group assignment fundamental of management mgt103 topic nestle company and its unpredictable scandal

Overview of the Company- Nestlé Group is a leading global company in the Food and Beverage industry, with a widespread production and business network worldwide.. Themission of "Good Foo

FPT UNIVERSITY - CAN THO CAMPUS

GROUP ASSIGNMENT

Course: FUNDAMENTAL OF MANAGEMENT- MGT103 Topic: NESTLE COMPANY AND ITS UNPREDICTABLE

SCANDAL

Instructors: Nguyễn Quang Duy

Can Tho, October 2023

Contribution Sheet Student name – Student code Parts in-charge Percentage of

contribution Huỳnh Thái Khang –

CS180719

Come up with ideas and create content and support do powerpoint 20

Trịnh Hà Vĩnh Huy –

CS181727 Do powerpoint, and suport content 18

Nguyễn Ngọc Xuyên –

CS182384 Support do powerpoint 10

Nguyễn Ngọc Thủy Tiên –

CS181448 Information support association 10

Phạm Ngọc Phương Vy –

CA171979 Search images and edit images 10

Bùi Triệu Vy – CS181468 search for data, support making

Lê Huỳnh Quang Long –

CS180953 Information support association 14

TABLE OF CONTENTS

I General Introduction 1

1.1 Overview of the Company 1

1.2 The Meaning of Nestlé's Logo 1

1.3 Formation and Development History 1

1.4 Mission and Vision Statement 2

1.5 Management Structure 2

PRODUCTION STRUCTURE: 3

STRUCTURE OF INTERNATIONAL BUSINESS DEPARTMENT: 4

II The situation that the company is facing 4

1 The Incident: 4

2 Impact on the Company 6

3 Corporate action 7

III Relevant Theory and Proposed Solutions 9

1 Relevant Theory 9

2 Proposed Solutions 9

III Reference source 12

I General Introduction

1.1 Overview of the Company

- Nestlé Group is a leading global company in the Food and Beverage industry, with a widespread production and business network worldwide Nestlé operates nearly 500 factories in 86 countries around the world, employing over 280,000 employees, marketing 8,500 brands with 30,000 products Nestle is the world's largest food and beverage company, headquartered in Vevey, Switzerland Nestlé's current products range from mineral water, baby food, coffee, to dairy products

1.2 The Meaning of Nestlé's Logo

- The Nestlé logo is inspired by the family crest of Mr Henri Nestle – the image of a bird

in a nest The Nestle family name, in German, means "bird's nest." The logo depicts a mother bird feeding three young birds, symbolizing the value of "family" in the company's mission and also establishing a connection with the company's original infant cereal product

1.3 Formation and Development History

- Formation History:

In the 1860s, pharmacist Henri Nestlé invented a type of food for infants who could not be breastfed His initial success was saving a premature baby who couldn't be nourished with breast milk or other conventional substitutes The value of this new product was quickly recognized after Nestlé's formula saved the premature baby From then on, Henrie Nestlé's Farine Lactée baby formula was widely sold in Europe

- Development Process in Vietnam: Nestlé's first business office in Saigon was established in

1912 Below are the milestones that record the rapid development of the company in Vietnam

Development History of Nestle – 2004

development journey The company has also experienced ups and downs to achieve the success it enjoys today One of the unpredictable situations and Nestlé's surprising responses in challenging circumstances will be discussed in today's essay

1.4 Mission and Vision Statement

- Mission: Nestlé is the world's leading nutrition, health and wellness company The mission of "Good Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night

- Vision: Nestlé's vision statement is “To be a leading, competitive, Nutrition, Health, and Wellness Company delivering improved shareholder value by being a preferred corporate citizen, preferred employer, preferred supplier, selling preferred products.”

