LETTER OF TRANSMITTAL
President, Michael’s Homestyle Pasta,
Date: 31 December 2001
Subject: Report on the analysis of issue faced by Michael’s Homestyle Pasta
With reference to your request for preparing a report suggesting immediate course of action to be taken regarding the Salmonella contamination at Southern Pasta Company, a report has been enclosed which analyses the situation, states the core problem, the appropriate options available to you and their criteria for evaluation, and final recommendation with proposed action plan. It is recommended that you call the clients and let them know about the contaminated batch.
Mike Valenti has discovered that a salmonella contaminated batch has been delivered to an important client. The new venture has made Mike’s company the only major player and thus it is important to keep that advantage by not losing important clients. He has to decide on a course of action which should not only solve the problem at hand, but also address the basic underlying problem of clash of cultures of the two companies. It is recommended that Mike should call the client restaurants as it is a step towards addressing the present issue as well as the root problem
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After knowing about delivery of Salmonella contaminated pasta to a major client of Southern Pasta Company (SPC), a company acquired by Michael’s Homestlye Pasta(MHP) just three weeks ago, Mike Valenti has to decide his courses of action. He cannot incur heavy financial losses and trying to contain that would mean risking lives of innocent customers. The stuffed pasta is a specialty product and with the acquisition of SPC, MHP is the only major player in the market. Thus the customers are dependent to a large extent on these two companies. The customer dependency is validated by the fact that the client did not terminate contract with SPC after the May 2001 recall. In spite of holding an advantage over the restaurant chain, Mike has to worry about stuffed pasta being taken off the menu. The client was one of the major reasons for Mike’s interest in SPC and accounts for 14% sales. Thus any action taken should take into account the importance of continuing this account. There has been no food poisoning report from the restaurants after the May recall, although the quality of product supplied by SPC is suspect. So it can be concluded that the restaurants have robust standards for cooking. Mike also hasn’t been able to spend enough time at Tampa. Thus the process of welding the culture of two companies has been affected. This can be seen as reason why Jones came forward only after 3 weeks when he developed a little trust in the new management. The employees at SPC are used to following orders, ethical or not, and used to working under an authoritarian management. Thus the difference in two cultures can be seen as the underlying root problem, while the issue at hand being just a symptom of the problem. So whatever decision is to been taken has to solve the contaminated batch issue as well as address the basic problem of clash of the cultures.
What course of action would be consistent with MHP’s working culture and lead to minimum financial, legal and reputation risk for Mike Valenti and his company? OPTIONS
* Do not call the client restaurants and trust their cooking standards * Call the clients and let them know about the contamination so that the necessary cooking standards can be maintained CRITERIA FOR EVALUATION
* Financial Implications
* Short term : Losses for the particular batch in question * Long term : Possibility of losing the client
* Legal implications
* The reputation of the company
* Ethical and social responsibility towards the clients as well as the final consumers. * The decision should be consistent with...
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