A PROJECT REPORT ON

ORGANIZATIONAL BEHAVIOUR OF NESTLE

SUBMITTED BY PRASAD D. MAHAJAN ROLL NO: 31

FOR THE DEGREE OF M.COM (PART II) MANAGEMENT

UNDER THE GUIDANCE OF PROF. SUDHA SUBRAMANIAM

M.L.DAHANUKAR COLLEGE OF COMMERCE DIXIT ROAD, VILE PARLE, EAST, MUMBAI 57

ACADEMIC YEAR 2013-14

AND

Declaration

I, Mr. Prasad D. Mahajan student of M.Com Part- II Management studying in M.L.Dahanukar College of Commerce, hereby declare that I have completed project on organizational behavior of Nestle for the academic year 2013-14, as per the requirements of the University of Mumbai as a part of Master Of Commerce- Part II programme. The information submitted is true and original to the best of my knowledge.

(Prasad D. Mahajan)

Acknowledgement

This satisfaction that accomplishes the successful completion of any work is when we say thank you to the people who made it possible, whose constant encouragement and guidance has been a source of inspiration throughout the completion of project. Firstly I extend my thanks to the various people who have shared their opinion and experiences through which I received the required information which is crucial for my project. Finally, I express my thanks to Professor Sudha Subramaniam who gave me this opportunity to learn the subject and guided me with valuable suggestions.

Index
Sr. No. Pg. No.

Topic

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Executive Summary Introduction Company Profile Products & Services Mission & Vision Statement Organization Structure Organizational Behavior Nestls Corporate Culture Organizational Behavior Practices In Nestle Barriers to Communication in Nestle Organizational Behavior Of Nestle Organizational Culture Of Nestle Analysis Conclusion Bibliography

6 7 9 10 12 13 14 15 16 19 20 22 30 34 35

Executive Summary

This report is on the organizational structure of Nestl. It starts with an introduction about Nestl followed by the history of Nestl. It gives a briefing about Nestl. The report shows an internal architecture of the working of the Nestl confectionary business. It includes the organizational behavior practices which define the communication style and the culture. It also defines the behavior of individuals and about the group in general. The objectives and policies of the organization are also stated along with the practices.

Introduction
Nestle India Ltd. is a part of the Nestle SA group which is one of the largest manufacturing companies in the world. Henri Nestle founded the company (with its headquarters in Vevey, Switzerland) in 1867. Nestle has two major divisions - Le Societe des Products which looks after the production and marketing and Nestec Ltd. which provides the technical assistance to the group companies. Since its inception in 1867, the company has diversified it product range from the infant weaning formula (which was its first product) to beverages, confectionery, ice creams and pet foods among others. In a span of 130 years the company has ranked 26th among the worlds largest corporations and boasts of a turnover of $48932.5 million and employee strength of 221,144 people spread over 75 countries worldwide (Annexure A).Nestle has long been viewed as one of the most multinational of the multinationals. This is because today only 2% of its turnover comes from Switzerland. Out of the remaining 98%, Europe contributes 43.5%, North and South America contribute 36.5% and Africa and the Asia Pacific Regions contribute 18%. Through its effective marketing and a vast sales and distribution network throughout the country, it ensures that its products are made available to consumers throughout the country. Nestl has large operations with multidimension areas but people, quality products and brands are the main flag bearers of the companys image. Nestl believes in creating shared value and is committed to the communities it works and lives with. The company is working closely with communities in areas related to Nutrition, Water and Rural Development, and continues to enhance the quality of life of people throughout its value chain.

The companys strategy is guided by Nestls Corporate Business Principles which are in line with internationally accepted best practices and ethical performance culture. The Companys priority is to bring the best and most relevant products to people, wherever they are, whatever their needs are, and for all age groups. Nestl is not a faceless corporation catering to faceless consumers, but is a human company providing a response to individual human needs. It respects the cultures of the countries and is committed to make a contribution to the quality of life of people. In line with Nestls global philosophy, its commitment to excellence in product safety and quality and to providing value and services to its consumers. As a socially responsible corporate, we always focus on environment friendly operations, ethical business practices and our responsibility towards the communities.

