This example will distinguish factual issues by clearly articulating the ethical issue regarding two food

poisoning incidents that occurred in Japan affecting many school children. This paper clearly identifies
the issue by applying the reasoning. I compared how the crises were handled differently by using
timelines. This is from my Bachelor of Applied Science 300 course assignment of presenting a crisis that
was handled ethically the first time and unethically the second.






Snow Brand Milk Food Poisoning Crisis
BAS 300
Melanie Palacio
Boise State University
December 2013



Abstract
Snow Brand Milk Products Co., Ltd. was founded in 1925 to help farmers become
independent due to falling prices resulting from a government trade tariff. Snow Brand was well-
established as the top company in the Japanese milk product industry (Inoshita, & Hasegawa,
2000). In 1955 Snow Brand experienced a food poisoning incident where 1900 students were
sickened. A prompt response stopped product distribution, ordered a recall, published
apologies to the public, investigated plants and production processes, and enacted measures to
prevent a recurrence of food poisoning (Wrigley 2006, p.356). Snow Brand gained respect from
the public and saved its reputation. Since the first food poisoning incident had been handled so
well, the probability that another incident would occur seemed highly unlikely. In 2000 a second
food poisoning incident occurred when a toxin generated by increased bacteria, infected a valve
during a 3-hour power outage allowing raw milk to stand at high temperatures at the Osaka,
Japan factory. The initial case was reported on the morning of June 27. By the time this crisis
was contained more than 14,000 were sickened. My goal is to establish a sequence of events
describing the crisis, the response time of the company and impact that this crisis had on the
Snow Brands reputation.






