Essay: Culture Of Nestle - An Analysis

Discuss about An Analysis of The Culture of an Organization?

Nestle or Nestlé is a company trading with beverages and Swiss transnational food with it does headquarter in Vevey, Switzerland. The products include frozen food, confectionery, breakfast cereals, baby food, and pet food. It has approximately 447 factories with 3, 39,000 people operated in 194 countries. The Company formed in the years 1905 when two of the companies – “Anglo- Swiss Milk: and “Farine Lactee Henri Nestle” merged together. The company had a primary listing on the six Swiss exchange. Maggi is one of the famous products of the Nestle, which is among kid’s favorite food/ snack item. The company has also become a major manufacturer of the variety of noodles and soup mixes. After the Second World War, Nestlé again became famous for being the manufacturer of Nescafe. The coffee manufactured by Nestlé Company has become a staple drink for the US military over that period. They get energy after a long fight with the enemies. This has created an upward rise of sales in the Nestle. Soon nestle has taken up a new project. Now, chocolate manufacturing has become a prime focus. Thereafter a phase came when Nestle has taken a dynamic step by acquiring various companies. The merge with Maggi was specifically portrayed. (Castelarhost team, 2005)

An Organizational culture is all about values and behavior within the organization which leads to the contribution towards the unique psychological and social environment.  Believes, values and principles of every organization depict the culture of an organization. The culture also has the inclusion of system, vision, values, language and norms within the Organization.

When we speak about culture within Nestle, some agendas has become the foundation of the culture. Those are mentioned below: -

Diversity

Unlike other corporate, Nestle has been doing for a number of years with diversity as the foundation. The company has worked to get the gender balance within the organization. The authority worked for enriching leadership culture and get talented people to work within the organization. Nestle has never set back in the field of ensuring better customer understanding.

Rewards and recognition

Nestle never hesitated in providing proper recognition to the employees who deserve.  They favor attractive remuneration and fair compensation for workers to boost their motivation. Nestle also believes in providing fair remuneration which is relevant to external level of compensation. With the desired leadership performance, recognition is given to the value performance.

Organizational culture/ Culture of an organization

Employee health and wellness

Employee health and wellness is always a concern for the Nestle. They provide each of their employees with a healthy, nutritious diet along with a variety of sporting activities. They believe, healthy that the mind can only be achieved if an individual is physically healthy and fit.

The Environment of a company is an important consideration for its growth and development. Both internal and external environment provides an impact on the business atmosphere. The organization structure includes the senior management along with the middle and the lower level management. This organization structure creates various problems within the enterprise. The problems like lack of communication, inefficiency, conflicts between staff members. It also becomes a great problem to get feedback from the base staff to the top level management. One group of employees has an opinion that they are much more powerful. This gives rise to a lot of complications within the internal environment. Even lack of team spirit can be observed. (Olsen, 2010)

Nestle also started working with the Fair Labor Association. This is basically a non-profit organization which is also known as multi stake. This works with nestle to improve the internal working atmosphere. Nestle never steps back to abide with corporate social responsibility. The shared value was established with encouraged business. Some social values are focused on great sustainability. Nestle also focused on areas of rural development and nutrition.  Various challenges within the environment either internal or external have been observed. The shared value approach was also being established by the management of Nestle. (Xuan, 2014)

A few months back one of the products of Nestle named as ‘Maggi’ went through massive controversies in India. The instant noodle failed the safety test in food laboratory. There was a test conducted in Gorakhpur lab where the expert found monosodium glutamate (MSG) in Maggi. The Lead was found in a very high quantity of the food item. The test conducted in both UP and Kolkata displayed harmful chemical within the Maggi instant noodles. The test also been conducted in the capital city, New Delhi, where again the test failed.

 The Complaint was filed in Burbank court for being such an unsafe food. The statutory authority informed the “Food Safety and Standards Authority of India” (FSSAI) to have a look into all the parameters while testing it in the laboratory. Even the test should be conducted worldwide. As per the food safety and standard rules, the flavor enhancer should not be included in infant food. The permission of MSG is not included in more than 50 items. These items include the varieties of Noodles and Pastas. (Press Trust Of India, 2015)

Internal and External Environment Analysis

The food category of Nestle named as Maggi comes under the category code 6.4.3. Maggi is among such a category of food where it falls under the Codex international standard 249 as considered by WHO. The main problem lies with the seasoning of the product that comes with Maggi instant noodles. The main purpose of the seasoning is to enhance the taste of the food item. But, while doing so, the manufacturing company is making the entire food highly adulterated. (Diligent Media Corporation Ltd, 2015)

These days kids are inclined towards the taste. MSG is such an ingredient that helps to stimulate the nervous system and make food tasty. According to US FDA, MSG is taken as safe. This is basically a combination of salt, pepper, baking powder and vinegar. Even in various types of natural foods such as cheese, mushroom, tomato etc glutamate is present. According to a doctor of Institute of Chemical Technology, Mumbai Maggi satisfying MSG limit can be harmful if consumed in large quantity. (Chatterjee, 2015)

