Nestle Case Study

1.

The company of Nestle had undergone both the first order change and second order change.
In a first order change, the company underwent some changes in terms of transactional and
organizational climate change. On the other hand, Nestle also underwent second order change
wherein there are changes in terms of transformational change. This order second-order type
of change is more evident. Below are the snippets organizational change that occurred at
Nestle according to its order:
First Order

Nestle began expanding globally and begun to purchase local subsidiaries in local
markets.

Offshore transfer of Executive from Switzerland to United States

Strengthening/Centralization of its IT department

Second Order

Diversification of market through entering in cosmetics and pharmaceutical market.

Complete overhaul of executive board with 10 executives replaced

Acquisition and Mergers

Discussing more on the second-order change, a transformational change happened when the
organization switched from entrepreneurial to become a wider and more professional
management kind of structure when they begun to purchase local subsidiaries in foreign
market in order for their sales agent (new position) to introduce their product outside of
Switzerland. Another transformational change that happen involves the visionary changes that
make the organization change in terms of involving in other fields of business through product
d1versification through:
i.

Production of chocolate with the ingredients of Swiss General Chocolate Factory ;

ii.

Created new product like malted milk, powdered beverage and powdered bottled milk ;

iii.

Production of coffee products ;

iv.

Merged with Maggi seasoning and soup manufacturers ;

v.

Entered cosmetic arena thus becoming the major shareholder of LOreal ;

vi.

Involved in producing pharmaceutical and ophthalmic products.

During the course change, the company applied some mid-management change theory
without destroying employees loyalty, impression, motivation, self belongingness and positive
behaviours.

Lastly, acquisitions and mergers was also a big part of Nestls second order type of change.
This provided them accelerated growth (but other critics had viewed it as negative), increase
in popularity and maintained organizational reputation.

2.

Peter Brabeck-Letmathe line of thought regarding incremental change that occurred in Nestle
is based primarily in his leadership mindset whose focus is on substance over style which

includes a strong dedication to discipline and long-term approach to growing a business.

Peter, according to literatures, took a conservative approach than his predecessor to improve
Nestls business. During the early days of his tenure, he slashed cost by increasing the
efficiency of manufacturing operations, got rid of mature businesses with little potential for
profit growth, and focused investment on fast-growing fields. Contradicting to Peters concept
of incremental change on Nestls overall business, incremental change (as what he thought it
was be), is not incremental after all. The aggressive acquisition of a number of food/beverage
industry (Ralston Purina, Chef America and Dreyers) expanded its market. In addition, the
direction of the company to spend over $1B to automate and integrate all of its worldwide
operation, from procurement through production to distribution including the revamping of
Nestls research and development unit to facilitate better coordinating among the groups
different businesses is an aggressive strategic move. This centralization allowed him to unify
the companys wide ranging negotiation and contracts with suppliers, and as a result, better
centralize production. The move had closed 38 factories and cut $1.6 billion in cost while
improving the companys ability to obtain volume discounts.

3.

Listed are the following specific implications that managers from Nestle had encountered:

i.

Bridging cultural gaps in bringing together people from different cultures together.

ii.

Creating a winning corporate culture through reinforcement and sustenance of

companys strength

iii.

Having to manage people through the trauma of change and deal with their fears and
concerns when Nestle centralized its IT.

iv.

Dealing within and outside of the organization

v.

Difficulty in building relationship per region per product line.

In summary, there are three (3) environmental pressures for change that managers faced
during the process. First is the geopolitical pressure in the form of emergency situation during
the world wars that requires immediate action or a long-term geographical realignment. At the
end of the WW1, Nestle have experienced financial losses due to price increase in raw
materials and total economic downturn and in WWII the company again was affected with low
profitability because Switzerland had became more separated from Europe. Due to this
pressure the company initiated the move to transfer its executive offices offshore.

Second environmental pressure that the company encountered is the market decline at the
end of WWII since the demand of condensed and powdered milk had changed through
customer preference. Customer taste wants fresh milk instead of condensed and powdered
milk. In relation, coffee beans and cocoa prices had increased rapidly and make it less of a
demand by the people which made the company to venture out in order for the business to
offset the loss. Concurrently, the CEO was facing a hyper competition pressure with AngloSwiss condensed milk prior Nestle decided to merge with it.

Third, and lastly, are the new broom pressures. This happened when the CEO appointed them
(coming from the outside) to improve and increase company quality and productivity to have a
more successful future. To control this type of change, the CEO had emphasized that they
must focus to reinforce and sustain strengths rather than changing them.

4.

