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Assignment!2!Media!Analysis:! Nestle! ! ! !

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! Table!of!Contents:! ! 1.!Introduction……………………………………………………………………………………………3! 2.!Corporate!Social!Responsibility………………………………………………………………..5! !!i)!The!Triple!Bottom!Line………………………………………………………………………...5! !ii)!Stakeholder!Theory……………………………………………………………………………..6! 3.!Corporate!Culture,!Ethics!&!Outsourcing…………………………………………………..7! !!!!!i)!Cultural!Relativism………………………………………………………………………………7! !!!!ii)!Universalism……………………………………………………………………………………….8! 4.!Competition!Analysis!&!Ethics…………………………………………………………………9! 5.!Conclusion………………………………………………………………………………………………10! 6.!Link!to!Article…………………………………………………………………………………………11! 7.!References……………………………………………………………………………………………..12! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

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! 1.!Introduction! As!the!global!market!presents!more!opportunities!than!domestic,!firm’s!looks!to! internationalise!their!operations!in!foreign!markets!to!acquire!more!market! share.!However,!the!process!of!globalizing!requires!firms!to!engage!in!acceptable! corporate!social!responsibility!catered!to!each!culture!group,!as!there!are! various!conflicting!moralities.!As!many!firms!are!susceptible!to!stray!from!ethical! guidelines,!corporate!social!responsibility!promotes!enterprises!to!act!within!the! best!interest!of!the!community!and!adopt!universalistic!values.!This!report!will! discuss!Nestle!negative!reputation!as!a!global!player!in!the!market!as!well!as! critiquing!its!poor!CSR!standards!with!theoretical!countermeasures!of!crosscultural!management.!! ! Nestlé!is!a!multinational!food!&!beverage!manufacturer!based!in!Switzerland! that!has!operated!as!a!global!franchise!since!1908.!Their!product!ranges!from! bottled!water,!confectionery,!snacks,!baby!food,!cereals,!coffee!&!teas.!Nestle!is!a! renowned!global!player!as!they!accrued!over!$1!billion!in!yearly!sales!worldwide! with!over!8000!brands,!333,!000!employees!and!447!factories!operating!in!more! than!194!countries!(Andrei,!2015).!The!firm!adopts!a!set!of!leadership!and! management!principals!integrated!with!innovative!strategies!that!has!developed! their!unique!brand!identity.!Although!Nestlé!claims!in!following!ethical! standards,!the!firm!has!averted!from!CSR!conduct!throughout!history!that!has! earned!the!organisation!an!infamous!reputation.!Child!labour,!pollution,!price! fixing,!false!advertising!and!manipulation!is!not!what!Nestlé!want!associated! with!their!brand!(Brunk,!2010).!Nestlé!had!outsourced!much!if!its!business! operations!to!developing!countries!claiming!it!was!for!“shared!value”!and!not!for!

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! lower!labour!&!resource!costs.!Moreover!through!many!controversies!associated! with!Nestlé,!the!brand!has!manipulated!its!image!to!convey!a!firm!that!operates! in!the!best!interest!of!consumers!when!there!is!clear!evidence!contrary!to!that! belief.!!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

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! 2.!Corporate!Social!Responsibility! Corporate!social!responsibility!is!the!initiative!firms!take!beyond!profit! maximisation,!to!benefit!social!welfare!&!the!environment!(McWilliams,!2015).! As!larger!corporations!have!more!obligations!to!stakeholders,!firms!are!more! prominent!to!tarnish!the!environment!&!engage!in!unethical!practices!to!meet! such!obligations.!CSR!is!significant!for!global!firms,!who!have!outsourced!their! operations!in!developing!economies!where!there!are!lower!influences!of! education,!unstable!political!system!&!poor!occupational!health!&!safety! standards!(Dobers!and!Halme,!2009).!Throughout!the!decades!of!Nestlé’s! operations,!many!accusations!of!the!firm!avoiding!CSR!&!exploiting!loop!holes!in! developing!political!systems!have!been!made,!however!the!multinational!has! made!attempts!to!better!their!management!capabilities!by!diversifying!their! business!model.!! ! i)!The!Triple!Bottom!Line! Triple!bottom!line!is!a!form!of!corporate!social!responsibility!that!encompasses! not!only!economic!profit!maximisation!but!also!maintaining!social!and! environmental!wellness!(Norman!and!MacDonald,!2004).!As!CSR!&!TBL!may! sound!identical,!the!deeper!difference!is!that!TBL!is!cultural.!Nestlé!had! established!a!negative!reputation!by!endangering!environmental!sustainability!&! social!maintenance!due!to!its!baby!formula!controversies,!where!the!firm!acted! unethically!by!exploiting!mothers!in!poorer!countries!with!low!literacy!rates! (Boyd,!2011).!This!resulted!in!bad!publicity!and!the!boycott!of!Nestlé’s!products,! which!inversely!affected!their!sales.!As!Nestlé!improved!model!focuses!on!shared! value,!it!is!vital!for!the!firm!to!adopt!a!long-term!strategic!sustainability!model!