Company Profile
Although Nestle has been associated with India since the beginning of the century through the importing and trading of infant food and condensed milk, manufacturing in India only began with the setting up of the factory in Moga in 1962. The first product to be manufactured was Milkmaid. In the last 35 years the company has shown rapid progress and has increased its product range to 80 products as of October 1997. Nestle India Ltd. now ranks 22nd amongst India are most valuable companies (Annexure B). Its gross revenue has increased from Rs 1001.1 crores to Rs. 1213.8 crores in1996. This remarkable growth has been achieved through Rapidly creating greater manufacturing capacity, both at factories as well as with co-packers. Taking measures to ensure availability and improved quality of key raw materials - fresh milk in particular. Strengthening of the sales and distribution network (particularly in smaller towns) Ambitious and cohesive manpower training and development programs for the personnel of the company across all disciplines. The companys exports also resulted in a very successful year in this area as exports grew by 27% to Rs. 250.8 crores in 2003. Themain contributors to this increase were the export of tea and coffee to USA, Japan, Russia, Hungary and Taiwan. Nestle India Ltd. wants to further increase its operations in India and has started construction of its sixth Factory at Bicholim, Goa for the manufacture of culinary products (a key thrust area) for this purpose.

Products & Services

Milk, Dairy & Chilled Dairy: Nestle Milk Pak Nesvita Nido Everyday Nestle Dahi Nestle Fruit Yogurt Nestle Raita MILKPAK Cream Nestle Creations Nestle Diet Yogurt

Beverages: Nescafe Nestle Milo Nestle Fruita Vitals

Bottled Water: Nestle Pure Life Available in 0.5, 1.5,12, 19 liters.

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Baby Food: Nestle Cerelac

Prepared Meals: MAGGI 2-minute Noodles MAGGI 2-minute taste maker

Breakfast Cereals: Nestle Corn Flakes Nestle Koko Krunch

Chocolate & Confectionary: KITKAT KIKAT Chunky POLO

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Mission & Vision Statement

Our Vision Nestls global vision is to be the recognized leading Nutrition, Health and Wellness Company. Nestl subscribes fully to this vision of being the number one Nutrition, Health, and Wellness Company.

In particular, we envision to; Lead a dynamic, motivated and professional workforce proud of our heritage and positive about the future. Meet the nutrition needs of consumers of all ages from infancy to old age, from nutrition to pleasure, through an innovative portfolio of

branded food and beverage products of the highest quality. Deliver shareholder value through profitable long term growth, while continuing to play a significant and responsible role in the social, economic, and environmental sectors.

Our Mission "To be in every way the leading company in the Indian food industry and a good corporate citizen by providing our consumers with superior quality products, our shareholders with rapid growth and fair returns and our employees with a challenging and satisfying work environment."

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Organization Structure
Nestl follows a flat, matrix organizational structure. The departments are divided function-wise and product-wise. All the products use different functional departments, and all the functional departments have specific product departments within them. The span of control is wide, as each department head has many direct and indirect reporting relations with his subordinates. Also, as in a pure matrix form, nearly all employees have two or more departments to report to, directly or indirectly. The Managing Director of Nestl reports directly to the Head Office in Switzerland, and gets guidance and objectives from them. Directly under the Managing Director are different functional departments: Business Executive Managers Head of Human Resource Department Head of Sales Department Head of Supply Chain4 Head of Food Services Department Head of Technical Department Head of Finance Department Head of Corporate and Legal Department