Nestle authority says, they did not add MSG in Maggi noodles. While making the noodles they use wheat flour, hydrolyzed groundnut protein and onion powder. All these ingredients contain glutamate. The authority also believes that the test has found out glutamate within the product which has come naturally. The testing method was approved by FSSAI for glutamic acid only. This particular component is easily found in many foods which also includes the hydrolyzed vegetable protein. The authority also said that the extent of sensitivity in the Indian laboratory test is not as sensitive as in other developed countries. Nestle India also have assured their test in the accredited laboratory with regular monitoring activity. Meanwhile, samples have been taken from 600 products across the nation and tested its safety. The result of the test stated that the extent of lead is within the limit. Thus, Maggi is safe to consume for people of all ages. (Chandran, 2015)

Gaining back the customer satisfaction is very difficult once a negative impression frames up in the market. Management of Nestle called up the Press conference to explain. The inclusion of lead in Maggi went vital in various news channels through flash. The speed in which the negative news about Maggi was spreading became actually impossible to stop and spread. People had trust on the beverages and food items sold by Nestle. But, the sudden news, reflecting its inefficiency in passing the safety test has violated the mind of every individual. Generally, the instant noodles are consumed by kids. Parents have become extra cautious and stood against Nestle. The government bodies, social group, media, human rights commission were involved in this matter standing against Nestle.

An Introduction to the report

The trusted brand Nestle had an allegation of manufacturing the food products that included monosodium glutamate (MSG). A Little quantity of it is acceptable, but nestle was found using it in more than the permissible limit. The controversy became hype with the attempt of instant noodle’s removal from all retail outlets and departmental stores. (Oyster Learning Pvt. Ltd, 2015)

FSSAI justifies about the ban on the Maggi noodles in the “Bombay High Court”. They have been claiming inclusion of lead in the food product beyond the permissible limit. The Advocate general of FSSAI named Anil Singh said; Nestle India Maggi manufacturer was studied by the food regulator and has approved a hearing to the company. They have still not revoked on the product approval. If the manufacturing company is willing to follow the lawful conditions, the court will allow the company to produce the products and sell them again in the market.

A petition was filed against Nestle where there was banning thought of Maggi with regards to 9 variants. It was prosecuted under the view of Justice B.P Colabawala and V M Kanade. The government of Maharashtra has banned the sale of the product. But, there was an argument which says, various samples of Maggi was collected by FSSAI from various states across the nation. There was a collection of 75 samples. All the samples were tested repeatedly in various labs. But among them 30 samples inclusion of the lead beyond the limit that is actually permissible.

A question also arose with Maggi as noodles with its quality check parameters. It was asked to test three variants of Maggi. But, if that is true, then why all the nine variants are banned? There was also the question about choosing only Maggi noodles for safety test. According to justice B P Colabawalla, other noodles should also be tested parallel with Maggi. The judge also marked that among 72 samples 42 were up to the mark. (Rana & John Revill, 2015)

Even in Bombay court, the FSSAI justified the ban of Maggi noodles. Maggi accepted that the certain batch of food product has led in non-permissible level. But, for these few samples imposing a ban to entire company is unfair. According to the authority within the company, they have tested the products in around 2,700 laboratories. But they found the extent of lead to be 0.5%, which is actually permissible.

The rule under FSSAI

To make the work easier and comfortable in the organization, there are various models which are propounded. These models will be helpful in defining the working culture of the organization in a well-defined manner. Mainly, the two common Models are defined in the processing of the Organizational process, which are named as the Greet Hofstede’s Model of cultural dimensions and Schein’s Model of Organizational Culture. Both of these Models possess their own areas of the specialization.

The Hofstede’s Model possesses the five cultural aspects in defining the organizational culture. The cultural aspects are named as the Power distance index, Individualism and Collectivism, Uncertainty Avoidance Index, Masculinity v’s Feminity and Indulgence v’s restrain. According to the Edgar Schein, it is believed that the Organization cannot able to adapt the changes in just a moment of time. For accepting the changes, the Organization needs a definite time. For organizational change, the three levels are defined thoroughly which are considered as the Artifacts, Values and Change Values.

The difference between the two models will be that in Hofstede Model, the five major aspects are defined to judge the cultural aspects, but in the Schein Model, the judgement for the cultural aspects will be done on the basis of the three aspects. Rather than this, the Hofsted believes in the “authority of the rules” and Schein believes in the “authority of the person”.

The model selected for the discussion is Hofsted’s Model. The Model is capable in providing the most suitable cultural aspects and also helps in identifying the major issues related to the organization. As the different criteria are defined in the Hofsted Model, so the evaluation of the organizational activities can be done easily.

The assignment had options among the practice, issue, event or sub-unit. I have chosen an issue with the organization instead of any event, practice or subunits.

I have ruled out the sub-unit as I did not find much to write about it.

Practice or events can be considered by I found it not much interesting than the issue. Yes, the reader will be happy to know about the issue and controversies. Every day, thousands of people read the newspaper just to find out if there is any recent happening.

