Managing in the Global Environment: Nutella Case Study Analysis

This case study analyzes the Nutella case, focusing on unethical advertising practices and their implications within a global business context. The assignment examines the ethical responsibilities of Ferrero, the company behind Nutella, in relation to its marketing claims and consumer perception. The study utilizes the 10 Principles of the United Nations Global Compact as a framework to identify breaches in ethical conduct, particularly concerning consumer rights and transparency. The analysis incorporates business ethics and corporate social responsibility theories to evaluate the impact of Ferrero's actions. The case study highlights the deceptive nature of the advertisements and the subsequent legal repercussions, including the class-action lawsuit and settlement. Furthermore, the study provides recommendations for Ferrero to improve its globally responsive business practices, emphasizing the importance of truthful advertising and consumer protection. The analysis covers the importance of ethical responsibility and the benefits it brings to a business from both transactional and reputational perspectives.

MANAGING IN THE GLOBAL ENVIRONMENT 200864 1
Managing in the global environment 200864
Name
Institution
Date

MANAGING IN THE GLOBAL ENVIRONMENT 200864 2
Article Attachments
1. A Mom Sues Nutella Maker for Deceptive Advertising.
By Whitney Blair Wyckoff
https://www.npr.org/sections/health-shots/2011/02/10/133565759/a-mom-sues-nutella-maker-
for-deceptive-advertising
“When I was in high school, one of my French teachers — a person whose opinion I trusted
without question — told me that Nutella was, essentially, French peanut butter.
For years I clung to the belief that the chocolaty hazelnut spread slathered on bread was a good-
for-me meal. When friends called me crazy, it only took a quick Google search to learn that even
though you can find Nutella in the peanut butter aisle, it isn't exactly a straight-up nutritional
substitute.
The discovery shouldn't have been much of a shock, I suppose. A glance at the Nutella label
would reveal the first ingredient is sugar, followed by palm oil. And how could something that
tastes so good be as healthy as, say, a bowl of Fiber One?
Perhaps because I had spent so many years blithely eating Nutella and toast for breakfast, I took
special interest in the case of Athena Hohenberg, the named plaintiff in a proposed class action
against Ferrero, the company that makes Nutella.
The California mom alleges in her legal complaint that she fed her 4-year-old daughter Nutella
after seeing ads that represented the spread as "nutritious" or a "healthy breakfast."

MANAGING IN THE GLOBAL ENVIRONMENT 200864 3
But last December, Hohenberg's perception changed. That's when she learned from friends that,
as her complaint says, "Nutella was in fact not a 'healthy' 'nutritious' food but instead was the
next best thing to a candy bar." Nutella contains 21 grams of sugar per serving. Half the 200
calories in a two-tablespoon serving come from fat.
Ferrero spokeswoman Elise Titan wouldn't comment on the specifics of the lawsuit, but she said
Ferrero stands behind its product.
Notwithstanding my own youthful Nutella experience, how could a mom mistake the spread for
health food? I mean, the stuff tastes like chocolate.
"So does Ovaltine," Hohenberg's lawyer Ronald Marron told Shots, adding that there are health
benefits associated with eating chocolate. Hohenberg wasn't available to speak with us herself.
Among other things, Hohenberg's lawsuit seeks a stop to Ferrero's marketing of Nutella as being
"healthy," run corrected ads to inform the public that Nutella isn't healthy, and return money the
company earned from "any wrongful act or practice."
Marron concedes there will be critics of the suit, saying, "Some people might think that this
lawsuit never should have been filed. But we want to hold food makers accountable."
To see some of the health claims, Marron says look no further than Nutella's website.
He and Hohenberg aren't the only ones to question the Nutella marketing messages. Jennifer
Harris, the director of marketing initiatives at the Rudd Center for Food Policy at Yale

MANAGING IN THE GLOBAL ENVIRONMENT 200864 4
University, which tracks food advertising, says her organization noticed the Nutella ads in
question about six months ago. "They seemed pretty outrageous," she tells Shots.
Harris says that food companies highlight the positive aspects of their food — and they don't
communicate the bad things.
"The main problem [with Nutella] is it has 21 grams of sugar, which is 5 teaspoons of sugar," she
says. "That's obviously not healthy." Instead, the company focuses on the low sodium, the
hazelnuts or the skim milk in Nutella. "This is one reason the public health community thinks
there needs to be more regulation over what is allowed to be promoted as healthy," she adds.
Marron says he expects that the court will decide whether to certify the case as a class action
within a year, unless there are other filings.”
(Wyckoff, 2019)
2. Nutella health claims net $3.05 million settlement in class-action lawsuit
By: Ryan Jaslow https://www.cbsnews.com/news/nutella-health-claims-net-305-million-
settlement-in-class-action-lawsuit/
“(CBS News) Is Nutella, the popular chocolate-hazelnut spread, actually good for you? A class-
action lawsuit over the spread's purported health claims has just been settled, with a judge siding
with a parent who says she was duped into believing it was good for her kids.
Nutella-maker Ferrero USA, Inc. will pay out $3.05 million as part of the settlement, with $2.5
million to be divided among consumers who file a claim, the New York Daily News reported.

