Nestle' Assignment

Analysis of Nestlé

5817190051 Liang Long 5817190053 Ou Shaoliang

5817190052 Chou Zhi qing 5817190054 Huang Yuli

Part1: Introduction of Nestle’N

estlé founded in 1866 by Henry. Nestle, is headquartered in Vevey, Switzerland with more than 500 factories worldwide, and has been one of the world's largest food manufacturers which originally is the baby food production and now known as the production of chocolate bars and instant coffee.

In 1864, Henry. Nestle invented the baby nutrition cereal against the high infant mortality and its good utility spread quickly. In 1866, Henry designed the company established the nestle brand in his own name. In 1868, Henry. Nestlé set up outlets in France, Germany, and Britain to begin the Nestlé’s internationalization. In the early 20th century, Nestle’ had factories in Europe and The Americas, merged other food companies at the same time,. Nestlé’ gradually grow into a world-class food companies. Now, Nestlé has more than 500 factories in the world and products are speeded all over the world. Nestlé also have more then 330000 employees and got the sale revenue of 92 billion Swiss francs in 2013.

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Part 2: Products

Nestlé is the biggest food company in the world. Nestlé have many branch companies and holding a lot of food Companies. Nestlé has 64 brands, with a wide range of products across a number of markets, including coffee, bottled water, milkshakes and other beverages, breakfast cereals, infant foods, performance and healthcare nutrition,

seasonings, soups and sauces, frozen and refrigerated foods, and pet food

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Product list

Water Yogurt Coffee Chilled Other drinks

Shelf stable baked goods

Ice cream Infant foods Performance nutrition

Healthcare nutrition

Seasonings Frozen food Refrigerated products

Chocolate,

confectionery petcare Foodservice products

1. Water： Nestlé is mainly engaged in the bottled water and bottled water production and sales, giving priority to low-end products, and sales in many countries such as China and Thailand.

.Yogurt： Yogurt is a part of the seized the market quickly.

.Coffee： Coffee is one of Nestlé’s main product,. Nestlé’s coffee product in all countries generally is originated from the local raw materials, in order to guarantee freshness and taste, it proper improvement according to the different tastes of the people.

.Infant foodsquality.

Part 3: Foreign market expansion

From Switzerland to Norway, from England to Australia to China, nestle, effort on a global scale to any one who has a potential of emerging markets with great determination and patience. And from the perspective of business strategy, nestle can own the steady development and expansion of the success in the world market to the three important measures including: the localization strategy of all-win development, capital operation and excellent market promotion and evaluating cultural affinity of the brand.

1. The localization strategy of all-win developmentF

rom human resource development and market cultivating to solving the raw material supply, Nestlé evaluates the long-term interests of the enterprise, and is willing to pay the huge investment. And then nestle show the world Business legend. The localization strategy of all-win development makes it get the admittance and quickly join into the emerging markets in many countries.

In India, in order to make the dairy factory have reliable product quality, Nestle loans to local farmers to dig a well and seed grass and provides free veterinary medicine and veterinary technology which makes the farmers provide plenty of enough milk for nestle.

In China, the backward Heilongjiang shuangcheng nestle when entering, for example, in order to solve the problem of milk supply, nestle not only sent to a specialist team from Europe, professor farmers take care of cows and milk collection technology, for farmers to pay interest for the loan. In this way, the nestle in local farmers to get stable income at the same time; also can effectively solve the supply of raw materials. Nestle to help farmers increase income development way soon get highly praised the

Chinese government, to nestle won a good social image. The localization strategy in advance, also make nestle in the case of industry competition pressure increasing and sustained and rapid development.

2. Capital operation

Nestle’ knew that if a enterprise wants to compete constantly breakthrough of resistance, quickly join into emerging markets with the advantages of stable position in the competitive market ,it needs continuous investment in mergers and acquisitions which are the only way and effective method. According to statistics, from 1985 to 2000, 15 years, Nestlé has spent $26 billion to buy other businesses. From 1999 to 2003, Nestle acquired at least 32 water companies. By controlling the leading enterprises, Nestle can control the market, and get a huge basic customer, and make the enterprise to obtain rapid growth. In 2001, Nestlé’s spent $10.3 billion to merge the North America's second largest pet food enterprises, at the same year in August, Nestlé hold the America’s third largest ice cream companies - (Dreyer) with for $2.8 billion.

