Corporate Governance and Strategy Report: An Analysis of Nestle

This report provides a comprehensive analysis of Nestle's corporate governance, exploring the ethical challenges and strategic decisions that have shaped the company's trajectory. The introduction establishes the significance of corporate governance and its impact on a company's reputation and profitability, highlighting the ethical responsibilities of executive boards and the importance of social welfare. The literature review delves into the conceptual framework of corporate governance, examining the roles of stakeholders, ethical values, and their influence on organizational productivity. The report investigates the relationship between ethical violations and Nestle's business activities and performance, focusing on controversies related to unethical marketing practices, labor exploitation, and child labor. The research methodology section would outline the approach used to gather and analyze data, followed by data interpretation, recommendations, and an action plan. The conclusion summarizes the key findings and implications of the analysis, offering insights into Nestle's corporate governance practices and their impact on its stakeholders.

Corporate Strategy
and Governance

Table of Contents
INTRODUCTION.......................................................................................................................3
LITERATURE REVIEW............................................................................................................5
Research methodology...............................................................................................................10
Data interpretation.....................................................................................................................13
Recommendation.......................................................................................................................25
Action plan.................................................................................................................................26
CONCLUSION .........................................................................................................................27
REFERENCES..........................................................................................................................28

INTRODUCTION
Corporate governance is term which is been used to have proper level of description
regarding balance among different level of participants involved in corporate structure which
can be such as inclusion of executive staff, shareholders and the existence of community
members. There is major level of impacts in terms profits and reputation of company with
poor policies to have explosion towards lawsuits and reputation. The members of executive
boards have the ethical duty to have proper making of decision on basis of their respective
interest of stakeholders. On further level, the corporation have ethical duty tin order to have
receptiveness to have protection of social welfare in the community they are actually
operating. The ethical issues as per lapses and dilemmas are understood as the root cause to
many problems of corporate management. The existence of corporate failure is one of the
circumstance if ethical issues which has turned part of scandals in various form have been
maintained public and political interest in regulation of corporate governance. Nestle has been
identified as the world largest food company with tag line of enhancing quality of life and
contributing towards the healthier future at respective level.
Ethical responsibility is considered to be integrative elements in terms of social
responsibility which have been destained in order to have providence of satisfaction of
consumer demands. The company has been in headlines a frequent time not because of the
existence of ethical practices. Nestle has been accused in terms of busting, false level of
advertising and tricking poor disenfranchised mothers into buying their baby formula, and
contaminating drinking water in areas in which they have factories for their numerous bottled
water brands. Nestle have major level of appearances of ethical problems in business which is
impacting level of profitability along with lowering the existing ethical rating of nestle which
ultimately have reduction in popularity among there loyal and potential customers. The
company nestle have embroiled into major level of controversy by getting highly criticizes
because of using ethical marketing practices which is actually endangering consumer health in
developing nation.
Nestle is also criticize for using unfair labour practices which have inclusion of
unfavourable working condition and exploitation of people. The company have been proved as
the one multinational company which is actually lacking standard along with disrespecting the
human legal rights along level of regulation which are actually developed to have province of

minimal level of satisfactions to demand on consumer and workers. This report has the
inclusion of soberer approaches in order to have representation of nestle ethical principles
along with development of company visible aspects related to corporate culture. There will
also the development of hidden aspects which is influencing company ethical behaviour as the
questionable way of doing appropriate business. In this report, the corporate social
responsibility along with cooperate level of practices of the brand nestle will be appropriately
reviewed and analysed. Consumer is one of unwritten ethical duties for all companies in to
order to have maintenance of standard to satisfies the needs of consumer and makes them
happy.