An issue related to business houses, individuals, and government becomes really popular. Thus, I always thou the issue would be interesting and can easily attract people towards the publication.

International food standards

Theoretical framework 1

Baby formula adulteration

Nestle also faced other controversies with regards to their food item. In the year 1977, adulteration in baby formula sold by Nestle became public. Thus,

A boycott was launched on the 7^th of July 1977 in United States. This issue was not only confined to the people of the United States, rather it was seen spreading to the entire Europe.

In the first phase of 1980, it has spread among the people of Europe. (Nanda, 2015) But this has come to an end after quite a number of years. By 1984, it has come to an end when Nestle agreed to follow the international marketing code.

The company had a huge loss of resources and brand name within these years of boycott period. Nestle have been abiding by the rules and met 104 criteria when they go ahead with the marketing of the formulated milk for kids. This was the result of the boycott that has given them a lesson. During the issue, even WHO confirmed about violation of their code by the Nestle. A lot of controversies rose during this stage.

Theoretical framework 2

‘Nestle bottle water’

There were also been controversies with regard to bottle water with Nestle. This was notified with the second world water forum.

Nestle took up the initiative to provide pure water to the public. They said they are very much concerned about public health which can be violated without purified water. But this soon became a reason for controversy.

The issue of Ethiopian debt was forecasted in the year 2002. Nestle also demanded a replay amount of US $ 6 million from Ethiopia. The condition of Ethiopia was really bad as people over there were suffering from severe feminine.

Emails went from more than 8,500 people to nestle complaining about the carelessness of Ethiopian government. Thus, the company thought of re-investing. Nestle agreed to the offer of $ 1.5 million. This was donated to three active charities in Ethiopia. (Kaye, 2014) 

Theoretical framework 3

Cookie dough

An issue was again cropped up with nestle in June 2009.

This time the problem was severe with Nestlé’s cookie dough refrigeration.

The remains were found in one of the plants in Virginia US.

As a result, more than 50 people consuming it became sick. Thus, they were taken to hospitals. This has created an outbreak.

The reason was contaminated flour availed from the raw material suppliers.

Reasons behind led and MSG in noodles

I didn’t choose the above mentioned issues because these issues are quite old and they are hardly remembered by any of the readers. I wanted to portray the latest issue that is already in the mind of people. The update will give a spark over the fuel. Thus, the effect will be more effective.

The Issue with Maggi has created an upside down in the total organizational structure of Nestle India. Not only the company, but Maggi lovers of all ages have suffered due to the issue. It has also created a tussle between Nestle India and the Indian government. People preferring Maggi have a great home of getting control over the situation. They were also highly confused about why did the trusted brand responsible for adulteration. While examining in various laboratories across the nation, the content of MSG was found to be different in various samples. But the high quantity of lead is found in the capital city of India. (Pioneer Team, 2015)

While analyzing the organization, it has been found that the external business environment changed in a day of this controversy. The entire nation makes a turn of dividing into two parts. One is supporting Maggi whereas others are dead against. Nestle being one of the strongest companies was also affected in its external business environment. As we all know that bad news spread pretty faster than the good, Nestle being an organization has whole also suffered a lot.

The competitor companies won over Maggi as people are buying those substitutes. The other noodle variants are taken most part of Maggi’s profit. Even though the competitor company also went through same crises period, yet for the few months they took over the lead in business. Soon the authority and food and health organization asked for the laboratory test of the other noodle company products. Most of them failed the test just like Maggi. (UKessays Team, 2015)

The stock exchange also affected by a drop of 9%. As per the expert stock market analyst, it has been the biggest drop in a single day. The board room of Nestle India had no profit talks rather than silence. The Maggi officials themselves were helpless. Nestle India had some drawbacks with regard to the localization factor. Normally companies do change their products on the basis of the localization. But, Nestle totally ignored the fact in India. The local factors must be considered in such a situation. It was also been found that MSG level in Maggi was quite high in the products sold in the US and Canada. But, In India, it is comparatively low. This fact was not being considered by Nestle India. (Shankar, 2015)

Nestle Views

Conclusions

For every food manufacturing company, quality is a major factor. Whether they induce health benefits or not health hazards should not be found in consumable products. The Nestle India as an organization has failed to satisfy this fact. The Maggi issue became a great concerned for people around the world. If the quality control of Maggi has been strong, the food product with the highest level of MSG was never been found. Nor people with belief in Maggi turned off their faces. Yes, the quality control team has been a major contributor of this unexpected Maggi controversy.

These days’ social media play a very active role in spreading the news. The loss which Nestle had incurred with Maggi controversy would not have been so much if it has been restricted to only newspaper and television. Nestle India totally ignored the fact. Soon, Maggi has come up with a new set of products by taking back all the products which caused such controversy in the market. Now, the test result was positive. Yes, Maggi is safe to consume with no harmful quantity of MSG. People are buying and consuming the product. But, Nestle must not forget testing its all products by themselves before releasing in the market.

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