Author: Jeevana J Adusumilli
Table of Contents
EXECUTIVE SUMMARY.......................................................................................................3
BACKGROUND/ CURRENT STATE........................................................................................4Problem/Opportunity.......................................................................................................................................................4
SWOT Analysis..................................................................................................................................................................... 6Porters Five Forces............................................................................................................................................................. 9
PROJECT OUTCOME/FUTURE STATE.................................................................................11Alternative 1 (Media Statement & Supply Chain Amendment)......................................................................12Alternative 2 (Investigate Supplier)..........................................................................................................................13Alternative 3 (Alternative for Palm Oil)..................................................................................................................13Alternative Assessment.................................................................................................................................................14
IMPLEMENTATION STRATEGY..........................................................................................15
CONTINGENCY PLAN........................................................................................................18
CONCLUSION....................................................................................................................18
References.......................................................................................................................19
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 2 Oct 2011
EXECUTIVE SUMMARY
Social media may be defined as media designed to be disseminated through social interaction between
individuals and entities such as organizations (Botha et al, 2011). Easy access, low marginal costs and
magnitude of audience explain the sustainability and strength of this medium. You Tube being one such
medium with an average view count of 21,085 viewers per day (Hill, 2008) and one video uploaded
every minute, twenty four hours a day (Botha et al, 2011) make it the second most visited website.
Sources like You Tube and Facebook not only impact brand reputation and equity but rapid circulation of
any information- by transforming viewers into producers. Influence of You Tube on brands is evident
from incidents like PETA vs. KFC. Greenpeace, an independent global organization chose to use the same
medium to raise an issue outlining environmental impacts of palm oil usage in Nestlé products, the
largest Food and Beverage Company in the world. This report conducts an in-depth analysis into
consequences of the action including reputation crisis, loss of customer trust, customer loyalty and
business to competition ultimately affecting goodwill. The report outlines three possible alternatives to
approach this problem, with the best being: Media Statement & Supply Chain Amendment. This
alternative facilitates timely communication addressing the issue with the customers and investors to
ensure undeterred brand image in the market. Recruitment of a “Zonal Corporate Governance and
Compliance Manager” responsible for fabricating and formulating a code-of-conduct for suppliers based
on the creating shared value initiative of Nestlé also secures the ethical boundaries of the business in all
regions. The new code-of-conduct is prepared with utmost uniformity but in compliance with regional
laws and is rolled out to each zone with a technical training program in place. An assessment is
conducted quarterly and the results are passed on to the CEO, Governance board and the Zonal officers
for reevaluation of the policies in place. In the event of non-compliance, the supplier is then suspended
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 3 Oct 2011
and an alternate is acquired at minimal costs considering the bargaining power of Nestlé.
BACKGROUND/ CURRENT STATE
Nestlé is the largest foods and Nutrition Company in the world with footprint in over 86 countries and a
net profit of CHF 10.43 billion (2009) despite the recession in 2008 (Nestle, 2009). The confectionary
accounts to 12 percent of the total sale with major contributors being Europe at 32 percent and North
America amounting to 31 percent of worldwide sale (Nestle, 2009). A demonstration of its stake in the
world confectionary market is the recent approach from Hershey’s in acquiring Cadbury brands
(National Post, 2009). Although the company is best known for chocolate, ice-cream and sugary snacks,
Peter Brabeck-Letmathe, the firm's chairman, and Paul Bulcke, its chief executive, hope to transform the
food company into the world's leading health, nutrition and "wellness" firm (Lusanne et al, 2009). The
executives aim to achieve this vision and continue to leverage on the secure brand image for preserving
market hold against competition including Unilever, DANONE etc. and strengthening Creating Shared
Value division.
Problem/Opportunity
Reputation crisis is a terminal component; the company can afford to bet on. The video demonstration
targeting Kit Kat (a star brand of Nestlé) from Greenpeace, an independent global organization is an
indirect threat to the Nestlé’s thriving goodwill of CHF 27.5 billion for 2009. The reason for protest states
that palm oil from Indonesia sourced through Sinar Mas used in Nestlé’s chocolates: Kit Kat, Butter
finger and Coffee Crisp is leading to destruction of natural habitat of orangutans and further extinction.
