Nestlé

Organisation Function

"While our Nestle Corporate Business Principles will continue to evolve and adapt to a changing world, our basic foundation is unchanged from the time of the origins of our Company, and reflects the basic ideas of fairness, honesty, and a general concern for people."

• [1]

Products Nestle sells:

• Beverages
• Cereals
• Chilled Meats
• Confectionary and cakes
• Creams and deserts
• Nutritional supplements
• Pasta and Cheese
• Pet food
• Yogurts and fromage frais
• Coffee and Hot Chocolate
• [2]

Organisations Business Principles:

Nestle is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices:

• Nestle's business objective is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners.
• Nestle does not favor short-term profit at the expense of successful long-term business development.
• Nestle recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust, and that without its consumers the Company would not exist.
• Nestle believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization.
• Nestle is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Therefore recruitment of the right people and ongoing training and development are crucial.
• Nestle continues to maintain its commitment to follow and respect all applicable local laws in each of its markets.

{http://www.nestle.com/All_About/Business_Principles/}

Nestle Management

Executive Board:

• Peter Brabeck-LetmatheChairman of the Board & Chief Executive Officer
• Francisco CastnerExecutive Vice President Pharmaceutical and Cosmetic Products, Liaison with L'Oreal, Human Resources, Corporate Affairs
• Lars OlofssonExecutive Vice President, Strategic Business Units and Marketing
• Werner J.Bauer Executive Vice President Technical, Production, Environment, Research and Development
• Frits Van DijkExecutive Vice President Asia, Oceania, Africa and Middle East
• Paul BulckeExecutive Vice President United States of America, Canada, Latin America, Caribbean
• Carlo DonatiExecutive Vice President Nestle Waters
• Luis CantarellExecutive Vice President Zone Europe
• Paul PolmanExecutive Vice President Finance, Control, Legal, Tax, Purchasing, Export
• Chris JohnsonDeputy Executive Vice President GLOBE Program, Information Systems, Strategic Supply Chain, eNestle, Group Information Security
• Richard T. LaubeDeputy Executive Vice President, CEO of Nestle Nutrition

[3]

Board of Directors:

• Peter Brabeck-LethmatheChairman & CEO; Chairman of Chairman's and Corporate Governance Committee Term expires: 2007
• Andreas Koopmann1st Vice Chairman Term expires: 2008
• Rolf Hanggi2nd Vice Chairman, Chairman of Audit Committee and Finance Committee Term expires: 2008
• Edward GeorgeTerm expires: 2007
• Jean-Pierre MeyersTerm expires: 2006
• Peter BockliChairman of Remuneration Committee Term expires: 2008
• Nobuyuki IdeiTerm expires: 2006
• Andre KudelskiTerm expires: 2006
• Kaspar VilligerTerm expires: 2009
• Daniel BorelTerm expires: 2009
• Carolina Muller-MohlTerm expires: 2009
• Günter BlobelTerm expires: 2009

[4]

Honorary Chairperson:

• Helmut Oswald Maucher

[5]

Nestle and Fairtrade

Nestle have recently been given the fairtrade mark for their coffee and they are now a company who are promoting themselves as one which will be fair to those who produce the coffee and cocoa that they sell by giving the farmers a decent wage for what they produce for them.

Nestle state that they are keen to help out the farmers who are growing coffee so that they can have a better wage ad so better living conditions. It has been stated that, “As the world’s largest direct buyer of coffee, Nestlé is keen to find a lasting solution for those coffee farmers in some of the world’s poorest countries who have been adversely affected by fluctuations in the price of coffee.” [6]

With this in mind Nestle have produced a fairtrade coffee, Nescafe Partners Blend, the coffee is has been produced with fair trade products and the proceeds made from this are given back to the farmer in regions such as El Salvador and Ethiopia.

• [7]

They state that they have been working with the coffee farmers for over 30 years and they want to gain and encourage sustainable development. In 2002 they set up the Susatainable Agriculture Initiative so that they can gain sustainable coffee growing. They aim to help the farmers socailly, economically and enironmentally in order to create a better livlihood for each of the farmers, their famillies and the villages they live in.

• [8]

This coffee is the first Nestle product to given the fairtrade mark. This is a mark which is operated and regulated by the fairtrade foundation, and so this means that it will only be given to those organisations which can prove that they are a company who are operating a fair trade. [9]

Not only is it coffee that is being grown and sold as fairtrade but the organisation alongside this, is also working in West Africa to help farmers find sustainble ways to grow cocoa. They want to find ways for farmers to increase their incomes and have a more sustaible and proserous future. To achieve this they are working with a number of organisations across the world in order to create a stronger benefits to this area. These organisations include:

• International Labour Organisation (ILO)
• The US Agency for International Development (USAID)
• The International Institute for Tropical Agriculture (IITA)
• West African governments
• farming networks.