1.5 Management Structure

Nestlé Vietnam has specific regulations regarding the organizational structure to ensure the company's operations are carried out efficiently and in line with the company's business strategy These regulations include:

- Determining the organizational structure: Nestlé Vietnam uses a decentralized organizational model, with departments and units divided by region or specialization This enhances flexibility and interaction between units within the company

2 Nestlé logo – 2023

the authority and responsibilities of each level of management and employee This ensures proactiveness in management and the execution of tasks for each individual in the company

The organizational structure of Nestlé Vietnam includes the following main departments:

- Board of Directors: This is the highest-level management body in the company, responsible for leading and managing the overall operations of the company

- Functional departments: These include Marketing, Sales, Finance, Human Resources, Production, Research and Development, Quality Management, and Risk Control Each department is responsible for its specialized area and contributes to the comprehensive development of the company

PRODUCTION STRUCTURE:

PRODUCTION STRUCTURE – 2023

STRUCTURE OF INTERNATIONAL BUSINESS DEPARTMENT:

II The situation that the company is facing.

1 The Incident:

On August 12, 2016, a customer named Mrs Lưu purchased Nestlé Milo milk for her grandchild and discovered that the product was spoiled Upon further inspection, Mrs Lưu found that the milk had a foul odor and there were numerous foreign objects inside the milk carton Additionally, her grandchild experienced stomach pain after consuming the product

Mrs Lưu's Reaction:

On the same day, she visited the Green Store to report the issue with the spoiled milk The store owner promised to contact the manufacturer, but there was no response by the following day Without receiving a satisfactory resolution, Mrs Lưu demanded that Nestlé Milo address the matter She also took her grandchild to seek medical attention and received a diagnosis of food poisoning Mrs Lưu insisted that Nestlé Milo take

responsibility for her grandchild's health

4 STRUCTURE OF INTERNATIONAL 2023 –

What Was Witnessed:

"When the police opened two boxes of Nestlé Milo milk and poured the milk into a plastic container, the milk appeared cloudy, had a foul odor, and contained numerous insects, commonly known as gnats These images were documented by local residents The police filed an official report on the incident and sealed the milk boxes They brought back 10 boxes for further investigation."

Response from Nestlé Vietnam:

Nestlé received feedback from Mrs Lưu and subsequently examined the 10 reported cases

of spoiled Milo milk They promised to provide an official response within 15 days (by August 12) On the reported date, Nestlé Vietnam stated that they had inspected the production records of the batch with manufacturing date: May 30, 2016, and expiration date: July 30, 2017, from the factory and found no incidents The company also noted that there were signs of tampering on the packaging, with noticeable marks on the top, front, and back of the boxes

Milo Nestle’s – 2016

reported product for further testing The results indicated that the product was safe for consumption

In Nestlé Vietnam's statement, they argued that the hospital discharge summary from July

27 only mentioned the diagnosis of "food poisoning surveillance" and advised to provide the child with a nutrient-rich diet This was deemed insufficient evidence to confirm food poisoning and its connection to the Milo product

Victim's Reaction to the Explanation:

In response to reporters after receiving Nestlé Vietnam's explanation, Mrs Lưu expressed ongoing frustration She stated, "They came to me and informed me that their product is still safe This conclusion was based on their testing of a different Milo milk box that they purchased, not the ones my family provided for my grandchild I affirm that the milk boxes

my family supplied to the police had no scratches or insect bites therefore, I do not accept Nestlé Vietnam's explanation."

Conclusion:

In this case, there is still ambiguity regarding the actual cause of the incident Mrs Lưu demands accountability from Nestlé Milo and rejects their explanation Resolving this issue will require further information and thorough investigation to determine the root cause and responsibility

2 Impact on the Company

- Direct impact on brand and market share of the product: Following the publication of an important report by the Financial Times, over 60% of Nestlé's traditional packaged food and beverage products did not meet international health standards This led to a significant financial setback for Nestle

- Alteration of star rating system for health: In 2018, CHOICE organization announced the need to change the star rating on Milo product packaging from 4.5 to 1.5 stars The packaging halt at this time resulted in significant financial losses for Nestle

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during the production process is a top priority for health-conscious consumers F&B hygiene issues could create a significant bias against the company, leading customers to prioritize alternative products

3 Corporate action

In this case, Nestlé only explains and draws conclusions based on product testing data, partly to proactively clarify the causes and reassure consumers due to the difficult-to-establish yet easy-to-lose reputation, as product quality can also be influenced by many external factors Therefore, the company reaffirms its product quality and recalls the products to prevent a similar situation from happening

