As shown by the table that Nestlé has been in a difficult year that the sale as well as the net profit had decreased dramatically. However, the dividend had increased, which means the profit for the shareholders still raised. It illustrates that Nestlé has satisfied the expectation of its shareholders despite decrease in sale.
2.2.2. Employees
Responsibilities towards employees
Ensuring a safe and healthy workplace with opportunities for development is the basis responsibility of a company to its employees. At Nestlé, according to the Corporate Business Principles, they commit to treat each other with respect and dignity and expect everyone to promote a sense of personal responsibility. Nestlé provides employees equal opportunities for development and advancement, protect their privacy and do not tolerate any form of harassment or discrimination. Nestlé committed to preventing accidents, injuries and illness related to work, to protecting employees, contractors and others involved.
To implement its responsibilities, according to the Corporate Business Principles, they support the United Nations Global Compact’s (UNGC) guiding principles on human rights and labor aim to provide an example of good human rights and labor practices throughout our business activities. Furthermore, Nestlé established Policy on Safety and Health at Work to ensure safe and inspiring workplace, guidelines are designed to improve the working lives of their employees. The Code of Business Conduct specifies certain non-negotiable minimum standards in key areas of employee behaviour, including compliance with laws, conflicts of interests, anti-trust and fair dealing, bribery, corruption, discrimination and harassment, and integrity.
The Nestlé Occupational Health and Safety Management System helps them monitor and improve health and safety policy, process and performance. They establish Local Safety and Health Organizations that provide specialist advice to managers and employees to advance a strong safety culture that effectively prevents accidents. Nestlé also has Nestlé Group Security (NGS), a global network of security professionals, which has a mandate to help ensure a protected work environment that facilitates high-level performance.
Meeting the objectives:
The table above illustrates that Nestlé archived some certain success in satisfy employees’ expectation. Nestlé is committed to preventing accidents injuries and illness related to work, and to protect employees, contractors and others involved along the value chain. They also successful implemented commitment to lifelong learning and development by increasing in training hour and course. The injury rate among employees decreased in 2011, the average hours of training per year per employee increased.
At Nestlé, adequate training programs are developed at the level of each operating company capitalizing on the availability of local, regional or global resources of the Group. A core curriculum, consisting of 52 courses, has been introduced in all markets. The courses are delivered locally by Nestlé trainers or selected globally approved providers. There is International Training and Conference Centre in Switzerland, Rive-Reine, where Nestlé people from all over the world meet to exchange information and ideas in seminars and training courses. Rive-Reine offers a wide variety of courses.
At 96% of sites they offer disease prevention and health promotion programs, providing for example vaccinations, HIV/AIDS prevention information, and cardiovascular and diabetes tests. Nestlé are supported by a network of occupational health professionals, nutritionists and rehabilitation experts, as well as voluntary “site champions” across the globe who provide health and wellbeing training and support to their employees.
Nestlé also signed multi-company commitment to the World Health Organization to help fight chronic diseases in the workplace. They rolled out a Global Online Human Rights Training Tool, which is mandatory for employees working in high-risk countries.
2.2.3. Consumers and customers
Responsibilities
The basis responsibility of any company to its consumers and customers is to providing a product or service of an expectative quality. As a food and beverage enterprise, the responsibility to ensure quality of its products is vital and the key factor of its existence. Nestlé’s commitment is never to compromise on the safety of any product. It is Nestlé’s responsible to implement their commitment of “Good food, good life”. They also commit that everywhere in the world, the Nestlé name represents a promise to the consumer that the product is safe and of high standard.
Quality assurance and product safety is one of Corporate Business Principles. To fulfill its responsibilities, Nestlé established the Quality Management System. It is the platform that they use globally to guarantee food safety, compliance with quality standards and to create value for consumers. Nestlé also applies internationally recognized Good Manufacturing Practices (GMP) and the internationally recognized HACCP (Hazard Analysis and Critical Control Point) system to ensure quality and food safety. The company’s is guides to ensure quality and food safety. There is also Nestlé Consumer Communication Principles contain mandatory rules on marketing communication to all consumers.
Meeting the objectives:
The table illustrates that Nestlé has invested into nutritious food for its consumers and create more food with more nutrition to enhance the health and wellness of the consumers. It can prove that Nestlé has satisfied its consumers and met its goals for its consumers. It has increased the products with nutritious ingredients, with Guideline Daily Amounts (GDA) labeling. Television advertising to children under 12 also decrease.
