Institute of Business and Information Technology

International Marketing
Final Project

Submitted to: Mr. Aly Raza Syed By: 04 08 11 18 '' Qasim Arsalan F06MD003 Talat Hussain KhanF06MD015 a!"a #alil F06MD01$ Hassaan Mu%a&&ar F06MD040 ("e) i%*an Ali #a&ri F06MD053

Table of Contents
Title

INTRO !CTION #ISTOR$

+ota!le Facts ,om-an" .n&ormation/ 0usiness 1ines

Page " % 5 6 ' 8 $ +, 10 11 1' +" 13 +% 14 15 +. 1$ 1$ '0 /+ '1 '3 '4 /. /1

#I&RARC#$
Pa2istan 3 Ke" -ositions occu-ie) (ite locations 3 Hea) 4&&ices an) Factor" 1ocations

STRAT&(IC POST!R& O) *OCA* B!SIN&SS

+estl5 in Pa2istan/ Mission (tatement/ 6ision an) (trate7" ,or-orate (ocial es-onsi!ilit" in Pa2istan +estl5 Frame*or2 &or ,(

INT&RNATIONA* B!SIN&SS IN-O*-&M&NT

Phase o& .nternational .n8ol8ement/ ,ultural 0orro*in7 an) ,ultural .m-acts

T#& MO & O) INT&RNATIONA* OP&RATION

Mer7ers an) Ac9uisitions/ #oint 6entures Tari&& an) +on:Tari&& 0arriers/ Duties an) Ta;es

STRAT&(I&S A OPT& TO R& !C& -!*N&RABI*ITI&S

,or-orate 0usiness Princi-les 3 Pa2istan e7ulator" Authorities e7ulator" Authorities *ithin Pa2istan

)INANCIA*S
Fi7ures : .nternational $ Month (ales Presentation Fi7ures : Pa2istan

STRAT&(I&S )OR INT&RNATIONA* B!SIN&SS OP&RATIONS PROB*&MS0OPPORT!NITI&S

Pro!lems/ <ro*th )ri8ers/ 4--ortunities/ Direction &or '008

INTRO

!CTION

(SOURCE: www.Nestl.pk, www.Nestl.com)

Nestl is a Switzerland Based International Food Group and is a merger of two companies:

Henri Nestl (1867) (1!"#)

Anglo Swiss (1886)

Merge

T roug its effecti!e marketing and a !ast sales and distri"ution network t roug out t e countr#, it ensure t at its products are made a!aila"le to consumers w ene!er, w ere e!er and owe!er. Nestl as t e uni$ue a"ilit# to pro!ide a complete range of food products, ser!ices and well known "rands to meet t e needs of consumers around t e world. It is not a faceless corporation catering to faceless consumers, "ut a uman compan# pro!iding a response to indi!idual uman needs. It respects t e cultures of t e countries it operates in and recognizes t e need for $ualit# of life of t eir people. Nestl% &akistan is proud of its commitment to e'cellence in pro!iding !alue and ser!ices to its consumers Nestl% &akistan (td is registered on t e )arac i and (a ore stock e'c ange. It operates in man# wa#s "ut people, products and "rands are t e main flag "earers of t e compan#%s image. Nestl &akistan en!isage to grow in t e s ortest possi"le time into a food compan# wit t e uni$ue a"ilit# to meet t e needs of consumers of e!er# age group * from infanc# to old age, for nutrition and pleasure, t roug de!elopment of a large !ariet# of food categories of t e ig est $ualit#. T e +ompan#,s strateg# is guided "# se!eral fundamental principles. Nestl,s e'isting products grow t roug inno!ation and reno!ation w ile maintaining a "alance in geograp ic acti!ities and product lines. (ong*term potential is ne!er sacrificed for s ort* term performance. Nestl &akistan !isualizes t e compan# to de!elop an e'tremel# moti!ated and professionall# trained work force, w ic would dri!e growt t roug inno!ation and reno!ation. It fulfills its social responsi"ilities and en!ironment is also taken care of. T e +ompan#,s priorit# is to "ring t e "est and most rele!ant products to people, w ere!er t e# are, w ate!er t eir needs, t roug out t eir li!es. Now Nestl is undisputed leader in food industr#, wit more t an -./ factories in 01 countries out of w ic 22. are in 3urope, 4-1 in 5merica, 416 in 5frica and 7ceania.

#ISTOR$
(SOURCE: www.Nestl.pk, www.Nestl.com)

+'2,3+4,.
In t e 406.s 8enri Nestl, a p armacist, de!eloped a food for "a"ies w o were una"le to "reastfeed. 8is first success was a premature infant w o could not tolerate is mot er,s milk or an# of t e usual su"stitutes. &eople $uickl# recognized t e !alue of t e new product, after Nestl,s new formula sa!ed t e c ild,s life, and soon, Farine (acte 8enri Nestl was "eing sold in muc of 3urope. 8enri Nestl endowed is compan# wit t e s#m"ol deri!ed from is name. 8is famil# coat of arms, t e nest wit a mot er "ird protecting er #oung, "ecame t e +ompan#,s logo and a s#m"ol of t e +ompan#,s care and attitude to life*long nutrition. T e Nestl nest represents t e nouris ment, securit# and sense of famil# t at are so essential to life.

