Dutch known as Bursa Malaysia in 1989. Nestle

Dutch Lady Milk Industries Berhad (Dutch
Lady) was founded by the Dutch farmer families. In 1963, Dutch Lady was
initially set up as Pacific Milk Industries (Malaya) Sdn Bhd. The company name
was changed
to Dutch Lady Milk Industries
Berhad in 2000 Dutch Lady is
classified as a company in the food and beverage industry Dutch
Lady was the first dairy company to be listed on Bursa Malaysia in 1968.
holding company of Dutch Lady is a Dutch corporation, Royal FrieslandCampina.  

brands of Dutch Lady are Dutch Lady, Omela, Joy, Frisco and so on. Dutch Lady
produces and sells dairy and “halal-certified” products such as condensed milk,
flavoured growing up milk, ultra-high temperature milk, powdered milk for
children and family, sterilised milk, fruit juices and yoghurt  

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Lady has 632 employees in Malaysia
Lady is considered to be a leading milk company in the food and beverage
industry Dutch Lady exports its
products to Hong Kong and Singapore Dutch Lady is influential as it won the
for sustaining its business very well.
Dutch Lady has a lot of loyal customers and this gives Dutch Lady an advantage
against other competitors and new entrants  


was established as in Penang. In 1939,
Nestle later grew and expanded to Kuala Lumpur. The founder of Nestle was Heinrich
Nestlé. Nestle specialised in the food and beverage industry and is an
investment holding company in the beverage industry. Nestle was listed on the
Kuala Lumpur Stock Exchange, now known as Bursa Malaysia in 1989.

Nestle produces breakfast cereals, coffee
and ice-cream. The famous brands of Nestle in Malaysia are Nestle also
manufactures food products for pets. For example, Friskies and Purina. Nestle
is a well-known name nationally. Nestle is ubiquitous in 191countries. Hiring
5500 employees, Nestle produces more than 500 “halal” products in our country There
are eight manaufacturing factories located in Malaysia Nestle has been
established for 104 years in Malaysia. Owing to the trusts that millions of
consumers towards Nestle, Nestle is an influential company in the industry.
Nestle has become a trusted brand by households and is enjoyed by so many
generations. This is due to Nestle maintains its quality and integrity

Nestle has a strong competitive advantage
against its many competitors. Nestle is very influential in the food and
beverage industry as Nestle has been termed the industry leader in the
industry. Besides that, Nestle has high market share. The world’s biggest
manufacturer in the industry is Nestle. Nestle is very powerful and influential
in the industry given its long historical existence in Malaysia

visions for both Dutch Lady and Nestle are different. Dutch Lady is already a
leading dairy company in the industry, hence, Dutch Lady aims to further
reinforce its position as a leader and to expand their businesses However, Nestle
aspires to be a leading, competitive, nutrition and health company. Nestle
visions to bring improved shareholder value by being the first-choice company,
employer, supplier that provides preferred products

that, both companies have similar mission. The mission for Dutch Lady and
Nestle is to aid Malaysians to enhance the quality of life with reliable dairy
nutrition. Both companies aim to continuously create nutritious and healthy
products for people

order to achieve the vision and mission, Dutch Lady repeatedly review the
production and marketing skills to strengthen its business sustainability Nestle
focuses on research and development of products in order to achieve the vision
and mission. Nestle focuses on understanding the nutritional needs of consumers
to create great quality products Both companies do not
have any changes in their visions and missions.

The chairman of Dutch Lady is. He has been an independent non-executive chairman of Dutch Lady for 7 years and 11 months.
is the non-independent, non-executive director of Nestle. He has been a member
of the board for 2 years and 3 months.No material contracts relating to loan
were entered into by Dutch Lady that involves the directors. All the directors
do not have any family relationship with other directors or major shareholders
of Dutch Lady. There is no conflict of interests between all directors and
Dutch Lady. The board of directors does not hold any shares in Dutch Lady  

The Chairman of the Board of Directors is He
has been an independent, non-executive director since 2009. The independent,
non-executive director, holds 8,000 ordinary shares in Nestle. Other than that,
the other directors are not shareholders of Nestle. All the Directors have not
committed any offence for the past ten years. None of the Directors borrowed
any loan from Nestle. None of the Directors have any family relation to any other
directors and/or major shareholders of Nestle. All the directors do not have
any conflict of interest with Nestle.

