Category: Nestle

Introduction

This essay applies different diagnostic instruments in the analysis of Nestle Company case study. It aims at encouraging students to discuss company cases provided. It also provides students with an opportunity to utilize the diagnostic processes along with change factors in the evaluation of change impacts on an organization.

The essay identifies the main possible causes of change in Nestle Company, and the reasons for reaching at such conclusion. It uses the guide questions to discuss the types of change that have occurred in this company.

Changes in Nestle Company

In looking at change in Nestle Company, the six-box organisational model will be used. This model was developed by Marvin Weisbord with the aim of assessing organizations functioning. This is a generic model that can be applied across wide varieties of companies (Hughes, 2007).

This framework was chosen as it represents particular means of analysing the company design and structure. It concentrates mainly on issues such as planning; roles played by support functions like personnel, remuneration standards, competition in company units, partnerships, control of organizations, accountability as well as performance assessments. In addition, the framework has the ability of following basic systems approach to the functioning of any company.

Some of the factors that have led to change in Nestle Company history include purpose, relationships, helpful mechanisms and leadership. Concerning purpose, the company had to undergo changes for it to experience growth. It reached a point the companys infrastructure had to change to take in the expanding client base and industry changes.

The company had to look for markets particularly in the U.S., improved technological ways of reaching the target markets, like moving manufacturing plants outside production markets to replace sales agents. Change was also driven by helpful mechanisms to maintain competitive advantage.

The company merged and acquired other companies for it to be dominant hence enjoying low production costs. In addition, acquisition helped the company to diversify its production lines from food industry to non-food industry. This enabled the company to diversify its risks.

Relationship is another factor. The corporate culture embraced by the companys management is one that embraced change. This aimed at gaining the employees confidence hence having free flow of ideas (Feldman, 2000). This is because there was need for the company to embrace good relations between employees, departments and the management. Lastly leadership did contribute to change since there was need for the company to have leaders who can apart from defining the purpose can also embody purpose in their programs. This is the reason the CEO Brabeck-Letmathe overhauled ten executive from the board.

Nestle company has undertaken both first and second order changes. In the first-order change, there are some changes which can be termed as being reversible. These changes have paved way for old stories to continue being told; for instance organizations strength development, changes within existing structures like overhauling the executive board and replacing it with ten members. Another example includes managements longevity maintenance other than improving short term operation profits.

The second-order change includes gear shifting, like changing from the use of sales agents in markets outside home markets to global expansion as well as the purchase of local subsidiaries in foreign countries. Another example is transforming to something different from previous operations like diversifying from food industry to non food industry.

The specific transformational change experienced at Nestle Company is type 1 transformation. This is based on the fact that, the organization transformed from entrepreneurial management structure to professional management structure.

For instance, the change of management structure by CEO Helmut Maucher focused mainly on financial improvement by the use of diversification strategies as well as acquisition strategies. This type of management ended up selling lots of nonstrategic and non-profitable businesses, and emphasized on acquisitions like the purchase of Carnation Company in 1984. This has been transformed to professional management structure under Brabeck-Letmathe.

This management structure emphasizes on critical thinking before making any change in the Company. This makes the company to depend much on managers commitment on corporate culture, instead of improving the organizations short-term operating profits; the management has preferred maintaining organizations longevity. This management structure concentrates on different ways of reinforcing and sustaining company strength other than ways of changing the company strength.

To some extent, I tend to agree with CEO Brabeck-Letmathe that he has used incremental approach in the companies change. I concur with him when he claimed that change should only occur gradually and where necessary. Companies should not just change because there is change, but they should change with reason.

The issue of introducing corporate culture in the organization is fundamental for incremental approach. It is true that for incremental approach the company should not focus on short-term profit operations rather long-term operations. This proves his fact that changes at Nestle are much focused and conscious. This is the best way of carrying out incremental changes.

However, I beg to differ with him on matters concerning the implementation of new technologies as being the companys central direction. This is based on the fact that, the role of technology can only be realized after a certain period of time so rejecting its implementation currently, will mean that at one time the company will have to make a drastic change in technology if not it will be left behind by other companies (Hughes, 2007).

Lessons from Frontline

The three major lessons are as a result of downsizing as being organizational form of restructuring, new technology implementations along with acquisitions & mergers. First downsizing entails the process of reducing the number of employees in an organization permanently.

This process might be achieved through various techniques like retrenchments, down-scoping and downscaling as witnessed in Nestle case. The reasons firms might take such action include closure or sell of particular business units that seem to be unprofitable, restructuring, reducing as well as saving costs, greater efficiency and effectiveness leading to higher productivity. It also aims at dealing with external pressures like stiff competition and change in technology.

However, it should be learned that downsizing by itself will not lead to productivity gains, when it has not been associated with other forms of change in business strategies. In addition, downsizing might be much expensive. This process might end up having some impacts on social as well as the psychology of employees remaining as well as those leaving. In addition, the process might make the company to lose very significant and skilled workers.

This is because by the time peers are leaving, the remaining employees will start doubting their future in the organization, and this might make them seek for secure jobs elsewhere (Hughes, 2007). In overcoming downsizing issues, managers have to ensure that they have addressed right issues in the right manner before thinking of job jettison. Managers have to explore all other ways of reducing costs before embarking on downsizing.

Another lesson is learnt from companys technological change. Companies have introduced technological change in their operations as an effect of various reasons. Some have taken it as being a way of change facilitating tool and production increase due to communication coordination. Others have introduced technology since their business units have created their own systems, which need to be, synthesized (Cascio, 2002)

However, it should be learnt from Nestle company that, implementation of new technologies is not always a straight forward concept. This rests on various researches that indicate that most of expenditures on the implementation of new technologies do not attain their intended goal. In addition new technologies effects might end up taking lots of time before being seen. This is because during implementation, there is need for training, typical advice and consultancy (Cascio, 2002)

To overcome this issue of new technology, company managers have to pay more attention on long-term effects of new technology, other than basing on short-term profitable operations. Managers should be in a position of taking advantages of technological crisis like Y2K to alter their systems for long-term effects.

Concerning the issue of mergers and acquisition, though in some circumstances companies might be left to operate the way it used to operate before merging or acquisition, in most cases such companies might be subjected to a complete overhaul in its governance structures, human resource systems, financial systems, and other operating systems, bringing these in line with the acquiring company (Feldman, 2000). This is because; one company might be much more influential as compared to the other.

In dealing with such a situation before entering acquisition or any merger managers should first deal with serious issues that might affect the merger or acquisition. They should ensure that they have dealt with issues like merger and acquisition pricing, merger and acquisition consolidation as well as cultural alterations (Hughes, 2007).

Implications for Change Managers

By looking at Nestle Company, there are some implications that ought to be considered by change managers. First, there needs to take extra care when categorizing organizational change as being small, incremental and adaptive, as compared to transformational and large ones. It is the affected person who knows the real pain or advantage of such a change.

As an interpreter, the change manager states that whether a change is adaptive, reactive, or transforming is not necessarily an objective given but will depend upon the perspective of the person doing the considering (Wetlaufer, 2001). When reacting to such an implication, the management team should mould such perception in a manner that will bring sense for the company participants, to have an idea of what is going on in the company.

Secondly, the company has been concentrating on single organizational change, not putting in mind multiple changes that might occur at the same time. Apart from this, there are some changes which might require other changes to boost their efficiency and effectiveness. For instance, empowering staffs, calls for changes in decision making routines, among others.

Singly, might be perceived as being small, however, collectively, have lots of impacts (Feldman, 2000). In reacting to such a case, whether a change is adaptive, reactive, or transforming is not necessarily an objective given but will depend upon the perspective of the person doing the considering (Wetlaufer, 2001). Meaning, management team ought to avoid putting lots of concentration on a single change.

Change managers should have an idea that at an individual level, changes might have very small consequences but putting them together, the results might be unanticipated consequences in the company.

As a coach, there are chances that the management team just like a team coach might assume that in case employees have been coached well, then people might take the initiatives of altering the companys routine practices (Maiese, 2003). However, in dealing with such a situation, the management team should provide conditions for exercising personal initiatives.

Lastly, at first sight managers might see what is happening as a paradox, as change is much important, for the companys stability. This might end up framing the basic stability and change paradox, where change may be needed to preserve or re-establish stability and stability must include change mechanisms to be adaptable (Cascio, 2002).

When dealing with such a situation, change managers and directors, opt to provide directions for stability. They have to inform people things that will be changing, and those that will not be changing (Taylor, 1911).

Conclusion

In conclusion, this essay has analysed reasons for changes in organizations and different change orders that Nestle Company has undergone till now. The essay has also shown the implications which company managers can face, in case they fail to understand the significance of images as well as mental frames. Images in the essay include the director, navigator, interpreter and coach. Finally, the paper has also explored the three frontline experiences as a result of three major changes in big organizations like Nestle.

List of References

Cascio, W. 2002. Strategies for responsible restructuring. Academy of Management Executive .16(3): pp. 8091.

Feldman, M. 2000. Organizational routines as a source of continuous change. Organization Science. 11(6): pp. 61129.

Hughes, M. (2007). The tools and techniques of change management. Journal of Change Management, 7(1): 37-49.

Maiese, M. (2003). The need for dialogue. Retrieved from https://www.beyondintractability.org/essay/dialogue/

Taylor, F. (1911). The principles of scientific management. New York, NY: Harper.

Wetlaufer, S. 2001. The business case against revolution. Harvard Business Review, 79(2): pp.113119.

Even though Nestle claimed that the company has a clear policy against child labor, the company was captured using such cheap production measures in 2015. Such actions contradict all the principles of corporate social responsibility because child labor oriented production is entirely unethical. There are many possible solutions to the problem, but they all cost money that the chocolate industry is unwilling to invest. The elimination of cheap labor will inevitably cause a significant increase in chocolate costs. This will provide more money to farmers, reducing the need for children and slave labor. One of the possible options to address the dilemma of child labor is to allow an increase the production costs. The company could have rationally described the reasons for such a change to the community and customers. Even though Nestle would have been put in the higher competition conditions, the unethical issue would have been eliminated (Clarke, 2015). Moreover, such a decision would have been rational from the perspective of corporate social responsibility, advancing the ethical approach to production.

The crisis conditions constrained Nestles options in addressing the childrens labor problem. Back in 2015, the only possible variant was to reduce the childrens labor to a minimum, trying to balance the production expenditures (Clarke, 2015). However, today Nestle is the leading company that can show the example of the successful elimination of illegal child labor out of supply and production chains. Such advancements can be achieved through the implementation of new technologies. Despite the significant expenditures, the automatization of supply and production can contribute to eliminating this problem. The company strives to develop an ethical approach to production. The automatization and usage of new technologies can alleviate the problem and help change the focus from cheap labor to automatized.

Reference

Clarke, J. (2015). Child labour on Nestlé farms: Chocolate giants problems continue. The Guardian. Web.

