Beech Nut Case Study on Ethics

Beech-Nut a distributor of apple juice in the competitive baby food industry started purchasing apple juice concentrate from a supplier called Universal Juice Company in 1977. There should have been questions at that time because Universal Juice sold its product at around 25 percent below the market value for apple juice. John Lavery the vice president of operations received his first indication in 1978 that the apple juice concentrate from Universal might be adulterated but ignored the warnings from Dr. Jerome LiCari, Beech-Nuts director of research (Starr, 1989). Then in 1979, outside laboratory tests and an unsolicited report from a Swiss laboratory determined that the apple juice was adulterated (Starr, 1989). With each repeated occasion no action was taken by Beech-Nut until in June 1982 when private investigator, Andrew Rosenzweig, who had been hired by the Apple Processors Trade Association, provided proof that the apple juice was an adulterated concentrate (Answers.com, 2009). Beech-Nut terminated their relationship with Universal when it was informed that it would be included in the lawsuit against Universal for distributing adulterated concentrate. The decision and action taken by Lars Hoyvald, the CEO of Beech-Nut has had ramifications immediately and several years later. Thomas H. Roche an Assistant United States Attorney stated the action Hoyvald took was a case of corporate greed and irresponsibility (Buder, 1988). In consideration of Hoyvald’s actions the following questions will be discussed: 1. If a recall would have required closing down the company, is avoiding a recall a risk worth taking? 2. If the apple juice is safe was the public harmed in any way? What about foreign countries? Beech-Nut 3 3. Is Hoyvald’s conduct representative of a CEO? Was he doing his job in difficult circumstances and what Nestle expected of him? 4. Should Nestle have kept the two executives on the

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