OD_C_8_PGDM_2014-16

Program & Batch: PGDM 2014-16

Term: II

Course Name: Organization Dynamics

Name of the faculty: Dr. Bindu gupta

Topic/ Title : Company Analysis – NESTLE

Original

or Revised Write-up:

Original

Group Number: 8

Contact No. and email of Group Coordinator:

08586803674 [email protected]

Group Members: Sl.

Roll No. Name

1 140103093

Manish Jain

2 140102017

Anand Kumar Chaturvedi

3 140102006

Abhilasha Shukla

4 140101175

Spriha Agarwal

5 1401011 Sridhar Soni6 1401011

87Tarun Prakash Vyas

Contents

1. Brief History of the Company 3

2. Vision, Mission & Values of Company 4

3. Services/ Products offered 4

4. Environment analysis for company 7

5. Expectations of Shareholders 9

6. Organization Structure 10

7. Organization Culture 11

8. Business Strategy 12

9. CSR initiatives taken in last 2 years

10. Change initiatives taken in last 3 years 17

11. Organizational performance on balanced scorecard 19

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1. BRIEF HISTORY OF THE COMPANY

Nestlé's begun in India around 1912 as the Nestlé Anglo-Swiss Condensed Milk Company Limited. Its primary operation was of importing and offering products.

In 1947, after India's autonomy, the Indian Government turned out with arrangements which underscored the requirement for nearby generation. Nestlé adjusted by setting up its first plant in 1961 at Moga, Punjab. The Government needed Nestlé to create the milk economy. Because of this Nestlé' began Agricultural Services to instruct, exhortation and backing the agriculturists in an assortment of angles. Case in point they helped in expanding the milk yield of their bovines through enhanced dairy cultivating systems, exploratory harvest administration practices, watering system and with the obtainment of bank credits.

Nestlé had an alternate methodology to business; it organized milk accumulation focuses that guaranteed reasonable costs and brief gathering. It likewise helped ingrain trust in dairy business. There was economical improvement and development because of which Moga transformed into a prosperous and dynamic milk locale today.

It has been nine decades since Nestlé has been working in India and aiding in its GDP development and it has fabricated an exceptionally uncommon relationship of trust and duty with the populace of India. It has given the nation business to agriculturists, suppliers of bundling materials and different products. The organization persistently strives to enhance and ad lib as per the change in the needs and outlook of the individuals to stay with time and give individuals Taste, Nutrition, Health and Wellness through its items. The society of development and redesign inside the Company and access to the Nestlé Group's exclusive engineering/Brands mastery and the far reaching concentrated Research and Development offices is an uncommon preference the organization appreciates. These techniques and practices help the Company to give wide mixed bag of superb and safe nourishment items at reasonable prices.

Nestlé India is a global brand and gives universal level quality in its brands that it offers like NESCAFÉ, KIT KAT, MAGGI, BAR-ONE, MILKMAID, MILKYBAR and NESTEA. As of late the Company has additionally presented prepared to-utilize results of day by day utilization and use seeing the current need, for example, NESTLÉ Milk, NESTLÉ SLIM Milk, NESTLÉ Dahi and NESTLÉ Jeera Raita.

Nestlé India is a dependable association which works with still, small voice and encourages activities that assistance to enhance the personal satisfaction in the nation it serves and won.

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2. VISON, MISION AND VALUES

Vision Statement:

Mision Statement:

3. SERVICES AND PRODUCTS OFFERED

Nestle has over the years acquired many brands in order to fulfil every possible food needs of people across all age groups. In its endeavour to serve people with variety, it has bagged multiple brands which can de divided into the following sub-categories:

Products:

Beverages

Prepared dishes and cooking aids

Milk Products & Nutrition:

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Chocolates & Confectionery

Services:

Nestle Professional

The following are the brands that come under each. Please note that these are the brands that are available in India under Nestle

Beverages:

Prepared dishes and cooking aids:

Milk Products & Nutrition:

Chocolates & Confectionery

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Vending & Food services

As times change the consumer behaviour and buying patterns change. According to surveys more and more people are spending on food and beverages out of home and this statistics is slated to only increase in the coming years. As the spending budget on food increases so does the expectation that comes along with it relating the quality of the food increases.

