Planning And Strategic Management Management Essay
Nestle is the worlds leading nutrition, health, wellness company. The headquarter of Nestle company is located in Vevey, Switzerland. That is in 1866, there was a first European condensed milk factory opened in Cham, Switzerland. The name of the company is Anglo-Swiss Condensed Milk Company which established by brothers George Page and Chatles Page. After that year, the founder of Nestle, Henri Nestle, a German pharmacist, developed a combination of cow’s milk, wheat flour and sugar, which name as Farine Lactee. The launched of Farine Lactee had become the largest competitor of Anglo-Swiss Condensed Milk Company.
In 1905, Nestle merged with Anglo-Swiss Condensed Milk Company after a couple of decades as fierce competitors to form the Nestle and Anglo-Swiss Condensed Milk Company. In 1929, the chocolate company Peter, Cailler , Kohler Chocolats Suisses S.A. joined Nestle. And in 1947, Nestle change its name to Nestle Alimentana S.A after merged with Maggi, a well-known manufacturer of seasonings and soups. In 1974, Nestle for the first time diversified outside the food industry and they become a major shareholder in LO’real, one of the world’s leading maker of cosmetic products. And then finally, the last name change that the company would endure was in 1977, where it adopted the name Nestle S.A.
The first product that launched by Nestle is Farine Lactee Nestle, a combination of cow’s milk, wheat flour and sugar. Farine Lactee was launched by Henri Nestle in 1867 and it was supported by the public. After that, Nestle also launched Milo in 1934. Milo is a chocolate and malt powder which is mixed with hot or cold water to produce a beverage and it is developed by Thomas Mayne in Sdyney, Australia. After the launched of Milo, another product launched by Nestle that famous among the world which is Nescafe. Nescafe is a powdered coffee that was introduced in Switzerland on April 1, 1938 after being developed for seven or eight years by Max Morgenthaler and Vernon Chapman. Another product that pull Nestle toward success is Nestle Pure Life, a bottled mineral water that launched in 1998.
The smart strategy of Nestle had bring them toward the road of success. In 2012, Nestle has around 8,000 brands on the market included 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.
Chief Executive Officer
Nestle Health Science
Corporate Governance Compliance
& Corporate Services
Strategic, Business Units,
Innovation Technology and R&D
Marketing and Sales
The organizational chart of Nestle showed that it is a hybrid structure. Hybrid structure is the combination of functional structure and divisional structure.
A functional structure is a structure that make grouping by similar work specialties. This structure group people together because they hold similar positions in an organization, perform a similar set of tasks, or use the same kind of skills. The functional structure in the organization chart of Nestle was shown in the upper part that is from the chairman until the level of the Operations, Finance & Control, Strategic, Business Units, Marketing and Sales as well as Innovation Technology and R&D.
A divisional structure is a structure that make grouping by similarity of purpose. This structure group departments according to organizational outputs such as by product type, customer, or geography. The divisional structure in the organization chart of Nestle was shown in the lower part. There are product divisional structure that is Nestle Waters, Nestle Nutrition, and Nestle Professional. After that, it continues with the geographic divisional structure that is Zone EUR: Europe, Zone AOA: Asia/Oceana/Africas and Zone AMS: Americas.
The hybrid structure of Nestle consists all the advantages of functional structure and divisional structure. This structure helps to creates unity among the staff members which is very important for all the large-scale business as well as Nestle. This structure also make the management more flexible as the senior management can communicate with the junior employees easily and maintain good relationship between each other. Besides that, the resources can be allocated and used efficiently. Therefore, wastage of time and resources can be avoided.
Planning and Strategic Management
Basic strategies used to respond to uncertainty
Nestle is a company that mainly act as a prospector while responding to uncertainty. Prospectors focus on developing new products or services and in seeking out new markets, rather than waiting for things to happen. Nestle had create many brands and many different types of products to satisfy consumers’ needs and wants. The table below showed the list of product of Nestle.