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Organizational Behavior
Organizational behavior is a field of study that investigates the impact that individuals, groups and structures have on behavior within an organization for the purpose of applying such knowledge towards improving an organization's effectiveness. It is an interdisciplinary field that includes sociology, psychology, communication, and management; and it complements the academic studies of organizational theory (which is focused on organizational and intra-organizational topics) and human resource studies (which is more applied and business-oriented). It may also be referred to as organizational studies or organizational science. The field has its roots in industrial and organizational psychology. Organizational behavior studies the impact individuals, groups, and structures have on human behavior within organizations. It is an interdisciplinary field that includes sociology, psychology, communication, and management. Organizational behavior complements organizational theory, which focuses on organizational and intra-organizational topics, and complements human resource studies, which is more focused on everyday business practices. Organizational studies encompass the study of organizations from multiple perspectives, methods, and levels of analysis. "Micro" organizational behavior refers to individual and group dynamics in organizations. "Macro" strategic management and organizational theory studies whole organizations and industries, especially how they adapt, and the strategies, structures, and contingencies that guide them. Along with those two levels of analysis, some scholars add categories of "Meso" scale structures, involving power, culture, and the networks of individuals in organizations, and "Field" level analysis which studies how entire populations of organizations interact.

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Nestls Corporate Culture

As we had discussed before, Nestle is one of the most multinational of multinationals and is spread over 75 countries worldwide. This implies that it has employees from diverse cultural backgrounds. Nestle respects the distinctive culture, mentality and traditions of every employee in every country. What Nestle aims at is to incorporate its own culture into its employees without stifling the individual employees culture and identity. When we went to Nestle we could feel the existence of a distinctive work culture amongst the management - the staff seemed highly motivated & cheerful and everybody had pin up boards in front of their tables with reminders, motivational messages and even time logs (the Nestle people seemed as if they availed of the benefits of time management) . Apart from this, Nestle has a vast distribution network. In order Nestle has a diverse product range and so it also has diversified risks Thus Management on Information systems plays a vital role in Nestle to provide information to the Sales and Marketing as well a the finance department .The Electronic Data Processing Department looks after Management Information Systems.

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Organizational Behavior Practices In Nestle

Communication:

Communication Strategies followed by Nestle: At Nestle the working environment was very formal. People were encouraged to participate and they could easily communicate with their co-workers. Few of the things that we noticed about their communication flow were Mostly downward communication occurs. However employee suggestions were also welcomed. They can talk to their superiors easily. Employees and workers are encouraged to participate in decision making to some extent. They are asked their opinions in any new package that the company is offering. But mostly at higher level, GM of all the departments interacts with each other for major decisions. And the lower level is informed about the decision. No trend of memos, unless there is a major event or an unexpected holiday announcement. There is not much written communication.

They mostly contact through a phone call or email. In a way we see that there is an open communication channel within the company. There is the network of communication links within organization, to achieve the goals as well as institutional objectives.

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Internal Communication:

Nestle has maintained open communication channels both downward and upward in the companys hierarchy. This is quite effective in creating a good working environment for the employees. Mostly all the conversation that is being carried on is through e-mails within departments and employees. All sorts of announcements are made through emails most of the time no such memos are used.

Downward Communication:

In Nestle message which is sent to workers by top authority is called downward communication.

It is the is deliberate creation of communication channels by the top authorities on formal lines to inform, instruct, direct, suggest and evaluate employees in the process of coordinating individuals efforts towards organization goal.

Downward communication takes place when managers like to inform or educate the employees.

Downward communication is also utilized by the managers to send feedback to the subordinates as a response to the upward communication.

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Upward Communication:

The message or any other data which is sent to authorities by the employees is called upward communication.

Through this, top management can maintain continuous touch with the low levels.

In absence of this communication top level will be isolated and in the long run managers will be totally fail to manage people and work

Examples include, Complaints about working conditions or about any other negligent employee. The medium used include letters and emails.

External Communication:

In Nestle the external communication means sending messages to persons outside the company. The sources used by Nestle for its external communication are as follows By Annual Report Media Advertisement Print media advertisement By giving packages Through services Through Presidents message

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Barriers to Communication in Nestle

The problems those are faced by Nestle are as follows

Cultural Difference: Since Nestle is a multinational company having thousands of employees from different areas and having entirely different culture, it faces a great problem in its day to day business activities.

Emotional Interference: Nestle has a huge area all over the world. And operate this huge mob employees is not an easy task. There are many reasons in which the employees become anger and which may cause of barriers.

