Challenges MNCs Face in Emerging Markets: The Nestlé Experience

V.S. Pai

Vision, 2018, vol. 22, issue 2, 222-231

Abstract: Maggi was the most popular instant noodles brand in India, which children in particular loved to snack on. The brand had a dominant position until suddenly in mid-2015 it got engulfed in controversy. Several state food regulators found that Maggi contained monosodium glutamate as well as lead well above the prescribed limits. Both these substances were harmful especially for children. When Nestlé India was confronted with lab test results it stuck to its position that they had a world class quality control process in place and that their products were safe for consumption. Finally, the national food regulator FSSAI, ordered a ban on the sale of Maggi including product recall. Consequently, several state governments imposed temporary ban on the sale of Maggi noodles in their respective states. The future of the company suddenly looked very bleak. Nestlé India was slow to respond to this fast unfolding crisis. Further, their responses were very brief and not adequately culture-sensitive. This led to the feeling in several quarters that the company was probably guilty of wrongdoing. To set right things Nestlé's worldwide CEO flew into India to douse the flames of the controversy and draw up an appropriate strategy to bail out the brand. He address the media, put in place a new CEO for Nestlé India and set brand Maggi on the path of recovery. However, Nestlé India was still facing a number of critical issues. What should be done to win over the trust of its customers? How should it recover market share lost to competitors both old rivals and new entrants? What strategy should it develop to succeed with the new products, especially hot heads, launched along with the comeback strategy? Should it change its approach to dealing with government health officials to prevent confrontations in future? How should it shorten the response time and make it effective in the face of a media backed public outcry in future?

Keywords: Branded instant noodles; Foods brand controversy; Business turnaround; Managing in emerging market; India (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:sae:vision:v:22:y:2018:i:2:p:222-231

DOI: 10.1177/0972262918767281

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