2.2.4. Suppliers
Responsibilities towards suppliers
Nestlé has the responsibility to its suppliers including: Fair prices their products and services, regular demand for their products and services, timely payment for their products and services. Nestlé has established Supplier code which is aligned with credible, internationally recognized responsible production standards and provides fair compensation for suppliers.
In coffee-growing countries it has a policy of buying coffee direct from the farmers. The company offers a fair price to the farmers, and so ensures regular supplies of guaranteed quality for its own factories. In countries where direct buying takes place, there is a widely advertised Nestlé price, and a minimum base price. By providing a reference level for growers, other traders are forced to keep their offer prices competitive.
2.2.5. Community
Responsibilities towards community
An organization is a part of the community that it serves. Therefore it should be responsible for the community including the government, the community life and nature. Nestlé is not an exception. It is responsible for obeying the laws of the local authority and of the world, contributing to the development of the community.
Nestlé is responsible for compliance the laws of the countries it do business and global principles and implement tax payment. To implement its responsibilities, Nestlé has established some principle documents applied to the whole organization over the world such as Corporate Business Principles, Code of Business Conduct, Supplier Code through which the Nestlé could guides the staff to obey the laws.
Nestlé committed to contributing to improvements in agricultural production, the social and economic status of farmers, rural communities and in production systems to make them more environmentally sustainable. One of the main departments - Corporate Agriculture (CO-AGR) provides in-depth expertise to support the definition of the business operations strategy, especially in the context of agriculture, rural development and water. There is Sustainable Agriculture Initiative Nestlé (SAIN) to guide Nestlé engagement in farming systems to support agricultural practices, rural development, sourcing processes and practice. Furthermore, Nestlé engages in developing sustainable agricultural practices and systems that contribute to long-term production efficiency, viable incomes for farmers and the transfer of agricultural knowledge to suppliers, supports the application of new technologies and advances in agricultural science, including the opportunities offered by bioscience.
Nestlé commit itself to environmentally sustainable business practices. At all stages of the product life cycle, they strive to use natural resources efficiently, favor the use of sustainably managed renewable resources, and target zero waste. To do these goals, they invested CHF 143 million in environmental improvement, identified and implemented projects to improve their environmental impact, worked alongside suppliers to promote best practice in their supply chain. The Nestlé Policy on Environmental Sustainability sets out our principles, approach, commitments and priorities. The Nestlé Environmental Management System (NEMS), which has been implemented throughout the Company since 1996, sets out how the policy is implemented across Nestlé sites and markets
Meeting the objectives:
- National and global principles
Nestlé has applied global principles across all the countries they operate to ensure the benefit for the contries they do business. They apply: United Nations Global Compact (UNGC), UN Millennium Development Goals (MDGs), International Labour Organization (ILO) conventions, Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises.
At the 2011 Corporate Governance Awards ceremony organised by World Finance Magazine, Nestlé received the award for Best Corporate Governance in Switzerland.
In 2011, Nestlé had contributed a lot of efforts to rural development. The table above shows the substantial increase in many aspects of the rural development. Particularly, the number of farmers trained through capacity-building programs had greatly increased. It can proves that Nestlé had put a great deal of effort and investment to help farmers.
Environment
As shown in the table above, Nestlé has met their goals in terms of environment. The organization has reduces the total amount of energy and fuel used and discharged as well as the amount of material and water used.
By the end of 2011, a total of 413 factories, 93 distribution facilities and 5 R&D centers had achieved ISO 14001 certification (environmental certification program).
3. Nestlé’s operations in different economies
As a company operating across the world, Nestlé has to adapt to the economy situation of each country it operates.
Vietnam is a which uses both directive and . The socialist-oriented market economy is a multi-sectoral commodity economy regulated by the market, but under state management and largely under state ownership.
Vietnam is opening up to global markets since jointed WTO and welcome foreign investors. In Vietnam land and climate for coffee growing are very favorable, so this is the ideal destination for investment in the production of coffee. Nestlé has developed a Partnership Project in Coffee with the Ministry of Agriculture and projects NESCAFÉ Plan to support 20,000 coffee farmers in the next five years and built new Nestlé coffee factory in Vietnam. Vietnam also has a abundant raw material resources which a food company needs.
Nestlé’s business in Vietnam has some difficulties. The confectionary industry is a liberalized sector and there are many companies are operating in this industry, particularly international competitor like , . Therefore Nestlé need to improve its products and service to attract and keep its customers. Complicated bureaucracy, poor quality of legislation including cumbersome procedures, inadequate infrastructure and technology have been barriers to foreign investment in Vietnam. Moreover, a large part of Vietnam‘s workforce is still inadequate qualified.
