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Ethical Leadership In Nestle and Chevron

EthicalLeadership In Nestle and Chevron

EthicalLeadership In Nestle and Chevron

Thedemand for ethical leadership on business is increasingly becoming amajor factor to be considered by companies that aim to maintain ahighly regarded reputation as stakeholders have developed a keeninterest in the principled management of outlets. Given thewidespread of the use of the internet, companies have much to gainout of real ethical leadership than before, as prospects of clientsthat are attached to the said firms are higher. The rational herewithis because favourable job attitudes developed by the employees due tosound decision making by top management has a direct link and effecton how other stakeholders view and relate with a given firm (Brunk,2010). In this precept, companies with clear intentions of carving astatus and market niches must embark on a deliberate attempt thatshall pursue the desirous success in their leadership, and thefollowing matters incidental to their existence. Besides, thecommitment to high standards of ethical values is not only right butalso profitable as doing otherwise has various cost effects relatedto unconsidered in actions that further prove costly to thebusinesses involved (Conrad, 2013). Given the stated, this papershall seek to elucidate the ethical leadership in both Nestle andChevron companies concerning recent decisions made in as far as soundethics or lack of it is concerned. By so doing, the target audience,who may be business students or company managers, will be in aposition to interact with the recommended ethical practices relevantto their studies and business practices respectively. The informationthat assists in the assembling of the presented work has beenobtained from secondary sources and materials and thereby providing alook at matters concerned in their wider perspectives. Certainly, itis only through the implementation of sound leadership that a firm isguaranteed an important advantage in an ethical system designed tosustain appropriate conduct and the yielding of intended andacceptable outcomes.



Nestleis a leading Swiss transnational food and drinks company with itsheadquarters in Vaud, Switzerland (Low &amp Davenport, 2009). Considered as a large food firm in the world, its production linecomprises the manufacture of several food items which include babyfood, bottled water, medical food, breakfast cereals, coffee and tea,confectionary, pet foods, frozen meals, snacks and a host of othermeals. Formed in 1905 through the merger of the Anglo-Swiss MilkCompany, the company grew tremendously through the World Wars, andthereby managing to offer past the old condensed milk and infantformula products it initially majored in making and supplying. Itspost wars emergence as a leading food maker followed the quick andresponse decisions by its management to enter into contracts with thegovernment, upon which it streamlined its operations and managed toreduce the earlier ballooning debt folio. In the 1990s, the companymade significant breakthroughs as it had an elaborate expansionworldwide following the removal of trade barriers by variousinternational markets. In recent years, the firm has enhanced itsproduction line since it has made acquisitions of a company likeVitaflo, which majors in the making of clinical nutritional productsfor patients with hereditary ailments (Singh &amp Singh, 2011). Also, it also acquired CM &amp D Pharma Ltd., a corporation thatfocuses primarily on the development of products meant for peoplewith protracted conditions like kidney disease. PrometheusLaboratories, a firm specializing in treatments for cancer andgastrointestinal diseases, was also assimilated, making Nestleoperate within an enlarged scope capable of delivering diversifiedproducts to different consumers (Mahapatra &amp Kumar, 2009). Thecompany`s commitment and endeavor to expand, premised on theobjective that prefers long-term growth as opposed to short-termsurvival has also seen its announcement to open over ten skin careresearch centers worldwide, thus deepening its investment in thefast-growing fair for healthcare products. Indeed, Nestle company hashad a culture which spans over 140 years corporate businessprinciples placed in the hands of its many employees, along withappropriate training tools to aid in spreading the company’s corevalues, aims, and missions. The management of the Nestle Company andsubsidiaries, therefore, are allocated all over as per thedemographic locations of various company branches or subsidiaries.

EthicalLeadership of Nestle

Accordingto Sethi (2012), Nestle company has had varied, and far-reachingcriticisms from stakeholders all over the world over its unethicalbusiness practices as were executed by the management in theiroperations in the recent past. The result of the backlashesoccasioned boycotts, a matter that worked to ruin the company’sgeneral reputation and goodwill. For instance, one of the criticalissues that of fraudulent labeling. Over 200 tons of powdered milkwas decommissioned following a revelation that the company subsidiaryin Colombia had repackaged the sacks from Uruguay under the brandname Conaprole, pretending that the items had been supplied from alocal Nestle company. The products were falsely stamped withfalsified production dates of 20th September and 6th October 2002,yet the real production dates were in between the indicated times. Inaddition to the existing misstatement, 120 tons were discovered amonth later with the same kind of falsification thus pointing to atrend of fraudulent dealings. Consequently, the discoveries caused astir, with the authorities being caused to launch investigations intorevelations. As such, the prosecutions were carried out, and Nestléwas charged with using low and contaminated milk, an offense whichwas considered as a grave attack on the health of the citizens’people, more so the children.

