Nestle: Sustaining Growth in Mature Markets - Term Paper Example

Nestle Describe the characteristics of each of the following elements in the Current Competitive Landscape: Globalization, Technology, Knowledge, Strategic Flexibility, Quality, and Profit Pool. Globalization: Globalization had a major impact on the food industry across the world. In the food industry, Foreign Direct Investments are now allowed. For example Europe attracts the largest FDI from US in the food sector, followed by Canada, Mexico and Asia Pacific. (United States Department of Agriculture (USDA), 2009). Nestle operates in 86 nations globally, has 500 factories and employs over 200,000 people. Globalization of the agricultural sector, which is the main source of raw materials for the food industry, has helped food companies to think globally and act locally. It has led to decentralized production and development of new markets. Above all globalization has resulted in increased competition. The world economy grew at 5.2% in 2007(Economy Watch, n.d.). Technology: Technology is a crucial part of the food industry. Automated production systems and availability of software’s like ERP has helped in improving the control and efficiency of the business. Since the food industry has a wide supply chain, using these technologies to integrate the supply chain is very important. Nestle is the leader in the food industry for filing patents for new research and development activities. Its competitive advantage lies in its unparalleled R&D facility. Knowledge: Availability of easy information on the internet has increased the bargaining power of the buyers. Nestle through its advertisements tries to increase the knowledge of buyers regarding health and nutrition. The 2005 forecast for internet users in basic states in Europe was 273,218 users (Europe & CIS, Telecom projections, 1995-2005, n.d.). Quality: Consumers worldwide are now concerned about quality. The food industry specifically needs to maintain a high quality since it affects the health of the buyers. In this segment if a customer complains about quality, it adversely affects the brand image of the company and it becomes extremely difficult to revive the lost image. Profit Pool: With the same food being offered by more than one company, price fairly remains the same. Profit has to be generated by reducing cost which is obtained by improving efficiency of operation. Discuss the Vision and Mission of Nestle Mission of a company describes the line of business the company is engaged in, the reasons for the company to exist in such a business, and the market it wants to serve. The mission of Nestle is to serve the food sector specifically Nutrition, Health and Wellness category by providing products with high nutrition and good taste (Nestle, n.d.). Vision refers to the position a company wants to reach in a given period of time and the manner in which it expects others to look at it. The vision of Nestle is “Good Food, Good Life”, good food being the prime factor for a balanced and healthy life (Nestle, n.d.). Identify and describe the fundamental principles that guide the company’s strategy. Nestle focuses on business practices based on principles. Although principles established may change depending on the situation, the basic foundation remains the same since the company’s basic tenets of existence is based on honesty, fairness and a concern for public. Nestle adheres to the following business principles in all the countries where it operates: I. Value Addition: The entire management and all the employees irrespective of their hierarchy should manufacture and market Nestlé’s products in a way that creates value for the customers that is sustainable in the long term for all its shareholders, business partners, employees and customers all across the globe where Nestle has its operations. II. Profitability: Nestle discourages short term profits at the cost of forgoing long term benefits. It rather believes in generating a decent profit annually which is essential to support its shareholders and to finance other investments. III. Consumers: Nestle realizes the importance of its consumers and that they are the backbone for its survival. It realizes that its consumers have entrusted their faith with the brand and Nestle as a company should ensure that their expectations are met. IV. Ensuring High Standards: Nestle has imposed various legislations to ensure that its employees follow a responsible code of conduct. In addition to this, it provides further guidance by way of voluntary business principles to ensure that the employees conform to the highest standards. V. People: Conduct of the people and the management reflect the degree of professionalism the company has. To ensure this, Nestle ensures that right people are recruited and continuously enhances their skills through training and development. VI. Legalities: Nestle operates