[10]

Corporate Social Responsibilty

What is Corporate Social Responsibility?:

Many organisations find that they have created and been given a poor image by the media and have been portrayed nagatively so that they public now can seen them in a light which will not be useful to their business. To overcome this many organisations have tried to overcome this by setting out to change their image and either try to or become a more socially responisble company. Corporate social responsibility now means that organisations have to take responosibilty for all the actions that it is involved in throughout the sale and production od their goods. Some companies make a genuine attepmt at this but many simply try and mask the truth in order for the public, their consumers, to see them as a better company who have a fair trading system to both society and the environment.

Nestle and Corporate Social Responsibilty:

Critism is not a new thing to the organisation and Nestle has found that it has faced a lot of negative media in the past. “Nestlé has a serious image problem because of its on-going aggressive marketing of baby foods. Instead of making changes required to bring its practices fully into line with international marketing standards, Nestlé invests heavily in Public Relations (PR) initiatives intended to divert criticism” (baby milk action)This claim then brings into question Nestle’s fair trade work as it can then be queried as to how fair-trade Nestle actually is. It has to be asked whether the company is involved in fairtrade in order to help the farmers or if it is trying to boost is image in the public eye? The above statment does calim that it has a good pr system and so its work in the fairtrade may simply be PR spin rather than a genuine effort to create fair and susatinable trade.

Negative Newsreports include:

• Boycott against Nestle because of baby milk advertising: It has been claimed that in 1970s women in the developing countries were encouraged to feed their babies with formula that had been mixed with unsafe water and were then encouraged to pay for formula milk once their own supply had run out due to the use of the formula milk. This has been stated to result in 1.5 million deaths.

*Legal action against Ethiopian government:

• Nestle Purina in Venezuela
• Nestle Water
• Fairtrade Coffee
• Genetically modified organisms
• [11]

Nestle and Unfairtrade

Despite the attempts by Nestle to prove to the world that they are changing their image by becoming involved in fairtrade in order to help the farmers and become a more responsible corporation, there are still a number of concerns surrounding them. The organisation is still under a lot of scrutiny and critisms are still being made about the company even in regards to its fairtrade attempts.

The first example comes from one group, the World Development Movement, which is a campaigning group which tackles the causes of poverty, They have said that; "The launch of a Nestle Fairtrade coffee is more likely to be an attempt to cash in a growing market... than represent the beginning of a fundamental shift in Nestle's business model." [12] Nestle are accused of trying to make more money form the fairtrade market rather than actively trying to help farmers to gain a better wage and have a more sustainable business. Fairtrade is gaining momentum and with this then Nestle is seen to be joining this for the monetary value rather than helping those they are buying from.

Concerns have been raised about the prices that the company is willing to pay for the coffee which it buys and then sells. They have been said to be “Paying prices as low as they can go - whatever the consequences for farmers - is a dangerous business strategy in the long term.” [13] They have been criticised for not caring enough about the role of the farmer and have not being paying a fair and competitive price for the coffee that they buy. In conjunction with this there has been claims made that the farmers as experiencing hardships because of a slump in the Market. The coffee that is grown in El Salvador comes from 5 smallholder farmers and they are now experiencing a severe threat to their livelihoods because of the price instability. The competition between the organisations are causing there to be an unstable market as companies like Nestle want the produce as cheap as they can get it. [14]

Looking at this further even they themselves state that; "Nestlé is very aware of the concerns that are raised about its activities in the developing world and that its reputation has been dogged by misperceptions"They find that they have had an abundance of claims and scandals attached to them and are now trying to rectify these issues. However many believe that they are involved in fairtrade in order to mask these problems and when their desire to be involved in fairtrade is looked at further it can be found that they merely trying to shed a positive image on themselves. However is fairtrade a mask that has been created by the company to enhance their poor image and bring back many of the customers that it has lost from an ongoing boycott?

The Baby Milk Action campaign has also found flaws and dishonesty in the Nestle fair-trade campaign. It has registered three complaints about the two-page advertisement.

• 1.Nestlé's portrayal of its involvement in coffee in El Salvador is dishonest and misleading
• 2.Nestlé's portrayal of its involvement in the coffee industry more generally is dishonest and misleading
• 3.Use of the Fairtrade mark is dishonest and misleading.

[15]

Resources

International Baby Food Action Network/Baby Milk Action Nestle's public relations machine exposed, April 2005.

Nestle homepage http://www.nestle.com/All_About/Business_Principles/

Nestle homepage(fairtrade) http://www.nestle.co.uk/OurResponsibility/DevelopingWorldIssues/Nestl%C3%A9AndFairTrade.htm

BBC news online http://news.bbc.co.uk/1/hi/business/4318882.stm

Wikipedia http://en.wikipedia.org/wiki/Nestl%C3%A9

Notes

Link back to fairtrade