...The case describes the problem faced by Peter Andersen CEO of Beech-Nut Nutrition Corporation about a delivery of apple juice concentrate from the Beech-Nut supplier for making apple juice. A private detective dramatically arrived at Beech-Nut plant situated at Canajoharie, New York and announced that the truckload of apple juice concentrate which had just been delivered to Beech-Nut by a supplier was in reality a truckload of flavored sugar water. The detective wanted Beech-Nut to join lawsuit against the supplier of the bogus concentrate. Andersen had conversation with his team members about the issue to get better understanding and consult with his legal advisers for the solution of the problem. Beech-Nut Nutrition Corporation: Company was founded in 1891 as a purveyor of smoked meats. Then diversified the business and entered into the business of selling food concern such as Life Savers, Table Talk pies and Tetley Tea. It was taken over by Squibb a large pharmaceutical and health care products company in 1969. In 1973 baby food division was taken private under the name of Beech-Nut by a small group of Pennsylvania businessmen led by lawyer Frank Nicholas. Nicholas as CEO tried to build the company image as provider of natural foods under the name of “Mr. Natural” and removed added salt and sugar from the Beech-Nut products. Due to financial problems Nicholas decide to sell the company in late 1970s. In 1979, world largest food company Nestle, S.A purchased Beech-Nut for...
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...BEECH-NUT’S APPLE JUICE By Donna J. Wood and Alden Detwiler During the 1970s and early 1980s, the Beech-Nut Nutrition Corporation, with primary plant facilities at Canajoharie, New York, and headquarters near Philadelphia, was the second largest maker of baby foods in the United States, with roughly a 15 percent market share (comparable to Heinz’s market share), compared to Gerber’s 70 percent. From its origins as a meatpacker in 1891 to its modern status as a diversified food manufacturer, the company had built a reputation for pure, natural, high-quality products (Welles, 1988; Traub, 1988). In 1973, lawyer Frank Nicholas and a group of colleagues bought the baby foods division of Beech-Nut from Squibb Corporation, which had acquired the company in 1969. The new owners were undercapitalized and overloaded with debt from the beginning, and the company began to lose money. Beech-Nut signed an agreement in 1977 with a wholesaler run by Zeev Kaplansky, Interjuice Trading Corporation, to purchase apple juice concentrate. Interjuice was able to offer concentrate well below the market price (Welles, 1988), an opportunity that Beech-Nut was reluctant to turn down, given its financial troubles. By 1978, with apple juice products accounting for 30 percent of total sales, the Interjuice contract provided significant cost savings to a firm deeply in debt (Welles, 1988). Early savings from the contract amounted to about $250,000 a year on a $50 million operating budget....
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...The Beech-Nut case is primarily a case testing the behavioral ethics and decision processes of key stakeholders in the crisis. This case primarily gives an overview on different roles of the key players and their outlook toward the adulteration speculation. I would like to briefly introduce the key characters, their responsibilities, and issues faced by them in their communication strategy, all of which in the wake of the crisis formed a basis for a crucial decision-making by the CEO. Peter Anderson Role: President and CEO Responsibilities: As the newly appointed CEO of Beech-Nut Nutrition Corporation Anderson was responsible for the following * Turning the loss making Beech-Nut into a profitable company * Increasing the market share of Beech-Nut * To supply healthy products rich in nutrition in the market which met Nestlé’s product standards * To undertake changes in the operational and marketing activities of the company which directly influenced the profitability of the company Ethical issues those faced by Anderson while addressing his role are listed as follows * The most important dilemma Anderson was facing during the speculative adulteration crisis situation was whether Beech-Nut Corp needs to join PAI in a lawsuit against Universal Juice Company who were the suppliers of apple juice concentrate to Beech-Nut * Whether Beech-Nut needed to continue selling its apple juice products from the finished inventory which was around 700,000 cases of the...
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... 2000. 116 F. Supp. 2d 190; 2000-2 Trade Cases (CCH) ¶73,066. The Federal Trade Commission seeks a preliminary injunction pursuant to Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), to enjoin the proposed merger of the baby food divisions of H.J. Heinz Company and Milnot Holding Corporation ("Beech-Nut"). . . . I. BACKGROUND A. Market overview Four million infants in the United States consume 80 million cases of jarred baby food annually, representing a domestic market of $865 million to $1 billion. There are only three major manufacturers and distributors of jarred baby food in the United States: Heinz, Beech-Nut, and Gerber Products Company. Gerber is by far the largest domestic manufacturer. It enjoys, and has enjoyed for some 40 years, a dominant market share that has recently grown to between 65 and 70 percent. The Gerber market share is now 65 percent, the Heinz share 17.4 percent, and the Beech-Nut share 15.4 percent. . . . Heinz's domestic baby food products are manufactured at its Pittsburgh, Pennsylvania plant, which was recently updated at a cost of $120 million. The Pittsburgh plant now operates at 40 percent of its production capacity and produces 12 million cases of baby food annually. . . . Beech-Nut manufactures all of its baby food in Canajoharie, New York, at a manufacturing plant that was built in 1907 and began manufacturing baby food in 1931. The plant is not technologically current. Beech-Nut submitted proof that it would be prohibitively...