LITERATURE REVIEW
Understanding the conceptual framework of corporate governance.
In accordance with Watt, (2018) it is a set of rules, regulations, procedures, laws, by
which business are operated, process and controlled. This term also includes the factors that
lay impact on working of business. It also affects firm’s suppliers, stakeholders, consumer’s,
competitors, government regulators and management. Corporate governance framework is
being designed by top management or board of directors, they are engaged in combining
business objectives with ethical and social framework. Corporate governance also consists of
various elements like for example every employee must be treated equally in firm. Also
company must make every worker aware about their rights so that they can utilize them
effectively.
On the other hand, Cuomo, Mallin and Zattoni, (2016) argued that the main purpose of
corporate governance is to implement a checks and balances system that minimizes conflicts
of interest. Conflict only arises when the two party’s opinion does not match with each other.
They have different opinions about how activities in business must be evolved. Since the
members in board of directors are from within and outside organization, they must maintain a
non-biased approach towards maintain employee relationship. No discrimination must be done
to workers by top management, as this will be violation of ethics, rules and regulations.
Conflict also occurs when board of director’s perception does not match with shareholders.
Like for example shareholders only want the part of profit, but there might occur chances that
executive want to invest profit in something more productive.
In the opinion of Cuomo, Mallin and Zattoni, (2016) all the policies, rules and
regulations of corporate governance must be transparent and disclosed in front of
shareholders. Commitment must be maintained by board of directors that they will be ethical
and honest while framing policies related to corporate governance. As this will assist company
in engaging employees more towards organization. Code of conduct also needs to be
maintained chief executives and board members and only new individuals can be allowed if
they met the sub-standards. If proper corporate governance is not maintained by organization
it can affect firm’s integrity, reliability, transparency and accountability. It overall lay negative
impact on organizations financial health. So special emphasis must be laid on it.

In contrast Anginer and et.al., (2018) stated that various organizations have high level
of corporate governance. Many shareholders who are engaged in company’s business. Merely
beingprofitable is not their aim. They had several other expectations towards organization like
for example they can expect company to increase environmental awareness among employees,
they motivate workers to use more sustainable way to achieve business objectives. Good
corporate governance can only be implemented with ethical behaviour and sound corporate
governance practices and policies. It must have transparent rules and regulations that are being
known by each and every shareholder. Sound policies will also make working environment
better.
Determining the relationship between ethical values and profitability or productivity of
organization.
In accordance with Aguilera, Judge and Terjesen, (2018) ethical values have an impact
on organizations productivity. Corporate governance basically keeps a balance on economic
and social goals of the corporation values and practice. When ethical values are being
followed in organization it builds trust of employees. Firm can increase employee engagement
and belongingness when rules and procedures are not being violated. It ultimately enhances
organizations profitability and productivity. It is beneficial for growth of various
organizations. Board members must be engaged in working ethically as this will assist them in
gaining future success for firm. While implementing rules and regulations they need to link
company’s objectives with goals of consumers, suppliers and employees and too ethically.
Only this way they can enhance firm’s productivity and operational efficiency.
On the other hand Hong, Li and Minor, (2016) argued that if bad corporate governance
and ethical values are not being followed in organization, then it doubts company’s reliability,
integrity, transparency. Bad corporate governance can affect the financial health of
organization. If board of directors do not comply and provide support to auditors, then this can
lead to non-compliant financial documents. It can negatively affect enterprise profitability and
revenue aspects. Poorly structured boards make it too difficult for shareholders to oust
ineffective incumbents. This situation can also reduce shareholder’s engagement towards
company and can result as an increase in employee’s turnover. This reduces productivity of
organization and also they can face a situation where goals and objectives of firm is not being
met.

As per the view of Admati, (2017) ethical governance has an effect on development of
team and performance level of every department working in organization. Ethical climate and
culture in organization makes the outcome of decision making more productive. It can also
lead to sustainable development of organization. The issue faced by organization in this is to
remain ethical to stakeholders throughout the process. Only this can make their corporate
governance good. They need to make sure that sustainable government not only provide
benefit to board of directors but also serve society and stakeholders which are engaged with
them. This will enhance organizations goodwill and employee will become more loyal
towards firm. It enhances operational productivity of firm. By this way company will stay
motivated and try to achieve objectives in more sustainable and ethical mode. Working
ethically also reduces conflict which is being arising in organization. It makes work
environment better and adjustable.
In the opinion of Anginer and et.al., (2018) unethical ways if followed by organization
can bring the whole organization in trouble. It can also hamper the image of company in front
of public that directly reduces their profitability. Legal actions can be filed against firm if they
are engaged in violating rules and regulations and are not involved in performing ethically. By
this firm will also not able to achieve their goals and objectives. Employees might feel
betrayed if board of directors are not being transparent or honest. It increases worker’s
turnover and also enhances liability of the organization. It decreases the productivity.
Identifying the extent to which ethical violation influences business activities and
performance of Nestle
In accordance with Hong, Li and Minor, (2016) ethical violation had a great impact on
Nestlé’s day to day business activities. Nestle got embroiled in a controversy, when it was
criticized for using unethical marketing practices endangering consumer health to promote its
infant formula in developing nation. It was analysed that Nestle uses unethical ways to
produce one of their famous and popular product that is Maggie Noodles. It has been analysed
that this product contains a chemical which can lay severe impact on health aspects of
consumers. So people in developing nation violated against it and Nestle got engaged in this
controversy. It reduces goodwill of organization and also the product was ban and banished
from emerging nations. It affected profitability aspects of company and reduces their
generation of revenue. Lots of consumer’s loss hope from organization.

