CASE OF NUTRITIONAL FOODS

Most companies have issues that require public relations assistance at one time or another. Bad publicity might result from malfeasance by management, product deficiencies, or being in an industry that suffers a setback. Yet relatively few companies have strategies in place for handling these eventualities, and many companies suffer significantly more harm than might otherwise be necessary because they have not planned for the crisis. When the crisis is of an ethical nature, the importance of building and maintaining an ethical work environment becomes obvious. However, few companies are motivated to take such bold steps once the crisis has passed. Certain products are particularly susceptible to a rapid loss of public trust due to their nature; food products are certainly among these. Consumers expect their food to be safe, and can be reluctant to return to a food manufacturer once a problem has been discovered and traced to that manufacturer. This is the situation that faces Nutritional Foods, and the steps that the company takes in the aftermath of a possible poisoning case could determine the company's future.

Nutritional Foods is facing possibly the most severe crisis that a company in its industry can face: the possible poisoning of consumers, including children. Upon receiving the initial reports, the company sent two managers to the two counties where the problems were reported. When two additional pr

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o compensation to victims voluntarily, but instead wait until the cause of the poisonings is determined and whether the company is going to be held liable. At the other extreme, Nutritional Foods could make a public settlement offer to all victims of the poisonings; this would be akin to a class action settlement. Such an announcement, however, would result in many false claims and possibly even claims by individuals who do not use the company's products. While a possibly popular tactic in the short-term, this approach has the potential to be extremely costly to the organization, and to promote unethical behavior by others--those consumers who might have no actual justification for funds, but who file anyway. Rather than making a public announcement offering compensation to victims, Nutritional Foods could approach victims privately and offer to pay their medical bills. Victims would be located through the health departments in the counties where they reported their problems. Such payment could be unpublicized and could include nondisclosure agreements so that the victims could not talk about the payments, either. Nutritional Foods also faces a challenge regarding the cause of the poisonings. It may be a statistical quirk, as

Category: Business - C