Snow Brand's Unethical Practices at Japan
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Case Details:
Case Code : BECG039
Case Length : 18 Pages
Period : 2000 - 2004
Pub. Date : 2004
Teaching Note : Available
Organization : Snow Brand Milk Products Co. Ltd.
Industry : Food
Countries : Japan
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BECG039) click on the button below, and select the case from the list of available cases:
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts Contd...
Rehabilitation and Restructuring
Starting with the food poisoning in June 2000, Snow Brand had suffered many blows, which resulted in loss of reputation, loss of public trust in their products and financial losses.
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Accordingly, to rehabilitate, it decided to undertake major restructuring and disinvestment of its holdings. Snow Brand drafted a rehabilitation program that featured a 90 per cent reduction in capital and financial assistance from major creditor banks such as Norinchukin Bank, UFJ Bank and Mizuho Corporate Bank.
According to the plan, Snow Brand hoped to receive 50 billion yen through debt waivers and a debt-for-equity swap. Apart from this Snow Brand also took up initiatives to regain consumers' trust. On March 22, 2002, Snow Brand Food announced the that it would sell its food-additives business (additives and ingredients used in jellies, jams and other kinds of food) to trading company Nissho Iwai Corp...
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The Judgement Day
On November 22, 2002, the Kobe District Court ruled that five former Snow Brand Food executives, including Hatakeyama, were guilty of fraud. The court believed that they conspired with Hiromi Sakurada (Sakurada), former senior managing director and Masami Inoue (Inoue), former managing director of Snow Brand Food to commit the fraud.
All five of them were sentenced to two years in jail but these jail terms were suspended. This meant that they did not have to spend any time in jail but it would be on their permanent record. "Considering the social impact the incident has had, I wonder if a suspended sentence was appropriate," said Muneo Yoshimura, a member of the Snow Brand Foods labour union. However, both Sakurada and Inoue pleaded not guilty and were tried separately. On March 25, 2003, the Osaka District Court, ruled that Osamu Kubota (Kubota), former head of Snow Brand's Taiki factory that had produced the contaminated powdered milk causing the food poisoning, and Koichi Izumi (Izumi), the factory's production manager, were guilty of negligence...
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Exhibits
Exhibit I: Consolidated Statements of Income Snow Brand Milk Products Co., Ltd., and its Consolidated Subsidiaries
Exhibit II: Snowbrand Subsidiaries
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