Case Study of Snow Band

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  • Topic: Management, Corporate governance, Milk
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  • Published : October 16, 2010
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Snow Brand Milk Products

‘Crisis or Opportunity?’

- Time for Corporate Revitalization

Hong Kong Baptist University

10 June 2010


|1. |Executive Summary |1 | |2. |Problem Identification |2 | |3. |Analysis |2 | |4. |Alternatives |4 | |5. |Recommendation |5 | |6. |Implementation |5 | |7. |Timeline |9 | |8. |Contingency Plan |9 |

Executive Summary

Snow Brand Milk Products Co Ltd (SBM), originally founded in 1925, is one of the largest dairy companies in Japan. The original mission of the company was to provide assistance to dairy farmers in Hokkaido to become independent operators after suffering from the 1921 earthquake. The founding motto of the Hokkaido cooperative, ‘Healthy Earth and Healthy People’ depicted the founding vision. The company’s logo of ‘a crystal mark’ symbolizes being the Polar Star of the dairy operation in Hokkaido. One of the founders of Snow Brand, Torizo Korosawa, emphasized the ‘spirit of establishment’ as the base of the corporate philosophy of the company, knowing very well that milk has had a special status in the Japanese culture and product market. The company was officially established in 1950 and had been a major dairy product provider competing with other major competitors including Meiji Dairies Corporation in Japan.

With the corporate background and market positioning of SBM, the report of the milk poisoning, the mismanagement of the crisis in terms of the response from the executives, the lack of quality control and the beef mislabeling scandal all reflected a disengagement with the founding culture and values of being customer focused by providing high quality dairy and food products.

In view of the avalanche of crisis incidents, what SBM imminently faced was a reputation crisis which was closely intertwined with financial losses and plummeted public trust. Yet below the tip of this iceberg lay the fundamental issues of leadership, conservative management and eroded corporate values.

While it was urgent to handle the series of crises happened, it was also time for SBM to consider corporate revitalization both from the business and corporate management dimensions.

Alternatives including corporate reengineering, spin-off, join venture and divestment are carefully considered and evaluated to provide appropriate recommendations for SBM.

This proposal will recommend SBM to take up immediate and longer term implementation steps to address the existing issues. The primary action is to ensure that the reputation issue trigged by the series of crises is managed by professional public relations professionals and the company is taking and also seen to be taking full responsibility in addressing the legal issues and compensation for damages caused.

Then recommendations on corporate reengineering including hiring new leadership positions, executive training, business strategies, product and production enhancement, financing plan, customer relations improvement, human resources management and contingency plan are clearly mapped out for SBM to move forward from the end of 2002 to 2006 and beyond. Problem Identification

Subsequent to the milk poisoning and beef mislabeling scandal, consumer trust for SBM had evaporated, and sales for SBM had plummeted. Meanwhile,...
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