On the other hand, Hussain, Rigoni and Orij, (2018) also stated that Nestle was
engaged in doing exploitation of labour. Unfair labour practices were being followed by them.
It was analysed that they were engaged in giving low prices to their hard working employees
and also discriminated among them. This affected their day to day business activities as so
many people left the organization. It gave company’s reputation a serious harm. Company was
also involved in appointing child labour and provided workers with unfavourable working
conditions. It proved that company has no responsibility towards following of basic human
rights. This made company’s reputation negative in front of public and they started violation
against. Nestle productivity was also being reduced as lots of employees left the firm because
of this concern. Many suites and charges were also being filed against company that laid
negative impact on their day to day business activities. This also reduces employee’s
engagement in firm. It affects their operational efficiency negatively. They were not able to
achieve their goals.
As per the opinion of Aguilera, Judge and Terjesen, (2018) research shows that Nestle
has low category ethical criteria. Nestle is one of the most hated company in world as they
were also involved in child labour, abuse and trafficking. Cocoa beans taken out form ivory
plantations uses child slave labour. Children who have been trafficked are between the age of
12 to 15 years. Company was being held liable for the violations of international law. Nestle
have the full knowledge about from where Cocoa beans were produced from but took no
action against it. This hampered company’s position in market and lots of consumers stop
buying their products. It negatively affected the day to day business activities of company.
Also Nestle faced criticism in Chinese food Scandal where firm’s Milk powder contains low-
level traces of Melamine. This had did severe harm to company’s position and also it affected
their day to day business activities. Nestle is advised to make their business practices more
ethical and integrative. They need to have proper understanding about the industry landscape
so that their business activities do not get hamper. They must be engaged in following a code
of conduct so that no such cases can be filed against them in future.
Investigate the ways to manage issue of ethical violation
As per the view of McCahery, Sautner and Starks, (2016) ethical violation can be
minimized in organization by building a culture of integrity. Company needs to build up
various ethical and compliance program and woven it into day to day activities of business.

Research proves that strong compliance program assists organization in building up a culture
of integrity. This program can assist organization in making working environment favorable
and also enhances engagement of employees in organization which is essential for growth of
firm. In a strong ethical culture, workers are more committed towards work and they also
bring up more innovative ways to solve problem that can increase operational efficiency of
enterprise.On the other hand Samra, (2016) stated that to reduce the incidents of ethical
violations of company, they must keep environment value focused. Corporate values must be
at mundane when formulating HR policies, hiring and retention, optional policies.
Organization must make sure that all employees and workers are aware about their rights and
responsibilities and company Policies. They must review all policies made by Board of
directors and if any issue arises they should discuss it freely with chief executives. They must
be engaged in finding solution to all problems. Thus, it can assist them in making working
environment better and this will also increase commitment of employees towards firm. They
will work with more enthusiasm and will also integrate their values with organizational values.
Also support must be provided by top management to staff members so that they can be
engaged in completing task in an ethical way. This will assist firm in developing goodwill.
In the opinion of Yermack, (2017) Board of Directors of company must be engaged in
creating long term sustainable values that fully rely upon the principle of corporate
governance. They must be transparent and honest. Also all the decisions which are being made
by them must be kept in knowledge of stakeholders. Framework based on corporate
governance must be continuously evaluated and revised by chief executives. This will assist
them in reducing ethical violations which are taking place in firm. It will also help them in
increasing goodwill of organization. It will also promote accountability and will be beneficial
for long term sustainable growth of stakeholders. It will also promote integrity in firm. Also
they must make sure that while preparing framework they also create value for employees and
society. This will also assist them in enhancing goodwill of organization. Audit committee can
also be appointed by organization so that they can check if firm is involved in doing ethical
misconduct. Committee can also guide firm to overcome the gaps which company is facing.
They must also not only profitable aspect but also on increasing awareness among employees
about sustainability. They can provide training to workers about effective utilization of
resources in an ethical way. This will assist them in creating sustainability.