+4,.3+4"'
In 4/.- Nestl merged wit t e 5nglo*Swiss +ondensed 9ilk +ompan#. B# t e earl# 4/..s, t e compan# was operating factories in t e :nited States, Britain, German# and Spain. ;orld ;ar I created new demand for dair# products in t e form of go!ernment contracts. B# t e end of t e war, Nestl,s production ad more t an dou"led. 5fter t e war Go!ernment contracts dried up and consumers switc ed "ack to fres milk. 8owe!er, Nestl,s management responded $uickl#, streamlining operations and reducing de"t. T e 4/2.s saw Nestl,s first e'pansion into new products, wit c ocolate t e +ompan#,s second most important acti!it#.

+4"'3+41.
Nestl felt t e effects of ;orld ;ar II immediatel#. &rofits dropped from <2. million in 4/10 to <6 million in 4/1/. Factories were esta"lis ed in de!eloping countries, particularl# (atin 5merica. Ironicall#, t e war elped wit t e introduction of t e +ompan#,s newest product, Nescaf, w ic was a staple drink of t e :S militar#. Nestl,s production and sales rose in t e wartime econom#. T e end of ;orld ;ar II was t e "eginning of a d#namic p ase for Nestl. Growt accelerated and companies were ac$uired. In 4/=> came a lot of mergers. ?i!ersification came wit a s are olding in (,7ral in 4/>=.

+41.3+442
Nestl di!ested a num"er of "usinesses4/0. @ 4/0=. In 4/0=, Nestl,s impro!ed "ottom line allowed t e +ompan# to launc a new round of ac$uisitions, t e most important "eing 5merican food giant +arnation. Nestl,s growt in t e de!eloping world partiall# offset a slowdown in t e +ompan#,s traditional markets.

+4423/,,,
T e first alf of t e 4//.s pro!ed to "e a fa!ora"le time for Nestl: trade "arriers crum"led and world economic markets de!eloped into a series of more or less integrated trading areas. T e opening of +entral and 3astern 3urope, as well as + ina, and a general trend towards li"eralization of direct foreign in!estment was good news for a compan# wit interests as far*flung and di!erse as Nestl. ; ile progress since t en as not "een as encouraging, t e o!erall trends remain positi!e. Nestl opened t e 2.t centur# "# merging wit t e 5nglo*Swiss +ondensed 9ilk +ompan# to "roaden its product range and widen its geograp ical scope.

/,,,35resent
In Aul# 2..., Nestl launc ed a Group*wide initiati!e called G(7B3 BGlo"al Business 3'cellenceC, aimed at armonizing and simplif#ing "usiness process arc itectureD ena"ling Nestl to realize t e ad!antages of a glo"al leader w ile minimizing t e draw"acks of size. Nestl was First to &roduce: Infant milk, +ondensed milk, 9ilk c ocolate, Solu"le coffee and Freeze*dried coffee.

NOTAB*& )ACTS
Nestl, "ased in Switzerland, is t e world,s largest food compan#. It manufactures a wide !ariet# of food products, from c ocolate to frozen dinners to pet food, and is one of t e top four water "ottling companies in t e world. It controls one*t ird of t e 5merican "ottled water market, selling water under >. different "rand names. Bottled water contri"utes to t e plastic waste pro"lem and seizes water t at s ould remain a s ared pu"lic resource. Nestl as "een repeatedl# sued for t e impacts of its "ottled water operations on communities and for false ad!ertising of its products. Nestl as "een criticized internationall# for its aggressi!e marketing of infant formula in countries w ere pota"le water is scarce, leading to a reduction in "reastfeeding and increased risk for infants. Nestl is also one of t e world,s largest c ocolate producers, and critics c arge t at t is makes it a contri"utor to c ild and forced la"or pro"lems in cocoa* growing nations. Switzerland*"ased Nestl S.5. manufactures a wide !ariet# of food products from c ocolate to frozen dinners to pet food. In addition, Nestl is one of t e most prominent "ottled water companies in t e world, and also produces personal and ealt care products. Nestl S5 emplo#s 2=>,.... 5ccording to a 2..6 glo"al sur!e# of online consumers "# t e Eeputation Institute, Nestl as a reputation score of >..= on a scale of 4F4...

COMPAN$ IN)ORMATION
$i%&er: N3ST(G Co'ntr(: &5)IST5N M)*or +n 'str(: Food H Be!erages S', +n 'str(: ?i!ersified Food -""7 S)les: 20,21-,1/1,... BIear 3nding Aan 2..0C E./lo(ees: 2,1=- B&akistan F as of Aanuar# 2..0C C'rren%(: &akistan Eupee M)r&et C)/it)l: 64,224,/10,=.. 0is%)l 1e)r En s: ?ecem"er S2)res O'tst)n ing: =-,1=/,-0= S2)re $(/e: 7rdinar#

3US+NESS 4+NES
Co55ee Nescaf, Taster%s + oice, Eicor, Eicoff#, Nespresso, Bonka, Jogas, (oumidis 6)ter

