Reference no: EM132214760

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.