Evaluation of an International Business Organization - Case Study Example

Evaluation of an International Business Organization: Introduction: The present study focuses on an evaluation of an international business organization considering Nestle as the choice of organization. Nestle company, established in the year 1866, has proved to be the leading nutrition, health and wellness company in the world. The mission of the company is ‘Good Food, Good Life’ focusing on which the company has been providing and further developing newer food products that provide nutrition to human health. The company believes in gaining the trust of the consumers that is only possible through their behaviors, service, strategies and operational activities enabling creation of a value for the communities that they cater to. Fairness, honesty, and thinking on long terms are the fundamentals of the Nestle Company. The Research & Development of the company is the largest of any other food company in the world (Nestle is, 2012). The foods and beverages products of the company include almost every product needed by consumers providing them with the essence of both taste and health. These include products of baby foods, bottled water, cereals, chocolates, confectionaries, coffee, culinary, dairy, drinks, healthcare nutrition, as well as pet care and other products of foods (Our Brands, 2012). The company had started its operations in Swiss but has now spread to almost every country in the world that reflects its global presence (Global Presence, 2012). This particular study focuses on the learning of the company’s key resources and capabilities, the core competencies of the company that lead to competitive advantages, as well as the changes in the external environment of the company that might affect the company’s competencies. Key Resources and Capabilities of Nestle: Nestle’s key resources have been obtained to be its Research & Development, the Human Resources and the Working Team at the company. The company has facilities for research, development and technology in around 29 countries in the world, making its R&D the largest among any other food company across the world. All the resources of R&D are brought together by the company thus being capable of providing its consumers with food solutions that are safe and reflect quality. The products are quickly and efficiently launched in the market with accordance to all regulatory measures that are necessary (Our Vision, 2012). The human resources team working in the company represents a complete business team focused on the strategic measures of the company and the successful implementation of them by the employees and every department associated with the company. The primary activities of the HR team include finding, developing, maintaining, and challenging individuals of different backgrounds that represents the core values of the company. Various functions are performed by the HR team that include talent sourcing, factory HR management, organization development, HR strategy, HR operations, labor relations, compensations, compliance, and human capital measurement, that are core to the delivery and success of the company (Human Resources, n.d.). Keeping the focus the need and effect of the human resources team, training and development are also considered significantly by the company. People from different departments are made to work together on the common goals of the company thereby catering to the global business needs. HR trainee program are meant for the trainees to be able to have the opportunities of hands-on approach for learning of all operations and plants thereby gaining all required knowledge and understanding of relations with the employees, the processes of recruitment and selection, training and development, compensation and benefits, and other associated functions, that are significantly required for the successful achievement of goals of the company (Human Resources, n.d.). The company’s capabilities get reflected in the manner the company developed from operating in a small village to becoming the largest food company in the world. This presents that the company is successfully capable of adjusting to the changes that occur in the external environment, without its fundamental beliefs, values, and missions being affected. The company is oriented more towards people, product and brand than on the systems. The company tries to use its available resources in gaining the confidence of the consumers, keeping in focus the social responsibilities as well. The members and employees of the company are highly significant resources of the company since they are strongly committed to the development, culture and values of the company (The Nestle’s Management and Leadership Principles, 2009, pp.3-13). The presence of the powerful employees and organizational members are influenced by the company towards attracting further talents for the company. Professionals are recruited from across the world having the potential capabilities towards execution of organizational strategies. Accordingly trainee programming in marketing and sales are also provided by the company as a part of their corporate resourcing program. The success of the company is also measured consistently (Belin, 2011). Thus the key resources and the capabilities of Nestle Company can be understood to have a significant focus on the satisfaction of the consumers through both the availability of the products and services. Nestle: Core Competencies: Nestle Company had clearly set its objectives on becoming the leader in terms of providing nutrition, health and wellbeing to the consumers. Considering the application of the VRIO framework, the significant values of the company have been in the way the company focused on satisfying the needs of the consumers with the availability of innovative products, making use of pure water, keeping them free of germs, free of chemicals, including different vitamins, and making the products unique and rare as against the other food companies. Moreover the company continuously focuses on improvement considering the social responsibilities as well that reflect on the organizational involvement and concern that the company ensures upon being unique and satisfactory to the customers. With its constant delivery and services, the Nestle brand name has gained position in the minds of the consumers such that the company is able to gain competitive advantages (Nestle, 2012, pp.40-42). The competitive advantages of the company can be reflected through its unparalleled product and brand portfolio, unmatched capability of the R&D, its geographical presence, its people, culture, values, and behavior. Moreover the growth of the company has been possible with the nutrition, health and wellness that the company provides through its products that are unique in their own way. The emerging markets are an added benefit to the company’s operations and performances. The leadership of the company also has a strikingly significant effect on its strategies and executions. Innovation and renovation are key factors to the operations of the company. Nestle ensures that their products and services are made available anywhere and everywhere for the conveniences of the consumers, that also creates value for the company. The level of communication to the consumers also proves to be an important part of the company’s competitive advantage over other food companies (Strategy- Nestle Roadmap to Good Food, Good Life, 2012). The value chain framework of the company can be represented through the following figure: Figure 1: The Value Chain for Nestle