Seeing this as an opportunity, Nestle has launched Nestle Professional – to cater to the quality demanded for out of home food products by its customers.The plan has three defined ambitions:

To Use global consumer insight and to deliver new business ideas that are profitable for customers.

Build closer working relationships with our customers namely our foodservice partner. 

To Use and leverage the strength of our brands, products and systems to help you have a profitable growth and customer satisfaction. 

Thus Nestle Professional provides its customers with new business opportunities which help them explore new avenues and target for a profitable growth

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4. Environmental Uncertainty framework:

Some concepts to describe the environment of organisation:

The organizational environment consists of all elements outside the boundary of the organization that can affect it

An organization's domain is its chosen environmental field of action or niche; it consists of external sectors with which the organization interacts to accomplish its goals

The task environment includes sectors with which organization interacts directly and that have a direct impact on the organization; it typically includes industry, raw materials, MARKET, and sometimes human resources and international sectors. the general environment includes sectors that influence the organization more indirectly; it may include government, socio-cultural, and technology sectors

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There are two dimensions of environmental uncertainty:

Environmental complexity (simple environment-complex environment) Environmental stability (stable environment-unstable environment)

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Nestle’s environment can be put under Low-Moderate uncertainity because:

They have large number of external elements and elements are dissimilar. It has 500 factories in 76 countries and selling its product in almost every

country of the world. It has almost 8500 brands. Therefore they have to depend on large number of external factors and constitutional frameworks to function properly. On the other hand Amul has lesser complex environment as it has just 40 brands and functioning mainly confined to India.

Elements remain same or change slowly

Nestle takes many steps to remain in a good position in these uncertain environment:

Dynamism: Regular changes on organisational design

Low cost: to remain competitive enough in the local market of target country

Differentiation: Bring new products in the market to have an upper edge over local producers

Technological factors: Use up to date technology to have cost and quality advantages over others

5. Expectations of Stakeholders

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NESTLE takes care of the people that it is associated with by the means of various program for the stakeholder engagement. The organization has constantly had faith in swaying organizations to distinguish the key stakeholders for their firm at National level, Global level as the system is co-ordinated midway. Making Shared Value (CSV) is the stakeholder engagement activity that helps the association to comprehend the desires, concerns and assessments on different issues that will help it develop in future and hence conveying responsibilities. The whole engagement program consists of two approaches:

1) Creating Shared Value ForumThis forum is focused on the role of business in development, and particularly to nutrition, water and rural development.

2) Stakeholder ConveningThe real centre of these gathering is to accentuate on issues particular to the organization, it incorporates ecological manageability, human rights, agreeability and conveyance of the responsibilities made to all stakeholders and each of the three Creating Shared Value forum's central territories Nutrition, Rural advancement and water.So far there have been seven stakeholders convening at various places across globe and the recent being the convening in London in 2013.

2007 (Geneva) 2008 (Washington DC) 2009 (Geneva and Kuala Lumpur) 2011 (New Delhi and London) 2012 (Nairobi and London) 2013 (London)

The results or the minutes of meeting are then shared with the senior management in order to modify or create policies for development and actions for fulfilment of the commitment. Some of the earlier convening led to the formation of a framework in partnership with Fair Labour Association (FLA) to eradicate the child labour involved in the cocoa chain of the company.

In the last assembling in London targets were to comprehend stakeholder desires and concerns; write about record for past gathering; empower crisp considering; audit our new table of responsibilities; and prioritize key activities on Creating Shared Value, supportability and agreeability issues.