The Snow Brand Company received the first report of food poisoning the morning of
June 27, 2000. The West Japan Branch received a call from a consumer whose children showed
symptoms after drinking Snow Brands milk product at dinner on June 26th. An employee of the
company immediately visited the consumers house and asked several questions, but did not
think that Snow Brands Milk was the source of the childrens symptoms. He told the consumer
that the company had received no other reports. The employee took the remaining milk product
from the house to have it inspected (Wrigley 2002; Wrigley 2006).
Osaka City Hall also received calls from local public health centers reporting food
poisoning symptoms, possibly linked to Snow Brand s product. City Hall officials promptly
conduct an on-site investigation at the Snow Brand Osaka plant on the afternoon of the 28th. At
11 p.m. that evening, Osaka City Hall official requested that a representative of the Snow Brand
West Japan Branch conduct a recall of its products and make a public announcement informing
consumers of the food poisoning. The Osaka plant manager thought that seven complaints out of
hundreds of thousands of products was nothing out of the ordinary.
June 29th. At 8 a.m., Snow Brands executives made a final decision to voluntarily recall
the products but decided not make a public announcement. Snow Brand president, Tetsuro
Ishikawa, formerly the financial director of the company, was informed about the recall an hour
later. After the stockholder meeting, Ishikawa visited with several stockholders in Sapporo; not
being included in the decision making process. When the decision was made to make a public
announcement, it was already 2 p.m. At 4 p.m. Osaka City Hall held a press conference to report
the food poisoning caused by Snow Brands Milk product. At 9:45 p.m., the Snow Brand
general manager of the Japan branch called a press conference to explain its recall of the product.
Already 58 hours had passed since the first call was received (Wrigley 2002; Wrigley 2006).
On July 1st, the number of food poisoning cases reached 6,121victims in eight of the 47
prefectures in Western Japan. Snow Brand Milk Products Company held dual press conferences
on July 1st, 2000. Ishikawa, Snow Brand president, attended the second press conference along
with the Osaka plant manager to apologize to the public. In that conference, the plant manager
disclosed that there were contaminants in the valves of the milk products line when the
equipment was checked on June 29th. Ishikawa shouted at him, Is that true? The director of the
public relations department also shouted at the plant manager in a loud voice, Is it a fact or your
guess? Moreover, the contamination of the valves for the milk products line was confirmed
before the first press conference that day: however, that fact was not reported at the conference.
The Osaka plant was shut down the same day (Wrigley 2002; Wrigley 2006).
On July 4th, the number of cases reported was 9,394. Snow Brand published its official
announcement in newspapers, but the manufacture date of the possible tainted products was
incorrectly reported in the announcement. In another press conference held on the 4th a
managing director replied to the questions about that mistake about the product date. There is
chaos in the company. It is very difficult to manage accurate information. In addition, it was
found that two other milk products caused the food poisoning as well. First, Snow Brand denied
that, but the inspection by Osaka City Hall confirmed the product lines for those two products
were contaminated. Osaka City Hall ordered Snow Brand to recall those two products and
strongly recommended a voluntary recall of all of the products, 56 items, produced at the Osaka
plant. During the press conference, media reporters asked Ishikawa many questions. He replied
saying, I do not know details about the manufacturing. I feel displeased because information did
not reach me. Then, finally, Ishikawa shouted at the reporters, I have not slept!! His
comments were aired on nationwide television.
Osaka Prefecture Police conducted an investigation on the grounds of professional
negligence resulting in food poisoning. A police executive commented, Each person at Snow
Brand told a different story. They do not share information among the plant, the branch or the
headquarters. Accurate information from the production front-line may not have been reported to
the executives (Wrigley 2002; Wrigley 2006).
On July 5th, the number of cases reported reached in excess of 10,000. The following
day, Ishikawa announced his resignation. During the press conference, he said, I sincerely
apologize that Snow Brand jeopardized its consumers and society, and this incident happened
because of our overconfidence in our policy and product quality. He was questioned about the
crisis management of Snow Brand and replied, We have a crisis management manual, but in
reality, it was difficult to follow the situation based on the manual. He insisted that the problem
was only at the Osaka plant, and did not affect all Snow Brand plants and products (Wrigley
2002; Wrigley 2006).
On July 10th, Osaka City Hall confirmed that the Osaka plant of Snow Brand recycled its
returned and outdated products to manufacture new products. Although this was not the cause of
the food poisoning, this damaged the entire image of Snow Brands products (Wrigley 2002;
Wrigley 2006).
On July 11th, at 11 p.m., Snow Brand announced its decision to voluntarily shut down its
21 plants nationwide. In dual press conferences, originally scheduled at the Western Japan
Branch and Snow Brand headquarters in Tokyo for 5p.m., was not conducted until 11 p.m. to
answer reporters questions. At the conference in the West Japan Branch, a spokesperson from
Snow Brand replied to questions suggesting that reporters ask for details from the headquarters
in Tokyo. On the other hand, at the Tokyo headquarters conference, a spokesperson suggested
that reporters ask for details from the Western Japan Branch. The heated criticism from the
media exposed Snow Brands disorganized media relations. Since the media could not get a
response from the company or an explanation, the reporters tried to collect information from
other sources; victims who had been poisoned, Osaka City Hall officials and the Osaka
Prefecture Police. Some accurate and inaccurate information was reported by the media and led
to employee confusion regarding the internal communication from the company. As a result, the
employees of Snow Brand did not have the same level of information as the consumers, retailers
and media. The media started to report the organizational problems within the company, not just
the technical mistakes of the company.
According to Coombs and Holladay (2012), the cost to the company to protect capital,
human resources and reputation during a crisis should be motivation alone for a company to
effectively plan for an event such as this. On August 4th, Kohei Nishi, from the sales
department became Snow Brands new president, and in a press conference, he explained the
companys rebuilding plan using visual aids to explain to the media.
On August 18th, Osaka City Hall pointed out that one source of the poisoning was
contaminated milk product that was manufactured at the Taiki plant in Hokkaido. The next day,