Furthermore, despite facing numerous unwarranted scandals, Nestlé cannot be stopped from growing In 2016, Nestlé's Bong Sen factory became the sixth Nestlé factory in Vietnam and the second in Hung Yen to be built It is expected that by 2025, Nestlé's increased investment activities will create about 600 direct job opportunities and thousands

of indirect jobs in the North region

In addition, Nestlé Vietnam is also included in the list of 30 outstanding enterprises in terms of legal tax compliance and fulfilling tax obligations to the state budget, with a total amount of VND 3,146 billion contributed to the state budget in the period of 2015 - 2019

In 2016 and 2017, Nestlé Vietnam achieved respective gross revenues of 11,493 billion VND and 13,154 billion VND, with corresponding net profits of 1,107 billion VND and 1,197 billion VND In 2019, these figures reached 15,967 billion VND and 1,844 billion VND, demonstrating a growth rate of 12% and 22% compared to 2018

8 Nestle Vietnam's financial targets – 2023

Nestle's scale – 2021

6% decrease compared to the beginning of the year, while the owner's equity increased by 12% to 3,106 billion VND

III Relevant Theory and Proposed Solutions

1 Relevant Theory (Fundamental Of Management -Chapter 7)[APA p.3-5]

The Incident:

- Organization Change: Organizational change involves making modifications to fundamental components of a company, such as its culture, technology, or infrastructure, which are utilized in its operations or internal processes

- Reactive Change: This is a piecemeal response to circumstances as they develop It is typically implemented after an incident has occurred and aims to provide a solution to the issue

Solutions:

The Lewin Model:

- Unfreezing: Individuals must be shown why the change is necessary

- Implementing change: The change itself is implemented

- Refreezing: Involves reinforcing and supporting the change so that it becomes a integral part of the system

2 Proposed Solutions

- Short-term Solutions:

First, for immediate response, Nestlé should apply the Lewin's model to plan and implement appropriate changes The Lewin's model can help Nestlé understand the change process after the contamination incident and establish specific measures to restore customer confidence and rebuild its reputation

- Step 1: Unfreeze:

+ Nestlé needs to identify the necessary changes and accept them The company must acknowledge that the contamination incident has occurred and affected the brand's reputation

+ A comprehensive investigation should be conducted to understand the situation, identify the main causes of the incident, and ensure that all relevant information and data are collected

+ At this stage, the company needs to take responsibility and be willing to make changes to address the issue

- Step 2: Change:

+ Nestlé should identify specific measures to address the contamination issue and ensure food safety

+ The company needs to create specific plans to enhance quality management and product standards

+ There must be changes in the production process and product testing to ensure that Milo milk will not be contaminated in the future

+ Nestlé should also focus on restoring customer and public confidence through communication and advertising efforts

- Step 3: Refreeze:

+ In this stage, the company needs to ensure that the changes have been implemented and are effective

+ Nestlé must maintain new food safety standards and quality management

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the company's patience and commitment.

+ The company needs to ensure that quality control processes are fundamental and sustainable in the future

- Long-term Solutions

Secondly, Nestlé can use the results of SWOT analysis to develop specific strategies

By applying SWOT analysis to assess the external and internal environment of the company, Nestlé can enhance its recovery capabilities after the incident and rebuild its reputation in the market, such as:

+ Focusing on improving quality management and ensuring food safety

+ Launching positive advertising campaigns to restore customer confidence

+ Investing in research and development to innovate products and create new business opportunities

In addition: Performing a SWOT analysis in this situation can assist Nestlé in comprehending the scenario, identifying their strengths and weaknesses, leveraging opportunities to enhance quality control and supply chain processes, and addressing threats that might impact their reputation and finances This can aid them in managing the situation and restoring customer trust

Internal Factor:

- Strengths:

+ Strong Brand: Nestlé has built a strong brand with a long history and a reputation for quality

+ Diverse Product Portfolio: The company has a diverse product portfolio, including milk, supplements, high-tech foods, and many other product lines

+ Extensive Distribution Network: Nestlé has a worldwide distribution network, allowing them to reach a large number of customers

- Weaknesses:

+ Contamination Incident: The contamination incident with Milo milk has impacted the reputation and reputation of Nestlé

+ Quality Management: The quality management process may need to be re-evaluated to ensure that all products meet food safety standards

External factors:

- Opportunities: