NAME : RAJARAJAN S/O RAMASAMY RICHARDSAMY

STUDENT ID : 033130050
HANDPHONE : 014-930 9054
COURSE NAME : BUSINESS ETHICS
COURSE CODE : BBM208/05
CLASS CODE : 3BET1
TUTOR NAME : MR. ANDREW WONG KIN HONG
ASSIGNMENT : TMA2






1. What are the ethical issues involved in the factual circumstances discussed
above? (10marks)
There are few ethical issues that can be discussed in this case such as Kanebo
didnt response to the complaint which was filed by their customers. According to
Abraham Lincoln human character can be described as the tree and reputation as the
shadow. It also can be define our character is what you really are; your reputation is
what people think of you. These shows Kanebo have failed to save their reputation
because they failed to response to the complaint. More than 15,000 people in Japan
have complain skin blotches which caused by a chemical contained in popular skin-
whitening creams which were made in Kanebo. The complaints was from 54
products of Kanebo and the products containing the whitening chemical
Rhododenol. Their reaction was to late where by the first complain was filed on the
October 2011 but the tend to ignore it and finally in July 2013 Kanebo decided to
recall millions of products from across the globe, because of problems with a the
content in the ingredients which is known as chemical whitening substance called 4-
hydroxyphenyl, This chemical is known as "Rhododenol" in Kanebo product. But end
of case Kanebo has promised that it will pay medical costs for customers left with
uneven skin colouring, which in some cases continued after they stopped using the
products.
The next ethical issue are continuous shipping their product even after
receiving thousands of complaint. This is proven Kanebo was forced to issue a
humiliating apology after the revelation that it had continued shipping flawed
cosmetics for a week after deciding to recall them, this might possibly increasing the
number of customers affected.

The next ethical issue are responsibility towards customers. As Kanebo a
leading cosmetics industry they should be little concern about their customers.
Kanebo have the responsible for ensuring that the products are using the non-harmful
ingredients and moreover they should provide the correct information about the
product to the customers. A company who cheats on any one of these accounts is
spoiling the image of the product. According to the principle of utility the actions are
right in proportion as they tend to promote happiness; wrong as they tend to produce
the reverse of happiness. Kanebo tend to ignore this principle in their company.