Introduction

Nestle company was founded in 1866 by Henri Nestle in Switzerland and is currently one of the nutrition, health and wellness company in the world. It is the largest Switzerlands industrial company and also the largest worlds food company according to Malik, Ali, Rana, Ilyas, & Khan (n.d.). The company has had robust performance recording CHF 109.9 billion in sales in 2008 with a net profit of CHF 18.0 billion (At a glance, n.d). The company has a huge workforce of about 283, 000 workers across the globe. It has widely dominated in the sale of coffee, milk products, confectionery, ophthalmics and dehydrated cooking aids which account to 60% of the company sales and more than 75% of the operating profits.

The current competitive landscape

On coming to the helm of leadership as the CEO of the company, Peter Brabeck-Letmathe embarked on an ambitious project to transform the company from a European based manufacturer with a limited proposition to a global food company. The firms foray into the global market exposed it to fierce competition in the international market from among others the Kraft, Master foods and Unilever (Strategic Management: Competitiveness and Globalization). With its strong financial clout, the journey to establishing a global brand has largely been a successful one. This has been supplemented with diversification through takeovers across the globe. The acquisition has enabled the firm to gain new market segments and to reduce its dependence in the mainly traditional coffee segment. This has seen the company lead in most of its products segments. This venture has positioned the company at number 8 among the worlds top 12 packaged food companies in terms of capital returns as at 1997.

Technology-wise the company has a vibrant research and development division. Their discoveries and inventions have led to development of useful applications for the company and a couple of innovative products to the consumer (About us, n.d.). The diverse range of scientists has introduced a range of management programs in order to reduce the cost of operations and also to streamline business functions. These have ranged from MH97 that had been introduced to cut cost of raw materials and to optimize production processes. Target 2004+ was later brought in after MH97 to improve operating performance by creating a regional manufacturing network. It laid emphasis on establishing benchmarks and transfer of best practices across the network. This program succeeded in raking out savings of more than CHF 3 billion between 2002 and 2004. The latter program was succeeded by Operation Excellence 2007 which was aimed at improving the supply chain productivity, optimizing planning processes, getting of production overheads and reducing product complexity. A program called FitNes was also employed to boost efficiency in the groups administration efficiency. This is projected to have netted about CHF 1 billion in savings. The greatest reap for the company was however the integration of The GLOBE initiative which was designed to improve among others operation efficiency, to establish the best practices in business processes, aligning data standards and to synchronize information systems.

Owing to its vast experience in the food industry, the group has amassed enormous knowledge of the market which gives it a key advantage over its competitors. Its high ability and efficiency in integrating new business acquisitions into its mainstream operations gives it a higher leverage as compared to its competitors. By diversifying its products and integrating business processing systems, the company has proven to be highly strategically flexible. Of late the group has taken into adapting the current best management practice in order to streamline its functions across the globe and also to improve efficiency and effectiveness in the production processes.

Over the years the company has also remained committed to production of high quality goods which has ensured it remains highly profitable. To demonstrate good financial performance of the group, it made sales worth CHF 60 billion and a net income of CHF 3.4 billion 3.4 billion in 1996. This has steadily been rising up to a level of CHF 109.9 billion in sales in 2008 with a net profit of CHF 18.0 billion (At a glance, n.d.).

Vision and mission of Nestle

Nestles vision is to be the leading food and beverage company in the world providing customers with healthy food at affordable rates. Through out her operations, the Company has remained true to their vision. This is demonstrated the virtue of being the best food and beverage company in the world. The Nestles mission is to provide the best food to people throughout her day and her lives. This is to be achieved through her unique experience of anticipating a consumers needs and creating solutions which enables Nestle to contribute to the wellbeing and enhancement of peoples lives (Malik et, al., (n.d). This is a restatement of the availability of their products in almost all of the countries of the world. It implies that at whatever location of the world only Nestle can be relied upon to provide the best food and beverages to meet their needs throughout the day and throughout their life. This statement emphasizes on convenience of the service. For example, people on transit require assurance over availability of commodities at any given time and location. The statement also emphasizes on her commitment to offer high quality products in their chains. Their success is attributable to over a centurys experience in delivery of quality products and services which has ensured loyalty by customers. The firm also affirms her capability to anticipate consumer needs and offer timely solutions. This is proven by her ability to introduce new products when demanded by the consumer. Responsiveness to consumer needs was evident in Pakistan where the need for provision of safe and healthy drinking water prompted them to introduce Nestle Pure life.

Some of the guiding principles of the company include manufacturing and marketing the companys products in a sustainable manner over the long term on behalf of the stakeholders. Their second principle asserts that the company does not give emphasis to short term benefits at the expense of successful long term business development. Nestle also recognizes that the customer is concerned with the companies character behind her trusted brand and thus values customers, whom they depend on. The company believes in the importance and effectiveness of legislation to safeguard responsible conduct although it also appreciates guidance of staff to ensure adherence to the highest standards. Another important guiding principle is professionalism, conduct and responsible attitude of its management and employees which emphasizes on the recruitment of the right people and ongoing training and development. Their last principle lays emphasis on commitment to follow and respect the local regulatory framework of any market.

Relationship with primary stakeholders

Nestlés key stakeholders include but not limited to customers, distributors, supermarkets, hotels, shopkeepers and the consumer. The company recognizes that they all have different requirements which must all be satisfied in order to retain them. Customers everywhere will always demand for excellent service, timely delivery and accurate information while consumers will always consider taste, appearance and price when making their buying decisions. The companys responsibility is usually to identify these needs and respond appropriately and effectively. Nestle commits itself to give its customers value for their money through delivery of quality products at reasonable prices. It also shares with the society the need to maintain environmental quality. The societal concerns are central to their business and therefore the firm commits to respect their needs and preferences.

Leadership

Nestles able leadership has been largely instrumental to her success. The leaderships strategic management skills have borne fruits in ensuring that the company remains highly profitable and relevant in the highly competitive industry. Under Brabecks tenure as the chief executive, he oversaw divestures from low yielding business activities and those that indicated very limited growth opportunities. These minimized closes in the firms operations. He also managed to transform the firm from commodity food processes which included raw material conversion towards the consumer and added value products. This meant that the company had to divest from manufacturing and related processing. He reinvested the proceeds towards greater acquisitions and product development which bore generous fruits. The leadership also believes in retention of the employees of the acquired businesses which helps smoothen the tradition and maintain some distinct cultures.

Reference

About Us. (n.d.). Welcome to the Nestlé Research Center. 2009. Web.

At a glance. (n.d.). Introduction.Web.

Malik, M., Ali, A., Rana, A., Ilyas, M., Khan, S. (n.d.). Nestle. 2009. Web.

Raisch, S., Ferlic, F. (2008). Strategic Management: Competitiveness and Globalization, Cases, 8th Edition, South-Western College.

Target change is vital for organizations that seek to maintain a favorable market position. Firms usually decide what changes to make in reaction to a market change. The Nestle Company considers China as its second-largest market following the United States. In 2015, the company experienced slow sales and stagnant revenue in the Chinese market. The trend was due to China experiencing a lower production of coffee and bouillon cubes in that year. Also, the deflationary measures in the European market offset the companys long-term revenue expectations from frozen foods. Also, the West Africa Ebola outbreak led to the termination of major economic ties with most parts of the word. Thus, if Nestle had acknowledged these market changes and formulated counter strategies, they could have prevented loss of revenue.

According to the firms CEO, the company seeks to add more premium products such as chocolate in the Chinese market and improve their product portfolio. The firm plans to make second order changes such as partnership in the European market to improve their domination in the European food market. These strategies are likely to improve the companys revenue.

Alternatively, the company can try making organic and ethnic foods that are more suitable for the European market. Nestle can weigh the option of abandoning the African market that is highly unpredictable and challenging for major food companies. It should also focus on restructuring their marketing strategies to achieve target market goals. The strategy is likely to foster incremental growth for the company in the international market.

Nestle International is a renowned global food and beverage corporation that had its origins in Switzerland in 1866. It operates in 191 countries worldwide and is considered one of the largest food and beverage companies globally. Nestle is known for its diverse products, including baby food, coffee, bottled water, and confectionery. The company is dedicated to providing high-quality products and services to its customers and maintaining a solid corporate governance structure.

One of the critical aspects of Nestles corporate governance structure is its compensation philosophy. According to the companys website, Nestles compensation philosophy is to attract, retain and motivate key employees and executives (Nestle Global, n.d.). This philosophy is reflected in the companys compensation package, which includes a combination of base salary, variable pay, and benefits. Nestles variable pay is based on performance, which is determined by the companys financial results and the employees performance.

The company culture at Nestle supports the companys philosophy on compensation. Nestle is committed to creating a positive and inclusive work environment, and it encourages its employees to be innovative and take the initiative. Nestles culture focuses on employee development and career growth, and the company provides training and development opportunities to help employees advance in their careers. This supportive culture is reflected in the companys low turnover rate, which shows employee satisfaction and engagement. According to Nestle (n.d.), the companys total turnover rate was less than 3% in 2020.

The fairness of the compensation package at Nestle International can be evaluated by comparing it to industry standards and the companys performance. Nestle (n.d.) states, the companys total compensation is benchmarked against industry standards and reviewed annually to ensure competitiveness. The companys strong financial performance suggests that the compensation package is fair and sustainable.

The impact of the age structure on Nestles compensation strategy is minimal. Nestles compensation package is designed to be fair and equitable for all employees, regardless of their age. The company pays employees based on their performance and contributions rather than their age.

In summary, Nestles compensation philosophy aims to retain and motivate key employees and executives, supported by a culture that fosters innovation and career growth. The compensation package is fair, competitive with industry standards, and rewards employees based on performance and contributions. The age structure has no significant impact on the compensation strategy.

Reference

Corporate governance. (n.d.). Nestlé Global. Web.

Abstract

This study explored the impact of group dynamics on the performance of individual employees, which in turn affects the total productivity of the company. The researcher used a total of 25 employees of the Nestle Company in examining the impact of group dynamics on their operations in the company. The researcher stratified the employees into blacks, Latinos, White Americans, women and men. The researcher then randomly picked five respondents from each stratum. These groups revealed that the stigma that exists among employees affects their productivity, though they feel the effect in different proportions depending on the appropriateness of the environment to them. The female employees felt the impact more than any other social group.

Introduction

In many companies, employees come from different cultural backgrounds, families, countries and, sometimes, continents (Levi 9). Companies also employ people who belong to different sexes and age groups. Whenever people with various cultural orientations and attitudes come together, conflicts are likely to arise (Levi 10). The occurrence of conflicts in companies can cause drastic effects on the productivity of the company. When people from these categories work together, conflicts arise because of their differences. For example, many male employees drink, worry about how to treat their pregnant wives and share attitudes about women.

On the other hand, the women encounter problems that affect their performance. For example, they menstruate every month and get pregnant at some points in their lives. All these factors have serious implications on the productivity of the employees. Race and sex can also have a major impact on the productivity of the employees. In fact, this paper uses sex and race in determining the impact of group dynamics on the productivity of employees in a company. These two factors affect the way the employees relate with each other or their bosses. According to Jackson-Dwyer, dealing with a common problem requires cooperation and knowledge sharing among human beings (4). Therefore, divisions due to these factors will affect cooperation and the processes of sharing knowledge, which in turn lowers the rate of productivity.