Nestl &ure (ife, Nestl 5$uarel, &errier, Kittel, +ontre', S.&ellegrino, 5c$ua &anna, (e!issima, 5rrow ead, &oland Spring, ?eer &ark, 7zarka, 8par, Ice 9ountain, Jep #r ills Ot2er ,e7er)ges Nestea, Nes$uik, Nescau, 9ilo, +arnation, (i""#%s, +aro, Nestomalt, Nestl S2el5 st),le Nestl Nido, Nespra#, Nin o, +arnation, 9ilkmaid, (a (ec era, 9oLa, )lim, Gloria, S!elt#, 9olico, Nestl 7mega &lus, Bear Brand, +offee*9ate C2ille Nestl S!eltesse, (a (aitiMre, (a (ec era, Ski, Ioco, S!elt#, 9olico, (+4, + i$uitin +%e %re). Nestl 5ntica Gelateria del +orso, ?re#er,s@3d#,s, ?rumstick@3'trNme, 9a'i"on@Tandem, 9ega, 9O!enpick, Sin &arar@Sem &arar@Non Stop +n5)nt n'trition Nestl Nan, (actogen, Be"a, Nestogen, +erelac, Neslac, Nestum, Guigoz, Good Start 8er5or.)n%e n'trition &owerBar, &ria, 9usas i He)lt2C)re n'trition Nutren, +linutren, &eptamen, 9odulen 3o'illons9 so'/s9 se)sonings9 /)st)9 s)'%es 9aggi, Buitoni, T om#, ;iniar#,Torc in 0ro:en 5oo s (/re/)re is2es9 /i::)s) Stouffer%s, (ean +uisine, 8ot &ockets, Buitoni, 9aggi Re5riger)te /ro '%ts (%ol .e)t /ro '%ts9 o'g29 /)st)9 /i::)s9 s)'%es9 sn)%&s) Nestl, Buitoni, 8erta, Toll 8ouse C2o%ol)te9 %on5e%tioner( )n ,is%'its Nestl, +runc , +ailler, Galak@9ilk#"ar, )it )at, Smarties, Butterfinger, 5ero, &olo 0oo Ser7i%es )n /ro5ession)l /ro '%ts + ef, ?a!igel, 9inor%s (%7ral Be$uit# interestC

#I&RARC#$
(So'r%e: International we"site www.Nestl.com)

Org)ni:)tion)l C2)rt ; +ntern)tion)l

8)&ist)n < =e( 8ositions O%%'/ie

Tre!or +la#ton, M)n)ging >ire%tor, 9? 7ffice BCo'ntr( He) o5 O/er)tionsC S#ed Iawar 5li, C2)ir.)n Ea#mond Franke, He) o5 0in)n%e )n Controls, Finance H +ontrol ?i!ision 8asee" 5slam, Co'ntr( 3'siness M)n)ger 6)ter, ;ater ?i!ision &eter ;uet ric , He) o5 $e%2ni%)l, Tec nical ?i!ision Salman Nazir, He) o5 S'//l( C2)in, Suppl# + ain ?i!ision
8

 :zma Paiser Butt, He) o5 H'.)n Reso'r%es, 8uman Eesources ?i!ision Jafar 8ussain, He) o5 S)les, Sales ?i!ision

SIT& *OCATIONS INC*! IN( #&A O))IC& AN )ACTOR$ *OCATIONS

(So'r%e: www.Nestl.pk)

Registere )n Cor/or)te O55i%es

308 Upper Mall, Lahore +92 042 111.637.853 +92 042 578 9303 +92 042 578 9304 Corporate Office Annex 304 Upper Mall, Lahore +92 042 111.637.853 Park Lane Tower 72-Tufail Roa , Lahore !a"## Lahore +92 042 609 9300 Sheikhupura actor! 29#h$.M.Lahore-%hei&hupura Roa , %hie&hupura +92 056 340 6615-25 +92 042 636 8710 "a#irwala actor! $a'ir(ala-$a'ir(ala Roa , $a'ir(ala, )i*#ri+# $ha"e(al +92 065 111.637.853 +92 065 241 1432 $%la&a#a' actor! ()ater* ,lo# "o. 32, %#ree# 3, %e+#or 1 10-3, .*la/a'a +92 051 444 5991-3 +92 051 444 5997 "arachi actor! ()ater* 23-0, 1or#h 2e*#er" ." u*#rial %#a#e, ,or# 3a*i/ 0u#hori#4, $ara+hi +92 021 472 0151-3 +92 021 472 0154

STRAT&(IC POST!R& O) *OCA* B!SIN&SS

(SOURCE: www.Nestl.pk, www.Nestl.com)

NES$4? +N 8A=+S$AN
Nestl as "een ser!ing &akistani consumers since 4/00, w en parent compan#, t e Switzerland*"ased Nestl S5, first ac$uired a s are in 9ilkpak (td. Toda# Nestl is full# integrated in &akistani life, and is recognized as t e producer of safe, nutritious and tast# food, and leaders in de!eloping and uplifting t e communities in w ic t e# operate. Nestl &akistan ensures t at t eir products are made a!aila"le to consumers w ere!er in t e countr# t e# mig t "e. +on!enience is at t e eart of t e Nestl p ilosop #, and t ere aim is to "ring products to people,s doorsteps

Mission St)te.ent
5t Nestl, we "elie!e t at researc can elp us make "etter food so t at people li!e a "etter life. Good Food is t e primar# source of Good 8ealt t roug out life. ;e stri!e to "ring consumers foods t at are safe, of ig $ualit# and pro!ide optimal nutrition to meet p #siological needs. In addition to nutrition, ealt and wellness, Nestl products "ring consumers t e !ital ingredients of taste and pleasure. 5s consumers continue to make c oices regarding foods and "e!erages t e# consume, Nestl elps pro!ide selections for all indi!idual taste and lifest#le preferences. Eesearc is a ke# part of our eritage at Nestl and an essential element our future. ;e know t ere is still muc to disco!er a"out ealt , wellness and t e role of food in our li!es, and we continue to searc for answers to "ring consumers Good Food for Good (ife.