3. Excellent market promotion

In China, Nestle has emphasized to offer Chinese the suitable taste food with high quality. Cooperating with the company's overall development strategy, nestle joined into China since the 80 s to the present, and products from milk powder, coffee, to the drinking water, ice cream, and other fields. However, Nestle in the field of production and sales, doesn’t pursuit the short-term profit, but a long-term, which also is the profound and original ideas of sustainable development.

art4: Analysis on

. Introductionon Multidivisional Structure

Multidivisional Structure, also known as the division system or multi sector structure sometimes refers to as the product of the structure or strategic business units. This structure can be targeted to a single product, service, product portfolio, major projects or projects, geographic distribution, business or profit center to organize the division.

Enterprises in the implementation of M structure can be divided into three types according to the functional structure of the set level and division to obtain supporting service from functional departments:

(1)Product division structure

The company set some functional departments as research, development, design, procurement, sales and others. The division mainly engaged in production, while the related functional departments of general company provide the required support services to the division.

(2)Multi division structure

The general company has set up a number of departments and all departments have set up their own functional departments to provide research and development, design, procurement, sales and other supporting services. Each division will produce their own design products, buying and selling by themselves.

(3)Matrix structure

It is a form of management which integrates the two forms of functional department and product department. Through the use of which double authority, information and reporting relationship and network, the function design and product design are combined, and the vertical and horizontal connection is realized.

2. Analysis on Nestle’ System and Organization Structure

According to Williamson's division method, Nestle should be identified as M type matrix structure. Nestle group's organizational structure is a typical M type matrix structure: in the horizontal, the organization in accordance with the functions and products divided into multiple divisions; in the vertical, it is divided into EUR, AMR and AOA (Asia-Oceania-Africa) three area (AOA), which is divided into greater China, Middle East, Oceania and Africa ar

Nestle Greater China area as the example, the broad China region has 24 enterprises (including Hong Kong and Taiwan), headquartered in Beijing, on behalf of Nestle headquarters in the Greater China region, which operates 21 companies, including two R & D center, a sales company, and its more than 18 factories. But on the water business, China's water business unit from Nestle China, it is to seek support from Nestle China's other functional departments, although its own business needs, to meet the needs of production and sales business and to achieve production and sales targets, in strategic decision-making needs to listen to Nestle China's instruction, while it also needs to be reported to the headquarters of Nestle water and follow instructions. This is the functional departments of the two

forms of integration and product integration organization structure.

Part5:About the corporate governance of Nestle’

　1.Multinational company "global village"governance

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estle shares listed on the Swiss stock exchange, over-the-counter ADR

in the United States. The nationality points, according to the

Stockholders most Swiss (nearly 40%), followed by Americans (nearly

30%), British, German, Norwegian, French and Belgian each own 5%.

From the point of shareholder identity type, proportion of institutional

investors is close to 80%.The board of directors is the highest

governing body of nestle company, responsible for the final

supervision and management for the whole group. Board care

company is not legal, the company's articles of association, and the

internal rules and regulations as belonging to the company general

meeting of shareholders or other administration power range of all

matters.

The board of directors is the highest governing body of nestle company, responsible for the final supervision and management for the whole group. Under the authorization of the board of directors, the nestle by the management committee is responsible for the daily management, at present a total of 14 management committee members, from eight countries, including four people in the United States, Switzerland, 3 people, 2 people, Canada, Belgium, Germany, Spain, France and India and other five countries in various 1 person. As a global company, nestle not only embodies in shareholder base and sales distribution, the members of the board of directors and management committee (executive) also fully reflected on the nationality of the distribution, from 10 countries of 29 members in group control and manage the nestle.2. Module combination marketing

The Nestle’ is a form of marketing portfolio. The company is located in Geneva, Switzerland, a small city headquarters on the production process, brand, quality control and the main raw materials to make strict rules. The line of political power, which is the head of the company, has the right to decide the final form of each product according to the requirements of the state. This means that the company

should maintain the principle of a comprehensive and decentralized management, but also pursuit a greater consistency. To achieve the dual purpose, the inevitable requirement is to maintain a delicate balance. This is a balance between international operations and local state operations. What is more, it is also the balance between international spread and the spread in local country. In order to correctly implement the new policy to inform the branch how to implement, Nestle’ has proposed three important documents including (1)Labeling standards (2)Packaging design manual (3)Brand strategy . The details involve the company's strategy and brand marketing strategy and product presentation.

