Mgmt 520 Final Exam Week 8 Essay

7538 Words Jun 18th, 2016 31 Pages

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(TCOs G and I) In the 1930s, after immigrating to the U.S. from a region in central Europe threatened by the onset of World War II, Luigi and Maria Spongee opened a bakery in Chicago. They specialized in snack cakes. Spongee Cup Cakes became so popular in the area that the family stopped being actual bakers and became manufacturers/ food processors of the snack cakes on a regional basis. After returning from the war, their son Steve completed college and began working in television advertising in the early 1950s. Steve approached his parents and his older brother Tom, who was now running the business, about the
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Spongee’s marketing efforts were successful. By also offering volume discount incentives, they had prevailed upon retailers in their traditional East Coast and Midwest markets to prominently display their products. To counter this strategy, Herbal Snacks offered a deep discount to TargetMart, a Southwest and West Coast discount chain, in exchange for an agreement to exclusively sell only their snack foods.
In reality, Spongee Cup Cakes used only FDA approved ingredients and preservatives and were made in American plants that always passed inspections. In contrast, although Herbal Snacks’s pilot plant was in Montana, it had subcontracted the bulk of its production to a plant in Canada. As a result, to maintain a level of quality, Herbal Snacks used the maximum amount of preservatives allowed under Canadian law for the imported product. The level was so high, reactions to the food were often reported. The levels were higher than those allowed by FDA regulations, but allowed per an agricultural import/export treaty between the United States and Canada. Several people who ate these Herbal Snacks required emergency room visits. A child in Idaho, with food allergy problems, even died. Her parents served her the snack, relying on the advertising, not knowing that some of the natural ingredients used in the Canadian-made product were dangerous to her.
The Spongee family seeks your advice and opinion regarding:
(1) Herbal Snacks’s

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