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! that!focuses!on!improving!environmental!&!social!impact!as!it!inversely!affects! economic!growth!for!the!organisation!(Norman!and!MacDonald,!2004).!!! ! ii)!Stakeholder!Theory! Stakeholder!theory!is!code!of!ethics!that!addresses!the!values!of!managing!an! organisation!&!to!create!as!much!value!as!possible!for!stakeholders!(Jamali,! 2007).!In!the!past!organisations!like!Nestlé!had!little!regard!for!CSR,!as!it!was!too! costly!to!implement!within!their!business!model.!This!can!be!aligned!with! shareholders!interests!as!the!firm’s!main!stakeholders!had!the!similar!ideals!of! maximising!profits!for!their!benefit.!Hence!an!organisation!is!held!accountable! for!their!shareholders!interests!as!they!represent!the!company’s!brand!&! business!operations!(Sun,!Stewart!and!Pollard,!2010).!Nestlé!had!acted!on! stakeholders!interest,!which!did!not!align!with!ethical!standards!at!the!time,! which!detrimentally!affected!their!company!image!and!legitimacy.!Like!any!firm! Nestlé!had!a!variety!of!stakeholders,!sometimes!with!conflicting!values!however! a!firm!is!not!only!accountable!for!their!shareholder!but!also!for!their!consumers! (Sun,!Stewart!and!Pollard,!2010).!If!Nestlé!had!taken!account!of!wider!social!and! environmental!concerns,!this!would!have!created!shared!value!for!all!their! stakeholders!benefiting!the!firm!overall.!However,!there!are!still!critics!of! stakeholder!theory!as!many!large!corporations!that!have!fiduciary!obligations!to! shareholders.!Although!it!may!seem!ethical!to!make!changes!for!social!and! environmental!sustainability!factors,!it!is!also!deemed!unethical!to!break! fiduciary!obligations!that!management!has!towards!their!investors.! ! !

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! 3.!Corporate!Culture,!Ethics!&!Outsourcing! Culture!is!the!collective!behaviour!of!a!certain!group!or!individual!that!has! different!beliefs,!values!and!attitudes!in!a!certain!environment!(Spector,!2000).! As!many!different!societies!possess!unique!characteristics,!firms!must!determine! a!suitable!business!strategy!that!they!can!work!in!to!produce!the!most!efficient! results!ethically.!The!concept!of!culture!can!be!applied!to!corporations,!as! corporate!culture!is!shared!beliefs!&!values!that!are!developed!within!an! organisation!over!time!(Gordon!and!DiTomaso,!1992).!As!Nestlé!operations!are! based!in!Switzerland,!they!have!diversified!&!outsourced!much!of!their! operations!to!many!neighbouring!economies.!Doing!so!the!firm!had!created! value!by!saving!costs!in!production!and!reinvesting!into!improving!product! quality!and!brand!equity.!However!in!doing!so,!Nestlé!ethical!&!social!obligations! have!been!questioned!as!they!chose!profits!over!ethical!practice.!In!previous! years!Nestlé!reason!for!outsourcing!productions!to!countries!like!India!with!poor! working!conditions!has!also!sparked!much!criticism,!as!their!motive!was!to!gain! from!cheap!labour!costs (Andrei,!2015).!Nestlé!management!had!failed! incorporate!necessary!corporate!social!responsibility!at!the!time,!however!they! have!made!attempts!to!better!the!working!conditions!in!neighbouring!countries! by!changing!core!values!of!the!company!(Sekhar!Bhattacharyya!et!al.,!2008).!! ! i)!Cultural!Relativism! Cultural!relativism!is!the!belief!that!culture!is!worthy!in!it’s!own!right!and!are!of! equal!value!(Healy,!2007).!Furthermore,!even!cultures!with!conflicting!beliefs! are!considered!a!justifiable!expression!of!human!existence.!As!Nestlé!is!one!of! the!largest!producers!of!confectionary!sweets,!the!need!for!cocoa!beans!is!