Research methodology
Research types is having references in terms of form in which data is considered to
have relevant in respective topic which can be terms of numbers or non-numerical. The
research type is been divided into the 2 types that is qualitative and quantitative research. In
this research, the researcher will have the implication of qualitative research which is been
refereed as the non-numericals and descriptive form in collecting information by having
proper level of observation. On the other hand quantitative research will be referred as
numerical and existences non descriptive form in which data is been collected by having
proper statistics or mathematical techniques' implication.
Data collection: This process is considered to the systematic way of collecting
information which will helps the researcher to develop research in more effective manner.
There is existence of two approachers through which the researcher can have proper level of
collection of informative to have accurate level of interpretation and analysis of data can be
done. Primary and secondary research are methods of data collection which is chosen by
researcher in order to have proper implementation towards achieving aims and objective of
research. The primary data is the method of collecting data which the effective use of survey,
questionnaire along with observation. The aim of primary data collection is to have the
authentication towards related development. On the other hand the secondary research
method, the researcher will have proper analysis of informativeness which is actually been
collected for any other purpose having relevance with present required data information. The
sources which have major inclusion in secondary research are such as the existence of book,
journals and article. This method is considered to be cost and time effective as compare to
former.
In this research, the researcher will have the implementation of both primary and
secondary one to have major level of authentication and accuracy in developing research at
signifiant way. The former have the implementation of well structure questionnaire which
have involvement in gathering fresh data with discussing in personal and getting maximum
level of data as one of the most effective result. This considered to be consistent in gathering
information in order to get maximum level of information from the respondent. The
questionnaire is good mix of both open and close ended to collect authenticate and accurate

data, On the other hand the researcher will have along secondary research by having proper
level of receives of various journals and article to have proper analysis of research gaps.
Sampling Techniques is been considered the process of identifying the individuals
group to the sample on behalf of the existing large level of population which have the equal
level of probability in order to have the participation in research to make it more level of
effective and efficient way. In order to get relevant level of information, there is two type of
sampling technique method that is random and non-random in which latter have collection of
sampling of basis of factor people's working experience, age, gender and knowledge. The
former will have the selection the target group at random level which have major aim to
increase level of morale of selected employees and reduction in existing level of basslines. In
this research, the researcher have implemented the use of probability random sampling which
will provide procedure which have the assurances of the different unit to have the equal level
of probability of been chosen to be parts of research in more accurate and effective way. The
researcher have chosen 30 employees form organization nestle to be the part of survey which
is done with well-developed questionnaire to have proper collection of data in more accurate
way. There will be used of probability random sampling so that each and every member have
a clear chance to have participation in research.
Data analysis- Research methodology have the following of several steps in order to
researcher more effective in sequential manner. The parts of data analysis in considered to be
important part which is need to be followed after having proper data collection. The selection
of data analysis is based on the research type and data collection method. This research project
is qualitative research with implementation of both primary and secondary. Secondary
research along will structure questionnaire. Type of this research project is qualitative so,
qualitative data analysis will be used. In qualitative type, thematic analysis will be used, in
quantitative data analysis, numerical data are being analysed with the help of quantitative
tools. The goal of implementation the thematic analysis in order to have the identification of
theme in systematic patterns which is considered to be important and intersectionalism. These
themes have major addressing of the research along with identification of issues. This is
considered to much more than the simple way of summering the data which can be done
throughout good level of thematic analysis interpretability along with which it is aiming actual
sense.

Ethical considerateness is the major conduction and important elements which is used to
keep in mind in order to have providence of major worth art developing at ever stage in more
effective manner. In order to have generation of effective research. It is important for scholar
to have the note down to the several revels of code of conduct which can be related to ethics
can be such as the -
 To not have foundation in order to take the respective level of participation in the
accurate level of data collection process.
 To keep the data secure and safe level of participation.
 To have the not disclosing in any type of information.
 To follow all steps with integrity and honesty. So, from the above discussed codes of
ethics, it can be said that by following all these, researcher can make its project
qualitative as well as successful.