University:

CSR Problems at Nestle

A Case Study Analysis Report
Owner

2012

Contents
Introduction ..................................................................................................................................... 2
Theoretical Framework ................................................................................................................... 2
Introduction to the Company .......................................................................................................... 5
The CSR Issue................................................................................................................................. 7
Stakeholders Perspective and Criticism ...................................................................................... 11
Conclusion and Recommendations ............................................................................................... 15
References ..................................................................................................................................... 17

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Introduction
The report focuses on CSR issues concerned with Nestle, the global chain of food and
beverages in the society. There are various issues that are related to the organization that still require a level of response from the companys perspective. Furthermore, the issues that have been
discussed are very critical and tend to set out the corporate image associated with the organization. Moreover, the report also focuses on the stakeholder response towards the issues that are
discussed in the report which has still been a sample of quite a negative influential factor in the
overall scenario pertaining towards the organization and its efforts.

Theoretical Framework
CSR acts as a vital link between the organization and the external environment. From a
global perspective, the activities associated with CSR are very crucial and are a major determinant of the overall level of satisfaction of the general public from the company. Furthermore,
CSR deals with the basics that are used to support the overall environment as a whole so that the
whole society could flourish along with the organization. Hence, let us consider the theoretical
framework associated with the varied conceptions regarding CSR and the various aspects associated with this divine yet dreadful activity which sets the world in more of a culminating approach
towards the conception of human existence as an overall impact of care and concern.
CSR is the core aspect which determines the ideas around which a company circles.
Hence, in a more traditional framework, it can be suggested that CSR activities associates with
the key ideas that a company wishes to implant among its target audience (Bueble, 2009). In the
modern era, companies are considered to be the sole representatives of a capitalistic environment
where monetary gains come first while importance to basic factors such as the environment and
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its inhabitants come later. Hence, CSR is that particular tool which allows companies to distort
such views about their existence and compels the local environment to believe that they value the
environment and the society and are willing to take measures to improve upon these crucial factors of human existence (Urip. 2010).
Business benefits associated with CSR activities also tend to be a major point of support
towards the conception of being responsible. Firstly, the human existence or resource is amplified with the upheaval of such CSR programs as they tend to encircle those ideas which enrich
the human resources that ultimately become a beneficial outcome in terms of their loyalty and
performance (Aras, 2009). Secondly, it also assists in managing the overall risk associated with
the operations of the company.In this regard, it can be suggested that the organization is able to
remove itself from an undesirable situation in the future and get the support of the general public
in the light of its CSR activities (Paetzold, 2010).The third in this regard is the branding strategy
which is associated with CSR. The corporate sector is able to create a brand image out of such
CSR activities. Hence, in this regard, the corporation becomes a caring brand which is deeply
immersed in the entire effect of welfare and protection of the society in which we combine
(Ward, 2008).
There are various stakeholders associated with CSR activities conducted by a corporation
with different attitudes and perspectives regarding the activities that are being conducted. These
stakeholders ultimately decide the potential outcome of the organization as a whole. There are
numerous conceptions associated with idea however the most prevailing among these is the idea
that stakeholders are not merely the shareholders of an organization, thus CSR activities that are
being conducted by an organization should support and guide the thorough examination strategy
associated with their interactions with the overall environment which is of major consideration
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and impact in the current scenario that is being considered at the moment. So, CSR activities are
associated with the shareholders of the organization and their purpose (Werther, 2010).
The general perceptions regarding CSR activities are not always inclined towards the
positive scenario as there are negative implications towards the conception as well. At first, the
conception of CSR creates a sense of a false identity of an organization in front of the eyes of the
general public and thus compels them to improve upon their mindsets regarding their predispositions with respect to a particular organization (Banerjee, 2007). Furthermore, the concept also
creates a conflict within the entire delusional framework of good deeds for an organization as
one hand, the company would be directly involved in adding up to the facets of brutal capitalism
while being associated immensely with global warming, yet on the other hand it would be portraying an image which fights against the same actions in an overall global scenario (Griffin,
2009). Thus, a two-faced situation is obtained in this regard. Another major criticism that is associated with the conception of CSR is regarding the ethical implementation of the motives behind the activity. As mentioned previously, there are numerous benefits of indulging into CSR
activities as it revamps the entire company image in front of the world and thus the main reason
why a corporate indulges in CSR activities is due to the ultimate benefit to the organization rather than the original reason which is related to the welfare and betterment of the global environment (Horrigan, 2010). Hence, in this scenario, welfare is a by-product of CSR meanwhile
the main aim is associated with corporate benefits.
CSR activities have now become a part of the daily lifecycle activities that are carried out
in an organization along with a supposed level of concern for the overall environment. There is
still a heavy debate regarding the ethics that surround the questions relating to societal welfare
and the corporate image in this particular regard (Visser, 2011). However it is an evident fact that
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there are two faces of the same coin among which one is associated with presenting a culture for
care and support while the other contends to determine a higher level of benefits for the organization. CSR is thus a double edged sword which tends to determine the overall positioning associated with an organization. Furthermore, in order to pertain towards a healthier future for both.
The corporate sector and the general public, there has to exist a reasonable amount of CSR which
can guide and support the overall welfare and productive approach towards the entire society under which we operate and to which we are much obliged.

