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Nestlé’s baby formula products affect the lives of innocent infants nationally and globally in a negative manner because of the organization’s poor communicative methods. This wealthy company has failed to thoroughly convey messages and instructions for their products as they branched out to non-speaking countries. This is just one of many communicative failures Nestle has committed, and it is the reason why this company has experienced infamous boycotts that are worthy of research and recognition. In the following case study paper, we will comprehensively explain various topics dealing with Nestlé’s baby formula products including the following: 1. The history and past reputation of its products that were distributed to developing countries. 2. Marketing strategies and why they were unsuccessful. 3. The demographics and statistics of its consumers and sales. 4. The current state of the company today. History and Past Reputation of Nestle Baby Formula Products This company dates back to 1867, when a Swedish merchant, chemist and inventor named Henri Nestle founded it. The Swedish-based company was the first to produce and market infant formulas to mothers who were either unable to breast-feed and/or to lighten their burdens of motherhood. Like many inventors in historical text, Henri Nestle named his company after his own last name to personify the commercial business. His main goals were to create secure and safe products that would provide nourishment for little ones born to a family environment. He strived to be recognized for producing traditional baby formula, both milk and soy-based, that would be the central element in Nestle’s corporate identity (Berkich, 2003). Nestle’s first commercially sold product was condensed milk, which was produced in Europe. Since that time, Nestle has become an oligopoly; producing other types of items that consumers may use. Aside from baby formulas, their products include the number one bottled water known as Nestle Perrier, and are the leader in instant coffee, and many of the popular candy out there today (Mantell, 2003). In addition, it is the manufacturer of cosmetics such as L’Oreal, eye care and nutritional supplements. Nestle’s contribution to this industry has made him the world’s favorite brand in over 489 factories worldwide. However, he has lost sight of providing consumers with high-quality nutritious foods for infants, especially as he began to seek success in international countries (Brabeck, 2003). Therefore, his quality image and reputation is no longer just that; rather it has become intricate according to different consumers. Like many large companies, Nestle had a vision of expanding and emerging outside of the United States. Perhaps, there was a specific reason that he branched out to countries like China, India, Russia, and Latin America. In these countries, it is culturally accepted that women are homemakers and child bearers. Therefore, women tend to stay home and
culinary products. Their strategies geared towards the U. ice cream.000 people in 508 factories around the world.S. in Vevey. Maybe this led Nestle to believe that they would spend large sums of money towards baby formulas because not all women are physically capable to breast-feeding. infant food. its annual profits exceed over $100 billion dollars. mothers sought easier and quicker methods to nourish their children. breakfast cereals. Nestle has created more problems for both infants and mothers by failing to successfully utilize the various media forms throughout its campaign. both milk and soy-based. pharmaceutical products and cosmetics. However. One the other hand. In addition. the baby formula market is a multibillion-dollar enterprise whose products are intended to insure the proper nurturing of precious infants. pet care. However. were successful and led to very high sales. market. As the leading vendor of baby formula. Although it was one of the most successful companies in the world.care for their many children.S. especially after having several children. frozen food. Nestle did several things during their campaign in third world nations. chocolates and confectionery. Switzerland. One of its main marketing strategies was the idea of expanding and branching out to emerging markets in foreign countries. Nestlé's product portfolio included soluble and roast coffee. the same effort was not placed forth towards their marketing campaign in third world countries. several mineral water brands. Marketing Strategies and Why They Were Unsuccessful Nestle is the largest food producer in the world and controls about forty percent of the global baby formula market. By the end of 2002. Abstract: Nestlé was one of the most successful foodbased companies in the world. economy as well as environmental hazards in each individual country. creating poverty and disaster in third world countries. dairy products. Nestlé was frequently . Interestingly enough. other beverages like tea and health drinks. Set up by Henri Nestlé in 1867. Nestlé grew over the decades by acquiring smaller companies to become the largest company in Switzerland by the 1960s. Nestlé’s business tactics would have succeeded in these countries if he had clearly communicated effectively through his products. and helps lighten the burdens of motherhood. it failed to recognize the language barriers. thus. the company employed more than 250. in doing this. Nestle performed a poor job in marketing towards its targeted audience in these countries because they did not place equal effort as they did for the U.
where bonded labor and children were used on plantations to harvest cocoa beans.criticized for using unethical marketing practices to promote the sales of some of its products. Nestlé also became mired in a controversy for selling genetically modified food in some Asian countries without labeling them explicitly. in 1975. The company was severely condemned by health agencies around the world for its marketing of infant formula in developing countries. the then communist government of . There were also demands on the company to stop purchasing cocoa from the Ivory Coast. revealed that Nestlé SA (Nestlé). Oxfam. was claiming compensation of $6 million from Ethiopia. Nestlé was making this claim because. by conveying the message that the formula was better for babies than mothers' milk. was also criticized for being too high priced. the mineral water brand the company launched in some Asian countries. Issues: » Understand the importance and role of corporate social responsibility in a business environment » Examine unethical corporate practices and their impact on a company's image and credibility Ethiopian Controversy In late 2002. one of the largest manufacturers of food products in the world.2 a relief group based in London. one of the poorest countries in the world. Pure Life.