Problem Statement

Relationships in any social setting are very important. They positively contribute to the physical and mental wellbeing as well as the longevity of people (Dwyer 4). However, they can create serious problems among individuals if they are not well managed (5). Nonetheless, human beings, being social creatures, cannot do without relationships. They need each other in order to create more resources. There are different types of relationships in human life (Jackson-Dwyer 5). Most of them are based on the social categories such as race, sex, class, position, religion and level of education. This study examined the impact of two of such social relationships on the productivity of a company. Precisely, it looked at the effect of race and sex on the productivity of employees in a company. The findings in this study were then used in making a general conclusion about the impact of social dynamics on the productivity of a company.

Hypothesis

Group dynamics, the different social categories and other shared traits, have an impact on the productivity of employees in a company. The impact on every employee in turn affects the productivity of the entire company because each employees performance contributes to the performance of the company at large. The following two questions were used for determining the impact of group dynamics on the productivity of the Nestle Company:

1. Does the way people interact in a company affect their productivity?
2. Do the different social categories and shared behaviors have any impact on the interpersonal relationship in a company?

Literature Review

Jackson-Dwyer argues that human beings share common problems and solving them is only possible through their sociality (4). By this statement, she means they must help each other in order to overcome the problems. He goes further to argue that each persons adaptation to different physical environments is dependent on their cooperation and sharing of knowledge within and outside their generations (4). In addition, she argues that social groups create the spirit of sharing tasks and information, which she believes helps coordinate actions within the groups for the benefit of everybody in the group (5). Her argument implies that the sociality of human beings helps them overcome big problems through sharing them. Therefore, it is easier for them to handle big problems when they handle them together than when every person handles his or her problem individually. In a company setting, therefore, groups can help improve the performance of the company if the relationship among the members is well coordinated.

Kelley proposes three factors as important to the existence of interpersonal relationships (3). He argues that such a relationship depends on three factors which are dependent on each other in the consequence of some habits, interacting in a manner that is responsive to the outcomes of the other partner and attribution of interactive events to dispositions (Kelly 4). According to Kelley, people become more dependent on each other based on what they do for each other (4). He also argues that they sometimes drop their interests for the sake of their partners interests (4). Therefore, when people become close to each other to the extent of forming partnerships, they become more concerned with their partners interests than theirs.

Longres indicates that the relationship within a group falls under the social process (7). He insists that many people interact with colleagues or create forums that are essential for the generation of ideas. He also argues that there is a high level of accomplishment among individuals who support group competency because they are always willing to listen to other peoples views. According to him, such people are not afraid of criticism. One of the key challenges facing individuals working for organizations is the complexity of tasks (Longres 8). However, with the help of groups, they can subdivide the tasks among themselves to ease the burden on individual members of the group. According to Longres, factors that impact constructive group dynamics may vary depending on the background of individuals and their relationship with their colleagues (8). In the context of a company, the background can strongly affect the working relations at the workplace as there is a thin line between home and workplace (11). Therefore, people can develop relationships similar to family relationships with fellow employees.

Method

The researcher used the survey method of data collection in gathering the information used for this study. The survey method was appropriate for the study because it was relatively easier to administer. More so, designing it required less time compared to other methods of collecting data. Other general advantages of survey include the possibility of carrying out surveys remotely via mobile devices, online, mail or email (Vogt 9). Using survey also makes the process of collecting data from many respondents easier because it helps handle huge populations using samples (Vogt 10). Standardized surveys are comparatively free from many types of errors. In addition, they can collect a wide range of data including the opinions of employees, their beliefs, values, attitudes and behaviors (Vogt 11).

On the negative side, the drawbacks involved in using survey include discomfort among respondents when responding to questions that present them in a negative way (Vogt 8). Worse still, respondents may also lie to the researchers with the purpose of hiding some truths. This study addressed these problems by stratifying the respondents into groups that had common traits. The strata helped get rid of the discomfort among the respondents as all of them had similar traits and experiences, and talking about them in the presence of their colleagues was not a problem.

1. 1. Questionnaires were used to collect information from the respondents to reduce the amount of time spent on data collection. Since the study aimed at collecting information about the employees opinions about the impact of their social categories and their productivity in their companies, the researcher had to use both qualitative and quantitative research methods (Creswell 215). The questionnaires aimed at collecting data that could be represented using figures and data that could not be represented using figures (Babbie 24). The questions were uniform and close-ended, and the respondents only had to tick against the most appropriate options.
   2. The study used the stratified random sampling method with the purpose of selecting male, female, black, white and Latino employees of the Nestle Company. The employees did not have difficulties participating in the study. They readily accepted the researchers request to have them participate in the study. There were a total of five strata: men, women, blacks, whites and Latinos. Five people were randomly chosen from each of the strata to fill in the questionnaires. The employees were asked to fill-in their questionnaires during lunch breaks to avoid interrupting the operations of the company, and they finished the exercise by the end of the one-hour lunch break.

Findings

A total of 25 respondents were selected from the entire population of workers at the Nestle Company. Therefore, there were 5 black employees, 5 Latino employees, 5 white employees, 5 men and 5 women. 75% of the black employees said that their color affected the way they related with the other employees. They went further to report that the strained relationship between them and other employees in turn affected their rate of productivity. 10% of white employees reported that they did not comfortably interact with the employees who belonged to the other two races. None of them said the poor relationship affected their productivity. 40% of the Latino employees indicated that they did not relate well with employees from the other two races. 20% of them indicated that their relationship with the rest of the employees affected their performance.

80% of the female respondents indicated that their relationship with other employees negatively affected their performance. On the other hand, only 20% of their male counterparts indicated that their sex affected their productivity. The remaining 80% had no problems interacting with the female employees.

Analysis

The findings indicate that the different groups of employees were differently affected by their social category. 75% of black employees indicated that their color affected their relationship with the rest of the employees. This situation might have resulted from racial discrimination or their inferiority complex. Racial discrimination might have demotivated them, making them less concerned with working for the company. It might also have made them feel inferior before employees who belonged to the other two races. Feeling inferior might have made them underperform in whatever duties they had in the company.

On the other hand, only 10% of white employees felt uncomfortable relating with employees who belonged to the other two races. Furthermore, none of them believed that relating poorly with the other employees affected their rates of productivity. The reason for this situation could be the position of whites in the American society. History favors them: they always experience less stigmatization compared to blacks and Latinos. On the other hand, the slavery the Black-Americans went through disadvantaged them by making them inferior to the other races.

The findings also indicated that 40% of the Latino employees experienced stigmatization. Out of this percentage, only half of them believed the stigma affected their productivity while the remaining 80% thought that it never affected their performance. The reason they experienced less stigma compared to the blacks could be the closeness of their skin color to the white Americans. The lack of an effect on their performance could be because the other races consider them as hardworking as the white Americans.

80% of the female respondents indicated that their sex affected their performance. The reason for this situation could also be stigma or abuse by their colleagues. Some men still consider women a weaker sex. As a result, they belittle and harass them using all possible means. Some of them go to the extent of touching them against their wish. Such mistreatment makes them uncomfortable while at work, and in the long-run, their productivity is also affected. On the other hand, only 20 % the male employees reported that their sex affected their productivity. This situation could have resulted from the treatment their female counterparts got from their seniors. Some bosses handle female employees better than men. This treatment could have made them feel discriminated.

Conclusion

Group dynamics have an effect on the productivity of employees. The nature of every group of people has its impact on the performance of the individuals. The reason for the impact the dynamics have on the productivity of the employees is their effect on personal relationships. Many of the social groups find it hard relating with each other. This study has examined the impact of race and sex on the productivity of employees in the Nestle Company. The samples the researcher picked had different opinions regarding the impact of their races and sexes on their productivity. Blacks and women recorded the highest number of individuals whose performance was affected by their social status. The impact on the Latinos was not as pronounced as that on the female and black employees. White employees felt a very negligible effect. Therefore, group dynamics have an impact on the productivity of employees and companies, but it depends on the social setting in which the employees work. If the setting favors them, then they will feel very little impact. If it does not favor them, a very great impact will be felt.

Works Cited

Babbie, Earl. The Basics of Social Research, 2010. Boston, MA: Cengage Learning. Print.

Creswell, John. Research Design: Qualitative, Quantitative, and Mixed Methods Approach, 2013. Thousand Oaks, CA: Sage. Print.

Jackson-Dwyer, Diana. Interpersonal Relationships, 2013. London, United Kingdom: Routledge. Print.

Kelley, Harold. Personal Relationships: Their Structures and Processes, 2013. New York, NY: Psychology Press. Print.

Levi, Daniel. Group Dynamics for Teams. Thousand Oaks, CA.: Sage Publications, 2001. Print.

Longres, John. Human Behavior in the Social Environment, 2007. Itasca, IL: FE Peacock Publishers. Print.

Vogt, W. Paul. Data Collection. Los Angeles: SAGE, 2010. Print.

“Children are like buds in a garden and should be carefully and lovingly nurtured, as they are the future of the nation and the citizens of tomorrow” – Jawaharlal Nehru. Unfortunately, child labor heartlessly engulfs children across the world. The term “child labor” is defined as children who “are either too young to work or are involved in hazardous activities that may compromise their physical, mental, social, and educational development” (UNICEF, 2019). According to the International Labour Organization (ILO) worldwide, there are 218 million children aged 5 to 17 are in employment while 158 million are victims of child labor; accounting for almost 11% of the child population (ILO, 2017).

This paper examines the child labor practices of American company Coca-Cola and Suisse company Nestle and their child labor practices in Cote d’Ivoire (Ivory Coast). Although governments and corporations are trying to tackle child labor, it remains a large-scale issue worldwide. Hence, companies must make a sustainable effort to stop child labor in their system and supply chain. Coca-Cola is well-known for its strict prohibition of child labor. In contrast, Nestle faces a lawsuit for affirmatively misleading customers about the use of child labor in its supply chain. Both Coca-Cola and Nestlé have productions occurring in the Ivory Coast, the world’s largest exporter of cocoa beans yet an extremely impoverished country where citizens suffer from poverty, dangers of farm work, and lack of access to education. As a result, multinational companies often outsource their production to the Ivory Coast to take advantage of the existing child labor and keep their prices competitive.

Nestlé has been a prime contributor to child labor, with countless media outlets and organizations exposing their unethical business practices. Many of these unethical practices stem from their management systems. If we look at the Principles of [Global] Corporate Citizenship, we see multiple violations of ethical business practices. First and foremost is their information accuracy. Over the last 15 years, Nestlé has been criticized for its promotion of baby formula over traditional breast milk. This campaign was used to encourage mothers to use Nestlé’s baby formula instead of breast milk in hopes of higher product sales. There were even reports that Nestle was using advertising campaigns to target groups of people in certain countries, such as Malaysia, South Africa, and Ireland (Wolf, 2015). This directly violates the international symbols of breast milk marketing substitutes and the WHO code, showcasing Nestlé’s promotion of unhealthy foods (Wolf, 2015).