Information overload and message competition: There are millions of messages which come from customer and they have not enough time to read and reply, thus barrier in communication.

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Organizational Behavior Of Nestle

Individuals are the bricks of an organization and Individuals create groups and groups create organization

Nestle organizational behavior focuses primarily on two major areas. Organization behavior looks at individual behavior based mainly on contributions from psychologist; this area includes such topics as personality, perception, learning and motivations. Nestle knows the importance of individuals (MAN) who are the main bricks for organization behavior. Nestle has been placing greater focus on employee empowerment and participation, which are essential for long-term growth and success of the company, and therefore employees have been encouraged to put forward their issues, concerns and suggestions. Nestle trust its employees focus on integrity, competence, consistency, loyalty and openness. Manager stops at people desks during the day to chat with them about their work, keeping up to date also earns the trust of employees.
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Secondly their organizational behavior is concerned with group behaviors, which influence roles, team building and conflict. The organization group behavior is good. Once the individuals are skillful, energetic, responsible, agreeable etc, then it is easy to make form successful groups. All these things make the organization behavior successful. In order to make all business affairs transparent, smooth and effective, following committees and teams have been formed which work cohesively and independently.

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Organizational Culture Of Nestle

Organization culture is a system of shared meaning within an organization that determines in large degree how employees act. After Nestles inception, the corporate culture underwent a comprehensive renewal program which was fully implemented in 2004. This program over the years included the revamping of the organizational architecture, rationalization of staff, employee empowerment and transparency in decision making through cross functional teams. This new corporate renewal program has divided the companys major operations into independent activities supported by legal, financial, informative and other services. In order to reinforce and monitor this structural change, related check and balances have been established by incorporating monitoring and control systems.

Importance Of Culture In Nestle According to the opinion of the Nestls sales officer Nestl is a sales oriented company. Strong culture is a symbol of more profit more earning and sense of responsibility. It is also a monument of well-disciplined enterprises in which every organ of that organization is well concerned with the ultimate objective of the organization. As its a fundamental truth that every individual from worker to Top manager is aware of his rights privileges responsibilities and outcome of efforts being invested. Special efforts for continuously enriching our business systems and implementing relative strategies have always been fruitful which are aimed at augmenting a work culture that enhances employee motivation as well as gaining a better understanding of forces that shapes motivation, attitude, behavior patterns and expectations.

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Six Dimensions Of Culture

1. Innovation and risk taking: According to our survey what we have found is that employees are not much encouraged to be innovative and take risks.

2. Attention to detail: According to our survey employees has given importance.

3. Outcome Orientation: The managers focuses on both results or outcomes and the techniques needed to achieve those outcomes.

4. People Orientation: Management decisions do not take into consideration the effect of outcomes on people within the organization. They have made their employees a central part of their culture.

5. Team orientation: They emphasize on team orientation i.e. work activities are organized around them. Stability Nestle is maintaining the status in contrast to growth.

6. Zero Tolerance Nestle have high ethical standards and a Business Principles and Ethics Policy in place. They value, encourage and inculcate corporate reforms, good governance, best business practices and an environment of continued adherence to Zero Tolerance, resulting in the development of our human capital and meeting all business challenges.

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Hiring & Recruitment

Hiring and requirement is the most important task performed by Centre of Expertise. It is the process on which the entire companys future and performance relies upon. The Business Partners are supposed to communicate the staff requirements of different departments, and set the job description and requirements. Contacts with universities and recruitment events are maintained to have good visibility of the Company and recruitment sources. The recruitment office looks for three key characteristics: knowledge, personality and motivation. For managerial positions, specific leadership qualities and business acumen is required. Even when promoting employees from within the organization, it is their role to keep an eye on valuable candidates. Those who meet the essential requirements are then evaluated through a series of screening tests, interviews and group discussion sessions to gauge their suitability for the job. It is extremely important to hire the right person, not just for Companys objectives, but to help integrate newcomers in the organization so that their skills and behavior can merge smoothly with the company culture. At Nestl the recruitment is done keeping the objective of diversification in mind. The organization has a global mindset which involves diversity to encourage and foster creativity and new ideas, which forms the unique selling proposition of a business.

