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Nestlé’s Ethical Issues in Developing Countries Case Study


Introduction

The global market is full of players that seek a substantial share of the market to survive in the respective turbulent and competitive industries. Therefore, huge corporations are perceived to possess competitive advantages since economies of scale favor them attributed to the scope of operations. Fair competition, which is characterized by justified means of production, is essential for ethical business operations, and thus non-conformity to the laid down standards is considered unethical (Bird, 2009). The issue of development and underdevelopment in the world can be viewed from the core and periphery aspects of economic activities. In this case, firms from industrialized societies exploit developing countries to develop their brands and gain competitiveness (Gugler & Shi, 2009). In this case, the ethical elements of the operations pose questions about the motives of such corporations, which results in displeasure to the greatest majority. Nestle has been criticized for allegedly exploiting developing countries in various ways to enhance its brand image. This paper will analyze the ethical issues regarding Nestlé’s branding strategies based on ethical theories.

Background Information

Set up in 1867 by Henri Nestle in Vevey, Switzerland, Nestle emerged as one of the most successful food-based corporations that dominated international markets. Its growth was witnessed in the 1960s when it acquired smaller firms in Switzerland and other countries to expand its services globally. The range of products sold by Nestle includes roast and soluble coffee, tea and health beverages among others. The company has a workforce of over 339,000 employees working in various units located globally in 508 factories (Nestle, 2015).

Despite the rich background, Nestle has been recently criticized as one of the multinational corporations that engage in unethical practices to brand its products, especially in the developing economies. Health agencies have faulted the corporation for promoting its infant formula by misinforming mothers in developing countries that the product is more nutritious than the mother’s milk (Muller, 2013). In another case, the company was accused of engaging in child labor in the harvest of cocoa beans in Ivory Coast (Andrei, 2015).

Besides, selling unlabeled genetically modified foods in some of the Asian markets elicited controversy about the company’s motives. The high-priced mineral water product, Pure Life, also evoked ill feelings regarding the ethical features of its operations in some of the Asian markets (Andrei, 2015). Moreover, pollution issues have been linked to the production operations of the corporation resulting in environmental sustainability concerns (Andrei, 2015).

The issues surrounding child labor, manipulation of illiterate mothers, unethical promotions, price-fixing, pollution, and mislabeling of its products are critical ethical concerns that need to be addressed to curb exploitation of individuals from poor countries. The significance of the issue is linked with the realization of justified business conduct, which is free from exploitative practices that seek to develop the brand of the particular corporation that has a global presence.

Ethical Theories that Explain the Controversies Regarding Nestle

Ethics is concerned with the rightness or wrongness of an act that has implications for the individuals and communities (Bird, 2009). Various ethical theories have been developed to provide a comprehensive understanding of the ethical aspect of living. These theories include Egoism, Utility, Natural Law, and the Kantian Theory. The following ethical theories would be essential in addressing the ethical issues surrounding Nestle in emerging nations.

Egoism

Egoism is based on the teleological ethical theory that identifies the goal as the pleasure, benefit, or the greatest good solely to the individual. Therefore, the rightness of an act is gauged on its maximum benefit to the individual and not the group or society. The ethical, psychological, and minimalist aspects of egoism would greatly assist in understanding the ethical issues surrounding the exploitation allegations facing Nestle. The psychological and ethical perspectives of the egoism theory are descriptive and normative claims respectively that underscore that humans are naturally motivated by only their self-interest to act. The minimalist approach is ideal for the Nestle situation since it applies to economic and social models. Thus, people will act in a particular manner to satisfy their interests (Bird, 2009).

The implication is that the top management and key shareholders at Nestle engage in activities that seek to fulfill their goals regardless of the means applied. Thus, minimalist egoism occurs when the company pursues its primary goal of attaining profitability to benefit the self-interest of the key stakeholders as depicted by the profit of $14.5 billion recorded in 2014 (Nestle, 2015).

Nestlé’s push for breastfeeding formula to illiterate mothers in less developed countries especially in Africa resulting in increased profits is a depiction of egoism. Convincing the uneducated mothers in emerging countries that the infant formula is equivalent to breastmilk portrays the essence of minimalist egoism to serve the interests of the corporation concerning profitability (Andrei, 2015). Taking advantage of the literacy levels of the mothers in the impoverished settings that lacked sanitation could be seen as unethical since the self-interests of the mothers and children were not factored, thus not founded on altruism. For instance, the failure to boil the water before administering the infant formula resulted in death cases due to waterborne diseases, which questions its egoistic justifications (Muller, 2013).

Utility

The utility theory argues that an act is regarded as right if it yields happiness not only to the actor but also to the individuals affected, unlike in the case of egoism. An unethical act is the one that results in the reverse of happiness (Bird, 2009). Thus, the consequences of an action during or after the occurrence are the primary concern of this theory whereby the impacts on the greatest majority is valued as morally right if it results in happiness. In business terms, the theory could be interpreted as the goods and services’ ability to fulfill the needs of the customers satisfactorily.

