Example Of Conflict Of Interest Research Paper
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Introductory Remarks and Rationale
Organizations set standards for them which can also be referred as the regulations. These regulations and standards are generally considered as norms of an organization. In order to effectively sustain and flourish in an industry, it is essential for an organization to comply with the standards and regulations set forth by the industry
Regulations that are associated with an industry or an organization often termed as the norms on which the entire productivity and value of an organization depends upon. Industrial Regulations and norms are also known with the name of Business Ethics and Corporate Social Responsibility (CSR), because of the presence of ideas that can empower the structure of an entity. The study and implementation of Business Ethics and CSR has emerged after the current global financial crisis (GFC)
Business Ethics is defined as a form of applied and professional ethics that is used to examine the ethical principles and morale that arise in a business environment in a given time frame. It is one of the most important and incredible fields of study that has a direct linkage with directing the performance of an organization in a well structured and powerful manner. Business Ethics and CSR work as driving forces to regulate the area of an organization implicitly to have a better growth of the Going Concern.
Likewise other organization, Nestle also has a critical eye and observatory mirror over their Business Ethics and CSR Functions. Nestle is a Swiss multinational food and beverage company of the world located in Vevey, Switzerland. Nestle S.A. is known as the largest company of the world gauge in terms of generating net revenues. The company is covered with a number of subsidiaries and has a high network of Branches; the Corporate Culture of the company is well diversified. Nestle has a primary listing in the Swiss Stock Exchange with a market capitalization of US$ 233 billion. The main rationale behind choosing Nestle as a company for the analysis is that Nestle is among the largest multinational companies of the world in which people belong to different set of mind, thinking capabilities, education and experience work together, and the management of the company is effectively designated this particular diversity with immense care and in a perfect manner.
Identification of Issues and Problems in Nestle
Apparently, there are no issues associated with the Nestle, as the financial well being and corporate structure of the company is very strong, but there are some problems that are associated specifically with the company that may hamper their growth in the future
There is a sigh of conflict found among the employees and the management of the company due to high communication barriers. This situation usually known as Conflict of Interest (COI) in which each and every individual belongs to the management officials try to fulfill their appetite first. Something similar has been found within the premises of the company from last few years that needs to be resolved as early as possible for the long term sustainability of the company.
The second big thing that is creating problems for the company in their corporate movement is their behavior with the external shareholders. The shareholders which are enjoying high yield and dividend each year have lots of insecurity in terms of the management of the company. Shareholders of Nestle would desperate to recommend some strategies to the company from which they can further increase their business, but unfortunately, the company has no platform from where the shareholders can pass on their advises to them and raise their voice against any bad decision taken by the company.
The third issue that may be a bigger challenge for Nestle is their sustainability in the nutritional food market while having numerous competitors around the world. The market of the United States (US) that was initially tapped by Nestle with their brilliant performance and unmatched products are now losing their integrity and value from the market because of the arrival of big giants like Proctor & Gamble (P&G), Mars and Monsanto.
It is extremely important for Nestle to overcome on all the aforementioned issues as early as possible to maintain their sophistication and effectiveness in the market for a long span of time, otherwise it will be very difficult for them to sustain in this industry.
It is required to mold the assignment in the Business Memorandum format, therefore in this section, the recommendation and consideration of ideas will be given to the managerial officials of Nestle in a business memorandum format. Therefore, each of the issue will be discussed simultaneously
Conflicting the Interest among Management and Employees
It is an obvious fact that communication is an important element that strides under an organization for their positive growth. Without positive and powerful communication medium, an organization cannot put them in the basket of prosperity. Communication medium and platform gives a chance and opportunity to the employees and management of an organization to interact with each other with zeal and positive mindset. The communication should be there to push the organization towards the Zenith.
It should be a state of Stigma for Nestle to have such an irresponsible issue within their premises as the large structure of the company doesn’t permit them to commit such issue. Unfortunately, here at Nestle, management and employees have no idea about the interest of each other, their objectives and their future as a result of low amount of communication. Currently, this problem lies in a lower level; however it will raise its head in the near future soon and may create problems and issues for the company. Therefore, it is better to overcome on this issue within the shortest frame of time.
