Nestle's Ethical Challenges and Responses

Introduction

Name and Nature of the Business Organization

Nestle is the world’s famous company and is leading nutrition, health, and wellness. The company’s mission, “good food, good life’ gives tasty and nutritious food in a variety of options. Their commitment to produce food and fulfill the need of the people are fulfilled for a century. However, the company came into controversy in May 2015 when a product of Nestle named Maggi noodles was suspected of having a higher dosage of monosodium glutamate.

Contents of the Essay

The study has considered Nestle as a case to review the ethical challenge faced by the company. This study will explain the ethical issues of the company and even will describe the framework and approaches for ethical reasoning.

Background to Company and Ethical Issue

Introduction to Company

Nestle is a Switzerland company that was founded by Henri Nestle in 1866. Around 3,39,000 employees are working in a factory and other business activities in almost every country. The company has spread its business in 197 countries, and there are 442 factories in about 86 countries (Fortune, 2011). Going in the Maggi product’s history, Julius Michael Johannes Maggi had inherited family business near Zurish in 1870 and wanted to involve women workers in preparing nourishing soup, and thus Maggi product came into existence. Nestle India Ltd. (NIL), which is the Indian subsidiary of global Nestle had introduced the Maggi brand in India in the year 1982 by launching Maggi 2 Minute Noodles (Nestlé, 2015). This product changed the entire food category and grabbed the market at a greater speed. The company has extended Maggi brand to the various range, and apart from noodles, various other products like soup, tastemakers, etc. were introduced by the company. As per one report, Maggi noodles had sold 250,000 tons of Maggi products in 2014 and had collected around rupees 2,500 crores a year. Maggi had about 80% of the share of India’s noodle market by 2014 and even had made 31.5 percent of Nestle revenues of India (Nestlé, 2015).

Ethical Challenge

However, in May 2015, the food safety regulators had reported that samples of Maggi noodles possess a higher level of monosodium Glutamate as well as 17 times beyond the limit of lead. This finding has collected various bad effects on the company’s reputation and sales. The sale of the product was banned nationwide for a certain period. The company was even filed various cases for not concerning public health and laws. However, after a test being conducted in three different cities of India, the product was found safe (Fortune, 2011).

Company’s response

Nestle company was always insisting on its customers and other authorities that Maggi noodle is safe. Maggi had recalled the stock, which was worth Rupees 320 crores from its shelves. Even more, the company gave Rupees 20 crores to burn the products to the cement factory. Nestle-India even lost the inventory of advertising of about 10 crores because of issues of Maggi. Corporate Affairs Ministry of India even charged rupees 640 crores fine on the company for the presence of an excess of lead and MSG. The company even stopped digital advertisements for the Maggi brand on television and social media. The company didn’t apply unethical practices and even worked day and night to build up future decisions, plant visits, tests, etc. (The Economic Times, 2019). Although, the company’s product was found safe, company still performed unethical practices while labeling its products. The company needs to apply regulations linked with safety standards like the Food Safety and Standards Authority of India (FSSAI) to regulate its products and make it safer for consumption.

Ethical Frameworks and Approaches and General Theoretical Background

Approaches for ethical reasoning

Utilitarianism

Utilitarianism is the common approach to make ethical decisions making decisions with results that take into consideration a larger group of people. It instructs to give weight to a various amount of good and bad which are produced through actions. This approach conforms regarding our feelings stating that results would be the consequence of our actions, and best actions would be obtained when good work is done or when an individual or organization does the least harm (Mizzoni, 2010). Ethical, environmental action produces good results and assists the ones who are affected by the harms like Government, community, environment, and corporations.

Individualism

The individualism approach considers the personal benefits which are considered as essential factors while making decisions. Individuals generally apply selfish inclinations to improve performance or to attain benefits. This approach states that those acts are moral which promotes the long-term interest of individuals. This theory is believed to lead honesty and integrity as it gives long term benefits. The action is intended to give a higher ratio of good to bad as compared to other alternatives. This theory is not popular as it is misinterpreted to give support to immediate self-gain (Crane & Matten, 2010).

