Professional Documents
Culture Documents
Nestle Pakistan Research Project
Nestle Pakistan Research Project
Pakistan
Nestl
Pakistan
Table of Contents
1. History....................................................................................................................3
2. Global Structure3
3. Organization Structure.....3
3.1. Human Resource Department...4
3.1.1. Shared Services4
3.1.2. Centre of Expertise..4
3.1.3. Business Partners.4
3.2. Brands Department5
3.2.1. Dairy.5
4. Mission Statement.5
5. Vision & Strategy..6
6. Core Business Activities...6
7. Consumer Service.6
8. Corporate Social Responsibility..7
8.1. Social Investments.7
8.2. Creating Shared Value..8
9. Human Resource Function..8
9.1. Shared Services (SS).8
9.2. Centre of Expertise...8
9.2.1. Hiring & Recruitment...9
9.2.2. Training Programs....9
9.2.3. Remuneration....10
10. Interview with the Human Resource Manager....10
10.1. Tasks & Responsibilities of the Manager....10
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Pakistan
10.1.1. Chain of Command and Span of Control.............10
10.1.2. Strategic Vs Operational Roles..10
10.1.3. Role as a Business Partner..11
10.1.4. Ensuring Coordination & Integration.......11
10.1.5. Training & Development of Employees11
10.1.6. Ensuring Motivation & Communication with Employees......12
10.1.7. Nestl as a Global Entity.12
10.1.8. Providing Guidance.12
10.2. Observations & Evaluation12
10.3. Application of Mintzbergs Roles......12
11. Interview with the Category Manager...13
11.1. Tasks & Responsibilities of the Manager.13
11.1.1. Sales Situation in Different Regions...14
11.1.2. Market Research..14
11.1.3. Shopper Segmentation.14
11.1.4. Promotion Design.14
11.1.5. Determining Stock outs...14
11.1.6. Penetration Data Analysis...15
11.2. Observations & Evaluation15
11.3. Application of Mintzbergs Roles..15
12. Observations & Findings.16
13. Exhibit 117
14. Exhibit 218
15. Exhibit 319
16. Exhibit 420
17. Exhibit 521
Nestl
Pakistan
18. Exhibit 622
19. Exhibit 723
20. Exhibit 824
21. Exhibit 925
22. Exhibit 10..26
23. Sites Used..27
History
It all began from a little venture by a Swiss pharmacist, Henri Nestl, to develop an
alternative for infants who cannot be breastfed, with a combination of milk, wheat
flour, and sugar. Not only did this formula help reduce infant mortality from
malnutrition across Europe, but also formed the basis for the worlds largest food and
beverages company. To this end, Nestl soon added chocolate, milk, and Nescafe
coffee to its line of items through mergers and research. Nestl kept increasing the
length and width of its product lines to cater to a wide range of consumer needs. As
Nestl was making its operations global, it found an eager market in Pakistan. Nestl
has been serving Pakistani consumers since 1988, when its parent company, the
Switzerland-based Nestl SA, first acquired a share in Milkpak Ltd. Few of the
milestones achieved by Nestl Pakistan and Milkpak Ltd. are mentioned in Exhibit
1.
Global Structure
At the international level, the world is divided into four parts, each reporting to the world
headquarters in Switzerland. Nestl employs bottom-up as well as top-down
reporting. For yearly budgeting, each territory reports next years forecasted sales to
its Area Manager who after gathering all these reports sends a summary for his area
to the Regional Manager. Regional and Zonal Manager do the same process until
National Sales Manager has the forecasted sales for the entire country. Target sales
Nestl
Pakistan
are then reported down to each zone, from where it is sent to each region, and the
process continues until each territory has its target sales (Exhibit 2).
Organization Structure
Nestl Pakistan follows a flat, matrix organizational structure (Exhibit 3). 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 Pakistan reports directly to the Head Office in
Switzerland, and gets guidance and objectives from them. Directly under the Managing
Director are different functional departments:
The following departments have an indirect reporting relationship with the Managing
Director:
Head of Nutrition
Head of Waters
UNDP Project
The first two departments are required to report directly to the Head Office, while the
UNDP Project comes under the United Nations.
Since this paper aims to analyze the Human Resource Function and the Brand
Function in detail, the following is the departmental structure of the aforementioned
functions.
Shared Services
Centre of Expertise
Business Partners
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Pakistan
Shared Services
Shared Services are responsible for data and record collections of all the employees of
Nestl Pakistan. They handle the payrolls, division of provident funds, medical
allowances, travel allowances, and all other administration of the employee funds.
