Code of Ethics for Food Establishments

free essayFood safety is a renowned premises as well as the foundation of life and consumer safety. Food safety is often associated with the quality of life and the overall body health. There are numerous ethnical issues involved in the food business, including improper handling of food materials that this study seeks to emphasize. The majority of the contemporary businesses have focused on profit maximization regardless of the consumers’ safety concerns. To achieve high profits, many businesses have used bad food as a replacement of good quality consumables and eventually, they have introduced it into the market at high prices. For instance, in early 2008, the Sanlu Group, one of the biggest dairy business entities of China, was involved in an alleged trade with contaminated milk product that affected approximately 53,000 children in the country (Ip, 2009).

During this particular scenario, it was reported that children had developed kidney stones from consuming the contaminated product for some days. With time, the babies that had consumed the contaminated milk suffered immensely, with the majority of them having high fever and infected urinary tract. This implied that the babies’ urinary system had been badly altered by the poorly positioned product. Food safety issues are not new in the business segment. In essence, there have been various concerns over the food safety issues and the adulterations that have been a major concern for many people particularly, the consumers (Ip, 2009). Thus, food safety challenge is perhaps one of the most fatal issues for the majority of countries worldwide today that pertains to the individuals’ health conditions, particularly in developing economies. The subject matter is highly influential, as it produces a widespread impact on the larger scope of global population, hence the nature of universality of the issue of food safety. It is believed that the increased awareness of food safety would be an essential measure towards enhancing food security as far as contamination is concerned. The spread of information on food safety is not principally anchored on the principle of social responsibility but rather on the fact that it is moral to provide safe or healthy food materials to the people.

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Initially, food safety started in China as an ordinary trade issue in early 21st century. However, since then, it has become an apparently huge domestic issue that needs urgent attention. The incident that occurred in the Chinese dairy industry had showed that the industry was less concerned about its social responsibility to the consumers. Similarly, it was a manifestation of poor legislations and supervision pertaining to the dairy industry of the country and, perhaps, a reflection of the situation in other sectors of the food industry in the country (Ip, 2009). The laxity between different official departments could be the main reason behind the proliferation of substandard products in the country’s food sector. Poor business ethics as well as flawed supply chain management and regulations are typically the main cause of bleached food safety (Crane & Matten, 2007).

Why Food Safety Problem has been a Universal Problem in Developing Economies

Food safety is a typical problem in many developing countries as well as within some developed ones. In the developing country, food contamination is a common phenomenon that requires urgent attention if a solution is to be realized. In particular, food contamination in developing economies is mainly on the rise because the majority of people in such countries have a skewed engagement in rigorous business activities to earn more money at the expense of quality (Ip, 2009). This scenario is also a manifestation of the collapsed morals in business engagements. The increased prevalence of food contamination in the global sphere has resulted into increased demand for more research into the sector in order to generate important information regarding the causes and potential prevention mechanisms for the problems that are generally a manifestation of the flawed business ethics (Michaelidou & Hassan, 2008).

Why this Topic is Important and Interesting

Food safety has become a major concern for people in the contemporary world due to the increased food-related ailments. One of the main contributors of this scenario is the increased ‘appetite’ for profits that has led to the negligence or compromise for quality due to the poor ethical standards of food vendors or suppliers. Therefore, this topic is therefore closely linked to Chapter 4 “Topics on Ethics”, making it quite interesting and important to cover as an application in the business segment (Nickels, McHugh, & McHugh, 2008). While this study considers the concept of ethics, it also demonstrates the challenges facing developing countries that are hardly capable of handling food safety issues amicably. The difference in the ability of developed countries and their developing counterparts is generated from the fact that ethical businesses have become increasingly ethically irresponsible. Hence, the ability to monitor and curb unethical behavior in the food industry is considered a major determinant of prevalence of food safety issues in developing nations or otherwise in the developed countries. This makes this topic not only relevant but also quite interesting to cover alongside Chapter 4 (Nickels, McHugh, & McHugh, 2008).

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People are more Concerned about Making High Profit in Food Business

Food Safety Problem as a Cause for Bad Influence

Business ethics comprises of processes undertaken by organizations towards achieving a balance between the interests of their stakeholders, such as employees, clients and the shareholders, since it leverage business operations in entirety (Hobbs, 2010). In many instances, business ethics may also describe activities that individuals engage in while serving in an organization as well as the overall impact of an organization as far as their products or services are concerned.

