An Evaluation of Ethical Issues, Risks and Remedies at Nestle

This essay examines the ethical issues associated with Nestle, a multinational food and beverage company. It explores various controversies, including the marketing of baby formula in developing countries, water wastage, child labor in its supply chain, product contamination, pollution, dubious business deals, and price fixing. The essay further analyzes the risks Nestle faces due to these ethical breaches, such as legal issues, poor employee performance and relations, loss of credibility, financial losses, and potential business closure. The analysis emphasizes the impact of these ethical violations on the company's reputation, financial stability, and overall sustainability. Finally, the essay suggests possible remedies to mitigate these risks and promote ethical business practices within the organization.

INSTITUTION
COURSE UNIT
STUDENTS NAME
STUDENTS ID NUMBER
TASK
Ethical issues
DATE
12th August 2017

Introduction
According to (Abutalibov, 2016), an ethical issue can be defined as a situation that
will require a person or an organization to make a choice between alternatives that must be
evaluated as being right or wrong. Different scholars have diverse definitions of the same but
however, the key point remains similar. This essay looks into an organization that has been in
the media in the recent past for ethical issues. This essay identifies the organization and the
ethical issues it has been mentioned with. It also looks at the risks the organization is facing
or might face as a result of these ethical issues. The remedies for the risks caused by the
ethical issues are also explored. Research shows that Nestle is one of these companies that
have been mentioned in the media with ethical violations. This is a food and beverage Swiss
multinational company.
Ethical issues related to the organization
Nestle is a multinational company from Switzerland that deals with the production of
food and beverages. It has been in the media for quite some time for the violation of ethical
issues. This company deals with food and drinks and among them is ice-cream, breakfast
cereals, dairy products, frozen food among other products. (Chell, 2017) .This Company has
been associated with several ethical issues. Firstly, it has been associated with a poor baby
formula and boycott. This company is said to have pushed their breeding formula to countries
that are less developed while targeting the poor knowing very well that it won’t be effective.
They made it seem that their formula was an alternative to the mother's milk. However, this
had several problems. For example, many of the mothers in poor countries like Africa
couldn’t access clean water and hence used this formula with water that is polluted therefore
putting the children into a risk.

Water wastage is another ethical issue associated with Nestle Company. Reports
claim that Nestle leads in the production of bottled water. However, research shows that 30%
of the 700m gallons of water drawn in a year from the ground in California by Nestle are
wasted. (Dugan, 2016). This is a major ethical issue because of water, being necessary for all
life and a scarce resource should be well used. 30% is quite a high quantity of water that goes
to waste every year due to the reckless behavior of the company. The company ignored the
fact that water is a universal human right and that everyone should be entitled to safe drinking
water.
Nestle company has also been associated with child labor in its supply chain.
According to (Michalos, 2016), the International Labour Fund filed at one time a case against
Nestle on behalf of three children from Mali. They were alleged to have trafficked the
children to Côte d'Ivoire, forced them into slavery and that the children experienced frequent
beatings in the cocoa plantation. It is said also machetes for harvesting cocoa pods caused
many injuries to the people.These claims are many enough prove that Nestle has in so many
ways violated children rights which are unethical.
According to (Goodstein, 2015) consumers were warned by the food and drugs
Administration and the centers for controlling and preventing diseases not to eat some
prepackaged Nestle Toll cookie dough because of the risk of contamination with a food
bacteria. It has been reported that in the United States it caused illness to fifty people from
thirty states where a half of them needed to be hospitalized. In a certain case, it is said that a
woman had a fatal infection before the consumed product was realized. It is also said that in
China six infants died while 860 people were taken to hospital after consuming Nestle
products said to have melamine contamination which is a substance added illegally to food
products so as to improve their protein content.

Nestle has also been associated with pollution in several ways. This is a major ethical
issue that ought to be addressed as quickly as possible because it endangers human life
(Crane, 2016) reports that over a year water pollution limits were violated 2152 times in 830
places by companies such as Nestle and Cadbury. It is claimed that the situation caused in
China was much worse than any other place. When United States and Europe became more
concerned about the environment with some choosing a more sustainable source of water
Nestle relocated to Asia where it made several environmental violations. Nestle water
manufacturing plant in Shanghai China also strayed operation before facilities for waste
water treatment passed an environmental impact assessment.
Nestle has also been involved in striking dubious deals to make a profit. It is said that
this organization made a deal with Mugabe’s wife to buy a million liters of milk every year
from a farm that was grabbed by owners by Grace Mugabe from its owners. According to
(Fiolleau, 2017), the most valuable farms since 2002 owned by the white have been taken by
Grace who has built empire for farming farms illegally acquired and t which led to ant his has
led to an international boycott and EU and US sanctions. Grace has been known for her
lavish lifestyle. Due to this deal, the country’s economy based on agriculture began to
collapse with inflation increasing tremendously. This is too unethical.
Nestle company has also been associated with poor price fixing. This has been evident
with their Kit Kat and other chocolates. It has been reported that the competition bureau in
Canada raided this company in an investigation of price fixing. (Hindley, 2017). With this
allegation, Nestle Company was faced with a class of lawsuit action that has settled for $9
million with the company not accepting liability. This company has been severally associated
with using dubious means to set prices.