Types of Products
Cerelac, Gerber, Gerber Graduates, NaturNes, Nestum
Nestle Pure Life, Perrier, Poland Spring, S.Pellegrino
Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, Nesquik Cereal
Chocolate & confectionery
Aero, Butterfinger, Cailler, Crunch, Kit Kat, Orion, Smarties, Wonka
Nescafe, Nescafe 3 in 1, Nescafe Cappuccino, Nescafe Classic, Nescafe Decaff, Nescafe Dolce Gusto, Nescafe Gold, Nespresso
Culinary, chilled and frozen food
Buitoni, Herta, Hot Pockets, Lean Cuisine, Maggi, Stouffer’s, Thomy
Carnation, Coffee-Mate, La Laitière, Nido
Juicy Juice, Milo, Nesquik, Nestea
Chef, Chef-Mate, Maggi, Milo, Minor’s, Nescafe, Nestea, Sjora, Lean Cuisine, Stouffer’s
Boost, Nutren Junior, Peptamen, Resource
Dreyer’s, Extrême, Häagen-Dazs, Mövenpick, Nestle Ice Cream
Alpo, Bakers Complete, Beneful, Cat Chow, Chef Michael’s Canine Creations, Dog Chow, Fancy Feast, Felix, Friskies, Gourmet, Purina, Purina ONE, Pro Plan
In the effort of seeking out new markets, Nestle had employed around 330 000 people in over 150 countries and have 461 factories or operations in 83 countries. Nestle also becomes one of the sponsors in many events. For example, on 27 January 2012, the International Association of Athletics Federations (IAAF) announced that Nestle will be the main sponsor for the further development of IAAF’s Kids’ Athletics Program for the consecutive of 5 years starting from January 2012. This is one of the biggest grassroots development programs in the world of sports.
In the year 2012, Nestle expect that it will be a challenging year as they will face many uncertainties in the global economy and. However, as a prospector, the company had made specific plans to overcome the uncertainties. They believe that they have good fundamentals and can will be able to diversify the global uncertainties.
Nestle aim to continue the innovation and renovation of their products as well as launching further promotion of nutritional diets and healthy lifestyles Nestle will remain vigilant and will take all necessary method to soften any impact on their business due to the volatile commodity prices that were expected to continue in 2012.
Besides that, Nestle company can also be consider as an analyzer. Analyzers let other organizations take the risks of product development and marketing and then imitate or perhaps slightly improve on what seems to work best.
For example, Nestle was Gail Borden’s most successful imitators in the production of milk. Nestle imitate and make changes based on the condensed milk manufactured by Borden’s first canned milk factory. Nestle invented a powdered milk food that primarily composed of cows’ milk and then mixed with water. By 1868, this product was being sold in Switzerland, Germany, France and England. After five year, the product was available throughout Europe. Eventually, Pet Milk and Carnation Milk were produced and sold in United States.
In the 21th century, humans’ wants are unlimited. Therefore, Nestle create new brands on the products that already exist in the market and are needed for the consumers to widen their choice.
Mission and Vision
Nestle’s mission is to be the recognized leader in Nutrition, Health and Wellness and the industry reference for financial performance. “Good Food, Good Life” is the promise they commit to everyday, everywhere – to enhance lives, throughout life, with good food and beverages.
Nestle’s vision is “As the leading Nutrition, Health and Wellness Company we enhance lives by offering tastier and healthier food and beverage choices at all stages of life and at any time of the day, helping consumers care for themselves and their families. This is the foundation of our promise of Good Food, Good Life and puts nutrition at the heart of everything we do. It is our firm belief that, for a company to be successful over time and create value for its shareholders, it must also create value for society. We call this “Creating Shared Value”. Built on strong foundations of compliance and sustainable business practices, this is our way to do business and to be the trusted leader in Nutrition, Health and Wellness.”
Grand strategy is a systematic, comprehensive, long-term plan of all the company use to achieve their goals. Market, product, and organization development is the main element of this strategy. There are three types of strategy such as growth strategy, stability strategy and defensive strategy. Growth strategy involves the expansion of a company. Stability strategy is a strategy there are no-change strategy or little change strategy. Defensive strategy is a control to reduce the probability of loss.
Nestle is a company that apply growth strategy. Nestle started the business in the year 1866 with the first European condensed milk factory and today becomes the world’s biggest food producer. The products of Nestle such as milk, beverages, coffee, ice-cream, confectionery and chocolate as well as junior food, has make a sales of CHF 44.1 billion in 2012 from CHF 74,660 million at 1999. The net profit increased by 8% to CHF 9.5 billion with the latest update on 9 August 2012. Now, Nestle had employed around 330,000 people in over 150 countries and have many operations or factories in the world compare to the number of employees in 1998 that only have 299,800 people.
Besides that, Nestle is increasing the size of their company year by year. One of the strategies is organizing many different types of promotion. They give discounts to customers by using coupons. For example, Nestle Toll House Birthday Sugar Cookies can save 55$ if we print out the coupons to buy it. In addition, Nestle also provide food samples to customers during promotion. For instance, free samples of Maggi MeeGoreng were given out on 2nd July 2012 to 2nd August 2012. These were the successful strategy of Nestle nowadays.
Nestle begin the business in 1866 with the combination of cow’s milk, wheat flour and sugar. After 1 year, infant cereal developed for a whole new world to babies. Next, Milo, Nescafe, Nestea, Nestle Pure Life, and Power Bar were launched in the years after 1929. Although these products launched, they merged with another company such as Maggi merged with Ursina-Franck. Nestle took the high risk of investment in the following year such as joint venture with L’Oreal, General Mills, Coca-Cola and Fonterra.