The medium of protest chosen by Greenpeace is You Tube, a widely popular video broadcasting website
with over 21,085 viewers per day (Hill, 2008) and one video uploaded every minute, twenty four hours a
day (Botha et al, 2011) make it the second most visited website. Easy access, low marginal costs and
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 4 Oct 2011
magnitude of audience explain the sustainability and strength of this medium. Sources like Twitter,
Vimeo, You Tube and Facebook not only impact brand reputation and equity but rapid circulation of any
information- by transforming viewers into producers. Influence of You Tube on brands is evident from
incidents like People for Ethical Treatment of Animals (PETA) vs. Kentucky Fried Chicken (KFC). The rate
of information exchange is evident from the 10,000 views received and a projection of nearly 12,000
more views for the day alone on You Tube. As the video is interchanged amongst other channels like
Facebook with 800 million active users, the momentum in the world market builds within few hours.
Greenpeace does not state non-violence as its norm, but it has been known to resort to direct-action
methods, primarily protests and has been a source of controversy in recent years (Shaw, 2010). An
example of one its stances being a climate protest conducted at Heathrow Airport by scaling a British
Airways Jet in 2008 (Milimo, 2008). With headquarters in Amsterdam, Netherlands, its 28 regional
offices operating in 41 countries that include Nestlé’s major contributors of revenue for chocolates:
United Kingdom and United States, and 2.8 million supporter base worldwide, it can be predicted that
rallies are evident.
Once the possible rallies commence at locations like Nestlé USA Headquarters, there is an increased
potential for media interference. The inferred unhealthy publicity is an early indication of hit to brand
identity further concluded by categorizing consequences into loss of customer trust, loyal customer base
and business to competition resulting in a deficit in goodwill. Nestlé has already been held accountable
on grounds of unethical business practices in the past for issue concerning its promotion of breast milk
substitute, which campaigners claim contributes to the unnecessary suffering and even deaths of babies,
largely among the poor. It has also been targeted by a Brazilian group called Cidadãos pelas Águas
(Citizens for Water) over the extraction of water from an aquifer in São Lourenço (Wikipedia, 2011).
Recurrence of cases doubting Nestlé’s business practices casts an uncertainty in customer confidence.
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 5 Oct 2011
The potential conflict between the company’s Creating Shared Value images built on compliance &
sustainability and the image projected by Greenpeace is a hindrance to visions of Peter Brabeck-
Letmathe (of transforming the company into a new Health, Nutrition & Wellness firm). Greenpeace’s
agenda not only includes concerns regarding Sinar Mas’s heavy deforestation of palm oil beds in spite of
deforestation laws in Malaysia and Indonesia but also its intentions of doing so in the future. The
potential environmental threats noted by Greenpeace concerning Orangutan extinction and defiance
from the supplier toward the govt. pose an obstacle for the future visions and current values leading to
a loss of customer allegiance and further a significant shortfall in goodwill.
IMPORTANCE
Low High
URG
ENCY
LowHindrance to Health, Nutrition & Wellness
image
Loss of Customer Trust
Loss of Loyal Customers
High
Business to competition
Deficit in Goodwill
Public Protests
Negative Media Publicity
Figure 1(a) Case Issue Importance and Urgency Matrix
Figure 1(a) is a demonstration of current key issues ranked in the order of importance and urgency. It is
evident that all the issues are interrelated and each individual instance is a consequence of the
preceding. In order to break the chain of events the first issue that needs immediate and utmost
attention is the public protests from online video that drive negative publicity.
SWOT Analysis
Strengths:
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 6 Oct 2011
Nestlé stands a shaper of the market trends and also has the ability to leverage its diverse brand
names to generate sales. Fortune 500 has listed it at a 48 as opposed to its competitor Unilever
at 121 in the ranking of 2009 world’s largest corporations (Fortune 500, 2009). One of Nestlé’s
chocolate brands; Kit Kat, 150 of which are consumed every second worldwide (Nestle, 2009)
chocolate bar brands of Nestle generated 12 percent of revenue amounting to CHF 12.9 billion
dollars (Nestlé, 2009). Nestlé’s large portfolio of prominent diverse consumer brands helps it
maintain and increase its shelf space presence giving it an advantage over competing firms that
lack such a strong brand portfolio (Wiki Invest, 2008).