to the independent auditor’s report, the financial report gives a true and fair
view of Dutch Lady’s financial performance at 31 December 2016. The external auditors
issued an unqualified report. No material misstatements are found in the
financial statements. There is sufficient audit evidence obtained by the
auditors. The financial statements are in accordance with Malaysian Financial
Reporting Standards and other standards. No issues, improvements and
suggestions were raised by the auditors.

to Nestle’s auditors’ report, the external auditors issued an unqualified
financial report. The financial report provides a true and fair view of
Nestle’s financial performance at the end of 2016. The financial report
faithfully represents the financial position of Nestle. No improvements and
suggestions were raised by the auditors. The auditors expressed that there is a
risk that Nestle might overstate their revenue. The auditors took action to
assessed the sales transactions and credit notes prior to and after the
reporting date. They also checked the journal entries that involves revenue.

The audit committee of Dutch Lady
encompasses four members. All members of the audit committee are independent
and literate in finance. According to Institute of Internal Auditors, the best
practice is to have at least on member that is an expert in financing., the
chairman, and a member of Dutch Lady’s audit committee are chartered accounts.
The latter is the past president of. The chairman of the audit committee has
broad experience in internal audit and financial management. This portrays that
the two members have the competencies in accounting and auditing.

            According to the Corporate Governance Statement, the audit committee is
to review the performance of internal audit with the Internal Audit Charter and
applicable professional standards. the chairman of the audit committee of
Nestle, and, another member, are qualified Chartered Accountants and members of
is the the. All members are able to use their knowledge and skills to manage
financial resources of Nestle. They are independent non-executive directors.

Dutch Lady may face raw materials risk Many manufacturers face financial pressure as
prices of raw materials are highly unstable over the past few years. In 2008,
raw materials that are used for consumer-packaged goods  increase at double digit rates The reason that
trigger the raw material risk this year is the increasing demand from China Supply
and demand can affect the raw materials costs Inflation may cause raw materials
costs to increase The rise in global raw sugar price in 2015 may also cause the
increase in raw material prices in Dutch Lady  

Dutch Lady may face health and safety risk. One of the
Dutch Lady labels, Friesland Foods, was recalling dairy products from Macau and
Hong Kong in 2008. The
yoghurt and strawberry milk that were produced in China were found to be
tainted by melamine  This may severely
endanger people’s lives According to the, melamine
may cause health problems in toddlers and children Dutch Lady failed to comply with the health and
safety regulations, hence, so Dutch Lady faced health and safety risk. The lack
of regular monitoring of the production process may cause health risk. The
unsafety production may go unnoticed and the contaminated products may be
consumed by consumers.

Dutch Lady may face reputation risk. Reputation risk exists follows by the adverse
results of another risk faced by Dutch Lady. Dutch Lady may face reputation
risk as a result of the health and safety risk aforementioned. By the reason of
Dutch Lady recalling the contaminated and unsafe strawberry-flavoured milk,
Dutch Lady’s reputation was tainted. The bad product quality
of Dutch Lady brands may cause reputation risk. The inclusion of melamine
depicts the quality of Dutch Lady products is bad. The unethical production of Dutch Lady cause people to
perceive Dutch Lady as a bad brand which is unsafe to be consumed. However, any
other risk that is faced by Dutch Lady may cause reputation risk, if
the former risk is not reduced.