Nestle has also suffered backlash for how they treat their employees, with countless accusations made by Columbian workers that Nestle was threatening to fire employees if they didn’t leave their union (Wolf, 2015). This violates workers’ rights and the Principles of [Global] Corporate Citizenship. The media has also been pressuring Nestle to cease its use of cocoa farms in the Ivory Coast and Ghana.

Many of their suppliers are known to use child slaves purchased or stolen from their families. These children are living in unsanitary conditions, being overworked, beaten, underfed, and unpaid. Nestle has acknowledged that they don’t intentionally use child labor, but only know where 49% of their supply comes from (Whoriskey, Siegal, 2019). All of these examples not only show poor business practices but ignorance of their products, impacts, and their workers.

Coke provides a more positive model for an ethical company. The lack of disputes involving Coke is in part due to its management system which is built around ethics. A series of checks and balances are in place to ensure that management, suppliers, and stakeholders are all held to a standard (Ethical Business Conduct, 2018). Coke also has a more proactive outlook when it comes to correcting any mistakes in its business model. If we look at their ethical business practices, we can see that they’ve been very active in combating child labor and have been involved in beach cleanups in the Ivory Coast, a region where Nestle has exploited child labor (Cola Ivory Coast Saves a Day to Save the Beaches). They’ve also been forward when working with unethical suppliers, having repeatedly ceased work with different companies even before any business interaction has occurred. Coke’s only ethical issue has stemmed from its production of plastic waste. When looking at Coke objectively we can see they have a firm grasp on ethical issues regarding child labor but are not quite as successful when it comes to environmental practices.

The journey towards good corporate citizenship requires planning, funding creating new programs, and a clear initiative. A five-stage model developed at the Center for Global Citizenship can be used to demonstrate a company’s level of corporate citizenship. Although the model offers five distinct stages a company can be operating in multiple stages at once. Coke has taken on the issue of child labor by addressing it both internally and externally. Using strict anti-child labor policies and third-party organizations that assess Coke’s 28 largest sugar-supplying countries Coke can ensure that no breaches occur (Wilton, 2018). In a report for the Ivory Coast done by Coke’s partner organization, Partner Africa, it was found that there was “ no evidence of child labor in the sugar supply chain…”. Coke also plays a role in the complete eradication of child labor worldwide. By joining the Child Labor Platform with the hope of ending Child labor by 2025, Coke demonstrated its support of the cause on a global scale (Wilton, 2018). The integration of Child Labor into Coke’s key initiatives, shown through their internal policies and global support, places Coke in the highest stage of corporate citizenship, the Transforming stage. In this stage, companies are leaders of the issue, have proactive systems to address them, and also have strong multi-organizational alliances to ensure that the problem is given the most attention possible.

Nestlé, on the other hand, has pledged for over two decades to fight against child labor but has been unsuccessful in doing so. Although aware of the issue as seen through the creation of the Cocoa Plan, which specifically aims to identify and eradicate child labor used by Nestle suppliers in the Ivory Coast, in 2018 a lawsuit was brought against the company for their use of children. The Nestle Cocoa Plan Report from 2017 states that 51% of children involved in the Cocoa Plan program are no longer involved in any form of child labor, (Introducing the Nestlé Cocoa Plan) however, Nestle can only trace 49% of its cocoa supply back to a specific farm Therefore, Nestlé could be unaware of child labor occurring due to their inability to trace cocoa directly back to farms (Whoriskey, Siegal, 2019). The ineffectiveness of the Cocoa Plan places Nestle in the Engaged stage of the Global Corporate Citizenship Model. Although aware of the issue and its impact on their ability to operate their programs are unable to effectively solicit change and still allow for violation to occur.

Social auditing is the act of looking at the business activities of an organization and analyzing their impact. A company can either design specific standards for the company or adhere to industry-wide standards. Both Coca-Cola and Nestle follow a mix of company-wide standards and industry-wide standards which are overlooked by Audit Committees.

At Coca-Cola, the audit committee is selected by the Board of Directors. Coke’s audit committee charter states that “Each Committee member shall meet the requirements of the New York Stock Exchange listing standards, and federal laws and regulations, concerning audit committees,” (Audit Committee Charter, 2019). Both Coke and Nestle’s stated purpose of the audit committees is to oversee both the independent and external auditors and create annual reports stating compliance with legal requirements, company conduct codes, and ethics programs. At Nestlé the committee is also appointed by the Board of Directors but is required to have at least two board members present on the committee who are not the CEO. The information gathered in audits is then used by both Coke and Nestle to produce annual sustainability reports documenting their environmental and ethical impact.

Based on the analysis and assessment provided in Exhibit 1, both companies have stated their commitments and publicly addressed the child labor issue. Therefore, Coca-Cola earns an A on its corporate social responsibility in both the United States and Ivory Coast since the company has been realistically making efforts to maintain child labor in its supply chain. In contrast, Nestlé receives an A in Switzerland and a C in Ivory Coast as obviously child labor still exists in its supply chains. In conclusion, it is recommended that Coca-Cola should continue to help end child labor. Whereas, Nestlé should be more proactive in promoting human rights in the workplace and combating the use of child labor in its global supply chains. As such, Nestlé should establish strong contractual agreements with its suppliers to enforce child labor laws and incentivize good labor practices through price premiums or long-term contracts. Additionally, Nestlé should conduct more audits of its suppliers to measure compliance with child labor laws and its supply chain standards. The process could include non-scheduled visits to the production facilities or farms, interviews with workers, and document reviews (KnowTheChain, 2018). The benefits of eradicating child labor will far outweigh the costs as it will help save more than 150 million children around the world from the worst form of child labor and eventually reap rewards in the form of enhanced reputation, legitimacy, and customer loyalty.

Commitments

The company makes the following commitments:

• Working with the Fair Labor Association (FLA) since 2011 to reduce children working in hazelnut supply chain
• Making progress in tackling child labor in cocoa and improving farmers’ lives and their communities with the Nestle Cocoa Plan
• Building schools in cocoa-growing communities to allow children to attend school and prevent child labor

The company makes the following commitments:

• Establishing two contractual agreements, Supplier Guiding Principles (SGP), and Human Rights Policy with direct and authorized suppliers to strictly prohibit the use of child labor and embrace responsible workplace practices
• Since 2013, the company has been working with third-party organizations to examine the realities of forced labor and child labor rights issues in the company supply chain (Wilton, 2018)

What steps does the company take to ensure no child labor in their facilities and supply chain systems?

Information is included in the Nestle Responsible Sourcing Standard. However, the company uses the word ‘shall not employ under the age of 15’ and has a different section saying if the suppliers employ young workers, ‘it shall demonstrate that the employment of young people contributes to their education and does not expose them to undue physical risks’ (Nestect Ltd., 2018)

Information is included in the SGP and Human Rights Policy. The policy says, ‘We prohibit the hiring of individuals that are under 18 years of age for positions in which hazardous work is required. And adhere to minimum age provisions of applicable laws and regulations (Wilton, 2018)

What steps does the company audit its suppliers to ensure regulations are properly enforced?

The company does not mention how they would audit their suppliers. Instead, the company encourages suppliers to make internal programs for continuous improvement and report any suspected violations of regulations, laws, and standards

It completes approximately 2,500 independent audits within the company system and supply chain. Additionally, it works on a due-diligence process through third-party organizations to examine the company’s 28 largest sugar-sourcing countries

Does the company conduct any labor rights monitoring or inspections of its facilities and suppliers in Ivory Coast?

Running a Child Labour Monitoring and Remediation System (CLMRS) in all its cooperatives. This system includes monitoring, training, and awareness of child labor. However, the company does not run any inspections

Farm and mill owners were asked what policy, management, and monitoring systems were in place to ensure no child labor occurred in the supply chain. This process is done by one of the largest sugar mills in Ivory Coast, which directly feeds into the Coca-Cola supply chain

Does the company have any corrective action plans with suppliers if found to violate child labor laws?

Nestlé has known for a decade that child labor exists in its supply chain. However, the company does not seem to make any significant impact or change to tackle child labor, especially in Ivory Coast

In 2004, Coca-Cola was claimed for purchasing sugar from El Salvador that used child labor. Since then, the company has been making huge efforts to ensure direct or authorized suppliers are not involved in any form of child labor

Does the company conduct any child labor practices in their headquartered countries?

No. Due to the strict child labor laws of the United States and Switzerland

References

1. (2018, August 22). Ethical Business Conduct. Coca Cola. Retrieved from https://www.coca-colacompany.com/stories/ethical-business-conduct.
2. (n.d.). Cola Ivory Coast Saves a Day to Save the Beaches. Coca Cola. Retrieved from https://www.coca-colaafrica.com/stories/coca-cola-ivory-coast-saves-a-day-to-save-the-beaches.
3. (n.d.). Quality and safety. Nestle. Retrieved from https://www.nestle.com/aboutus/quality-and-safety
4. Audit Committee Charter. (2019 February). Retrieved October 27, 2019, from https://www.coca-colacompany.com/investors/audit-committee-charter
5. International Labour Office (ILO). (2017). Global estimates of child labor: Results and trends, 2012-2016. Geneva: International Labour Office (ILO). Retrieved from https://www.ilo.org/global/publications/books/WCMS_575499/lang–en/index.htm
6. International Labour Organization (2017). Global Estimates of Child Labour. Results and Trends 2012-2016. Retrieved from https://www.ilo.org/global/topics/child-labour/lang–en/index.htm
7. Introducing the Nestlé Cocoa Plan. (n.d.). Retrieved October 28, 2019, from https://www.nestlecocoaplan.com/read-more#our-progress.
8. Jawaharlal Nehru. (n.d.). AZQuotes.com. Retrieved October 27, 2019, from https://www.azquotes.com/quote/1059491
9. KnowTheChain. (2018). 2018 Food and Beverage Benchmark. Know The Chain. Retrieved October 28, 2019, from
10. https://knowthechain.org/2018-food-and-beverage-benchmark/
11. Nestec Ltd (2018). Nestlé Responsible Sourcing Standard. Vevey: Nestec Ltd. Retrieved Oct 30, 2019, retrieved from https://www.nestle.com/sites/default/files/asset-library/documents/library/documents/suppliers/nestle-responsible-sourcing-standard-english.pdf
12. UNICEF. (2019, October ). Child Labour. Retrieved Oct 29, 2019, from https://data.unicef.org/topic/child-protection/child-labour/
13. Whoriskey, P., & Siegel, R. (2019, June 5). Hershey, Nestle, and Mars won’t promise their chocolate is free of child labor. The Washington Post. Retrieved from https://www.washingtonpost.com/graphics/2019/business/hershey-nestle-mars-chocolate-child-labor-west-africa/.
14. Wilton, B (2018, June 11). How Coke is Doing its Part to Help End Child Labor by 2025. Retrieved from https://www.coca-colacompany.com/stories/how-coke-is-doing-its-part-to-help-end-child-labor-by-2025
15. Wolf, C. (2015, August 21). Has Nestle Gone Too Far? Forbes. Retrieved from https://www.forbes.com/sites/clarkwolf/2015/08/20/has-nestle-gone-too-far/#4cb5794e146c

The below paper will investigate the ethical issues in regards to the use of child labour, with in the supply chain of Nestle, the international consumer goods manufacturing company.Thes report will look into what ethics in international business is , how this is defined and how it applies to the case of Nestle’s Supply chain , it will also explore the ethical dilemmas faced by Nestle SA. Secondly it will try to identify what are the root causes of these ethical dilemmas, how the company is currently facing them and what are the drivers of this kind of behavior.