2. Identify the stakeholders involved. (5marks)
The stakeholder is a group and individuals who benefit from or are harmed by
and whose rights are violated or respected by corporate actions. The concept of
stakeholders is a generalization of the notion of stockholders, who themselves have
some special claim on the firm. According to Freeman and Reed, 1983 had define
there are two senses of stakeholders, which is known as narrow definition and wide
definition. The narrow definition includes those groups who are vital to the survival
success of the corporation, meanwhile the wide definition includes any group of
individual who can affect or is affected by the corporation. The stakeholders in
Kanebo Company are Employees, Manager, Owners, Customers, Suppliers, Society,
Government, and Shareholders.
3. Was Kanebo forthright and honest in the beginning? Why or why not?
(10marks)
Kanebo was not forthright and honest at beginning. The reasons why Kanebo
was not honesty in the beginning because Kanebo tend to ignore the problem and
continuous sell the products even there were many complaints were filed by the
customers, this scenery shows that Kanebo is more interesting in gaining profit from
their products but do not have responsibility towards their customers. According to
Liberty always put forward the harm principle that the only purpose for which
power can be rightfully exercised over any member of a civilized community, against
his will, is to prevent harm to others. This principle should be followed by every
person or companies in the market now, but it is so sad to be mentioned that Kanebo
failed to follow this principle. Besides that Kanebo did not have the intensive to
conduct the investigation regarding the complaints filed by the customers, this is the
great example to show Kanebo were not honest at all in handling their products in the
market.
4. Does the initial response from Kanebo constitute fraud? (10marks)
Yes, the response from Kanebo is constitute fraud because Kanebo start
receiving the complaints from their customers on the October 2011, but they did not
even investigated about the case in more deeper and the tend to ignore the problem
and continuous sell the products to the customers. The most important Kanebo did not
deal the case with honest at all in their communications and actions. According to
Abraham Lincoln, honesty is ethical executives are, worthy of trust and honesty is the
cornerstone of trust. Ethical executives do not deliberately mislead or deceive others
by misrepresentations, overstatements, partial truths, selective omissions, or any other
means and when trust requires it they supply relevant information and correct
misapprehensions of fact. Kanebo are not only truthful, they are candid and forthright.
5. From what you have just read, was Kanebos recall action timely? What could
they have done better? (15marks)
Of course Kanebo did not take action towards the complaints on right time. On
my point of view what could be done better by Kanebo are such as, the moment
Kanebo receive the first complain from the customer, they should have done some
investigation regarding that case and send the sample of their product to the lab, if this
action were taken previous by Kanebo, for sure the image of Kanebo would not be
damaged as what happened now. The next recommendation is Kanebo should be
more transparent with their products and also their customers, where by they should
be very clear with the ingredient used in the products and also the harm on the
products. Kanebo should be more genuine about their products and also their
customers well being too. According to Abraham Lincoln, Ethical executives are
caring, compassionate, and kind. Moreover Kanebo fail to understand the concept of
stakeholders; those who have a stake in a decision because they are affected by it and
they always consider the business, financial and emotional consequences of their
actions on all stakeholders. A research from Harvard Business review shows that
business ethical are something executives seek to accomplish their business
objectives in a manner that causes the least harm and the greatest positive good. From
this statement we can conclude that Kanebo fail to do so because the harm was much
higher than the positive result towards their customers. Finally Kanebo product maybe
can be more sustainability, for example the key aspects of raw materials for cosmetics
must be safety and skin-friendliness, and even the manufacturers must also consider
the impact of their use on the global environment.
6. Do companies have to operate ethically to be successful? Justify your answer.
(20marks)
In my point of view companies have to operate ethically to be successful
because there is a high road to success, one where people live and work according to a
set of values, ethics and principles that can make them feel good about themselves
and the job they do. As a result, people are proud to work for these companies,
customers are proud to buy from them, and shareholders are proud to invest in them.
According to sustainable business forum; we each have to live with ourselves, and our
ethics will determine how good that life is, inside our own heads and hearts as well as
inside our companies. Not only that Aristotle also claims that all the things that are
ends in themselves also contribute to a wider end, an end that is the greatest good of
all.
The world most ethical company won by Kao for the year 2013. The main
reason Kao entitled as most ethical company because their Integrity, this principle
were inherited from the Kao founder, shows that Kao is committed to enduring by
laws and ethics to engage in honest and healthy corporate activities. Moreover,
compliance hotlines that members can contact to report or consult about matters that
might infringe legal and ethical guidelines have been organized at each Group
company, allowing them to take responsible actions without worry. Moreover Kao
has been proactively involved in contributing to protect the global environment and
has taken on such societal issues as health and aging through its business activities.
Besides that, the ethical organization should pay respect to their employees and their
customers, putting their well-being ahead of the bottom line. So this is the reason why
company have to operate ethically and this can help them to achieve success in long
term.
7. Write a short study on product safety criteria in the market today. (10marks)
According to the short study that were conducted, it can be conclude that there
are few safety criteria in the cosmetics market such as checking the product quality in
the product development stages, confirm safety by their own strict standards,
commercial production after zero batch, unceasing companywide quality
improvement activities after product release, more user- friendly product labelling,
and promotes development of alternatives to animal testing. The first safety criteria
are checking the product quality in the product development stages whereby at the
product development stages, they will check the complete function of the products
and also with certain appropriate test towards the products. Not only on finished
product but checks on the quality of raw material, usage and labelling too.
The next safety criteria is confirming the safety by their own strict standards,
whereby they have own Safety Assessment Standards for Products and Materials such
as methods used to prepare the each product category and also the raw materials used
to prepare the products. Moreover the standards will highlight the most important
criteria for the product which is non- harm to human health and minimum
environmental impact.
The third safety criteria is commercial production after zero batch where by
the first production of a product run after trials have been completed a zero batch.
The zero batch is subject to quality inspection and stability tests in storage,
transportation and usage. The in charge committee members from the organization
will evaluate the result and start the production.
The forth safety criteria is unceasing companywide quality improvement
activities after product release whereby they does hear from their consumers for
continuous quality improvement. If there is any issues rise the customer relation
department will conduct the investigation regarding that company.
The fifth safety criteria is Product Labelling is a crucial factor to ensure that
the consumer can select the correct product and use it safely. The most important aim
of every label should be to provide information that can be understood by the
consumers. Not only that the label should also carry warnings about the nature of any
danger and how to avoid it.
The last safety criteria are more user- friendly product labelling and promote
development of alternatives to animal testing. In addition to these criterias, company
should be proactively involved in contributing to preservation of the global
environment. All these criteria have implemented by using The Cosmetic Products
(Safety) Regulations 2004.
8. Do you think Kanebo will recover from this scandal? Recommend actions that
Kanebo could take to repair its brand image and consumer confidence.
(20marks)
Perhaps it is very hard for Kanebo to recover from this scandal , but yet there
are few recommendation that is suggested which is possibly Kanebo can be much
more transparent with the ingredient that are used towards their products, this might
be one of the best way to prove the customers that the ingredient or key ingredient
used in the products are safe and Even Kanebo can have few testing on their products
/but not on lab rats but the test should be done on the human itself and be transparent
with the outcome . The result might conceive the customers that the products are
much safer than the previous one.
The next recommendation is Kanebo might have some collaboration program
with any other brands or certainly really successful brands and maybe they might try
to launch products with the collaboration with any upcoming brands in the cosmetic
industry. This might give a good image for Kanebo and even can win the heart of the
customers.
The next recommendation Kanebo might change the complete brand name, the
formula and maybe can start everything from the starting point /new brand with new
faces and new images might be created. This might give a better name and better
image.
Finally I would recommend Kanebo might even try to change the complete
formula of their products and try to sell the products but with giving 100% guarantee
or warranty on consumers usage of products. This might give a better or more trust
on the products produced by Kanebo to their customers.

Reference
A guide to the Cosmetic Products (Safety) Regulations 2008, 2010. Department for
Business Innovation & Skills.
The Cosmetic Products (Safety) Regulations 2004.
Junichi Mizuo. 2013. Changes in Business Ethics during Lost Two Decades, and
Prospects for the Future in Japan: From a View Point of Business Ethics Compliance,
Corporate Governance, and Global CSR.
http://www.kao.com/jp/en/corp_csr/safety_03.html
http://www.kao.com/jp/en/corp_imgs/corp_csr/pdf_reports_01_02_01_012.pdf