Company (International Business Strategy, 2012, p.5). As far as the VRIO framework is concerned on the Nestle Company, it has been obtained that the company has gained “value adding, rare and hard to imitate opportunity, which is synergetic with organization” through its outsourcing strategies as well as the strength in supply and distribution facilities (International Business Strategy, 2012, pp.5-6).. The development of the products and the commitment of the company to the continued satisfaction of the consumers are other factors that proved to be advantageous for Nestle (International Business Strategy, 2012, pp.5-6). Nestle: Effects of Changes in External Environment: The Nestle Company has been known to adjust to the external environment that has a nature of changing rapidly and every now and then. For a period of 140 years, the company has sincerely adjusted to these changes without its values and beliefs being affected. The company follows the policy of undertaking changes gradually rather than drastically initiating risky measures, and is thus capable of managing change and driving sustainable growths and profits for the company. However certain changes in the external environment like recession and global crisis have been found to have certain effects on the company’s performances. For instance the shipment growth of the company had been affected and slowed down as a result of the recession since shoppers tend to shift foods that are branded to more private labeled products. The volume of the products that were sold was also affected by the changes in the environment due to recession where the company had to depend on increases in prices accompanied by the higher prices of raw materials. However, the company still survived successfully against the effects of the recession (Project Report of SHRM on Nestle, 2012, pp.16-21). The external environmental changes that might have an effect of the core values can be more clearly understood from the following list of factors (Nestle the Global Brand, 2011, pp.18-19): Demographic Environment: (1) With more educational understanding, more would be the awareness among the consumers about different brands and food qualities and hence they would choose depending on their own learning; (2) People with higher levels of income would have higher purchasing power hence they will be capable to buy more; (3) The products from Nestle cater to people of all age groups; (4) The products are not gender biased and include both males and females. Economic Environment: (1) With higher rates of inflation, the purchasing power of the consumers would be affected thereby affecting the sales of the company; (2) The level and distribution of income are not equal across the nation and highly varied; (3) The market place would be highly affected if significant changes occur in the factors like income, cost of living, rates of interest and savings. Political Environment: (1) Regulations of the governments have a significant impact on the protection of the consumers’ interests and hence the society; (2) Political conditions if unstable can affect the market places; (3) Worse conditions might arise from law order situations. Legal Environment: (1) The company is registered in the stock exchanges of Pakistan. Social/Cultural Environment: (1) Pakistani people reflect higher consumption behavior and purchase greater number of goods; (2) Pakistan being a Muslim country, no ingredient can be added to the products that are not allowed by the Muslim religion; (3) Nestle focuses more on the posh areas since Nestle water has become a branded item. Technological Environment: (1) The environment is changing too fast; (2) With the changes, the offerings of the company and the marketing policies are also changing; (3) Nestle needs to remain updated with the latest technological advancements. These factors are essential for the strong organization culture of the company (Nestle Organizational Culture, 2012) to be realized to keep a focus on the measures that might prevent impacts of the changes in the external environment on the company’s performances and achievements. If these are not focused by the company then the core competencies of the company might be affected since management of external changes proves to be highly significant. Sustaining Competitive Advantage: The Nestle Company is an international organization and its competitive strategies are associated with not only its innovations and services but also with the strategic partnerships that it maintained with other international companies. The company is all the more focusing on newer markets and newer businesses in order to gain further growth and reputation across the world (Nestle Competitive Strategy, 2005). Nestle has been obtained to plan and execute several strategies that successfully determined the company’s position as it is today. However considering the external factors, and other associated factors that have the ability to affect the core competencies of the company, it is necessary that the company keep a greater focus on measures that can help the company sustain its competitive advantages. Some of these measures may be to take advantage of lands in countries that are poor that can solve their problems of starvation as well as increase the competitive advantages for the company. The values of the company would be sustained with these efforts. Secondly, the company needs to avoid measures that are bound to be unsuccessful. This should be managed with the creation and development of a good management team that can plan for some backup measures as well in cases of failures. The company’s R&D being highly efficient and innovative, Nestle should invest more on their research and development practices, thus enabling the delivery of more and more newer products. Products for mothers and children can be given significant concerns than they are in the present times. The partnerships and joint ventures of the company should be given more importance that the company is highly good at (Nestle Conclusion, 2010). Considering these measures, the company might be able to sustain its competitive advantages for a longer period of time and against the effects of the external factors. Conclusion: The above study has focused on the current status of the Nestle Company, its key resources and capabilities, its core competencies, its competitive advantages, as well as the external environmental changes that might have impacts on the company’s performances and achievements. From the study it can be concluded that Nestle has not only proved to be successful in its innovations, researches, developments, advancements and reaching out globally to its consumers, but also these factors are continuously being developed at the company with the team of working people being sincerely involved in the process. However, it is also a significant matter of fact that the external factors not being under the control of the company, the company needs to keep a focus on the different factors that might have impacts on the performances of the company and thus consider measures accordingly such that these factors do not hamper the success of the company. Thus with the company stressing more on its positive strengths, as well determining the areas that might cause weaknesses as well, the competitors, the continuous changes in the technological advancements, it can be expected that Nestle Company would be able to manage well and sustain its current status of success and leading position among the food companies in the world. References 1) Belin, E. 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