Theoretical background on ethical challenges

The virtual Theory

The virtual theory stated that ethical actions need to be consistent with human virtues. This theory resembles to act in an ethical manner, which leads to good character. Character is emphasized in this theory to promote an individual’s wellness within society. The Virtue theory explains that immoral character needs to be avoided as it leads to bad characters (Mizzoni, 2010). When one doesn’t have virtues in its characters, then they are not accepted in society, so this theory always reveals that one should not perform wrong works.

Application of Theory

Utilitarianism approach in Maggi case

Taking the Utilitarianism theory into consideration, it could be stated that in the case of Nestle, the company was supposed to give quality products to its customers. The customer's desire was nutritious Maggie noodles, which the Indian people receive any exchange of money with the company. People of India have always presumed Maggie as quick and nutritious food for children and adults. Following the definition of Utilitarianism into consideration, ethical actions are evaluated using viewing its results, measuring the good effects over the bad effects as well as its effects on the people (Crane & Matten, 2010). Nestle’s actions of higher lead didn’t follow the ethical actions but were unethical. Although the company got passed in all the tests, the wrong labeling of products was still unethical. ‘No added MSG’ labeling was found wrong as the product was found containing MSG. Although nestle supplies Maggi noodles to bring a healthy and pacer lifestyle to its customers, but they are responsible for their unhealthy lifestyle. It is because MSG consumption results in a severe headache, facial tightness, muscle weakness, chest pain and many other chronic health issues (Waller, 2005). Utilitarianism is a very strong ethical theory that needs to review all the values of the business and should follow the rules and regulations ethically to bring business to success.

Individualism approach in Maggi case

Individualism favors the freedom of actions over the state of actions. As per this theory, business actions should maximize profits for its owners but within stated law and regulations. Taking Nestle company into consideration, it could be seen that individualism is shown straightforwardly. This approach stated that none of the actions of the company were unethical or illegal. The Indian government gave Nestle the clearance for its product safety and even removed banned. The purchasing of Maggi from Nestle was optional and the choice of the Indian people. Although the company was once found to give false labeling, families had complete freedom to either choose to support the actions of Nestle or leave them. The non-labeling of the presence of MSG was a business strategy to reduce the acknowledge regarding health issues (Waller, 2005). The employees will be performing anything to attain prosperous outcomes for a company that is ethical for the company to attain success.

Virtue Theory in Maggi Case

The virtue theory stated that one must not apply any immoral practices or character in the workplace. In terms of Nestle’s Maggi case, the way the company presented itself in front of its customers was not ethical. Nestle knew that its product contains monosodium glutamate (MSG) which is very harmful to people, but they didn’t care about the customer's health. No MSG added labeling was also provided in the products wherein the test found that there is MSG present in the products. The difference is that the company doesn’t add the MSG, but it is extracted from different components present in the products. This acts of not labeling the contents of MSG doesn’t reflect good characters nor does it promote ethics within society (The Economic Times, 2019). This theory states that Maggi should have done proper labeling which is its bad side, while the clearance from food safety authority is its good actions, which have got acceptance after longer banned.

Conclusion

It can thus be stated after reviewing the case of Nestle that the company has faced ethical challenges due to misconceptions of excess lead and MSG. Although the company found clearance of safety after various tests, it was seen that labeling of the company was not as per the labeling standards. It can thus be concluded that each of the organizations should follow ethical practices in their workplace.

References

Crane, A. & Matten, D 2010, Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization, Oxford, Oxford University Press.

Mizzoni, J 2010, Ethics: The Basics, John Wiley & Sons.

Waller, B 2005, Consider Ethics: Theory, Readings, and Contemporary Issues, New York, Pearson Longman.