Case: Nestls Infant Formulas

Killing Babies
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Introduction
Nestl's Baby Killing Formula
Nestl's Values
Nestl's Strategy
Issues in the Case
S.W.O.T. analysis
Recommendations
Story Begins
Early 1970s, rumors about powdered infant
formula were causing the high infant mortality
rate.

The company denies all accusations.

They said that the reason is caused by the
people unable to read instructions or use the
product properly in the developing countries.
The Baby Killer
1974, a British organization, War on Want,
published a 28-page pamphlet, The Baby
Killer.

It criticized Nestl and Unigate for engaging
ill-advised effort in Africa.

The general public is concerned.
Attention From Public
A German Third World Working group
reissued and revised a German translation of
The Baby Killer.

In this version, it is focused on Nestl and its
unethical and immoral behavior.

Later, it is renamed to Nestl kills babies.

Nestls Action
The executives of Nestls sued the activists for
defamation.

The lawsuit last 2 years, but Nestl won in the end.

We won the legal case, but it was a public-relations
disaster.

Now more people know about the problems with Nestls
baby formula.
The situation
In April 1977, the Columbian General Hospital
encountered an increase in deaths in the premature
ward. The bacteria was traced back to a Nestl
factory, but 25 deaths occurred before the cause
was found.

Also in 1977, the Austrian Department of health
reported that 134 infants had fallen seriously ill as a
result of being fed contaminated infant milk formulas
produced by Nestl.
The Cause
In 1976, The Nestl Tongala plant found cracks in the
spray drier used to turn liquid milk into powdered form.

As a result, bacteria was found in the samples of infant
milk powder.

The state Department was not informed and Nestl
continued to sterilize the equipment without halting
production.

The drier was kept in operation for full 8 MONTHES after
contamination was found.
The Boycott
In July 1977, a boycott was organized in the United
States and soon spread to other nations, It was
named INFACT. The boycott lasted until January 26,
1982.

They demand: 1. Stop all together the use of milk nurses.
2. Stop distributing free samples.
3. Stop promoting infant formula to the
health care industry.
4. Stop consumer promotion and
advertising of infant formula.
Nestles Values
Nestl USA's core values are the principles
we want to characterize our culture.

People
People from all diverse backgrounds are our most
important asset and the source of our competitive
advantage.
We operate in teams where we expect and reward
responsible risk taking.

Nestles Values
-Quality
-We are dedicated to continuous improvement in
the food safety and quality of every product we
make and in every activity we perform.

Nestles Values
Brands
Our strong brands ensure the continuity of our
growth and profitability. Their support is every
associate's responsibility
Consumers
Our reason for being is to understand, anticipate
and best fulfill our consumers' needs We
appreciate and support the critical role our
customers play in getting our brands to the
consumer while working closely together to
achieve mutual value.
Nestles Values

Performance
Exceed total Company High Performance Targets
(HPT's) for RIG, Organic Growth and EBITA.


Source: NestlUSA.com

*Nestle utilizes these core values rather then a mission statement*
Strategy
Since the company isnt allowed to market their
product due to the demands of INFACT the only
reasonable thing left to do is pay extra for shelf
spacing and placement in suggested retail stores

Educate retail employee about their product.

http://manonamission.blogspot.com/2005/11/nestle-
usas-mission-statement.html

Issues in the Case
ACTION
-Poor Judgment


CAUSE
Nestle would always
state claims that they had
nothing to do with the
baby killings
The company would not
present itself in meetings
while the International
Baby Food Action
Network (IBFAN) was
present as well.




Issues in the Case
ACTION
- Not facing the problem
head on


CAUSE
Nestle would come up
with lame excuses.
Nestle would blame the
people
They said that women in
the developing countries
are NOT following the
instructions for the baby
formula

Issues in the Case
ACTION
- Prolonging the Problem
CAUSE
-The Boycotts
-Their Slogan was to
Crunch Nestle
-20 different countries
- Articles
- The Baby killer
- Nestle kills babies

Issues in the Case
ACTION
- Not having a quick
positive reaction
CAUSE
- Nestle didnt make the
changes for World
Health Organization's
(WHO)
- Did not try to change
public relations
- Nestle vs Germany
Source:babymilkaction.com


S W O T Analysis
Strengths


Weaknesses

Opportunities

Threats
A Giant Worldwide Corporation,
with sales of $12.5 Billion 1983.
Controls extensive interests in
the food and cosmetic
industries.

Poor management teams,
didnt respond quick enough.

Expanding product, growing
market.

Competition, losing trust of the
customers, bad management.
Recommendations
Take the product off the shelf

Apologize to the people in public

Find solutions quickly