The allegations regarding the exploitation of children in the cocoa plantations in Ivory Coast through child labor emanate from the utilitarian perspectives of morality. The forced child labor and trafficking from neighboring countries like Mali mostly involves children between the ages of 12 and 15 years to work forcefully on the cocoa farms. The child abuse reports from the Ivorian cocoa plantations as manifested by machete injuries among the children shows that the utility of the acts is not beneficial to the greatest majority (Andrei, 2015). The affected vulnerable children and the international community have not been happy, thus resulting in legal complaints against Nestle. Therefore, the pain inflicted during and after the process of production only serves the interest of Nestle by disregarding the implications to the affected local and international communities. The sought after cocoa products seem to bring happiness to its consumers as the sweetness of chocolates, and other products conceal the dark side of the story behind its production.

Kantian theory

Kant’s moral philosophy is based on categorical imperativeness whereby a systematic approach reputes moral duty as an obligation that binds all moral agents without exception. The theory values the aspects of universalizability, human dignity, and reciprocity. The universality aspect holds that every agent could act in a similar way that is in conformity with universal expectations. The human dignity feature condemns using people to benefit oneself. Reciprocity is founded on the concept that individuals should act as legislators and legislated in the “ends” kingdom. Therefore, the ethical rationale is founded on the situation if other people can act in a similar way or if the action is in line with the goals set by society. Therefore, certain actions may be regarded as unethical even if they result in more happiness than the opposite (Arnold, Beauchamp, & Bowie, 2012).

Nestle is believed to have signed dubious deals with Mugabe, the Zimbabwean President through his wife, Grace. The partnership saw the confiscation of white-owned farms to pave the way for the production of dairy products, which resulted in international boycotts from the EU and the US. The economy required record-breaking inflation levels and the failure of the agricultural sector prompted the need for partnerships to improve the economy. Therefore, Grace’s move in association with Nestle can be considered unethical if the Kantian theory is applied (Andrei, 2015). The exploitation of the white owners of the land nullifies the moral obligation of the actors based on the features of universalizability, human dignity, and reciprocity. Similarly, the child abuse and forced slavery in the Ivorian cocoa plantations shows that the motive of the actions brings satisfaction to the consumers, but it compromises the dignity of the African children in the region.

Natural Law

In moral philosophy, natural law is considered as a structure of right or justice that is regarded as common in all humans. This law is a result of nature and not the societal rules or positive law. The theory emphasizes reasoning for the analysis of both personal and social human nature to make deductions concerning the obligatory rules of moral behavior. The law is universal since it dwells on the aspect of human nature, which makes up the global society. The basic principle of the natural law is based on the divine providence and practical rationality, and it advocates the practice of good deeds and avoidance of evil acts (Arnold et al., 2012). In this case, the knowledge of the basic goods fosters morality whereby natural goodness is achieved.

Based on the understanding of human nature, Nestle can be criticized for violating the natural laws in various instances that it has tried to develop its brand in the developing countries. The promotion of mislabeled products and unhealthy foods in Africa and Asia shows that the motives are incompatible with the expectations of the natural goodness. A study has showed that 46% of the breakfast cereals containing the highest salt, fat, and sugar levels are from Nestle. This aspect implies that the health effects undermine the attainment of natural goodness (Andrei, 2015). Building the brand name of the company through unscrupulous means that are against the natural law expectations have resulted in detrimental consequences to the health status of the populations in developing countries.

Conclusion

Globalization has enabled giant corporations to find new markets in the developing countries. In fostering their competitiveness, some corporations like Nestle have engaged in unethical practices that seek to enhance the brand of the organization. Ethical theories that include Egoism, Utility, Kantian, and the Natural Law can be used to relate to the case of Nestle as various dimensions of analyzing the morality of their operations is facilitated. Thus, issues regarding child labor, pollution, mislabeling of products, bogus partnerships, manipulation of illiterate mothers and unethical promotions can be justified or refuted based on the ethical theories.

References

Andrei, M. (2015). . ZMEScience. Web.

Arnold, D., Beauchamp, T., & Bowie, N. (2012). Ethical Theory and Business. Upper Saddle River, NJ: Pearson.

Bird, F. (2009). The Ethical Responsibilities of Businesses in Developing Areas. Journal of Business Ethics, 89(2), 85-97.

Gugler, P., & Shi, J. (2009). Corporate social responsibility for developing country multinational corporations: lost war in pertaining global competitiveness. Journal of Business Ethics, 87(1), 3-24.

Muller, M. (2013, Feb. 13). . The Guardian. Web.

. (2015). Web.

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IvyPanda. (2020, June 16). Nestlé’s Ethical Issues in Developing Countries. Retrieved from https://ivypanda.com/essays/nestls-ethical-issues-in-developing-countries/

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"Nestlé’s Ethical Issues in Developing Countries." IvyPanda, 16 June 2020, ivypanda.com/essays/nestls-ethical-issues-in-developing-countries/.

1. IvyPanda. "Nestlé’s Ethical Issues in Developing Countries." June 16, 2020. https://ivypanda.com/essays/nestls-ethical-issues-in-developing-countries/.


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IvyPanda. "Nestlé’s Ethical Issues in Developing Countries." June 16, 2020. https://ivypanda.com/essays/nestls-ethical-issues-in-developing-countries/.

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IvyPanda. 2020. "Nestlé’s Ethical Issues in Developing Countries." June 16, 2020. https://ivypanda.com/essays/nestls-ethical-issues-in-developing-countries/.

References

IvyPanda. (2020) 'Nestlé’s Ethical Issues in Developing Countries'. 16 June.

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