1. Frame this situation as a decision. What are the strategic choices that Gerber faces as a result of these circumstances?

2. Suppose you were a senior manager at Gerber when this issue came to light. What are the critical choices you need to make? What are the potential risks and costs for:

(1) Ignoring the potential problem.

(2) Responding with the decision to end the use of all phthalates in your production processes immediately.

The Gerber Products Company (subsidiary of Nestlé Group, Fremont, MI), the well-known maker of baby products, was facing a set of critical choices about whether to continue using the plastic known as polyvinyl chloride, commonly known as PVC. PVC is a composite plastic material used in numerous household, commercial, and medical products including food storage containers, toys, and medical tubing. To make PVC pliable for use, chemical plasticizers called phthalates are added to soften the plastic. In late 1998, the environmental group Greenpeace announced that it had conducted scientific testing on the effects of phthalates on lab rats and found them to cause cancer. Greenpeace claimed its testing showed that the chemical leeches from the plastic over time and was particularly worrisome when it was used in products small children suck or chew on. Phthalates have been used in the plastics industry for several decades with no known cases of them causing health problems. Nevertheless, Greenpeace’s press release, which was strategically timed to coincide with the holiday shopping season, was immediately picked up by television networks. The show 20/20 did an entire segment on the possible health risks of phthalates.

Gerber’s problems got worse when attention focused specifically on products made for oral use by children, including pacifiers, nipples, and other feeding products. Gerber, which is the largest producer of these products in the United States, faced a serious strategic decision. Should it continue using phthalates, which had been so critical to the development of its many products but could be carcinogenic, or invest heavily in new technologies to eliminate phthalates from its product line? The choices were risky and involved significant costs—societal and legal costs as well as monetary costs. The company clearly needed a strategy for effectively analyzing the alternatives and selecting the best option.