Sanlu's Melamine-Tainted Milk Crisis in China

Sanlu's Melamine-Tainted Milk Crisis in China Description

On 12 September 2008, Sanlu Group, the biggest producer of milk powder in China, rocked the country when it admitted that its infant formula had been contaminated with the toxic chemical melamine. China's national inspection agency extended its investigation to other dairy manufacturers across the nation. Shockingly, products of 21 other dairies, including some famous Chinese brands, also tested positive for melamine. Due to consumption of melamine-laced milk products, more than 56,000 infants and young children had become sick and four babies had died from kidney failure by the end of September. The melamine scare also resulted in many countries recalling and banning goods using milk products from China. When Sanlu became the key culprit in the milk crisis after its infant formula was revealed to contain as much as four times more melamine than other tainted brands, the company apologized to the public. Sanlu also explained that its unscrupulous raw-milk dealers had illegally added melamine to milk. However, it failed to explain its delay in alerting the public when it first received customer complaints in late 2007. Instead, Sanlu had tried to cover up the news until being prompted by its New Zealand partner, Fonterra, which later alerted the New Zealand government. As a result of the milk crisis, the local government of Shijiazhuang, where Sanlu was headquartered, was accused of holding back the news from the central government. Fonterra wrote off all its investment in Sanlu, and Sanlu finally declared bankruptcy on 24 December 2008. The Sanlu incident has spotlighted the inadequacy of China's entire dairy supply chain and has forced the government and the industry to make a collective effort to restore consumer confidence in Chinese dairy products.

Case Description Sanlu's Melamine-Tainted Milk Crisis in China

Strategic Managment Tools Used in Case Study Analysis of Sanlu's Melamine-Tainted Milk Crisis in China

STEP 1. Problem Identification in Sanlu's Melamine-Tainted Milk Crisis in China case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of Sanlu's Melamine-Tainted Milk Crisis in China case study

STEP 3. Industry Specific / Porter Five Forces Analysis of Sanlu's Melamine-Tainted Milk Crisis in China case study

STEP 4. Evaluating Alternatives / SWOT Analysis of Sanlu's Melamine-Tainted Milk Crisis in China case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis Sanlu's Melamine-Tainted Milk Crisis in China case study

STEP 6. Recommendations Sanlu's Melamine-Tainted Milk Crisis in China case study

STEP 7. Basis of Recommendations for Sanlu's Melamine-Tainted Milk Crisis in China case study

Case Analysis of Sanlu's Melamine-Tainted Milk Crisis in China

Sanlu's Melamine-Tainted Milk Crisis in China is a Harvard Business (HBR) Case Study on Global Business , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Sanlu's Melamine-Tainted Milk Crisis in China is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Sanlu's Melamine-Tainted Milk Crisis in China case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Sanlu's Melamine-Tainted Milk Crisis in China will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Sanlu's Melamine-Tainted Milk Crisis in China case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Global Business, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Sanlu's Melamine-Tainted Milk Crisis in China, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Sanlu's Melamine-Tainted Milk Crisis in China case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Global Business Solutions

In the Texas Business School, Sanlu's Melamine-Tainted Milk Crisis in China case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Sanlu's Melamine-Tainted Milk Crisis in China

Step 1 – Problem Identification of Sanlu's Melamine-Tainted Milk Crisis in China - Harvard Business School Case Study

The first step to solve HBR Sanlu's Melamine-Tainted Milk Crisis in China case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Sanlu Melamine is facing right now. Even though the problem statement is essentially – “Global Business” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Sanlu Melamine, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Sanlu's Melamine-Tainted Milk Crisis in China.

The external environment analysis of Sanlu's Melamine-Tainted Milk Crisis in China will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Sanlu's Melamine-Tainted Milk Crisis in China case study. PESTEL analysis of " Sanlu's Melamine-Tainted Milk Crisis in China" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Sanlu's Melamine-Tainted Milk Crisis in China macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Sanlu's Melamine-Tainted Milk Crisis in China

To do comprehensive PESTEL analysis of case study – Sanlu's Melamine-Tainted Milk Crisis in China , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Sanlu's Melamine-Tainted Milk Crisis in China

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on Sanlu's Melamine-Tainted Milk Crisis in China

Government policies have significant impact on the business environment of any country. The firm in “ Sanlu's Melamine-Tainted Milk Crisis in China ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Sanlu Melamine is operating, firms are required to store customer data within the premises of the country. Sanlu Melamine needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Sanlu's Melamine-Tainted Milk Crisis in China has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Sanlu Melamine in case study Sanlu's Melamine-Tainted Milk Crisis in China" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Sanlu Melamine in case study “ Sanlu's Melamine-Tainted Milk Crisis in China ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Sanlu Melamine in case study “ Sanlu's Melamine-Tainted Milk Crisis in China ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on Sanlu's Melamine-Tainted Milk Crisis in China

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Sanlu's Melamine-Tainted Milk Crisis in China ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Sanlu Melamine can compete against other competitors.

Government Scheme & Subsidies Impact on Sanlu's Melamine-Tainted Milk Crisis in China

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Sanlu's Melamine-Tainted Milk Crisis in China case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on Sanlu's Melamine-Tainted Milk Crisis in China

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Sanlu Melamine needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Sanlu's Melamine-Tainted Milk Crisis in China

Social Factors that Impact Sanlu's Melamine-Tainted Milk Crisis in China

Technological Factors that Impact Sanlu's Melamine-Tainted Milk Crisis in China

Environmental Factors that Impact Sanlu's Melamine-Tainted Milk Crisis in China

Legal Factors that Impact Sanlu's Melamine-Tainted Milk Crisis in China

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Sanlu's Melamine-Tainted Milk Crisis in China case study. PESTEL analysis of " Sanlu's Melamine-Tainted Milk Crisis in China" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: Sanlu's Melamine-Tainted Milk Crisis in China case study solution