Introduction to the Company

Nestle is an international chain which has been operating since more than two centuries
in the global environment. It has numerous brands that work under its flagship and are readily
becoming an utter necessity of ones life. Hence, Nestle, the global chain is more of an extravagant food and beverage chain which has the capability to empower a global mindset. The company has more than 400 factories all across the world and more than 300,000 employees which
talks about the overall productive capacity of Nestle as an overall organization. This mammoth
leader has also been termed as the number one in the list of companies that are portrayed in fortune 500 (About Nestle). The company is thus a huge success and has empowered itself to reach
new horizons so that it could become a global leader.
The company has around 600 brands operating in the global environment which are designed as per the needs of the various segments of the society. From nestle water bottles to juices
and beverages; Nestle has clearly expanded upon its ability to produce as a vital global organization. Furthermore, this global existence also brings light towards the overall profitability of the
organization which sums up to billions of dollars in the global environment. Due to its mammoth
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exposure, the company has also been able to secure a public image which suggests that the organization has clearly uprooted the entire spectrum.
Since the company is a global giant, it is expected to support the global environment as
well. In the light of this particular statement it can be suggested that the organization takes special care for its public relations so that it can attain a healthy public image which can further add
up to support the overall productive capacity of the organization as a whole (Schwarz, 2002).
Furthermore, in this same aspect the company has recently initiated its training program for chefs
under which, these young entrants are taught about the values regarding food and nutrition. This
program sets to create a more future perspective of the organization which can further allow it to
be more globally grasped into a unique platform of related yet crucial activities. Recent news
about the organization also suggests that it is still growing. A press release suggested that the organization has now acquired Pfizer nutrition for a sum which rounds up to more than $10 million
(Nestle Press Release, 2012). This aspect communicates the overall power of the organization
and its ability to be increase upon its level of overall growth and prosperity. Hence, the organization still has enough aptitude to increase upon its operations to a further infinite level of performance with reference to its current overall positioning within the consumers.
Hence, in a nut-shell, it can be suggested that Nestle, the global giant is one of those organizations which is capable to encircle the global environment in such a manner that it benefits
both parties the corporates and the general public. In this context, the organization has a role to
play under which on one hand it can generate an even larger lump of monetary inflow and on the
other hand it can play a vital role in designing the global environment.

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The Corporate social Responsibility (CSR) Issue

