Free Essay

Nestle Boycott

In: Business and Management

Submitted By
Words 747
Pages 3
Nestlé Boycott
Final Exam Case Study

Business Ethics

The arguments for continuing the Nestle boycott from the viewpoint of consumers is that in the last 30 years, there has been significant amounts of change that have resulted from the boycott. Nestle not only agreed to abide by the WHO code but Nestle also stepped up their efforts to develop new ways of managing this baby milk issue. As stated in the article, the company introduced an ‘ombudsman system’ to encourage employees to confidentially report violations without fear of retribution — this shows their efforts to change. Another example is that they are being open and transparent with their marketing by allowing Bureau Veritas, the global auditing firm to complete an internal and independent assessment. We can see that the efforts of the boycott are not being ignored in that Nestle went to great lengths to release dedicated reports on its economic and social impacts in Africa and Latin America for the first time. On the other hand, there are also arguments against continuing the boycott. Infant formula products account for less than 1% of Nestlé’s profits, yet this 30-year boycott and issue is still present today and if anything the media coverage of this issue for the last 30 years has caused anything but harm to Nestle. If anything, they are receiving more publicity than ever. Seeing as Nestle has wilfully accepted each demand by the boycott and has abided by every code of conduct presented by the WHO and other similar health organizations around the world, we can see that they are not phased whatsoever. Releasing confidential reports and agreeing to an independent audit are risky for a multinational company the size of Nestle. If anything, Nestle has more than simply complied with the requests of everyone. The main argument against the boycott is Nestlé’s increased publicity in the media, which is doing the exact opposite of the boycott’s intentions. This increased publicity has also caused Nestlé’s share price to increase almost 1600 percent in the last 30 years.
According to Crane and Matten, “under perfect competition, consumers drive the market”. (Crane and Matten, 2010) By definition consumer sovereignty is essentially the power consumers have to determine what goods and services are produced. The theory suggests that consumers, not producers, are the best judge of what products benefit them the most. Due to the fact that consumer markets depend so heavily on demand, producers must monitor the needs of these individuals if they want their products to have any chance at success. The implication Nestlé’s case has for notions of consumer sovereignty is that Nestle is full and well aware of their customers needs and wants and they are abiding by it. They know that if they were to do otherwise, their chances at success would be very slim. From the case, we can conclude that as soon as the issues of the boycott rose, Nestle did not put up much of a fight. They rather embraced it and complied accordingly. This can be seen in CEO, Peter Brabek’s comments, "we also carry out annual audits on WHO Code compliance with a sample of Nestlé companies, and we investigate any substantiated claims made by those who believe we have broken the Code.... If we find that the Code has been deliberately violated, we take disciplinary action." (Brabeck-Letmathe, 2007) From his comments, we can see that Nestle has put consumer sovereignty as their highest priority as they continue to abide by the WHO code. To further evaluate whether or not Nestle truly is embedding consumer sovereignty into their practices with the rise of this boycott, we would have to use the Consumer Sovereignty Test (CST) proposed by Smith. This test is comprised of three factors: * Consumer capability—the degree of freedom from limitations in rational decision making enjoyed by the customer. * Information—the availability and quality of relevant data pertaining to a purchase decision. * Choice—the extent of opportunity to freely switch suppliers.
(Crane and Matten, 2010)
In conclusion, the implications of the boycott have led Nestle down the path to embed consumer sovereignty into their business model and everyday practices.

References

Brabeck-Letmathe, Peter. "Addressing the Water Challenge." The Huffington Post. TheHuffingtonPost.com, 25 Apr. 2013. Web. 4 Dec. 2014. <http://www.huffingtonpost.com/peter-brabeckletmathe/addressing-the-water-chal_b_3152926.html>.