This paper will also look at what Nestle is currently doing in regard to addressing any ethical concerns in its supply chain and analyzing what its current effectiveness will be. Lastly, it will look at ways in which Nestle can address any ethical issues within its supply chain and find solutions to the ethical dilemmas identified, that it may want to implement to combat any negative consequences that may arise from such unethical practices.

Introduction

This paper seeks to investigate and critique the notion that “The sole purpose of a firm is to make money for its shareholders” it will look at the firm itself and how it is set up, what drives the decisions of the firm and what external factors will influence the future and current actions of the ferm in how it runs its operations as well as how ethics plays its part in the profitable operation of the business. In this essay more focus will be given to the ethical questions of the firm and how this impacts the business and how it interacts with its diverse stakeholders, including actions in communities in which it operates as well as looking into what impact these ethical or unethical actions will have on the profitability of the firm if any.

In the second part of this essay an analysis of the actions of a multinational corporation such as Nestle will be investigated (Specificly in its Cocoa Supply Chain, where issues of Child Labor have been Raised by the media) to determine how companies are currently handling this issue of ethics in international business and identify any current issues of ethics that may be faced by the company. Lastly this paper will look at possible recommendations as to how a company such a Nestle will be able to manage its ethical responsibilities and take actions if needed to mitigate and minimize the company’s risk of being exposed to unethical behavior. By doing this it will be possible to confirm or renounce the above statement and provide more insight as to the current state of ethical behavior in multinational companies in the current global economy.

Analysis

Description of ethics in an international business context

Business Ethics, is the demand for moral and ethical behaviour in all aspects of business either national or international companies.

Business ethics is about the social responsibility, corporate compliance, employer and staff rights that every company has to take into account when running its operations. The aspect of ethics like morality, responsibility, accountability, decisions and actions of any corporate organizations has to be addressed from the lowest point to the highest level. Basically, the foundations for the business ethics are behavior, attitude, values, demands of courtesy, manners, honesty and integrity. (Universal Class, 2019) Companies and their acts were considered “responsible for the consequences of their actions in a sphere wider than that covered by their Income statement” (Wood,2015). CRS unfold among multinational companies due to the loopholes in the international regulatory framework. MNCs abused differentiation in social and environmental gauges for “commercial advantage” utilizing escape clauses to maximize their worth. (Zerk, 2006: 1). CSR provided the chance to companies to demonstrate their sincere goals.

Ethical dilemmas

An ethical dilemma is a situation in the decision-making process regarding two possible choices, neither of which is absolutely correct from an ethical viewpoint. Although we face many ethical and moral issues in our daily life, most of them come with relatively simple solutions. In a perfect world ,we would – it can be said that there would be no conflict and that all people involved in activities with each other would be treated fairly and justly and that there would be no corruption and peace among all.

And that corporations doing business in communities would consider all stakeholders and their needs into account when making business decisions that affect all involved. There may be various challenges in the world of business depending upon the nature, size and type of organisation. It is important that business organisation maintain a certain benchmark of ethics in order to regulate dilemmas that are obvious to businesses.

Some of the ethical dilemmas in business are human resources issues, safety issues of the employee, conflicts of interest and maintenance of customer confidentiality. As well as conflicts between differing cultural views.

Drivers for unethical behaviour

Cost reduction

Nestle, after its major economic breakdown and due to World War, it faced prominent dropped in profit from $20 million to $6 million. Due to this, the company established factories in developing countries as the labour cost is minimum in those countries.

Unrealistic Performance Expectations

In MNC’s there is excessive pressure from the parent company to meet unrealistic performance goals which can be met only by cutting corners or acting in an unethical manner. In order to meet those goals Nestle have forced children to work up to 14 hours per day, six days per week. There are around 14,986 child labour cases on the cocoa farms only in Cote d’Ivoire and Ghana since 2012. (Douglas Yu,2018)

Decision Making Process

In a world of business there comes a situation where meeting a business target and achieving organisational goal seems above than realizing whether the behaviour are unethical simply because they fail to ask,” Is this decision or action ethical?” Instead they focus on straightforward business calculus to what they perceive to call a business decision forgetting that the decision may have an inevitable ethical dimension. The fault lies in the processes that do not incorporate ethical considerations into business decision making.

Cultural differences

The climate in some business does not encourage people to think via ethical consequences of business decisions resulting to bring unethical behaviour in an organization. Child labour seems to be unethical to many developed countries but for the under developed and undeveloped countries child labour might be the only option to feed their family, to fulfill their daily necessity. And for MNC this might seem to be an acceptable way of doing business in order to meet its target.

Socio economic factors

Socio Economic factor may have an impact on the propensity of people, and organisation to behave in an unethical manner. The existence of child labour in Nestle supply chain for its chocolate products due to consumer not willing to support such labour with their purchasing power define the root cause for companies toward unethical behaviour. (Oliver Nieburg, 2018)

Some people seem overly driven to make money and succeed at any cost. In this pursuit, ethics often take second place to the pursuit of profit (Schwartz 1986). In collectivistic societies, many people aspire to some form of socio-economic egalitarianism where income and benefits are roughly evenly divided; no one is either too rich or too poor, and harmony prevails as an ultimate goal (Gelfand et al. 2004; Hall and Hall 1987) In Individualistic societies, many people aspire to self-determination and independence and personal success with financial and material as a measure of that success.

Nestle in Sub-Saharan Africa

The root causes that lead to child right exploitation in Sub Saharan Africa and South Asian countries is poverty. It is an assumption that due to the poverty the children must work by necessity. It is estimated that as of year 2013-20144 around 2 million children(1.15 million in Cote d’ Ivoire and 880,000 in Ghana) were working in the cocoa sector in Sub saharan Africa as per the report published by “International Law and Policy Institute,2015”

Nestlé SA, a multinational manufacturer of food products that has been doing business since 1866 with its head office in Vevey, Switzerland, it operates factories in more than 80 nations. Nestlé’s chief offerings are condensed and powdered milk, baby foods, chocolate products, candies, instant coffees and teas, soups, seasonings and condiments, frozen foods, ice cream, and bottled water as well as pharmaceuticals. (Britannica)

Nestle being such a large and diversified MultiNational corporation faces many of the above ethical dilemmas in its day to day operation around the globe. One of which that has sparked a lot of intrest by the media and communities around the world has been the ethical dilema in regards to the use of child labour in the Cocoa Supply Chan of Nestle

Nestle being one of the biggest manufacturers of Chocolate in the world uses a significant amount of cocoa in its chocolate production , as cocoa is a key ingredient in the manufacturing process of making chocolate.

Nestle currently procures most of its cocoa supply from the international cocoa market , but due to the nature of the cocoa plant that produces the cocoa bean that only grows in certain climatic conditions around the world this supply has been concentrated in countries such as Ghana , Ivory Coast, Indonisia , Papua New Guinea and Central ammerican countries .

The 2 main supplying nations of cocoa beans to Nestle being Ghana and Ivory Coast

However, there is a dark side to chocolate produced from the above beans , thousands of children in West Africa are forced to work in the cultivation of cocoa beans, the primary ingredient of chocolate. Ivory Coast, the leading supplier of cocoa, accounts for more than 40% of global supply (Salaam-Blyther, Hanrahan & Cook 2005).

Due to the increased demand for cocoa beans by the world market and the naturaly limited supply of beans as well as the geografic limitations of growing areas , countries such as Ghana and Ivery Cost have leading roles in the supply of the important bean to the market , but due to facters inharnat to the two countries such as scatterd suppliers and small produsers ,high poverty levals , low economic development and littel or no regulation by govermants that can be seen to be corrupt , the production of cocoa beans has fell victum to ethical abuses and explotations , one of which takes the form of child labour in the farming of the much needed cocoa bean where children are used by small scale cocoa farments in the growing of beans to do tascs such as harvesting , cleaning, carring, and genaral taking cear of the cocoa trees.

Resulting is children being exploited by this need for cheap labour in the cocoa industry, due to may consumers now taking intrest in the responsabil production and sustainability of the products they buy many larg corporations have started to see more intrest in how there supply chains are effected by such ethical dilemas as the use of child labour , as this delema is now impaciting the corparations brand in bouth a ethical as well as economic asprect .

Facing this threat companies have now been placing more focus on managing such ethical dilemmas.

In 2001, the cocoa industry (including major multi national companies such as Hershey, Nestle and M&M/Mars) made a voluntary promise to implement the Harkin Engel Protocol (commonly known as the Cocoa Protocol), to certify their cocoa as a “child labour free” product (Salaam-Blyther, Hanrahan & Cook 2005; Chocolate Manufacturers Association 1989).

In 2012, Nestle was the first company in the industry to approach a comprehensive supply chain: the Child Labour Monitoring and Remediation System (CLMRS) which identifies issues of child labour within Nestle supply chain and provides targeted solutions to prevent similar situations going forwards. Since the adoption of Child labour Monitoring Remediation System Nestle has succeed to reduce incidents of child labour by 51% . Probably 100% never will be quite possible but still Nestle is in its continuous journey.

To do this companies are using audit and certification services from third party companies such as Fair Trade Certified, Rainforest Alliance (RA) and UTZ

Child labour in cocoa industry is a biggest challenge. Understanding the scale and complexity of the problem is the first step towards finding the right solutions. Nestle continuous effort to minimize child labour from it’s supply chain has remained in it’s paper work rather than implementation. In spite of having child labour, Nestle can focus on professional body of farmers for better farming practices. Moreover, it can focus on community awareness support programs as an appropriate and well-targeted educational initiative can change the attitude of the entire community.

Nestle has been claiming that forced child labour is unacceptable and has no space in their supply chain and there is no tolerance for the use of forced labour or child labour in their operations. However, nestle has not been following what it is saying. There are various policies and system established by Nestle like Fair Labour Association which led to Child Labour Monitoring Remediation System (CLMRS). There is an implementation gap between what it has been saying and what it is doing. Nestle need to increase its transparency and credibility to enhance its effort. Nestle should be accountable to their degree of responsibility to respect and protect human rights. Further, it is recommended to pursue government statute and regulation to bring sustainable transformation to the overall cocoa industry.

Conclusion

The most common ethical issues in global business so far involved human rights, employment practices, environmental issues and the moral obligation of multinational companies. Ethical issues and dilemmas in international business are rooted in the various forms of political systems, law, economic development and culture & tradition depending upon nation to nation. This paper has discussed the child labour issues in Nestle supply chain. The extent and nature of child labour is influenced by poverty, weak enforcement of laws and policies designed to overcome child labour. Despite initiation of various guidelines, protocol (Harkin-Engel), polices and collective efforts of NGO and INGO, we can still question ‘Has there actually had any effect in reducing child labour?’, the effort to reduce child labour is indeed the step to eradicate the child labour or it is just a vested interest of certain parties to have positive aspects of their concern organisation.