Centre of Expertise
The Centre of Expertise is the department responsible for recruitments, remunerations
and organization development through Nestls training programs, both local and
international.
Business Partners
The Business Partners form the link between different human resource activities of the
organization, and the functional departments they are working with. The Human
Resource ManagerCommercial is a Business Partner for Sales and reports to the Head of
Sales Department. He is supposed to form a link between the Human Resource
Department and the Sales Department, making sure all decisions made by the Sales
Department are in line with the Companys goals and policies.
Brands Department
The department for Brands has been subdivided into departments for each product line
that Nestl produces. Each of these product lines comes under a Business Manager, who
has two Brand Managers under him. Each Brand Manager is responsible for specified
products under a certain product line, and has two Assistant Brand Managers reporting to
him.
In each of the units that are under the Business Managers, there is a Category Manager,
who is equivalent in position to the Brand Manager. A Category Manager reports
indirectly to the Business Manager, and directly to the Head of Sales Department.
Dairy
Dairy is the chosen product line for the project. Dairy is divided into four different
product lines, which are further divided into units each headed by a Business Manager.
The product lines of dairy are:
Child Nutrition
Tea Creaming
Adult Health and Wellness
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Pakistan
Chilled Dairy
The first two are responsibilities of one Business Manager and the last two of the other.
The Category Managers job is to form a link between the Brand Manager and the Sales
Manager from the Sales Department.
Mission Statement
At Nestl, we believe that research can help us make better food so that people live a
better life.
Good Food is the primary source of Good Health throughout life. We strive to bring
consumers foods that are safe, of high quality and provide optimal nutrition to meet
physiological needs. In addition to nutrition, health and wellness, Nestl products bring
consumers the vital ingredients of taste and pleasure.
As consumers continue to make choices regarding foods and beverages they consume,
Nestl helps provide selections for all individual taste and lifestyle preferences.
Research is a key part of our heritage at Nestl and an essential element of our
future. We know there is still much to discover about health, wellness and the role
of food in our lives, and we continue to search for answers to bring consumers
Good Food for Good Life.
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Pakistan
Consumer Service
Nestl believes in providing efficient consumer service as part of its strategy. And this
consumer service is not only limited to handling consumer complaints, rather it revolves
around building a long-term holistic relationship with consumers.
In fact, for Nestl, the organization chart (Exhibit 5) is upside down. The consumers, and
not the managers, lie at the top of the hierarchy. Thus all the activities aim to provide
timely and efficient response to consumer needs and fulfilling their wants in the best
possible manner.
Nestls advanced consumer contact management system CONSO+ helps it in customer
relationship management, and forging close, long term and trustworthy ties with its
consumers.
Apart from the more formal lines of communication, the company also has the human
element-the field staff, which remains in contact with the consumers.
Thus efficient consumer service goes a long way in ensuring consumer loyalty, as well as
guaranteeing higher revenues per consumer, from more consumers.
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Pakistan
impacts while at the same time restricts the negative impacts that occur as a result of its
operations in the value chain.
Social Investments
Nestl Pakistan complies with Environment Act (1997), and tries to ensure that at every
stage of its operations, the environmental impact is minimal. All Nestl factories are ecoefficient (more production for less resource consumption, waste, and emissions) and have
environment committees that manage and review environment issues.
Nestl Pakistan responded immediately to the earthquake that struck Northern Pakistan in
October 2005 by providing its infra-structure and resources to work in the affected areas
in collaboration with Pakistan Air Force to distribute goods worth over Rs. 20 million.
Nestle and its employees together also donated about Rs. 36 million for the rehabilitation
process.
Nestl Pakistan has wide range of activities under its social investment programme. A
brief outline of each activity is as follows:
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Pakistan
pay and compensation strategy is tied to the achievement of the business objectives and
helps them build a growth-oriented culture.
Apart from payrolls, SS is in-charge of administration of employee funds. It is supposed
to decide that which employee gets which fringe benefit, and to what extent, for example,
medical allowances, travel allowances etc. The provident funds for employees are also
calculated by SS.
The SS is a vital department for maintaining employee motivation and loyalty to Nestl.
It needs to be ensured that all data collection and PAs are done correctly, and in line with
the procedures and guidelines set by the organization. It also needs to give enough
allowances and leverages to the employees to allow them to balance their personal and
professional life.
Nestl believes that employees private and professional life should have a good balance.