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...In 1981, when Las Hoyvald join Beech-Nut, the company was in financial trouble. In the competitive baby food industry, the company was a distant second behind Gerber, with 15 percent of the market. Although he was new to Beech-Nut, Hoyvald had wide experience in the food industry, and his aim, as stated on his resume, was “aggressively marketing top quality products.” In June 1982, Hoyvald was face with strong evidence that Beech-Nut apple juice for babies was made from concentrated that included no apples. The concentrated was bought from the supplier of the low-cost apple concentrated, Universal Juice Company since 1977. First investigation by two employees of Beech-Nut showed that there are presence of corn syrup, but the Vice President of Beech-Nut, Mr. Lavery dismissed the report. A turning point occurred when investigation by private investigator showed that Universal plant only produced sugared water and invited Beech-Nut to join a suit against Universal. Some of the executives have urged Hoyvald to switch the supplier and recall all the apple juice on the market, but he was hesitant because he claimed that even if the apple juice was bogus, no evidence that the juice was harmful. Switching supplier required Beech-Nut to pay additional cost of $750,000 for the juice and recalling all the apple juice on the market would cost about $3.5 million and means that they are admitting that the company has sold adulterated product. He also said that it tasted like...
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...CASE: ‘’BEECH –NUT’S BOGUS APPLE JUICE’’ TOPIC: UTILITARIANISM When Lars Hoyvald joined Beech-Nut in 1981, the company was in financial trouble. In the competitive baby food industry, the company was a distant second behind Gerber, with 15 percent of the market. After faltering under a succession of owners, Beech-Nut was bought in 1979 by Nestle, the Swiss food giant, which hoped to restore the luster of the brand name. Although he was new to Beech-Nut, Hoyvald had wide experience in food industry, and his aim, as stated on his resume, was “aggressively marketing top quality products.” In June 1982, Hoyvald was faced with strong evidence that Beech-Nut apple juice for babies was made from concentrate that included no apples. Since 1977, the company had been purchasing low-cost apple concentrate from a Bronx based supplier, Universal Juice Company. The price alone should have raised questions, and John Lavery, the vice president in charge of operations, brushed aside tests that showed the presence of corn syrup. Two employees who investigated Universal's “blending facility” found merely a warehouse. Their report was also dismissed by Lavery. A turning point occurred when a private investigator working for the Processed Apple Institute discovered that the Universal plant was producing only sugared water. After following a truck to the Beech-Nut facility, the investigator informed Lavery and other executives of his...
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...Beech-Nut Journal This is a story about how Beech-Nut and its top executives-Anderson and Storer, were driven by the ambitions of making profits and covering negative publicity that overshadow their sense of business ethics and social responsibilities. Beech-Nut, which had maintained its image that its products were 100%pure, nutritious and of high quality, still kept selling apple juice after top executives acknowledged the fact that the concentrate was adulterated. Even worse, they didn’t stop illegally selling the apple juice, even after third party inspections by the FDA and PAI. What they chose to do was to take advantages of loopholes in the law. In order to avoid seizure by FDA, phony juice were transferred from one warehouse to another, to foreign countries and overseas markets so that Beech-Nut was able to minimize its financial losses and get rid of legal sanctions. It’s not like flipping coins where you always have equal chances of getting caught or not caught by doing bad things. Meeting financial targets for a company is surely important to top executives, but more important is to make right decisions and judgments that align with their moral duty and obligation. Social responsibilities are sometimes confronted with a company’s benefits. It has an obligation to act to benefit society at large. For Anderson, he should behave as a responsible individual first rather than a CEO who only focuses on financial goals. It is also a duty for every individual...
