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This report is based on the following case study -
Consumers have higher expectations than ever before. They want products to match these expectations. They also want accurate, up-to-date and useful information about what they buy. In short, consumers want the facts. This growth of consumer power is known as consumerism. In the area of fast moving consumer goods (FMCG), marketing has become a specialised and complex process.
When developing products, organisations try to meet the needs of their consumers as fully as possible. This is vital if they want to do better than their competitors. Nestlé is the world's biggest food and beverage company. It wants to be known as a 'Respected, Trustworthy, Food, Nutrition, Health and Wellness Company'. Its actions are guided by a series of business principles as shown in the diagram below.
Nestlé's business principles
Market research by Nestlé showed that its customers have a genuine and growing interest in information about its brands. In particular, consumers want more information about what they eat and drink. Consumers feel this information should be supplied as part of the product. As a consequence of this information, Nestle participated in the development of 'Guideline Daily Amounts' (GDAs). These were developed by the Institute of Grocery Distribution (IGD), a trade association in conjunction with a number of leading manufacturers and retailers, including Nestlé.
Corporate responsibility through food labeling
Nutritionists and scientists provided the details of the nutrients that the average person needs to consume each day. The GDAs were produced in line with published government recommendations. The symbols were designed to show the amount of calories, sugars, fat, saturates and salt in products. The consistent use of these symbols helps consumers to understand the GDAs. This means they can make choices quickly and easily about their daily diets.
Having developed the guidelines, the next step was the most difficult. Nestle' would like to know if it is economically viable to place GDA information on their packaging. To assist them in making this decision they need some market research done on consumer expectations and also on consumer requirements for packaging labeling.
In business, ethics are the moral principles or values held by those within the organisation. These support and influence its decision-making. In order to be ethical in its operations, Nestlé's decisions are guided by a series of business principles. The well-being of consumers and employees is central to its business principles. For example, one principle is: ‘Nestlé recognises that its consumers have a sincere and legitimate interest in the behaviour, beliefs and actions of the Company behind its brands in which they place their trust, and that without its consumers the Company would not exist.’
Nestlé has also developed a series of business principles focused on communications with consumers. Two of these are:
1. ‘Nestlé consumer communication should reflect moderation in food consumption and not encourage overeating. This is especially important regarding children.
2. Nestlé consumer communication must [match the desire for] healthy, balanced diets. Our advertising must not imply the replacement of meals with indulgence or snack foods, nor encourage heavy snacking’.
Creating Shared Value
Nestlé's business principles and its approach to corporate responsibility were the beginning of what is known within Nestlé as ‘Creating Shared Value’. The process of Creating Shared Value has two important elements. It links the needs of shareholders and consumers to the need to respect people and the environment. Creating Shared Value means that Nestlé looks at the impact of each corporate activity on the wider environment. This attitude is at the heart of everything that the company does. This process starts when products are sourced from various parts of the world. It continues through the manufacturing and distribution of products. It ends when products are distributed to customers (for example, supermarkets) and ultimately sold to consumers (the public).
Each step in this value chain could have harmful consequences if not managed properly. For example, without sustainable agricultural practices the natural resources of farms worldwide might be damaged. By
embedding corporate responsibility in its business practices in this way, Nestlé is able to contribute positively to societies across the globe.
Nestlé's business principles are central to its framework for corporate responsibility. This framework also enables it to Create Shared Value with suppliers, partners, customers and consumers across the world. Corporate responsibility involves Nestlé doing more than the regulations and laws require. This means that the individuals and organisations it does business with have more trust and confidence in Nestlé. Using a series of business principles has helped Nestlé to link good practice with good business. Undertaking business responsibly is not always easy. There are many costs to consider.
However, Nestlé feels that it is important that the company is seen to act responsibly and is responsive to consumers' needs and Nestlé wants to position itself favorably in the minds of consumers, which means that they will react favorably to its products. This will have a long term positive impact on the company's reputation.
The purpose of corporate business principles is to influence how employees within the organisation behave. These principles and policies are given to everybody at Nestlé. These principles provide clear guidelines for employees. This helps them to make choices which reflect the company's ethical stance. As well as creating value for the company, Nestlé also creates value for the societies it serves. The business principles which determine how it does business create a framework for auditing the activities of the organisation. This auditing ensures that the business Creates Shared Value. Nestlé emphasises the importance of evaluating its activities against the business principles. This makes it possible to measure the behaviour of the business in ethical and socially responsible terms.
This report is based on the following tasks on the case study - <br />Task 1 - Report - 1,500 words - 40%<br />Given the information provided here about Nestle and this packaging option, write a brief report of about 1,500 words about the size of the FMCG market in Australia and in particular size of the segments of people with special dietary needs and those who are health conscious with recommendations for Nestle about whether these are viable enough markets for them to change their packaging to host the GDA information.<br />In your final recommendation you are also asked to address the ethical and corporate social responsibility issues inherent in the final decision for Nestle and demonstrate that you have considered the company's business principals and ethical perspective in your final recommendations. Make sure you include a statement of how your final recommendation supports or doesn't support the company's ethical position and justify your stance.<br />Use data that you find from secondary sources (the internet, Australian Bureau of statistics etc.) for this report and present this in tables and graphs to support your recommendations.<br />In your report consider the following information:<br />
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