6. Organization Structure

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The Organization structure of NESTLE is a Matrix structure, where in all the functional heads directly fall under the CEO Paul Bulcke and in turn to the chairman Peter Barbeck Letmathe. The regular administration of the Nestlé business is dealt with by our Executive Board. The 14 assigned Board Members oversee differing parts of the worldwide business. The Nestlé Group is overseen by topographies - Zones EMENA (Europe, Middle East and North Africa), Americas and Asia/Oceania/Africa - for a large portion of the nourishment and drink business, with the special cases of our universally oversaw organizations, which incorporate Nestlé Waters, Nestlé Nutrition, Nespresso, Nestlé Professional and Nestlé Health Science. We likewise have joint wanders, for example, Cereal Partners Worldwide and Beverage Partners World.

7. Organizational Culture

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People are the essence for the organization culture at NESTLE. As the world's heading nutrition, wellbeing and health organization, the mission of "Great Food, Good Life" is to furnish shoppers with the best tasting, most nutritious decisions in an extensive variety of sustenance and refreshment classifications. "Great Life" likewise alludes to the way we live and cooperate. We accept that when we impart normal qualities, it brings about a significant improvement. This features:

Trustworthiness coupled with a solid hard working attitude The craving to do quality work Neighbourly, open and legit correspondence A soul of participation and openness to different thoughts and ideas A reasonable methodology to business An openness to future patterns and new business strategies Pride in improving organization's notoriety and execution An energy for items and brands

Talking about the company culture which is related its people. Nestle has the culture of team focused and open door policy which become one of its corporate strengths. The company focuses on collectivism and performance orientation attitude to encourage employees to work harder (Ali et al, 2009).

8. Business Strategy

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Objectives of NESTLE are to be the pioneer in Nutrition Health and Wellness, and the business reference for money related execution, trusted by all stakeholders. The organization accepts that authority is not pretty much size; it is about conduct; and we perceive that trust is earned just over a long time of time by reliably conveying on our guarantees. These targets and practices are typified in the straightforward expression, "Great Food, Good Life", an expression that entire ties up our corporate desire. Genuine playing point originates from a consolidation of hard-to-duplicate points of interest through the worth chain, developed over decades. Everything is determined by Nutrition, Health and Wellness motivation, Good Food, Good Life, which tries to offer buyers items with the best nutritious profile in their classifications. They drive towards item advancement, replenishment and quality, operational execution, intuitive associations with customers and different stakeholders and separation from contenders.

The Nestlé Roadmap is expected to make arrangement for the kin behind a firm set of vital needs that will quicken the accomplishment of organizational goals. These goals request from people a mix of long haul spark required to manufacture for the

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future and transient entrepreneurial activities, conveying the essential level of execution.

Competitive advantages

Unmatched product and brand portfolio

Unmatched R&D capability

Unmatched geographic presence

People, culture, values and attitude

Genuine playing point originates from a combo of hard-to-duplicate focal points all through the worth chain, developed over decades.

There are characteristic connections between incredible items and solid R&d, between the broadest geographic vicinity and an entrepreneurial soul, between extraordinary individuals and solid qualities.

Growth drivers

Nutrition, Health and Wellness

Emerging markets and PopularlyPositioned Products 

Out-of-home Premiumisation

These four zones give especially energizing prospects to development. They are relevant over all our classes and as far and wide as possible.

All that we do is determined by our Nutrition, Health and Wellness plan, Good Food, Good Life, which looks to offer purchasers items with the best dietary profile in their classifications

Operational pillars

Innovation & Renovation

Wherever, whenever, however

Consumer engagement

Operational efficiency

Nestlé must exceed expectations at each of these four between related centre capabilities. They drive item advancement, replenishment and quality, operational execution, intuitive associations with shoppers and different stakeholders and separation from our rivals.

