Changing Nestle - Case Study Example

Efficient CEOs like Helmut Maucher and Brabeck-Letmathe initiated radical changes in the organization. Large-scale and transformational changes are necessary for maintaining organizational survival. Clardy says about the organization change as, “the field organization change was long equated with organization development (OD), whose proponents were up-front with the bona fides of their approach: full disclosure, informed consent, inclusive participation, and so on.”(Rothwell, Stavros, Sullivan & Sullivan, R.

A, 2009, p. 12). The OD includes the dispositions to improve their organizations by applying knowledge from the behavioral sciences—psychology, sociology, cultural anthropology, and other related disciplines. Analyzing the changes taken place in the Nestle shows that the firm had undergone both the first order change and second order change. In a first order change, the firm makes only some changes in terms of transactional and organizational climate. On the other hand, Nestle had undergone a second order change in terms of transformational changes.

Some of the important organizational changes were as follows. First order changes 1. Nestle started to transfer executives Switzerland to United States. 2. Nestle concentrated on the strengthening and centralization of its IT departments. 3. Started to purchase local subsidiaries in local markets and began to expand globally. Second order changes 1. Nestle completely refurbished the executive board with ten executives replaced (Palmer et al, 2005) 2. Nestle started to diversify its markets through their introduction into cosmetic and pharmaceutical markets. 3. Nestle introduced the acquisition and merger of several companies.

The second order change is more evident in the organization. Transformational change had taken place as the organization switched from entrepreneurial to a wider and more professional management. An important transformational change that had taken place in the organization was involvement in other fields of business through product diversification. In the same way, the acquisitions and mergers provided them accelerated growth, and increased popularity and reputation. However, throughout the course of change, the company took extra care in sustaining employees’ loyalty, impression, motivation, self belongingness, and positive behavior, even though the management had applied some ‘mid-management change theory’.

As Palmer et al (2005) state, the change occurred in Nestle, emphasized by Peter Brabeck-Lemathe as incremental change. It is based on his leadership mindset, which focuses on substance over style, with strong dedication, and long term approach to growing business. In contradiction to Peter’s concept of incremental change on Nestle’s overall business, the incremental change was not incremental at all. Its market had expanded due to the aggressive acquisition of a number of food industries and due to the automation and integration of all its worldwide operation to facilitate better coordination in an aggressive strategic move; and the move had ended in closing 38 factories and cutting $1.

6 billion in cost while improving the company’s ability to obtain volume discount, which Peter meant was incremental (‘Peter Brabeck-Letmathe-1944’). The three important lessons coming from the frontline are downsizing through retrenchment and down scoping,