Reporting structure or incentive structure or set of guidelines for employees
Q4. Read the following case study and answer the questions. (2×10=20 Marks)
Who pays the penalty when babies drink sugar water?
How do you punish a corporation? The president and vice-president of Beech-Nut admitted that they knowingly permitted adulterated apple juice to be sold for babies. The babies who drank the juice, of course, had no way of knowing that the juice was not right, and no way of communicating it if they did. The company pled guilty to 215 counts of violating federal food and drug laws, and paid a $2 million fine. According to the New York Times, its market share dropped 15 percent. The president and vice-president were not fired. On the contrary – the company paid all of their legal fees and their salaries until their appeals ran out. No one from the company ever went to jail or paid a fine out of his own pocket. On the witness stand, one of the executives explained his decision to continue to market the adulterated juice: “What was I supposed to do? Close down the factory?”
- What was the executive supposed to do?
- What reporting structure or incentive structure or set of guidelines for employees would be most likely to achieve the best result for the company and its customers?