Nestle faces environmental risk. Nestle has a poor environmental culture and
fail to help to reduce the natural hazards. Nestle pumps tens of millions of
gallons of water from the forests of California yearly while knowing California
is a drought prone area. As a result, California has water shortage However,
Nestle does not care about the environment. Nestle continues to earn a
tremendous profit by bottling the city water and sell to the public. Nestle
uses a permit that expired 28 years ago and only pay the an amount of $524
yearly Nestle faces environmental risk when Nestle does not comply with the
environmental regulations as Nestle uses an expired permit.

risk may arise when Nestle
breaches the rules and regulations or is being sued by third parties. Nestle faces legal risk as Nestle is being sued by the reason of false
advertising. The lawsuit alleges that Poland Spring Water, one of the Nestle
brands deceived consumers that the water is allegedly drawn out from the woods
from Maine. However, the water is claimed not to be “100% Natural Spring Water”
as advertised It is alleged that Nestle charges consumers a premium price for
the “non-spring water”. The lawsuit alleged Poland Spring Water is not entitled
as spring water and is not in accordance with the If Nestle falsely advertises and mislead consumers, then Nestle violates
the consumer law and faces legal risk

Reputation risk may arise as a result of the bad consequences of another risk. Nestle
faces reputation risk as Nestle implements unethical business practices. Nestle
uses child labour in its cocoa production in Africa Nestle has been using child
labour for more than a decade now. In 2015, approximately 1 million of children
were found to work in Nestle’s farm. Children who are younger than 15 years old
work at Nestle’s cocoa farms. Children were found carrying out unsafe tasks,
for example, carrying heavy loads and using knifes there was evidence of forced
slavery. The young worker did not receive any salary for a year Nestle was sued
for using child labour. Nestle’s reputation is on the line as the use of child
labour is illegal and morally dangerous. The immoral exploitation of children
can tremendously affect how consumers perceive Nestle.


The volatile price of milk can affect the revenue
and profitability. Dutch Lady may suffer severe losses as the selling price now
is not able to cover the cost of goods sold. However, Dutch Lady increased the
product price to cover the production cost and raw material cost Dutch Lady did
not exactly take action to reduce the raw material risk. The risk of raw
material still exists. The costs of raw material may keep rising tremendously
and Dutch Lady may have to keep increase its selling price. This in turn will
lose a lot of loyal customers as there are so many choices that can provide
homogeneous products in the food and beverage industry. Dutch Lady may not be
able to compete with its many competitors. Dutch Lady’s revenue may decline
enormously. Dutch Lady may cease to be the industry leader if it cannot
maintain its loyal customers.

The incompliance of health rules, standards and
regulation may cause Dutch Lady to pay a tremendous amount of penalty.
Customers may lose confidence in Dutch Lady and its products. Dutch Lady may
lose loyal customers. Customers may boycott the products by Dutch Lady as they
are afraid of the possibility of having health problems after consuming the
products. Dutch Lady’s operation may face difficulties. Dutch Lady’s revenue
and profitability reduce immensely. However, Dutch Lady recalled the product
right after finding out the melamine test was tested positive. Stopping the
production of strawberry flavoured milk, Dutch Lady took action to reduce the
health and safety risk. Dutch Lady recalled all the plastic milk bottle
products. Dutch Lady starts to abide by the According to the Dutch Lady
Malaysia, Dutch Lady now enforce many more stringent requirements to ensure the
Dutch Lady products meet their own high standards on quality, food safety and
environment safety

Dutch Lady was facing reputation risk, Dutch Lady took action to conduct a
press conference to provide assurance to consumers and the public that all
products are safe to consume except for the two products that were found to be
contaminated However, Dutch Lady’s effort did not stop the poor reputation
entirely. Customers may lose confidence in Dutch Lady’s products. Supermarket
retailers may avoid to display Dutch Lady’s products on their shelves and opt
for other brands that have a good reputation. The

shareholders of
Dutch Lady may lose confidence as Dutch Lady face difficulties in operation and
in making profit. The shareholders may divest their shares as they do not want
investments that have a great potential for financial losses.


The consumers may not support Nestle’s products anymore as they lose
confidence in the unethical operation. Nestle may face adverse publicity and
the Nestle brand name may be tainted. Nestle may have to pay penalty to the
U.S. Forest Services as Nestle breach the environmental regulation by illegally
drawing out water with an expired permit. Nestle reduces the environmental risk
by implementing water withdrawal reduction efficiency programs Nestle plans to
work with all stakeholders to protect the water resources after receiving
complaints and protests. Nestle ensures their operation do not compromise the
local communities’ water rights Nestle took action to reduce environmental
risk, so this ameliorate Nestle’s reputation. Consumers may gain confidence in
Nestle after seeing Nestle complies with environmental regulations.