@ision )n Str)teg(
T e Nestl glo"al !ision is to "e t e leading ealt , wellness, and Nutrition +ompan# in t e world. Nestl &akistan su"scri"es full# to t is !ision. In particular, we en!ision to: (ead a d#namic moti!ated and professional workforce F proud of its eritage and "ullis a"out t e future. 9eet t e nutritional needs of consumers of all age groups F from infanc# to old age, from nutrition to pleasure, t roug an inno!ati!e portfolio of "randed food and "e!erage products of t e ig est $ualit#. ?eli!er s are older !alue t roug profita"le long*term growt , w ile continuing to pla# a significant and responsi"le role in t e social, economic and en!ironmental sectors of t e countr#.

 ;e a!e profita"le and di!ersified ig $ualit# food and "e!erage product portfolio, deli!ering 6.:=.Q ad!antage to consumers, a!aila"le across all sales c annels. 7ur "rands are t e preferred c oice in t eir categories. +onsumer insig t dri!es all aspects of our marketing and communication efforts. 7ur communications to t e consumer are rele!ant, cutting*edge, and ad ere to t e ig est standards of responsi"le communication. 7ur compan# is seen as t e No. 4 career destination for talented, moti!ated and am"itious professionals. 7ur result*oriented organizational structure ensures effecti!e communication and empowered self*management. 7ur milk collection and agro ser!ices will continue to pla# t e primar# role in de!elopment of t e dair# sector in rural &akistan. 7ur proacti!e inno!ation and reno!ation culture is t e ke# to our success in t e marketplace. Full# integrated s#stems BNestl &akistan, suppliers, customersC ensure efficient "usiness processes. Non*strategic acti!ities and products are outsourced or discontinued.

Cor/or)te So%i)l Res/onsi,ilit( in 8)&ist)n

In 4=. #ears of e'perience, Nestl a!e learnt t at "usinesses and t e societies in w ic t e# operate are in a s#m"iotic relations ip. If societ# flouris es, "usiness is good. If a "usiness does well, it "rings wealt and sta"ilit# to a societ#. From t is organic interdependence comes Nestl%s conception of corporate Social Eesponsi"ilit# B+SEC. Nestl tries to +reate S ared Kalue at e!er# step of t e !alue c ain, to ensure t at t eir actions "enefit not onl# t e compan#, "ut also societ# at large. Bot are, after all, interdependent. T is consideration affects all of Nestl%s corporate initiati!es.

Nestl 0r).ewor& 5or CSR:

INT&RNATIONA* B!SIN&SS IN-O*-&M&NT

82)se o5 +ntern)tion)l in7ol7e.ent
Nestl is in t e Glo"al 9arketing p ase of international in!ol!ement. It as more standardization "ut still it adopts products to countries w ere for e'ample culture or religion re$uire products to "e manufactured from different raw materials or packaging to "e made in a different wa# or s ow somet ing more suited to t eir understanding and conform to t eir cultural norms. T us t ere is more standardization and a little adaptation.

C'lt'r)l 3orrowing )n C'lt'r)l +./)%ts

Nestl, w ile "eing a Swiss compan# as adopted t e culture and norms of &akistan in t e respect t at "esides t e Jonal 9anager and +ountr# 8ead of 7perations, all ot er positions are filled "# &akistani citizens. In t is wa#, t e cost of la"or is reduced "# iring local uman resources to fill positions. 5not er impact of following t is strateg# is t at locals do not feel alienated and do not alienate Nestl as a Rstrange foreign firmS a!ing not ing "ut foreigners selling foreign products. In addition, local know* ow and cultural norms are "etter understood and situations in!ol!ing local market knowledge or suppl# c ains and in dealing wit negotiations are muc "etter andled "# a!ing locals perform t ose duties.

T#& MO
=e( >)tes
4066 4/.4/2/ 4/=> 4/6/ 4/>4 4/>= 4/>> 4/04/00 4/00 4//2 4//0 2... 2..4 2..2 2..1 2..= 2..-

& O) INT&RNATIONA* OP&RATION

(So'r%e: Nestl Fact"ook, Nestl, 2..> )

MERAERS B ACCU+S+$+ONS
+ompan# Founded 9erger "etween Nestl and 5nglo*Swiss +ondensed 9ilk +ompan# 9erger wit &eter, +ailler, )o ler + ocolats Suisses S.5. 9erger wit 5limentana S.5. B9aggiC Kittel Be$uit# interestC 9erger wit :rsina*Franck (,7ral Be$uit# interestC 5c$uisition of 5lcon B2..2: partial I&7C 5c$uisition of +arnation 5c$uisition of Buitoni*&erugina 5c$uisition of Eowntree 5c$uisition of &errier 5c$uisitions of San &ellegrino and Spillers &etfoods 5c$uisition of &owerBar 5c$uisition of Ealston &urina 5c$uisition of Sc Oller and + ef 5merica 5c$uisition of 9O!enpick, &owwow and ?re#er,s 5c$uisition of Kalio Bice cream acti!itiesC 5c$uisition of ;agner, &rotika, 9usas i