Despite the recession in 2008 Nestlé has continued to invest in Research and Development
(R&D). Nestlé holds 3000 scientists, technologist, engineers and anthropologists working in the
R&D department of the company worldwide. It invested CHF 1.36 billion in 2009 as opposed to
CHF 1.39 billion in 2008. The product development process involves three stages ranging from
discovery (that involves In Vitro & experimental studies and human studies/ clinical trails) to
product development (that involves product information, quality and safety, product
information and packaging) and product launch (that involves communication and customer
support). Nestlé's global R&D is applied locally to meet different consumer needs and
preferences through their 320 Application Groups worldwide.
Weaknesses:
Increased product recalls within the past few years. Nestlé USA's Baking Division has recalled all
varieties of Nestlé TOLL HOUSE refrigerated cookie dough products, including their Cookie Bar
Dough, Cookie Dough Tub, Cookie Dough Tube, Limited Edition Cookie Dough items, Seasonal
Cookie Dough and Ultimates Cookie Bar Dough with 28 cases of E.coli reported in March 2009
(About Pediatrics, 2009). Nestlé also recalled Nesquik Strawberry Powder 21.8 ounce that may
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 7 Oct 2011
contain small fragments of aluminum in 2008. Repeated recalls lead to low brand equity and
affect the customer loyalty.
Following the recession of 2008, a slower growth is projected in the company’s sale. Although
Nestlé managed to secure strong cash flow, the net profit margin for the year 2009 dropped to
CHF 11.79 billion compared to CHF 19.05 billion from 2008 (Nestlé, 2009). Since the customers
spending is significantly low and is expected to raise at a snails pace on accounts of job security
and the economy, a substantial hike in volume sales can not be expected anytime soon.
Opportunities:
Nestlé’s vision is to strengthen its position in the market against the competition with a new
image. Since, Peter Brabeck-Letmathe, the firm's chairman, and Paul Bulcke, its chief executive,
hope to transform the food company into the world's leading health, nutrition and "wellness"
firm, this gives it a chance to gain an added advantage against its competition (Lusanne et al,
2009). An organic growth projection of 4.1% in the 2009 annual statement of Nestlé portrays
rising health awareness in consumers in regard to fat consumption, cholesterol etc. With
products like BOOST that is loaded with 26 vitamins and minerals, antioxidants plus protein, and
a strong Research and Development wing in place the company has a scope for fabricating the
vision and further capitalizing on it.
Threats:
Continued allegations on the company in concern to unethical business practices. Nestlé has
been held on bar in 2003 in regard to the baby formula being promoted by the company as a
substitute for breast milk in China, India, Russia and Latin America. Various health organizations
contended the substitute on accounts of environmental hazards like baby’s health. In the
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 8 Oct 2011
Philippines, there exists a Boycott Nestlé campaign-2001 due to suspected labor rights violations
in a factory in Laguna province led by Kilusang Mayo Uno(Wikipedia, 2011).
Nestlé is seen to enter more mature markets that are being dominated by brands like Danone
and Kraft. Kraft with its acquisition of leading gum and candy brands in much of EU has
facilitated the company a market hold. Tang, Oreos, and Jacobs Coffee are some of the brands
that have are particularly successful abroad and have allowed developing markets’ (Asia, Oceana
and Australia) to account for 21% of Kraft's total revenues (Wiki Invest, 2008). Danone being the
first to arrive with a yogurt product in France, it holds to be a market leader. Nestlé’s significant
sales drop in Europe (8.4%) from 2008-2009 as opposed to other markets shows the struggle.
Porters Five Forces
The threat of the entry of new competitors: Nestlé stands a leader against its immediate competition
including Unilever Plc., Kraft Foods Inc. and Tyson Food Inc. grossing CHF 107.6 billion in 2009 (Nestle,
2009). The company has been in operation since 1866, for 122 years giving the company a strong
footprint in the food manufacturing industry. Although the industry is very competitive and is constantly
evolving with entrants, Nestlé has an advantage of holding majority of the share in the market. With a
substantial brand equity and a base of loyal customers Nestlé is at an insignificant risk from entrants.
The threat of substitute products or services: Nestlé’s portfolio of brands covers almost every food and
beverage category in the market ranging from baby food (Cerelac) to weight management (Jenny Craig).
In spite of the diverse brands, Nestlé has seen resistance from other brands like Danone in European
markets, which led to a drop in its 2009 sales. Due to the nature of the industry and consumer attitudes
toward food it is essential for Nestlé to constantly support its R&D for gaining an edge over competition
with new introductions. Health and wellness objective is a clear example of the recent initiatives Nestlé
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 9 Oct 2011
has undertaken. But reputation threats from organizations like Greenpeace pose feasibilities for
competition (Kraft Foods Inc., Unilever etc.) to scoop the customer base.