Nestle is a global giant with most of its operations being conducted offshore and via the
assistance of numerous workers as it is deemed to be a production oriented organization, hence
the main issue in terms of the CSR platform that has prevailed for CSR is related to this fundamental aspect which then acts as an element to tarnish the overall existence of the organization
and its global operations. The second issue in this regard is the child care dilemma which has
been quite evident in the organization as it has beenunable to redeem the overall image which it
plans to implant in its customers. Hence, these are the two main issues of concern in the report
where a critical analysis has been performed in order to present a clearer picture in this particular
regard. CSR pertains towards the environment under which a company exists and operates and
thus the organization has to take care of various elements during its operations. The main issue
associated with workers can be exemplified and critically analyzed through various such occasions where the organization had taken such coercive measures which acted as a backfiring entity
for the entire organization.
In 2008, in the locality of Santa Domingo, the company had shut down one of its global
factories without any prior notice to its workers that had worked and earned their bread and butter from the factory. This immediately created a riot which was led by the workers of the factory
against the organization as there was a mass reduction in the number of employees without even
a prior notice in this regard. To critically analyze this position, consider the fact that one individual that had been working for a huge brand since a major portion of his life suddenly encounters
a situation under which the company doesnt exist in that locality anymore and that too without
any prior confirmation in this regard. This would ultimately tarnish the image of the company in
front of the major stakeholders for the organization which are the employees that transform the
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company goals and objectives into utter realities by putting in the man power which is essential
for the transformation. Hence, this particular action had acted as one of the major aspects which
could set out to create a downturn in the overall achievements of the organization as a separate
performing global entity.
In 2007, Philippines division of Nestle also saw a similar disposition to one mentioned
above. However, here the issue was directed towards the sales force of the organization where
they were dismissed without any proper reasoning. This particular aspect of the issue pertaining
towards Nestle has two sides of the coin which is in some cases a more bitter reality while in the
other it is seen as a negative action. In the time of breakdown, the sales force is the first team
which is waved off in order to maintain the level of profits of the entire organization(Ferrell,
2010). Hence, it can be suggested that this was a pre-determined act which had been used to set
out against a critical situation where the company is suffering such a level of inclination towards
losses. However, the other side of the same picture also suggests that such an action should be
contained and based on specific fortified information rather than trifles in the labor angle of vision. Since the sales force is the most crucial factor which ensures the increased level of profits
for the organization, acting in such an irrational pattern with these individuals can surely be used
as an element against the going concern for the organization as a whole (Spiro, 2003). Hence, the
dilemma for CSR exists here where the corporation on one end supports the global environment
for continuous efforts in labor development while on its own part it is taking such practically
challengedactions.
Being a part of the labor union is the fundamental right of every worker and Nestle in its
course of action has somewhat ensured the dismissal of this particular aspect of consideration.
What the company did was that it created false supervisory roles which had the similar job de8|Page

scription as that of workers, however the only point of difference in this was regarding that they
were not allowed to be a part of the labor union. This had created a negative impact of the social
desirability of actions that pertain in this particular aspect. Hence, it can be suggested that the
organization has been involved in irrational activities in this particular aspect. The overall critical
analysis to this fundamental aspect suggests that the organization has been denying the basic
rights which acts as a core drawback hurting the public relations of the company. Hence, in this
particular aspect it is considered that the organization is moving against its own employees
which are a crash against the level of CSR that persists in the overall organizational activities and
charts. Hence, management also suffers via this action as the workers which are the main resource for the organization are developing a more hardening image of the so called global business giant.
Nestle focuses on providing quality health to the world via its products, however when it
comes to the company itself, it is not taking such actions which ensures the same for its own employees. In Pakistan, where the most lucrative product for the company is the Nestle pure water
bottle, the workers that are involved in producing and packaging the bottles are denied the right
to enrich themselves with the product and are forced to drink warm tap water in the middle of the
summer where the temperature rises well above 40 C. Hence, alienation between the product and
the producer is being generated in such localities where its products are being produced. This as
a critical incident has shacked the overall basis of the foundations under which Nestle operates as
it tends to act against its own workers. A critical analysis towards this basic factor suggests that
the organization is unwary of the effects that pertain towards its labor force. On a CSR perspective, the corporation has to take corrective measures in this regard so as to solve the various disputes which are fueling the fire against the organization. I personally believe that this alienation
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between the product and the producers is the major element which can destroy the rational existence of the organization over an unethical framework of practically incapable actions.
One more critical aspect under the labor framework suggests that the organization tends
to keep its workers away from critical information which can become a part of their working
scenarios. Hence, in this regard the whole mountain of trembling realities mounts up the corporate image of the organization in the minds of its employees. Critically analyzing the situation
suggests that there are rather a few dispositions against the company which denies basic information. This level of denial can act as against the company and its public image which creates a
high level of concern for the overall public relations department.
The second major issue to the whole scenario is regarding the child care activities and
products that are associated with the organization. On one hand, the organization portrays an image of being considerate of child care and suggests that these are the future stars for the global
environment while on the other hand the company is indulged into child labor in various localities especially in the African region for the cultivation of cocoa which is essential for one of its
major product lines. This is creating a bad impression for the overall CSR image of the organization which can lead towards a tarnishing end. Furthermore, another major concern in this regard
is the level of auditing of activities in the baby milk production department of the organization.
Hence, this is a major concern for the global environment and tends to create such an opinion
under which the organization portrays a lack of responsibility in their course of action. The organization also shows faulty implications of its baby milk formula which has been challenged by
the global health organization (Ethicsworld, 2008). The Public Relations department however
suggests that there have been numerous miscalculations in terms of the internal standards which
have been portrayed. I personally believe that such an outward implication of the formula is an
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irrational plea against the CSR activities that are surrounded by the organization and should thus
be assumed to represent a clearer image in terms of their overall actions and activities.
The baby milk scandal was an utter reality of the organization which resulted in loss of
lives of children in various regions such as Africa. This loss of lives has added up to the entire
spectrum of negative influence of the actions towards the overall performance and activities of
the organization. The profits are also moving down towards a negative interval as the stakeholders have been negatively correlated with these specific crucial incidents that set out to disrupt
and tarnish the overall image which is to be ascertained in a radical manner.
Hence, in an overview of the above course of action, it can be suggested that the overall
CSR issues pertaining towards the organization are two in number which have to be solved in
order to attain the global understanding and positioning which the company desires. Moreover, it
can also be suggested that the organization has been of the opinion that the employees can stay
alienated from the overall existence of the activities that take place in the framework of the organization. Both the issues are quite critical and have to be addressed in a rational manner so that
the company can regain its overall corporate persona along with its remarkable employees which
are the major asset of the organization in various patterns. Lastly, the issue pertaining towards
child labor and other such realities is very sensitive in nature and requires a great deal of attention and remarkable expertise so that the organization is able to come out of the situation with
flying colors.