DO+N$ @EN$URES
=e( >)tes
4/>= 4/04 4//. 4//4 2..2 (%7ral Galderma * BToint !enture wit (%7ralC +ereal &artners ;orldwide * BToint !enture wit General 9illsC Be!erage &artners ;orldwide Bformerl# ++NEC F BToint !enture wit +oca +olaC ?air# &artners 5mericas * BToint !enture wit FonterraC (a"oratories inno! * BToint !enture wit (%7ralC

$AR+00 AN> NON;$AR+00 3ARR+ERS

5s per information pro!ided "# t e Nestl official we inter!iewed for t is information, we were told t at RBeing a 9ultinational compan#, Nestl is e'empted from almost all tariff and non*tariff "arriersS. 8owe!er a finance official was not a!aila"le for inter!iew to pro!ide more t oroug detail as to w ic "arriers Nestl is in fact e'empted from and w ic "arriers it isn%t e'empted from. 8owe!er, we would disagree wit t is information and e!aluate t e trade, tariff and non*tariff "arriers and t e regulations laid out in t is regard "# local law and go!ernment regulator# aut orities. 5 detail of t ese "arriers can "e o"tained from legal documentation a"out t e Statutes, Eules, Eegulations and Guidelines from t e Securities and 3'c ange +ommission of &akistan we"site: ttp:@@www.secp.go!.pk@laws.asp

>U$+ES AN> $AEES A884+E>

5 similar set of information was pro!ided to us in t is regard as well. 8owe!er we can safel# sa# t at t e duties and ta'es applied upon Nestl conform to t e rules and regulations "# Go!ernment Eegulator# aut orities like t e State Bank of &akistan, T e + am"er of +ommerce and T e Securities and 3'c ange +ommission of &akistan. In t at respect, Nestl conforms to t e rules laid out "# local law and duties and ta'es applied are dul# paid out "# Nestl as is stated later on in t e financial reports, e.g. in t e #ear ending on ?ecem"er 2..> Ta'ation on Nestl was Es. >==, -==, ...

S$RA$EA+ES A>O8$E> $O RE>UCE 8O4+$+CA49 O8ERA$+ONA4 AN> A>M+N+S$RA$+@E @U4NERA3+4+$+ES

Cor/or)te 3'siness 8rin%i/les (+ntern)tion)l) (So'r%e: Nestl +orporate Business &rinciples ?ocument, T ird 3dition, Septem"er 2..=, Nestl S.5., &u"lic 5ffairs.)
Nestl is committed to t e following Business &rinciples in all countries, taking into account local legislation, cultural and religious practices: Nestl%s "usiness o"Tecti!e, and t at of management and emplo#ees at all le!els, is to manufacture and market t e +ompan#%s products in suc a wa# as to create !alue t at can "e sustained o!er t e long term for s are olders, emplo#ees, consumers, "usiness partners and t e large num"er of national economies in w ic Nestl operatesD Nestl does not fa!or s ort*term profit at t e e'pense of successful long*term "usiness de!elopment, "ut recognizes t e need to generate a ealt # profit eac #ear in order to maintain t e support of our s are olders and t e financial markets, and to finance in!estmentsD Nestl recognizes t at its consumers a!e a sincere and legitimate interest in t e "e a!ior, "eliefs and actions of t e +ompan# "e ind "rands in w ic t e# place t eir trust, and t at wit out its consumers t e +ompan# would not e'istD 8

 Nestl "elie!es t at, as a general rule, legislation is t e most effecti!e safeguard of responsi"le conduct, alt oug in certain areas, additional guidance to staff in t e form of !oluntar# "usiness principles is "eneficial in order to ensure t at t e ig est standards are met t roug out t e organizationD Nestl is conscious of t e fact t at t e success of a corporation is a reflection of t e professionalism, conduct and t e responsi"le attitude of its management and emplo#ees. T erefore recruitment of t e rig t people and ongoing training and de!elopment are crucialD Nestl operates in man# countries and in man# cultures t roug out t e world. T is ric di!ersit# is an in!alua"le source for our leaders ip. No single document can capture e!er# legal o"ligation t at ma# "e re$uired in eac of t ese countries. Indeed, t ere ma# "e conflicting legal re$uirements. Nestl continues to maintain its commitment to follow and respect all applica"le local laws in eac of its markets. If an interpretation of an#t ing contained in Nestl%s +orporate Business &rinciples is construed as contrar# to local laws, suc interpretation s ould not "e followed in t at countr#.

