New Year’s Eve Crisis

CASE STUDY
Introduction
• Michael’s Home-style Pasta company
• Founded by Mike Valenti
• Specialises in producing gourmet stuffed pasta shells
• Valuation : 17 Million dollar
• Based in Connecticut

• Southern Pasta company

• Another pasta company which is the only major competitor of MHP
• Previously owned by Friedrich Walz and Hans Schimdt, now acquired by MHP
• Valuation : 8 million dollars
• Based in Florida
Situational Analysis
• MHP acquired southern pasta in 2001 in lieu of its aspiration of monopoly in the
market
• Inadequate due diligence and long acquisition process with falsified report from
southern pasta
• Contaminated pasta supplied to major restaurant chain of southern pasta
• Reputation of company at stake
• Regulatory and health hazard
Problem Statement

Mike needs to find a solution which ensures that the health of the customers is not
jeopardized while maintaining the reputation of his company in the industry along
with the minimization of the losses.
 
Alternatives

Upon analysing the situation, the following approaches can be taken:

• Ignore the issue
• Recall the delivered consignment
• Inform the restaurants regarding the contamination and ask them for complete
recall or to heat the pasta at 160F(without any failure)
Evaluation of Alternatives
Criteria Approach-1 Approach-2 Approach-3

Financial Viability Not viable. Viable. Viable.

Legal implications Many. None. A few(if restaurant fails to

follow your orders)

Ethical considerations Unethical. Ethical. Ethical.

Reputation Adverse effect. No effect. Negative effect if restaurant

doesn’t follow the orders.
Recommendations

Considering the stakes, completely recalling the delivered shipment is the

most viable alternative.

Action Plan
• Identification of contaminated shipment using tracking mechanism
• Notice of recall to be sent to all the restaurants
• Setting up of an independent investigation committee to deliberate on whether
legal action is to be taken or not
• Setting up of a meeting with the clients for clarification on the unfortunate
incident
Contingency Plan

Prioritise the recall of consignment based on volume:

• Restaurants with lower volume orders can reheat above 160 0F conveniently
• Restaurants with high volume orders to totally recall consignments and be
compensated suitably