EMAMECH - EF

Case Study 3: Snow Brand

Group 3:

I. Introduction

The Snow Brand, a Japanese company that focuses on providing customers with

dairy products, found itself under scrutiny by the public due to an incident dating back to

the 2000s. Food poisoning due to bacterial contamination in their skim milk powder was

the main issue of the company which was discovered after an investigation by the

Health Ministry and the local government in Japan. In combination with delayed

announcement and product recall, a move widely considered to be extremely negligent,

the impact of the contamination worsened and around 14,000 people fell ill. As a result,

the company’s reputation plummeted and lost consumer trust.

II. Statement of the Problem

The CEO’s failure in crisis management, communication, sanitation protocols,

and organizational culture of the company.

III. Objectives

1. Adhere to extremely strict quality control procedures at every stage of the

production process to prevent future incidents and ensure the safety of all

products.

2. Rebuild trust through advertising with transparency about the incident, and

the massive improvements made at the center.

 3. Enhance preparedness to effectively manage future crises and mitigate

their impact on consumer trust.

4. Re-evaluate and redefine organizational roles and responsibilities and

strengthen communication channels within the organization.

IV. Analysis

The Snow Brand food poisoning outbreak reveals the crucial role of setting

specific, challenging goals in ensuring food safety. Within Snow Brand's operations, the

absence of clear directives on hygiene procedures led to systemic deficiencies, despite

the inherent difficulty in maintaining stringent standards. This lack of commitment to

defined goals highlighted a failure to internalize organizational objectives effectively.

Furthermore, the incident exposed shortcomings in feedback mechanisms, hindering

the company's ability to address emerging issues promptly. The crisis underscores the

importance of Goal-Setting Theory in guiding organizational practices, emphasizing the

need for clear objectives, accountability, and effective feedback loops to ensure robust

food safety protocols and rebuild consumer trust.

Henri Fayol’s Process Management Theory highlights the importance of key

principles in management: planning, organizing, Snow Brand Milk Products Co. failed to

adequately plan for the potential risks, such as power outages, in their production

processes. There was a lack of policies and procedures in place for dealing with these

incidents which led to the propagation of bacteria in the dairy products. The

organizational structure of Snow Brand seemed to lack clear lines of authority and
responsibility, particularly regarding crisis management. There was confusion and delay

in decision making. This lack of leadership and prompt decisive action allowed the crisis

to escalate further. Coordination between different departments and authorities was

inadequate. Delays in communication hindered the effective coordination of containing

the crisis and lessen its impact. The company’s control mechanisms were insufficient to

prevent the contamination of their products or to respond to the situation effectively

once it had occured.

V. Alternative Courses of Action

1. Develop an updated company manual abiding by the HACCP on all processes

performed on raw material. All employees must undergo regular external

training on health and safety protocols in handling dairy products and

internal training on manual knowledge and risk management preparedness on

various scenarios.

Advantages Disadvantages

● Increased scientific knowledge on ● External training for all employees

the process of producing dairy is expensive and it takes time

products (leading to less mistakes away from working so it is costly

made due to lack of knowledge or for the company

negligence) ● Internal training takes time away

● Increased preparedness of all from working so it is costly for the

employees for various situations company

● Increased quality in products ● Unexpected accidents may still

created, meaning more products happen which does not have a

made in a batch pass the safety corresponding protocol

requirements and leads to less

waste and less costs.

2. Rigorous inspection by an in-house microbiologist (at each plant handling raw

materials), for product safety at each stage of the production, and a higher-level

manager, to ensure adherence to strict quality above all policy. Become certified

in various health and safety benchmarks.

Advantages Disadvantages

- Quality of the product is - Potential for large amounts

closely monitored and of loss of revenue and

ensured to be of the highest resources for wasted

- Consumers can become products.

more confident in the - It is expensive hiring a

product seeing the microbiologist at each plant

meticulous process and and the necessary

 trust is rebuilt equipment to check the

- Sanitation inspection culture

certifications can lead to

regained trust from

consumers

- More products made in a

batch pass the safety

requirements and leads to

less waste and less costs.

3. All incidents and complaints are taken seriously and each must be resolved.

Conduct daily meetings to have space to discuss certain incidents that have

occurred while other employees were away from work. Have a direct chain of

command so information can lead to top management when necessary. Every

incident that leads to a potential problem or a wasted batch must be written a full

report about that is sent to top management for transparency.

Advantages Disadvantages

● Information easily gets around ● Meetings can take away time from

organization and all issues are working and it can be a loss for the

addressed immediately company

 ● Employees are able to raise ● Full-length reports can be very

concerns and give suggestions to time-consuming and take

managers, which can improve the managers away from other tasks

production process and employees ● Relies on managers being quick to

feel they have a more active role relay information to top

● New managers and employees management and vice versa

have detailed reports of past

incidents from before they were

employed and they have a point of

reference on how to respond in the

future

4. Increased marketing tactics in order to gain back the lost consumers. Advertising

(commercials, packaging, ambassadors) must be centered around the health and

safety of the product and transparency of the meticulous production process.