UK generally has a market economy where a major proportion of the economy is privatized but most important decisions are made with a strong interference of the government. UK economy is managed under concepts of market liberalizations, price lowering & low taxing with the influence of the government. In private sector resources are allocated primarily by market forces, though some sector where resources are allocated mainly by government. Consumers have the power to influence resource allocation. Their spending decisions will send signals to the producers about what goods to produce and how many to produce.
In UK, customers have high living standard and concern more about health and satisfied taste. They have a high demand quality food and are willing to spend money on it. Therefore Nestlé has been developing many high quality food and beverage lines with great taste such as: Nestle Pure Life, KitKat, Carnation, Nesquik with irresistibly delicious, Néscafe and so on. With support of advanced technology and equipments, great infrastructure, especially subsidized and modern agriculture which can provide sufficiently high quality raw material, Nestlé has an optimal condition for developing its business.
However, since UK is a market economy, almost all products depend on customers’ demands, Nestlé has to adjust to satisfy them. Furthermore, there are many powerful international competitors that Nestlé has to deal with.
4. Fiscal and monetary policy
Fiscal policy
Fiscal policy involves the use of government taxation, spending and borrowing to affect the level and growth of aggregate demand, output and jobs. Fiscal policy is also used to change the pattern of spending on goods and services through affecting aggregate demand and .
The UK government is trying to use fiscal policy to stimulate economic activity and promote high and stable levels of growth. Government borrowing increased sharply due to falling tax revenues from the recession and attempts to increase Aggregate Demand. UK government has applied a tightening of fiscal policy and reduced spending.
On the other hand, the UK government aims to have the lowest corporate tax rate in the G7 and among the lowest in the G20 nations. Due to the great recession over the world, the corporation tax rates in UK have decreased since 2007 to stimulate the economic activities. Particularly the income tax has also declined since 2007. Lower rates of corporation tax and other business taxes, lower income tax mean more disposable income for consumers and more cash for businesses to invest in jobs and equipment, the price of confectionery goods would also decrease. This can increase demand and increase sale accordingly.
Money policy
Monetary Policy involves changes in interest rates, exchange rates, the money supply and ultimately price inflation to influence the levels of consumer spending and aggregate demand. Low interest rates mean lower interest expense for businesses and higher disposable income for consumers. This help increase demand because saving is discouraged, new borrowing and spending is encouraged, and confidence and investment increase which can stimulate the economic activity leading to rise in business sales. If the economy is growing too quickly and inflation is expected to exceed the government’s target, then interest rates would be increased to reduce the rate of growth and inflationary pressures.
The Bank of England has already Rates to a historic low of 0.5% in 2009 and is still remain the same in 2013 due to the great recession. Nestlé has been affected by the UK’s policies. The sale in the UK has increase $4.4 million in 2011 (KPI in Annual Report). Nestlé UK and Ireland confectionery sales hit record levels in September the company said. “Overall, the business is growing market share in the majority of categories” said Paul Grimwood, Chairman & Chief Executive. In the last year alone NESCAFÉ Dolce Gusto, has increased machine sales by over 77%. In confectionery, the ultimate affordable treat, chocolate multipacks (+17.20%), blocks (+20.7%) and confectionery share bags (+30%) have also seen significant increases (Source: nestle.com.uk)
Nestle also announced: “Nestlé will invest £500 million in the UK over next 3 years to establish our next generation of world-class manufacturing facilities in the UK”. This decision probably affected by the decrease in interest rate.
5. Impact of competition policy and other policy on Nestlé
Competition puts businesses under constant pressure to offer the best possible range of goods at the best possible prices, because if they don't, consumers have the choice to buy elsewhere. The Competition Act (1998) and Enterprise Act (2002) prohibits a number of illegal activities by firms including formation and operation of cartels, abuse of monopoly, concerted practice such as firms colluding instead of competing. These policies can support fair business competition, more diversity of services due to competition among the enterprises, and changes in business climate and technology. Nestlé can operates its business without worry about cheating, focus on investigating in Research and Development to improve its products. Nestlé is prepared to compete successfully in today’s business environment and will always do so in full compliance with all applicable antitrust, competition and fair dealing laws
Industrial policy includes: investment in physical and human capital, support for small and medium-sized enterprises, promotion of R&D and innovation, improvement infrastructure. In UK,
Overall, UK government’s spending is increasing since 2007, especially education has the 3rd largest subsidies. This can help business like Nestlé create a qualified and skillful workforce to help its business grow. UK also plans to encourage as much as 51 billion pounds ($80 billion) of spending on U.K. infrastructure and exports in the latest effort pull the economy out of recession. This can encourage the overall economy in UK and also for Nestlé.
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