Business Submission: Nestle
Business Submission: Nestle
The UN Global Compact involves ten principals that cover areas in anti-corruption, the environment, human rights, and labor. Companies are requested by the UN Global Compact to incorporate the ten principal in their core business strategies so as to facilitate the achievement of good values in the four areas (Gregoratti, 2012). Nestle is a member of the UN global Compact and incorporates all the ten principals in its core business strategies. The company has participated since 2001. In this case, the status of the company is active while its differentiation level is global compact advanced (Timmermann, 2009). The company deals with products in the food market including beverages. It is the largest food company when measured in terms of revenues earned. The company has operations in more than 85 countries with more than 450 factories (Nestle, 2006). The company’s value chain involves agriculture and sourcing raw materials, manufacturing and distribution and marketing of products to the customers (Ten, 1999). This paper aims to give the approaches that Nestle and other companies in the food industry can apply in compliance with principle 1-businesses should respect and support the protection of internationally declared human rights. Another principle that this paper aims to give the approaches is principle 3- businesses should recognize individual’s right to effective bargaining. Additionally, the principle borders on the fact that business should uphold the freedom of association (Global Compact, 2000).
Nestles business principles involves meeting the customer’s needs for nutrition, quality they trust and enjoyment in the consumption of their products. Nestle also abides with the local laws and in the case, such laws are limited it has developed primary activities in its value chain that should be followed. In the achievement of this business principle, the company should support and respect the protection of universally declared human rights. The company can ensure that it employees are adequately compensated for the work done. Large multinational companies usually take advantage of farmers through poor compensation for their products. As such, the company should have a given standard of compensating the farmers. The company’s approach should focus on sustaining agriculture; which is core to their business (Sagafi-nejad, 2008).
The company facilitates freedom of association and recognizes the need for collective bargaining. As such, the company’s business approach should involve open dialogue and mutual respect for all the stakeholders. The company should adhere to the core labor standards, and they should be cooperation between the company’s executives and the employees (Rasche, 2010).
The positive and negative lessons learnt from these business practices and approaches
Universally declared human rights add value to the lives of different individuals. Nestlé’s approach to support and respect human rights will add value to the lives of its employees and other stakeholders; including the consumers. When employees are paid well, their security and health are taken care of. In this perspective, this results to better performance of the employee replicating to better results for the company (Williams, 2008). The approach to sustain agriculture has advantages running through the whole value chain. Investments by Nestle in agriculture will result to better quality farm products; there will be development of farm infrastructure and the yields from the firms will improve (Nestle, 2007). This will reduce the risks of manufacturing low quality products and consumption of less notorious products by the consumer. The impact of investments in agriculture will be development of the sector and creation of employment opportunities in the respective communities.
Accordingly, effective dialogue and the corporation will build trust between the employees and management. The management will effectively address issues by the employee and thus interests and expectations of both parties will be maximized. The company avoids unnecessary strikes and work stoppages. Basically, there do not exist any negative impacts related to this approach. However, the company will find that the impact of investments in sustainable agriculture will have a significant effect on its financial statements. This is because the costs involved are high especially in research.
Business Practice Recommendations
In the achievements of the two principles discussed in this paper the following recommendations should be considers by businesses in UN Global Compact.
- It should be the responsibility of the management of a company to familiarize themselves with the internationally declared human rights. Additionally, the managers should seek to achieve them in relation to the employees and all other stakeholders (Langwith, 2008). This should form part of the company’s business strategy.
- Companies should invest in research and development of agriculture. The research objective should be the improvement in the quality of agricultural products and the development of the people in this sector.
- The companies should invest in the sector to sustain the development of the farmers as well as improve the quality of the products. The investments should aim not only to improve the company’s profit but also to improve the yields of the farmers.
- The management should have period open sessions with the employees as well as a constant mode of communication. For example, through company’s email or suggestion boxes. The company representatives should listen to labor unions and should have a procedure of addressing the labor union demands.
Benefits, Challenges and Implications for Key Stakeholders
The implementation of the suggestion recommendations will affect the stakeholders differently depending on the expectations of each stakeholder. The company shareholders will benefit if after the suggested recommendations are implemented the profitability of the company improves. This would mean better returns for the funds invested. The challenge to the company’s shareholders would be in approving decisions to invest in sustainable agriculture while the company should focus on better marketing skills so as increase its market share and increase its revenues. The implication to the shareholders is that the company will deviate from maximization of wealth for them to improving the value of other stakeholders.
Thus, the farmers and employees will benefit from the fact that they will have better compensation. The farmers not only have deeper pockets but also they will produce quality products and have higher yields. The challenge to the employees will be to provide maximum service to the company. This would imply that the employees and farmers would have better working conditions. The benefit to the management of the company is that they have the ability to meet two UN Global Compact principles. However, the challenge to the management arises where they have to ensure that the objectives of the shareholders are met. This would then imply that a company will require a dynamic management team that can maximize the interest of all stakeholders.
In conclusion, if the above recommendations are implemented, the company’s value will rise. This would result to an addition of the value of the stakeholders. The company will be among thousands of other companies that aim to promote human rights and fundamental right at work.
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