In the same spirit, Nestl encourages flexible working conditions whenever possible and
encourages its employees to have interests and motivations outside work.
This not only maintains satisfaction with the job, it also increases loyalty, productivity
and provides motivation for better performance in the future.
Centre of Expertise
The Centre of Expertise is the department in Human Resource Function which is
responsible for recruitments, organization development (training programs) and
remuneration.
Nestl
Pakistan
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.
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 and providing the
requisite training once the candidate and his needs are identified.
The programs are not just limited to functional specific training, for example sales
training, but also for augmenting interpersonal skills and image building, in short, the
softer skills.
The training could be local, regional or international, based on need and performance. At
the International Training Centre in Switzerland, the trainee has the opportunity to meet
managers and leaders from all over the globe, getting training sessions from even the
CEO, Peter Brabeck-Letmathe.
Remuneration
Nestls remuneration is benchmarked against other organizations and surveyed on a
regular basis to ensure that it remains competitive and fair. The policy needs to be framed
keeping local market, individual performance, skills and potential for development in
mind. This is what they call the Total Competitive Remuneration.
The managers task is to ensure that the remuneration structure facilitates the
implementation of flat organizational structure and be flexible so as to be able to adapt to
the evolution. It is also the managers task to evaluate remuneration of each staff member
taking into account her/his professional performance and her/his specific responsibilities.
These specialists need to know about stock options, and how to compare and compensate
the employee payroll system. They need to make regular changes in their strategies and
find new ways of operating to increase the efficiency of the whole organization. This
helps ensure not just the companys growth, but motivation for individual growth as well.
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Pakistan
Nestl
Pakistan
In contrast to the Centre of Expertise which requires specialists, Mr Janjua is a generalist;
he doesnt have to be an expert but has to be aware of everything that is going around in
the organization.
Providing Guidance
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Pakistan
His role also focuses on providing guidance to the employees when needed e.g. that when
opinion surveys had to be filled out for all the employees; he provided them with an
orientation to ensure there were no confusions as regards to the survey.
Description
He is involved in the UNDP project in collaboration with Nestl for the
empowerment of women in rural areas. He intervenes in case decisions
are being taken without keeping the organization objectives in mind.
He is constantly involved in motivating and ensuring good
communication with the employees and ensures they have a sense of
direction and they feel part of the organization.
His role doesnt directly deal with maintaining external relations. But
in case of selection and assessment he can make better decisions with
the help of his contacts.
Informational
Monitor
He has to monitor that the plan of actions and strategies of the
departments are in line with Nestls vision i.e. he has to ensure
consistency and coordination.
Disseminator He communicates the recruitment needs of other departments to the
Human Resource Department.
Spokesperson He communicates the needs of the training programmes to the trainees.
He acts as a link between the external environment and the
organization.
Decisional
Entrepreneur He is continuously involved with different departments while making
future plans or changes in the way things work.
Disturbance In order to ensure that departments objectives are in line with the
Handler
organization, he may have to take drastic steps as he forms the link
between the centre and the subunits. He may have to take decisions on
a short notice as he is actively involved in decision making processes.
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Pakistan
Negotiator
Resource
Allocator
Large groceries
Super markets
Small stores
Khokhas ( cigarette/ pan shops)
Bakeries
Pharmacies
Wholesalers
Rural channels.
Market Research
Mr Saqibs job description also requires him to carry out market research on a regular
basis. This helps in identifying the changing consumer demands and tastes. This also
enables the company to review their strategy so that it synchronizes with the companys
goals and objectives. In this era of fast changing trends it has become almost impossible
for an organization to survive without being aware of the consumers needs. Market
research helps to serve the organizations purpose in this regard.
Shopper Segmentation
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Pakistan
An interesting task that is performed by the Category Manager is to analyze the shopper
segmentation i.e. evaluating various customers according to their status, nutritional needs,
age, gender etc and which channel are they prone to buy from. For instance, a huge
percentage of population buying from the grocery stores such as H. Karim Buksh and AlFatah are working mothers. Thus products that cater to the needs of working mothers
should be distributed to various grocery stores. Moreover, keeping in view the short
shelve life of dairy products it becomes vital to distribute appropriate products to each
channel, which meet the needs of each channels ultimate consumers.
Promotion Design
Moreover, the Category Manager also being responsible for analyzing the success of
promotional activities has to evaluate the pre-promotion and the post-promotion scenario.
This enables him to analyze the potential of a particular promotional activity and the
impact it has on the sale of products, thus making certain that the promotional activity is
not detrimental to the profitability of the product.