Prices can be set lower than competitors’ to gain market share initially.

Advantages Disadvantages

● Increased brand reputation and ● Advertising can be very expensive

consequently, consumer and its benefits cannot be easily

confidence quantified
 ● Increased sales leading to ● Some consumers will still be

increased revenue hesitant to use Snow Brand,

● Increased market share over time especially if they were affected by

the incident in 2000

VI. Recommendation and Implementation

Undoubtedly, the largest mistake Snow Brand committed in this entire

incident is by not upholding their responsibility for health and safety by reusing

the contaminated skim milk powder, and the mere negligence and concerning

lack of knowledge by employees in such an industry that handles a perishable

raw product. Because of this, our most important recommendation is hiring a

microbiologist at each plant that handles the raw materials, having the managers

regularly inspect employees, and become certified in various health and safety

benchmarks. Having a microbiologist in the plants that handle milk and dairy

products in their most perishable state is not only beneficial but essential to

ensure safety. It is not sufficient for the employees to check the bacteria amount

on their own and decide how to treat the material if it is found to be

contaminated, as observed from the incident. A microbiologist is able to identify

the bacterium found through culture tests and give advice on the correct way to

kill them. It is helpful for at least one to be stationed at each plant so that they do

not have to rely on external labs and get results as soon as possible. Delayed
results can lead to delays in the production process and more costs for Snow

Brand. This is to ensure that safety is ensured at a scientific standard. Having the

appropriate certifications for health, safety and sanitation is also to ensure that

outside of the company, Snow Brand is meeting industry standards. This can

even be a way to gain consumer trust again. Lastly, managers monitoring

employees during the production process is to be able to keep track of workers’

habits and if they follow the manual and the necessary health and safety

precautions. This is done periodically a few times in a day and managers can

provide feedback or correct employees when they fail to follow the manual.

After the investigation done by the local government and the Health Ministry

came to an end, Snow Brand had to deal with their consumer’s loss of trust and a

general negative reputation when it comes to their products. Most people,

whether they were an existing customer or not, would avoid Snow Brand

products, fearing the products are low quality and downright dangerous. To

combat this stigma, Snow Brand should invest in various marketing tactics to

change the consumer perception of their brand. One way they can go about this

is to include the health and safety/sanitation certifications they have gained on

the front of their product’s packaging. This can convey to consumers that they

take safety seriously and are certified by local and international health ministries

and organizations. They can also be transparent in their meticulous production

process, explaining how materials are handled and the safety measures they

follow and add stories of these in the back of their packaging, further promoting
 their dedication to safety. They can also have brand ambassadors, specifically

those who are known for their healthy lifestyle, or athletes, to show people that

some of the figures they look up to in terms of health and nutrition consume

Snow Brand and it can encourage more consumers to try again. To be able to

increase their market share, they can set their price just slightly below their

competitors so they can be competitive. It is not set low enough that it may make

consumers doubt the quality, but low enough that some consumers can be

enticed to purchase Snow Brand instead of another brand to save money. In

general, these tactics aim to increase consumer confidence in Snow Brand and

increase their sales.

VII. Conclusion

The mass food poisoning of thousands of individuals stems from the

critical lapse in hygiene and quality control standards within the production

facilities of Snow Brand Dairy. From the improper handling and storage of dairy

products to the lack of implementation and management of facilities, It

demonstrated the pressing need for strict adherence to public health standards of

businesses and the significance of strict rules governing food safety. Snow Brand

Milk Products Co. was known as one of the biggest manufacturers of dairy

products in Japan and because of the incident, they faced severe scrutiny and

regulatory sanctions leading to reforms in their production processes. It ruined

the company’s reputation and it experienced a massive drop in milk products

sales and garnered public distrust of the safety of their products, resulting in

group losses and closure of some of its dairy factories.

To respond to this crisis, the group concludes to a stricter oversight and

monitoring measures must be implemented and managed properly. The business

must adhere to strict quality control to ensure safety of products. Since the

incident left with public distrust, it also calls for rebuilding trust but with

transparency and show of improvements later on. Management of the higher-ups

also needs to be improved upon to effectively monitor roles and responsibilities,

and make a solid and stable communication in the organization. Knowledge is a

need for all employees to adapt in emergencies or rare circumstances, so

training and seminars will also be necessary for more practice. We believe that

Snow Brand will still be able to recover from this incident as they would not be

the first large company to have had such an incident. A prime example would be

Johnson and Johnsons. However, J&J is still a very strong, recognizable brand

today with many loyal customers. We believe that our objectives and alternative

courses of action will allow Snow Brand to move past this incident entirely and

only be recognized as a leading dairy company in Japan, known for its quality

and safety.