A Report on The New Years Eve Crisis Submitted in partial fulfilment of the requirements of the course Written Analysis

and Communication I Instructor: Prof. Asha Kaul (Academic Associate: Ms. Pakhi Sharma)

Letter of Transmittal

To: Mike Valenti, Founder & Owner, Michael[s] Homestyle Pasta Connecticut, United States of India[America] Date: 31st December, 2001 Sub: Assessment of the salmonella contamination issue and suggested recommendations [recommendations are always suggestions] Dear Mike, I have comprehensively analyzed the background of the salmonella contamination incidence[incident]in Southern
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Pasta[company] after taking into account the details of the situation, enumerating the options available for consideration, and evaluating the options. Based on the study, I would recommend that you inform the client about the salmonella contamination incident. Please find the report enclosed. Sincerely,

Executive Summary: Mikes company Michael[s] Homestyle Pasta acquired another pasta supplier, Southern Pasta [company]. Mike was unaware of the salmonella contamination of [in] Southerns inventory. By the time he became aware, part of the inventory had already been shipped to Southerns largest client. Mike has to formulate, within the next few hours, an action plan for tackling the situation. The options available are: do nothing
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and[or] inform the client [decision report has 3 options. Only two have been mentioned here]. The criteria include: minimizing loss of business opportunities, preventing [reduce the severity of] regulatory actions, minimizing implementation costs, and maintaining clients trust about safety. Based on the criteria, it is recommended that Mike inform the clients about the salmonella contamination. [problem has not been stated explicitly] (Word count: 101 words)

Table of Contents Letter of Transmittal ............................................................ 2 Executive Summary .............................................................. 3 Situational Analysis .............................................................. 5 Problem Statement ............................................................... 6 Options .................................................................................. 6 Criteria for Evaluation ......................................................... 6 Evaluation of Options ........................................................... 6 Recommended Option .......................................................... 8 Action Plan ............................................................................ 8

Situational Analysis: Connecticut-based Michaels Homestyle Pasta (MHP), started by Mike Valentini[Valenti], acquired Florida-based Southern Pasta (SP)[Southern Pasta Company] on December 10, 2001. MHP and Southern Pasta were the only major producers of pasta, stuffed with large pieces, in the US and hence, the
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acquisition, gave MHP a near-monopoly. Both firms supplied food [pasta]products to restaurants and independent retailers.[distributors]. [not concise. Mere repetition of case facts] Southern was forced to sell itself[?] to MHP as it had been making losses for the past two years. The reasons for Southern Pastas[poor] performance included: top-down management style of Walz leading to employee dissatisfaction; lower levels of automation than MHP; salmonella contamination problems; and loss of key clients to MHP.[are the assumptions about the reasons for southerns poor performance relevant to the problem at hand?] On the other hand, Mikes inventiveness, customer service orientation, and leadership skills drove MHPs growth. As Southern[s] financial performance and reputation was weak, it was necessary for Mike to assure himself about the quality of Southerns products. [?. From the case it is apparent that the due diligence process was not very thorough and that the salmonella contamination was not a major issue for Mike.] Hence, Mike approved the acquisition only after checking the laboratory test results[consulting documentation] of Southerns products. However, on December 3[1], 2001, he
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came to know that the laboratory results were manipulated and in reality, most of Southerns inventory was salmonellainfected. Southerns recurring salmonella contamination could be linked to operational processes such as hand stuffing of pasta items [not a valid inference. Southern has been stuffing some pasta products by hand for years; the contamination problem has occurred only in the current year. No link can be established between pasta stuffed by hand and contamination] and low cleanliness standards. Southerns cooking practice also did not generate temperatures high enough to kill salmonella, which cannot withstand temperature above 160 Fahrenheit. [cant say this with certainty, at supplier level

you have to heat it to 158F] Salmonella contamination was a potential disaster on both business and regulatory fronts. The salmonella infected products had already been shipped to Southern Pastas largest customer and featured in its New Year[s] Eve menu. The earlier incidence of salmonella contamination had occurred with the same client. Regulations posed another danger as US laws hold both suppliers and producers legally responsible for food contamination issues (LegalMatch, 2009). The only positive was that the customers cooking standards stipulated
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that the pasta be cooked at 160 Fahrenheit. [so what is the problem?] [Uncertainty that the pasta will be properly cooked by the restaurants has not been pointed out] Circumstantial evidence suggests that Walz and Schmidt knew about the contamination issue and deliberately tried to prevent Mike from knowing the same. Walz did not permit representatives of MHP to visit the plant[this is not true] while Schmidt forced Fred to manipulate the results by threatening to fire him. Problem Statement: Within the next few hours, Mike has to decide the course of action to tackle the salmonella contamination issue as otherwise restaurants will start serving the potentially infected food. [the problem is not clear from the statement. real issue is the possibility of food poisoning and serious loss of reputation.] Options: The options available to Mike are: Do nothing and hope the client will decontaminate the products by following their standard procedure
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 Inform restaurants about the salmonella contamination[and what? How is this different from the third option?] Inform restaurants about the salmonella contamination and advise clients to heat the pasta shells to temperature above 160 Fahrenheit Criteria for Evaluation: Minimization of the loss of business opportunities [is there a minimum figure? What about other losses?][should be business, not business opportunity] Reduce the severity of [possible] regulatory actions: Intentional breaches of the law are considered more serious than non-intentional ones. [what is the basis for this statement?] Minimization of implementation costs: The implementation costs mostly refers to recall costs [and which other costs?] Maintain and enhance clients perception of safety standards. A positive image on safety will help retain current clients and acquire new one.[s]