1F C'sto.er
9eeting +onsumers% Needs: Nestl aims to create !alue t at can "e sustained o!er t e long term "# meeting consumer needs for nutrition, enTo#ment, and $ualit# t e# can trust. NestlGs Co..'ni%)tion wit2 %ons'.ers is ,)se on t2e 5ollowing 3)si% 8rin%i/les: 4. Nestl consumer communication s ould reflect moderation in food consumption, and not encourage o!er*eating. T is is especiall# important regarding c ildren. 2. ; ere!er possi"le, we s ould s ow c ildren in ealt # energetic pursuits and a!oid t e portra#al of an inacti!e lifest#le com"ined wit un ealt # dietar# patterns. 1. Nestl consumer communication must "e congruent wit ealt #, "alanced diets. 7ur ad!ertising must not impl# t e replacement of meals wit indulgence or snack foods, nor encourage ea!# snacking. =. Nestl is committed to ad!ertising to c ildren in a wa# t at does not undermine t e aut orit#, responsi"ilit#, or Tudgment of parents or care pro!iders. It must not encourage Rpester powerS. -. Nestl ad!ertising to c ildren must not portra# c ildren in unsafe situations nor encourage t em to accept in!itations from people t e# do not know. 6. Nestl consumer communication a"out ealt "enefits of products must a!e a sound nutritional "asis. >. Nestl consumer communication s ould not e'ploit !iolence, "ad manners, or profanit#. Its content must reflect good taste in a gi!en countr# and culture. It s ould not depict attitudes t at are discriminator# or offensi!e to religious, et nic, political, cultural, or social groups. 0. Nestl communications must not s ow or encourage t e consumption of our products in a wa# t at could "e considered dangerous.

/. Eegarding ad!ertising placement, it is against our principles to sponsor tele!ision and radio programmes or magazines w ose strateg# for attracting !iewers or readers relies on e'ploiting !iolence, se', or encouraging offensi!e "e a!ior toward ot ers. 4.. Nestl consumer communication s ould not portra# competitors% products inaccuratel#, nor denigrate t em.

-F +n5)nt He)lt2 )n N'trition

; en 8enri Nestl de!eloped is milk food for "a"ies o!er 41. #ears ago, it sa!ed t e life of a "a"# w o could not "e "reast*fed. Nestl%s in!ention responded to t e need for a nutritionall# safe alternati!e to "reast milk. Toda#, Nestl researc and de!elopment creates ig $ualit# infant formula products for use w en an alternati!e to "reast milk is needed t at is specificall# nutritionall# adapted. Nestl also offers superior complementar# BweaningC foods. 8enri Nestl also insisted t at e!er# mot er a"le to "reast*feed s ould do so. T is principle is still t e cornerstone of Nestl polic# toda#, and is in line wit t e aim of t e International (6HO) Co e o5 M)r&eting o5 3re)st;.il& S',stit'tes , w ic was adopted "# t e 6orl He)lt2 Asse.,l( in 4/04. T e International +ode recognizes a legitimate market for "reast*milk su"stitutes and pro!ides recommendations to go!ernments on ow its marketing s ould "e regulated. T erefore Nestl: F encourages and supports "reastfeeding as t e "est start in lifeD F carries out researc and de!elopment aimed at t e constant impro!ement of infant formula products for use w en a safe alternati!e to "reast milk is neededD F ensures t at its infant food marketing practices conform strictl# to national legislation, regulations, or ot er measures taken "# go!ernments to gi!e effect to t e aim and principles of t e International +ode. In addition, in all de!eloping countries, w et er or not t eir go!ernments a!e taken action to full# implement t e International +ode, Nestl: F gi!es detailed instructions to its staff on ow to implement t e International +odeD F pro!ides a summar# of its polic# for t e information of emplo#ees and t e pu"lic in t e form of t e Nestl Instructions, w ic is translated into man# languagesD F regularl# conducts training of emplo#ees to ensure complete understanding of t e +ompan#%s responsi"ilities under t e International +odeD F de!elops its infant formula la"els and educational materials in line wit t e International +ode, after field researc and consultation wit ealt aut orities F as an internal om"udsman s#stem ena"ling emplo#ees to alert t e +ompan# on potential non*compliance wit t e International +ode in a confidential wa#, outside line management structures. In eac countr# t e designated om"udsman in!estigates and reports alleged !iolations of t e International +ode directl# to a mem"er of t e Nestl S.5. 3'ecuti!e +ommittee at t e +ompan#%s glo"al ead$uartersD F conducts audits on a regular "asis of its companies% infant formula marketing practices. Nestl is a founding mem"er of t e +ntern)tion)l Asso%i)tion o5 +n5)nt 0oo M)n'5)%t'rers (+0M), w ic was formed to facilitate industr# dialogue wit 6HO and go!ernments, and to encourage responsi"le marketing standards for t e infant food industr#.

HF H'.)n Rig2ts
Nestl full# supports t e Unite N)tions Alo,)l Co./)%tGs two guiding principles on uman rig ts. Nestl t erefore: Supports and respects t e protection of international uman rig ts wit in its sp ere of influence B&rinciple 4C and 3nsures t at its own companies are not complicit in uman rig ts% a"uses B&rinciple 2C Nestl aims to pro!ide an e'ample of good uman rig ts% practices t roug out its "usiness acti!ities and as an interest in encouraging t e impro!ement of social conditions, w ic are an important factor for sustaina"le de!elopment. Nestl also recognizes t at go!ernments are ultimatel# responsi"le for t e esta"lis ment of a legal framework for protecting uman rig ts wit in t eir markets. Nestl e'pects eac market to respect and follow t e local laws and regulations concerning uman rig ts% practices.