Anothercase in point to illustrate the wrong and ethically unfoundedpractice is that Nestle Company involved itself in the illegalextraction of groundwater at the Serrada Mantiqueira region ofBrazil. The company management was well aware after they had beenbriefed that the over-pumping groundwater would lead to depletion andresulting damage vulnerable water resources. Considered water sourcesof high mineral content and medicinal properties, the concernedjurisdictions went further to give guiding procedures that sought tooffer protection to the environment and attached bases. The residentsdetected a sharp change in the taste of water beside the completedry-out of one of the springs, associating the incidences to thepractices of Nestle that had pumped massive volumes of water in thepark from a well measuring 150 meters deep. In a bid to conceal theiraction and to avoid costs of production, the company demineralizedthe extracted water then transformed it into table water, branding itas Pure Life. As is known to be a fact, water needs to stayunderground for several years to gradually be enriched by minerals,and over pumping drops its mineral abundance for years to come. Asso, the Brazilian government made it illegal to demineralize water, aprovision in the guidelines the Nestle deliberately overlooked.Pushed by the Citizens for Water movement, the authorities initiateda federal investigation that resulted in charges against Nestle, alegal battle which the company lost after protracted challenges thatalso meant the denting of its image in the global markets owing tothe un-procedural practices by its leadership.

TheNestle Company has also had its top management twist the establishedcompany policy that they further lobbied to be implemented by theBritish government. The UK’s company Chief Executive petitioned thegovernment, which was just about to introduce a vaccination plan, andmanaged to force a complete turnaround in the intended policy. As aresult, Nestle was exposed, just recently, regarding its role inurging British government not to inoculate livestock during thecrisis of foot and mouth disease. The underlying reason is thought tobe the fact that Nestle suspected that a successful vaccination ofcattle in Britain would necessitate the mass production of milk, amatter that could dent their profits from the export of powderedmilk. Further to that, the company management held onto theirreservations that the authority’s move would lead to the closure ofits factory in Dalston, Cumbria, a major producer of powdered milk toother upcoming countries, which also employed over 550 people. Thefinal example of bad ethical leadership used by the company is aboutthe engagement of suppliers whose disregard to human rights isconsistent and increasingly bothersome to the existence of othersdespite the fact that such violations are conspicuous. A report wasunveiled sometime in 2009 that showed that Nestle had consistentlybought its milk for production from a supplier, which had seizedtheir production land from a rightful white owner. The managementdenied the report, but the media proved their assertion, showing thedeliberate and utter disrespect to people, property and the need tospeak the truth in the process of doing business.

PersonalEthical Decision-Making Predispositions regarding Nestle

Iwould vouch for a system that is not driven just by the need forprofits at all cost but a lean and well-meaning, systematicgovernance that is inculcated into the leadership and spread down tothe implementers. The priority, therefore, remains that which ensuresthe collaboration of Nestle principles and compliance with thecompany’s well-thought standards and policies. Accordingly, inconsideration of the virtue theory that consists of four primaryattribute characteristics practiced in business, and which includecourage, honesty, temperance or self-control, and justice andfairness. In considering the same, the Nestle has not demonstratedthe full practicable principles. That is to say that theirengagements did not meet the aspirations and the silent desires ofthe participators or the stakeholders.



ChevronCorporation is a big American company, being one of the successors ofStandard Oil, which boasts of over 185 branches that are active invarious countries, and has its headquarters in the San Ramon,California. The company is enthusiastically engaged in numerousaspects of oil dealings, natural gas extraction, and a participant ingeothermal energy industry products, including hydrocarbonexploration and production. Besides, it carries out the refining,marketing and transport of the energy products stated, besides thechemicals manufacturing, power generation, and sales. Chevron`ssecondary operations produce and sell merchandises like fuels,greases, condiments, and petrochemicals. Its other alternativesenergy services include which include geothermal, solar power, windpower, biogas, and hydrogen. Between the years 2011–2013, thecompany scheduled to conduct research that would lead to theacquisition of renewable energy ventures. Given its widening growthand subsequent investments, Chevron can be claimed to be one of theworld`s largest producer of geothermal energy. The company’sstrategic mergers and acquisition have also made it witnessconsistent growth obtained from the synergy that follows is theteaming up with various firms with their healthy ends too. It isnoteworthy that even with its scattered subsidiaries the company hasmaintained its core objective and fundamental purpose which is toprovide the energy the humankind need for functions of progress (Du &ampVieira Jr, 2012).

