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Business & Professional Ethics 6th Edition by Leonard Brooks
Edition 6ISBN: 9781133708087Business & Professional Ethics 6th Edition by Leonard Brooks
Edition 6ISBN: 9781133708087 Exercise 14
On April 13, 2006, Bausch Lomb's (B L) CEO, Ron Zarrella, indicated that B L would not be recalling their soft contact lens cleaner Renu with MoistureLoc. Drugstores in the U.S.A. were, however, removing the product from their shelves due to a concern over reported infections related to Fusarium keratitis, a fungus frequently found in drains and sinks. Zarrella went on to say that Renu kills the fungus that causes the infection, and he was considering how to rebuild the brand and mitigate the "ripple-effect" caused to other B L products. Up to April 12th, B L's shares had fallen by 7 percent due to these health concerns.
On May 31, 2006, B L indicated that it was halting worldwide sales of Renu because tests showed that misuse could cause blindness due to Fusarium fungal infection. "B L said it appeared common, if frowned-upon, lens care practices-like topping off solution in storage instead of replacing it-could leave a film on lenses that shielded Fusarium from the sterilizing agent in MoistureLoc." The company also found unacceptable manufacturing practices in the company's Greenville, South Carolina factory, but said they did not relate to the infection problem.
When Zarrella was first questioned, he knew that there had been a number of incidents of infection in Hong Kong, which B L had reported to the U.S. Centers for Disease Control and Prevention in December 2005, as well as other reports in the U.S.A. However, another product from the Greenville plant was also implicated. Although the incidence of infection were five times higher for Renu than for any other cleaner, the evidence was not enough to halt production and sales. At the time, lens care contributed 20 percent of the company's revenue, which had amounted to $1.75 billion in the first nine months of 2006. When the recall was announced, the company's stock rose 12.7 percent, but was $10 below its early April level. Lawsuits subsequently occurred.
What should Zarrella have done, and when?
On May 31, 2006, B L indicated that it was halting worldwide sales of Renu because tests showed that misuse could cause blindness due to Fusarium fungal infection. "B L said it appeared common, if frowned-upon, lens care practices-like topping off solution in storage instead of replacing it-could leave a film on lenses that shielded Fusarium from the sterilizing agent in MoistureLoc." The company also found unacceptable manufacturing practices in the company's Greenville, South Carolina factory, but said they did not relate to the infection problem.
When Zarrella was first questioned, he knew that there had been a number of incidents of infection in Hong Kong, which B L had reported to the U.S. Centers for Disease Control and Prevention in December 2005, as well as other reports in the U.S.A. However, another product from the Greenville plant was also implicated. Although the incidence of infection were five times higher for Renu than for any other cleaner, the evidence was not enough to halt production and sales. At the time, lens care contributed 20 percent of the company's revenue, which had amounted to $1.75 billion in the first nine months of 2006. When the recall was announced, the company's stock rose 12.7 percent, but was $10 below its early April level. Lawsuits subsequently occurred.
What should Zarrella have done, and when?
Explanation
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As CEO, Zarella had ultimate responsibil...
Business & Professional Ethics 6th Edition by Leonard Brooks
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