Beech-Nut

In this case there is one main problem that the CEO of Beech-Nut must face: what to do about “adulterated” apple concentrate product. Throughout the case, several ranking members of the company and its manufacturers discussed their views of the situation and what was done or should be done about each one. What seems to be a slight power struggle between the CEO Anderson and Operations VP Storer has caused breakdowns in communication and withheld prominent information in the case. A former supplier, Hartog, had warned Beech-Nut (i.e. Storer) that “there was phony product on the market” but Storer thought nothing of it and viewed it as bitterness from losing the supplier contract. This information along with the previous “testing” that questioned the quality of product coming out of Universal suppliers would have been valuable to evaluating the current situation. Storer’s actions of using the questionable concentrate in the mixed juice instead of the pure apple juice were a reasonable short term solution of not loosing buckets of product. However, Anderson would do well to heed Donovan’s advice and begin looking towards other suppliers. The Nestle goal besides profit is to make the most healthy and good quality product without deceiving the public or the consumers. In complying with that goal it would be wise to temporarily sever ties with Universal Suppliers until their product is deemed completely pure and unadulterated. The price of going with a more expensive supplier in the interest of quality will mitigate the future and far most costly price of possibly fighting a legal battle where the quality of all Beech-Nut products are questioned by authorities. Additionally, there may be a reason the other suppliers are more expensive in that their product is pure and they go through extra measures to ensure that, which will be beneficial to Beech-Nut. However, I do not think it is advisable (like Donovan) for Beech-Nut to become involved in the pending lawsuit from PAI versus Universal. Since the test for purity and quality have not been proven complete nor accepted by the FDA, it would be in the best interests of Beech-Nut and Nestle to NOT become involved unless future conclusive testing shows that Universal was passing on adulterated product in violation of their contract with Beech-Nut. Otherwise, the money spent on what would probably be a very lengthy lawsuit can be better spent in ensuring the products from Beech-Nut meet the Nestle standards. As for the lack of communication between Storer and Anderson, I think the approach Anderson took to gathering all information before “confronting” Storer both helped and hurt him. While it did cement the notion that Anderson is the CEO and Storer reports to him, it led to Storer withholding information. A proposed solution to this would be for Anderson to make his presence more know at “Storer’s Plant” in the physical sense so that all plant employees and Storer are aware that Anderson is in charge and he is interested in ensuring quality of Beech-Nut in all areas not just the finance of it all.