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[what about the ethical question involved in a case of potential food poisoning? Obviously this question is very important to Mike, as is clear from the case] [criteria have not been specifically defined] Evaluation of Options: Do nothing and hope restaurants will decontaminate the products Minimization of loss of business opportunities: Successful execution of this option will ensure a business-as-usual scenario. However any cases of salmonella detection by clients or salmonella poisoning will lead to loss of clients as MHP/Southern knowingly increased client risks. [faulty reasoning, they will lose clients irrespective of knowing/unknowing] Reduce the severity of regulatory actions: The detection of salmonella contamination is likely to attract more severe regulatory and legal actions, compared to option 2 [cant compare with the second option before evaluating the 2nd option], as the act was done knowingly.[ no basis for the assumption that regulatory
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action will be less severe] Non-detection will help firm avoid the regulatory penalties. Minimization of implementation costs: If detected, MHP will have to bear recall costs. [what about the costs of losing business altogether?]Recall costs in the first incidence of salmonella contamination was $0.5 million. Maintain and enhance clients perception of safety standards: If contamination is not detected, current perceptions about food quality are maintained. However, the need to maintain the faade of business-as-usual might delay the implementation of process improvements in cooking.

The probability of detection cannot be calculated accurately. However, as the [?] will be shipped to 200 restaurants and restaurants are legally liable for selling defective food products, the possibility of detection at client site remains a strong possibility. Inform restaurants about the salmonella contamination [and what else?] Minimization of loss of business opportunities: This option might lead to vendor termination[termination of
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account] as this was the clients second experience of the receiving salmonella-contaminated food from Southern. On the other hand, proactive intimation of the issue will help the new management project win client trust as they informed clients despite facing potential loss. [ it is not likely that the client will ever trust you again, according to the case] Reduce the severity of regulatory actions: The twin incidence [multiple occurrences] of salmonella contamination in one year will attract FDA sanctions but consequences may be less severe compared to the worst possible scenario in option 1. [What is the worst possible case?[ how can you say this? There is going to be a food poisoning outbreak. And what is the basis for assuming that FDAs actions might be less severe? ] Minimization of implementation costs: The firm may be asked to recall the products. [so are the costs minimized? Where is the evaluation of the option?] Maintain and enhance clients perception of safety standards: This option creates internal and external pressure for process improvements and might lead to improvements in firms long-term image.[not clear]
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Inform restaurants about the salmonella contamination issue and advise them to heat the pasta shells till 160 F This option is similar to option 2 in terms of criteria related to regulatory actions and quality. [explain your evaluation clearly] Minimization of loss of business opportunities: By proactively providing a solution, Southern better positions itself to win client trust.[ It appears from the case facts that there is high possibility that you will lose your clients if you inform them..] Minimization of implementation costs: As the firm provides the client an immediately implementable solution, it may not be asked to recall the goods.[recall has not been mentioned in SA, or options. is a recall something you want to avoid? Not clear.] Recommended Option The absence of data about the probability of salmonella poisoning makes a purely financial decision impossible. [nowhere in the analysis is there a mention of the financial aspects of the decision except for the recall costs. What about other costs?] However, the third option is selected because it
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minimizes the maximum possible damage [really? You could still be thrown out of business.], reduces the possibility of recalling goods[the criterion is minimizing implementation costs] , and provides greater opportunities for building trust.[against case facts][for the recommendation, evaluation is based on different criteria. This displays inconsistency.] Action Plan: Inform the customer about salmonella contamination and advise them to heat the product above 160F [only first step is relevant. The rest are long term actions, and not relevant for the current crisis] Ensure that the temperature attained during the cooking process of any food is high enough to kill all known harmful micro-organisms, usually found in the foods Improve the cleanliness standards of Southerns plants and inventories Invite customers to Southerns plants to inspect the plants manufacturing processes Inform Walz about the contamination issue and seek his reasons related to the contamination issue

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 In case of no reply/unsatisfactory reply, send a legal notice to Walz seeking damages for his role in hiding the contamination issue during the due diligence process.

[you should not address long term issues in the action plan. This is a crisis situation.] (Count of words: 1055 words)

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