Ethiopian Controversy Contd. Several relief agencies world over.72 billion) would stoop so low as to demand compensation from a poor.. was born in 1814 in Frankfurt. chemist and innovator. the founder of Nestlé. The company had been castigated several times for using unethical marketing practices to promote its products in developing countries.. wheat flour and sugar in different proportions. A merchant. This was not the first time that Nestlé had been embroiled in controversy. The ELDC was at the time.$5. he developed a formula for infant nutrition by experimentally combining cow's milk. the nationalization had been undertaken by a previous government. a subsidiary of a German group called Schweisfurth. He called this concoction "Farine Lactee". many observers felt that this statement by Brabeck was just an eyewash. without paying compensation for nationalization. Germany. People were shocked that one of the most successful companies in the world (profits in 2002 . and there seemed little reason for Nestle to rake up an old issue and demand such a huge sum. called for a boycott of Nestlé's products. for selling genetically modified foods without appropriate labeling. . The claim was widely reported in the media and Nestlé came up for severe criticism from all quarters. In addition. and for supporting the use of child labor in some places. However. needy country (per capita income in 2002 . Background Henri Nestlé. The compensation claim seemed to show that the company lacked a sense of social responsibility.Ethiopia had nationalized a company called the Ethiopian Livestock Development Company (ELDC). Most of these offences by Nestlé had been committed in developing countries. Nestle had acquired the Group in 1986.$100). and that the company's behavior was inexcusable.
which meant 'little nest'. mainly because of government contracts. By the early 1870s. (This symbol was later adopted as the corporate logo of Nestlé). but company's name was retained. Henri Nestlé sold the company for one million Francs. Nestlé grew rapidly during the First World War (1914-1918). (This company was set up in 1866. he fed the formula to a prematurely born infant whose mother was seriously ill. maternity and nourishment. In 1867. Later in 1867. Anglo-Swiss Condensed Milk and thwarted a major threat. Nestlé set up a facility in Vevey. This was called the Nestlé Company. Switzerland. He was able to save the life of the infant. the old and the infirm. It had launched an infant formula in 1878 which competed with the one made by Nestlé). to produce and market the formula commercially. In 1875.The formula was meant to provide nutrition to infants whose mothers were unable to nurse them. Henri Nestlé adopted the logo of a nest with a mother bird protecting her young ones. The company also diversified into related products like condensed milk and milk chocolate. Nestlé's infant formula became very popular and in 1868. In 1905. . he began exporting to South America and Australia. he opened an office in London to match the increasing demand. Nestlé's popularity soared. For the new company. This was in fact a graphic translation of his name... and Nestlé Milk soon became popular as a food for infants. It was meant to convey values like security. and subsequently. protection. Nestlé bought out its main rival.
indulging in ethically questionable practices. This type of promotion was in violation of the 'International Code of Marketing Breast-Milk Substitutes' of the WHO /UNICEF. In developing countries. Critics said that Nestlé had promoted the use of infant milk formula (which many experts believed.Excerpts Nestlé's Socially Irresponsible Practices Most of the controversies that Nestlé was embroiled in involved developing countries. Infant Formula It was ironical that the biggest controversy in Nestlé's history involved the product on which the company was built. It was also alleged that Nestlé subtly developed the belief that using the formula was more beneficial to the mother as well as the child. there were still several large companies which shrugged off their responsibilities towards the society. If large companies behave unethically. it soon comes to the notice of the public and the company's . in developing countries. However. the public was either unaware or more tolerant towards deviations from established standards.. in an unethical manner. where corporate crimes are detected early and the compensations to be paid can be painfully heavy.. was harmful to the health of the mother as well as the child). Analysts felt that this was probably because the laws and procedures in developing countries were considerably lax than those in developed countries. Conclusion Corporate social responsibility became an important issue in the late 20th century and the early 2000s. as a result of increasing public awareness and a scrutiny of the activities of public companies. The company was criticized particularly for its promotions which implied that women in westernized countries routinely used the formula as a substitute for mother's milk.
but more often than not. as the bad publicity generated by unethical practices leads to far greater losses in the long run.image is tainted. Companies like Nestlé made a public show of their support to social causes. Companies are often worse off for having behaved unethically in the interest of short term gains. (Refer Exhibit-III for Nestlé's Corporate Business Principles). Many companies have well laid out charters to govern their social responsibility and behavior. in order to divert attention fro . these are only on paper.
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