Executive Summary

Nestle is a Transnational Organisation that sells and distributes manufactured goods worldwide. Their products include confectionery, skin care products, perfume, pet food as well as major shops services like Starbucks. It is a wealthy business that operates in both developed and developing country. Nestle plays a major role in contributing to the global economic growth each year, with factories in 85 different countries. Nestle’s widespread nature improves the standard of living to people worldwide, due to the investment and employment it creates.

• Subsidiaries
• Nestle is secondary
• Established etc.

This report with outlines the features of Nestle being the location, the size, the core business and its prime function. It will then continue on to explain the operations of the business, specifically referring to the ITO of a KitKat. It will then describe three human resources facing the business being the employees pay rise, child labour and —. A discussion of the positive and negative reasons of financial, marketing and legal management issues will follow. The positive reasons are —. The negative reasons are –. The report will then go on to discuss the two ethical issues of Nestle which include the positive and negative use of palm oil and both the positive and negative movement towards zero waste. Finally, the report will identify and explain the strategy of —– to increase the competitive advantage of Nestle.

Features

There are many features of a Transnational Organisation, that makes a business — . The report will outline the specific features of Nestle including its size, annual sales and profit, the industry’s classification, location and the business’s prime function.

1) Size

Nestle is a major, well-known organisation, that needs a significant number of employees and factories to handle the production needs of the company. With Nestle supporting over 2000 brands that range from drink products to pet food, the demand for workers is high. In 2018, it was reported that Nestle had 308 000 employees working for them in 418 factories worldwide.

2) Sales and Profit

Through supplying consumers with a various range of goods, Nestle’s receives a significant amount of income. Annually, Nestle’s total reported sales were at a total of 91.4 Billion CHF (136.81 billion AUD) as shown in Figure 1. This was a 2.1 % increase from 2017 (89.6 Billion CHF). From that total, Nestle earns a net profit of 10.1

3) Industry Classification

Nestle is classified a secondary ‘??’ as it manufactures and processes raw materials, into finished goods.

4) Location

Nestle has factories in 85 different countries around the world. Its headquarters are located in Vevey, Switzerland. The specific address is Rue Entre-deux-Villes 10 1814 La Tour-de-Peilz Switzerland. Figure 2 shows the amount of Nestle’s factories located around the globe, where they are and what the factory produced. This is shown by the key below on Figure 2.

5) Prime Function

Operations

The operations of a business are how the products are changed from the input to the output, through the transformation process. The report will explain the manufacturing and production process of a KitKat, showing the inputs, transformations and outputs of one of Nestle’s most well-known, worldwide chocolate.

1) Inputs

There are many raw materials that goes into the making of the iconic KitKat. The ingredients include the sheets of wafers, the cocoa beans, wheat, sugar cane, yeast, sodium bicarbonate and full cream powdered milk. The cocoa beans are sourced from the Ivory Coast in West Africa. Before the transformation process of the KitKat begins the beans must be transferred into a usable ingredient. This is done before they reach the factories of Nestle. The cocoa beans are fermented, dried and roasted. They are separated from their hulls to produce the cocoa nib, which is used to make cocoa butter and cocoa liquor. The cocoa butter and liquor are the two key raw materials needed in order to make a KitKat. The sugar cane goes through a list of purification steps before being sent to Nestle as raw sugar. The machinery needed to undergo this transformation include the cocoa grinder, the cocoa bean roaster, the sweltering tunnel, the conveyor belts, winnowing machine, nib-grinding machine, rectangular molds, hydraulic press, conchers, the cold tunnel and the packaging machines.

2) Transformation DIAGRAM

Through Nestle factories worldwide, these raw materials are transformed using high quality bulk machinery into the finished product, increasing the product’s value. The raw materials are brought to the factory. There they start to be processed into a KitKat. To start, the wafer sheets are combined and pasted together using a small layer of chocolate. The wafers are cut into their specific size, in order to fit the molds. The wafers are passed onto a conveyer belt where the chocolate flows constantly, leaving the wafers coated in one layer of chocolate. The chocolate wafers are placed into their molds and pass around the conveyor belt again, this time the chocolate filling the mold. The wafers are smoothed out as they pass a – set at the perfect height to remove excess chocolate. The chocolate is now taken out of the mold and placed on a new conveyor belt sent to be packaged in the iconic red packet. It is then placed into a major bucket, where it is collected for Nestle to sell. These processes increase the value of the raw materials as they are turned into a favourable treat that is hard to produce at home.

3) Outputs

The finished product is the KitKat. It is then distributed worldwide for consumers to buy. The product’s value is increased to the customer. TALK MORE ABOUT VALUE

Human Resource

There are 3 main human resource issues facing Nestle. This report will describe the three main human resource issues facing Nestle being the pay rise workers gained, the child labour work on the Ivory Coast and —

1) Wage Increase

Nestle has had a human resource issue that has benefitted Nestle employees now and for the future generation. In 2014, Nestle in the UK agreed to pay all employees the living wage. This agreement was to be implemented by December 2017. Nestle were the first leading manufacturer who committed to this change. This change by Nestle meant that not only do workers received an 3% increase on their wage that was already ‘well above the cost-of-living rate,’ but they also received Work, Health and Safety benefits. The wage was already 40% above the minimum wage, so this made an additional increase. The benefits included in the agreement the use of leave for members affected by family violence and flexible hours for older workers who ‘wish to transition towards retirement’. The company also agreed to train and take on extra apprentices, benefiting the outside community too. The chief executive of Nestle in the UK and Ireland stated ‘As a major UK employer, we know that this is the right thing to do. Not only does it benefit our employees but also the communities they live and work in.’ As a result of the feedback, Nestle received a positive reputation on the media. Living Wage Foundation director Rhys Moore commended Nestle on their achievements stating ‘The accreditation of Nestle as a living wage employer marks a significant milestone in the campaign to tackle in-work poverty. We hope that the leadership they have shown will encourage others in this industry to follow suit and improve conditions for those at the lowest end of the pay scale and sub-contracted staff.” Nestle’s action not only was resourceful for people in or hoping to be in the Nestle industry, but to people in other companies who were not receiving the living wage. There was pressure in other business to do so if they didn’t want to lose their workers.

2) Child Labour

Nestle has been publicly shamed against a major human resource issue – using child slaves to farm their cocoa beans. The Transnational Corporation receives it cocoa beans from the Ivory Coast. This is a place that has no laws against human trafficking and a place where children are being stolen from their homes to work. These child slaves do not get paid and are forced work in abysmal conditions, held against their will. On the Ivory Coast alone, 200 000 children are enslaved, with Nestle as their biggest offender. These children age around 11- 15 sometimes even younger, yet still undergoing 80 – 100 hour weeks, according to the CNN. Nestle pledged nearly 20 years ago to stop using cocoa harvested by children, however still to this day are using cocoa from these areas. Each child is watched by a farmer to ensure they are doing the right work. They do not speak often and have to lie their age to make this business seem ‘legal’. Abou Ouedrago (Figure 6) is one of the many children enslaved on the Ivory Coast. He is only 15 years old, but is told to say 19 to make the business seem legal. Like all child slaves that work there, he does not attend school and was taken from his family by a bus 5 years ago. Whilst Nestle is UTZ certified, the program only enables farmers better opportunities – the people onlooking the child slaves. The unreliability of this cocoa being certified is shown through the 2019 statistic that Nestle can only trace 49% of their cocoa. In 2005, a law suit was filed on behalf of three Malian children, allegedly trafficked, forced into slavery and beaten. In defence of the International Labour Rights Fund Nestle’s Executive Vice President stated that “No company sourcing cocoa from the Ivory Coast can guarantee that it doesn’t happen, but we can say that tackling child labour is a top priority for our company.” This statement shows that there is no guarantee that child slavery will end. Therefore, another human resource issue is the use of children in the farming of the cocoa beans.

3) Job Loss

In 2017, Nestle has stated that in Singapore employees will lose their job. They did not specify how many workers, but an approximation of 3% of 1400 employees (42 employees) would lose their job. It was stated that ‘some roles will no longer be available’, with employees from finance and other departments given the retrenchment letters. Nestle Singapore has stated that they will give the employees satisfactory compensation, expert support and connect the employees with other job opportunities.

Management Issue

1) Nestle’s Growth Rate

In 2018, it was reported that Nestle’s sales grew ‘at their slowest rate in more than two decades’ according to the Financial Times. It was stated that Nestle’s shares fell 2.6% to 75 Swiss Francs.

2) False Marketing Claims on Baby Milk Formula

Nestle’s manipulative marketing issues about the nutritional claims on its baby milk formula became a major management issue in 2018. It was marketed that the formula was ‘identical structure’ and ‘inspired by’ human breastmilk, despite the prohibition by the World Health Organisation in 2018. It was promoted that it was healthier as it was free from vanilla flavourings. Changing Markets Foundation campaign director Nusa Urbanic stated “If the science is clear that an ingredient is safe and beneficial for babies then such ingredients should be in all products. If an ingredient is not healthy, such as sucrose, then it should be in no products. Nestle’s inconsistency on this point calls into serious question whether it is committed to science, as it professes to be.” The management of the product by Nestle, has been miscommunicated towards the target market and has had a detrimental impact on the consumers trust on Nestle. The formulas that were most misleading were S-26 Gold, Nan, Illuma, Nido and Gerber by stating ‘closer to breastmilk’. Professor George Kent of the University of Hawaii stated that “closer to breastmilk … is not the same as saying it is close to breastmilk. New York is closer than New Jersey to Paris, but that does not mean New York is close to Paris.” Nestle has used marketing tactics by carefully choosing the wording to make the product seem more superior and more valuable to customers. The product was fed to newborns in hospitals, if the baby rejected breast milk. This led to malnutrition in newborns. Due to the effect on children, the World Health Organisation create guidelines for advertising breastmilk. However, once facts about the baby formula started being released, boycott campaign posters against Nestle started to become familiar. Figure 24 indicates the public disapproval by these baby milk formulas. This help spread awareness about Nestle’s false accusations. Despite this, a study by the ‘Changing Market Foundation’ found Nestle is still promoting their formula as ‘scientifically equal/ or superior to human breast milk, despite evidence to the contrary’. Nestle has specifically exploited low income mothers by targeting them with this product in a chance to make their baby healthier.

3) Legal

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Ethical

Many Transitional Corporations like Nestle, having ethical issues that they are facing, as the production of their goods have made them morally correct in certain aspects, yet morally incorrect in other aspects. This report will discuss the two major ethical issues affecting this business which are, the company’s use of palm oil and Nestle’s proposal to reduce their waste.

