The New Year's Eve Crisis

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The New Year’s Eve Crisis

Submitted in partial fulfilment of the requirements of the course Written Analysis and Communication I

Instructor: Prof. Avani Desai
Academic Associate: Mr. Sudhir Pandey

Submitted on June 30, 2012 by
xxxx
Section B
June 30, 2012

Mr. Michael Valenti
Michael’s Homestyle Pasta
Connecticut

Dear Mr. Valenti,
Subject: Advice regarding the decision on Southern Pasta Salmonella poisoning issue The enclosed report contains my analysis of the Salmonella poisoning issue in the recent lot of seafood-stuffed pasta shells. Based on the potential risk to human life, minimization of financial losses and preservation of Mike’s reputation, I recommend that you initiate a recall of the entire lot of pasta shells. I have worked out an action plan to implement the recall operation, which is included in the report. Sincerely,

xxxx

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Executive Summary

Southern Pasta, a company recently acquired by Mike’s has delivered pasta shells contaminated with Salmonella to its largest customer. Mike’s needs to decide how to prevent the infection from reaching the public while minimizing financial losses and damage to its reputation. Mike’s can hide this information from the restaurant chain or even instruct them to pasteurize the food to inactivate the bacteria. However, any slip-ups can lead to regulatory issues and multi-million dollar lawsuits. It is recommended that Mike’s should initiate a food recall. Although this is a costly option, but it ensures public safety and garners customer and employee goodwill, which will be beneficial in the long-term. * Number of words: 108

Table of Contents

Situational Analysis1
Problem2
Options2
Criteria for Evaluation2
Evaluation of Options2
Recommendation5
Action Plan5
List of References6
Exhibits7

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Situational Analysis

Michael’s Homestyle Pasta, a leading supplier of gourmet stuffed pasta shells, has recently acquired its arch-competitor, Southern Pasta Company. Mike’s faces a corporate nightmare as the recent lot of seafood stuffed pasta shells shipped out by Southern to a restaurant chain is tainted with Salmonella. The prior knowledge of the poisoning and the demand spike due to New Year festivities further aggravates the problem from an ethical and operational standpoint. The recall costs can be to the tune of $ 0.5 million, which represents almost 2% of the revenues. There is also an impending risk of losing the restaurant chain, which is the largest customer for Southern Pasta, as this is not the first occurrence of Salmonella poisoning in Southern’s products. The restaurant chain is valuable to Mike’s as it accounts for $ 3.5 million of the $ 8 million revenues of Southern and is one of the primary reasons for the acquisition. Losing this key client could trigger a domino effect leading to other restaurant chains terminating business relationships with Mike’s. Since nearly half of Mike’s sales were to restaurant chains, this could be detrimental to future revenues. The operating procedure requirements set forth by the restaurant chain can eliminate the bacteria. However, if the infection reaches the public, the situation can quickly manifest into a PR and legal fiasco for Mike’s. This can exact an emotional toll on Mike Valenti, more so when he needs to stay home for his wife’s delivery. Also, Mike’s has to ensure that it upholds its ethical integrity and portrays the image of an organization that regards public safety as sacrosanct. This will be important to merge the cultures of Mike’s and Southern.

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Problem

How should Mike’s protect the public from Salmonella poisoning while minimizing its losses and preventing repeat occurrences in the long-term? -------------------------------------------------
Options

1. Do not inform the restaurant chain.
2....
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