Nestle is a food and beverage company that is principally located in Vevey, Switzerland. The company makes huge profits becoming famous given that it ranks number 39 with Forbes list of most valuable companies (Gleckman, 2013). The company has also become widely disliked due to the many past and partly present scandals and ethically questionable decisions by its marketing and distribution planners. Nestle was the target company of the 1970s accusations that they were making major contributions to unnecessary death and suffering of infants around the world through their aggressive marketing of baby foods in breach of international marketing standards. The world boycotted against the nestle corporation, whereby consumers all over the world stopped purchasing nestle products. The following are ethical issues that lead to the boycott:
Situation before change
The company, through marketing department gave nestle formula samples so that the breast milk of mothers would dry up. The company aimed at creating a crisis so that mothers could not have any other alternative other than buying nestle products. The company then misled its customers by dressing women who did not have any specialized training as nurses (The Nestle Boycott, 2012). These women were mere marketers who could not offer any nursing services. By dressing the women as marketers, the company led customers into believing that they could give them enough nutritional information. These simple marketers could not provide enough information on the products that they were selling, contrary to what they made people believe.
Then, nestle ignored the code provided by World Health Organization. The code recognized that inappropriate feeding practices could lead to infant malnutrition, morbidity and mortality in across all countries. Nestle never followed this code that applies to the marketing of breast milk substitutes and the related products that can make a contribution to these major public health problems. Nestle did not follow the code which regulates manufacturers and distributors of infant formula by stating that should ensure that each container has a message that cannot be removed, clear and understandable. They ignored the statement which stipulates that manufacturers and distributors should not provide samples of products, either directly or indirectly to the pregnant women, mothers, or members of their families.
Mothers and children suffered due to the unethical conduct of Nestle whereby children died, and some mothers became sick. Due to the use of unscrupulous means, the company made huge profits. The employees of the company and the shareholders’ benefits out of the huge profits were massive. When people, especially those in the developing countries realize the means Nestle is using, they will not buy and company will not make such profits for the employees and stakeholder. The shareholders will lose some of their investments and withdraw, while some employees will lose their jobs. The community that trusted nestle lost their trust and began to see them as enemies to humanity. The healthcare system withdrew their support and did not want to be associated with Nestle because of the way they were doing marketing against requirements of public health (Prakash, 1994).
Reasons for change
It dawned on the management of Nestle that they had to change their ethical values because everybody was going against them. In the beginning, Nestle had given an alternative to breastfeeding whereby they distributed a formula in poor countries, misleading their market and giving little information on the proper use and the effects of the product. Nestle learned that this choice of market segmentation was unethical. They learned that the free samples they were giving to mothers were making their breast milk dry up. Most of the information the company received was from employees whom they sent out to the countries that were affected, mostly developing countries. The information reached them that babies got seriously ill, and at some extent they died. Nestle was then forced to change their market positioning, especially from the recommendations of a judge. The judge warned the company that if they did not want to face the accusations of causing death and illness through their unethical sales practices, then they should change the way they were doing their business. The greatest reason Nestle could change is that people were getting informed, especially the civil society, who could then call for boycotts every now and again (Carroll & Buchholtz, 2014).
Going through change
The big change that has been witnessed since the introduction of International Code of Marketing of Breast Substitutes is that in more than 60 countries, Nestle has introduced into their law the measures in the code and the subsequent relevant Resolutions of World Health Assembly. The other change is that the company is intensely investing in PR related strategies and surveillance. In January of the year 2014, a Swiss court ruled in favor of ATTAC Switzerland whereby Nestle was ordered to pay damages and costs to that company after infiltrating the group when it was producing a book on the practices of Nestle. Last year, Nestle unveiled a special centre for monitoring social medial postings so that it could handle it, intervene and solve issues that are related to it. Nestle instituted an International Nestle Boycott Committee the secretariat for which is the UK group milk campaigners who were working on the implementation of the code and resolutions in the legislation. Nestle is working in order to fully comply with the international code (Carroll & Buchholtz, 2014).
Nestle changed the messaging in their campaigns to say that breast milk is good for the babies. In the place of untrained salespeople posing as nurses, they began sending real nurses who had trained and who had the correct nutritional information to pass to customers on the usage of their products. They started including the warnings and important instructions on the packaging of baby formula powders. To some degree, they stopped selling some baby formula powders. Many people do not believe that nestle made the above changes, but according to their chairman, they followed the recommendations of report that resulted from the boycott and made such changes (Salazar, 2014).
Sustaining change through management systems
Nestle management read the reports that were written where the recommendations were that they had to change their ethical values. They first began by updating their policies and systems to accommodate change. They started to employ the services of external auditors to help them maintain the required standards. Nestle is now carrying out annual audits on World Health Organization Code compliance with a sample of Nestle companies, and these companies are investigating any substantiated claims that are made by those people who believe that Nestle has broken the code. If the management of Nestle finds out that any company has violated the code, they then take disciplinary action against that company. Then, the management adopted FTSE4Good’s stringent criteria for inclusion into its index for ethical investors. The organization recognized that non-communicable disease like obesity are growing and can affect both the poor and the rich in the society (Salazar, 2014).
Nestle executives believe that they have a valuable role to play in a society in the struggle against problems related to public health, and they welcome the debate about how best the required outcomes can be achieved. In the light of that, Nestle has initiated serious and systematic efforts in overall sugar content and recipes that make their products. They have pledged a commitment to nutrition, health and wellness. Besides, Nestle executives are working in partnership with the public sector, pooling their efforts to find effective and evidence-based solution to communicable and nutritional diseases and illnesses.
The research is important because it exposes how companies are using dishonest and unscrupulous means to make huge profits at the expense of the customers. There are not enough regulations that are protecting the consumers from selfish and individualistic companies who would only care about their own interests. There are parents who still do not have enough information concerning the product they are using as it was the case with Nestle. Mothers suffered, and infant children became ill and even died. A great number of lives of children could be saved if the unethical issue of Nestle were rectified early. However, by Nestle accepting to make changes means that there could be a reduction in the unfortunate cases. The case is educative for all consumers who should know their role in rising up to defend their rights if they detect foul as it was the case with boycotts. Other organizations should learn to give the interests of people the priority. They should follow the industry as well as the legally required standards of manufacturing, marketing and selling. If other companies were not doing so, then they should begin now.
Reference
Carroll, A., Buchholtz, A. (2014). Business and society: ethics, sustainability, and stakeholder Management. Cengage Learning.
Gleckman, H. (2013). Nestle Company Value. Forbes. Forbes Magazine.
Prakash, S. (1994). Multinational corporations and the impact of public advocacy on corporate strategy: Nestlé and the Infant Formula Controversy". Journal of International Business Studies 25 (3): 658–660.
Salazar, H. (2014). Business ethics PowerPoint Slides. Western New England University, Kodiak.
The Nestle Boycott (2012). Baby milk action.