The bargaining power of consumers: Global sales share of Nestlé’s product mix is significantly high
compared to its competition. Fig 1(b) shows sales share of Nestlé’s at Regional, Country and Product
levels.
Fig 1(b) (Gehlhar, 2003)
The buyer switching costs being are at a bare minimum, although majority of the products hold secure
positions, other categories like Confectionary and Dairy products suffer a potential risk. An example of
its strategy is its response to Unilever’s acquisition of Ben and Jerry’s by expanding its ice cream core
business by acquiring General Mill stake in Ice Cream Partners USA, giving it ownership of the premium
Hagen-Daz in the United States (supplying to the recent demand for premium ice cream) (Gehlhar,
2003). Although the bargaining power of consumers is high in the industry Nestlé is a working monopoly
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 10 Oct 2011
in most nations and product categories.
The bargaining power of suppliers: Nestlé becomes aware of any actions or conditions not in compliance
with the Code, Nestlé reserves the right to demand corrective measures. Nestlé reserves the right to
terminate an agreement with any supplier who does not comply with the Code (Nestle, 2011). Since the
company’s strong distribution channel comprises of suppliers (165 000), farmers (556 6000) and
multiple agents, Nestlé enjoys minimal switching costs. Nestlé’s interaction processes with suppliers
starts from informing suppliers about contracts to engaging and assessing them to constant monitoring
with Gap analysis and corrective actions of necessary to qualifying suppliers with development and new
opportunities (international). So, the company holds a higher bargaining power than its suppliers.
Intensity of competitive rivalry: Nestlé is a global power in the nutrition and foods industry. But
Technology employed by food processing firms is relatively unsophisticated and could easily be
replicated by rivals (Gehlhar, 2003). Preserving the brand identity is more important in avoiding
replication of similar processing technology by competition. The combination of processing technology
and specific brands helped Unilever differentiate its oils and fat products from those of its rival ConAgra
(Gehlhar, 2003). Nestlé in spite of secure brand equity is still at constant competition from its
progressing rivalry. But the company has been constantly vying with initiatives like acquiring Stouffers
brand in the United States giving the company the leading position in the ready meals product category
(Gehlhar, 2003).
PROJECT OUTCOME/FUTURE STATE
It can be inferred from the current and past business state that Nestlé’s reputation, which sustains large
part of the business has been targeted by organizations in multiple instances. Present allegations by
Greenpeace in regard to Sinar Mas Group’s (supplier) practices in order to meet growing global demand
of palm oil that includes Nestlé’s (and other companies: Unilever, HSBC, Carrefour, Burger king and
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 11 Oct 2011
Mattel) are a threat to the brand equity of Nestlé’ as well as 12 percent confectionary (Kit Kat, Rolo,
Butter finger and Coffee Crisp) market share.
Alternative 1 (Media Statement & Supply Chain Amendment)
Foremost risk in order of urgency and importance is public protests at regional headquarters (especially
North America and Europe that account for nearly 60 percent of chocolate market) of Nestlé that
further leads to negative media publicity. In order to counter this plausible action by Greenpeace, it is
vital that Rudolf Ramsauer (corporate communications officer) responds to the video posted by
communicating to the public directly through a recorded and written corporate statement on the
corporate website and social media websites. This will help bar the rising mass hysteria and public
pressure over the allegations of unethical corporate governance. The public statement may include
Nestlé’s tragic ignorance of supplier conduct in spite of rigid policies and assessments in place and a
possible course of action. This message ensures public trust and unassuming market equity. In due
course since Unilever (an immediate competition to Nestlé) dropped Sinar Mas as a supplier on grounds
of unacceptable environmental practices in December 2009, pressure mounts on Nestlé to suspend
Sinar Mas as well. If Nestlé chooses to approach a new supplier, they would have to be from Malaysia,
Indonesia or Colombia as they are the volume producers (63.9 million tones and account to ninety
percentage of world production) that can furnish the supply. Any portion of new supply may again be
acquired through the deforestation considering the event that Sinar Mas could heavily deforest in spite
of several deforestation laws in place in both nations. So, the best approach in this case would be to
formulate a new code-of –conduct and launch a training plan for all zones outlining the importance of
compliance with laws and sustainability. Considering the repeating pattern of accusations against Nestlé
on grounds of ethics calls for a need to appointing three corporate governance officers for all three
market zones (EUR, AOA & AMS) reportable to concerned zone heads ensures the practice new policies
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 12 Oct 2011
and no further accusations against the company. This ensures full execution of the creating shared value
initiative. Scope: The scope of this alternative includes human resources, suppliers, supply chain
initiatives, marketing department and all supplier code of conduct. When policy changes and code of
conduct changes occur, a training program is in place for education purposes. The budget allocation for
the project is $750, 000, and the time frame is six months.