In the event that we exceed expectations in these ranges we will be customer driven, we will quicken our execution in all key regions and we will accomplish fabulousness in execution

NESTLE is looking to accomplish authority and acquire that trust by fulfilling the desires of purchasers, whose day by day decisions drive our execution, of shareholders, of the groups in which we work and of society all in all. They accept that it is just conceivable to make long- term practical quality for our shareholders if our conduct, techniques and operations are additionally making worth for the groups

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where they work, for our business accomplices and, obviously, for our purchasers. They call it "Creating Shared Value".

They are also contributing for the future to guarantee the budgetary and natural supportability of our activities and operations: in limit, in innovations, in abilities, in individuals, in brands, in R&d. Their point is to help without trading off the capacity of future eras to help, and to do so in a manner which will guarantee beneficial development a seemingly endless amount of time and an abnormal state of returns for our shareholders and society everywhere over the long haul.

The Positioning of NESTLE is as of now in the competitive rivalry sector of the Porter’s five forces driving the market. This can well be understood with the following diagram.

The company is a well established brand in the market and they are also the market leaders in their segment, so the red are represents the positioning of the company in the above chart.

The Competitive strategy of the company also depends upon how they wish to distinguish themselves in the market based upon the competitive scope and advantages they have over their rivals. This is represented in the below chart.

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They think fortifying their authority in this business is the key component of their corporate technique. This business sector is described as one in which the buyer's essential inspiration for a buy is the cases made by the item focused around wholesome substance. Keeping in mind the end goal further bolstering fortify their good fortune around there, Nestlé made Nestlé Nutrition as an independent worldwide specialty unit inside the association, and accused it of the operational and benefit and misfortune obligation regarding the case based business of Infant Nutrition, Healthcare Nutrition, and Performance Nutrition. This unit expects to convey prevalent business execution by offering buyers trusted, science based nourishment items and administrations.

The Corporate Wellness Unit was intended to incorporate wholesome worth included their sustenance and refreshment organizations. This unit will drive the sustenance, wellbeing and health association over all their nourishment and drink organizations. It incorporates a significant correspondence exertion, both inside and remotely, and strives to nearly adjust Nestlé's investigative and R&d mastery with buyer profits. This unit is in charge of facilitating level, cross-business ventures that address current client concerns and also expecting future customer patterns for the development of unit.

International Strategy

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Nestlé is a worldwide association. Knowing this, it is not shocking that worldwide system is at the heart of their aggressive centring. Nestlé's focused methods are related chiefly with remote immediate interest in dairy and other nourishment organizations. Nestlé means to adjust deals between okay however low development nations of the created world and high hazard and conceivably high development markets of Africa and Latin America. Nestlé perceives the gainfulness potential outcomes in these high-chance nations, yet promises not to go for broke for the purpose of development. This procedure of supporting keeps development relentless and shareholders upbeat.

At the point when working in a created business sector, Nestlé strives to develop and increase economies of scale through outside immediate interest in huge organizations. As of late, Nestlé authorized the Lc1 brand to Müller (an expansive German dairy maker) in Germany and Austria. In the creating markets, Nestlé develops by controlling fixings or transforming innovation for nearby conditions, and utilize the suitable brand. Case in point, in numerous European nations most chilled dairy items contain at times two to three times the fat substance of American Nestlé items and are discharged under the Sveltesse brand name.

An alternate method that has been effective for Nestlé includes hitting vital organizations with other huge organizations. In the early 1990s, Nestlé entered into collusion with Coca Cola in prepared to-drink teas and espressos request to profit from Coca Cola's overall packaging framework and skill in readied drinks.

European and American sustenance markets are seen by Nestlé to be level and furiously aggressive. Hence, Nestlé is setting its sights on new markets and new business for development.