Nestle may have to pay at least of penalty for false advertising and
misleading labelling Nestle faces adverse publicity no matter Nestle uses 100
per cent spring water or otherwise. Consumers may not want to purchase any
products from Nestle because Nestle has a reputation of not producing high
quality products. Nestle may face financial losses if consumers lose confidence
in Nestle. Nestle denied the allegations and expressed that Poland Spring Water
is pure and natural. Nestle stated that the water brand has a great record in
terms of quality. Nestle also constantly monitor the water brand abide by all
federal and state rules an. Nestle’s action may provide assurance to consumers
and this may in turn increase the consumer’s confidence.


Consumers may boycott Nestle’s products because Nestle has the
reputation of using child labour. Nestle has been boycotted as Nestle knowingly
supported child slavery. Nestle may face the loss of market share as a result
of the notorious reputation of using children as labour. The total sales earned
by Nestle may plunge dramatically. The shareholders of Nestle may want to sell
their shares as a company that has a bad reputation may not operate well in the
industry. Nestle has a bad reputation because of the usage of child
exploitation, so Nestle aspires to tackle child exploitation. Nestle made a lot
of efforts to raise awareness among the farmers to stop child exploitation.
Nestle notified the farmers about the code of conduct which forbids to use
child labour Nestle help children that are involved in child labour by registering
their birth certificate and subsidise school bags and uniforms to children. Nestle
implements the Nestle Cocoa Plan to tackle the child labour issue


Dutch Lady should prioritise health and safety risk. This is because if
the incident of contaminated milk incident occurs again, consumers may no
longer trust Dutch Lady and Dutch Lady’s operation may be at stake. Dutch Lady
can reduce the health and safety risk by regularly monitoring the production
process. Dutch Lady should ensure all employees involved in the production
process adhere to all health rules and regulations. Dutch Lady should always test
the finished product whether it is safe and high quality for consumers to
consume. Health and safety risk can be reduced by ensuring the employee cleanliness.
Dutch Lady should walk the employees through the health protocol. Dutch Lady
should communicate with workers in the factory to ensure they are fully aware
of the details These suggestions could help Dutch Lady to reduce health and
safety risk.


Out of the non-financial risks Nestle may face, reputation risk is the
most significant risk Nestle should prioritise. This is because Nestle’s
reputation is at stake due to the use of child exploitation. If Nestle does not
prioritise the risk, Nestle’s operation may go downhill. Nestle can set
stringent rules to control what labour they use. Nestle can work with suppliers,
bodies or organisations to ensure the supply chain are properly trained regarding
on the issue of child labour and how to tackle the problem. Nestle can also
implement a code of conduct to eliminate child exploitation and protect the
welfare of children. However, Nestle has to ensure the code of conduct is
communicated through employees, suppliers and farmers in Africa. Nestle can
work with suppliers to make sure cocoa farmers are aware of the regulations in
the code of conduct. Nestle can implement corporate social responsibility to
ameliorate its reputation. For example, Nestle can donate money to children’s
orphanages and schools or built schools for children to have a chance to have
an education. This will change what people think of Nestle. Nestle’s reputation
slowly may be amended.


Nestlé is worth investing as compared to Dutch Lady. Nestle won a gold award
for The as Nestle has the highest return on equity for the past three years.
The award also bestowed Nestle as the top puclic companies to be listed on
Bursa Malaysia because Nestle’s growth of profit is outstanding and the return
shareholders get is very high. Hence, investors that invest in Nestle may get a
good amount of return.


Besides that, Nestle also won. Nestle’s products like, were recognised as the number one most chosen
brand for food and beverage in Malaysia. This depicts that Nestle’s profit
surged dramatically. Nestle’s continues to perform very well. Investors may
earn a generous amount of return as Nestle’s profitability is better than Dutch
Lady. Nestle was also awarded This
shows that although Nestle may face environmental risk, legal risk and reputation
risk, Nestle’s profitability is not affected. Nestle is able to sustain its
business aside from all the risks faced.


All things considered, Nestlé has better future prospect as compared to
Dutch Lady Milk Industries Berhad. Therefore, Nestle is much more worth