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“How shall freedom be defended? By arms when it is attacked by arms, by truth when it is attacked by lies, by faith when it is attacked by authoritarian dogma. Always, in the final act, by determination and faith.”

― Archibald MacLeish

Sunday, March 21, 2010

Nestle Philippines:Business Case Study About Business Ethics

Backgrounder:
As Nestlé’s popularity grew more businesses wanted to merge and become partners with Henri Nestlé's business. From 1866 to 1947 the Nestlé Company had gone through several name changes. In 1905, Anglo-Swiss Condensed Milk Co. and Farine Lactee Henri Nestlé merged, and the company’s name became Nestlé & Anglo-Swiss Condensed Milk Co. Then in 1929, Peter-Cailler-Kohler Chocolats Suisses S.A. merged with the company. The name was then changed to Nestlé & Anglo-Swiss Holding Co. Ltd, on November 27, 1936. In December 1947, Co. acquired all the shares capital of the Alimentana S.A. company so this point the name was at Nestlé Alimentana S.A. And then finally, the last name change that the company would endure was in 1977, where it adopted the name Nestlé SA ). 
Along the way Nestlé’s company remained successful, which allowed them expand to new regions and territories throughout the world, making them the world’s biggest food and beverage company. Nestlé’s headquarters are located in Vevey, Switzerland, but the Nestlé Company has factories or operation in almost ever country in the world.From CastelarArticl
Nestle Philippines
Nestlé Philippines, Inc. (NPI) today is a robust and stable organization, proud of its role in bringing the best food throughout the stages of the Filipino consumers’ lives. The Company employs about 3,400 men and women all over the country. It is now among the top companies in the entire Nestlé world, and is among the country’s Top 10 Corporations. Its products are No. 1 or strong No. 2 brands in their various categories. 

The Nestlé culture
Apart from its commitment to safety and quality and its respect for diversity, Nestlé is committed to a number of cultural values. These values come partly from its Swiss roots and have been developed during its history. They are also evolving so as to support the permanent reshaping of the Company.
They can be described as follows:
• Commitment to a strong work ethic, integrity, honesty and quality.
• Personal relations based on trust and mutual respect. This implies a sociable attitude towards others, combined with an ability to communicate openly and frankly.
• A personalized and direct way of dealing with each other. This implies a high level of tolerance for other ideas and opinions, as well as a relentless commitment to co-operate proactively with others.
• A more pragmatic than dogmatic approach to business. This implies being realistic and basing decisions on facts.
• Openness and curiosity for dynamic and future trends in technology, changes in consumer habits, new business ideas and opportunities, while maintaining respect for basic human values, attitudes and behavior.
• Pride in contributing to the reputation and the performance of the Company. This calls especially for nurturing a sense of quality and long-term achievement in the daily work beyond fashion and shortsighted gain.
• Loyalty to and identification with the Company.

The Case Study
Consider this case involving the Company and a distributor, Forefront IT Trading Corp., owned by Filipino investors who are now complaining of unfair and unethical business practices by their foreign partners. In a disgusting display of corporate bullying, the multinational refused to pay Forefront's more than P12 million in collectibles unless it signed a Release and Quit Claim dropping all other legitimate claims. This when a ranking official of the foreign firm had promised, verbally, the settlement of all just and reasonable claims.
The amount consisted of close to P1 million in withheld expanded value-added tax (EVAT) for 2007 that the multinational should refund to Forefront, plus P11.07 million representing performance incentives, advances made by Forefront for the company's promotional activities and cost of products taken back by the multinational.
The multinational allegedly took back the products in Forefront's possession after terminating the distributorship agreement when the latter protested the meddling and unprofessional conduct of the multinational's sales official assigned to it. The distributor had wanted a replacement.
It turned out that the multinational's sales official was carrying on an extramarital relationship with a Forefront executive, a married man. She exploited this relationship to secure unusually large orders of her employer's products and even slow-moving items that Forefront had to dispose of even at cost, even to the extent of forgoing profits. Santa Banana, she even succeeded in passing on to Forefront some poorly paying accounts not included in the original agreement. All these eventually resulted in huge losses to the distributor.
This came to a point where Forefront experienced difficulties in meeting its payroll, the 13th month pay for December 2007, and separation benefits for some 80 employees who had to go as a result of severe financial stress.
When advised of the affair and the resulting conflict of interest situation, the latter simply dismissed the matter as "a purely personal affair between two consenting adults," and ignored the request that their sales official be replaced. Yet, the multinational's own Corporate Business Principles and Code of Conduct states, among other things, that the company "requires its management and employees to avoid even the appearance of impropriety in its business relationships on behalf of the company."
"All business depends upon men fulfilling their responsibilities." Mahatma Gandhi