MANAGING IN THE GLOBAL ENVIRONMENT 200864 5
As part of the settlement, anyone in the U.S. who purchased Nutella between January 1, 2008
and February 3, 2012 (or for Calif. residents between August 1, 2009 and January 23, 2012) can
file a claim. People can claim their purchases until July 5, 2012 and expect $4 for a single
purchase and up to 5 jars for a maximum award of $20 per household.
NPR reported last year that California mom Athena Hohenberg proposed a class-action suit
against Ferrero stating that she had fed her 4-year-old daughter Nutella after seeing
advertisements that suggested the spread was part of a healthy breakfast. Hohenberg was
reportedly shocked to find out it contained 21 grams of sugar, 200 calories, and 11 grams of fat
(3.5 of which are saturated) per serving.
"Nutella was in fact not a 'healthy' 'nutritious' food but instead was the next best thing to a candy
bar," read the complaint.
That lawsuit was met with some ridicule across the web by people who were surprised to hear
someone thought a chocolate-based spread could be construed as healthy.
"Here's a suggestion for the thousands of other litigious California mothers: Try a little
responsible parenting. Try reading the labels and understanding what they mean," read a blog
from LA Weekly.
"Nutella isn't the breakfast demon that Hohenberg and others make it out to be, certainly not
when consumed as advertised," read a blog from Slate.
But it appears a judge sided with Hohenberg. Ferrero also agreed to change its marketing
campaign, modify the Nutella label to state fat and sugar content on the front of the jar and will
create new television ads, and change the company website.

MANAGING IN THE GLOBAL ENVIRONMENT 200864 6
A call placed to Fererro USA, Inc. in Somerset, N.J., was not returned at press time.
Were you fooled by the ads? Take a look at one of the commercials in question. What do you
think?”
(Jaslow, 2019)

MANAGING IN THE GLOBAL ENVIRONMENT 200864 7
Business Ethical Responsibility
Business ethics define the company policies and culture in the pursuit of sustainable
survival in the competitive market as well as the chartered planes of the nation. A company that
implements ethical practices in its daily routine is likely to flourish and achieve its profit
objectives as well as developmental success. Ethical practices in business range from the
business cultures and regulations on respect for human rights, moral rights concerning lab our,
environmental rights and responsibility as well as contribution to the fight against corruption.
As a firm, an organization should respect, uphold, and protect the rights of its personnel
as well as the customers. It can achieve this by appreciating the favorable implication of its
activities upon the human resource and the clients. Moreover, business ethics involves
straightforwardness o the firm in its daily operations to both its workers and the customers.
Therefore, a business that intentionally lies in advertisements violates business ethics (Gunter,
2016). Additionally, a company can respect the rights of its workers by ensuring that there exists
no compulsion in human labor or child labor whatsoever. Moreover, firms can appreciate human
rights by fostering equity amongst workers, fighting against discrimination or professional ran
disrespect.
To the environment, a firm can uphold ethics by taking precautions against
environmental pollution as well as initiative participating in environmental responsibilities such
as cleaning. As an environment-friendly firm, a business can adopt environmental technology
and call upon other firms to implement similar policies. A perfect example can be the use of
biodegradable packaging for companies that deal with packaged products.
Another method that a form can ensure conformity to ethical practices includes
participating in the formulation of internal policies that fight corruption. By implementing anti-

MANAGING IN THE GLOBAL ENVIRONMENT 200864 8
corruption regulation, a firm will be responding to national as well as sociopolitical development
of the nation. The fight against corruption can involve enacting strict policies against both
intrinsic and extrinsic bribery and extortion. Moreover, an organization should appreciate anti-
corruption strategies by employing workers base on merits.
Importance of Business Ethical Responsibility
Business Ethical and social responsibility can significantly benefit a business in both
transactional and reputational angles. These two beneficial aspects of ethics result in attracting
more customers, sustain and attract more skilled professionals, as well as calling upon investors
to trust the business transactions (Prof. Rawat et al., 2015). Attracting customers always
translates to boosted sales, a factor that determines the size of the profit margin. Moreover,
ethics always protect employees as well as leads to a sense of belonging to the business family;
this motivates employees to pursue the business goal. Furthermore, conformity to business ethics
enables a firm to overcome legal fines as well as maintain its operational image amongst the
customers and the media. A firm that observes ethics will automatically enjoy free marketing
from the media and the customers as the will reputably speak well about it.
Case Discussion
In the Nutella case, Hohenberg was the complainants while the chocolaty-spread makers,
Ferrero Inc. was the defendant. The customers accused the firm of unethical advertisement
practices because it only disclosed the attractive part of their product tot e community, without
saying anything about the health hazards it had. From the advertisement, the customer deduced it
essentialness to human health, especially for children. However, the accusation disclosed that
the product concurred with the French peanut butter; this came from the analysis of the
ingredients which included 21 grams of sugar (5 teaspoons) and 200 calories of fat from its palm

