Read the case below and please answer the questions from 1 to 4 Blue Bell is the

Question

Read the case below and please answer the questions from 1 to 4

Blue Bell is the nation’s third largest ice cream maker behind Nestlé, which produces Edy’s, and Unilever PLC, which makes Ben & Jerry’s. Blue Bell started its business in Brenhaman, Texas, in 1911. It grew to having manufacturing operations in Texas, Oklahoma, and Alabama, employing around 3,900 employees. The company’s products have been sold in 23 states.

Blue Bell faced a major listeria contamination problem across all of its three major plants in 2015.

The problem gained attention in 2015 when inspectors from South Carolina found Listeria monocytogenes in two products that were made in Blue Bell’s Brenham plant. The situation got worse once the Centers for Disease Control (CDC) “matched the Blue Bell bug to listeria strains blamed for an unsolved 2014 outbreak at a Wichita hospital: Five patients, already hospitalized with serious illnesses, had been infected; three died. Investigators later confirmed that four drank milkshakes with Blue Bell ice cream. Further testing would link the company to 10 listeriosis cases dating back to 2010.

Blue Bell learned about the South Carolina findings in February 2015. The company responded by retrieving 10 different products produced on the factory line in question. It made no statement to consumers. About one month later the company learned about the Wichita deaths. This led to a decision of stopping production on the tainted production line. Ultimately, the line was shut down permanently.

In March, the listeria problem grew. Listeria was linked to a chocolate ice cream cup made in Oklahoma. The company recalled the ice cream cups. In April, Blue Bell then suspended all operations in Oklahoma after the CDC linked the bacteria in the chocolate cup with five more listeria cases as far back as 2010. The company vowed to find the source of the contamination, and it announced a recall of seven more flavors.

In April, another link was found between listeria in containers of chocolate chip cookie dough ice cream that were produced in Brenham. This led CEO Paul Kruse to publicly apologize and recall all of its products—eight million gallons of ice cream. The company ended up laying off 37% of its 3,900 employees while also furloughing 1,400 more.

Employees interviewed by CBS contend that poor manufacturing practices were potential causes of the problem. Two employees “described antiquated machinery run amuck, oil dripping into the food mix, and melted ice cream left pooling on the factory floor because supervisors didn’t want to slow production.” Terry Schultz, an employee who worked on the contaminated line in Brenhan, told CBS “A lot of time, I walked in there, and there was just ice cream all over the floor. Sometimes these machines, they would just go haywire, and it would just, the product would just continually run through the conveyor belt, and it would just drop right onto the floor.” This was bad because moisture provides a good environment for bacteria to grow.

Schultz said that he complained to a supervisor and was told “Is that all you’re going to do is come in here and complain every afternoon?” He concluded that “Production was probably more important than cleanliness.”

The second employee interviewed, Gerald Bland, told CBS that “he was instructed to pour ice cream and fruit juice dripping off the machine throughout the day into barrels of ice cream mix.” He also noted that “You’d see oil on top from the fruit feeder leaking that would still go right into the barrel.” This practice was discontinued about a year before the plant was shutdown.

Although Blue Bell executives would not respond to CBS’s request for an interview, the company told a Fortune reporter that “isolated views expressed by two former Blue Bell employees on CBS News do not reflect the experience of the vast majority of our employees . . . our top priority and commitment is to produce high quality, safe, delicious ice cream for our customers."

Consider this statement in light of an FDA inspection report from 2015. The FDA reported finding bacteria in Blue Bell’s Oklahoma plant on 17 occasions beginning in March 2013. In spite of this finding, the FDA noted that Blue Bell did not follow up "'to identify sanitation failures and possible food contamination,’ taken proper steps to root out the problem, or informed the agency of its findings."

One reporter concluded that “Blue Bell failed to follow practices recommended by government and industry groups that might have prevented listeria contamination of ice cream at all three of its main plants.” In response to this, a company spokesperson said, “We thought our cleaning process took care of any problems, but in hindsight, it was not adequate.” He then stated that the company “would immediately clean the surfaces and swab until the tests were negative."

The contamination crisis and its effects on Blue Bell almost led to the company’s demise. The company was saved by a loan of up to $125 million from Texas billionaire Sid Bass. The Bass family now owns one-third of the company.

In January 2016, a CNN report indicated that “enhanced testing of its [Blue Bell] facilities has found locations where suspected listeria may be present.” This is good news in that the new testing procedures are finding potential problem areas, which then enables the company to clean and sanitize them. The company notes that “We have tested and will continue to test every batch of ice cream produced. No products produced have tested positive (for listeria). No products are shipped to stores until tests confirm they are safe. We will continue to work closely with our regulatory agencies, as we have throughout this process."

As of January 2016, Blue Bell is shipping product to 15 states and plans to use a phased approach for shipping ice cream to its remaining markets.

1. How did Blue Bell’s response to the contamination at its plants impact the triple bottom line?

2. Which of Blue Bell’s internal and external stake- holders were positively and negatively affected by the contamination crisis? Be specific.

3. Which of the six general environmental forces influenced the manner in which Blue Bell responded to this crisis?

4. To what extent did Blue Bell respond ethically to the contamination problem? Explain.

Explanation / Answer

Ans 1: The triple bottom line impact:-

1. Social: The company's response was delayed keeping in view the earlier cases of Listeria still it was a wise decision to recall the 10 different products produced on the factory line in question, followed by stopping production and shutting down the line permanently when the problem persisted. Public apology also had a positive impact on social front.

2. Environmental : The FDA investigation report revealed that company did not pay heed to the environmental conditions, sanitation and the food contamination which led to the outbreak. Not following the practices as per the government standards for a long time even after the outbreak was a major failure on the company's part.

3.Financial:- The recall all of its products which mounted to eight million gallons of ice cream lead to heavy losses both internally as well as externally.Since the sales declined due to listeria outbreak and the delay in finding out the cause was another issue being addressed to.Shutting down the plant led to laying off of 37% of its 3,900 employees while furloughing 1,400 more.Futher delay in action for improving the sanitation resulted in crisis and the company culd survive through a loan of $125 mn from Texas investor and one-third of the ownership transfer.

Ans 2: The contamination crisis had a negative impact on its stakeholders.

a) Customers: The primary external stakeholders had serious health issues due to the outbreak of listeria on account of the inability of the company to identify and address the cause.

b)Employees: The sanitation concerns of the employees (internal stakeholders) were not addressed in time which led to the problem and the consequences were faced by the employees being laid off due to shutting down the line.

Ans 3- The Politic/Legal forces influenced the manner in which Blue Bell responded. Although earlier cases of Listeria had been reported in 2010, it was post the findings of inspectors in South Carolina in 2015 that the company started taking action which resulted in "recalls creep" i.e. multiple recalls to address the issue. Although internally employees had cited sanitation an issue ,it was only after the FDA report revealed sanitation as the primary reason corrective actions were taken by Blue Bell.

Ans 4- Blue Bell responded to the problem ethically to a great extent ,however the problem could have been resolved at an earlier stage. The company recalled 10 of its products post the findings of Listeria monocytogenes in 2015. The products recalled included those linked to the cases before 2015 as well. Then the production line was stopped in order to address the issue. When the Listeria problem grew ,the ice-cream cups relating to the problem was recalled.The CEO gave a public apology and recalled all of its products to address the growing Listeria issue.Further the sanitation was improved and testing technology was enhanced to ensure that the each of the new batches of ice-cream produced were free from Listeria.

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