The management of Nestle is recommended to use the Management Bi Objective (MBO) approach within their premises. MBO Approach is one of the most incredible strategic human resources management tools used by the organizations to value their employees. The approach requires the organization to invite their employees to participate in the decision making activities of the company. For Nestle, employees should be valued as they are the backbone for them, and without them the company has a Zero value. Moreover, Nestle has to eradicate all the communication barriers among the employees and the management, so any employee can approach any managerial official with ease. The basic problem associated with Nestle is their high amount of communication hierarchy due to which the lower level of employees are unable to furnish their concerns before the upper management.
It is also recommended to the management of the company to arrange such orientation programs in which they can communicate with their employees directly. Define the company’s policies, objectives, goals and interest and let them speak to share their interest as well. With this collaboration, Nestle can retain their position as the number one company of the world in which the employees are valued as the part of the family. Employees always have powerful ideas in their mind which can be very helpful for the organizations as far as their long run productivity is concerned. It is likely to have in the Nestle employees as well because the company has a rigorous selection process from which they hire the best human capital of the society.
Behavior with Shareholders
The entire business ethics and CSR study revolves around the management of the shareholders in a defined and effective manner. As per the indicatives of CSR, shareholders are the actual owner of an organization because they will have the highest amount of risk association with the company, and any mishap with them can endanger the life of the entity.
Shareholders should be treated in a respective manner by the organization. Nestle is one of those organizations that have a big and powerful external shareholder base that creates value for them explicitly. Apart from giving higher yields on their investment and dividend, the company also acknowledges and greets its every shareholder in its annual report. However, something is still missing from this corporate behavior of the company with their shareholders which is continuously underpinning the minds of their shareholders.
The company is not in the favor of giving any proxy rights to their shareholders from which they can influence their decision for the sake of the company. The behavior of the company is not at all effective and bearable. Having such a large customer and shareholder base, Nestle found themselves in nowhere by implementing such strategies on their corporate behaviors. It is very important for the company to direct their behavior with positive attitude.
Arranging proper Annual General Meetings (AGMs) once a year, or Extraordinary General Meetings (EOGMs) in case of emergency within the premises of the company with all of their shareholders to discuss the future of the company is the best strategy that can increase the level of satisfaction among the shareholders of an organization, and will be equally beneficial for Nestle as well. Nestle is recommended to arrange these meetings and give confidence to their shareholders that they are very important for the company, and the company will be pleased to have their concerns over a particular decision. The level of satisfaction of the employees will certainly improves with the passage of time with this activity and by providing the Proxy rights them, through which they have the authority to hire and fire any managerial official.
It is certain that the company will leap out from all of their problems and issues if they will be able to maintain a healthy and powerful tradeoff among the employees and the management.
Maintaining the Competitive Position
Nestle, who had a monopoly in almost every part of the world are now having fierce competition in some of the major markers of the world. Due to the arrival of companies Kraft Foods, Mars, Monsanto and others, the company is losing its market share from the major markets like the United States, United Kingdom (UK) and others. It is now become very important for Nestle to have powerful strategies in order to compete with other organizations which are identical to them. The company makes sure that every strategy they have or made should comply with the industry regulations and standards.
Firstly, pricing is the most important factor for the consumers of a product that can attract or repel them from buying it. In connection to have such a high competition in the nutritional food market, there are numerous companies which are launching products that comparatively cheaper than that of Nestle. Nestle is recommended to decrease their pricing structure a bit from their competitor’s product. The financial structure of the company is sound and powerful, and it will not affect them with high intensity. The nutritional food products and supplements have a perfect elasticity in which a decrease or increase of a single dollar has a large effect over the quantity demanded of the product, and the same is applicable for the products of Nestle.
Secondly, there is no need of Mass Marketing and Leap Fogging in the industry, as new companies are doing it for increasing their sales. Nestle should not focus over the incremental sales, but they have to focus over the retention of their customers for a long span of time. It is the only way from which they can compete with the organizations launching and distributing homogenous products.
Corporate Social Responsibility (CSR) is a form of self regulations that integrate exclusively in a business model to direct and improve its performance. CSR is a policy cum mechanism from which a business monitors and ensures the compliance with the ethical standards and interest. The stance of CSR has been bifurcated into different values that include shareholders, customers, employees and the management.
The main theme of this order is to analyze the effectiveness of CSR and Business Ethics in terms of value the organization. Nestle is the selected organization for this analysis, and the analysis found that the company is doing an exceptional job as far as managing their effectiveness and business, however there are some ingredients of conflict of interest which are undervaluing their effectiveness. Powerful recommendations are included in the analysis to overcome on these issues completely.
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