Crane, A., & Matten, D. (2010). Introducing Business Ethics. Business Ethics. New York: Oxford University Press Inc. (Original work published 2004)

Similar Documents

Premium Essay

Nestle (Darkside Case)

...Introduction Nestlé, founded in 1866 by Henri Nestlé, is the world’s largest food company, producing products such as chocolates, soups, coffee, cereals, baby formula, and a host of other items (Nestlé, 2006). In the late 1960’s and 1970’s, Nestlé found itself in the centre of a scandal (Krasny, 2012). It was accused of encouraging mothers in Asia, Africa, and Latin America to use baby formula instead of breast milk, a healthier and less expensive alternative (Krasny, 2012). The allegations of non-ethical marketing practices led to boycotts of Nestlé products, beginning in 1977, in the United States and Europe: some boycotts continue to this day (Facebook, 2012). The criticisms, public outcry, and attention from social activists resulted in Senate Hearings in the United States and meetings by the World Health Organization (WHO, 1981). The result was a new set of marketing rules, introduced in 1981,that restricted the promotion of baby formula (WHO, 1981). These restrictions are outlined in the International Code of Marketing of Breast-Milk Substitutes (WHO, 1981). The aim of the code is to “ensure the proper use of breast milk substitutes, when these are necessary, on the basis of adequate information and through appropriate marketing and distribution” (International Lactation Consultant Association, 2001). When you consider the corporate marketing practices uncovered in the Nestlé scandal, one can see that a corporation’s vision must go beyond profits, and consider...

Words: 3303 - Pages: 14

Free Essay

Nestle: the Infant Formula Controversy

...BRIEF HISTORY Nestle Alimentana, Vevey, Switzerland, the world’s largest food processing company is the subject of controversy and international boycott for allegedly causing mass deaths of babies in the third world all because of their irresponsible advertising approach and marketing activities. To appreciate better the problem here are some of the significant events of the controversy. * 1974- British journalist published a report that suggested that powdered formula manufacturers contributed to the death of third world infants by hard-selling their products to people incapable of using them properly. * Nestle immediately banned its infant formula advertisement in some markets. * 1977- Interfaith Center on Corporate Responsibility in New York compiled a case against formula feeding in developing nations, and the Third World Institute launched a boycott against many Nestle products. * 1978- Nestle implements total advertisement ban worldwide. * 1981- World Health Organization drafts a CODE to regulate advertising and marketing of infant formula. * May 1981- Nestle announces it would support the Code. * February 1982- Nestle issued to Marketing personnel to follow the Code to their best understanding. * May 1982- Nestle formed Nestle Infant Formula Audit Commission (NIFAC) to review the company’s instruction to field personnel to determine if they could be improved to better implement the Code. * October 1982- Nestle accepted NIFAC......

Words: 1009 - Pages: 5

Free Essay

Nestle Porter

...Journal of Business Strategy THE NESTLE BOYCOTT: IMPLICATIONS FOR STRATEGIC BUSINESS PLANNING Rafael D. Pagan, Jr. Article information: To cite this document: Rafael D. Pagan, Jr., (1986),"THE NESTLE BOYCOTT: IMPLICATIONS FOR STRATEGIC BUSINESS PLANNING", Journal of Business Strategy, Vol. 6 Iss 4 pp. 12 - 18 Permanent link to this document: http://dx.doi.org/10.1108/eb039126 Downloaded on: 10 January 2015, At: 02:12 (PT) References: this document contains references to 0 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 1761 times since 2006* Users who downloaded this article also downloaded: Downloaded by UNIVERSITY OF HUDDERSFIELD At 02:12 10 January 2015 (PT) N. Craig Smith, (1987),"Consumer Boycotts and Consumer Sovereignty", European Journal of Marketing, Vol. 21 Iss 5 pp. 7-19 http://dx.doi.org/10.1108/EUM0000000004694 N. Craig Smith, (1989),"Consumer Boycotts", Management Decision, Vol. 27 Iss 6 pp. - http://dx.doi.org/10.1108/ EUM0000000000050 Edmund S. Muskie, Daniel J. Greenwald, (1986),"THE NESTLE INFANT FORMULA AUDIT COMMISSION AS A MODEL", Journal of Business Strategy, Vol. 6 Iss 4 pp. 19-23 http://dx.doi.org/10.1108/eb039127 Access to this document was granted through an Emerald subscription provided by 422267 [] For Authors If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose...

