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Thursday, 27 June 2013

Sanlu group and customers

Sanlu group is a milk company in china which was affected by a milk scandal that led to its closure. This scandal prompt the company to a research in order to find out what causes the inefficiencies and final the big loss. In this research it considers various issues which affect the day to day running of any company.

The stakeholder theory this entails that stakeholders are very important to any organization therefore their interest should come first for the success of the organization. Among the main stakeholders are customers. Customer play a very huge role in an organization they are the consumers of the products therefore their interest should be key. Customers want quality product which are safe for consumption. They also want honesty explanations to any default of a product to ensure that their trust is maintained hence retain them.

Sanlu Company was founded in 1996 as predecessor to Shijizhunang Dairy Company which had been formed in 1995. The company progressed well for 13 year in 2005 it received y= 864 million investment from New Zealand Dairy cooperative. This led to increase in production capacity of 600,000 tonnes annual in 2006. This performance continued until 2008 when the company was faced by the scandal which was very detrimental and was closed.

Sanlu Company had shown responsibility to its customer by assuring them that its products were of high quality by doing though testing each and every time. It had also braded itself very well all over china by producing good powder milk to infants and adults. Its customers had absolutely trust on them.

The scandal could have been avoided if Sanlu company took to consideration the complains raised by its customer but it showed no commitment. First the farmer were under pressure to make profits since the farm inputs were costly and compared to their returns they could not keep up the cost hence put water to their milk and add Melanie to increase the protein content.

The handling of the scandal was also not committal instead of admitting that there was a problem they kept hiding truth to its customer even after receiving various complains. Journalist who would interview some of its customer and try to bring out the whole issue they would suppress them and ensure that no information comes out, hence by the time they were taking action it was too late for them.

This was contrary to its competitors in the likes of Unilever, Nestle and Cadbury who immediately initiated investigations on whether their products were affected by the melanine scandal. On discovery that it was the case they took massive camping to inform their customers what had transpired also recalling some of its products and also did a proper quality audit.

The company would have avoid this scandal if it had taken the right measures of admitting that there was a problem with their products and take the right action. Cover ups and assuming that all was well with their products was a wrong move which they will leave to regret. This serves a lesson to other companies that they should not ignore their stakeholders.
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