Nestlé Violation of Business Ethics (Case Study)

Many companies believe that a good business principle is an ethical business, which is a business with superior and sustainable performance carried out by an act of obeying such principles in line with applicable laws and regulations. In simple term, business ethics is none other than ethics put into a practice by a business. It is the application of proper understanding of what is right and wrong for the various institutions which entail business activities.

Nestlé Indonesia is a subsidiary of Nestlé SA – a leading company in nutrition, health and wellness whose headquarter is in Vevey, Switzerland. Nestlé SA was founded more than 140 years ago by Henri Nestlé – a pharmacist who succeeded in concocting baby porridge to help a mother save her baby who was very sick and unable to receive breastfeeding. The company’s motto is “Good Food, Good Life” which illustrates the ongoing commitment to combining science and technology; providing products which can meet basic human needs for nutritious food and beverages, as well as safety for consumption and delicious taste. However, Nestlé Dairy Products in 2004 were withdrawn from a number of European countries’ market because they contained the Sakazakii bacterium which can provoke blood vessel infection or inflammation of the digestive system as they appeared to be deadly to infants and adults.

In the case of business ethic violation done by Nestlé Indonesia, The Indonesian National Dairy Industry seems to have underestimated the problem of the Enterobacter Sakazakii bacteria which contaminates children's formula milk products. According to the Sciences News Online site from research conducted spanning across 35 countries, it was found that the level of contamination of the Enterobacter Sakazaii bacteria in infant formula was 14 percent. What’s more, the study also further discovered that the bacterium were found in the dust scattered on the floor of the baby formula manufacturing factory, revealing the fact that the company’s plant had failed to maintain its hygiene standard procedures whereby the site should be clean of all harmful viruses, germs or bacteria.

Meanwhile, Nestlé has been criticized for producing infant formula containing E. Sakazakii bacteria, especially for formula milk products which are marketed in developing countries. Being part of a global company established and widely recognized as one of the prominent players in the area of fast moving consumer goods industry, there is no excuse for Nestlé to continuously improve and strengthen its R&D capabilities through Innovative Partnerships at every stage of the product development process from initial collaborations with startup and biotech companies to final partnerships with all of its key suppliers.

Nestlé's Corporate Business Principal is the foundation of PT NESTL's corporate culture which has developed over 140 years. Since the success of Henri Nestlé in inventing baby porridge "Farine Lactée" to help a mother who wished to save her baby, the company’s Corporate Business Principal will continue to evolve and adapt to the changing world. Although in 2004 the company’s dairy products were pulled off from a market circulation in several European countries due to bacterium issue, however, this did not apply to its subsidiary operated in Indonesia. In 2011, the Indonesian Food and Drug Supervisory Agency so-called BPOM as the superior regulator in FMCG industry did not find any contaminated formula milk after taking 96 samples of its various brands just to test if there was any possibility of Enterobacter Sakazaki bacteria contained.

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