Stakeholders Perspective and Criticism

Stakeholders are the major concern for the organization, these are individuals that set out
to represent the company and who supports it in its overall operations. In response to the above
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considerations, the companys stakeholders have portrayed a rather harsh opinion regarding the
corporation and its course of action. The most important stakeholders in the organization are the
employees that work in it and in this case, the response that has been recorded from such individuals is quite negative. The employees set out to create the image that is necessary to complete
the organizational goals and thus they are to be given the most important level of priority among
all others (Schwalbach, 2010).
Nestls employees have moved into a revolt against the organization in many cases.
Since the past two years, there have been numerous protests by the workers of the organization
in this regard as they were against the policies of the company. Nestle denied them their basic
right to be a part of the union club which created the whole chaos in the beginning. Up till now
there have been no specific actions that had been taken in this regard as the company has not
given much consideration towards this factor. However, to ascertain to the general public that the
company is considerate of the working labor, it has initiated a few training programs which are
used to improve employee morale in the field. In a summary of this event that followed, it is
deemed essential that the organization has to pay an even more consideration in this regard as
they would otherwise be unable to ascertain the organizational benefits. Furthermore, the CSR
report for the recent years has still not given much consideration towards this. Hence, the employees are still dissatisfied with the various sectors that they are being affected especially in
terms of a financial background where the employees are even denied the right to negotiate for
their basic wage rates. The discrepancy has increased to such an extent that the workers in many
parts of the world have started to move against the organization in a similar pattern as the one
mentioned above in the previous segments of the report.