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...14: Stockholder Rights and Corporate Governance Inland Bank; Cisco (Niihka) Inland Bank and Cisco case assignments (Niihka) Class Two Owners continued Living Richly (text, pg. 236); Adelphia (Niihka) Adelphia case assignment (Niihka) Week of Sept 7 Class One Labor Day – NO CLASS ClassTwo Forms of business; Intro to Business Processes “Forms of business” excerpt (Niihka); Ciao Baby Pesto case (Niihka) Baby Pesto case due Week of Sep 14 Class One Customers as stakeholders Text Ch 15: Consumer Protection Read Guns Excerpt Odwalla case due Class Two Read Chapter 3 Timberland case due Week of Sept 21 Class One Suppliers as stakeholders “Intro to Supply Chain Management,” excerpt from Handfield (Niihka) Class Two Suppliers cases Beech Nut (Niihka); Ford and Firestone (Niihka) Ford and Firestone case assignment (Niihka) Week of Sep 28 Class One First Exam Class Two The community as stakeholder Text Chapter 18 Corporate Philanthropy vs. Corporate Social Responsibility; Corporate Philanthropy and the Arts (text) Corporate Philanthropy and the Arts case assignment (Niihka) Week of Oct 5 Class One Employees as stakeholders Text Ch 16: Employees and the Corporation Text Ch 17: Managing a Diverse Workforce Class Two Employees continued Dukes vs. Wal-Mart Stores No Smoking Allowed case assignment (Niihka) Week of Oct 12 Class One What is Context? Why is it important to...
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...Early farmers picked up some fruit of wild plants to home, eat them, and spited out the bigger seeds or defecated the tiny size seeds to human latrines. And then the seeds germinated in the early lab. But the key points were how the early farmers decided to pick up which fruit? It’s not hard to make some hypothesis: Fruit size: Strawberry, early farmers went into thorny thicket amid the mosquitoes on a hot, humid day to pick up strawberry; the only criterion is the size. The early farmer would choose only bigger size ones to compensate the while to get sunburned and mosquito bitten. Bitterness: Many wild seeds evolved to be bitter, bad-tasting or even poisonous to keep human or animals away from eating them. Natural selection functioned as getting the fruit tasteful dispersed by animals and continue the process of reproducing, meanwhile if the seed remained tasteful, the animal will chew them up as well. Occasional individual almond trees have a mutation in a single gene that prevents them from synthesizing the bitter-tasting amygdalin, which breaks down to yield poison cyanide. Such trees die out in the wild, while the trees lived near humans survived by being picked up by curious children or early farmers who noticed the non-bitter fruit. Fleshiness, Oiliness and fiber length are all similar in the selection process. Initially the wild fruit had less fruit around their seeds, but early farmers chose the fruit mutated to be with more Fleshiness, less seeds, such as squashes...
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...Ethics and the Conduct of Business, 7/e Boatright ©2012 / ISBN: 9780205053131 Chapter begins on next page > PLEASE NOTE: This sample chapter was prepared in advance of book publication. Additional changes may appear in the published book. To request an examination copy or for additional information, please visit us at www.pearsonhighered.com or contact your Pearson representative at www.pearsonhighered.com/replocator. C H A P T E R 1 Ethics in the World of Business Listen to the Chapter Audio on mythinkinglab.com CASE 1.1 Explore the Concept on mythinkinglab.com Merck and the Marketing of Vioxx On September 30, 2004, Merck & Co. announced the withdrawal of Vioxx, its highly profitable pain reliever for arthritis sufferers, from the market.1 This announcement came only seven days after company researchers found in a clinical trial that subjects who used Vioxx more than 18 months had a substantially higher incidence of heart attacks. Merck chairman and CEO Raymond V. Gilmartin described the action as “the responsible thing to do.” He explained, “It’s built into the principles of the company to think in this fashion. That’s why the management team came to such an easy conclusion.”2 In the lawsuits that followed, however, damaging documents emerged casting doubt on Merck’s claim that it had acted responsibly by taking appropriate precautions in the development and marketing of the drug. For decades, Merck’s stellar reputation rested on the company’s...
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...EF 5010: Economics for Business Semester B 2014 Syllabus LI King King (李景景) Time and Venue Duration: 17January – 25 April 2014 (Every Friday) Time: 7:00PM-9:50PM Venue: AC2 -1503 Instructor Dr. LI King King Department of Economics and Finance Email: likingking@gmail.com Phone: 3442 7604 Office Location: AC2-5102 Personal Webpage: http://likingking.weebly.com/ Office Hours: Friday 5:00PM-6:00PM or through appointment via email. Email is always a great way to reach me. Course Website: Available on Blackboard Teaching Assistant WONG Chun Kit Christopher Email: chriwong@cityu.edu.hk Phone: 3442 9980 Office Location: AC1-P7706 Office Hours: Wednesday11:00AM-12:00Noon 1 Course Description The fundamental objective of this course is to introduce to managers the important economic concepts and tools to improve their decision-making and to achieve managerial goals. The course will emphasize the economic way of thinking, and will enable managers to better understand the economic environment in which business decisions are made. Developing innovative solutions to business problems will be encouraged throughout the course. Learning Objectives Ø Apply the tools and theories from microeconomics to perform demand and supply analyses. Ø Identify different market structures. Formulate different pricing strategies under different market structures or consumer characteristics. Ø Apply basic game theoretic models to formulate business strategies such as pricing. Ø Understand...
