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INTERNATIONAL BUSINESS MANAGEMENT

Topic of Project:

NESTLE

Submitted to:

Sir Hammad Badar

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Group Members

Maryam Khalid (2014-ag-4205)

Tehreem Ashraf (2014-ag-4195)

Maryam Rabia Zafar (2014-ag-4132)

Aqsa Tabbasum (2014-ag-4122)

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INTRODUCTION:

Nestle S.A is a Swiss multinational nutritional and health-related consumer goods company

headquartered in Vevey, Switzerland. They have more than 2000 brands ranging from global

icons to local favorites, and they are present in 191 countries around the world. They have 447

factories and 339,000 employees. It has been the largest food and Beverages Company in the

world, measured by revenues and other metrics, for 2014, 2015, and 2016.It ranked no. 72 on

the Fortune Global 500 in 2014 and no. 33 on 2016 edition of the Forbes Global 2000 list of

largest public companies.

Nestle's products include baby food, medical food, bottled water, breakfast cereals, coffee and

tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks.

29 of Nestle's brands have annual sales of over 1 billion (about US$1.1 billion), including

Nespresso, Nescafe Kit Kat, Smarties, Nesquik, Stouffer's, Vittel, and Maggi. It is one of the main

shareholders of L'Oreal, the world's largest cosmetics company.

HISTORY:

It originated in a 1905 merger of the Anglo-Swiss Milk Company for milk products established in

1866 by the Page Brothers in Cham, Switzerland, and the Farine Lactee Henric Nestle Company

set up in 1866 by Henri Nestle to provide an infant food product. The two World Wars both

affected growth: during the first, dried milk was widely used but the second war caused profits

to drop by around 70%.

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OBJECTIVE:

Nestlé’s objective is to combine and strengthen its leading position in the food area to meet the

needs and desires of customers around the world, for pleasure, convenience, health and

wellbeing.

MISSION STATEMENT:

“…positively influence the social environment in which we operate as responsible corporate

citizens, with due regard for those environmental standards and societal aspirations which

improve quality of life.” — Henri Nestlé, 1857.

VISION STATEMENT:

To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved shareholder value by being a preferred corporate citizen preferred employer preferred supplier selling preferred products.

OTHER NESTLE BUSINESS:

Nestle Health Science Nestle Institute of Health Sciences Nestle Nespresso Nestle Nutrition Institute Nestle Purina Pet care Nestle Skin Health Nestle water

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SHARE CAPITAL DISTRIBUTION GEOGRAPHY:

Strategy Implementation

There are several strategies that the company can peruse. From alternative strategies, Nestle

can follow environmental strategy and growth strategy.

o Environmental Strategy

Nestlé believes that environmental functions is a mutual obligation and needs the support of all

segments of society. One of the strategies that the company can inspect in order to attain a

worthy business is succeeding an environmental sustainability strategy. Nestlé is following this

strategy in all stages of their product life cycle. This strategy ponders on using natural resources

efficiently in order to produce environmental friendly products. They implement this strategy

by the courtesy of the useof sustainably coped renewable resources, and mark zero leftover.

Also, by investing constantly in order to develop better environmental functions.

Environmental Management System.

One of the particular focus areas of the company is water. Nestlé is dedicated to the

environmental usageof water and nonstop upgrading in water management. This is done

through The Nestlé Commitments on Water set, which sets primacies and objectives on

accountablewater usage.

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o Growth Strategy

Nestle Corporate growth strategy consists of obtaining to grasp leadership and warrant that

confidence by sustaining the prospects of customers. “Creating Shared Value” is a term used in

the company, which refers to the behaviors, strategies, and operations that are creating value

for the communities where Nestle operate.

Their growth is done by investing for the future in order to certify the financial and

environmental sustainability of activities and procedures. This includes:

Capacity.

Technologies.

Capabilities.

People.

Brands.

R&D.

Their purpose of the growth strategy is to

I. Meet today’s needs without compromising the capacity of future generations to meet

the needs.

II. Do this in a way, which will guarantee profitable growth in the future.

III. Also to provide a high level of returns for shareholders and society at large over the

long-term.

o Nestlé’s Marketing Strategy

The management following what is expected has designed a marketing strategy mix. Which

is basically the combination of four aspects: product, distribution, promotion and price.

Nestle main strategy and way of business is to focus on innovation and renovation while

maintaining a balance between the earlier two and geographic activities and product lines.

• Nestle is devoted internationally to taking into consideration local legislation,

cultural and religious practices:

• Manufacturing and marketing the company's products in a sense to create

sustainable value over a long period of time for stakeholders, employees, consumers

and business partners, is Nestlé’s business objective.

