Reference no: EM132755742

1. From a company standpoint, Zuzu cannot simply retract the +8% yield differential in "seconds", as these are perishable items being sold that more than likely have already been consumed by the end-user at the grocery stores. It makes no sense to alert the general public of the overstated % of leaked products, as long as those products have exceeded the industry standard requirements, as well as legal production requirements. Just because Zuzu traditionally promotes above average production standards, does not necessarily mean they are breaking the law by lowering their bar a bit. Zuzu's traditionally high standards are aimed at marketing, which strategically lures in consumers from competitors due to standards exceeding their competition. Circling back to Zuzu, instead of correcting the PR if the company is in compliance with industry regulations, they should treat the overinflated grocery products as a sunk cost, and reallocate the profits attained from the +10% profits to a liquidity reserve, aimed at fortifying their marketability and hedging their risks associated with consumer complaints/legal & PR backlash. Spaulding has a duty to report his findings to Zuzu upper management, along with the aforementioned recommendation.

2. The center's manager has changed the standards of quality and appearance so that he will have a bigger bonus. Spalding must communicate this to his management. Now that he knows of the discrepancy between what is supposed to happen and what has actually happened, he cannot report the numbers without explaining the difference. As the IMA states, he should provide all relevant info so that the reports can be understood properly.

Zuzu is emphasizing the boundary system. They should change the way the managers are evaluated for bonuses so that they are not compromising standards in order to reach profit numbers.