Alternative 2 (Investigate Supplier)
Having the video removed from the website on grounds of violation of trademark ensures no further
transfer of information. Also, since Nestlé has a corporate social media presence, it can ensure no bad
remarks on every appearance including Facebook page and Twitter. The company can take a slow
approach toward investigating the supplier and the concerned agents. If Greenpeace’s accusations turn
out to be true then Nestlé can look into alternative suppliers. This way the company can avoid the
pressure built up but may instigate a protest from Greenpeace considering there is not profitable
reaction to the video posted. Scope: The scope of this project involves the Information Technology,
Marketing departments and supply chain initiatives. The budget allocation is $2,20,000 and the time
frame is two month.
Alternative 3 (Alternative for Palm Oil)
The company may pursue laid-back approach and resort to having the video removed from the
websites, further protect social media presence in Facebook and Twitter. Since Nestlé has a very strong
Research and Development entity, it can concentrate on conceiving an alternative for palm oil. This
alternative crushes information spread but may again encourage Greenpeace to protest considering no
immediate course of action. This alternative also does not take into account the uncertainty of time
frame for a new invention and certainty of Indonesia becoming the third largest carbon emitter after the
United States & China by 2012 if the deforestation continues (Greenpeace, 2011). As this fact does not
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 13 Oct 2011
comply with Nestlé Creating Shared Value initiative, the company may loose customer trust, customer
loyalty and further goodwill. Scope: The scope of this alternative involves Information technology,
Marketing and R&D. An individual is contracted to protection of Nestlé trademark until R&D arrives at a
solution. The budget allocation is $4,50,000 and time frame is at least 5 years.
Alternative Assessment
Fig2 (a) is an assessment of alternatives against magnitude of threats and reinforcing brand equity. The
weightage is allocated according to the order of risks depicted in Fig 1(a). Alternative 1 addresses all the
concerns associated with current situation. The communication ensures that Greenpeace video is
addressed to the public oppressing any retaliation, new code-of-conduct and new title dedicated
Creating shared value (sustainability and compliance) protects the company’s initiative and further any
occurrence or repetition of persistent allegations against Nestlé.
Decision Criterion Alternative 1 Alternative 2 Alternative 3
(Weighting) (Media Statement (Investigate Supplier)
(Alternative for
& SCM Amendment) Palm Oil)
Cost 0.1 4 10 8Time 0.2 7 10 8
Corporate Image 0.2 7 4 3
Customer Satisfaction
0.3 10 5 3
Ethics 0.1 10 7 4Goodwill /
0.1 10 4 4Corporate Vision
Total 8.2 6.4 4.7Fig 2(a) Decision matrix for alternative assessment
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 14 Oct 2011
This alternative also facilitates Peter Brabeck-Letmathe (chairman), and Paul Bulcke (chief executive)
hope to transform the food company into the world's leading health, nutrition and "wellness" firm
(Lusanne et al, 2009).
IMPLEMENTATION STRATEGY
The project for alternative 1 is broken into three phases: Communication & Recruitment phase,
Formulation & Fabrication phase and Assessment phase. Each phase with Cost Analysis and Risk
assessment is as explained.
