Beech-Nut Nutrition Corporation Essay Example
Beech-Nut Nutrition Corporation is the second largest baby food producer in the United States (Mint, 1987). The company specialized in high quality products made of natural ingredients to their consumers (Sims, 2003). In 1977, Beech-Nut started buying apple juice concentrate from a Bronx-based supplier, Universal Juice Company (Boatright & Patra, 2019 p. 18) a decision that saved Beech-Nut over Two Hundred and Fifty Thousand Dollars annually. Upon suspicion of the significantly lower cost of this supplier, a whopping 20-25% below market price, Beech-Nut’s Director of Research and Development, Jerome J. LiCari sent a memo to the company’s management voicing his concern and to arrange for a meeting to evaluate the evidence he had accumulated since switching suppliers. Once the meeting had been completed the company’s President Neils Hovyald did not take any further action much to the dismay of LiCari, who then proceeded to resign from Beech-Nut and report his findings to the Food and Drug Administration (Boyd, 2012 p.287). Beech Nut was then confronted with the dilemma as to whether they should investigate the apple juice concentrate which could possibly lead to a recall or ignore the issue and sell off the product. Through careful evaluation rendered through the criteria of both the stakeholder theory and the fair dealing principles, Beech-Nuts’ response, or the lack thereof, to the dilemma presented before them represents unethical behaviour.
During the 1970s the company was having a lot of financial difficulty and were looking to cut costs as a way to compete themselves with Gerber the leading baby food producer.
According to the stakeholder theory, Beech-Nut’s response to the ethical dilemma before them was not successful and thus not the best ethical response. In order to apply the stakeholder theory, Beech-Nut’s stakeholders must be defined, and these would be groups of individuals directly affected by the actions of the firm. These groups relying on the existence of Beech-Nut include internal stakeholders such as Beech Nuts employees and management and external stakeholders, which would be Beech Nuts suppliers and customers. Success of the company’s response to the ethical dilemma can be best assessed by looking at the interests of stakeholders. When looking at success we must also recognize that this does not mean that profit maximization is not of major importance when looking at this sort of success. Beech-Nut’s action of disregarding evidence mainly takes two things into account, that the profit of 7 million that would have increased with the switch will result in a 4 million loss when switching suppliers and that the recall would not have been feasible due to the financial pressures already being faced by the company. Prior to the FDA’s investigation commencing a private investigator discovered Universal Juice Company was only producing fake apple juice and reported his findings to Vice President John F. Lavery and the rest of Beech-Nuts top management who decided against the choice they were given to join suit against Universal (Boatright & Patra, 2019). When ignoring the possible evidence of an adulterated product provided to management, they risked the image of the brand if the apple juice concentrate was found to be adulterated. Management of a company rely on the company to make decisions that represent them well and thus a status that is good among society. Beech-Nut was told by independent testers that the apple juice concentrate supplied by Universal Juice Company were unlikely to be apple juice, months prior to the FDA investigation, and may in fact contain other ingredients with little apple juice present in the product (Mintz, 1987). Since this happened before the product was ever sold to market, it completely ruins the reputation of Beech-Nuts employees with a negative light on the research and development teams of the firm. The action of ignoring evidence of possibility of chemicals and other non-apple ingredients being in the apple juice concentrate completely disregards children consuming the apple juice who could be allergic to the ingredients not listed on the predicts nutrition label due to the company’s blatant disregard for the health and safety their consumers. Beech Nut has a responsibility to provide safe products to their customers especially because these customers are at fully trust the Brand to provide them with 100% fruit juice for their babies and toddlers Fair dealings with suppliers are a two-way deal, suppliers have the responsibility to be operating in an ethical manner thus in the case of Universal Juice Company sell the products as advertised. But it is also Beech-Nut’s responsibility if striving to be operating fair to continuously test the products that they are selling to make sure that it is in line with what they are advertising it to be. Beech-Nuts ethical duties to deal fairly with their competitors namely Gerber are not a major motivator to their actions they are not as extensive as their duties to the other groups mentioned. In order to improve Beech Nuts response, the firm could have.
According to the fair dealing’s principle, Beech-Nut’s actions were not a successful response to the ethical challenge presented before them. With the five core ethical values highlighted for their importance in the text “Business Ethics” Beech-Nut’s response will be assessed. These five ethical values are honesty, trustworthiness, compassion, fairness, and justice. When the Food and Drug Administration started their investigation and presented Beech Nut with evidence that their apple juice was fake, Beech-Nut denied the agency of any help with their investigation. This was far from being honest, as an honest response would be being truthful within their company, informing customers that there could possibly be a difference in the contents of the product and aiding the FDA in their investigation. Instead they tried to sell out their juice with mass promotions and exporting caseloads of the juice to countries such as the Dominican Republic and Taiwan (Mintz, 1987) where the FDA has no authority. In doing so, once the FDAs investigation ruled that the juice was a mixture of water, sugar and chemicals (Greene, 2018) despite Beech-Nut’s claim to be 100% pure apple juice; they were only left with 20 thousand cases of inventory rather than the 700 thousand they originally had at the beginning of the investigation (Boyd, 2012 p.287). This deprived everyone of justice as the firm did not play according to any rules. Further this action makes the actions of the firm to be like moves in a game (Sheldon, 1982) Beech-Nut Corporation refused to deal fairly and instead of helping with the investigation sent of the products to areas where they cannot be recalled by the FDA. This would have also been the fairest response as being fair constitutes of doing the most honorable action based on how the action affects other people. If Beech Nut were to sign the lawsuit their brands name would be tarnished, and it makes their whole 100% pure products reputation look phony and as with the fair dealing’s principle their primary motivator for their decision cannot be their self-interest. Self-interest is looked at more as Beech Nut is more concerned with maintaining the brands reputation rather than admit any wrongdoing while simultaneously upholding the profits of shareholder. In terms of compassion, the firm’s response of not informing unsuspecting parents of the young children consuming the product lacked compassion as they have no way of knowing that the product, they not good for them. Although company scientists reported to Beech-Nut’s management that there could he found it almost indetectable differences between Universal Juice Company’s apple juice concentrate and beet sugar, Beech-Nut disregarded this report and continued selling the apple juice (Means, 1987). In 1982, after thorough investigation the FDA concluded that the apple juice (Greene, 2018) sold by Beech-Nut was an adulterated product and was not a hundred percent pure apple juice as advertised rather it was a diluted apple juice concentrate consisting of “malic acid, corn syrup and cane sugar syrup” (Means, 1987). Once the private investigator gave them the opportunity to create a preemptive decision to follow suit against Universal Juice Company, this would have allowed them to show trustworthiness to the consumers, the parents whose children consumed the product. This decision would also require two other things; for Beech-Nut to inform parents that there is a possibility of an adulterated product being sold on the market and also switch suppliers. This response would have allowed Beech-Nut to continue being a trusted source of baby food to parents who purchase their products because of the well-known and up to then reputable brand name. This response would have also improved their demonstration of compassion as no one with compassion would have sold to be consumed by children as they didn’t know what was in the product. One main thing prosecution argued when the case went to court is that this adulterated product which the company had no idea what it consisted of who sold to the “most unsuspecting and trusting people in our society - infants” (Greene, 2018)
Conclusion: Beech-Nut’s response to the adulterated product was not a successful response to the ethical challenge presented before them according to both the stakeholder theory and fair dealings principle.