In the contemporary business segment, business excellence demands many inputs, including technical skills, good products, and practical understanding of the business processes and undertakings. However, the latter in isolation cannot propel modern businesses to excellence. Instead, business ethics has been associated with assisting businesses to achieve and sustain success. Modern consumers also place a high demand on the producers to generate quality and safe products for the consumption purposes since people have become highly sensitive to their health conditions. In this regard, there has been an increase in the demand for accountability as well as transparency, becoming quite essential measures of investment decisions (Ferrell, Fraedrich, & Ferrell, 2015). Indeed, business ethics has been one of the fundamental links between these expectations and the establishment of an excellent business.

In addition, business ethics entails responsibility garnered from a fair competition in the internal and external environments of a company. For instance, fair promotion could be one of the inputs towards enhancing healthy competition in a business environment. However, modern businesses do not allow this isolated engagement. Instead, many food businesses engage in free market segments, in which competition is a major aspect that defines their daily engagements (Ip, 2009). Subsequently, many business enterprises have been engaged all forms of inputs, including compromised qualities, to maintain their business operations in a progressively dynamic business segment.

More to say, individuals within organization are often motivated to operate since every individual have an opportunity to be promoted (Yan, 2012). In essence, corporate are also considered response to safeguard natural surroundings in order to mitigate pollution, such as air and water, or other impediments like noise and solid wastes. Moreover, modern businesses also demand that employees work within safety environments and further correspond to the host country’s regulatory framework.

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In the case firms break business ethics and laws, they are typically rendered guilty and fined by the law enforcement agencies. However, the majority of the contemporary food companies have been largely focused on profit, maximizing the levels of operations at the expense of quality, and maximizing the level of production. Subsequently, many companies have ended up breaking ethical and environmental legislation, thus accruing to hefty fines at the expense of their businesses. However, surprisingly, the amount of money that such business entity largely surpasses the fines they are charged for overlooking the business ethics and regulatory standards set by the governments. The ideal objective of business ethics is to provide an equal play for all employees as well as the clients (Ip, 2009). In particular, business ethics ensures that businesses provide quality products and services for the clients, which is a safeguard against counterfeits of substandard products.

Ensuring that food production guarantees maximum safety and the health of consumers is one of the common business ethics in the food industry that has been recently focused immensely. A shift of concern to this area of development has been spearheaded by the increased food safety concerns that have arisen lately. Without regulatory measures to safeguard against these standards, firms may develop bad reputations within the industry among the suppliers and the consumers. For instance, negative news pertaining to food poisoning in China resulted into the Chinese government taking precautionary measures such the prohibition of local milk collection centers from procuring milk product from the dairy farmers and subsequently pushing the firms towards a constrained financial status and virtually no income generation. This shows the magnitude of impact that unsafe food may have on a country and humanity as a whole (Ip, 2009).

Case Study of Food Safety Issue in China

One of the prime food safety issues in China involved Sanlu dairy product with an incidence of contaminated milk powder. Despite the fact that the unsafe food scandal had arisen from Sanlu, the effect of this bleach scandal reached virtually entire dairy sector of China. Therefore, the contamination of the food material at one level influences the entire supply chain due to the dire impact with tightened regulations among other associated impacts. With regard to contract theory, the organization such as Sanlu ought to have kept its promises as laid down in the contracts with an assurance of high product quality and a safeguard against food contamination now and in the future. In essence, the company should have informed its consumers concerning the ingredients of their products. However, Sanlu claimed from the theory of Reasonable Care that both buyers and sellers were unequal by virtue of their status (Ip, 2009). The enterprises that take advantage of their positions regardless of their product designs, supplies, and production are expected to take maximum care of their consumers by offering guarantees of safety over consumption of products.

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In the contemporary business environment, all businesses can benefit from establishing an effective code of ethics. The establishment of the code of ethics can provide a platform and guidelines for the effective decision-making at different levels of operations. With regard to food, establishments, restaurants, wholesalers, and grocery stores face a defined range of ethical challenges that are tied up to the treatments of minimum wages of their employees and a choice between the costs of food and quality. The considerations of food costs in the modern business have been the main cause of compromised quality. In essence, food establishments must also be familiar with the supply chain they use in order to monitor and enhance cleanliness by instituting safety measures across the chain. In addition, the financial considerations may also lead to the food establishments considering a cheaper food ingredient to leverage the costs of production while maintaining or increasing returns ((Nickels, McHugh, & McHugh, 2008, p. 100).

