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The Parmalat Collapse


Code : GOV0001

Year :

Industry : Food, Diary and Agriculture Products

Region : USA Europe

Teaching Note:Not Available

Structured Assignment :Not Available

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Parmalat - Internationalization & Brand Building In 1970, new milk legislation was passed in Italy, which allowed milk producers to sell their products not only in specialized milk shops but also in every grocery store. Parmalat was quick to react, and used new technologies to modify and start new plants, thus leaving behind all its competitors. In 1973, it launched special milk called Parmalat Vita7 (enriched with 7 vitamins). In the same year, when the milk salesmonopoly of ‘MunicipalMilk-distributing centers’ was broken in Italy, Parmalat began to sell its products all over the country. Until the mid 1970s, milk represented 80% of Parmalat revenues, but it began to branch out into other innovative products like yogurt, long-life cream and milk substitutes...

Parmalat – North America & Latin America Though Parmalat opened its first overseas unit, called Yolat, in Brazil in the 1970s, its presence in that country was felt only in the 1990s. It acquired small dairy and food-processing plants that had strong market presence in several Brazilian states – significant ones being the purchase of 51%stock of the country’s largest dairy, Cooperativa Central de Laticinios do Parana and a $160million deal to acquire Batavia, amajor dairy cooperative...

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Parmalat – Final Chapter In November 2003, Parmalat’s success began to turn sour when it disclosed an investment of €500 million ($619 million) in Epicurum, amutual fund based in Cayman Islands19 . There was a furor among investors, because it was not until a request from Italian market regulator ‘Consob’, that Parmalat admitted about the holding. Parmalat tried to pacify its investor by stating that it would recover the money within 15 days. But, unfortunately when Parmalat tried to recover its funds, Epicurum was flooded by redemption requests from its other investors, and as a result it had to freeze all redemptions and liquidate...

Parmalat – The Plot According to BusinessWeek magazine26 Parmalat was a story of globalization gone wrong. The roots of Parmalat scandal, according to investigators dated back to 1989, before it became a public company. It was believed that Parmalat began to create a web of offshore finance companies in Dutch Antilles to hide its liabilities from investors prior to being listed on theMilan Stock Exchange27 . At the time, Grant Thornton audited Parmalat’s accounts including the offshore finance companies...

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