Nestle company, again has been reported to have been promoting food that is
unhealthy and mislabelling. A report that was conducted by UK Association of Consumers
show that seven out of fifteen cereals for breakfast that contain high levels of sugar, salt and
sugar belong to Nestle (Sekaran, 2016). Nestle labels have not only been misleading but also
downright false. It has been associated with the labeling of powdered milk with a different
local brand as well as labeling those packets with the wrong production date. Nestle brought
old milk that was powdered from another country and labeled it as a new product from the
local market. This is both unethical and illegal. Just but to draw the line, Nestle has by being
associated with many unethical issues that originate from several factors such as greed for
huge profits, ignorance among other causes.
Risks for the organization
There are several risks that have been faced by Nestle Company for having ethical
issues. It is obvious that violation of business ethics will never go unaccounted for. For
instance, this company has faced a never ending line of legal issues. In almost every country,
the federal and state government usually sets rules and procedures that should be followed by
every business. Every business, therefore, has to abide by these set rules so as to operate
smoothly. However, if for any reason a business does not abide by them, it faces large fines
and penalties (Hough, 2016). This is what has happened to Nestle Company. As it had been
discussed earlier, Nestle Company in several occasions has been fined for not adhering to the
required ethics and following the already laid procedures and rules.
Poor employee performance is also another risk that has faced Nestle Company has
faced. It is said that in some cases employees get so much interested in getting ahead and
making money to the point of forgetting and ignoring the set procedures and protocols. This
actually has a very negative impact on the business because it will lead to very many careless

errors and render the already finished job useless and one to be restarted again. This has
actually affected Nestle Company. Due to little or no observance of the already laid
protocols, employees are reckless and most of the times what they produce is rendered sub
standard (Maknlk, 2016). This is why sometimes they brand their products wrongly so as to
conceal the flaws in their work. Again, a minority of those employees who abide by the
required ethics do not get support and hence don’t feel motivated and this affects
performance in the company.
The company has also faced poor employee relations. This has much affected all the
stakeholders in that company and this has resulted in poor management. When the manager
shows the lack of business ethics he loses respect from the lower rank employees and it
would be very difficult to have a business succeed without well-respected leaders (Savulescu,
2017). Lack of business ethics has also caused lack of trust amongst the employees
themselves because they have been used to the fact that none of them bears the quality of
integrity. This is because none has shown seriousness in the observance of moral values.
The company has lost credibility. This is because the failure of observance of the
required ethics has been known by the public. This is one of the dangers that a company
could face because it loses key customer base. This is the worst thing with business because it
will definitely affect the volume of the sales that a company used to make (Berlin, 2016). It
can also render the company incredible and result to customers and consumers withdrawing
from the consumption of commodities from a particular company. For the case of Nestle, it
has been rendered incredible by much of consumers. Most of the people even fear its
products because they have been reported to have adverse effects on the human body. It has
also been reported that some people died while others were hospitalized after the
consumption of their products. This has a long-term implication that one of these days that
company can come into a closure following allegations or lack of enough sales to sustain it.

Nestle company has also suffered the risk of incurring big losses. This is one of the
greatest risks that a company may suffer and this is because e very investment is aimed at
making profits (Noordsy, 2016). Over the recent past, this company has been associated with
the manufacture of substandard goods and supplying them to the world market. The fact that
consumers are dying after consumption of their products has made them be feared. Everyone
began fearing giving money to buy something that could kill him or her. As a result, the
company’s sales volume decreased. This made them incur big losses. This was evidenced
after they began setting prices by dubious means so as to put up for the lost revenue yet
violating another ethic.
A threat of business closure is another risk that Nestle Company has been facing for
quite some time. In China, residents have been complaining about the pollution that this
company has been causing. Again, the United States has also laid petition against the water
drawn from California of which 30% is wasted (Kliobnt, 2017). In Zambia, residents usually
complain about their lands that were grabbed under the Nestle treaty with Grace Mugabe. All
the petitions put this company at the risk of closure by affecting the lives of citizens rather
than working to better the lives and of the community as a whole. Complaints from these
people can anytime see this company closed because it does not uphold high moral standards
as required by the law.
Lack of business goal satisfaction is another risk facing Nestle Company due to the
failure of observance of ethics in business. It is quite clear that most of the activities that the
company engages in are not in accordance with the set business guidelines. This leads to poor
management leading to poor performance. If a business performance decreases then the
productivity goes down (Rhodes, 2016). This affects the business adversely and makes it
unlikely to reach its long-term set goals. If a company had the plans that it should have
achieved this and that within a specified period of time, then it is unlikely to meet that if it

