What are the responsibilities of companies in this or similar situation?
Nestle. The world’s leading Nutrition, Healthand Wellness Company. Its mission of ” GoodFood, Good Life” is to provide consumers with the best tasting, most nutritious choices ina wide range offoodand beverage categories and eating occasions, from morning tonight. The Company was founded in 1866 by Henri Nestle in Vevey, Switzerland, where itsheadquarters are still located today. Nestle employ around 280 000 people and havefactories or operations in almost every country in the world. Nestle sales for 2010 werealmost CHF 110 bn. Current controversy
In this particular case, the issue was that Nestle Alimentana, one of the world’s largestfood-processing companies had been the subject of an international boycott as a result of the accusations that the company was directly or indirectly responsible for the death of Third World infants. The charges were based on the sale of infant feeding formula, whichsupposedly caused the mass deaths of babies in the Third World. Corporate socialresponsibilityof the company Corporate Social Responsibility refers to operating a business in a manner thataccounts for the social and environmental impact created by the business.
It signifiees acommitment to developing policies that integrate responsible practices into daily businessoperations, and to reporting on progress made toward implementing these practices. Responsibilities are as follows 01) Every multinational company like Nestle has a prudent Business policy whichcomes after deep scrutiny about the environmental, cultural impact of their activities. For example nestles principles are noadvertisementto general public, no sampling tomothers , no use of commission or bonus for sales, no point of sale advertisement, nofinancial and material inducement to promote products etc.
So, every company shouldstick on their policy. 02)Around the world every country countries has own law to protect its people fromillegal or illogical operation of companies. In this case every company should respectcountry’s law and they also should play their production and marketing activities withconsidering these laws. 1. What are the responsibilities of companies in this or similar situations? Any industry or company, in its attempt to expand operations and explore opportunities, employ marketing strategies that ultimately lead to one thing- sales objective/ target achievement.
And many times over, this mindset resorted to different marketing/ promotional schemes, regardless ofculture, lifestyle, beliefs, etc. across the globe. Marketing jargons like ” scare tactics”, (eg Whitehall’s Incremin: lack or iron among children can lead to death”, source: Health Today Philippine edition) ” premium offers” (Bisolvon’s ” win a car, join….. , source: Mercury Drug branch), ” free if you buy” (bundling of Colgate-Palmolive , shampoo + toothpaste) ” save” ( Unilever’s shampoos 33% savings in a bigger sachet pack) , are examples of this ” mind-conditioning” among consumers.
Nestle’s case proved one point- we cannot undermine the marginalized sector of the society and use them to gain profits and increase market share. One case-in-point was how milk was promoted in the mid- 70’s: Lactogen (Nestle) : ” When breastmilk fails choose Lactogen” (ad in Sierra Leone) Klim (Nestle): ” The child is going to die, because the mother’s breast has given out, Mama o Mama the child cries, if you want your child to get well, give it KLIM milk (a radio ad in Africa) Another industry that remains controversial up to this time is the cigarette/ tobacco industry.
For many years, issue on responsible marketing is challenged by several sectors. Despite the inclusion ” smokingis dangerous to your health” in cigarette packs and the ongoing debate ” freedom of choice” – that consumers’ will do what pleases them, incidence of lung cancer continue to rise in developing countries. Responsibilities of companies facing the same issue include the following:
- Adhere to the policies set by regulating companies. For milk companies, follow the guideline stipulated in the ” International Code of Marketing of Breastmilk substitutes” For cigarette ompanies, adhere to the Master Settlement Agreement” which stipulates the do’s and don’ts in cigarette advertising. This can save the company in any potential threat or problem
- Changing the culture or local practice doesn’t happen overnight, add to that is the huge investment needed to teach how people should behave in a manner large companies want them to be. It is important torespectage-old practices and understand local dynamics
- To say that third-world countries are a dumping ground of large multinationals maybe subjective because there are companies who conduct business ethically.
In any respect, companies, big or small, should be responsible in educating its target market, be able to answer consumers’ inquiries (Hotline is one good example), and begin to think the long-term benefits of each action to avoid damaging the equity of their company. 2. What could have Nestle done to have avoided the accusations ” Killing Third World Babies” and still market its product? Nestle understandably wanted to come out strong in supporting its milk product line, especially that they have the muscle andmoneyto hold different marketing programs.
But rather than contradict age- old practice of breastfeeding and resort to scary campaigns ” breastfeeding is not good at all…”, they should have concentrated on the additional nutrients breastfeeding moms can give to their children. The advertising hyped so much on the inefficiency of breastmilk. And its advertising campaign came out to be a desperate act of winning new sets of customers. Misinformation also put Nestle in a bad light. With advertising comes responsibility to educate the consumers, no matter which country you are in.
Another thing mentioned in the case is the inability of Nestle to comply with the implementing guidelines which provoked the consumers to continue rallying against Nestle. Reality is, even in the local setting, practices mentioned in the case (such as sampling todoctors, sponsorship in medical societies, direct advertising to consumers) is still evident. Legal pursuits can be avoided if Nestle abided with the guidelines. All in all, this problem could have been avoided if:
- Nestle concentrated on the nutritional benefits of infant formula, with proper clinical substantiation to back up its claim
- Uphold best ethical practices. Being one of the leading companies worldwide, they should set ethical standards and do not resort to cheap gimmickry to entice consumers
- Employ a wholistic approach. Educate all perceived target group- doctors, mothers, schools, hospitals, pharmacies, nurses and midwives.
By doing an integrated approach, it will uphold its commitment to deliver quality products to its market and be a reliable healthcare partner as well
After Nestle’s experience, how do you suggest it, or any other company, can protect itself in the future?
The recurring issue ” to create the need or address the need” remains a challenge to most companies.
Nestle is no exception. It wants to be a pioneer in changing the lifestyle and mindset of consumers during the early-mid `70s, coupled with their desire to expand operations to third world and developing countries to sustain its business growth. In this case, they are changing the practice (traditional breastfeeding) drastically and tried to create the need (infant formula) which is not highly present yet when they launched the campaign. Below are some ideas that can help protect other companies.