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January 22, 2013

BEAM: The Count of Monte Sodexo

Gather around, students. Gather around. Today, in Mrs. Beam’s introduction to business ethics class, we’ll be completing a case study on a charming French company named Sodexo. 

No, they do not manufacture the traditional French delicacies of kisses, fries or toast like one might expect. They’re in, of all things, the food and facilities management business. In fact, New Albany-Floyd County Consolidated School Corp. hired this company in 2011 to provide outsourced custodial services to the schools in their system. 

The courtship between Sodexo and NA-FC schools was as romantic as April in Paris. In lieu of roses or wine, Sodexo bid considerably lower than the other companies attempting to win the contract. Too low, some thought. 

Going into the deal, an NA-FC official acknowledged in this newspaper that the company would most likely lose money the first year, but Sodexo was looking toward being together for the long term and hoped to make money down the road. Knowing how to charm, they also promised to donate $25,000 to the NA-FC Education Foundation and another $5,000 to local scholarships. 

So Sodexo took the contract knowing they’d initially lose money while agreeing to pay a pretty nice chunk of change to an NA-FC nonprofit? Sacrebleu! What a deal. But, since we’re studying business, is it a realistic deal?

School board President Mark Boone at the time raised concern over the too-good-to-be-true arrangement. In the Sept. 20, 2011, edition of the News and Tribune, Boone said “What company in their right mind would lose $1 million and donate another $30,000 to the corporation?” and “Something doesn’t add up right.”

Despite these questions, NA-FC schools hired Sodexo and the custodians, voila, became outsourced employees.

Fast forward one year. Summer love has a way of losing its magic. Not being able to live up to its relationship obligation, Sodexo returned to NA-FC and demanded more money or they were walking out of the marriage. Guess why. Low and behold, they were losing money. Twice as much supposedly as they previously had anticipated. 

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