Unethical business practices of NESTLE
Ethics is a very important component of a business that can lead to success. When a company focuses on ethics they can achieve effective reputation as well as long-time financial rewards. Ethical practices in businesses improve the regulations involving government laws. Companies can explore their ethics in front of the stakeholders, customers and investors by promoting integrity among the employees that can help to gain trust from customers, stakeholders and investors. The companies have to employ ethical practices for retaining the employees who are valuable for the companies. This helps to lead to the improvement of employee morale and job satisfaction that are very beneficials for both the company and the employees. The companies which rely on unethical practices that could be very harmful for them. Unethical business practices can be the cause of reduced productivity levels. When customers are aware about the unethical practices of the companies, they can refuse the products of the companies that can lead to the loss of reputation. Sometimes the unethical practices can be the legal issue that can lead to a huge number of fines or penalties. In the report here is a discussion on Nestle company and their unethical behavior (Caratas, 2023). The study also explores moral philosophical bases that were infringed upon due to unethical business practices. The report also analyzes the impact of unethical business practices on ethical decision making. It also evaluates unethical business practices on the consumers or competitors or stakeholders. The study also shows the ways that the leaders and employees will react to unethical practices in the businesses.
Nestle is a multinational company that produces different types of food products and sells them across the whole world. The company operates in 187 countries around the whole world. They use different types of strategies for expanding their business. The company was founded in the year of 1866. The head-quarter of the company is situated in Gurgaon, Haryana. The company’s current revenue is $102.59 billion by selling different types of products such as noodles, chocolates, milk, breakfast cereals, sauces and so others (Dinarintasitepu et al., 2023). The company has 2000 brands within the whole world Maggie, Nescafe, Milo and so others. Mainly the company is an effective player in the FMCG industry.
Nestle is the company which is selected as the case study because the company is recognized as the most unethical corporation because of its unethical practices. The company is a big company that possesses a huge number of products such as packaged food. The company have a huge list of unethical business practices such as child labour usage, unethical promotion of products and so others. Mainly in the last decades, it is identified that Nestle had used various unethical practices (Yusoff et al., 2023). The consumers are boycotting the products of the company. There are various controversies present in the marketplace on Nestle that can be encountered losses of sales and they had paid huge penalties for their unethical practices.
Nestle produces different types of food products for babies and infants. Their formula for baby milk was very popular in the market. They encourage mothers to replace breast milk with their milk formula. It was very bad that they recruited women to improve sales. Under-educated mothers believed the sales women who are dressing like nurses. The women provide free samples to the mothers and the mothers depend on the milk formula. They stop lactating, which can create problems for their babies. This marketing of Nestle leads to an increase infant's death across the whole world. As it is known that breast milk of mothers is very important for all the infants and their growth. It helps the babies by providing all the components for their development of their immune system. The lack of breast milk can cause the babies to face different diseases and it can be the death of the babies (Mehmood, 2022). The marketing of Nestle leads to the deaths of thousands of babies and the formula of baby milk coded as 'baby killer'. In the last time of the incident WHO (World Health Organization) passed an international code of marketing that can affect the marketing of the milk but the damage happened. After that the company tries to clear their image by advertising the advantages of breast milk. After the blunder they tried to inform mothers that breast milk is very important for infants and they tried to push the milk formula with government laws.
The other unethical practice that was performed by Nestle is package water. The company sells packaged water bottles but the bottles are made of single-use plastic that is the cause of environment pollution and can be the cause of death of millions of sea creatures. As per some reports, the water bottles that are collected from the banks of the rivers, seas, most of them are the bottles of Nestle. It proves that Nestle has a big contribution to land and water pollution. Not only are the bottles of water harmful for the environment, the water filled in the plastic bottles damages the environment equally. As the company was blamed as exploiting the groundwater where the products are selling at a good rate. It is stated that it is very unethical for the environment. Nestle is also accused of taking water for bottled water plants from the areas where water sources are not sufficient and pushing the people of areas to consume dirty water (Sheldon, 2020). They also sell the water with the effective labels which are expressing that it is the freshwater. But they are using the tap water for the people as fresh water. After some years of the incident the company it is identified as Nestle takes water from local areas of Pakistan by using their factories. Not only from Pakistan the company collected water, it also collected water from various undeveloped nations and the company exploited because of tax regulations.