MANAGING IN THE GLOBAL ENVIRONMENT 200864 9
oil component. As per the advertisement, the description f the product was that of a harmless
bowl of fiber perfect for a nutritious breakfast for kids.
Hohenberg’s lawyer, Mr. Marron, told the court that Ferrero should stop their lies in their
marketing and make the issue clear to the public as well as return the money back to the
customers whom they duped into buying by lies. In the judgment, the ruling favored
Hohenberg’s side. The firm was fined $3.05 million and another $2.5 million that will be
compensated to the consumers that will make a legal complaint about the product.
Nutella Case Analysis According to the United Nations Global Compact
The Ten UN Business Ethical Principles
The UN global compact focuses on the implementation of the principle-based approach
in the pursuit of business ethical practice. According to the UN, it is through conformity of the
ten principles that a business can safely claim to practice business ethics. The ten principles are
in four categories namely human rights ethics, labor, environmental and anticorruption ethical
practices determine the international weighing scale for business social responsibility (United
Nations, 2019). In summary, the principles entail the following:
i) Every business organization or enterprise should conform and protect the
internationally acknowledged human rights.
ii) A business should ensure its day to day operation does not result in the violation of
human rights and freedoms.
iii) No matter where a firm is located, upholding to freedom of association and apricating
the collective bargaining privileges is legally mandatory.
iv) A firm should not coerce a laborer to undertake a task since compulsory.

MANAGING IN THE GLOBAL ENVIRONMENT 200864 10
v) Every business should abstain from employing children to prevent child labor cases.
vi) It is the responsibility of a business to mitigate the existence of employment,
occupational, gender, and any other form of discrimination within the business
operations.
vii) It is ethical for a business to uphold precautionary approaches to environmental
conservation.
viii) A responsible ethical business should initiate participation in environmental
preservation moves.
ix) Firms should adopt and develop environmentally friendly technology.
x) In the pursuit of business ethics, firms should operate against corruption, for instance,
extortion and bribery.
What Nutella Makers Violated in The Un Ethical Principles
In the pursuit for increase in sales of their chocolate hazelnut spread through TV
advertisement, Nutella makers violated the first principle of the UN Compact ethical practices
that outline the necessity for firms to abide and respect the rights of its consumers. It is
internationally conventional that a customer has the right to know the benefits dangers of
consuming a product. Moreover, it is legally mandatory that a business should disclose all the
pros and cons of its product when advertising. However, Nutella makers id the negative health
implications of their chocolaty spread. This advert made their customers, more so women, to
believe in their adverts and think that it is beneficial for their children to consume the product.
Unfortunately, it had adverse effects health-wise which resulted in the lawsuits that befell the
business that lost more than 5.2 million dollars to the court ruling that resulted in a fine against
the firm.

MANAGING IN THE GLOBAL ENVIRONMENT 200864 11
Nutella Case Analysis by Ethics and Corporate Social Responsibilities
Cooperate social responsibilities (CSR) are philosophical business principles that guide
business operations not only to produce reliable and quality goods and services, charge fair
prices for their products as well as treating their employees fairly by paying them well, but also
to ensure that their actions implicate the social environment positively (Kulshrestha and Padiya,
2011). Business environment does not only mean the surrounding land but also the selling and
buying environment. For the case with Nutella, concealing the adverse effects of the chocolaty
spread product is a violation of the CSR responsibilities since it hazardously affects the buyers’
health. Therefore, I would too judge against the firm for the negligence of social obligations. It
is the responsibility of all business to ensure the communication of the features of their products
and leave the buying decision for the customers. In this way, a company will have no
responsibilities to any harm as a result of the product. For instance, the cigarettes producer’s
cation their consumers in such a way that getting cancer due to smoking becomes a personal
choice. In conclusion, business should ensure that they indulge in legal and social ethical
practices to protect their environment because the significance of the surrounding is an asset to
their business success as well as a balance of the natural ecosystem.
Recommendations
Ferrero should apologize to the public for the lies in product marketing. Moreover, they
should start conforming with the international conventions in business ethics in marketing and
be transparent to their clients.
Moreover, Ferrero should also employ a health and nutrition expert who will be
evaluating the nutritional aspects of the products and make it public. This way, the firm will

MANAGING IN THE GLOBAL ENVIRONMENT 200864 12
repaint its image and recover its lost customers since the buyers will be fully aware of the
nutritional effects as outlined by the legally certified nutritionist.