(1) Labeling standards . It is just a guide file which make a clear stipulation on the various elements of the design of the label . Such as the identity of the Nestle’ coffee, the font and the use of color, as well as the ratio between the various details of each other. This document also lists the various product label legend, suggesting that the company should use these tags as early as possible.

(2) Packaging design manual.

It is a file with more flexible use which propose the various ways to adapt the standard . For example, the use of packaging materials and packaging form.

(3) Brand strategy .

It is the most important document. It includes some details of the marketing principles, the background and the main characteristics of the brand. These main features include: brand personality; the desired image; company; other two documents related to the visual features; and the development of brand use. The executive of the company has realized that the economic globalization has made the enterprise marketing activities and organization

mechanism change from the past "large" structure into a "module" structure. So that the focus of the work move to the combination module, the implementation of modular combination marketing.

The modular combination marketing mode of Nestle’ enterprise settles the contradiction brought by the development of enterprise. Market changing is mainly reflected in the division of the market which is more and more detailed and personalized .From the perspective of marketing, corporate opportunity to profit follows the consumer demand, and therefore, the change in consumer demand is considered to bring potential business opportunities. Nestle Company's each module (Branch) is independent basing on their own market, but also related with other modules to make up a "large" structure of the enterprise. Nestle Company divides its general market into different modules which is in charged by the corresponding module, and it can hold the market dynamics more accurately and improve the accurate grasp and meet in the market demand . At the same time, each module has the ability to operate the market independently and conducts the right to adjust, and take appropriate strategy according to the change of the module market without affecting the total strategy of the enterprise. Nestlé’s modular strategy is an optional way considering the ability to resist risk from the perspective of enterprise organization. Module combination emphasizes the relative independence of each module in the respective market and adjust according to the respective market from competitors, customers and other aspects, while the other parts of the enterprise doesn’t need to adjust, which makes it have a flexible, strain, anti risk.

The combination marketing of Nestle, which makes the structure of network organization, also makes the company have the characteristics of network: One is to use the special

market method to replace the administrative means to contact the various business units and its relationship with the headquarters of the company. The market relationship in the organization structure of the network is a full range of market relations, which includes the transfer of property rights basing on capital input , the flow of personnel and the relatively stable commodity trading relationship. Another one is a powerful virtual function based on the organization structure network. Every independent business entity in the network organization structure can use the external resources in all kinds of ways, and recombinants the external resources to create a huge competitive advantage.

Part 6: the recent financial performanceTwo major mergers and acquisitions

February 19th 2015, Nestle released its 2014 performance with full year sales of 91.6 billion Swiss francs, the annual sales growth rate of 4.5%. At the same time, Nestle’ also announced the 2015 expectation, hoping to have about 5% of organic growth, and improve the profit rate.

It is worth attention that, Nestle’ development in China market is of slowdown. According some report, we can observe from the region that last year's organic growth rate of 5.4% in the Americas, 1.9% in Europe, Asia, Oceania and Africa is 5.7%.But the actual internal growth rate of these regions is 2.4%, 2.3% and 2.4% respectively. And there are media reports data show that in 2013 Nestle China sales growth of 27.6%, in 2012 Nestle China's sales growth of 91.4%.

In recent years, Nestle’ in the global M & a path has been playing a role of food and predators, constantly in the global market mergers and acquisitions and divestitures, and in China, the most attention was undoubtedly the in 2011 in a

large-scale annexation of the two major domestic food enterprises Yinlu and Hsu Fu Chi. "

Overall, Nestle’ business growth in China market appears decelerated growth,

in addition to infant nutrition, Nestle drinking water and nestle professional plate. And both of Yinlu and Hsu Fu Chi which are merged by Nestle’ appear weak increasing performance of different degree. It also reflects food and beverage market weakness in China's which has not yet shown some signs of improvement .So in the future, Nestle’ in Chinese market is still facing a tough fight.