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! essential.!The!firm!had!outsourced!its!operations!to!Mali,!an!African!city!known! for!its!industrial!production!of!cocoa!beans!(Schrage!and!Ewing,!2005).!Nestlé’s! outsourcing!involved!the!use!of!child!labour!as!the!firm!had!saved!production! costs!for!economic!benefit.!Nestlé!had!deliberately!outsourced!to!Mali!as!there! are!lenient!moral!standards!in!terms!of!child!labour!&!human!trafficking,! exploiting!human!rights.!! ! ii)!Universalism! Universalism!is!when!society!emphasises!the!importance!of!laws,!values!&!moral! obligations!to!the!breath!of!the!community!(Schwartz,!2007).!Nestlé’s!ethical! misconduct!had!violated!many!of!societies!moral!values!thus!why!the!firm!has! undergone!changes!to!their!business!model!to!a!system!of!“shared!value”!(Faria,! 2007).!Shared!value!is!essential!to!a!company’s!profitability!&!competitive! position!(Li,!2011)!as!it!leverages!the!firm’s!unique!resources!“by!creating! economic!value!by!creating!social!value”!(Li,!2011).!However!recently!Nestlé!had! made!attempts!to!better!their!universalistic!values!&!better!CSR!conduct!by!reinvesting!into!the!community!by!raising!health!awareness!&!reduce!the!amount! of!sugar!in!their!products!(Sekhar!Bhattacharyya!et!al.,!2008).!The!company!has! released!information!on!their!website!promising!to!meet!CSR!conduct!&!making! shared!value!a!long!term!goal.!! ! ! ! ! !

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! 4.!Competitive!Analysis!&!Ethics! Competitive!analysis!is!the!process!that!is!devoted!to!understanding!the! strengths!&!weaknesses!of!competing!firms!(Koutsoupias!and!Papadimitriou,! 2000).!As!Nestlé!had!breached!CSR!conduct!by!engaging!in!price-fixing!scandals,! the!firm!had!wrongly!exploited!competitors!by!using!their!brand!equity!to!create! an!unfair!advantage.!As!the!majority!of!Nestlé’s!products!are!confectionaries! focusing!on!taste!rather!than!health,!it!is!unable!to!target!health!conscious! consumers.!However!the!firm!has!created!a!sub!brand!“Nestle!Nutrition”!as!an! autonomous!global!business!unit.!This!can!be!deemed!unethical!in!the! perspective!of!many!as!the!firm!supports!two!entirely!different!concepts!to!gain! economically.!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! !

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! 5.!Conclusion! To!finalise!this!report,!it!is!evident!that!Nestlé!has!damaged!its!reputation!in!the! past!decades!due!to!evading!corporate!social!responsibility!obligations!in!many! of!it’s!business!operations.!As!Nestlé!had!many!global!operations,!it!had!many! stakeholders!with!conflicting!values!and!interests.!Nestlé!had!acted!within!their! own!interests!aligned!with!stakeholders!who!had!similar!views!of!only! maximising!profits,!ignoring!environmental!&!social!sustainability.!However,! Nestlé!adopting!triple!bottom-lining!strategies!is!shown!to!positively!affect!the! corporation!as!it!focuses!on!social!awareness!and!conducting!ethical!business! operations.!Nestlé!had!also!capitalised!on!cultural!differences!in!an!international! setting!of!operations!as!many!countries!had!poor!moral!standards!of!human! rights.!Nestlé!had!engaged!in!many!unethical!business!decisions!at!the!time! including!price-fixing,!child!labour,!pollution,!false!advertising!and!manipulation! of!many!communities!as!they!exploited!cultural!differences!to!save!costs!in! production.!However,!Nestlé!management!had!taken!steps!to!better!their!CSR! standards!by!incorporating!the!concept!of!“shared!value”!to!improve!their! reputation!and!company!image.!! ! ! ! ! ! ! ! !

