A few months ago, Post Foods faced a serious ethical dilemma that had a diverse impact on its image and is likely to have an influence on its further performance. It is most evident that the company will have to manage a series of legal lawsuits as it is accused of false advertising (Watson, 2016). The complaints are only the most evident outcomes of the ethic scandal; meanwhile, it is predictable that it implies other concerns as well.
Hence, the paper at hand is aimed at examining the significance of this incident and the consequences it is likely to cause. A particular focus is put on the social, economic, legal, and other factors that are critical for the company’s performance. It is important to evaluate the associated risks and point out the affected stakeholders to outline the relevant action plan.
First and foremost, the public scandal is of high social significance. Hence, the problem of pesticides is getting more and more popular in modern society, and the mass media cannot fail to elucidate it. The public is currently divided into two groups: those who believe that glyphosate causes cancer and those who insist on its harmlessness. The problem is most actively examined by two organizations, the World Health Organization (WHO) and the European Food Safety Authority (EFSA), none of which has been able to provide consistent evidence of the interconnection between glyphosate and cancer so far (Corporate Europe Observatory, 2016).
Whatever the outcomes of these debates are, the company’s name figures in the press in relation to this dilemma – it produces a negative impact on Post Foods’ image that is initially supposed to be associated with natural and healthy eating (Watson, 2016).
As long as the company’s customers realize that Post Foods’ advertising campaign is deceiving, they might shift to the competitors. It should be pointed out that this shift will occur not because of the products’ quality or taste, but due to the negative connotations that the company’s reputation has acquired after the incident. The consumers are likely to choose another company the name of which has not figured in a similar scandal yet. The customer outflow will essentially cause the fall of sales, and the revenues will decline. It should be noted that it is the first time that the positive dynamic of sales is disturbed. Thus, according to the company’s annual report, its net sales have been growing since 2012, reaching almost five million dollars in 2015 (Post Foods, 2015).
From the cultural perspective, it should be pointed out, that consumer behavior has changed significantly throughout the past decade. Thus, people have become more health-conscious; they want to know what they eat and ensure that their meals do not do any harm to their health. Therefore, the current incident shows that Post Foods fails to integrate into the modern food market where the key focus is put on natural and healthy ingredients rather than catchy and impressive advertising slogans.
Every market player strives to enhance a good ethical and moral reputation, and Post Foods is not an exception. In its annual report, the company puts a particular emphasis on the sustainability aspect (Post Foods, 2015). It is needless to explain that the false advertising practice reveals the unethical basis of the company’s business making methods and distorts the customers’ loyalty significantly.
Despite the fact that the scientific community has not provided consistent evidence of the glyphosate’s causing cancer, the Organic Consumers Associates (OCA) claims that it is already empirically proved that the glyphosate refers to endocrine disruptors that cause numerous health-related problems (Watson, 2016). Hence, the consumption of glyphosate-containing products hazards consumers’ health.
From a legal standpoint, two important outcomes should be considered. First and foremost, the company will receive complaints about endangering consumers’ health. In this case, it is likely to rebut the prosecution relying on the fact that there is currently no evidence of the cancer-causing effect of glyphosate (Corporate Europe Observatory, 2016). Secondly, the company can receive lawsuits associated with false advertising.
In this case, it will be more problematic to rebut the prosecution, as the company’s slogans guarantee 100% naturalness, while glyphosate is evidently a pesticide. The only way to win a suit, under such conditions, is to put the blame on farmers and pretend the company did not know about the glyphosate’s containment. However, in this case, the company will have inevitable problems with its suppliers.
The incident is of high significance to the company’s further performance. It has a diverse negative impact on the company’s image distorting its competitive advantage in the relevant market. As a result, it can be assumed that the company’s sales might fall because of the loss of the customers’ loyalty. The incident represents a hazard to the company’s relationships with its suppliers as well. Thence, it might be concluded that the problem needs to be addressed as soon as possible to avoid severe complications.
Corporate Europe Observatory. (2016). Glyphosate: the pesticide industry keeps the data secrecy scandal going in the name of ‘investment protection’. Web.
Post Foods. (2015). Annual Report. Web.
Watson, E. (2016). Post Foods targeted in the latest ‘100% natural’ lawsuit over glyphosate, Food Navigator. Web.