In Asia, Nestlé's technique has been to obtain nearby organizations so as to structure a gathering of self-governing provincial chiefs who know all the more about the society of the neighbourhood markets than Americans or Europeans. Nestlé's solid money stream and agreeable obligation value degree abandon it with adequate muscle for takeovers. As of late, Nestlé procured Indofood, Indonesia's biggest noodle maker. Their centre will be fundamentally on extending deals in the Indonesian market, and in time will look to fare Indonesian sustenance items to different nations. Nestlé has utilized a wide-region method for Asia that includes delivering distinctive items in every nation to supply the locale with a given item from one nation. Case in point, Nestlé produces soy drain in Indonesia, espresso flavours in Thailand, soybean flour in Singapore, sweet in Malaysia, and cereal in the Philippines, for regional distributions.

9. Change initiatives taken by Nestle in last 3 years

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Nestle Needs Youth:

Nestle has launched Nestle needs Youth campaign which is committed to help 20000 people under the age of 30 find employment by 2016. In UK and Ireland, under this initiative, Nestle is creating some 1900 opportunities via placements, apprenticeship and traineeship over the next 3 years.

Nestle is hoping to alleviate Europe economic depression through youth employment initiatives. Laurent Frexie, Nestle’s vice president and zone director for Europe, said in an annual event that they are hoping to make the employment situations better in Europe where currently one out of four young people don’t have a job.

Above graph shows how the unemployment rate is rapidly increasing in Eurozone which is heading towards triple dip recession. Nestle understands the huge impact it is causing on society when these people are left without margins, income, future and most importantly hope. As Nestle is growing and investing in Europe, they are simultaneously trying to make skilled workers, by training them on particular process regardless of their level of education.

This initiative, first of its kind, shows the unique role that corporate could play in reviving Europe’s job crisis. Company says it will hire 3000 people in France, 2420 in Germany, 1250 in Spain and 1080 in Italy over the three year period. All sectores will

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have opportunity depending upon the person’s interest including Sales, marketing, finance, HR, administration, engineering and R&D.

To facilitate transition between school/college and employment, initiative will include Readiness for work program with career counselling etc. Nestle will also encourage 63000 suppliers to take part in this campaign through employment, training or internship.

Nestle sets out actions to address child labour:

Nestle sets out an action plan to address the issue of child labor. The initiative is in response to a report on the company’s cocoa supply chain in the West African country by the Fair Labor Association (FLA).Nestle is going to take strict actions as this issue is against everything they stand for.

FLA has made 11 recommendations to Nestle on which company has agreed to act upon all, in some cases with collaboration with partners. Nestle is committed upon eradication of child labour from its cocoa supply chain mainly in West Africa.

Nestle believes that the best results can be achieved only by working with the locals and educating them on the ill effects of this. A robust monitoring system will be created for the proper execution of remedial steps. Some facts:

More than 6000 cocoa farmers have received training till 2012 as the part of the plan

Over 800000 better cocoa plants have been distributed to them

By 2015, Nestle is planning to train 25000 more farmers in the country

In march 2013, Nestle built its first school s part of child education programme.

Diversity:

As a global organization, diversity is high up on Nestle’s agenda. They want a culture that provides equal opportunities to everyone and people are treated with dignity and respect. They are trying to diversify the talent pool and bring about gender equality. At a glance:

Trying to improve gender balance by focusing on developing talent, growing local knowledge and ensuring men and women at management levels progress at the same rate

signed up to the UN Women’s Empowerment Principles, and broadened the efforts to include promoting women’s empowerment in our supply chain

They were named Company of the Year at the European Diversity Awards 2013

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What Nestle is doing currently?

Women Empowerment

In an attempt to overcome some of the challenges women face, such as limited financial resources, knowledge gaps and access to credit and lending, Nestle has developed several initiatives that promote training and professional development for women, in line with the UN’s Millennium Development Goals. Nestle is also offering help such as business training, technical assistance and credit schemes to women in emerging markets. Also they are promoting gender equality in their value and supply chains.

10. Organizational performance on balanced scorecard

Balanced scorecard was introduced in 1992 by Dr. Robert Kaplan and David Norton as a performance measurement framework. The balanced scorecard is most commonly used by companies for ensuring the execution of strategies.