In China, the sufferings of the infants were largely attributed to the contamination of the milk powder. The government of China does not confine food production to the international standards such as ISO, HACCP, and GMP among others. The United States Department of Agriculture (USADA), in collaboration with the Food and Drug Administration, demands that every food selling enterprise submits samples for testing (Ip, 2009). This is one of the measures by a stringent and responsible administration towards enhancing food selling hygiene amidst the runaway violation of health legislation by the profit-focused entrepreneurs. The USA’s FDA also defines the regulatory provision of HACCP as the management system, in which the safety of food is addressed via an analysis and controls of the biological, physical, and chemical toxicants from the raw production, handling, and procurement of the finished products ((Nickels, McHugh, & McHugh, 2008, p. 94).

As a result, there have been serious effects of the contaminated milk on babies. One of the contaminants of the milk had been melanine, the chemical that made milk appear very rich in protein. This scenario was associated with the fact that many buyers would presumably seek milk products that had been rich in protein, which would eventually translate into the individuals making hefty returns from the milk sales. However, the contra effect was that the melanine chemical was a major hazard to the health condition of the babies. Moreover, the majority of the milking stations were poorly equipped with the facilities required to check up any form of contamination of milk. While this situation held, it was apparent that business enterprises took the advantage of this situation to perpetrate illicit products in order to maximize their profit levels regardless of the impact on consumers. This aspect could be directly attributed to the flawed business ethics. As a result, Sanlu’s has product caused severe harm to several babies as well as their families that had consumed the contaminated milk powder (Ip, 2009).

Since this incidence of contamination, the Chinese government has taken hefty measures towards enhancing food safety across the country despite various shortcomings by the virtue of available resources. In particular, the Chinese government has enacted legislations, from which any company within China is required to comply with, but it can apply for the exemptions from inspection given that they have a clean record of producing high quality food product. In this regard, business entities with clear ethical considerations in their productions and supply of food products are often exempted from the inspection based on a perceived clean record of high quality production capacity and quality (Ip, 2009).

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Focus of People on Ethics in Food Business

The Importance of Ethics in Food Business/Japanese Food safety Precaution

To demonstrate a commitment to the enhanced ethics in the food industry, food vendors or establishments must show significant diligence prior to signing a contract with any new suppliers to consider the costs and to factor in all forms of costs that may be considered significant to affect the production costs. In this regard, the companies may be less susceptible to coercion into seeking cost-reducing prospects that could eventually lead to a compromise in the production standards. The code of ethics also demands that food establishments understand the source of livestock for their suppliers among other background information. In the 21st century, food companies also start to perceive a negative scenario, in which law has become highly porous, thus allowing a serious breach in the ethics present in the food industry (Maloni & Brown, 2006). As a result, the majority of the contemporary food establishments have also began to participate in combating the growing health epidemics that has been accelerated by unhygienic or unhealthy ingredients.

A proper code of ethics must entail a commitment of the sellers to sell healthy products in isolation devoid of using harmful ingredients. In the 20th century, the food companies had paid very little, if any, attention to fat contents in food or any other harmful constituents. However, this could have been spared due to lack of understanding of the unhealthy impact of this product as the result of high intakes in the long run. This unhealthy production of food had led to a pool of consumers becoming addicted to the unhealthy food component that endangered not only their health but also their lives (Maloni & Brown, 2006).

In the 21st century, the food establishments still serve the same products but with a combination of the enhanced ingredients that are meant to minimize fat and other additive contents ((Nickels, McHugh, & McHugh, 2008, p. 100). Food contamination is a major challenge to China due to the singled out concern of poor regulation, as China is a developing country. The main food safety issue that was witnessed in Japan was an isolated case of the Fukushima Nuclear accident that led to the fears of radionuclides contamination of food materials. However, the Japanese government enacted several legislations to combat any subsequent incidence of contamination and it has remained steadfast in the quest to protect the citizens against food contamination until today (Maloni & Brown, 2006).

Comparison between the Japanese and Chinese Food Safety Issues

Japan is considered the biggest importer of the food products. In particular, the company raised its net import of vegetables from about 1.1 million tons to about 3 million tons between 1990 and 2000. The share of the Chinese imports of these vegetables into Japan had also increased over the same period by about 40 from 40% in 1994 to about 80% in 2007. The rising volume of exports of vegetables to Japan may be explained by the heavy investments of the Chinese food processing industry in the vegetable processing sector. Such increased investments have prompted the growth of the demand for vegetables. Investors are lured by the Chinese vegetable processing industry that is able to generate convenient products from the vegetables at relatively cheap prices as the result of four main factors, namely high proximity to Japan, low labor cost, low cost of production, and being very open to foreign direct investment (Engelseth, Takeno, & Alm, 2009).

