiative and living environment.
Paying much attention on sustainable development may promote a responsible firm’s efficiency, reducing environmental impact, supporting local community simultaneously.
Implications for Firms/Managers in a Similar Situation
From Fomenter case, there are some implications for other firms or managers should know the significance of corporation social responsibility and ethical behavior. In Fomenter case mentioned above, there is a distinct concept about international business environment, which refer to corporation social responsibility.
The definition of CARS is “adhering to principles of corporate social responsibility means operating a business in a manner that meets or exceeds the ethical, legal and commercial expectations of all stakeholders, including customers, shareholders, employees and the communities where the firm does business” (Cassavas & Knight, 2014, p. 134). When the enterprise is in a crisis, firstly, firm leader should guarantee that realize the primary responsibility to the social at a crucial time. From the case we see CARS has a close relationship with corporate crisis management. The dairy company like
Fomenter strengthen their social responsibility by themselves and also has a positive teamwork with government to survey the incident. Meanwhile, Fomenter initiatives to proactive disclosure information to the public so that ensure the test results is accurate, objective and fair, finally corporate image do not damage. That is what other firms should learn from Fomenter. According to the case we can know that it is important for firm to build a strong CARS because it will helps the firm not only gets a good reputation but also enhances the loyalty, brand and pay close attention to company goals.
In addition, strong CARS can help the firm become special, especially useful in foreign markets in order to strengthen its position in globalization (Cassavas & Knight, 2014, p. 133). Hence, CARS also suggests a proactive views on ethical behavior in which companies not only focus on maximize profits, but do other good things that benefit the environment, customers and society as well. However, many firms and industries have been adopt CARS gradually (Cassavas & Knight, 2014, p. 133). Additionally, being ethically is not required by law, it is simply the correct things to do.
Governments, consumers and the media also increasingly demand hat managers behave ethically. “Companies that commit ethical blunders risk drawing unwanted attention and developing a poor reputation. Ethical behavior is good business, leading to an enhanced corporate image and increased selling prospects. The firm with a reputation for high ethical standards gains advantages in hiring, motivating employees, partnering and dealing with foreign governments” (Cassavas & Knight, 2014, p. 130). To sum up, modern firms must perform CARS and ethical behavior.
The specific way for firm to manage is that they need adequate aspirations in order to make CARS become the firm’s outshone. Making suggestions for firm staffs in internal discussion so as to let everybody make full sense of the meaning of CARS. Companies are also supposed to put CARS idea into strategic plan, decision-making process, corporate behavior and enterprise sustainable development. Moreover, CARS and ethical behavior also should meet with sustainability of economic, social, environmental, and humanity’s needs without harming future generations.