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Training Programs:

Training is seen as an ongoing process. It doesnt only involve training sessions and lectures, but day-to-day interactions with the superiors and fellow employees, absorbing their knowledge and ideas: guidance and coaching by managers is a given. Knowledge also comes through the tasks assigned: simple learning-by-doing and on-the-job training. Apart from that, Nestl is committed to enhancing employee skills and competencies through formal training programs. These are selected according to individual requirements and the job they are working for. The candidates are selected based on their performance, potential and personal development goals and recommendations come from the Head of Human Resource Department and the Business Partners of respective departments. The Centre of Expertise is responsible for designing.

Power And Politics:

Power is a potential ability and influence for a people which direct other people in desired direction to do something. In an organization managers use normally two types of power interpersonal and formal. Formal power is based on an individual position in the organization and personal power comes from an individual unique characteristics.

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Legitimate Power:

Legitimate power is used in Nestle as it is based on the power a person receives as a result of his or her position in the formal hierarchy of an organization. The employee has the authority to control and use the organizational resources.

Expert Power:

Expert power is the influence based on special skills, knowledge or expertise. Expertise has become one of the most powerful sources. As jobs have become more specialized the organizations have become increasingly dependent on experts to achieve goals.

Learning

In Nestle learning is done to make the employees skilled at creating, acquiring, transferring knowledge, and to enhance their skills. In an Organization learning is a long-term activity that builds competitive advantage over time and requires sustained management attention, commitment, and effort. In Nestle collaboration with team members give the employees opportunity for learning social, technical and creative skills. When learning is effective the organization is highly aware of how to motivate its employees in the best ways. Rewards, such as education, bonuses are given to motivate employees.

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There are different kinds of rewards NESTLE gives to their employees which are as follows:

Cash bonuses Promotions Make team leader Increments in salaries Allowances like (fuel allowance, mobile allowance)

Teams And Groups:

A group whose individual efforts result in performing that is greater than the sum of the individuals input. At Nestle, employees work in team and they have a team of over 4,500 unique individuals who make it Pakistans largest company. Being exposed to best practices and an enabling environment, they are the best minds in the industry today. By working in teams, employees bring their collective skills and knowledge to bear on problems and to develop innovative ideas for the organization. To be effective, teams should be formed with employees from a variety of functional areas. Work satisfaction relates to personal satisfaction of team members for the work they have done. In Nestle their team consists of individuals who have technical expertise, problem solving, decision making and interpersonal skills. And the work team members do provide them freedom, the opportunity to use different skills, the ability to complete it and that work has a substantial impact on others.

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Conflict Management:

Nestle compromised self managed work teams according to employees response they feel greater level of responsibility on their shoulders and they measure the things like planning ,scheduling of work, and assigning tasks to the members of team, control the place of the work, make decisions through discussion between the team members, take actions to solve the problems and also interact with their customers and we found that the employees called their colleagues relationship officer rather than sales officer.

Code of Conduct

In line with Nestle managements effort to maintain the decorum and ensure an environment that is cohesive to the development and success of the people, a Code of Conduct has been put in place where the following activities can result in disciplinary action: 1. Unsatisfactory and negligent job performance. 2. Excessive and unauthorized absence from duty. 3. Unsatisfactory safety performance. 4. Reporting on duty under the influence of drug or intoxicants. 5. Absence from duty without notice or permission from the supervisor unless the cause of absence prevents giving notice.