Words: 4361 - Pages: 18

Free Essay

Unethical Behaviour

...formula, and since most of them could not afford the formula, they gave their children an insufficient quantity of the formula. The formula also required clean water, which most mothers could not access. Nestle again made the news when they sued the country of Ethiopia, one of the world’s poorest countries, for six million dollars during the time when it was in the midst of the worst drought in 20 years. Nestle wanted compensation for its stake in the Ethiopian Livestock Development Company (Eldico), which it obtained through an investment in Schweisfurth, a German company. Ethiopia had nationalized Eldico and sold it for a profit. Nestle finally reached a settlement of $1.5 million with Ethiopia, the maximum the government could afford. Recently, Nestle has made headlines again for getting caught spying on Attac, a non-government organization. Nestle has been ordered to pay compensation to the organization. (http://www.frontlinedefenders.org/node/21523). Numerous other shady dealings have been reported about the big company, from allegations of murder (http://www.dw.de/nestle-under-fire-over-colombian-murder/a-16195009) to harassment of a Corporate Food Safety manager (http://www.multiwatch.ch/cm_data/PR_text-Final_15_05_2012_final.pdf). With numerous scandals to its name, Nestle is one company that epitomizes poor business practices, not to mention poor life...

Words: 582 - Pages: 3

Free Essay

Nestle Analysis (Not Completed)

...Nestlé S.A. is a Swiss multinational food and beverage company headquartered in Vevey, Switzerland and it’s largest food company measured in the world. Nestlé’s origins date back to 1866. Their product includes baby food, diary products, bottled drinks, cereals, snacks and ice cream. It is the most astronomically immense food company in the world quantified by revenues. In September 1867, in Vevey. Henri Nestlé started with a milk-based baby food, and soon began selling it. Daniel Peter begin seven years of work perfecting his invention in the milk chocolate manufacturing process. In August 1866, Anglo-Swiss Condensed Milk was established and this is where their history begins and today Nestle has became a world leading food company. Nestle remains the quality and nutrition of their products. Nestlé and other corporations engender a good standing relationship with the countries’ regime for the future of their corporation. The rise in IT consuming which concerns the sale of hardware, software, machineries, and related internal and external services has improved the efficiency of distribution and production between the seller and the consumers. It also contributed to the enhancement of IT systems of companies, especially those who operate in an industry that deeply rely on technologies. And Nestle is definitely one of them. In appeasing local and government laws and regulations in different countries, economical factors like rates of inflation and exchange play a very......

Words: 1074 - Pages: 5

Free Essay

Nestle Case Study

...Excelsior ID# 30796152 M5A1- Nestlé Nestlé Case Study Nestlé has been considered the world’s largest food and beverage company for many years and they achieved this by operating under a localization strategy. Under a localization strategy, a company focuses on local responsiveness, and requires little coordination between the subunits. Working under a localization strategy, firms do not have a high need to integrate mechanisms to knit together different national operations. With that each operation has the ability to control operations by relying primarily on output and bureaucratic controls and a policy of management by exception. Considering the need for integration and coordination is low, under a localization strategy, the need for common processes and organization culture is also low (Hill, 2011). With that, each operating unit basically acts as its own entity, creating their own independent set of core values and policies. Nestlé traces its origins back to the first European condensed milk factory, based in Cham, Switzerland, that opened in 1865 by the Anglo-Swiss Condensed Milk Company. One year after this, Henri Nestlé, a trained pharmacist, launched one of the world’s first prepared infant formula companies in Vevey, Switzerland. The two companies, that at the time were fierce competitors, decided to merge in 1905 to become the Nestlé we know today, and their headquarters are still in Vevey, Switzerland (Nestlé, 2012). Nestlé begin with the localization......

