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CASE STUDY 1

Case Study 1: Nestle recalls over 760,000 pounds of Hot Pockets, may contain 'pieces of glass

and plastic'

Abbas S. Munshi

Rochester Institute of Technology

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CASE STUDY 1

Corporate Power

Nestle has influenced the decisions of their shareholders by recalling 762,125 pounds of

contaminated Hot Pockets. Due to the negligence of Nestle’s production, the value of their shares

must have dropped causing shareholders to suffer economic loss. Moreover, lack of consumer

trust in Nestle can also contribute to their losses which would just be transferred to stakeholders.

These losses involve a series of decision making which the shareholders need to make and it is

highly influenced by Nestle’s actions, thus defining their corporate power.

Business Environments involved

Competitor Environment

Nestle’s negligence can cause their customer base to weaken. The contamination of Hot

Pockets will not only cause customers to question its consumption safety but even that of other

products manufactured by Nestle. Competitors of Nestle will see this as an opportunity and they

will begin their moves in attracting Nestle’s customers towards them.

Political environment

Nestle has attracted the attention of the United States Department of Agriculture Food

Safety and Inspection Service. The federal agency has urged consumers to dispose the product or

return it to the place of purchase. The agency has also classified the recall of Hot Pockets as a

‘Class I’ recall which means that the product is a health hazard. This intervention of government

again just scares away consumers from Nestle. Moreover, Nestle has dealt with plastic

contaminants in one of their other products as well which just seems

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CASE STUDY 1 1 Case Study 1: Nestle recalls over 760,000 pounds of Hot Pockets, may contain 'pieces of glass and plastic' Abbas S. Munshi Rochester Institute of Technology CASE STUDY 1 2 Corporate Power Nestle has influenced the decisions of their shareholders by recalling 762,125 pounds of contaminated Hot Pockets. Due to the negligence of Nestle’s production, the value of their shares must have dropped causing shareholders to suffer economic loss. Moreover, lack of consumer trust in Nestle can also contribute to their losses which would just be transferred to stakeholders. These losses involve a series of decision making which the shareholders need to make and it is highly influenced by Nestle’s actions, thus defining their corporate power. Business Environments involved Competitor Environment Nestle’s negligence can cause their customer base to weaken. The contamination of Hot Pockets will not only cause customers to question its consumption safety but even that of other products manufactured by Nestle. Competitors of Nestle will see this as an opportunity and they will begin their moves in attracting Nestle’s customers towards them. Political environment Nestle has attracted the attention of the United States Department of Agriculture Food Safety and Inspection Service. The federal agency has urged consumers to dispose the product or return it to the place of purchase. The agency has also classified the recall of Hot Pockets as a ‘Class I’ recall which m ...
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