6. Using influence for promotion, transfer or posting. 7. Conduct that violates common decency and morality.

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8. Engaging in a fight or in activity that could provoke fighting on site property. 9. Insubordination or deliberate refusal to comply with reasonable requests or instructions. 10. Use or possession of weapons, ammunitions, explosives, intoxicants, illicit drugs or narcotics on site. 11. Acts of horse play on site property. 12. Gambling on site property or bringing illegal gambling paraphernalia on to the site. 13. Theft or unauthorized removal of site property or property belonging to site employee, contractor and vendor. 14. Intentional damage to site, employee, contractor or vendor property. 15. Dishonest act or fortification of records, including the giving of false information when required. 16. Bringing combustible material on site or having any type of match sticks, cigarette lighter or flame producing device in restricted areas. 17. Smoking except in designated areas. 18. Using or divulging without permission, any confidential information gained through employment at the site. 19. Physical, mental or sexual harassment of fellow employee including threat to do bodily harm. 20. Crime involving fraud, indecency, breach of dignity or public morals and other serious offences. 21. Any other commission or omission which, in the opinion of the company, requires/justifies dismissal/termination of employment.
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Analysis

After studying various issues related to the organizational behavior within the organization we analyzed that

The organization behavior regarding goal setting for employees I have analyzed that the management of Nestle is effective in setting goals according to the competition in the private sector.

The management style in Nestle is kind of participative management in which employees are given chance to share their ideas for decision making.

There are different kinds of rewards NESTLE gives to their employees which are as follows: Cash bonuses Promotions Make team leader Increments in salaries Allowances like ( fuel allowance, mobile allowance)

We found very different kind of reward in Nestle that they motivate their employees whose performance is not up to the mark by giving them the salaries equivalent to the market value of the any other employee of same rank so as to motivate their employees.

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Many of the employees are being rewarded after accomplishment of their sales target in such a way that their management take them to the picnic or invite them for dinner frequently. And another very interesting fact which I found in Nestle is that their management does not fire their employees even their performance level is not up to the mark. Overall employees are satisfied with their company and jobs.

To some extent they are given empowerment to do their work. Most of them agree that their jobs are not creating any physical or mental problems for them.

But according to my opinion employees are facing job stress. It is a fact that cannot be denied. Because we know that stress is inevitable. It can only end up with the end of life But the company deals with this problem and provides them proper counseling.

Most of the employees have positive attitude toward their jobs.

If we see an overall picture, then it is clear that they are somewhat satisfied with their jobs and they dont have a lot of stress on them. But still there is a need of improvement in strategies of NESTLE to make workforce more productive.

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NESTLE asses the employees performance on:

Leadership. Communication skills. Team work and Co-operation. Problem solving & decision making. Flexibility. Customer focus.

In NESTLE training to the employees is given for the current improvement in the job while developmental program is for improving the skill which will be used in the future. Both managers and non-managers receive help from training and developmental program but mostly non-managers are concerned with training while the managers are concerned with developmental programs.

Nestle has got the combination of leaders that are both task oriented and leadership oriented. This shows that Nestle have the leaders that perform better in all situations and can manage their teams more effective and efficiently.

The organization properly communicates its strategies to its employees to carry good results efficiently and effectively. The communication between the employees is good and that drives them to do outstanding achievement in work. In Nestle the employees are listened, respected, trusted, and valued that gives them a sense of self worth and belonging.
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Nestle is providing clear path for career advancement to its employees, Company gives full support to its employees in this context. At Nestle, employees work in team and they have a team of over 4,500 unique individuals who make it Pakistans largest company. Being exposed to best practices and an enabling environment, they are the best minds in the industry today. By working in teams, employees bring their collective skills and knowledge to bear on problems and to develop innovative ideas for the organization.

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Conclusion

To increase goodwill and positive impression of Nestle among employees and customers Company should adopt the following things:

Enhance more promotion opportunities for their employees. Encourage employees to participate in decision making. We would suggest that specific job related training should be imparted to employees this would give an additional benefit to employees for improving their skills.

Professional counseling program should also be started to provide employees with the information, regarding future prospects at Nestle and in the mobile industry

They should be establishing and maintaining effective communication with each employee, sharing of ideas and employee involvement in decision making process.

The employer should show a greater trust to employees and employees should feel good about their employer.

There should be no artificial barriers between employees and management.

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Bibliography

www.nestle.com www.managementparadise.com http://www.nestle.in/

http://economictimes.indiatimes.com/nestle-indialtd/infocompanyhistory/companyid-13330.cms http://en.wikipedia.org/wiki/Organizational_behavior

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