Tainted Milk Powder

Question 1: Given strong profit growth, has there been any damage to Baidu. com’s reputation? Answer: Yes, there was damage to Baidu. com’s reputation. The examples of damage to Baidu. com’s reputation are: * The rumors made the company’s information appear unreliable. * Baidu. com’s users may start to boycott from using this search engine. They are hoping that Baidu. com may change their behavior after the protest. * Due to the boycott activity, the number of daily visitors may reduce drastically. * Due to the number of visitors decreased, those existing advertisers may withdraw their advertisement and switching to other company.

As a result, they lost valuable contracts/customers. * Baidu’s shareholders also may sell off their shares in market. As a result, the share price dropped, this is also indicating that they lost public trust. Question 2: What the future reputational damage affect and how could it be measured? Answer: * Damage public trust, number of viewer and user drop * Mostly for a company to gain trust and confidence from the user of their product is not easy and take time. * But, to damage it just take a short period of time. For example doing unethical action in managing business operation. * Many news and rumors spread in media about Baidu. om have received some payment from tainted milk manufacturer for not advertise any news about them. * No concrete evidence about the rumors, but could damage their reputation, public trust and confidence of their source of information. * The number of viewer or user that use their search engine that been lower after the spread of bad news and rumors could be used to measure for the damage of public trust. * Investor not interested to invest, share price drop * The bad news and rumors about the unethical action by this company triggered the public trust toward them * It makes many people debate and alked about their action after the spread of issue regarding information hidden, thus make many speculations towards this company. * Too much bad speculation been made toward their company impact to drop of share price. * We think that it would make investor or future investor might be not interested to invest in this company if the rumors are true due to the share price dropped continuously. * Affect company profitability, low income from advertiser * When the trust or confidence from the user or people toward this Baidu. com has decreased, it means that the viewer or user their search engine also decreased. Thus, the better for advertiser to promote their product in the search engine which have more viewer compared to Baidu. com * Besides, we think that Baidu. com might have to reduce the advertising fee in order to attract the advertiser use their search engine to promote products * Thus, impact from advertiser being changed to the other search engine or lower the advertising fee make the Baidu. com would faces low profitability and income. Question 3: What steps could Baidu. com take to restore its reputation, and what challenges will it have to overcome?

There are 3 steps to restore the company reputation as below: 1. Know The Truth * The Company will first have to look at themselves and seek the reality. * Is there any truth in what the people say about themselves? * Baidu. com will have to look at the rumor of how they were said to have accepted payments to withholding a company’s information from online searches. 2. Take Action * Baidu. com might held a press conference to admit its wrong doing and try to fix it from there. * Although there were many are upset by the admittance, but they will be more upset if the Baidu. om have not admitted to their wrong doing. * That’s the matter related to trust and knowing that they will stand up for the mistake that have been made. 3. Dispel the Rumors * Baidu. com will have to overcome the rumor of how they were said to have accepted payments for withholding a company’s information from on-line searches. * They will have to disclose all of their financial records. This is done in an effort to make the company financial activities as transparent as possible and display that they are confederate in their financial activities. This will aid the company in regaining the trust of the public and the public will ultimately trust the information that is contained on the search engine. The biggest challenge is regaining trust from the stakeholders, investors and then the consumers as the company bad reputation has built over a period of time. * Do not expect to get rid of it within a few hours or days. It will take time for people to remove the company old, bad image from their mind and replace it with the new, pleasant one. * It is a matter of trust and knowing that one will stand up for the mistakes that have been made. Therefore the company needs to take social responsibility for the crisis. * There were innocent lives lost all because no one spoke up about the tainted product. * Naturally there will be repercussions for all involved but consumers are forgiving if the situation is handled correctly. So, just keep on making efforts and soon, people will get used to the image of the ‘new you’. Question 4: Governments throughout the world have been slow to react publicly to serious problems such as SARS, mad cow disease, and now melamine contamination. Who benefits and who loses because of these delays?

Answer: a) Benefits * Companies involved in related industry. * Government’s slow reaction gave opportunities for these companies to continue supply consumer with no quality product that bring harms to the consumer itself as long as the company gain benefit from it. * Eg: Mad cow disease was cause through nutrient give to the cows itself. Naturally, cows are supposed to eat grass. However, the ranchers try to cut costs by feeding these animals with dead animal. Besides, the ranchers feeding them with hormones and other chemical to fatten them up faster for marketing.

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In a nutshell, the ranchers along with other related parties are benefited through cost reduction as well as faster “harvesting”. * Government * Government itself gain benefit from their action. * One of the examples is from tourism industry. When the government announces the serious problem face by the country, especially if it is health related, it might frighten the tourist to visit the country. Thus, it can affect income received by the country. * The government usually will try to protect their local market and local product.

