Case study on

GROUP MEMBERS:

ALI HASSAN
RUMAS AMJAD
HUNZALA KHALIL
Introduction:

 Nestle is a Swiss company which is known as the largest Food and

Beverages company in the world.
 Henri Nestlé, the company’s founder, worked as an assistant to a local
pharmacist early in his career.
 Founded in 1866, Initially, the company sold only infant’s cereal but they
quickly diversified to include a variety of products including chocolate,
coffee, soup, yogurt, water and frozen foods in their portfolio.
 The organization employs nearly a quarter of a million people from 70
different countries around the world.
 Nestlé ‘s success has been driven by a combination of product innovation
and business acquisition.
Nestle’s Corporate Governance:

 Nestlé Pakistan is committed to maintain high standards of good corporate

governance without any exception.
 The Directors are pleased to state that the Company is compliant with the
provisions of the Code of Corporate Governance as required by SECP and
formed as part of stock exchange listing regulations.
 It has adopted and implemented the Corporate Governance Principles of its
parent Company, Nestlé S.A. Switzerland, which cover the following four
essential areas:
• Rights and responsibilities of shareholders;
• Equitable treatment of shareholders;
• Duties and responsibilities of the Board of Directors; and
• Disclosure and transparency.
Problem Statement:

 Nestle has got long reputation for producing a wide varieties of quality food
and milk products for babies.
 But in a recent report, the company has reportedly violated the ethics of
marketing and manipulated customers with misleading nutritional claims on the
baby milk products.
 It was also reported that Nestle mostly ignored nutritional advice of its products
in the advertisements.
 Nestle has been reported to be misleading their customers on the products
with dishonest information on the quality of the products.
 Due to this arising issue, nestle can face legal issues if the company fails to omit
the mistakes.
Discussion:

 Nestle aggressively pushed their breastfeeding formula in less economically

developed countries (LEDCs), specifically targeting the poor.
 They made it seem that their infant formula was almost as good as a mother’s milk,
which is highly unethical for several reasons.
 The first problem was the need for water sanitation. Most of the groups they were
targeting – especially in Africa – didn’t have access to clean water (many don’t to
this day), so it was necessary for them to boil the water.
 But due to low literacy rates, many mothers were not aware of this, so they mixed
the formula with polluted water which put the children at great risks.
 Nestle seems to have knowingly ignored this and encouraged mothers to
use the formula even when they knew the risks.
 Breastfeeding, one of the most important aspects for an infant, especially
in unsensitized areas, was cast aside.
 Baby formula was “the nearest thing in the world”, and this “splendid
triumph of care and science” is “so like mother’s milk that the tiny stomach
won’t notice the difference”. But the tiny stomach did notice the
difference.
Solution and Recommendations:

 Making ethical decision in a business is an important factor for the success of a

company.
 The ethical decisions should be taken by the leaders of the companies and they
should make the stakeholders aware of all the ethics and policies
of the respective companies.
 Being a multinational company, it is difficult for the leaders of Nestle to maintain
similar ethics in all the countries that the company is operating. But the ethics should
be in accordance with the cultures of each countries and most importantly quality
of food should be equal everywhere regards of cultures.
 The ethical decision should be made according to the need of the society and
what values doe the stakeholders expect from the companies.
 Nestle can conduct some surveys and feedback sessions with the customers,
which will help the company understand the faults in the products and
further can help the company improve its products.
 Nestle can consult with the customers on the required changes they want in
the products and this should be done in all the companies that the company
operates.
 The main policy of the company should be maintaining the same quality in
all of their product around the world and further not violate the marketing
ethics.