Advantages of implementing a balanced scorecard:

Increased focus on strategy and results

Align organizational strategies with individuals working for it

Effectively communicates organization’s mission and vision

More reliable for providing incentive based pays

To give comprehensive view of organizational performance

Employee satisfaction

Provides feedback to both internal business outcomes and external outcomes

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FINANCIAL:

Measures Company’s implementation and execution of its strategy

CUSTOMER:

Measures customer satisfaction, retention and marketing of product/services in eyes of customers

INTERNAL BUSINESS PROCESSES:

Allows managers to see how well their business is running. It measures criteria such as innovation and operations.

LEARNING AND GROWTH:

This is basically concerned with human capital, organizational capital and informational capital.

Nestle considers measuring of organizational performance is important because:

It understands the importance of continuous learning and development

It is committed to giving and receiving honest and timely feedbacks

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Building an environment where people have sense of personal commitment

Nestle believes in giving as much responsibility to individual as possible

NESTLE’s BALANCED SCORECARD:

Financial Internal Business Customer Learning & Development

Sales Employees PPP GLOBE-NCE

EBIT Factories Customer acquisition R&D

Net Profit

The financial perspective can help the company understand its shareholders’ perception. Nestle’s EBIT grew steadily in the past 5 year period at a rate of 21.7% from 13,302 million to 16,194m in the year 2010. Moreover, the relative sales figures grew from 98,458m in 2006 to 10,9722m in 2010. In addition, the net profit margins showed a dramatic growth over the last five years from 9,197m in 2006 to 34,233m in 2010. Such a significant increase of net profit was due to the disposal of 52% of Alcons’ outstanding capital, which increased the profit (as a percentage of sales) from 9.7% in 2008 to 31.2% in 2010 year.

Secondly, an internal analysis makes it possible to identify the level of operational procedures. During the year 2006, Nestle’s workforce involved 2,65,000 people, a number that increased in the year 2008 to 2,83,000. Throughout 2009, the company cut about 5000 jobs resulting in a 2,81,000 person workforce for 2010. In addition, the company in 2009 was operating 449 factories 30 less from the year 2006.

With respect to the third perspective of Learning & Innovation, Nestle seems to have a strong focus throughout the years. Taking into consideration Nestle’s product innovation, it can be seen that the company is aiming for a deeper scope within this area. In 2006, Nestle spent about 1.7 billion for its R&D with a further increase in the following years . Nestle spends about 1.9% of its annual revenues on its R&D program which is considered as one of the key drivers of growth. In addition, the company combines two programs, GLOBE and NCE, which enable the reduction of production waste. Through these models, Nestle has achieved 1 billion in 2008 which has further increased its efficiencies to a 1.5 billion saving in 2009.

Finally, the consumer perspective is related to how customers perceive Nestle. This can be measured through Nestle’s PPP model which aims to focus on low-income consumers around the world. Within 2007, the PPP performance involved 37 countries while in 2008 this number almost doubled to 70.

References

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[1] African Journal of Basic & Applied Sciences 4 (3): 95-105, 2012 http://www.idosi.org/ajbas/ajbas4(3)12/6.pdf, Page 98

[2] http://www.csrwire.com/reports/1299-Nestl-in-Society-Creating-Shared-Value-and-meeting-our-commitments

[3] NESTLE website, http://www.nestle.com/aboutus/management, Management

[4] https://careers.nestleusa.com/working/culture-and-values, Culture & Values

[5] http://www.nestle.com/aboutus/strategy, Nestle Roadmap

[6] Castelar host, http://articles.castelarhost.com/nestle_competitive_strategy.htm,

[7] https://manuscriptservices.co.uk/extras/examples/nestle.pdf,

[8] A new role for business: Nestlé's Creating Shared Value Forum, http://www.csrwire.com/press_releases/37421-A-new-role-for-business-Nestl-s-Creating-Shared-Value-Forum,

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