Words: 1543 - Pages: 7

Premium Essay

Operatiom Management

...Operations Management Fall Semester 2011 Final Project “Operations management at Nestle” Instructor: Prepared by [pic] Table of Contents |List of Abbreviations………………………………………………………………………………………………… |3 | |List of Figures/Tables………………………………………………………………………………………………... |4 | |Executive summary…………………………………………………………………………………………………… |5 | |1. Introduction…………………………………………………………………………………………………………. | | |2. Company’s background | | | 2.1 History of Nestle………………………………………………………………………………………………... | | | 2.2 Nestle strategy…………………………………………………………………………………………………… | | | 2.3 Current situation of Nestle in Kazakhstani market……………………………………………………………… | | | 2.4 Major......

Words: 4132 - Pages: 17

Free Essay

Nestle Case

...advertisement The most unethical practice in my opinion was to advertise Nestle’s product in third world countries without proper knowledge and expertise in this market. What Nestle did was they used to send sales people working on commission to the mothers of new born babies and offer them free samples. However, after a period of time when the samples were gone, the mothers used to dilute it with water from local rivers which in many cases served as a local toilet and laundry which resulted in diarrhea and other related illnesses. Many parents believed that the bottle itself had a nutrient value and didn’t even mix the formula. This kind of advertisement resulted in revenue loss of Nestle Company for a few decades. Targeting vulnerable third world countries Nestle knew what market they target, but they weren’t prepared for it, from which resulted in an ethical issue. The main issue is that they couldn’t send the right message to the third world consumers. Nestle wanted to westernise the third world countries, but in result they ended up in “killing babies”. (Caryn L. Finkle, 1993-1994) Neglecting uneducated third world countries The problem that people didn’t understand, is that the less developed countries had a problem with being properly educated and most important is having a clean water supply. Nestle wanted to help these people in hope to solve the malnutrition problem, but in fact they ended up in mocking their own reputation. They neglected the fact that......

Words: 385 - Pages: 2

Premium Essay

Nestle

...[pic] MGT 210 Group Assignment Company: Nestle Bangladesh Submitted to: ZULFIQUER ALI HAIDER Section: 14 Semester: Fall 2014 Submitted by: Anamika Bardhan – 141-0141-630 Ekramuzzman Ekram – 141-0509-630 Humayra Chowdhury – 141-1832-630 Jarin Anjum Chowdhury – 141-0508-630 Samiul Haider Khan – 133-1316-630 6th of December, 2014 To Zulfiquer Ali Haider Course Instructor School of Business North South University Dhaka-1229 Subject: Submission of Report on Nestle Bangladesh LTD. Dear Sir, This is to inform you that we have completed the report on Nestle Bangladesh LTD. which you had` assigned us for the course MGT 210 for the semester of FALL 2014. For the report, we tried to identify how Nestle operating their local business being a multinational company in Bangladesh. In writing this report, we have followed the instructions that you have given us, and we have also applied relevant concepts that we have learnt throughout the course. Some information, references & interview of a manager have been taken from different sources to facilitate our report. However, we will be glad to clarify in interpreting this analysis if needed. Finally, we have put our effort to make the report as informative as possible. We are thankful to you for giving us this unique opportunity. Yours sincerely Anamika Bardhan - 141-0141-630 Ekramuzzman Ekram - 141-0509-630 Humayra Chowdhury - 141-0508-630 Jarin Anjum Chowdhury -......