EthicalLeadership of Chevron Corporation

ChevronCompany has had some accusations owing to the management’sleadership style that seems not so keen on the matters about theadequate procedures laid by various hosting jurisdictions. In recenttime, the company engaged in conducting illegal drilling andcontamination of soil, environment and vegetation, and the pollutionof water sources and supplies in Ecuador (Bulatova, 2014).Consequently, the dependants of such ecosystems like human beings andanimals of all kinds found along the outlet of the Amazon Rain Foresthave had to put up with contaminated supplies. The adulteration hasled to the compromise in the health of the people and countlessanimal species, which are either sickened or made incurably ill,causing fatalities in many instances. The court battle which ensuedand that has been on-going for over 50 years has created aconsiderable depression in the reputation of the company that hasalso occasioned the firm to incur enormous costs in its attempt todefend the case. Due to their actions, the communities of Ecuadorhave had a changed life ever since Chevron illegally drilled anddefied the laid environmental guidelines concerning waste managementin the affected country. Seen by many to be a morally and improperconduct, the company has fumbled with declining goodwill and stricterregulations, in particular, hosting jurisdictions, a matter thatcompounds their miseries besides the employee turnover that wasprompted by their leaderships’ actions and omissions (Rampersad,2014).

King,Case &amp Premo (2010) point that given its negligence and thedisregard of the accepted principles that guide corporations that aredealers in oil and related products in the transportation of thegoods, the company faced an oil spill off the coast of Angola(Domenec, 2012). The mess prompted the Angolan authorities, for thefirst time, to demand 2 million dollars in compensation for theenvironmentally degrading mishap. That followed after a widespreadoutcry by organizations, environmentalists, researchers and mediahouses, thereby painting the firm in a bad light despite its earliereffort to publicize its activities and get endeared to givenauthorities to cutting further market segments and enhanced sales. Aswell, the cost implications and loss of reputation in this case onlyworked to derail the progress that the firm had contemplated. Thedetachment by the leadership affirms the negative and undesirablerepercussions of unethical leadership that tends to ignore the setlaws which are meant to steer the corporates and the stakeholders tolevels upon which all can benefit in the course of the businesses`undertakings (Baumann-Pauly &amp Scherer, 2013).

PersonalEthical Decision-Making Predispositions

Inthe case of the Chevron Corporation, the management leadership oughtto have carried out proper research on supposed environmental impactsbefore undertaking to drill water at a point that would endanger thelivelihoods depending on the ecosystem and equally jeopardize thecompany’s reputation. In addition to the regrettable outcomes andtheir attendant impacts, the company must have engaged in morecost-effective settlements than the protracted court sessions and thesubsequent injunctions, which have all ensured that the corporationsuffers unstable human labor and a cozy market in various hostingcountries or any prospective host. Besides, good manners would haveled its leadership to agree to concessions early enough with engagingin lengthy denials. The firm should have its leadership and itsemployees to undertake to commit to the best practices and observethe adoptable corporate social responsibility undertakings to createa smooth edge between the stakeholders and the firms in the business.


Thecompany cannot do as it wishes. In this precept, it incumbent uponthe management to infuse and cascade guiding practical ways ofconducting business in a manner that do not create conflict with theauthorities as they enhance the aims and objectives of the company inquestion. The step will include the planned activity of training theimplementing workers to be sure that their actions are in tandem withthe laid down procedures, taking maximum care to adhere to theregulations, which conform to the host’s laws. Furthermore, it isout of the sheer commitment to implement sound leadership informed bythe research, consultation and respect for human dignity that a firmis guaranteed the most significant leverage in an ethical systemdesigned to sustain a fitting conduct and consequently yieldingintended and acceptable outcomes. Therefore, in defining clearboundaries of responsibility, it must be appreciated that aresponsive and caring crew that works as a unit is not one thataffects the managers’ duty or work towards the intendedbeneficiaries. A team must have a leader, within its ranks, whoassumes full responsibility. In that manner, operations are guided byethical mannerisms while conducting business, hence harmony, growth,and profitability.


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