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

<span class="text_page_counter">Trang 1</span><div class="page_container" data-page="1">

<b>FPT UNIVERSITY - CAN THO CAMPUS</b>

<b>GROUP ASSIGNMENT</b>

<b>Course: FUNDAMENTAL OF MANAGEMENT- MGT103Topic: NESTLE COMPANY AND ITS UNPREDICTABLE</b>

<b>Instructors: Nguyễn Quang Duy</b>

Can Tho, October 2023

<b>Contribution Sheet</b>

<b>Student name – Student codeParts in-chargePercentage of</b>

</div><span class="text_page_counter">Trang 2</span><div class="page_container" data-page="2">

<b>contributionHuỳnh Thái Khang –</b>

<b>Come up with ideas and create </b>

<b>content and support do powerpoint ²⁰Trịnh Hà Vĩnh Huy –</b>

<b>CS181727^{Do powerpoint, and suport content}¹⁸</b>

<b>Nguyễn Ngọc Xuyên –</b>

<b>CS182384^{Support do powerpoint}¹⁰</b>

<b>Nguyễn Ngọc Thủy Tiên –</b>

<b>CS181448^{Information support association}¹⁰</b>

<b>Phạm Ngọc Phương Vy –</b>

<b>CA171979^{Search images and edit images}¹⁰</b>

<b>Bùi Triệu Vy – CS181468^{search for data, support making}</b>

<b>Lê Huỳnh Quang Long –</b>

<b>CS180953^{Information support association}¹⁴</b>

</div><span class="text_page_counter">Trang 3</span><div class="page_container" data-page="3">

<b>TABLE OF CONTENTS</b>

<b>I. General Introduction...1</b>

<b>1.1. Overview of the Company...1</b>

<b>1.2. The Meaning of Nestlé's Logo...1</b>

<b>1.3. Formation and Development History...1</b>

<b>1.4 Mission and Vision Statement...2</b>

<b>1.5 Management Structure...2</b>

<b>PRODUCTION STRUCTURE:...3</b>

<b>STRUCTURE OF INTERNATIONAL BUSINESS DEPARTMENT:...4</b>

<b>II. The situation that the company is facing...4</b>

</div><span class="text_page_counter">Trang 4</span><div class="page_container" data-page="4">

<b>I. General Introduction1.1. Overview of the Company</b>

- 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.

<b>1.2. The Meaning of Nestlé's Logo</b>

- 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. Thevalue of this new product was quickly recognizedafter Nestlé's formula saved the premature baby. From then on, Henrie Nestlé's Farine Lactée babyformula was widely sold in Europe.

- Development Process in Vietnam: Nestlé's firstbusiness 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

</div><span class="text_page_counter">Trang 5</span><div class="page_container" data-page="5">

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.

<b>1.4 Mission and Vision Statement</b>

- Mission: Nestlé is the world's leading nutrition, health and wellness company. Themission of "Good Food, Good Life" is to provide consumers with the best tasting, mostnutritious 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, andWellness Company delivering improved shareholder value by being a preferred corporatecitizen, preferred employer, preferred supplier, selling preferred products.”

<b>1.5 Management Structure</b>

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

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

2Nestlé logo – 2023

</div><span class="text_page_counter">Trang 6</span><div class="page_container" data-page="6">

the authority and responsibilities of each level of management and employee. This ensuresproactiveness in management and the execution of tasks for each individual in thecompany.

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. Eachdepartment is responsible for its specialized area and contributes to the comprehensivedevelopment of the company.

<b>PRODUCTION STRUCTURE:</b>

PRODUCTION STRUCTURE – 2023

</div><span class="text_page_counter">Trang 7</span><div class="page_container" data-page="7">

<b>STRUCTURE OF INTERNATIONAL BUSINESS DEPARTMENT:</b>

<b>II. The situation that the company is facing.1. The Incident:</b>

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. Thestore 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.

STRUCTURE OF INTERNATIONAL 2023<b> –</b>

</div><span class="text_page_counter">Trang 8</span><div class="page_container" data-page="8">

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

</div><span class="text_page_counter">Trang 9</span><div class="page_container" data-page="9">

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

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.

<b>2. Impact on the Company</b>

- 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.

6

</div><span class="text_page_counter">Trang 10</span><div class="page_container" data-page="10">

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.

<b>3. Corporate action</b>

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 thousandsof 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.

</div><span class="text_page_counter">Trang 11</span><div class="page_container" data-page="11">

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.

Nestle Vietnam's financial targets – 2023

Nestle's scale – 2021

</div><span class="text_page_counter">Trang 12</span><div class="page_container" data-page="12">

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

<b>III. Relevant Theory and Proposed Solutions</b>

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

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.

<b>2. Proposed Solutions</b>

- 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.

</div><span class="text_page_counter">Trang 13</span><div class="page_container" data-page="13">

- 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.

</div><span class="text_page_counter">Trang 14</span><div class="page_container" data-page="14">

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 threatsthat 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.

</div><span class="text_page_counter">Trang 15</span><div class="page_container" data-page="15">

quality management and raise food safety standards.

+ Product Innovation: Nestlé has the opportunity to innovate products to attract new customers and improve brand reputation.

- Threats:

+ Competition: The food market is highly competitive with many strong competitors. + Customer Disappointment: The contamination incident may lead to customer disappointment, and they may switch to other brands.

<b>III. Reference source</b>

Chart--271-2016.html

nam-post139755.html

viet-nam-a4513.html

ghiep-vu/bao-cao-tai-chinh/nestle-kinh-doanh-ra-sao-tai-C7.MGT103.pdf

12

</div>