Yamato Food Biochemical, Inc.

1
Yamato Food Biochemical, Inc.

• Group 8
• Catherine Angel
• Jeremy Archibald
• Jerry Bell
• Alison Moss

2
Background

• Producer of biochemical food ingredients
• Sell to food processing companies, not customers
• Production sight in Japan (Kanazawa)
• Sells to global market
• 3.5 billion market size
• International marketing manager- Yoshitaka Mori

3
Manufacturing Process

• Continuous process
• Must be operated 24 hours a day to avoid
  expensive shutdowns and startups
• Continuous process offers few operational options
• One small change could force Yamato to redesign
  its entire production process

4
Positives of Accepting Deal

• Wouters was Yamatos biggest client in the US
• Annual business of 30 million dollars
• Avoid negatively affecting company relations with
  Wouters

5
Negatives of Accepting Deal

• Low forecasted sales
• Less than 300,000 annually
• Kosher certification would require extensive
  restructuring changes (cleaning, shutdowns)

6
Did Mori Accept the Deal?

• Yes!

7
New Business Opportunity

• Wouters Foods asked Yamato to supply kosher food
  ingredients
• Kosher certification requires that food be
  prepared and manufactured in accordance with the
  Kosher rules
• Rabbis must approve in order to receive Kosher
  certification

8
What happened with the Tokyo Rabbi?

• Mori submits application with Tokyo rabbi for
  kosher certification
• Yamatos production staff prepares thick booklet
  documenting production process
• Rabbi comes to inspect production line and
  expressed many concerns
• After one year, Yamato gives up and no kosher
  certification is granted

9
What happened with the New York Rabbi?

• Yamato U.S.A gets anxious and sends their own New
  York rabbi
• Yamato hires translator with limited engineering
  knowledge to assist rabbi
• Rabbi doesnt review booklet, lack of thorough
  inspection
• NY Rabbi issues kosher certification

10
What happens after receiving Kosher certification?

• Yamato manufactures kosher ingredients and sells
  to Wouters through Yamato USA
• Annual kosher sales expand to 1 million
• Kosher business barely large enough to break even
• Company relations with Wouters strengthen

11
Passover Sweetener

• Wouters wants Passover sweetener
• Passover has stricter kosher rules
• Mori contacts New York rabbi
• NY rabbi reluctant to give certification
  contacts Israeli headquarters
• Israeli headquarters contacts Tokyo rabbi who
  originally rejected certification
• Passover certification denied, kosher
  certification terminated

12
Ethical Issues

• NY rabbi accuses Yamato and production staff of
  unethical behavior
• NY rabbi felt Yamato should have encouraged him
  to read the booklet

13
Results of Unethical Behavior

• Upset sales staff
• Loss of kosher business
• Upset of largest US client
• Mori requests meeting with NY rabbi and Israeli
  headquarter staff

14
Which Ethical Framework did Yamato and Mori Use
in Their Decision Making?

• Utilitarian Framework
• Maximize Benefits
• Minimize Costs
• Acting utilitarian can lead to further
  consequences

15
Costs and Benefits of Moris Actions

• Costs
• Losing kosher certification
• Risk of upsetting 1 client
• Upsetting rabbis/certification board
• Hurts future business reputation of Mori and
  Yamato
• Benefits
• Avoid increase in production costs due to
  shutdowns
• Satisfy Wouters
• Help sales staff increase profits

16
Which Ethical Framework should Yamato and Mori
have applied?

• Kantian (Theory of Rights)
• Golden Rule
• What should have happened
• Given rabbi full disclosure
• Hired translator with more specific knowledge
• Either follow stricter kosher rules or tell
  Wouters that it cant be done

17
How Mori Should Act at the New York Meeting

• Suggestions from the class?????

18
How should Mori act at the New York Meeting?

• Use Theory of Justice Compensatory Justice
• Compensate individuals for what they lost when
  they have been wronged by others
• Should match severity or magnitude of the loss
• This particular situation is difficult to match
  the compensation to the problem

19
Sears Application of Compensatory Justice

• Sears Auto Centers was deliberately cheating
  customers with unnecessary services and parts
• CEO publicly admits and accepts responsibility
• Sears pays full cost of state investigation
• Sears compensates customers in California with
  coupons and refunds
• Amounted to largest consumer fraud settlement in
  history

20
Results of Sears Auto Centers

• Theyve been able to overcome obstacles and
  continue to build more trust with their loyal
  customer base
• Today, Sears Auto Centers are well respected and
  act as a market leader

21
How Should Mori Act at New York Meeting?

• Start with formal apology and accept all
  responsibility
• Offer to completely redesign production process
  with help of rabbis to satisfy kosher
  certification
• Discuss other compensation offers with rabbis
  based on what they believe is fair

22
Conclusion

• Questions??