IF H'.)n Reso'r%es )n t2e 6or&/l)%e

Nestl full# supports t e Unite N)tions Alo,)l Co./)%tGs four guiding principles on la"or. Nestl t erefore up olds: Freedom of association and t e effecti!e recognition of t e rig t to collecti!e "argaining B&rinciple 1C T e elimination of all forms of forced and compulsor# la"or B&rinciple =C T e effecti!e a"olition of c ild la"or B&rinciple -C T e elimination of discrimination in respect of emplo#ment occupation B&rinciple 6C Nestl also respects t e local laws and regulations applica"le to uman resources in eac of its markets. 8uman Eesource &olic# is also set "# t e local markets, w ic must follow local legal re$uirements Nestl regards its personnel as its most !alua"le asset. In!ol!ement at all le!els starts wit open communication, w et er on specific aspects of t e "usiness, or a"out t e acti!ities of t e +ompan# in general. Suggestions for c anges and proposals for impro!ements of Nestl%s practices are encouraged.

#F C2il 4),or
It is generall# acknowledged t at t e causes of c ild la"or are comple' and include po!ert#, differing stages of economic de!elopment, social !alues and cultural circumstances. Nestl "elie!es polic# de!elopment must take into account t e social and legal situation of indi!idual countries. 5ction to eliminate c ild la"or must "e guided "# t e "est interests of t e c ild, as ill* considered policies and commercial measures can make t e situation worse for c ildren. T erefore, Nestl: F is against all forms of e'ploitation of c ildren. T e +ompan# does not pro!ide emplo#ment to c ildren "efore t e# a!e reac ed t e age to a!e completed t eir compulsor# education, as defined "# t e appropriate aut orities. Nestl e'pects its industrial suppliers and "usiness partners to appl# policies t at a!e t e same

standards as t e +ompan#%s Business &rinciples and reser!es t e rig t to audit t eir compliance. F a"ides "# national laws in all countries in w ic it as operations and complies wit t e +ntern)tion)l 4),or Org)ni:)tion (+4O) +on!ention 410 on t e 9inimum 5ge for 3mplo#ment and t e I(7 +on!ention 402 on t e ;orst Forms of + ild (a"or. T e I(7 recommendations are "ased on t e :nited Nations +on!ention of t e Eig ts of t e + ild B5rticle 12CD F offers its co*operation wit t e rele!ant :nited Nations agencies, go!ernments and t e "usiness communit# in t eir efforts to deal wit t e pro"lem of c ild la"or, w ic include t e encouragement of uni!ersal primar# education and all aspects of economic de!elopment worldwide.

Cor/or)te 3'siness 8rin%i/les (8)&ist)n)

;e are dedicated to following t e "est practices laid down "# our parent compan#, Nestl S5. ;e a!e implemented t e +orporate Go!ernance &rinciples esta"lis ed "# Nestl S5, co!ering four core areas: Eig ts and responsi"ilities of s are olders 3$uita"le treatment of s are olders ?uties and responsi"ilities of t e "oard of directors ?isclosure and transparenc#

+orporate Internal 5udit

Eecognizing t e need to maintain transparenc# and !erif# t e application of corporate standards, Nestl &akistan as esta"lis ed an internal audit department t at monitors administrati!e and operational functions t roug out t e compan#. T anks to its operations, we can "e assured t at ade$uate internal controls are in place, management information is relia"le, resources are used effecti!el#, and compan# assets are safeguarded.

Reg'l)tor( A't2orities
(So'r%e: Nestl +orporate Business &rinciples ?ocument, T 2..=, Nestl S.5., &u"lic 5ffairs.)
ird 3dition, Septem"er

N)tion)l 4egisl)tion )n +ntern)tion)l Re%o..en )tions

Nestl emp asizes t at, as a minimum, its emplo#ees must compl# wit t e laws applica"le in t e countries in w ic it operates. Nestl ensures t at t e ig est standards of responsi"le conduct are met t roug out t e organization, "# compl#ing in a responsi"le wa# wit t e Nestl Cor/or)te 3'siness 8rin%i/les, w ic guide +ompan# acti!ities and relations ips worldwide in eac sector of "usiness interest. Nestl supports and pu"licl# ad!ocates t e Unite N)tions Alo,)l Co./)%t and its ten principles, an initiati!e of t e :nited Nations Secretar#*General. T e Glo"al +ompact asks companies to em"race, support and enact, wit in t eir sp ere of influence, a set of core !alues in t e areas of uman rig ts, la"or standards and t e en!ironment.

Nestl recognizes t at increasing glo"alization is leading to t e de!elopment of more and more international recommendations. 5lt oug , as a general rule, t ese recommendations are addressed to go!ernments, t e# ine!ita"l# impact on "usiness practices. 5mong ot ers, Nestl as incorporated rele!ant +ntern)tion)l 4),or Org)ni:)tion Con7entions , and t e +ntern)tion)l (6HO) Co e o5 M)r&eting o5 3re)st;.il& S',stit'tes into its policies. Nestl endorses rele!ant commitments and recommendations for !oluntar# self* regulation issued "# competent sectoral organizations, pro!ided t e# a!e "een de!eloped in full consultation wit t e parties concerned. T ese include t e +ntern)tion)l C2).,er o5 Co..er%e (+CC) Business + arter for Sustaina"le ?e!elopment. 5lso, Nestl uses t e Org)ni:)tion 5or E%ono.i% Co;o/er)tion )n >e7elo/.ent (OEC>) A'i elines 5or M'ltin)tion)l Enter/rises , appro!ed in Aune 2..., as a reference point for its +orporate Business &rinciples.

