New Year’s Eve Crisis

Case Study Report

Letter of Transmittal

From,
ABC Consultancy,
Jamshedpur,
India

31st December 2001

To,
Mike Valenti,
Michael’s Homestyle Pasta,
Connecticut

1
Sir,

Subject: Regarding requested consultation on the ongoing crisis

Please find attached the required document containing a detailed analysis of the current crisis at
your company. The report includes immediate as well as future course of action, based on
relevant parameters. Presently, Mike Valenti is advised to contact Southern’s client and inform
them about the contamination issue as well as remind them to follow standardized cooking
procedures.

Regards,
John Doe,
Senior Consultant

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 Contents
1. Executive Summary .......................................................................................................... 4
2. Problem statement ............................................................................................................ 4
3. Situational Analysis .......................................................................................................... 5
4. Alternatives ....................................................................................................................... 6
5. Criteria for Evaluation....................................................................................................... 7
6. Recommendation:............................................................................................................. 7
7. Action Plan: ....................................................................................................................... 8
8. Long Term Plan ................................................................................................................. 8

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 1. Executive Summary

The following report has been prepared after extensively analyzing problems faced by MHP on
New Year’s Eve which put Mike and his organization’s reputation in jeopardy. The company is
on the brink of suffering from huge financial and reputational losses which should be minimized
by careful deliberation of all possible alternatives and then following the most suitable action
plan.

The prime factors that were considered while arriving at the suggested solution were elimination
of health hazards for consumers, brand image of MHP, monetary losses and the legal
implications with utmost emphasis on health of consumers.

After conscientious study, it’s recommended that Mike informs the Chain about the
contamination and implores them to stick to standardized cooking procedures.

2. Problem statement

Michael Valenti, owner of MHP recently acquired Southern Pasta which is facing a Salmonella
contamination crisis. Batches of contaminated seafood-stuffed pasta-shells have reached the
customer restaurant chain with outlets countrywide.
The need of the hour is to devise a strategy to contain the contamination with minimum loss.

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 3. Situational Analysis
Problems
BACKGROUND
• Difficulty in integration of the cultures
of two companies due to different Acquisition of Southern Pasta
management styles. by MHP on 10th December,
• No complete disclosure of affairs by 2001 - after being competitiors
Southern Pasta. in the field of hand made pasta
• Blemished History of Southern Pasta (Acquisition worth $3.5 Mil).
a. Has been a part of a contamination
scam before.
b. Has 60% of revenue in 90+ day
recievables.

Added Information
• Food contaminated by Salmonella -
needs to be boiled at 160' to avoid
health hazards. PROBLEM OF CONTENTION
• Time crunch of 4 hours before direct Contaminated food sent to the
consumption by customers.
biggest client of SP which is
• Huge order on New Year's eve to the 50% of the revenue share on a
client which comprised of approx 50%
of the revenue share of SP. high consumption day.

Added Information
• Mike's wife was expecting - hence Mike
couldn't himself travel to the newly
acquired company.
• Legalities pertaining to manslaughter if
found guilty.
• Dan convinced Mike to buy the
company because he presumed that
they already had enough information
while competing.
• Mike wanted a monopoly in the field of
Hand Made Pasta with SP being the
only feasible competitor.
• During the last recall faced by SP, total
cost amounted to half a million dollars.
REASONS
a. Southern's quality assurance manager
pressurised by SP's former President to
present a clean chit - leading to sample
data manipulation.
b. He also withheld the information upto
the eleventh hour.
c. Lack of due deligence by MHP's founder
for avoiding personal inspection of the
newly acquired company.
d. Mike - Lack of retrospection as he
bought the company despite a blemished
history.
IMPLICATIONS
a. Risk of health hazards for the
people consuming the
contaminated product.
b. Risk of destroying the
reputaion of the company due to
media coverage - mandated by
FDA in case of visible symptom of
the situation.
c. Shutdown of the company
along with legal ramifications
and huge financial loses.
d. Death of the Product

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 4. Alternatives

(Word Count - 223)

 5. Criteria for Evaluation
1. Ethically considerate – A check on how much the alternative conforms to the social
values and ethical norms of the organization.
2. Customer Satisfaction - An indicator of how the particular alternative will appeal to the
customer (Restaurant chains in this case).
3. Sustaining Brand Image - A comparison of the alternatives’ potential to sustain the
reputation of Mike’s Homestyle Pasta after its implementation
4. Aligned to Mike’s Core Philosophy - Indicates how aligned is the chosen alternative to
Mike’s personal values and current mindset.
5. Minimum loss of Revenue - The relative financial impact and ramifications when the
alternative is put to action.
6. Ease and Speed of Implementation - A comparison of the operational practicality of the
alternative in question.
7. Legal abidance - To what degree does the alternative abide to the legal system in place

6. Recommendation:

It is recommended that MHP:-

a. Follows the course of action (1a).
b. Takes immediate measures for contacting the restaurant chain and intimates them the
situation.
c. Requests the VP-Ops of the Chain to direct all outlets which received the defective products
to heat the sea-food stuffed pasta-shells to a temperature greater than 160°F.
d. Provides the Chain with incentives to retain them as customers and as an apology for the
hardships caused.
 7. Action Plan:

The PR-office of MHP is recommended to:

a) Contact VP-Ops of the Chain and inform them about the possibility of the sea-food stuffed
pasta-shells delivered being infected by Salmonella.
b) Provide them information about locations where products delivery has been made and
implore them to direct Chefs to heat the shells to a temperature above 160°F.
c) Compensate them for loss of revenue caused by the non-delivery of the two loads stopped
by Fred.
d) Negotiate an incentive with compensation to the Chain for the inconveniences.

8. Long Term Plan

1. Replace the heaters and procure ones that can heat the foodstuffs to a temperature
greater than 160°F.
2. Conduct a thorough audit of the newly acquired Southern Pasta.
3. Ensure better quality control processes, such as randomized sample selection, multiple
independent lab tests etc.
4. Devise a reporting system where each restaurant maintains the given temperature and
track every store in the chain is following the reporting system.