• Nestle prefers long-term business development to short-term profit.

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• Nestle is invested in its customers feedback, and admits to identifying the genuine

interest coming from them. They believe that without the customers, the company

would not exists.

• Nestle always maintains a respectable relationship with the countries in which it

operates, by respecting laws, culture and traditions.

- STRATEGIC HRM AT NESTLE Nestlé aims to increase the business, list of customers, profits and sales but, at the

same time, to improve the Standard of living everywhere it is active and the quality

of life for everyone. Nestlé is also convinced that nestle employees is the strength of

the Company and it is impossible to achieved without their energy and their

commitment, which makeshieve people its most important asset. Involvement of

people and also showing their interest at all levels starts with the basic and

appropriate information on the Company's activities and also on the specific aspects

of their work. Through shared their views, ideas and communication and focused

vision, everyone is invited to share and contribute their opinions and views to

improvements enhancing Company personal development and results.

The recruitment process at Nestle is clearly defined.

• People with qualities like dynamism, realism, loyalty, pragmatism, hard work,

honesty and reliable.

• Match between candidate's values & company's culture.

• Recruitment for management levels takes place in the head office and all others

at the branch level. The existing employees are promoted to higher posts as per

the requirements. There are no lateral recruitments. Another source of

recruitment is campus placements and human resource consultancies.

Nestle maintain its mission and goals through three different policies (Operational Pillars,

Growth drivers, and Competitive advantage).

Operational Pillars:

1. Innovation and renovation

2. Operational Efficiency

3. Whenever, Wherever, However

4. Consumer communication

Growth Drivers:

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1. Nutrition, Health, and Wellness

2. Emerging markets and popularity positioned products

3. Out-of-home consumption

Competitive Advantage:

1. Unmatched Product and Brand Portfolio

2. Unmatched Research and Development capability

3. Unmatched geographic presence

4. People, culture, values and attitude

Nestle used these strategies to ensure that it succeeds in the market. Nestle uses strong brands

that are able to create competitive barriers. As part of their operational pillars, their key

success comes from their unbelievable marketing. Their marketing is based on the element that

they are able to provide quality and cheaper priced products while providing customer

satisfaction. This comes from their main mission of nutrition, health, and wellness.

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They have also partnered with other large companies, for example: Coca Cola. They also do

something very different than their other competitors, Nestle purchases local companies to

create regional mangers that know the local markets and culture. This allows them to gain a

strategic advancement in the global areas that they are part of, to gain better consumer

satisfaction.

Each brand of Nestle business has the same strategy since Nestle is a food organization. The

core strategy for each brand is the same as the organization's strategy as laid out in the 3

pillars. The manufacturing factories for these brands follow the same procedure for energy

reduction. They recycle many of their products in order to create energy to produce their

products. Their main strategy is to create low-cost, highly efficient operations make a

universally ability products, and to improve communications with their consumers. Similar to

their business strategy, they are able to focuses these similar strategies through their brands.

Organizational Structure of Nestle

Nestle is a function based organization. Tasks in the organization are distributed into separate

jobs, which are later grouped together under different departments. The organizational

structure at nestle is hierarchical, as it shows on the chart.

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The chain of command spreads from the organization’s upper levels to the lowest levels, clearly

showing who is supposed to report to whom. Suggestions move from downward to upward,

while orders move from upward to downward. Thus encouraging employee to s hare their

opinions and thoughts with their superiors, yet keeping ordered easy to follow and from a

single direction. Moreover, in an effort to stay in pace with change and current trends, Nestle

has moved towards decentralizing decision-making, and to be more flexible and responsive.

Improved Organizational Structure

Perhaps an improved version of the organizational structure could be one where departments

are divided according to the genre of the product being manufactured and sold, thus making it

relevant and more convenient to manage and project expectation and goals. In the improved

version of the organizational structure each department or rather facility will work as an

individual unit, however they all must report to the headquarter office with reports that

indicated how well they are doing and what they may be facing.

This can implemented on a local level, since Nestle operates in multiple regions all over the

world, it would be better to satisfy customers to have functions operation under each location’s

requirement, while still maintaining the main values of the original company.

1990–2011: Growth internationally

The first half of the 1990s proved to be favorable for Nestle. Trade barriers smashed, and world

markets developed into more or less combined trading areas. Since 1996, there have been

various achievements, including San Pellegrino (1997), Spillers Pet foods (1998), and Ralston

Purina (2002). There were two major achievements in North America, both in 2002 – in June,

Nestlé merged its US ice cream business into Dreyer's, and in August, a US$2.6 billion

acquisition was announced of Chef America, the creator of Hot Pockets.

