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Assignment 1: The New Years Eve Crisis

A Report submitted to Dr. Rohini patel

In partial fulfillment of the requirements of the course


Written analysis and communication

By
Rohit Chaudhary
Student, PGDM (IM)
Roll No:
On
6/11/15

Adani institute of infrastructure management, Ahmedabad


Table of contents
1. Summary.............................................................................

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2.
3.
4.
5.
6.
7.
8.

Issues and challenges..


Statement of the objective...
The options
Criteria for Evaluation..
Evaluation of options
The recommendation
Action plan..

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1. Summary
Mike Valenti, founder and president of Michaels Homestyle Pasta of Connecticut, has just
finished a four-hour conference call with his top managers, his lawyer and Fred Jones, the QA
manager at Southern Pasta Company. Michaels had acquired Southern, a Florida firm, three
weeks earlier, on December 10, 2001. It had taken the quality assurance manager until early in
the morning of New Years Eve day, Monday, 2001, to admit to Ted Brewer, V.P. of Operations
for Michaels, that he had been falsifying safety inspections of Southern products. He told
Brewer that the lobster ravioli leaving the Southern plant had been contaminated with listeria.
Much of the last batch of product had been sent to Southerns largest customer, a national chain
of 200 restaurants.Michaels had purchased Southern, in no small part, to capture this
account.Jones stated that the president of Southern, an Austrian national, had coerced him into
falsifying the quality control reports. The discussion leads to options that the management team
could follow. Since New Years Eve is the largest sales day of the year for restaurants, Valenti
knows that he has to do something quickly. He also knows that, regardless of what he does, the
reputation and future of his company rest on the outcome of his actions. He is considering what
to do at the end of the case, late in the afternoon of New Years Eve day.

2. Issue & challenges


1. One of the major issue aroused when he got a call from Ted about the seafood-stuffed pasta
shells that Southern had just shipped to its biggest customer were tainted with salmonella.
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2. After Michels purchase of Southern Mike realized that Walz was not going to provide detail
information. So, Mike was concerned about what else might not have been disclosed.
3. The operations and working system of two companies were very different, so Mike was facing
an issue of integrating both the companies into one.
4. Apart from seafood-stuffed pasta shells being contaminated by salmonella, the results of the
independent lab testing samples of stuffed pasta were also falsified.

3. Statement of objective
His main object is to maintain his reputation and minimize the loss in term of finance and
customers

4. The options
1. Do not call the clients
2. Call the clients
3. Recall the damaged items

5. Criteria for evaluation


1. Financial Implications
Long term: Possibility of losing the client
Short term: Possibility of losing particular batch
2. Legal implications
affects the reputation of the company.
3. Ethical and social responsibilities
Mike valenti should have responsibilities towards his clients.
4. The decision should be consistent with the culture of MHP and address the
underlying problem of difference and conflict of cultures in two entities.
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6. Evaluation of options
1. Do not call the clients
I.

I.

Financial Implication
o Short term: He might incur losses and may have to provide compensation
o Long term: Possibility of losing good will and clients
Legal implication
If the restaurants maintained their cooking standards by baking the pasta
shells at 160 degree Fahrenheit than they would not have to face any legal
issue. but if they did not maintained the cooking standards then they face
legal issue.

II.

III.

Reputation of company
If he did not tell to the clients, reputation of the company would be
affected when they would come to know.
Ethics and Social responsibility
He is not able to fulfill his social responsibility.

2. Call the clients


I.

II.

III.
IV.

Financial Implications
o Short term: He does not need to give compensation
o Long term: After companies come to know about contamination. They
would not buy from him and so he would incur 3.5 million losses.
Legal implications
They were inform to maintain their cooking standard so no legal
implications can be faced.
Reputation of the company
The reputation is going to affected.
Ethics and social responsibility
He is able to fulfill his social responsibility.

3. Recall the damaged item


I.

Financial Implication:

o Short term: If he recalls the contaminated batches of pasta. He would have


to pay compensation to the client and also incur cost of contaminated
food.
o Long term: He would incur loss of 3.5 million.

6. Recommendation
Based on the evaluation, Mike should call the client. There is possible financial risk in all the
situations. By choosing this option it will help Mike to minimize losses in each and every
criteria.
7. Action Plan
All the client restaurants are to be contacted by them before the dinner time. Communicate to
client about how this problem was brought to mike only an hours ago. Look for the other
solution for the contamination and reorganize the process as in MHP as soon as possible to
complete shutdown in case of FDA inspection.

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