Words: 3849 - Pages: 16

Free Essay

Nestle

...Nestlé in 2008 PAGE LIST COURSEWORK COVER COVER……………………………………………………………………………………1 PAGE LIST………………………………………………………………………………..2 INTRODUCTION……………………………………...…………………………………3 HISTORY……………………………………………..…………………………………..4 * TIMELINE……………………………………………….………………………..7 BUSINESS MODEL AND FRAMEWORK…………………………...…………………8 QUESTION AND ANSWER………………………………………………..……………9 * QUESTION 1……………………………………………………………………...9 * QUESTION 2………………………………………………………….…………14 * QUESTION 3………………………………….…………………………………17 * QUESTION 4……………………………………………….……………………19 * QUESTION 5…………………………………………………………….………20 ANALYSIS………………………………………………………………………………22 * SWOT……………………………………………………………………………23 * PORTER’S 5 FORCES……………….…………………………………………30 * PORTER’S VALUE CHAIN……………………………………………………36 * BCG MATRIX…………………………………………..………………………39 * PORTER’S GENERIC STRATEGIES……………………….…………………41 FINANCIAL STATEMENT……………………………………………….……………44 CONCLUSION……………………………………………………..……………………49 RECOMMENDATION……………………………………………………….…………51 CITATIONS…………………………………………..…………………………………53 INTRODUCTION Nestlé is the largest food and beverage company in the world. It is also well on its way to becoming world leader in nutrition, health and wellness. Nestlé is a Swiss company, founded in 1866 by Henri Nestle. Henri Nestlé, the founder of Nestlé, was a life-saving chemist but also an innovative marketer. He used scientific knowledge to develop products that met consumer needs. He used his name to brand his products in a......

Words: 14085 - Pages: 57

Premium Essay

Development

...RECENT DEVELOPMENTS In 2010, MAGGI® launched its “Happiness is homemade” communication campaign which was developed from the brand’s vision of uniting Malaysian families through cooking and sharing moments together around the dining table. “Happiness is homemade” was applied to every strategic move and executed in every piece of communication. MARKET Malaysia is a melting pot of cultures united through their love for food. Through homecooked food, families come together and share simple joys of life. In today’s fast-paced lifestyle, the struggle for time has made such occasions rare, slowly dissipating the beauty of homemade meals and togetherness. MAGGI®’s mission is to bring back the charm and wonders of cooking and sharing by offering a wide range of products and solutions to support mothers in meeting various lifestyle needs. MAGGI® helps mothers to prepare tasty and balanced meals for their families every day, the key to continuing the tradition of great family values. Positioned as the leading culinary expert in Malaysia, MAGGI® has entered the homes and hearts of every Malaysian. MAGGI® is dedicated towards supporting mothers and their role in raising children who are the future of Malaysia. All MAGGI® products are locally produced in Malaysia and are halal. yellow background, are recognised throughout the country as a stamp of quality and mark of assurance. MAGGI®’s reputation is also strongly endorsed by chefs, its range of sauces and liquid stocks are......

Words: 613 - Pages: 3

Premium Essay

Dsadsad

...PHILIP KOTLER Philip Kotler (born May 27, 1931 in Chicago) is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University Why chocolate? I. According to a recent study conducted by a major chocolate brand in India the major consumers of chocolates apart from kids are teenagers and people between the age of 15 - 35. Most of the chocolate brands in India produce chocolates in different sizes that are priced according to their sizes. Chocolates like Diary Milk and Five Star can be got for just Rs 10. Chocolates in India are slowly and steadily substituting the mithai or traditional Indian sweets. Due to the increasing levels of social consciousness people prefer gifting well wrapped chocolate packets rather than sweets on occasions and festivals. Taking advantage of this situation GATHERING AND ANALYSING MARKET INFORMATION PRODUCTS Amul chocolates Parent Company Amul Category Chocolates Sector Food Products Tagline/ Slogan Taste of India USP Quality and affordability STP Segment Quality conscious children and adults Target Group Kids and youth Positioning Taste of India by giving them quality products SWOT Analysis Strength 1. Good product range which includes chocolates, toffees, syrups etc 2. Good quality and packaging 3. Excellent distribution network of Amul ensure availability 4. Branding and advertising through TVCs and print ads is popular 5. Pricing is good......

