An overview of the Maggi debacle in India and the solution from the perspective of Managerial Skills.

1. Critical situation in an organization
and managerial solution
NAME: HENA MARIA JOY
REG NO: 16
SUBJECT: MANAGERIAL SKILLS
MBA A

2. 2
Introduction
The Maggi crisis
The solution

3. Maggie Noodles had humble beginnings in India. In a country where
instant noodles was a novelty, Nestle introduced Maggi noodles.
Primarily aimed at working mothers, Maggi served as a quick filling
snack or meal for children. Maggi went on to create the ‘ Two
Minute Revolution’ in India and went on to become a market leader
in the field .
With innovative advertisement and a loyal customer base it seemed
nothing could go wrong, until it did.
3

4. THE MAGGI
CRISISAn overview

5.  In 2014 the one of Nestlé's most successful product ‘Maggie Noodles’ came
under scrutiny when a lab in Gorakhpur claimed to have proved that the
product contained MSG( Monosodium glutamate 1).
 In 2015 Kolkata central laboratory independently proved the same fact.
 This led to extensive test of Maggie samples by laboratories in various states.
 This resulted in the product being pulled off the shelves.
5

6.  Once the product came under the microscope the allegations of violations
piled on.
 The product contained the tag ‘No MSG added’ on the outer cover which was
an act of mislabelling.
 A spin off product of Maggi named ‘Maggi oats masala’ was launched without
proper standardisation.
 Maggie was officially Banned by FASSAI on June 5th 2015.
6

7. By 2015 Maggi Noodles has a very loyal customer base. The findings
came as a shock for the customers and consumers. With many laboratories
finding the same result about the composition of the product, customers were
furious. What made the matter worse was the repeated denying of the findings
by Nestle.
Nestle maintained it was safe to eat shortly after which the FASSAI ban
was imposed. The customers considered this a huge breach of trust.
7

8.  In the instant noodles market Maggie had a share of almost 80%. After the ban it
plummeted to 0%.
 Nestle saw a decline of 17.2% in sales when the year ended on Dec 2015.
 Net profit went from Rs. 1185 crore to Rs.563 crore.
 Nestle destroyed over 30000 tonnes of Maggi.
 It took a huge hit when it came to customer loyalty and trust.
8

9. THE SOLUTION

10.  Nestle soon came to terms with the mistakes they were making in handling the
situation.
 Their blatant lack of communication with customers and complete dismissal of test
result from laboratory were firing back at them.
 Amid one of the largest setbacks the company has ever faced, Suresh Narayan took the
driving seat.
 One of the first steps taken was to accept the consequence before challenging the
opponent.
 Nestle decided to destroy almost 30000 tonnes of Maggie.
10

11.  “This is a case where you can be so right and yet so wrong” – Paul Buckle
(Nestle CEO)
 “When you manage an issue in India, you're dealing with a certain set of
unknown entities. Its like being shot at in the dark”. – Suresh Narayan
(Managing Director, Nestle India)
11

12.  The company engaged in an almost year long legal battle to bring back Maggie
to the stores.
 Nestle filed a petition in Bombay high court against the ban by FASSAI.
 On 11th August 2015, NCDRC filed a complaint against Nestle on behalf of
consumers.
 On the 13th August 2015 Bombay high court overturned the ban on Maggie
Noodles.
 On 16th October test results mandated by Bombay high court showed Maggi
to be safe.
 On 9th November 2015 Nestle India makes Maggie available for sale again.
12

13.  “My factories are open, my processes are open; come see exactly what you want
to see. This is a company for which food quality and safety are at the centre of our
culture and is non-negotiable”
– Suresh Narayan
 One of the first things the management did was to learn from the mistakes.
 Their abysmally poor communication during the time of crisis had cost them and
hence, one of the first step taken was to communicate with consumers.
 Mr Narayan personally spent time convincing the stakeholders.
 The plan was to involve people in getting the reputation of Maggie back.
13

14.  Nestle had dedicated employees and under the constructive leadership of Mr
Narayan they managed to revive idle factories in a matter of days.
 One of the major steps taken by the management was to introduce the
product in the digital platform through Snapdeal. The first 60000 boxes were
sold within 5 minutes.
 Among all the steps taken to revive Maggi the Advertising campaigns sealed
the deal.
 The innovative advertisements like, using the same actors(now older) for a
remake of old advertisement and new advertisement appealing to the trust of
consumers played a major role in making Maggi noodles a household name
again. 14

15. While Nestle made initial mistakes in handling the situation with lack of
awareness and no solid plan, it cannot be disputed that revival of Maggi
Noodles is a huge success story for Nestle.
Under proper leadership and management the company managed not
only fixed its mistakes but managed to make a comeback which seemed
impossible. This was possible only due to the Skills exhibited by the
management at every step.
While the Maggi noodles debacle still remains a case study , The revival of
Maggie is surely a success story of good managerial skills.
15

16. “It was a blessing in disguise”
-Suresh Narayan
16

17. Reference and Acknowledgement
 ASBM journal of Management
 Fotrtune.com
 The Hindu
 Quora
 Google (image courtesy)

18. 18