has ethical issues. In the same manner, Nestle Company has faced many challenges in
expansion and have not satisfactorily met the set goals.
Another risk that Nestle has suffered over the recent past due to ethical issues is poor
customer retention. This has mainly occurred due to loss of the company reputation. It is
usually very important how a company is viewed by the public. Loss of public image results
to customers withdrawing from consumption of that company's commodities. In the same
way, Nestle has lost reputation over the recent past making customers refrain from acquiring
their commodities. When this happens, it becomes dangerous for the company because this
can lead to its Termination if the correct procedures are not taken quickly to correct that. It
becomes very difficult to erase what has already been created in the people’s mind about a
particular organization (Angelos, 2017). Therefore, as a result of this fact, Nestle in the recent
past has not been able to retain customers as they used to do sometimes ago.
Product banning is another major risk that has been faced over the recent past. When
the quality and standard determining bodies note that a particular product does not meet the
quality specification, that product is banned. As discussed earlier in this paper, some of the
products from this company were noted to have some adverse effects to human life. It was
seen that many people were hospitalized and a few died due to the consumption of Nestle
products (Nixon, 2015). This has led to the total ban of some products. For instance, the
breakfast cereals that were alleged to have very adverse effects to human life were
completely banned. This is because they couldn’t be allowed to continue harming or killing
people while the standard determining bodies were watching. This is a very great risk
because it also affects sales and at long run affects the profit making which is the main
objective of any organization.
How to resolve these risks

In spite of the fact that Nestle Company has lost reputation to a great extent over the
recent past, it can still employ some strategies and solution to resolve them. However it
would not be too easy for them, they ought to ensure that the correct solutions are put in place
very fast. There are a number of these solutions. To begin with, the company can set a new
beginning and restate its goal and objective. This will help it abandon all virtues that it used
to practice. A new beginning will enable the company started working a fresh so as to uproot
all that had been planted by the virtues they practiced (Crane A. &.). By this method, the
company will take a new direction and with all efforts employed the reputation will be gained
again.
The company can also get a new management team. It is said that new brooms sweep
clean. It would be therefore advisable to acquire a new management team under serious
vetting so that the team the existed can leave and pave way for a new beginning. It would be
very difficult to make an existing management adopt a new ruling because change is not easy
(Congress, 2017). This is why it is advisable to ensure that there is an acquisition of a new
team that will take the flag of the company to another level and help clean and restores the
blurred image of the company.
The company must also rebrand its products. This does not mean using dubious
means to deceive the people. This means getting another brand for their products. This is
because it would be somewhat difficult to re-convince the people that what used to be their
low-quality products are now fit for human consumption (Hedgecoe, 2016). So as to regain
the lost taste, they ought to ensure that the old brand is left and adoption of another brand is
done as quickly as possible.
Another solution would be adhering to the set guidelines and standards. The company
should under all cost stop manufacturing substandard or harmful products and observe

business ethics. Even if other corrective measures are taken and the company continues
producing harmful products the measures would be in vain. Total abstinence from business
vices should be taken and high moral standards adhered to (Martinez, 2016). The company
should also ensure that it meets the correct standard set by quality regulation bodies
beginning from the product quality to environmental management.
This company can still use media to reorganize itself. Media is one of the bodies that
can make an organization lose or get back its reputation. Since its ethical violation story was
covered by the media, this company should also take a step and go to the media and give a
report about a new beginning. The only body that makes a lot of impact to the people in the
world is media. This is because it is very influential and it is what the people trust in
(Beckman, 2016). Therefore, Nestle should go to the media and talk to the public, apologize
for all the mistakes done and promise the people a beginning of new quality products. To
make it more effective, it can still make a short documentary like an advert that can be
displayed in TV stations and also shared over the social media.
The company should also set an action plan. This will show all the procedures for
ensuring that the Company’s reputation is gotten back. This plan will involve all the plans
and strategies aimed at the restoration of the company reputation (Brazil, 2017). It should
include the action and the role played by different parties in the process. It should also be
noted that this plan is not just to be created but rather be implemented too. Before
implementing, the company should set targets and say that within a specified period of time
the company should have acquired this and that. With this, the company will know whether
or not it is making progress. This plan should be worked upon until what is desired is
achieved and the best way to achieve this is through determination.
Conclusion

Conclusively, a company may have different ethical issues whether intentional or as a result
of accidental mistakes. This includes and is not limited to sub standard product production as
a result of poor management, lack of adequate personnel, resources or out of intention. It
should be noted that these issues have very adverse effects to a company or any organization
and if not solved can lead to a closure of the business due to order or low-profit margins or
huge losses. Ethical issues also make an organization lose reputation and public image. This
is what kills the organization. Even though this may happen, it should be appreciated that
there are also corrective measures that if well employed can restore the company’s image.
However, it should be noted that prevention is better than cure and thus every organization
should aim at upholding business ethics before things get worse for it.

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