For instance, what happen in China when the news of contaminated milk spread is that it causes sales of dairy product to drop by 30-40%. * Government slow action has given them opportunity to search for proper solution before expose it to the public. Aside from avoid panic among public, this action can also benefit them from loss of income and maintain country’s reputation. b) Loses * Public * Public were negatively affected from government slow action, especially when it’s involving human’s life. * Eg: The melamine-tainted milk powder was responsible for the deaths of four infants and the sickening of more than 6,200 more.

If the public are aware of the situation, they won’t buy the milk powder, thus can prevent loss of lives. * Also, it can hurt public’s finance when they spend their money on the products that they can’t even use. * Most importantly, public might lose faith on the government itself. Public rely on the information given by the government. If the government itself didn’t disclose important information, from whom the public can depend on. * In addition, when the countries are facing serious problem such as diseases, the government need to diverge the limited public money to support medical costs.

It is burdensome since the public monies are use to clean up the mess done by irresponsible parties that only have view on profit only. * Pharmaceutical industry * It is not a one-day task in developing a new cure for new disease * The scientist needs to do research, identify the cause of disease, and find suitable chemical/element needed to produce the drugs. * When the government gave late announcement to public, all scientists are not able to create new medicine and thus, bring loss to them in terms of profit. Question 5: In some cultures, a ‘culture of secrecy’ or manipulation of the news is tolerated more than others.

How can this be remedied by other governments, corporations, investors and member of public? Answer: * Governments * Government can design law to prevent this culture because it can affect public. * They can impose fine and penalty to those who are exercised the culture of secrecy. * The penalty imposed is a way to punish company and people who involve in this case. * It is as a warning to others firms so that they are not doing the same thing in the future. * The law and penalty should be imposed when there is evidence that the company is exercising this culture. * Corporations They should disclose all the information that concerns about public because public has the right to know what happen because it relate to them. * For example, corporations can disclose about their Corporate Social Responsibility (CSR) in their website. They should include all information so that public didn’t lost trust to them. * Investors * Investors can take action such as disapprove the unethical activities done by companies. * They have a great power towards companies because they are the shareholder. * Investors can sell their shares as a way to disapprove action taken by companies. If by taking that action also cannot alert the company, they can be a whistleblower by telling the authority about the company wrongdoing. * Member of public * Member of public can prevent this culture by the increasing of press freedom. * They can work with press to make sure that news spread faster. But, immunity should be given for public interest disclosure where the matters give serious harm to public. Before the immunity given, the news should be disclose to authorities both internally and externally and no action taken. Besides, public can complain to non-profit organization (NGO) or consumer association about companies wrongdoing. * Thus, when this action can be taken, companies may be thinking twice before they hiding something from public and consequences that they are going to face in the future. References 1. Tainted-Baby-Milk Scandal in China, RetrivedMarch 8, 2013 from http://www. time. com/time/world/article/0,8599,1841535,00. html, 2. Tainted Baby Formula Scandal Blows Up in China, Retrieved March 9, 2013 from http://blog. foolsmountain. com/2008/09/12/tainted-baby-formula-scandal-blows-up-in-china/ 3.

Baidu Caught in Backlash Over Tainted Milk Powder: Search Engine Denies Screening Out News; More Rivals Online, Retrieved March 9, 2013 from http://online. wsj. com/article/SB122176870268453547. html 4. The Google of China: The Secret of Baidu’s Runaway Search Engine Success, Retrieved March 9, 2013 from http://www. time. com/time/world/article/0,8599,2111545,00. html 5. Lorraine Day, M. D. Mad Cow Disease: What the Government didn’t Telling You. Retrieved March 9, 2013 from http://www. drday. com/madcow. htm 6. 2008 Chinese Milk Scandal. Retrieved March 9, 2013 from http://en. wikipedia. org/wiki/2008_Chinese_milk_scandal#Chinese_industry . Pharmaceutical Industry. Retrieved March 9, 2013 from http://en. wikipedia. org/wiki/Pharmaceutical_industry 8. Tainted milk: Unravelling China’s Melamine Scandal. Retrieved March 9, 2013 from http://thinkbusiness. nus. edu/articles/item/118-tainted-milk-unravelling-china%E2%80%99s-melamine-scandal 9. Storer, J. A chance to tackle the culture of secrecy in government. Retrieved March 12, 2013 from http://www. thepunch. com. au/articles/a-chance-to-tackle-the-culture-of-secrecy-in-government/ 10. 2008 Chinese milk scandal. Retrived March 12, 2013 from http://en. wikipedia. org/wiki/2008_Chinese_milk_scandal

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