AC504: Ethical Issues in Business and Accounting
Unit 1 Assignments
Oluseye Akindebe
Kaplan University
June 30, 2015
Professor: Danyell Weaver
Assignment 1
1.) Given strong profit growth, has there been any damage to Baidu.com’s reputation?
I am convinced that there has been a significant damage done to Baidu.com’s reputation. Baidu.com, an online news also known as the “Google of China” was involved in a case involving human’s health. The rumor about Baidu.com was that the company neglected its ethical code of conduct by accepting bribe to protect a certain number of milk manufacturing company from online searches about the tainted milk scandal. Though there was no basis for this rumor, however, it is easy for the public to believe that Baidu.com has accepted payments to keep stories containing a specific milk manufacturing company’s name from online searches about the tainted milk scandal. As it was stated at the concluding paragraph of the case, Baidu.com’s stock declined; share price dropped from $308 to almost $110. This points to the facts that the public has lost faith in the company. Children’s health is important than any financial gain; maybe if prompt awareness about the tainted milk has been broadcasted online, the number of 6,200 sick infants might have been reduced or probably prevented (Brooks & Dunm, 2010).
2.) What would reputational damage affect, and how could it be measured?
A company’s reputation is more and more recognized as a business asset which is vital to maintaining and increasing business value. Reputation matters as it can explain the reason for some clients’ preference over certain products or services, and that can make the difference between success and failure. Some companies measure their reputation based on their integrity while others rely on the value of their company’s stock price. If a company’s reputation is damaged, integrity is at stake, the entire organization looks bad, and consequently, the company’s stock price will begin to dwindle as relate to the situation of Baidu.com. The declining in stock price will have adverse effect on the company’s profitability and dividends. The overall effect can be measured by the ratings of the company. When the ratings begin to fall, there will be fewer or no sponsors, profit, and stock price will decrease, the company will be struggling to keep up with other competitors and, if there is zero chance of continuity, the company will cease from operating.
3.) What steps could Baidu.com take to restore its reputation, and what challenges it have to overcome?
The very first step is to take statistical data and ask the question, how did we get into this chaotic situation? Answers to this question might help Baidu.com to retrace their steps and fix the problem; though, it might take a while to regain their initial status. Also, the company has to disregard its pride, managements should acknowledge accountability, publicly apologize for any wrong doing, and perhaps promise to take necessary action against any employee(s) liable. One of the challenges to overcome is the backlash from the company’s competitors. These competitors will want to constantly criticize Baidu.com in order to tarnish its good image so that people can view the company as bad. Another challenge is regaining trust from the public, investors and consumers.
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 members of the public?
Over years, the “culture of secrecy” has been failing especially with the enactment of “The Foreign Corrupt Practices Act (FCPA) of 1977.” Though, FCPA was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business; but with the enactment of certain amendments in 1998, the anti-bribery provisions of the
