Situational Analysis

Mr. Mike Valenti, CEO of Michael’s Homestyle Pasta, had acquired Southern Pasta Company
and control of the company went to Mr. Mike on December 10,2001. Michael’s Homestyle Pasta
had a sales revenue of around $17 million while Southern Pasta Company had that of around
$8 million.

On New Year’s Eve, Mr. Mike Valenti was informed that Southern Pasta stocks contaminated
with Salmonella bacteria has been despatched from the distribution centres to the major
customer which caters to around 200 restaurants. This customer accounted for around 50
percent of the revenue stream and one of the major reasons for the purchase of Southern
Pasta. The custom made pasta stuffed with seafood varieties was one of the featured items of
the chain of restaurants. It was further informed that the samples which were sent before
sending the stock were manipulated to falsify the results.

The restaurants are supposed to cook the pasta over 158 F which kills the bacteria and hence,
resulting into no harm. However, if the contaminated pasta is undercooked, then it will lead to
Salmonella bacteria infection. Salmonella Bacteria infection can lead to death and it can also
lead to birth of stillborn baby if consumed by any pregnant lady. Also, on infection or possible
death, FDA will take action.

Problem Statement

The contaminated lot of pasta has already left the distribution centre of Southern Pasta. This
custom made pasta will be served soon in all the 200 restaurants of a major customer which is
one of the featured menu items. If the pasta infects the customers, FDA will investigate and
issue a press release and broadcast it over national TV channels which will have a detrimental
effect on the company’s image. It might also lead to loss of the major customer which accounts
for around 50% of the $8 million revenue stream of Southern Pasta.