Downsizing through retrenchment and down scoping, Technological change, Mergers and
Acquisitions are considered the top three (3) lessons coming from the frontline. In general,
downsizing causes stress not just for the ones who leaves the company and those that
remains. Keeping the morale of these survivors is very important in every company. Often,
employees who remain do not feel happy that they survived the layoffs. Rather, they feel
angry or shocked that the layoffs happened.
Their image of the company may have changed, as they now feel that the environment has
become more cut-throat and everyone is on their own in battling to survive
In assisting employees after downsizing, we must help them understand why it happened. Call
a meeting to discuss the nature of the downsizing, what the future holds, and the security of
their jobs. Also take this time to answer questions or issues that they want to have addressed.
If possible, offer career counselling to those who are having a hard time with the change.
Clearly communicate what the future holds. Address the new changes in policy and structure
any why they are in place. If there is a large amount of restructuring, make time for employees
to come together to build new working relationships through workshops or social time. This
way, they quickly become more comfortable with the new environment and people they will be
working with.
Moreover, in assisting management to retrenchment and down scoping, we must communicate
to them why the process is necessary, and be open to discuss the issues they have with the
downsizing.
They, too, will be directly affected in the future when it comes to structure of the groups they
manage, new process that need to be implemented, and new workgroups that will be formed.
Lastly, Nestle must monitor the aftermaths of the process checking if there is an increasing
trend of absenteeism and retention rate.

Boeing Case Study

1.

An organizational model is a representation of an organization that helps us to understand

more clearly and quickly what we are observing in the organization. As Burke had
explained the usefulness of this organizational models in a number of ways such as: (1) it
enhances our understanding of organizational behaviour, (2) it helps is categorize data
about the organization, (3) it helps us interpret data about the organization, and (3) it
helps provide a common, short-hand language. In relation with the Boeing case study, two
types of diagnostic models can be deemed useful in determining the key factors that
revolve on the situation.
A synthesis of Six-Box model and Force field analysis are best fit models to determine
factors that are centering Boeings situation. First, Weisbords Six-Box model, which
categorizes the organizational life in six (6) facets including, purposes, structures,
relationship, leadership, rewards, and helpful mechanism. In this model, the structure
refers to a way in which the organization is organized. The ways in which people and units
interact is termed relationship. Also included in the box of relationships is the way in which
people interact with technology in their work. Rewards are the intrinsic and extrinsic

rewards people associate with their work. The leadership box refers to the typical
leadership tasks, including the balance between the other boxes. Finally, the helping
mechanisms are the planning, controlling, budgeting, and information systems that serve
to meet organization goals. However, this model focuses on the internal issues within an
organization primarily by posing diagnostic questions which have to do with the fit
between what is and what should be.
In order to determine external factor, Force Field analysis is considered so as to have a
well-rounded analysis of the organization that will consider the external factors (since
internal factors have been identified in above model). The force field analysis identified
both driving forces and restraining forces within an organization. These driving forces,
such as environmental factors, push for change within the organization while the
restraining forces, such as the organizational factors act as barrier to change. In general
the intention is to move to a desirable state of equilibrium by adding driving forces, where
important, and eliminating restraining forces, where appropriate.
2.

In the Six-Box model each box poses a question that refers to his premise regarding the
nature of the formal and informal systems within the organization. It is within these
questions that I will be explaining my choice.

a.

Purpose: Do organizational members agree with and support the organizations

mission statement?
Answer: On the eventual resignation of Phil Condit, many breathed as a signed of
relief wherein they are hoping the change will be occurring soon.

b.

Structure: Is there a fit between purpose and the internal structure of the
organization?
Answer: the loss of being the industry leader from Airbus, stock prices decreasing
by 6.5%, and increasing competitive pressure triggered a series of changes to
overcome the bureaucratic structure, outdated technology system and
unnecessary processes in the company that had changed little since WWII.

c.

Relationship: What type of relationship exists between individuals, between

departments, and between individuals and nature of their job? What is the quality
of the relations? What are the modes of conflict?
Answer: The merging of Boeing and McDonnell Douglas brought difficulties in
terms of cultural synthesis since the latter had a very strong culture that focused
on their dealings with the government officials for defence contracts whereas the
former has a family oriented culture. In addition, the investors were in doubt that
there was trickery in regard with the merging and the $92.5M pay-out to
shareholders.

d.

Rewards: What does the organization formally reward, and for what do
organizational members feel they are rewarded and punished? What does the
organization fit need to do to fit with the environment?

Answer: The case had not elaborated further the results Stonecipher announced
worked closely with unions to reverse the low morale of the employees from the
past management however, it is assumed that this was addressed in year 2007
when the tides had turned and Boeing again became the number one in the
aviation industry. From this point, morale was reversed, and again assumed,
employees was rewarded in accordance to their performance.
e.