In the same time-frame, Nestlé entered in a joint bid with Cadbury and came close to

purchasing the iconic American company Hershey's, one of its fiercest confectionery

competitors, but the deal eventually fell through.

In December 2005, Nestlé bought the Greek company Delta Ice Cream for €240 million. In

January 2006, it took full ownership of Dreyer's, thus becoming the world's largest ice cream

maker, with a 17.5% market share. In July 2007, Nestle developed the Medical Nutrition

division of Novartis Pharmaceutical for US$2.5 billion, also purchase, the milk-flavoring product

known as Ovaltine, the "Boost" and "Resource" lines of nutritional supplements, and Opt fast

dieting products.

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The Brazilian president, Lula da Silva, inaugurates a factory in Feira de Santana (Bahia), in

February 2007. In April 2007, returning to its roots, Nestlé bought US baby-food manufacturer

Gerber for US$5.5 billion. In December 2007, Nestlé entered into a strategic partnership with a

Belgian chocolate maker, Pierre Marcolini. Nestlé agreed to sell its controlling stake in Alcon to

Novartis on 4 January 2010. The sale was to form part of a broader US$39.3 billion offer, by

Novartis, for full achievement of the world's largest eye-care company. On 1 March 2010,

Nestle concluded the purchase of Kraft Foods's North American frozen pizza business for

US$3.7 billion.

Since 2010, Nestle has been working to transform itself into a nutrition, health and wellness

company in an effort to struggle declining confectionery sales and the threat of expanding

government regulation of such foods. This effort is being led through the Nestle Institute of

Health Sciences under the direction of Ed Baetge. The Institute aims to develop "a new industry

between food and pharmaceuticals" by creating foodstuffs with defensive and corrective health

properties that would replace medical drugs from pill bottles.

The Health Science branch has already produced several products, such as drinks and protein

shakes meant to battle starvation, diabetes, digestive health, obesity, and other diseases. In

July 2011, Nestle SA agreed to buy 60 percent of Hsu Fu Chi International Ltd. for about US$1.7

billion. On 23 April 2012, Nestle agreed to acquire Pfizer Inc.'s infant-nutrition, formerly Wyeth

Nutrition, unit for US$11.9 billion, topping a joint bid from Danone and Mead Johnson.

Nestle in Pakistan

Nestle in Pakistan is operating since 1988 under a joint venture with Milk Pak ltd and took over

management in 1992.

Butter, cream, desighee under brand name MILK PAK

Juice drink under brand name FROST

1990 it start producing NIDO, Everyday, CERELAC

1991 LACTOGEN 1 & 2

1994 MILO and NESCAFE 3 in 1

1998 sweet treats (POLO)

1999 fruit drops, NESTLE PURE LIFE

NESTLE fruita vitals

STRENGTH

Strong brand name.

Socially responsible company.

Innovative.

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Multinational.

Quality products.

The world’s largest processed food and Beverage Company.

Presence in almost every country.

Strong brands like Nescafe, Maggi and Cereal.

High quality and strong R&D team.

Dedicated and focused company.

WEAKNESS

Selective investment due to uncertain economic and political conditions.

Lack of awareness among the target market.

Complex supply chain management.

Subsidiaries difficult to manage.

Too much product distracts from core business

OPPORTUNITIES

Pakistan is the 7th largest producer of milk in the world.

Credit policy can be adopted to increase sale.

Potential to expand to smaller towns and other geographies.

Expansion of product folio.

Further development of global brand.

Emerging market penetration.

More health based products.

THREATS

Global image may harm all brands if one brand fails.

New diet trends.

Immense competition from the organized as well as unorganized sector.

There is no entry barrier for new entrants.

Taste of consumer is difficult to change.

Inflation is getting higher and purchasing power of people is decreasing.

CHANELS OF COMMUNICATION

- INTERNAL COMMUNICATION • PERFORMANCE AWARD

• PROMOTION

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• EID BONUS

• FREE RETURN TICKETS

• INCREASES IN SALARIS OF EMPLOYESS

- EXTERNAL COMMUNICATION • INTERNET

• ADVERTISEMENT

• T.V.ADDS

• RADIO

• SIGNS BOARDS

• NEWS PAPER

• PUMPHLETS

• BROUCHERS etc.

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BRANCHES IN PAKISTAN

Nestle in Pakistan has its branches in fallowing major cities.

LAHORE

ISLAMABAD

FAISALABAD

SHEIKHUPURA (factory)

KARACHI

Nestle Pakistan is proud of its commitment to excellence in product safety and quality and to

providing value and aims to be the leading Nutrition, Health and Wellness Company. As a

socially responsible corporate, they always focus on environment friendly operations, ethical

business practices and our responsibility towards the communities.

