The case study “HOW THE MILK SPILLED” revolves around PARMALAT, one of the biggest & most successful companies of Italy, The case discusses the unethical issues prevailing in the company as the company has been using false accounting & complicated financial systems to create a picture of financial health, misleading investors as well as analysts.
The company, PARMALAT was set up by Calisto Tanzi in 1960s. He inherited his family business that was started by his grandfather, producing processed like seasoned ham, cured meat & tinned tomatoes. Tanzi was not satisfied with simply running the family business & decided to explore new products & markets to grow his business.
On a trip to Switzerland after noticing a carton of milk he decided that route to success was through milk He set up a pasteurization plant near Parma to produce milk & sell in the areas surrounding the town. In 1963, the name “Parmalat” was given to the company & milk was also marketed under the same name. Parmalat meant “milk from Parma”. Parmalat was the First branded milk to be produced in Italy & became highly successful. Over the years, the company expanded operations to other areas of Italy & Parmalat soon became a national Brand. The splashing milk drop logo of the company was one of the best recognized corporate symbols & the company stood for all that was healthy & good. Over the years, Parmalat diversified into a variety of other products like yoghurt, vegetable sauces, fruit juices, baking products, soups & mineral water.
But all the good reputation of the company was until the events of 2003 which proved that behind the façade of goodness & health was an unhealthy penchant for complicated financial structures that milked the publicly held Parmalat group to keep the tanzi family companies keep running. Accounting scandals has almost become a trend of the times. It all started with Enron, the American energy...
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