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Pakistan
Moreover, an excellent coordinator and communicator are essentials of a Category
Manager. He coordinates with the sales, finance and the marketing department constantly.
Moreover, to ensure that everything is running smoothly at each channel he needs to
maintain regular contact with the relevant person at each channel.
Since there are not much people working under Mr Saqib, the leading management
function doesnt really come into play. But still he has to guide people on how to analyze
each area and how to collect the data relating to each region.
The Category Managers role as a controller is vital. He makes certain that each activity
being carried out is in conformance with the organizations requirements and standards.
He has to ensure that efficient allocation of funds is being made. Moreover, he has to
control human resources so that each individual is working in the best interest of the
organization and for this purpose he provides guidelines to each employee.
Liaison
Description
Though the Category Manager is not directly leading a group of people
but he has to deal with subordinates in the sales and distribution
department. For this purpose he provides them guidelines for various
activities they are required to carry out and is in continuous contact
with them.
The Category Manager has to maintain good relationship with the
distribution department and with external retailers for the smooth
running of the business operations. Moreover, maintaining a good
relationship enables to gather relevant and significant information that
bolsters the organization growth.
Informational
Monitor
The main task of the Category Manager is to analyze the various
factors affecting the consumer demands. For this purpose he seeks
information from the relevant personnel at various channels. Moreover,
he also coordinates with the sales and distribution department to gather
information about the sale of a particular product.
Disseminator As a disseminator, the Category Manager communicates to the
Business Manager all the information gathered from either the
personnel at various channels or the personnel working in the sales and
distribution department.
Decisional
Disturbance In times of difficulty, the Category Manager takes steps to take the
Handler
organization out of trouble. For instance, when Olpers came into the
market, it turned out to be a strong competition for Nestl. The
Category Manager analyzed the strategy adopted by Olpers and took
appropriate steps to counter it.
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Pakistan
2001
2004
Milkpak Ltd. is founded by Syed Babar Ali. It manufactures UHT milk cream and
butter as well as fruit juices.
Production of long shelf life UHT milk begins at Milkpak Ltd. Sheikhupura factory.
Nestl SA acquires 40% share in Milkpak ltd.
Sheikhupura factory starts the production of Nestl Nido milk powder and cereals. A
new plant is acquired at Kabirwala in the Punjab
Nestl takes over the running of the company and begins to develop its milk
collection network. A maggi noodles plant is installed at the Kabirwala factory.
Milkpak Ltd. is renamed Nestl Milkpak Ltd.
The Kabirwala plant becomes a fully owned unit of Nestl Pakistan Ltd.
Nestl pure life bottled water is premiered in Pakistan. Within a few years it becomes
one of the worlds leading brands of bottled water. Meanwhile, Nestls milk
collection system in Punjab matures and the company is able to buy all its milk from
farmers instead of relying on contractors.
Nestl Pakistan acquires the Fontalia and AVA water companies which specialize in
supplying water to homes and offices.
Afghanistan becomes the fourth sale zone of Nestl Pakistan Ltd.
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Nestl
Pakistan
2005
Nestl Milkpak Ltd. is renamed Nestl Pakistan Ltd. The GLOBE project is
successfully launched, and is intended to have further cooperation and information
sharing with Nestl companies around the world. Nestl Pakistan responds swiftly to
Octobers devastating earthquake, using its own distribution channels to bring aid to
the worst affected areas.