In conclusion, Nestle is trying their best in the sales of products. they have smart plans to overcome the uncertainties. Growth strategy was used to increase their capital and Nestle will invest new products and new markets in the future.
Nestle mainly focused on differentiation strategy. Nestle is a quality focused company. They differentiate their products with their competitors by giving them better customer satisfaction and quality with in an acceptable price limit. All their market is based on quality products and customer satisfaction. The main factor that motivates a customer is to buy their goods is the nutritional content in their products. They also focused on creating a strong brand by creating brand equity.
In order to have a better quality on their products, Nestle had created Nestle Nutrition, which is a global business organization designed to strengthen the focus on their core nutrition business. They believe that strengthening their leadership in this market is the key element of their corporate strategy. In order to reinforce their competitive advantage in this area, Nestle created Nestle Nutrition as an autonomous global business unit within the organization, and charged it with the operational and profit and loss responsibility for the claim-based business of Infant Nutrition, HealthCare Nutrition, and Performance Nutrition. This unit aims to deliver superior business performance by offering consumers trusted, science based nutrition products and services.
In order to produce a better quality product, Nestle had made an effort on research and development. Research and development is a key of competitive advantage for Nestle. Without research and development, Nestle could not have become the leader in food and beverage industries. With 29 research, development and technology facilities worldwide, Nestle has the largest research and development network compare with other food company. Based on the research and development done by Nestle, they are able to produce many products that have a high quality in nutrition, wellness, taste, health, texture or convenience.
Besides that, Nestle also use cost-leadership strategy for minor products. Nestle had used a new strategy called Nestle’s Popularly Positioned Products (PPPs) strategy that provide consumers with high-quality, nutritious products, regardless of where they sell them and the price point at which they sell them. PPPs focuses on the specific needs of 3 billion lower-income consumers worldwide. PPPs offer these consumers the opportunity to consume high-quality food products that provide nutritional value at an affordable cost and appropriate format. With a range of locally adapted distribution methods, including street markets, mobile street vendors and door to door distributors, PPPs are a source of income for street traders and individual distributors and contribute to the creation of local jobs.
Utilizing the identified strengths and opportunities
Overcome the identified strengths and opportunities
Firstly, on 21 May 2012, Nestle was in the rank of No. 18 in The Gartner Supply Chain Top 25. The Gartner Supply Chain Top 25 is about leadership. Nestle has created a successful supply chain segment for its popular Nespresso line. Nestle is also highly advanced and integrated in its raw material sourcing strategies, and has invested significantly in supply development and innovation.
Moreover, on 12 April 2012, Nestle becomes the first food and beverage company that receives A+ rating, which is the highest standard in Global Reporting Initiative (GRI) for Creating Shared Value report. This shows that Nestle do take seriously their responsibility to create shared value and conduct their business in a sustainable way.
Next, Nestle won the ACCA Malaysia Sustainability Reporting Award 2011. This was because Nestle use Sustainability Reporting to communicate to stakeholders regarding the progress of their Creating Shared Value strategy, which is to create value simultaneously for society and their shareholders while carrying out our business activities.
On 19 May 2011, Nestle receives top environment award which is the 27th World Environment Center (WEC) Gold Medal award for its commitment to environmental sustainability. This shows that Nestle was recognized as a global company that has demonstrated an example of sustainability in business practice.
Furthermore, on 7 June 2011, Nestle became winner of the Stockholm Industry Water Award for its leadership and performance to improve water management in its internal operations and throughout its supply chain. Nestle also has a leading role in the 2030 Water Resources Group.
Besides that, in July 2010, Nestle Malaysia was crowned as a winner of the Asia Responsible Entrepreneurship Awards 2010 (AREA). This awards show that Nestle was recognized as an organization that have shown a lot of efforts, perseverance and courage in corporate social responsibility initiatives.
Last but not least, Nestle won the StarBiz-ICR Malaysia CR Awards in the year 2009. Nestle was one of the seven public-listed companies which were recognized and honoured for their outstanding Corporate Responsibility practices at the StarBiz-ICR Malaysia CR Awards 2009 presentation ceremony.
(Nestle is…, 2012)
(Nestle becomes main sponsor of IAAF Kids’ Athletics programme, 2012)
(Message to Shareholders (Annual Report 2011), 2012)
(Reports & Downloads, 2011)
(Nestle is…, 2011)
(The Gartner Supply Chain Top 25 for 2012, 2012)
(Insight: The challenges of achieving greater transparency, 2012)
(Nestle Wins ACCA Malaysia Sustainabiliti Reporting Award 2011, 2011)
(Nestle receives top environment award, 2012)
(Nestle Wins the Stockholm Industry Water Award, 2012)
(Awards and Recognition, 2012)