Nestle uses child labour that is also an unethical practice. The company made chocolate products with cocoa that are made by child laborers (Deuschle, 2023). According to some reports in the year 2000 the company was blamed for using child laborers who make cocoa for the chocolates. The company refuse the blame and claims that they are not employing child labour. The child’s who are producing cocoa, most of them are unpaid laborers and they are working on their parents' farms. The farmers are not able to send their children to the schools and they work hard to fulfill the necessities such as shelters, food and so others. The company claims that for solving the issues of the farmers, they pay the farmers who work for the companies. They increase the payment of the farmers and tell customers that the cocoa is made ethically through their packaging. But it does not solve the problem that was child labour an illegal issue. Although they have not done anything to solve the problem and do not provide any evidence that the things they sell were produced ethically, they still have farms and factories where forced child labor is being practiced.
Another unethical practice was noticed in a product of the company. The company was using huge amounts of lead and monosodium glutamate in making Maggie. The scandal happened in Uttar Pradesh, India (Dam, 2021). The level of using lead was more than prescribed standards that are prescribed by FSSAI (Food Safety and Standards Authority of India). The customers protest about the scandal. They boycotted the product and the government also banned the product. After the scandal, the government tested the product and allowed the company to sell the product. Nestle developed a cold formula and introduced it to the customers. They advertise the product as a solution to diarrhea and it plays an important role in the development of the eye and brain. The advertisement was false, which is also an unethical practice of the company.
The customers who rely on the baby milk formula of Nestle. After the scandal of baby milk products, the customers tried to avoid the products of the company. The customers think that the company did not provide good products to their customers. Some surveys stated that customers explained that the company cheated them and it is not a loyal company. Then the unethical behavior of producing pollution to land and water influences the mindset of the customers. They think that the company is responsible for environmental pollution (Rahi, 2020). The customers also believe that the company creates problems for the people of areas who are facing issues regarding water because of Nestle water plants. The customers say that they do not believe the company as they provide harmful products to their customers. Some of the customers are believe that the child labour using was true because the company offers payments for the work of the child. They also think that the company provides normal tap water to their customers within the packaged water. Some of them also believe that the company is loyal and they are satisfied with the products of Nestle.
The impact of unethical commercial practices on Nestle's ethical decision-making, codes of ethics, and social accounting, as well as the company's relationships with stakeholders, has been negative. The company's reputation has been tarnished and public confidence has been undermined as a result of unethical business practices, including the marketing of infant formula over breast milk, the use of child labour, environmental contamination, and deceptive advertising. The Nestle standards of ethics, intended to protect integrity, honesty, and ethical business practices, have also been damaged by this unethical conduct (Mohr and Thissen, 2022). When unethical judgments are made, the organization's ethical standards are undermined from the very start, which results in a breakdown in the ethical decision-making process. Moreover, bad incidences like environmental problems and child labor claims have cast a shadow over the company's social accounting initiatives. These actions have damaged Nestle's social accounting reports and called into doubt its dedication to sustainability and social responsibility. a number of these immoral actions, nestle is subject to greater regulatory scrutiny, potential legal repercussions, and consumer boycotts. This not only impacts its financial success but also makes it more difficult for the company to draw in and keep ethical investors and socially responsible customers. Nestle has to move swiftly to solve the problems and reverse the effects of these unethical practices (Talpur et al., 2023). To ensure moral decision-making at all organizational levels, it must strengthen its codes of ethics, advance openness, and put strict controls in place.