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The second major group of stakeholders in any organization includes the customers and
the general public associated with a particular product. The consumers tend to be the major aspect due to the fact that ultimately they are the buyers of the products that are being created within an organization (Ellis, 2008). Hence, they are also to be considered in this regard and communicated efficiently. The consumers responded to the previously mentioned issues in quite a decisive tone as they started to revolt against the organization. Here, they were creating anti Nestle
forums where they further enriched and fueled the fire associated with the baby milk product
scandal. The scandal resulted in the loss of numerous loves of children in various localities
which was again more of a negative CSR partitioned activity. The actions that have already been
taken by Nestle in this regard are an inclination towards their future endeavors. The recent annual CSR report of Nestle had taken into consideration this factor under which the organization has
consulted the world health organization and international ethics association so as to review upon
the issue. However, it has still not accepted the responsibility for the faulty formula which resulted in the loss of numerous lives and caused the entire functionality of Nestle to trip over its actions. Hence, the course of action in this regard is still missing as there is still a vital link which
has to be considered in the overall performance ranking of the organization. The general public
in the form of current and potential customers of the organization have responded in a very negative manner via various social media networking websites such as Facebook which has again
added up to the entire disturbing scenario for the organization as a whole.
The investors are another major set of stakeholders in the organization which finance the
overall activities that the organization pertains towards, hence when talking about Nestle, there
have been instances where the investors have shown a negative attitude. Investors are the important asset of an organization as due to their help, the company is able to continue its opera13 | P a g e

tions and to generate the desired level of monetary gain which is essential for the organization so
as to grow and prosper into newer horizons with a specific concern towards the financial aspects
(Coombs, 2011). In terms of Nestle, this response was recorded in a form of drop in the share
price level of Nestle in the global market. This drop shows a decreased investor response and
reliability towards the organization as it tends to destroy the overall image. The investors respond more to the factor of hype rather than definite actions in various cases and this was evident
through the financial downturn that was obtained in Nestle during the previous years. In the
global market, Nestls share price decreased which showed a negative influence of the activities
over a very vast spectrum of activities in the global market. Be it a third world country such as
Pakistan or be it a more developed side of the world in the form of UK, the response was similar
at all locations. Nestle has responded to this particular aspect by ensuring via press releases that
the company is moving towards a healthier financial plan. The recent acquisition of Pfizers food
division for more than $10 million is a recent example which shows an inclination towards the
companys perspective of indulging into Improving CSR activities and Public Relations of the
organization. Hence, the acquisition also suggests that the corporation is considering rapid
growth related activities which can be used to set out the overall financial profitability in the near
future.
Further criticisms have also been obtained and recorded in this regard where other corporations and competitors have made sure that the issues stay on the surface for a longer duration
of time span which is associated with the organization. Furthermore, the overall set of activities
that are associated with the company are also brought forth at various occasions by the general
media and news personnel who tend to encircle the company in the midst of a CSR challenge
that is associated with the operations of the company being considered. Moreover, it has also
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been observed that the general public has stopped purchasing the products associated with the
corporation in a more irrational manner as they are emotionally challenged against the atrocities
that are associated with Nestle.
In a nut-shell, it can be suggested that the two major problems that had been mentioned in
the report are still to be addressed in the global environment as these problems still require an
immense level of solution towards this specific problem. Furthermore, it can also be suggested
that the company has not responded in a more mature and definite pattern whereby it has not addressed the critical aspects of the problems in its overall annual CSR report. The organization
thus still lacks a level of commitment and fulfillment in terms of solving the issues pertaining
towards the overall organization.

Conclusion and Recommendations

Overall it can be concluded that there are two main issues relating to Nestle which are of
essential concern. One hand lays the issue of the workers that are being challenged in an overall
scenario and are being continually disrupted in their overall course of action while on the other
hand the second main issue pertaining towards the organization is the problem that has risen up
due to the child care scandal which again consists of two major concerns. On one, the company
is indulged into unlawful child labor instances which are a major setback against the organization
while on the other it has been targeted for its baby milk formula which was responsible for taking lives of numerous children in Africa. The response that was recorded in this regard was regarding the stakeholders ultimate response towards the organization which was immensely negative. Furthermore, the employees went on strikes, the general public started anti Nestle campaigns and the investors showed a level of fright in their investment schedules towards the or15 | P a g e

ganization. Nestle has been working towards solving these key issues however the company has
not yet taken any coercive and definite action against this global issue.
On the basis of the above findings, the recommendations made to the company included
that the company should improve the working conditions for its workers, workers should be given liberty to form unions, in order to demand their rights. Furthermore, the wants and needs of
the employees should be completely satisfied.. The wages should be fair in all sets of operations,
additional training and development activities must take place so as to improve the worker commitment, and fake supervisory positions need to be immediately terminated. The company
should take ownership and responsibility of its baby milk scandal and the families that were affected need to be given a special compensation plan.

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