1) Use of palm oil

Nestle has been shamed over the use of unsustainable palm oil, with individuals questioning Nestle’s environmental concerns. The palm oil Nestle was using contributed to deforestation, habitat lost as well as the removal of Indigenous people from their land. Nestle has been flooded with disapproval after an incident in 2010, that caused damage to the Transnational Corporation’s reputation. Figure X shows the image of a worker biting into an orangutan’s finger, a movement that showed Nestle as an unsustainable company. Consumers explored the use of Nestle’s ‘sustainable palm oil’ that is supplied by Sinar Mas. Greenpeace spoke out about this issue stating that Indonesia has the 3rd highest level of carbon emissions due to the deforestation. Nestle can no longer claim to use certified sustainable palm oil in its chocolate or other products, after breaching the contract and being suspended by RSPO (Roundtable on Sustainable Palm Oil). This became a flaw in Nestle’s business as consumers became hesitant to trust Nestle’s ‘certified’ products. However, the suspension was not due to the viral orangutan finger KitKat but due to Nestle not submitting a progress report and the unpaid membership fee that was overdue. Nestle had owed 2000 Euros to RSPO. As a result of Figure X, Nestle has spoken out saying that ‘Sometimes those messages don’t go down from the top to the bottom or rise from the top to the bottom” meaning that Nestle was unaware of the issues that their food manufacturing was creating. A spokeswoman from Switzerland head office stated that ‘Once it became evident that the Facebook page had been overwhelmed by protesters, we decided that our best course of action was to step back, listen and take note.’ Whilst this issue was deeply concerning, Figure X sparked movement for Nestle to gain customers trust again and this issue gave them the light to voice their next steps towards the reduction of unsustainable palm oil. As soon as the news came out, Nestle had a plan implemented to prevent the backlash which positively affected the environment. Nestle decided to suspend all purchases from Sinar Mas ‘after it admitted to mistakes in the area of deforestation’. They made a goal that by 2020 all palm oil purchased by Nestle would be 100% responsibly sourced. In 2018, the statistics show that 64% has been locally sourced, showing the improvement in their use of palm oil. Nestle has taken actions to focus on the palm oil that is traceable and has excluded companies that are linked to deforestation. Figure 3 shows that the WWF believes that they are making acceptable progress in the community and are trying not to affect the environment – their 2030 ambition (zero environmental impact). Therefore, the ethical issue surrounding Nestle’s use of palm oil has had some negative effects, but seems as if this incident has made Nestle learn about how to become a sustainable palm oil consumer.

2) Reduction of waste

One of Nestle’s major ethical issues is the amount of waste that they produce annually- something Nestle is trying to overcome. As a result from Nestle having a wide variety of products, their reduction of waste is vital, in order to contribute to the building of a sustainable world. Nestle contributes tonnes of waste annually into landfill and to overcome this, Nestle has stated in its 2018 annual report, that by 2020 they are going to be landfill- free. Whilst this is ideal and would be ethically correct, the goals seem unreachable when considering approximate figures of how many tonnes of waste Nestle produces each year. From every imperfect chocolate that cannot be sold at full price, the plastic bottles that Nestle produces annually, the Starbuck plastic cups and straws, the goal seems merely possible to reach. Nestle estimated that they have had ‘losses along our entire vale chain at 12%. This includes the losses upstream of the raw materials that we buy, and the losses in manufacturing, distribution and at the consumption stage.’ However, Nestle has stated that 293 factories have achieved zero waste, over 70% of all factories Nestle owns. This is shown by Figure 4 which demonstrates Nestle’s consideration of the environment. However, whilst Nestle may achieve zero waste in factories, the goods that are produced are wrapped in plastic packaging – something that affects the environment detrimentally. With thousands of Nestle products sold daily, the company realized that to in order to combat this issue they must make 100% of the packaging recyclable or reusable by 2025. Figure 5 shows the desperate need to develop another solution, as all the plastic that is created on the conveyor belt will end up in landfill. The Nestle Institute of Packaging Sciences is researching and developing alternatives to plastic. Those in which include recyclable, biodegradable, compostable polymers and paper alternatives. They state it ‘is expected to deliver a pipeline of functional, safe and environmentally-friendly packaging solutions.’ This would be ethically correct as not only does it take some pressure of the environment and reduce the amount of waste ending up in landfills, but it puts pressure on other major companies to rethink their packaging materials. Therefore, Nestle is trying to reduce the amount of waste they have in their factories and are also trying to make the waste that their goods are packed in more environmentally sustainable.

Competitive Advantage

To increase the competitive advantage of Nestle, there needs to be shops around the world where Nestle can promote their items and can sell the goods that were not fit on the shelves i.e the second shop.

Outcomes

This report has outlined the features of Nestle being —-. It then explained the operations of the business, specifically referring to the ITO of a KitKat. It described three human resources facing the business being the employees pay rise, child labour, and —. A discussion occured of the positive and negative reasons of financial, marketing and legal management issues will follow. The report discussed the two ethical issues of Nestle including the positive and negative use of palm oil and both the positive and negative movement toward zero waste. Finally, the report has identified and explained the strategy of —– which would increase the competitive advantage of Nestle.

Task 1

To classify the types of industries, there are three types of industries which are Primary, Secondary, and Tertiary. Primary factor are the basic production of the company. For the Secondary factor, it is based on the production of goods like industries and construction craft. The industry which based on the providing services is the tertiary. As Nestle is a company which includes these three industries form, it has a good relationship with their farmers which provide the source raw materials for their product. Then, it also has a factory which made the raw materials to become finished goods. As well as it also has a distribution and retailing. And it always remains fully aware of changes in consumer behavior and consumer taste. Therefore it can satisfy the customer expectation.

There are three types of organization size. They are Small, Medium and Large. Therefore, we can measure the size of organization by Number of Employees, Sales turnover and Capital employed. Among them, the Number of employees can be said it’s the most effective one. So, the firm which has less than 50 employees can be said to be small firms. And the firm which has less than 250 employees is medium-firm and more than 250 employees is large firm. For Nestle Company it has340, 000 employees over the world. Therefore the size of it is large. Sales turnover of Nestle Company for 2016 to 2018 has increased. That is, the sales for 2016 is about 89469, 2017 is 89590 and 2018 is 91439.With percentage, we can say that it has increased about 2% from 2016 to 2018.

Legal structure can be classified into four groups. They are sole traders, partnership, private limited company and public limited company.

Sole traders are the smallest form and most common type of organization. But it is said to be “One Man Show “and has unlimited liability.

Partnership means that at least two people are needed in the business and it is small but it has unlimited liability.

Private limited company means the share of the company cannot be sold to public. It also has limited liability.

Public limited company is a very large business and it must have a minimum of one shareholder. Then, the shares of the company can sell to the public and it has also has limited liability.

Nestle is a public limited company which has a stock exchange which means that it is easy to buy and sell the shares to shareholder. And the Capital invest to Nestle is large amount.

The sectors of the organization are public sector, private sector and voluntary (third) sector. Public sector means it is run by the government and wellbeing of citizens. Private sector is for profit making organization. Voluntary sector is for non-profit making organization. Nestle is a private sector because its objectives is for profit-making and it is public limited company which includes in private sector.

Stakeholder is a person that interest what is happening in the organization. Stakeholder is classified into two forms (internal and external). Internal Stakeholders means that he/she is a part of the organization and External is that he is not in an organization but will be affected by the organization.

Power Interest Matrix for Nestle Company

High power Director, NGO Government, Owner

Low power Community, Employees Media, Competitor, Suppliers

Low Interest High Interest

This is a part of the stakeholders that affect the Nestle Company in direct or indirect way. Government, communities, employees, consumers, NGOs, trade association and academia are the stakeholders group of Nestle which is their continuing business success therefore it has been helped by them for creating shared value (CSV) strategy.

Task 2 Background Information of Nestle

Nestle was started in 1886 and Henri Nestle, the founder of Nestle develops a breakthrough infant food in 1867 and in 1905 the company merges with Anglo-Swiss, which become well-known Nestle. The headquarters of Nestle is at Vevey, Switzerland. Nestle is the world largest food and beverage company and it have over 2000 brands ranging from global icons and local favorites, and are present in 190 countries worldwide. But the main brands of Nestle are Coffee like Nescafe. Water, Drinks like Milo, Chocolate like Kit-Kat and frozen food like Maggi. (Nestle.com, 2019)

The ambition of Nestle is that “To enhance quality of life and contribute to a healthier future.” (Nestle.com, 2019)

The mission of it was “Good Food, Good Life” which means “to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.” (Nestle.com, 2019)

The vision and values of it was “To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved shareholder value by being a preferred corporate citizen, preferred employer, and preferred supplier selling preferred products.” (Nestle.com, 2019)

Task 3

Functional organization plays an important role in organization. The function of organization are based on the size of the organization, this means that the function will increase when the size of organization becomes large. A functional organization is the process that carries out within a department of a company. It includes operation, marketing, human resources, information technology, finance and warehousing. The importance functions of Nestle are Marketing, Finance, Human Resource and Production.

In Marketing, it classified into four departments which are Customer Relation Department, Sales, Distribution and Research & Development. The Marketing function of Nestle is to fulfill the objectives of organization. Therefore it collects the survey in order to know the customer’s taste and satisfy the customer their expectation. As well as it always need to observe the lifestyle of people. There must have a good relationship to the retailers in order to have better estimation of demand of the product and get a feedback from the sales person. In Nestle, marketing FOUR P’s is also important. Therefore the production will know how much demand is there and how much units will be needed. But to be fixed with the objectives of the business it always maintains the quality of the product.

Then the finance function in Nestle controls all the expenses of the departments. But in Human resource function, that it is to hire people if there are no sufficient employees and it also settle down all issues related to employee’s needs and wants. It also needs to prepare salaries and some financial rewards or non-financial rewards for employees. Therefore in Nestle, the employees of HR departments visit the fields in order to have in touch with farmers and they also arrange events and some meeting in an organization.

In addition Nestle also has a Safety, health and environment Department to ensure the hygiene of the product. This department ensures the employees are covered by a safety environment and health management system (Nestle.com, 2019).

The Organizational Structure

The Organizational Structure means the arrangement of lines of authority, right and duties of an organization. It determines how the roles and responsibilities are assigned and coordinated and how information flows between the different levels of management. BusinessDictionary.com. (2019) .There is four types of organizational structure. They are Functional, Divisional, Matrix and Project-Team.

Functional is the structure based on the arrangement of the Department such as marketing, Production, Finance and HR. It arranges people in their techniques and specialist expertise which can make the organization get facilitate their coordination in the service of the whole enterprise. Therefore functional arrangement gives better opportunities for promotion and career development.

Divisional structure is a design which an organization is split into a number of self-contained business units, each of which operates as a profit center. Usually this structure is based on the products/services, or geography or both and with certain key of functions such as planning, finance reserved for headquarters.

Matrix structure is a structure based on combination of functional organization with structure built around products, projects or programs.

Project team is a temporary structure that carries out a particular task, often in a highly unstable environment. Once the task is finished, the group is disbanded and individuals return to their usual department or assigned a new project.