Consumers, suppliers, rivals, and other stakeholders of Nestle are all adversely affected by unethical business practices. First and foremost, these actions seriously undermine consumer confidence and trust in the brand. Consumers may feel duped and misled when they learn of unethical practices, such as the marketing of infant formula over breast milk or the exploitation of child labour in the manufacture of cocoa. This damages their brand loyalty and might cause a sharp drop in sales and market share (Grabs, 2023). Second, unethical behavior may deteriorate the rapport with suppliers. Suppliers could be reluctant to work with a business that has a bad reputation for ethics. This might make it difficult to get raw materials or negotiate good prices, which would hurt the supply chain and operational effectiveness of the business.
Thirdly, unethical behavior might put Nestle at a competitive disadvantage. The negative publicity resulting from Nestle's unethical acts can be used to the advantage of rivals who follow better ethical standards. As a result, customer preferences may shift in favour of more morally sound rivals, costing a company market share and possible commercial prospects. Finally, the company's unethical practices may also have an effect on stakeholders such as investors, workers, and regulatory organizations. Investor apprehension over potential legal and financial issues might result in a decrease in the stock price of the firm (Delabre et al., 2023). Employee morale and productivity may suffer as a result of demotivation and disillusionment. The financial stability and reputation of the firm may suffer further if regulatory agencies impose fines and penalties for infractions.
Leaders and staff at Nestle must work together to correct previous errors and stop recurrences in order to respond to unethical business practices. Implementing thorough ethical training programmed is essential, as is admitting wrongdoing and accepting responsibility for it. Enhancing openness and early detection of any misconduct requires the establishment of a confidential reporting mechanism and external audits. The company's dedication to ethical behavior is further strengthened by reviewing and strengthening policies in accordance with these standards and by giving employees the freedom to make moral choices. Nestle's commitment to bringing about good change is demonstrated by its open communication with stakeholders on corrective measures and social responsibility programmed (Pitteloud, 2023). A more responsible supply chain is ensured by working with partners and suppliers to meet ethical standards. Long-term trust with customers, investors, and the general public is fostered by relentlessly seeking improvement and fostering an ethical culture. By adopting these steps, nestle can make up for its previous immoral behavior and pave the way for a more moral and sustainable future.
Establish Ethical Oversight: To constantly monitor and evaluate the company's ethical practices, nestle should establish an impartial ethics committee or hire an ombudsman. This group can offer objective analysis and suggestions for advancement.
Improve the transparency of the supply chain: Implement a thorough supplier verification procedure to guarantee that partners follow ethical principles. Responsible sourcing will be encouraged through routine audits and public reporting of supply chain practices.
Strengthen Whistleblower Protection: To promote exposing unethical behavior without fear of reprisal, whistleblower protections should be strengthened. This will help in the quick identification and resolution of possible problems.
Introduce Ethical Incentives: Create an incentive program that recognizes and rewards staff members and vendors that exhibit ethical behavior. A culture where ethical behavior is appreciated and promoted may be cultivated through rewards and recognition.
Sustainability Integration: Integrate sustainable practices and moral principles into the company's decision-making processes. This comprises assessing the financial elements of corporate practices as well as their effects on society and the environment.
Collaboratively Engage Stakeholders: Encourage candid conversations with customers, investors, NGOs, and communities (Kaplan, 2023). Transparency may be improved and connections can be strengthened by listening to their worries and including them in decision-making.
Strengthen Corporate Governance: Improve the board's monitoring of moral behavior and make sure that everyone is held accountable. Independent directors have a significant impact in maintaining moral standards.
In conclusion, Nestle's unethical business practices have had a negative impact on corporate reputation, customer trust, and stakeholder relationships. The company's exploitation of child labor, environmental degradation, and deceptive advertising, together with its promotion of infant formula over breast milk, have all had a significant negative influence on its market position. However, nestle can start to regain confidence and improve its reputation by owning up to the mistakes it has made in the past, putting strong ethical controls in place, and adopting sustainable practices. The building of an ethical workplace culture requires open communication, constant ethical training, and a dedication to social responsibility. Restoring consumer and stakeholder confidence by taking proactive measures to combat unethical behavior would help position Nestle as a responsible and socially conscious industry leader. Nestle can create a route to moral success and long-term sustainability via constant improvement and teamwork.
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