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Strategic Management Assignment - Nestle - Desklib

   

Added on  2020-03-23

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Running head: STRATEGIC MANAGEMENTStrategic Management: Nestle IndiaName of the Student:Name of the University:Author note:

1STRATEGIC MANAGEMENTIntroductionNestle is originally a Swiss multinational food and drink company. It is the world’sbiggest food company, measured by the revenues and other aspects. The company ranked 33among the 2000 largest global public companies in the list by Forbes (Nestle.com 2017). Therelationship between Nestle and India goes back to 1912, when it started to export its products toIndia. After independence, the Government of India took the initiatives to build a strongeconomic relationship with Nestle. It has its headquarter in Gurgaon, Haryana, and has itspresence all over the India. For more than a century, Nestle has contributed in the Indianeconomy through better life, employment opportunities and business opportunities for thefarmers (Mitra 2016). The company produces and supplies international quality food productsunder international brand names, such as, Maggi, Nescafe, Milkibar, Milkmaid, Kit Kat, Nestea.It has launched some specific products for the Indian markets, such as, Nestle Dahi, Nestle JeeraRaita etc. As the company has achieved huge success in India, it has also faced some severecontroversies, such as, in the case of Maggi and MSG. The following report focuses on some different aspects of the company, such as, theirboard structure, public scandals and its implications in terms of corporate ethics, theirrelationships with the stakeholders, relevance of the guidelines by the OECD corporategovernance principle and the application of the Carroll’s philanthropic model in the context ofthe chosen company. The purpose of the report is to highlight and discuss about the strategicmanagement of Nestle India and its corporate governance, ethics and corporate socialresponsibility.

2STRATEGIC MANAGEMENTBoard structureBoard structure of a company is generally concerned with the issues related to theoperation and freedom of working of the board committees, diversity regarding the companyexperience, functional backgrounds of the members and the top management. The board is agroup of people, holding the higher positions in the company and responsible for takingdecisions on behalf of the company. Their main purpose is to maintain the corporate governance,ethics, corporate social responsibility, and looking after the stakeholders interests. In majority offirms, there is a two-tier corporate hierarchy. The board of directors or governors is on the firsttier and they are elected by the shareholders. The upper management is on the second tier andelected by the board of directors (Blake 2016). The board structure can be classified into four categories. Figure 1: Board Structure(Source: Blake 2016)In Nestle India, there are three committees, namely, Board of Directors, comprising offive people, Adult committee, and Risk Management Committee, both consisting of three

3STRATEGIC MANAGEMENTmembers. After the Maggi ban in 2015, Nestle changed its business strategy and its MD EtienneBenet stepped down. He was replaced by Suresh Narayanan, who was the Chairman and CEO ofthe company’s segment in Philippines. Narayanan has spent almost 320cr INR to pulp out theexisting stock of Maggi from the market and changed other strategies to fight back the ban(Nestle.com 2017). Controversy: Maggi ban in IndiaIn the year 2015, Nestle faced a huge downslump in its 103 years old business in India.One of its products, Maggi Two-Minute instant noodles faced a severe breakdown when it wasbanned by the Food Safety and Standards Authority of India (FSSAI). Nestle was told towithdraw the product from the market. 38000 tonnes of Maggi noodles were simply withdrawnand destroyed and the sales of the other Maggi labeled products, i.e. ketchup, jams, beverageswere affected too. The market share went down to zero from 80% in just a few days (Mitra2016). It all started with a routine check by a FSSAI inspector, Sanjay Singh, in Uttar Pradesh,who wanted to check the claim of No Added MSD by Nestle India. He sent the sample to thestate laboratory for testing, which brought out positive results. For double checking, he sentanother few samples to the Central Food Laboratory in Kolkata in 2014 June. In 2015 June, theresults came out as positive once again, with 17.2ppm (Parts per mllion) lead. This amount ismore than 1000 times than what Nestle had claimed initially. The company was sent letters butthey did not clarify. The national newspapers started writing about it, but Nestle maintained itsclaim that it does not add MSG in Maggi. Finally, on June 5, 2015, FSSAI ordered Nestle to

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