Kudler Fine Foods Regulatory Environment

Kudler Fine Foods Regulatory Environment

MBA 502

University of Phoenix

February 12, 2007

[pronoun agreement: since the antecedent (organization) is singular, the pronoun (their) must be singular {his or her}]

Section A

When Kudler Fine Foods shuts down its deli, confectionary and on-site meal preparation departments for refurbishing it will need to consider the legalities of laying off the employees in those departments. Legally, Kudler has the right to shut down the departments in order to remodel the stores. The company is also obligated to make sure the employees whose employment is terminated are protected and fairly compensated for their services. Kudler must also keep in mind it has to account for terminating its employees in three stores. Following is a checklist of issues to consider when terminating employment:

Determine whom in each department will or will not be needed

* For those employees who are not transferred to other departments, unemployment compensation may be collected.

o "The Department of Labor's Unemployment Insurance (UI) programs provide unemployment benefits to eligible workers who become unemployed through no fault of their own, and meet certain other eligibility requirements," (www.dol.gov, 2007).

§ Kudler will help terminated employees file unemployment claims.

* If any of those employees put money into his or her 401k plan, Kudler should help them roll over the 401k if requested.

* Kudler may set up career counselors for the terminated employees to help them find new employment.

Decide if any of those employees can be utilized in the new areas

* For the employees who are transferred to the new service areas, Kudler must provide adequate training to prepare them for their new positions.

* In accordance with section D of this paper, Kudler will hire the employees into their new positions.

Ensure the employees whose employment is terminated understand the reasons for termination, and if possible, transfer those employees to new departments.

* Stress termination is not due to any discriminatory factors, but because services are no longer required.

Section B

Contracts with local organic growers

Local organic produce growers want contracts with Kudler so they can have some certainty regarding where their produce is sold. Kudler's would like to increase the customer's perception of the value of the foodstuffs that they are purchasing. Should Kudler's enter into contracts with these growers? What type of a contract would be appropriate? What group of legal rules would apply to the contract?

The Kudler Company surveyed their customers in 2005 and 2006 to see how the company was performing. The survey results could be divided up into three different areas of performance, the company stores, the product being sold and the service of the employees. The company's strength lies in their physical facilities. The company's weakest aspects lie in their products or merchandise. The question that especially stands out is the customer's value of the merchandise for the price paid. More than half did not feel that the product value was in line with the price paid (Kudler Fine Foods, 2006). The graph below summarizes the categories of the survey for 2005 and 2006.

The disturbing trend to note is that all the areas have decreased from 2005 to 2006, especially the products and merchandise. By the use of contracts with the local organic growers the Kudler organization could:

* Satisfy the customers by bringing their product prices more inline with the merchandise. The company can negotiate for reduced cost of the produce. The cost savings may be passed on to the consumer.

* Help the customers to feel the value in merchandise purchased. By entering into a contract with the local organic growers, the consumer may feel that the organic produce has a higher value than commercially processed produce.

It would be advantageous for both Kudler's and the local organic growers to enter into a bilateral, where both parties exchange promises (Mallor, 2003). The local organic produce growers want some certainty regarding where their product is sold. The Kudler organization may run the produce department similar to farmer's markets and allow the contracted vendor or vendors would be responsible for stocking and presentation of the store's presentation. Kudler's would like to have their shelves stocked with quality organic produce for the customers. This would bring the price inline with the value of the product and instill a sense of higher value for the consumer.

Both entities would need to conform to the Uniform Commercial Code, UCC, in forming the contracts. This would allow both organizations to establish a uniform set of rules for the contracted transactions, create a body of rules that would solve common problems of everyday commercial transactions and fairness and high standards in the market place (Mallor, 2003). The contract should outline the rules and standards for each entity and the penalties that would occur if the contract were not being followed.

Section C

Liability and regulations of organic produce

Organic produce does not have preservatives or other additives to maintain the freshness of the product. What product liability implications does this have for Kudler? What affects could this have on the company? What regulatory Implications do this have for Kudler?

According to the USDA Economic Research Services, "research shows some consumers perceive organic products as a safe and healthy way to avoid potential risks of exposure to pesticide residues in food (Ralston, 2004)." Fresh foods present other dangers to the consumers through food borne illnesses. This becomes a liability to Kudler's Fine Foods if their customers become ill from the products sold at Kudler's. Negative effects of food-borne illnesses were seen from the hepatitis A outbreak linked to the Mexican restaurant Chi-Chi's (Roebuck, 2004). When Brittan announced the possible link between bovine spongiform encephalopathy