Leadership: Do leaders define purposes? Do they embody purposes in their

programs? What is the normative style of leadership?
Answer: Yes, their program fully embodies its purpose. Result showed, in the year
2007, that the laid down plan was effective. As a result, the company had
repositioned itself on the top, the morale of its employees is high and they have a
new market (7E7). Again, the leadership style of the new management was not
emphasized on the case, it is assumed that the style of leadership is combination
of autocratic and participative. For autocratic the decision of Stonecipher to
manufacture 7E7 planes and For participative when he closely worked with labour
unions to redirect employee morale.

f.

Helpful Mechanism: Do these mechanisms help or hinder the accomplishment of

organizational objectives?
Answer: The mechanism employed by Stonecipher had tremendously help in
meeting the organizations objectives.

Casework: Action Planning

1.

To start with, the OD practitioner must first clarify and verify its client expectations and
the extent of change that they are expecting in order for her to direct his action plans.
After gathering the expectations, he must inform the client on the preliminary data
gathering methodology through extensive assessment of the organization that he will be
using so that the organization will not be surprised on the activities that will be performed
by the OD practitioner.
Under his extensive assessment, the practitioner will focus on the following areas:

Organizations in-depth understanding of the organizations mission and vision

(though this is not yet well-established).

Alignment of employees to the organizations values

Understanding overall political system

o

Systems and Policies

Organizational Procedure

Leadership Behaviours

Group Processes, and

Levels of satisfaction

Who/what departments are assigned to specific goals

How well do they understand their role in the organization?

After gathering all pertinent information regarding the reasons on the misalignment and
misunderstanding of the organization towards its goal, the OD practitioner must establish
and draft the vision and mission of the company. Submit it to the executives for their
approval. If approved, he must formulate specific values aligned to the formulated mission
and vision and then submit again for approval.
2.

Now since the foundation of the action plan is already laid down, and the specific
objectives is already known through the created mission and vision, then it is now the time
to be more specific in developing the strategy and actions plans in managing the transition
between present and future.
The OD practitioner should determine and brainstorm with selected participant projects
within, between and among the organization. Then the OD practitioner will summarize
actions according to their weight based on the diagnostic and component analysis he
prefers to use. The practitioner will now determine top 3 action plans (three each for
within, between and among) on which this will be the key projects. This projects will again
be submitted to the executives with details (one can use the format of PDCA) for buy-in.
Once approved, the action plan will now be executed and monitored (effectiveness).
Now the key projects will be supported by small projects from the brainstormed items. The
small projects will not be neglected however this will be incorporated in the on-going OD
major projects.

3.

The OD practice will not end after execution and relaying to the management
improvements from the applied changes from the activity. A continuous review, planning
and improvement process must be implemented to make sure that (1) the projects and
actions are carried out accordingly and will not die out; (2) the strategy will be regularly
reviewed and updated so that it maintains its relevance and effectiveness; and (3) new
actions are added to replace those that have been completed. In short, there must be a
follow-through of the activities. In this regard, the senior staff will be chosen to oversee
strategy implementation.

Small Group Intervention: A Case Study

Having in that the kind of situation, the next step to consider for me to check the
organizations mission and vision and have an initial investigation on how the organization
adheres to their objectives from the VP of HR. Next step is for me to ask if we can
schedule a council meeting in order to clarify the details on the direction and the extent of
change the organization wants to be and the companys timetable.
Preliminary
methodology and diagnostic tools will be discussed in order to gain buy-in from the council.
The process of organizational development that will be implied will follow below diagram in
order to be systematic and to account all possible areas. It is important to keep and stick
into a systems perspective in trying to sort out what the cause of any problems identified.

Figure 1: Organizational Development Process

Model

In parallel, I can also use analytical tools under the TQM principle, diagnostic tools and
component analysis to have an in-depth analysis on what the problem is and thus could
generate a real solution to the problem. With this, I can already formulate a strategic plan
that also includes environmental scanning and scenario planning. The whole action plan
will emerge from the assessment and feedback phase, and the process may actually begin
during the feedback session as employees suggest next steps in addressing the
assessments findings.
In formulating the strategic plan, a group will be formed in order to have a broader
conceptualization of the action registered and an understanding of what is the problem
and what needs to be done. The problem will be diagnose by a core group depending on
their individual area of responsibility and job design. Moving forward, the team, will design
and choose appropriate interventions to facilitate execution and monitoring of the action
plan. Furthermore, after the timetable for the monitoring, the team will evaluate its
effectiveness and revise if necessary until further institutionalizing the organizational
change. One important factor in this activity is the employee involvement in order for
them to have a sense of pride and acceptance on the changes that will be coming and
being executed.
Moreover, whether the change is in 1 st and/or 2nd order, performance management,
developing talent and managing workforce diversity and wellness will be also taken into
account so as to motivate employees for continuous improvement.