High ready market for raw vegetables has resulted in reduced initiative to monitor and enhance the quality of production of finished food products of the Chinese market, while the Japanese producers have created a robust food production framework that enhances quality production and supplies, which translates into the improved safety of the products. One main apparent scenario that has been discovered is that food consumers in Japan are more sensitive to food safety concerns as compared to China and any other place globally. Nevertheless, the Japanese consumers have overreacted since the food safety concerns in China are lower (Millstone, 2009).

If a company has a HACCP plan, it could prevent bad influences and subsequently enjoy the benefits accruing from the HACCP provisions. Such benefits includes the reduced consumers’ sentiments, the reduced prevalence of illness or physical injuries as well as the reduced potentials for negative publicity that can eventually ruin the reputation of a firm. Negative effects of the products as the points of concentration are not considered as the best techniques of marketing food products. Instead, the undertaking of considerable benefits attributable to the use of the legislations in place includes cost-savings mechanisms and enhanced efficiencies as well as enhanced revenues as the result of the implementation of HACCP. In this regard, the adoption of competitive regulatory framework does not only increase the costs of operations of a business but may result in enhanced performance capacity of a business due to increased positive publicity among others benefits accruing to its implementation (Maloni & Brown, 2006). Furthermore, the overall impact lies in ensuring that the business adheres to the general and legal principal accords as well as the ethical consideration of people’s healthy living.

Positive benefits accruing from the implementation of regulatory framework have also developed to a highly desired consideration during the food production at the primary level. This includes the use of the human-friendly chemicals during the growing of crops and rearing of animals. For instance, for the case of Sanlu, if they pursue international standards, such as the adoption of the HACCP plan, it would eventually reduce the risks associated with milk contamination. Additionally, there could have been minimal number of affected infants with kidney stone ailments or even dead ones (Ip, 2009).

Prior to this incidence, only Sanlu had been identified to have set up collection centers across Hebei, a time that quality of milk could be easily monitored and ascertained. However, after the entry of Inner Mongolia and China Mengniu Dairies, they enhanced public ventures into the business, hence becoming a scenario of increased dairy farmers that changed the milk quality monitoring prospects (Ip, 2009). While this scenario could have been associated with the failure of the government to enlarge its monitoring and evaluation capacity alongside expanding the supply points, it could also be largely associated with poor business ethics of individual entrepreneurs taking advantage of flawed monitoring mechanisms to exploit the public and enhance their profit making levels.

The perspective, in which inspection exemption is granted, is a major source of flawed regulatory mechanism in China as compared to other states like Japan. For instance, high sensitivity of the Japanese citizens to food safety concerns has been the main driver towards the formation of a strict legislation mechanism that safeguards the country against any form of deterioration of standards of food. Thus, the Japanese government is highly devoted to the standards and regulations pertaining to imports besides introducing quarantine periods as safeguards against any form of contamination (Millstone, 2009).

The country also stems up the technical requirements needed in the production, while these requirements are virtually inexistent in China. In China, the documentation of these legislations is also hardly a subject to any form of interpretation or translation, while the government of Japan sidelines its commitment to remain firm on its original laws by writing and interpretation. This strict focus on the laws safeguarding food products is derived from the demand by the citizens for high level of safety with regard to food products in their country (Ip, 2009).

It is unethical to bend the laws to fit individual situation. The subject matter regarding the concerns of the Japanese government that aim to prevent any form of reproduction and the interpretation of its legal framework pertaining to food safety is mainly the result of the flawed interpretation of the law to suit specific entities. In particular, individual restaurant and hotel owners in China often produce poor quality of food products amidst the existing legal framework to safeguard against such practices. However, to overcome the impact of the law in such circumstances, unethical entrepreneurs bend the law in their favor in order to outwit the authorities and perpetuate their unhealthy production practices (Millstone, 2009).

Despite the historically flawed food production in China and the dairy sector in particular, there have been various reforms established towards enhancing the production of hygienic products and achieving the enhanced food safety. In this regard, the Chinese government has various departments that are associated with food production either directly or indirectly. For instance, the Ministries of Health and Agriculture are just among other state departments charged with generating high profile products but they have been associated with considerably poor cooperation and efficiency. Furthermore, different departments have also followed their respective regulations and standards that lead to diverse and conflicting consideration with regard to the realized level of standards (Shelton, Zhao, & Roush, 2002). This scenario downplays the prospective goal of enhanced standard consideration of the food products.


