initiative
Introduction
Case 1
Case 2
Case 3
Case 4
Case 5
Case 6
Case 7
Case 8
Case 9
Case 10
Case 11
Case 12
Case 13
Case 14
Case 15
Case 16
Case 17
Case 18
Case 19
Case 20
Case 21
Case 22
Case 23
Case 24
Case 25
Case 26
Case 27
Case 28
Case 29
Case 30
Case 31
Case 32
Case 33
Case 34
Case 35
Case 36
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
Yesterday's Pastry

Case 1:

Yesterday's Pastry

By Rama Asundi

 Atlantic bakery, owned by Manuel Trigo, makes a variety of pastries to serve the Mayagüez community.  The product is good, and Trigo's business has grown rapidly.  He is justly proud of the quality of his products and their fair prices.

 But success brings its own problems.  Trigo finds it increasingly difficult to handle both the financial aspects of the business and the bakery operation.  He has decided to concentrate on baking and delegate the financial responsibilities to José Chavito, a recent graduate from the College of Business Administration at UPRM.

 José joined Atlantic bakery with great expectations of improving the business operation and increasing its profitability.  Upon setting up a paper accounting system, he found that the profitability of the operation was not very good and somewhat erratic.  Part of the problem stemmed from increasing competition.  But Atlantic also lost money because of the large amounts of left over pastries that were simply thrown away.

 José decided to solve this problem by mixing the left over pastries with fresh ones and then selling the whole lot at a slightly reduced price.  This eliminated the waste and also benefited the customer by lowering the overall price.  But it also lowered quality because some of the items bought by the customer were not as fresh as the others.  Still, José reasoned that the lower prices would attract new customers while eliminating profit draining waste.

Questions:

1.. Is there an ethical problem here?  What is it?

2. Should José recommend that Atlantic notify its customers that some of its product is not as fresh as others?  Why or why not?  If they should, how would they advertise the change without driving customers away?

3. Is there a problem with mixing left overs with fresh product?  Under what circumstances?  Why or why not?

4. If you have problems with José's business strategy, what would you recommend in its place?  (Assume that José is responding to a legitimate business problem with Atlantic.)