INTERNATIONAL
Americas
Greater
China
Asia
Oceania
Australia
National
Sales
Manager
NATIONAL
North
South
ZONAL
18
Center
Afghanistan
Nestl
Pakistan
Lahore
Muzang
REGIONAL
Samnabad
19
Nestl
Pakistan
20
Nestl
Pakistan
BOSTON
BOSTONCONSULTANCY
CONSULTANCYGROUP
GROUPMATRIX:
MATRIX:
Analyzing
AnalyzingCurrent
CurrentStrategic
StrategicBusiness
BusinessUnits
Units
Relative Market Share
High
Low
Stars
Question
QuestionMarks
Marks
Milkpak
Nesvita
Everyday
Yogurt
Cream
Cream
Raita
Raita
Fruit
Fruityogurt
yogurt
Low
Cash
CashCows
Cows
Dogs
Dogs
Nido
Nido
Neslac
Neslac
Desi
DesiGhee
Ghee
High
Market
Growth
Rate
21
Nestl
Pakistan
Customers
Sales People
Managers
Board of Directors
22
Nestl
Pakistan
23
Nestl
Pakistan
Planning
Organizing
Organizing
Leading
Leading
Controlling
Controlling
Mr Fuad Ghazanfar Mr Omar Hassan
Saqib
Janjua
Technical
Skills
Human
Skills
Conceptual
Skills
Mr Fuad Ghazanfar Mr Omar Hassan
Saqib
Janjua
Nestl
Pakistan
External Analysis
STRENGTHS
Investment in R&D, and innovative products
Market research about shopper segmentation and
distribution channels
Integrated and centralized information systems
Efficient consumer service builds loyalty
Creating shared value for all strategic partners
Flat structure and decentralized
Matrix organization
Coordination among departments achieved by
Business Partners, Category Mangers, etc
Diverse workforce
Effective and efficient HR systems
Knowledge sharing and training programs
Effective performance appraisals
Achievement based compensation
Competitive remuneration benchmarked against
industry
Motivated workforce
Growth oriented culture
Monopoly in tea whitener because of technology
Own distribution channels for bottled water;
Home delivery increases customer satisfaction.
OPPORTUNITIES
Exemption of dairy sector from taxes
Compliance with environmental laws
Social responsibility & social investment programs
to build a positive corporate image
Partnerships with farmers for sustainable
agriculture and providing farm assistance to create
greater value for all
High brand value of Nestl, which denotes quality;
this cannot be matched by rivals such as Tarang
A larger consumer base can be acquired as much
population still uses Gowalla milk
Entry into more niches possible by defining finer
market segments. Like low cal milk, more
innovative products can be launched, such as foods
for cardiac patients, drinking yogurt, etc. These are
value added products in the premium market that
offer consumers more value for more money and
can fetch higher revenues for the company.
Furthermore, the more differentiated the products,
the more difficult it is for rivals to copy.
WEAKNESSES
THREATS
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Nestl
Pakistan
Exhibit 9
(Porters Model)
Threat of New Entrants
For value added products barrier to entry are
higher because these products connect with the
customer on an emotional level. Gaining
confidence and trust of the customers is very
difficult. Brand loyalty is very which means a new
entrant will have difficulty in making a place for
itself. Furthermore even if a new entrant does
make some impact on its consumers it will have to
sell at least 750,000 tonnes of milk to create one
percent market share for itself.
Nestl enjoys monopoly power over powdered tea
whitener market because no company has yet been
able to develop this technology.
Suppliers
The un-processed milk is collected
from farmers and gowallas from
rural areas. There are many
collection centers across Punjab.
With the entry of new milk firms
who are willing to pay higher prices
and as well as provide them with
other attractive incentives, the price
of this milk is going up. An
example of this is that of Olpers of
Engro food Company who have had
long standing relationship with
these farmers and are willing to
give them fertilizers at subsidized
rates in exchange to their
commitment to sell their milk only
to Olpers.
COMPETITORS
Haleeb(CBL Foods)
Olpers( Engro)
GoodMilk( ShakarGanj
Foods)
of
12t
Customers
Dependent on
products.
Young health
conscious customers
for Nesvita.
House holds for
milkpak and yougurt.
Offices, institutions
and households for
Everyday
Infants and kids for
Nido
26
Threat of Substitutes
The main substitute is the
Farmers (Gowalla) milk
U.H.T treated milk caters
to only 9% of the
populations milk needs.
Nestle constitutes, 38%
Olpers19%, and
Haleeb 28% of that 9%
of the total milk market.
Exhibit 10 (Minutes
the Meeting held on
h
May 2008)
meetings and holds
opinions within the
suggested different
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Pakistan
organizations for the project but we finally decided upon Nestl Pakistan. Till now we
have had around three meetings in which we decided
Three people will be conducting interviews with the respective managers. We will then
bring together all information and apply different managerial theories on them and
critically examine the structure and functioning of different departments.
Sites Used
1. http://www.nestle.pk/community/responsibility-to-environment.aspx
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Pakistan
2. http://www.nestle.pk/community/earthquake-relief.aspx
3. http://www.nestle.pk/community/welfare-projects.aspx
4. http://www.nestle.pk/community/creating-shared-value.aspx
5. http://www.nestle.pk/index/nestle-pakistan-milestone.aspx
6. http://www.nestle.pk/index/strategies.aspx
7. http://www.research.nestle.com/tools/mission_statement.html
8. http://www.nestle.com/AllAbout/AllAboutNestle.htm
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