Organizational structure of Nestle

The Organizational structure of Nestle is global matrix structure which means that it has a functional organization with a structure of product/ project type based and in addition it also has a geographical division which let the market and distribution of the organization wide. (Nestle.com, 2019)

Organizational structure of Nestle

Task 4 (a)

There are two types of environments which are internal and external.

The general environment (PESTLE) of Nestle

A PESTLE analysis is an analytic tool used by an organization to track the environment they are operating in and it also has a wide view from many different angles for the environment.

Political factors

Political factors relate to how the government takes place in the economy. . Political factors include Government Stability, Taxation, Industrial policy and foreign trade policy .As Nestle is a multinational food and beverage company which sell its products in190 countries. Therefore the government stability and taxation are important because each country’s political is not the same. Thus Nestle is unprotected to political power in different regions of the world then it is exposed to government authority and overlook in the diverse regions that it operates in. The risk of production bottlenecks has been happened because of the government policies and changes. If the taxation for government increases, it will cause the price of Nestle selling increase. Then this will let the demand of the product decrease and will cause our customers decrease. But Nestle has prevention this to happen.

Economic factors

Economic factors include Inflation, Income, Interest rates, Economic growth and Exchange rates.

As Nestle is a multinational company in more than 190 countries, foreign exchange rate are an issue. Therefore the exchange rate and prices always be eased to affect the company. As Nestle product is sell in reasonable price, if the customers income increase, the demand of the product will also be increase. If in other hand, the demand will decrease. But Nestle tries to maintain the price of the product. Because of the inflation of U.S dollars in 2018, the prices have been raised but these tendencies will help them for 2019 and beyond.

Social factors

Sociocultural influences businesses vary from country to country. Social factors include Demographic trends, Lifestyles, Health and Taste & Preference. It also must be enable to offer products and services that aim to complement and benefit people’s life style and behavior. As Nestle mission is “Good Food, Good life”, it has focused the food they produce in good quality which is healthy and nutrients. So, Nestle focus on reducing salt, sugar and saturated fat in some product for obesity. Nowadays, food and beverage is important for people according to their lifestyle therefore they have a segmentations for them and also aware of changes in their behavior and taste. For example Magi soups in China and Indonesia have different flavors according to the local taste, habits and culture. Thus Nestle always fulfill the expectation and requirements of customers. (Nestle.com, 2019)

Technological factor

Technology todays affect company in their production process and marketing. For Nestle, technologies are a vital part of their R&D. Therefore the technologies and processes enable the safe development and the nutrient of foods and beverages. It also has advance technology in packaging and equipment and new beverage system. (Nestle.com, 2019) This helps in increasing production. Mobile technology, social media and internet is important for nowadays. Thus Nestle creates a website for customer who wants to get the information from them. As well as it can get the feedback of customer. It also promotes and advertises their product in social media in order to increase the sales.

Legal factors

Legal factors involve the labeling rule, employment law and consumer protection law which influence on the operation. They have GDA based labels which is to give consumers the information about calories, sugars, fat and other nutrients in a food and beverage. It has QR code on certain packaging which can get the information and ingredients of the product by scanning. (Nestle.com, 2019) Nestle has child labor in the supply chain of cocoa plan. Therefore Nestle is tackling child labor in cocoa. In 2012, they setup a Child Labor Monitoring and Remediation System (CLMRS) in Côte d’Ivoire and in 2016 it began rolling out in Ghana. Therefore Nestle helps children in cocoa plan to attend school and built schools for them. Nestle has the health and safety laws for their employees and they must sure the quality and hygiene of the product for consumers. (Nestle.com, 2019)

Environmental/ Ethical factors

Nestle has taking action in plastics and pollution. This means that their packaging, plastics, has been ended or as little. Therefore they have Nestle institute for packaging sciences to develop sustainable packaging material. Not only this, they also looked at water usage, non-renewable energy use and solid waste generation. They also committed to use a communication method s to engage consumers on environment. Therefore they have launched an application to help recycle waste packaging correctly. (Nestle.com, 2019) Nestle has unethical in the baby milk formula in 1970s which cause the baby to die and suffer the infants. This happens as they promote it as an option to breastfeeding. From this, Nestle has been has an unethical in the formula of the product and advertising.

Conclusion

Nestle is a multinational of food and beverage company which exists in more than 190 countries. Therefore in PESTLE analysis, the social factors can affect the company as it is a company to enhance “Good Food, Good Life”. So, the life-style, culture and the consumer behaviors are important for the taste and preference of the product. (Nestle.com, 2019)

Task 4 (b) Market Structure

There are four kinds of market structure. They are the perfect competition, monopolistic, oligopoly and monopoly. Perfect competition is the most competitive market structure which means it has many buyers and sellers. It is homogeneous and it has no barriers to enter the market. And there is only one price for the good so it is a price taker. And the profit for this market is normal. An example is fruit and vegetables market.

Monopolistic competition is slightly different from perfect competition because it has different products instead of identical products. Therefore customers have many choices and the price is little difference. An example is restaurant.

In oligopoly, there is only small number of firms in the market. The competitors of this market are few and it is difficult to entry and exists. The price is stable and this price is set by the price leadership. Also the abnormal profits can exists in this market. An example is Music Entertainment, Pharmaceuticals.

Monopoly is at the end of the market competition which means it has no competitive at all. That is, it has only a single producer who supplies the whole market which means only one seller. Therefore it is difficult to entry and the power in this market is absolute. Abnormal profits are exits due to the price discrimination which is a price marker. An example is Microsoft Word.

Nestlé’s Market Structure

Nestle is a monopolistic market structure because it has many competitors in this market. The competitors are not only for the large company, but also the product which competitive with Nestle in local and international competitor. And key competitors of Nestle are Mondelez, Kraft Heinz, Hershey’s and Unilever. Therefore to survive and growth in this market which has many competitors, Nestle has to develop new products which can satisfy the customer. As Nestle has market in EU, ASEAN, BRICS, MINT/MIST therefore to find new market it is not easy as Nestle exits in 190 countries worldwide. And the world has 193 countries so in this way Nestle do not need to find new market. But instead of this, Nestle can produce some luxury goods and accessories for kitchen.

To differentiate the product with the competitors, Nestle can change the packaging of the product in creative design which is recycle to environment. And the qualities of the product can always develop and the taste of the product can always change according to the lifestyle of the people. It can also have promotion in seasonal movements and events like Back to School Program and Mother’s Day. The price of the nestle is affordable because it is a First moving Consumer Goods ( FMCG ) product which means it can be used or eat easily in this fast social lifestyle. Therefore the price of the products cannot be raise and it is price maker. But if it wants to raise the price, it must do the packaging, advertising and the quality of the product to be suitable with the price, but the price range cannot so be high.

Task 5 SWOT analysis of Nestle

A SWOT analysis is an analytic tool which states the internal and external factors that affects the business. And it also helps to work out a plan for future.

Strengths

It is the advantages of internal factors to the firm. Nestle is the most famous brand name in the world because it has established a good reputation in the food and beverage system which provides the products’ quality high for daily life in global. It is a multinational company which operates in 190 countries and it is the largest FMCG market with variety of product brand name. Therefore it has over 2000 brand and the most famous brand is Maggi, Milo, Kit-Kat and Nescafe. And it has strong relationships with suppliers, retailers and distributors. It has maintained a strong supply chain and R&D network. It also has mergers, acquisitions and joint ventures to enhance its market share. And the company also has CSR for the environment. And the company always improves the product’s taste and quality due to the customer’s behavior.

Weakness

It is the disadvantages of internal factors to the firm. As it is company which operates in worldwide therefore it has different controversies in each country and this cause issues to the brand image of the company. This issue is unethical like child labor which is used in cocoa farms. Therefore to decrease the issues and controversy, Nestle should announce new rules, principles and strategy to this case in order to reduce the harm to company. Or it can also do some prevention to let the issues be prevented. It has many competitors in the market. Therefore to competitive with others, it always has to find new product and market. The product of the Nestle is plenty and this are under in the same group therefore to manage the product is a challenge work. So, to be easy to manage, it must find a new structure or develop new advanced technologies to manage with system in the computer.

Opportunities

It is the advantages of the external factors to the firm. Nowadays, people are taking care of their health so they have high requirement on food. Therefore Nestle has focus on the Nutrition and hygiene of the food which is to introduce healthy food products to consumers. Due to the decreasing of tax, the price can decrease so that the consumers and product demand will increase. And the income levels increase will also carry out the sales demand. The decrease of taxation and increase of incomes are due to the government stability and inflation rate. The less power the competitor have, the more power Nestle will get. This means that Nestle can have less competitive. The Foreign Direct Investment can also be opened as it is a large multinational company.

Threats

It is the disadvantages of the external factors to the firm. Due to the increase of government taxation, the price of the products will increase which will cause the demand of the consumers and product decrease. This can be maintain if Nestle has a good relation with government and pay government the tax regularly due to the law and regulations. If the power of the competitor is high, Nestle cannot be able to competitive with them. To solve this problem, nestle should find out new product and market to be competitive with competitor. The irregular movement like disasters and climate change causes the raw materials they planted be decreased or destroyed. To prevent this, Nestle should have a backup plan in order to decrease the harm of it.

Conclusions

This analysis can help the Nestle when expanding the company. And the threats and weakness of the company can be prevented and reduced. Strengths and Opportunities can let the company be growth than before. Therefore, the SWOT analysis an useful analytic tool.

Task 6 Trade Bloc

It is a group of countries within a geographic region that protect themselves from impact from non-members. It is a form of economic integration and shaped the world trade pattern rapidly. There are four types of trading bloc. They are Preferential Trade Area, Free Trade Area, Custom Union, Common Market and Economic Union. The advantages of Trade Bloc are the trade barriers among the member countries is reduced, the better relations can be maintained, the free transfer of labor, capital and other factors can be promoted, common currency is created and higher employment is being promoted. The disadvantages are that the benefit of free trade between countries in different bloc is lost and the inefficient producer within the bloc can be protected from more efficient ones outside the bloc.

As Nestle headquarters is in Switzerland, therefore it is the main trading partner for EU. And Swiss is also a member of the European Free Trade Association (EFTA) which is competitive in several sectors vital to global economy. EFTA was set up in 1960 for promotion of free trade and economic integration between its members. It also developing EFTA’s worldwide network of free trade agreements (FTA). Therefore there are 7 countries in EFTA Joint declarations on cooperation which include Myanmar, 4 countries in Negotiations currently on hold which include Thailand, 4 countries in Ongoing Negotiations or Talks which include Vietnam, India and Malaysia, 29 countries in FTA which include Singapore, Hong Kong, China, Korean, Indonesia and Philippines.

Globalization

Globalization is the growing interdependence of the economy of the world, cultures and population which is joined together by the world’s developing network of trade and communication. The economies of nations are brought closer by trade, foreign direct investment, capital flows and the spread of technology. And the key drivers of globalization are technology, transportation, GPS and containerization.

Nestle has operates in 190 countries, so the transportation of it is easy whether by land, air and water. The technology of Nestle is that it has a global website of its company and has good advertising through social media. It also has GPS to know the location for the headquarters and factories.

Therefore trade bloc and globalization factors are important for Nestle while operating.