-Strategies in Pakistan

The company’s strategy is guided by Nestlé’s Corporate Business Principles which are in line

with internationally accepted best practices and ethical performance culture. Nestles existing

products raise through innovation and renovation while maintaining a balance in geographic

activities and product lines. Long-term potential is never sacrificed for short-term performance.

The Company’s priority is to bring the best and most relevant products to people, wherever

they are, whatever their needs are, and for all age groups.

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Nestle Pakistan today is the leading Food & Beverages Company in Pakistan with key focus on

Nutrition, Health and Wellness and reaching the remotest of locations throughout Pakistan to

serve the consumers. Nestle Pakistan also prides itself in being the leaders in Nutrition, Health

& Wellness. Ever since 1867, when Henri Nestle invented the first infant food, nutrition has

been in our DNA.

Today more and more consumer’s emphasis on nutrition, as they realize that food choices

affect their health and quality of life. Nestle Pakistan operates in many ways but people,

products and brands are the main flag bearers of the Company’s image, and they continue to

enhance the quality of life of Pakistanis.

Controversy and criticism

Status of Potable Water

At the second World Water Forum in 2000, Nestle and other corporations persuaded the

World Water Council to change its statement so as to reduce access to drinking water

from a "right" to a "need." Nestle chairman and former CEO Peter Brabeck-Letmathe

stated that "access to water should not be a public right." Nestle continues to take

control of aquifers and bottle their water for profit. Peter Brabeck-Letmathe later

changed his statement.

Ethiopian debt (2002) In 2002, Nestle demanded that the nation of Ethiopia repay US $6 million of debt to the

company at a time when Ethiopia was suffering a severe famine. Nestle backed down

from its demand after more than 8,500 people complained via e-mail to the company

about its treatment of the Ethiopian government. The company agreed to re-invest any

money it received from Ethiopia back into the country. In 2003, Nestle agreed to accept

an offer of US $1.5 million, and donated the money to three active charities in Ethiopia:

the Red Cross, Caritas, and UNHCR.

Child labor The International Labor Rights Fund filed a claim in 2005 under the Alien Tort Claims Act

against Nestle and others on behalf of three Malian children. The suit alleged the

children were worked to Ivory Coast, forced into slavery, and experienced frequent

beatings on a cocoa plantation

The 2010 documentary The Dark Side of Chocolate brought attention to purchases of

cocoa beans from Ivorian plantations that use child slave labor. The children are usually

12 to 15 years old and some are trafficked from nearby countries. The first allegations

that child slavery is used in cocoa production appeared in 1998. In late 2000, a BBC

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documentary reported the use of enslaved children in the production of cocoa in West

Africa. Other media followed by reporting widespread child slavery and child trafficking

in the production of cocoa. In September 2001, Bradley Alford, Chairman and CEO of

Nestle USA, signed the Harkin–Engel Protocol (commonly called the Cocoa Protocol), an

international agreement aimed at ending child labor in the production of cocoa.

Chocolate price fixing In Canada, the Competition Bureau raided the offices of Nestle Canada (along with

those of Hershey Canada and Mars Canada) in 2007 to investigate the matter of price

fixing of chocolates. It is alleged that executives with Nestle (the maker of Kit Kat, Coffee

Crisp, and Big Turk) planned with competitors in Canada to inflate prices.

The Bureau alleged that competitors' executives met in restaurants, coffee shops and at

conventions, and that Nestle Canada CEO, Robert Leonidas once handed a competitor

an envelope containing his company’s pricing information, saying: "I want you to hear it

from the top – I take my pricing seriously."

Nestle and the other companies were subject to class-action lawsuits for price fixing

after the raids were made public in 2007. Nestle settled for $9 million, without

admitting liability, subject to court approval in the New Year. A huge class -action lawsuit

continues in the United States.

Former Nestle Canada CEO Robert Leonidas is under threat of a criminal charge for his

role in the price fixing of chocolates in Canada when he was at the helm of Nestle

Canada from 2006 to 2010.

Food safety

Milk products and baby food

In late September 2008, the Hong Kong government found melamine in a Chinese-made

Nestle milk product. Six infants died from kidney damage, and a further 860 babies were

hospitalized. The Dairy Farm milk was made by nettle’s union in the Chinese coastal city

Qingdao. Nestle admitted that all its products were safe and were not made from milk

infected with melamine. On 2 October 2008, the Taiwan Health ministry announced that

six types of milk powders produced in China by Nestle contained low-level traces of

melamine, and were "removed from the shelves".