Communication & Recruitment phase: During this phase of the project Rudolf Ramsauer (corporate
communications officer) communicates with public and media through the homepage of corporate
website (http://www.nestle.com/Pages/Nestle.aspx) and social media portals including Facebook
(http://www.facebook.com/Nestle) Twitter (http://twitter.com/#!/nestle) and YouTube between March
18th -19th 2010 with an apology from Nestlé’s on grounds of ignorance in the event that Sinar Mas (a
major supplier) is indulging in unethical means to supply the company. Nestlé also emphasizes the fact
that in spite of rigid supplier code-of-conduct and periodical assessments the supplier managed to resort
to ways that do not comply with deforestation laws in Indonesia leading to near extinction of
Orangutans and increased carbon emissions. The phase also includes changes in Nestlé’s current
organizational structure to accommodate a new role as in Fig 3(a), “Zonal Corporate Governance and
Compliance Manager”. This new role is responsible for implementation of creating shared values
objectives and other job duties include: Overseeing and monitoring the implementation of the
compliance program including new code-of conduct for suppliers: Reporting on a regular basis to Zone
Heads and Governing body (D.P.Frick), CEO and progress of implementation; Periodically revising the
program in light of changes in the organization's needs and in the law and policies and procedures of
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 15 Oct 2011
Government; Ensure employees & suppliers have received, read and understood the standards of
conduct; Developing, coordinating, and participating in a multifaceted educational and training program
that focuses on the elements of the compliance program and seeks to ensure that all appropriate
suppliers, employees and management are knowledgeable of, comply with, pertinent Federal and State
standards; Assisting management in coordinating internal compliance review and monitoring activities,
including annual or periodic reviews of departments; Independently investigating and acting on matters
related to compliance, including the flexibility to design and coordinate internal investigations and any
resulting corrective action with all departments, contracted vendors, and if appropriate, independent
contractors; Developing policies and programs that encourage managers and employees to report
suspected fraud and other improprieties without fear of retaliation; Continuing the momentum of the
compliance program and the accomplishment of its objectives long after the initial years of
implementation. The scope for recruitment time is March 18th – April 18th and the budget allocation for
recruitment of three managers being: $2,70,000(Recruitment expense). The only risk involved in this
phase is time objective for recruitment.
Formulation & Fabrication phase: This phase involves fabrication of a new supplier code-of-conduct
(based on regional laws and cultural constraints for each country) involving the new recruits (Zonal
Corporate Governance and Compliance Manager) with D.P.Frick (Corporate Governance and Compliance
Director) and Chairman (Peter Brabeck-Letmathe). A technical training and educational program based
on the measures is then rolled out to each country. This initiative and new recruits are introduced o
investors and the public through a public statement by Rudolf Ramsauer (Corporate Communications
Officer). A new commercial is rolled out for Kit-Kat stressing on new initiatives by the marketing
department. This phase is aimed at being completed by May 19th 2010. And the budget for travel, legal,
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 16 Oct 2011
marketing ($2,80,000) and educational expenses is $2,00,000. The risk involved in this phase is time
objective and aim to achieve utmost uniform practices across all zones.
Fig 3(a) New Organizational Structure
Assessment phase: During this phase each Zonal Governance and Compliance Manager visits assesses
suppliers including Sinar Mas compliance strategies. And a report is then generated for corporate
governance, CEO and Zonal Managers for further revival of the policies if required. This phase also
involves quarterly assessments within the origination to ensure conformity of the new policies. The risk
involved in this phase is recurrence of unethical behavior from suppliers. The targeted completion time
of this phase is August 19th 2010.
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 17 Oct 2011
CONTINGENCY PLAN
In the event that the project fails, and any supplier (including Sinar Mas) employs unethical means to
furnish Nestlé’s requirements then the contingency plan falls in plans. Any supplier that does not comply
with new code-of-conduct of Nestlé or does not pass the assessment phase of the implementation
strategy is suspended from any future dealings with the company. An alternate supplier is sourced
during this action. Because Nestlé possesses quantity of bargaining power as compared to the supplier,
cost incurred for the switch is estimated to be considerably low and even negligible. By choosing a new
supplier, Nestlé can educate and develop them according to its policies and needs by maintaining a long-
term relationship.
CONCLUSION
Nestlé is the largest nutrition and foods company in the world. The threat posed at the company by
Greenpeace on grounds of unethical means may seem a minor issue. But accusations by various
organizations on same grounds agents Nestlé calls for a need to reevaluate its organizational structure
and strength of Creating Shared Values Initiative. Although the company has been attempting to
reestablish its brand equity through each occurrence, absence of an accountable personnel such as
“Zonal Corporate Governance and Compliance Manager” within the organization to fabricate rules
according to each nation forces employees and suppliers to leverage on its policies in place. Also
consistent communication with public from the corporate communications and governance ensures
customer and Investor trust. In turn resulting in unaffected brand equity.
NESTLE: A SOCIAL MEDIA NIGHTMAREBusiness Case Report 18 Oct 2011
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