Words: 1630 - Pages: 7

Premium Essay

Nestle Case Study

...Rina Thomas Nestle Case Study September 16, 2013 Introduction Nestle is one of the biggest food companies in the world with sales of $47 billion annually. Nestle has undergone through a huge number of transformation throughout the years. (Palmer, Dunford & Akin, 2009). Nestle manufacture product such as different cosmetics and chocolates that has been long known as a worldwide leader in its business. To increase its growth in operations, Nestle had picked up other markets for diversification other than the food industry which Nestlé’s first pick item was the cosmetic brand. But after some time, the company had acquired other products like ophthalmic and pharmaceutical. At last, for the expansion the company was required to concentrate on enhancing productivity, business expansion and financial improvement. Body 1. Did Nestle undergo either first-order and/or second-order change according to the case? Answer listing examples of types of change from the above story. In the case study, Nestle went through major first order change. One of the first-order changes that occurred was in the 1900’s when Nestle changed its approach to global expansion by acquiring subsidies in other countries. Prior to that, Nestle only operated with sales agents to buy their products out of Switzerland, so they changed their international strategy maintaining the company’s goals and the organizational mission. During the First World War, this had increased the demand...

Words: 1158 - Pages: 5

Free Essay

Nestle's Overview

...Company Overview NESTLÉ® was formed in 1905 by the merger of two competitors Anglo-Swiss Milk Company and Farine Lactée Henri Nestlé. (Nestle, 2013). The name of the company comes from the last name of the founder of the company, Henri Nestlé. He was a German pharmacist who developed a milk-based baby food. According to the company’s website, the corporate headquarters are located in Vevey, Switzerland, and the company has more than 25,000 employees nationwide, and 25 manufacturing facilities, 35 distribution centers, and 15 sales offices across the U.S. (Nestlé, 2013). Currently, the role of a CEO plays Paul Bulcke, who started working for the company in 1979 (Nestlé, 2013). The employees of Nestlé are dedicated to produce high quality products and maintain the best service (Nestlé Waters North America, 2013). The company believes in respect for people, honesty, integrity and teamwork and wants to achieve the organizational objectives by meeting current needs of people without compromising the needs of future generation (Nestlé Waters North America, 2013). The beliefs provide framework for decision making process and the same they shape the culture of the company. According to the company’s website, Nestlé works with partners like, the Partnership for a Healthier American (PHA) and USDA to promote healthy hydration and encourage people to healthy life style (Nestlé Waters North America,2013). The Nestle Company is a wide array of products that range from......

Words: 425 - Pages: 2

Premium Essay

Nestle: Profit Means More Than Human Safety

...known to put their profits before the people are but not limited to: Pfizer, ExxonMobil and Chevron. While doing the research for Week 1e-Activity I came across several website articles that discussed Nestle and child slavery and/or child labor. While reading this I became appalled with what I was reading and decided to share this case with you. Per the International Labour Organization, which is part of the UN, it is estimated that 284,000 children are working in dangerous conditions on cocoa farms in Côte d’Ivoire (the Ivory Coast) in Africa, where more than 40% of the world’s chocolate comes from. In recent years it has come to light that Nestlé buys from a third party cocoa that has been picked by slave labor and child labor. It has been said that children as young as twelve years of age have been kidnapped, trafficked or coerced labor. In 2005 nonprofit organizations sued Nestlé under two federal statutes, Torture Victim Protection Act and the Alien Tort Claims Act, which allows victims of human rights abuses who do not reside in the United States to sue U.S companies for violations of international law. The suit also charged Nestlé of making false claims that the problem of child labor on cocoa farms were being resolved. Nestlé ’s response was the following: "Nestlé is not the owner of any plantation," says Peter Brabeck-Letmathe, chief executive, exasperated after seven years of protests connecting the Swiss multinational with forced child labor in Ivory......

Words: 561 - Pages: 3