Reg'l)tor( A't2orities wit2in 8)&ist)n

Nestl is in constant contact wit t e following t ree main go!ernment organizations w ilst operating in &akistan: ; ile representati!es of Nestl were una"le to gi!e an# specific details on t e direct influence of an# of t ese organizations, we can see t at t e# a!e o"!ious implications on local operations of Nestl as an 9N+ operating wit in &akistan. 1F St)te 3)n& o5 8)&ist)n (S38) State Bank of &akistan is responsi"le for formulating and conducting monetar# and credit polic# in a manner consistent wit t e Go!ernment%s targets for growt and inflation and t e recommendations of t e 9onetar# and Fiscal &olicies +o*ordination Board wit respect to macro*economic polic# o"Tecti!es. T e "asic o"Tecti!e underl#ing its functions is two*fold i.e. t e maintenance of monetar# sta"ilit#, t ere"# leading towards t e sta"ilit# in t e domestic prices, as well as t e promotion of economic growt . T e UEules of BusinessU for NBFIs "ecame effecti!e since t e da# NBFIs came under State Bank%s Turisdiction. 5s from Aanuar#, 4//>, modar"as and leasing companies, w ic are also specialized t#pe of NBFIs, are "eing regulated@super!ised "# t e Securities and 3'c ange +ommission BS3+&C, rat er t an t e State Bank of &akistan. 5s t e custodian of countr#%s e'ternal reser!es, t e State Bank is also responsi"le for t e management of t e foreign e'c ange reser!es. T e task is "eing performed "# an In!estment +ommittee w ic , after taking into consideration t e o!erall le!el of reser!es, maturities and pa#ment o"ligations, takes decision to make in!estment of surplus funds in suc a manner t at ensures li$uidit# of funds as well as ma'imizes t e earnings. T ese reser!es are also "eing used for inter!ention in t e foreign e'c ange market. -F 8)&ist)n C2).,er o5 Co..er%e B +n 'str( T e &++I ser!es as a "ridge "etween t e pri!ate sector and t e Go!ernment. It pla#s an important role in polic# formulation "# maintaining a constant interaction wit t e rele!ant aut orities in "ot t e Go!ernment and "usinesses. HF Se%'rities )n EJ%2)nge Co..ission o5 8)&ist)n (SEC8)

T e S3+& is responsi"le for pro!iding t e rules regulations, policies and guidelines for 9N+s, S93s and all ot er "usinesses operating wit in t e "oundaries of &akistan. T e S3+& is responsi"le for promoting +orporate Social Eesponsi"ilit# in &akistan and Eegulation, Super!ision and &erformance in +orporate Go!ernance. T e Nestl officials w o were inter!iewed for t is purpose mentioned t at t e policies t at Nestl is following are in accordance to t e rules stated "# t e legal re$uirements of t e Go!ernment of &akistan.

)INANCIA*S
(So'r%e: Nestl &akistan (imited, Financial Eeport for t 2..>, Nestl Group 2..> +ompan# profile) 0ig'res ; +ntern)tion)l
Note: +8F means Swiss Franc e #ear ending 14 ?ecem"er

-""8 < ! .ont2 s)les /resent)tion So'r%e: * Eodd# + ild*Killiers, 8ead of In!estor Eelations

0ig'res ; 8)&ist)n S)les: 2..> Sales F net 7wn manufactured (ocal 3'port Goods purc ased for resale (ess: Sales ta' Trade discounts B4,11.,1=>C 2..6 BEupees in V...C 22,.-.,./1 4,1--,12= -H9I"#9I17 6-6,-/4 B>..,>.1C --9"H"9!#8

2>,/-/,.12 4,/.2,>-4 -!9861978H -/1,66/ B-00,0>.C B4,614,40/C -89-H#9H!H

8ro5its 2..> &rofit "efore ta'ation 2,..-,=-Ta'ation 8ro5it )5ter t)J)tion 19H6H9-!" 2..6 BEupees in V...C 2,-=/,>-6 B6=2,46-C

B>==,-==C 198"#9-1-

STRAT&(I&S )OR INT&RNATIONA* B!SIN&SS

OP&RATIONS

(SOURCE: N3ST(G 2..0 85(F*I35E E75?S87; F S3&T39B3E 2..0, A593S SING8, +F7)

PROB*&MS0OPPORT!NITI&S
(So'r%e: Iasir 9alik, 7perations 7fficer, Nestl &akistan (imited, www.Nestl.com) 8ro,le.s:
5s suc , t ere seems to "e no pro"lem t at Nestl is facing in almost all zones it is operating in, including T e Asi)9 O%e)n) )n A'str)li) (AOA) region including &akistan. 5lso, local competition, alt oug ig , pro!ides little in t e wa# of taking awa# profits from Nestl. T ere is constant market growt and potential in t e market for future growt . &otential risks and uncertainties include suc factors as general economic conditions, foreign e'c ange fluctuations, competiti!e product and pricing pressures and regulator# de!elopments.

Arowt2 in =e( .)r&ets ri7en ,(:

T e strengt of t e Nestl Brands +lear priorities for inno!ations 5"o!e a!erage growt wit top customers H ?iscounters

O//ort'nities:

575: growt opportunit# &erformance is on track &otential for continued growt is promising 5ligned organization and portfolio wit a !ision and a plan Strong management wit local e'pertise

>ire%tion 5or -""8

Focus on growing "usiness Focus on deli!ering return on in!estment Focus on profita"le growt