As of 2013, Nestle has implemented initiatives to prevent corruption and utilizes what it

calls a "factory and farmers" model that eliminates the middleman. Farmers bring milk

directly to a network of Nestle-owned collection centers, where a computerized system

samples, tests, and tags each batch of milk.

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To reduce further the risk of infection at the source, the company provides farmers with

continuous training and assistance in cow selection, feed quality, storage, and other

areas. In 2014, the company opened the Nestle Food Safety Institute (NFSI) in Beijing

that will help meet China's growing demand for healthy and safe food, one of the top

three concerns among Chinese consumers.

The NFSI announced it would work closely with experts to help provide a scientific

foundation for food-safety policies and standards, with support to include early

management of food-safety issues and collaboration with local universities, research

institutes and government agencies on food-safety.

Cookie dough In June 2009, an outbreak of E. coli O157:H7 was linked to nestle refrigerated cookie

dough originating in a plant in Danville, Virginia. In the US, it caused sickness in more

than 50 people in 30 states, half of whom required hospitalization. Following the

outbreak, Nestle voluntarily recalled 30,000 cases of the cookie dough. The cause was

strong-minded to be polluted flour obtained from a raw material supplier. When

operations resumed, the flour used was heat-treated to kill bacteria.

Maggi noodles In May 2015, Food Safety Regulators from the Uttar Pradesh, India found that samples

of nestles leading noodles Maggi had up to 17 times beyond allowed safe limits of lead

in addition to monosodium glutamate. On 3 June 2015, New Delhi Government banned

the sale of Maggi in New Delhi stores for 15 days because it found lead and

monosodium glutamate in the eatable beyond permissible limit. Some of India's biggest

retailers like Future Group, Big Bazaar, Easy day, and Nilgiris had imposed a nationwide

ban on Maggi as of 3 June 2015. On 3 June 2015, Nestle India's shares fell down 11%

due to the incident.

Thereafter, multiple state authorities in India found unacceptable amount of lead and it

had been banned in more than 5 other states in India by 4 June 2015.The Gujarat FDA

on 4 June 2015, banned the noodles for 30 days after 27 out of 39 samples were

detected with objectionable levels of metallic lead, among other things. On 4 Jsune

2015, nestles share fell down by 3% over concerns related to its safety standards. On 5

June 2015, Food Safety and Standards Authority of India (FSSAI) orders banned all nine

approved variants of Maggi instant noodles from India, terming them "unsafe and

hazardous" for human consumption.

On 5 June 2015 Nepal indefinitely banned Maggi over concerns about lead levels in the

product. On 5 June 2015, the Food Safety Agency, United Kingdom launched an

investigation to find levels of lead in Maggi. Maggi noodles has been withdrawn in five

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African nations - Kenya, Uganda, Tanzania, Rwanda, and South Sudan by a super-market

chain after a complaint by the Consumer Federation of Kenya, as a reaction to the ban in

India. As of August 2015, India's government made public that it was seeking damages

of nearly $100 million from Nestle India for "unfair trade practices" following the June

ban on Maggi noodles. The 6,400 million rupee suit was filed with the National

Consumer Disputes Redressed Commission (NCDRC), regarded as the country's top

consumer court, but was settled on 13 August 2015.

The court ruled that the government ban on the Nestle product was both "illogical" and

had violated the "principles of natural justice." Although Nestlé was not ordered to pay

the fine requested in the government's suit, the court ruled that the Maggi noodle

producers must "send five samples from each batch of Maggi [noodles] for testing to

three labs and only if the lead is found to be lower than allowable will they start

manufacturing and sale again." Although the tests have yet to take place, Nestle has

already destroyed 400 million packets of Maggi products.

Recommendations:

Nestle was boycotted for being blamed of not using the best possible breast milk in their

products for poorer areas. I would recommend that since other leading industries (who are also

pursuing the field of nutrition, health, and wellness) have been using organic products as part

of their products, Nestle should use their science research technology to look into the organic

foods. This would show the consumer that nettle’s main objective is to provide for the wellness

and health of their customers.

One of Nettle’s weaknesses was that they also have unhealthy product brands. This can clash

with their mission and goals, so I recommend that Nestle look into those products that have

highly unnecessary sugar, fats, and ingredients that are unhealthy and see how they can

enhance their product so that they can make their brand more powerful.

Nestle should also diversify its product range and introduce ice creams and some other

products which can cut the competition of the major companies in Pakistan. Dog items should

be back up by the cash generated by cash cows & renovate them. Nestle should increase the

distribution Network and diversified their portfolio.

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