in 86 countries globally. Such diversified operations across many nations calls for diversified legal commitments. Nestle respects the legal systems of each nation and agrees to abide by the law in every nation it operates. Explain how Nestle establishes and manages relationships with its primary stakeholders. The primary stakeholders of Nestle are its customers, employees and suppliers. Employees: Nestle believes that its employees are more important than the systems. Its fundamental principles are based on the fact that to guarantee success of the company, its employees have to be motivated. Accordingly, Nestle hires the best people and provides continuous training and development to enhance their skills (Nestle, n.d.). Suppliers: The Nestlé’s Supplier Code sets certain minimum non negotiable standards that every supplier has to meet in order to be associated with Nestle. The supplier is responsible for maintaining certain standards among its employees, subcontractors and others who are associated with the supplier. The supplier needs to align itself with the principles of Nestle. It encourages its suppliers to formulate those agricultural practices and production system which can be sustained. It ensures that the supplier compensates his employees sufficiently and doesn’t indulge in foul practices (Nestle, n.d.). Customers: Nestle tries to establish customer relationship by offering products which are nutritious, enjoyable and good for health. Nestle is a company driven by consumers and it offers customized products depending on the country. It communicates with thousands of customers through consumer hotlines and websites. Its communications always encourage moderate food consumption and discourage over eating. Its communications are always in line with health and nutrition. Discuss the leadership tasks that are fundamental to Nestlé’s success. Given the large number of operations and employees that Nestle has, Leadership tasks are fundamental to Nestlé’s success. The Basic Nestle Management and Leadership Principles were established in 1997. The employees in Nestle are more focused towards adding value rather than exercising formal power. The leadership tasks that a manger is entrusted with are: Personal Dedication & Courage: A manager must have the ability to take risks and initiatives and must not cripple under pressure. Motivational Skills: A manager must be able to motivate his team and get the best out of his team members. Inquisitive Nature: A manager must be inquisitive and must have an interest in different cultures which is important given the fact that Nestle operates in 80 countries. He should continuously update himself and share his knowledge with others. Out of Box Thinking: A manager must be creative and have the ability to think out of the box. He must not criticize mistakes but should also make sure that such mistakes are not repeated. Accepting Change: A manager is entrusted with the responsibility of accepting change and implementing new ideas and concepts which would be useful for Nestle. Adaptability: The leader should have the ability to adapt himself and his team depending on the situation. A manager faces challenges everyday and he needs to make important decisions in a short span of time. He must be able to make quick decisions based on the situation. International Experience: In line with Nestle which is a global company, the manager must have international experience. (Nestle, 2009). References: Nestle. (No date). About Us. Retreived April 17, 2010 from http://www.nestle.com/AllAbout/AllAboutNestle.htm United States Department of Agriculture (USDA). (July 29, 2009). Global Food Markets: Foreign Direct Investment. Retreived April 17, 2010 from http://www.ers.usda.gov/Briefing/GlobalFoodMarkets/Investment.htm Nestle. (No Date). About Us. Retreived April 17, 2010 from http://www.research.nestle.com/about_us/About+us+-+Home.htm Nestle. (2009). The Nestlé Management and Leadership Principles. Retreived April 17, 2010 from http://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&ved=0CAcQFjAA&url=http%3A%2F%2Fwww.nestle.com%2FResource.axd%3FId%3D1353AE38-2F44-4F5F-A31F-72D57EE0CF35&rct=j&q=nestle+leadership&ei=aq7JS7e0NsKvrAeQwcGwBQ&usg=AFQjCNEoDJqbZ9OatDzVhRq3wG-0AeAL2g Nestle. (2008). The Nestlé Supplier Code. Retreived April 17, 2010 from http://www.google.co.in/#hl=en&q=nestle+supplier+code&meta=&aq=f&aqi=g1&aql=&oq=&gs_rfai=&fp=6e67f0911d014d29 Nestle. (No Date). People first. Nestle Insight: Business Principles. Retreived April 17, 2010 from http://actrav.itcilo.org/actrav-english/telearn/global/ilo/code/nestle.htm Economy Watch. (No Date). World Economy. Retreived April 17, 2010 from http://www.economywatch.com/world_economy/ Europe & CIS, Telecom projections, 1995-2005. (No Date). Internet Users. Retreived April 17, 2010 from http://www.itu.int/ITU-D/ict/statistics/at_glance/E1_ICT_1995-2005.pdf Read More