Apparently, this study has focused on the production practices that are largely unethical in the global food production domain. However, this study has made a special focus on the Chinese food market that has been largely characterized with acute disregard of health considerations of the consumers. In particular, there has been poor legislation as well as enforcement of the laws pertaining to food quality and consumption trends of different foods in the country. Unlike China, Japan has been associated with very strict and rigid legislations pertaining to control of food production to enhance hygiene and mitigate food contamination (Millstone, 2009). For instance, China has been associated with the contamination of baby milk by the primary milk dairy company, Sanlu, that was associated with about 300,000 babies as victims of contaminated milk powder in addition to the few members of their families that had also consumed the milk (Ip, 2009).

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While this level of damage could be attributable to the governments’ failure to institute rigid production mechanisms, it is clear that Sanlu has also failed to institute standard measures to ensure quality milk powder supplies to its consumers. One of the main factors that resulted into this scenario like any other businesses was the need for the business to enhance its profits while constraining the associated costs. These aspects were true to the nature of contamination that was pure negligence or lack of ethical production capacities. Although there have been various incidences of food contamination in China, individual negligence has been a major consideration that has limited the realization of an efficient food merchant (Ip, 2009).

As a result, the government has undertaken several measures, such as enhancing international standards, although the exemptions for inspections against contravention of these laws have created loopholes for the proliferation of the breach. In order to minimize food contamination, the unethical production mechanism of business entities could be checked by the Chinese central government setting up food safety council that would spearhead the monitoring of the food safety and coordinate the operations of the inspection departments in addition to announcing consistent public information regarding a given public food standard. The adoption of universal food product standards could alleviate the problem of food contamination across the country (Ip, 2009).

Similarly, companies operating in the food industry must enhance their efforts to manipulate services from the factoring agents. This mechanism is critical in mitigating the instances of food contamination by increasing profit-maximizing investments. Hence, this would reduce the factors responsible for ditching companies into a financial pit. Moreover, this process would also be ideal in promoting the prospects of reducing the costs associated with debts. Thus, it is important for the companies to promote their credit sales towards trustworthy clients in isolation, although credit sales are considered a marketing tool for the maintenance of sales or the enhancing expired sales. Making critical considerations in this case would improve the decision-making process ((Nickels, McHugh, & McHugh, 2008, p. 95).

With regard to credit offers, the credit departments of the companies are answerable to the credit risk management committee of the entire entity that must form a pact partnership with the individual company’s credit risk management. In essence, companies should establish credit policies in line with the business units, comprising of collateral requirements, risk grading mechanisms, and reporting among others aspects of development, including statutory and regulatory requirements. In addition, the companies should develop authorization structure of approval as well as the renewal of their credit facilities. The authorization limits should be also allocated to credit officers of the business units. Businesses integrate a robust and effective credit policy that would help enhance the company’s resilience to negative externalities.

Food production and supply businesses must develop an ethical framework, upon which its operations will be established towards enhancing productivity while maintaining quality outputs. The management of the business must also assess their credit quality of all counterparty while considering their financial position and accrued experience over time. For instance, Sanlu should concentrate on quality production regardless of the government interventions based on the impact of sub-standard milk product on the population. Although the performance of the dairy business has been prevalently good, the credit risks arising from the increased competition and increased individual awareness might minimize its profit maximizing prospects. Ensuring minimal incidences of bad debts in the food companies would also limit the quest for substandard products to enhance revenues.

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Poor business ethics is not only detrimental to enterprise profit making prospects but also to the lives of individual consumers. Poor business ethics and the failure to undertake an elaborate corporate social responsibility for the business enterprises regarding their consumers also have a negative impact on the food safety of the companies. In essence, many business entities, particularly in China, are responsible for overlooking the existing food safety regulations due to poor enforcement mechanisms. However, if the business entities could engage their ethical consideration in the production and supply of the foods without singular focus to profit maximization, it would be possible to enhance food safety based on the ethical consideration as opposed to the existing legal prescription to food standards.

Finally, the incident involving Sanlu is only an example of the negative impact of poor ethical consideration of the food producers that has had a detrimental impact on the consumers. However, due to the contemporary dynamics that has shifted the mindset of entrepreneurs to profit maximization focus, governments must establish legal mechanisms that could be aligned with the international standards, such as HACCP, to protect the consumers against substandard food product that have adverse effects on their health. In particular, the Chinese government should constitute a firm legal framework to enhance safeguards against contaminated food materials.

In order to remain competitive on their markets of operations, food businesses must also monitor, adjust, and review their credit policies frequently in line with their business traits and mission. The companies should strategically establish their production based on a projected corporate social responsibility among the prime considerations, quality production while enhancing capital formation and profit maximization. For the businesses to retain or accelerate their financial performance, they must establish internal mechanism that would enhance its position on the market while leveraging its resilience amidst the dynamic external business environment.