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...The field of Business Ethics relies on a relatively small core of well-known cases of corporate behavior to illustrate the themes of the subject. Near the top of this list of familiar names (e.g., the Ford Pinto, Tylenol, and Bhopal) is Nestle´ S.A., the Swiss food conglomerate. Of all the business histories examined by students of ethics, Nestle´’s saga of controversy is perhaps one of most intriguing. In the late 1960s, Nestle´ was criticized by social activists for its marketing of powdered milk formula for infants in less developed countries. The case became a cause ce´le`bre as Nestle´ became the victim of a well-organized boycott campaign. The conflict has become a popular case study in the business school curriculum because it demonstrates the need that companies have to constantly preserve and enhance their legitimacy in the public eye. The discussion of legitimacy leads quite naturally into a discussion of issue management, and the consequences of mismanaging a public issue (Post 1985 p. 127). Although Nestle´ was the subject of the boycott, the infant formula controversy may have initially been seen more as a dispute over generic bad practices within the infant formula industry rather than as a focused attack on one particular firm, a perspective that Nestle´ itself may have wanted to engineer. The original publication that stimulated the boycott refers to an industry-wide pattern of marketing of infant formula. (Muller 1974) To begin with Nestle´...
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...Virtue Ethics—Analysis of the Virtue Expected | Virtue ethics draws its inspiration from the Greek philosopher Aristotle (384–322 B. C.). In Th e Nicomachean Ethics he explored the nature of a good life. He thought that the goal of life is happiness. Th is is not happiness in a hedonistic sense. Instead, happiness, for Aristotle, is an activity of the soul. We fulfi ll our goal of being happy by living a virtuous life, a life in accordance with reason. Now, virtue is a character of the soul that is demonstrated only in voluntary actions (i.e., in acts that are freely chosen after deliberation). So, we become virtuous by regularly performing virtues acts. But Aristotle also felt that there is a need for ethical education so that people will know what acts are virtuous. Aristotle thought that we can understand and identify virtues by arranging human characteristics in triads, with the two extremes being vices and the middle one being a virtue. For Aristotle, courage is the mean between cowardice and rashness; temperance is between self-indulgence and insensibility. Th e other virtues of pride, ambition, good temper, friendliness, truthfulness, ready wit, shame, and justice can similarly be seen as the middle way between two vices. Virtue is the golden mean. Th is is not an arithmetic mean, but rather a path between extremes positions that would vary depending upon the circumstances. You need to use your reasoning to identify the mean in each ethical situation, and you become better...
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...An adulterant is a substance found within other substances (e.g. food, beverages, fuels), although not allowed for legal or other reasons. The addition of adulterants is called adulteration. An adulterant is distinct from, for example, permitted food additives. There can be a fine line between adulterant and additive; chicory may be added to coffee to reduce the cost—this is adulteration if not declared, but may be stated on the label. The term "contamination" is usually used for the inclusion of unwanted substances due to accident or negligence rather than intent. Adulterants added to reduce the amount of expensive product in illicit drugs are called cutting agents. Deliberate addition of toxic adulterants to food or other products for human consumption is poisoning. In food and beverages[edit] Past and present examples of adulteration, some dangerous, include: Roasted chicory roots used as an adulterant for coffee Diethylene glycol, used dangerously by some winemakers in sweet wines Apple jellies (jams), as substitutes for more expensive fruit jellies, with added colorant and sometimes even specks of wood that simulate raspberry or strawberry seeds Water, for diluting milk and alcoholic beverages Cutting agents used to adulterate (or "cut") illicit drugs—for example, shoe polish in hashish, amphetamines in ecstasy, lactose in cocaine Urea, melamine and other nonprotein nitrogen sources, added to protein products to inflate crude protein content measurements[1] ...
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...Ecological Economics 24 (1998) 259 – 274 Scope and limits of the market mechanism in environmental management Bo Gustafsson Swedish Collegium for Ad6anced Study in Social Sciences, SCASSS, Gota6agen 4, S-75236 Uppsala, Sweden ¨ ¨ Abstract This paper tries to evaluate the role of the market mechanism in environmental management and warns against reductionist views on the causes and remedies of environmental damages. According to some of these views, proper pricing of the environment and extensive use of market mechanisms in environmental management would solve environmental problems. But various conditions tell against such simplifications, namely: the complex causality behind environmental damages; the complexity of the functions and values of nature; as well as limitations of the market mechanism in coping with the functions and services of nature. Several of those limitations — the difficulties of defining and enforcing property rights to nature’s functions and services; the pervasiveness of externalities conditioned by the public goods characteristics of many environmental functions and values; the difficulties in enticing, processing and using information about environmental goods; and the high transaction costs caused by all these circumstances—often rule out contracts and trading of environmental services. It is less known that the basic cause of market existence and extension, namely specialization and division of labour, have negative environmental effects. With respect...
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