the Hokkaido government conducted an on-site inspection of the Taiki plant. The inspectors
found that due to an electrical power outage that occurred on March 31st, 2000, raw milk
material for the powdered skim milk remained at a high temperature. This allowed the
staphylococcus aureus bacteria and enterotoxin to grow in the milk. Plant workers found that
even though the bacterial count exceeded the companys safety standards during a quality exam,
the plant shipped the powdered milk to the Osaka plant. The Taiki plant did not realize the
connection between the electrical outage and the staphylococcus aureus bacteria until the
Hokkaido government and the Prefecture Police confirmed the linkage.
On August 23rd, Snow Brand held a press conference and admitted the contamination of
the product manufactured at the Taiki plant. Hokkaido Prefecture Police started an investigation
of the Taiki plant claiming negligence that resulted in the poisoning (Wrigley 2002; Wrigley
2006).
On September 26th, Snow Brand submitted its business reconstruction plan, but was
forced to revise the plan several times. Snow Brands fiscal earnings showed a deficit on March
31, 2001. In the end, more than 14,780 victims were sickened. This food poisoning outbreak was
recorded as the worst case of food poisoning in Japanese history (Wrigley 2002: Wrigley 2006).
According to Coombs, a crisis is described as an unpredictable, major threat that can
have a negative effect on the organization, industry and stakeholders (Coombs, 1999, p.2).
Snow Brand experienced a crisis that they were ill prepared for. The key is to plan ahead by
creating an effective crisis management strategy that is based on the principles of honesty,
transparency, compassion and concern for the consumer. An effective strategy that was based on
these values would have helped to minimize the damage to the brand and aid in its survival and
possible recovery. Snow Brand did not utilize any of these principles of strategy. The company
made false claims during press conferences claiming that the contaminated valve was rarely used
when in fact it was used every day. Instead of showing compassion for the consumer, Snow
Brand was more concerned with their reputation and status.
Crisis management is a process of strategic planning a for a crisis or negative turning
point, a process that removes some of the risk and uncertainty from the negative occurrence and
thereby allowing the organization to be in greater control of its own destiny (Fearn-Banks,
2002, p.2). There seemed to be no crisis management or plan that was in place for such a crisis.
Furthermore, it soon became apparent that company officials attempted to cover up the
companys negligence. The problem was never communicated internally with any other branches
or at the shareholders meeting. The Osaka plant did not value the importance of the consumers
voices; they did not realize that they needed to share the information in order to prevent a crisis.
Snow Brand being unprepared did not convey accurate information during announcements to the
public; therefore increasing public distrust. Within the organization there was no centralized
communication between the internal and external entities causing confusion. An official at the
Osaka City Public Health Office stated, We could not understand which office was in charge
because of getting faxes from both the Tokyo headquarters and the Western Branch (Inoshita &
Hasegawa, 2000, p.63). This confusion caused incorrect information to be conveyed during the
press conferences making them unsuccessful. To increase credibility with the press and the
public, calm and composed responses regarding the crisis needed to be communicated by Snow
Brands executives.
The media is the connection between the company and the public. Unfortunately, Snow
Brand made a mistake in planning a dual press conference. Inconsistent information was
provided when responding to the medias questioning. This gave the media the ammunition to
report that Snow Brand was not cooperating. Snow Brand covered up crucial information by
attempting to minimize the situation. This gave the public the impression that Snow Brand was
more concerned with its reputation than the loyal customers that were sickened. The negative
outcomes for the company were in fact due to: failure to react quickly, lack of structure in place
to respond accurately to a crisis, no proper methods to inform stakeholders, and inaccurate
information.
The five crisis stages are detection, prevention/preparation, containment, recovery, and
learning (Fearn-Banks, 2002). In regard to this incident, as soon as Snow Brand received the
first call of a possible poisoning due to consumption of the product, there should have been an
inspection of the factory, a product recall issued and a press conference to announce the
possibility sickness from the tainted product. Through this food poisoning crisis, Snow Brand
realized their social responsibility. In crisis management, a company should work to: improve
quality assurance, renew corporate philosophy, promote customer-focused management, enhance
corporate governance, and restructure the crisis management function (Corporate social
responsibility, January 1, 2004).
In conclusion, the reason for the negative outcome for the company was due to the
improper crisis management and lack of a crisis plan. To have simply identified that there was a
crisis and to have responded promptly with a resolution would have helped, but instead Snow
Brands actions negatively affected the credibility and reputation of the company. Snow Brand
attempted to save its reputation instead of the lives and welfare of its loyal customers who were
sickened. There was no method of information that was communicated internally or externally.
The plant was slow to recall products. The plant was not shut down for inspection until two
weeks after the poisoning was reported. The company lied about the contaminated valve
claiming that it was used every few days, which in fact it was actually used every day. During
press conferences, inaccurate information was reported. The president of the company resigned
and was later convicted of fraud, sentenced to two years in jail, along with 5 other executives.
Snow Brand experienced major losses for the first time since 1950. There was an attempt to
restructure and reorganize; too little, too late. The losses continued into 2001, where jobs were
cut and factories were closed. In the end, more than 14, 780 people were sickened. It would be
fair to say that this crisis would not have spread and the number of people poisoned could have
been minimized if Snow Brand had a crisis communication plan in order to minimize permanent
damage to consumer confidence and the reputation of the company. In an effort to approach its
social responsibility according to (By 2000), the message from Kohei Nishi, the new president,
clearly stated his regrets, acknowledged the companys mistakes, and said that Snow Brand was
determined to move forward. The companys bottom line is grave testament to the impact is has
all had. Snow Brand reported a consolidated net loss of 52.9 billion yen (about $430 million)
(By 2000). Snow Brands market share was around 45 percent before the incident, immediately
after it plunged into single digits (By 2000).












References
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