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! 6.!Link!to!Article! http://www.zmescience.com/science/nestle-company-pollution-children/! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

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! 7.!References:! !

Brunk,!K.!2010.!Exploring!origins!of!ethical!company/brand!perceptions!—!A! consumer!perspective!of!corporate!ethics.!Journal(of(Business(Research,!63(3),! pp.255-262.! ! McWilliams,!A.!2015.!Corporate!Social!Responsibility.!Wiley(Encyclopedia(of( Management,!pp.1-4.! ! Andrei,!2015.!Why(Nestle(is(one(of(the(most(hated(companies(in(the(world.![online]! ZME!Science.!Available!at:!http://www.zmescience.com/science/nestle-companypollution-children/!Accessed!1!Apr.!2016.! ! Dobers,!P.!and!Halme,!M.!2009.!Corporate!social!responsibility!and!developing! countries.!Corp.(Soc.(Responsib.(Environ.(Mgmt,!16(5),!pp.237-249.! ! Norman,!W.!and!MacDonald,!C.!2004.!Getting!to!the!Bottom!of!“Triple!Bottom! Line”.Business(Ethics(Quarterly,!14(2),!pp.243-262.! ! Boyd,!C.!2011.!The!Nestlé!Infant!Formula!Controversy!and!a!Strange!Web!of! Subsequent!Business!Scandals.!J(Bus(Ethics,!106(3),!pp.283-293.! ! Jamali,!D.!2007.!A!Stakeholder!Approach!to!Corporate!Social!Responsibility:!A!Fresh! Perspective!into!Theory!and!Practice.!J(Bus(Ethics,!82(1),!pp.213-231.! ! Sun,!W.,!Stewart,!J.!and!Pollard,!D.!2010.!Reframing(corporate(social(responsibility.! Bingley,!U.K.:!Emerald.! ! Spector,!B.!2000.!The!Corporate!Culture!Survival!Guide:!Sense!and!Nonsense!About! Culture!Change.!Academy(of(Management(Perspectives,!14(1),!pp.156-157.! ! Gordon,!G.!and!DiTomaso,!N.!1992.!PREDICTING!CORPORATE!PERFORMANCE! FROM!ORGANIZATIONAL!CULTURE.!J(Management(Studies,!29(6),!pp.783-798.! ! Sekhar!Bhattacharyya,!S.,!Sahay,!A.,!Pratap!Arora,!A.!and!Chaturvedi,!A.!2008.!A! toolkit!for!designing!firm!level!strategic!corporate!social!responsibility!(CSR)! initiatives.!Social(Responsibility(Journal,!4(3),!pp.265-282.! ! Healy,!L.!2007.!Universalism!and!cultural!relativism!in!social!work! ethics.!International(Social(Work,!50(1),!pp.11-26.! ! Schrage,!E.!and!Ewing,!A.!2005.!The!Cocoa!Industry!and!Child!Labour.!Journal(of( Corporate(Citizenship,!2005(18),!pp.99-112.! ! Schwartz,!S.!2007.!Universalism!Values!and!the!Inclusiveness!of!Our!Moral! Universe.Journal(of(Cross-Cultural(Psychology,!38(6),!pp.711-728.! ! Faria,!A.!2007.!Strategic!Corporate!Social!Responsibility!in!Latin!America:!A!Critical! Standpoint.!Social(Responsibility(Journal,!3(1),!pp.23-33.! ! Li,!J.!2011.!The!Big!Idea:!Creating!Shared!Value.!CFA(Digest,!41(1),!pp.12-13.!

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! ! Koutsoupias,!E.!and!Papadimitriou,!C.!(2000).!Beyond!Competitive!Analysis.!SIAM(J.( Comput.,!30(1),!pp.300-317.! !

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