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Unit 3: Planning and Decision-making

Notes

Case Study General Mills Inc.

t's a nightmare for a company that sells millions of boxes of breakfast cereal each year:
For an entire year, those boxes of cereal were sold and eaten by customers who did not
Iknow the cereal had been treated by a pesticide not approved by the FDA. General
Mills discovered that millions of boxes of Cheerios, Lucky Charms, Oatmeal Crisp, and
other cereals had been tainted by a less-expensive chemical than the approved one, sprayed
on the oats by a subcontractor who later billed General Mills.

When the FDA notified General Mills of the problem, the organization reacted with
disbelief. But after their own scientists investigated the situation, the company had to
agree with the FDA findings. Then they began immediate testing to verify that the substitute
chemical posed no health dangers. "If we felt there was any question, we wouldn't have
waited for the federal government to act," claims a company spokesman. "We would have
pulled the product immediately." The company quarantined 15 million bushels of oats
sprayed with the pesticide, along with about 50 million boxes of cereal.

So far, so good. But what alternatives is the organization considering in regard to disposing
of the tainted cereal? Although General Mills has said it would not manufacture the
sprayed oats into cereal for human consumption, it did ask the EPA for a waiver so that it
could sell six million cases of cereal that are already in warehouses; then it reversed the
request. The company had also indicated that it might sell the oats for animal feed. If the
organization decides to export the cereal to a country with no restrictions on the
unauthorized pesticide, the FDA and EPA insist on notifying the country importing the
goods.

General Mills faces some hard decisions brought on by the decision of one subcontractor
to knowingly substitute one chemical for another. And while the organization can be
commended for taking quick action to remove the cereal from circulation, it must be
careful about future decisions it makes regarding how to dispose of the cereal. No one
wants to imagine spooning into a bowl of tainted Cheerios first thing in the morning.
Questions
1. Do you think General Mills made the right decision and took the proper steps
immediately after the FDA's discovery? Why and why not?
2. What might be some barriers to rational decision making among those involved in
determining how to dispose of the tainted cereal?

3. Would group decision making be helpful in determining how to dispose of the
tainted cereal? Why or why not?
Source: Richard Gibson, "Cereals with Pesticide were in stores for a year", The Wall Street Journal, July 7, (1994) page B1, B4.

3.14 Summary

To make an organisations successful, planning is utmost important.

Objectives have to be set in key areas in every organisation, such as market standing,
innovation, productivity, resources, performance etc.

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