INDUSTRIAL RELATION (FAHM3093)

TOPIC: NESTLE (POWER SOURCE)

BATCH: SEMESTER 2

GROUP MEMBERS:

THIVYA SRI KALIDASS BOSH 1802-8667

RUTHRAASHINI KALIDAS BOSH 1802-8661

PILVA PRIYA PARAMASIVAM BOSH 1802-8664

PATRICIA OLIVIA ALEXANDER BOSH 1802-8666

 CONTENT

TOPIC PAGES
INTRODUCTION TO ORGANISATION

DESCRIPTION OF POWER SOURCES

POWER SOURCES THAT INFLUENCES

ORGANISATION-IR

SUGGESTIONS

CONCLUSION
REFERENCES
 1) INTRODUCTION TO ORGANISATION

 Name of organisation: Nestle

Nestle is the world’s largest food and beverage manufacturer. Headquartered

in Switzerland, Nestle is present in 191 countries around the world. The founder
of Nestle was Henri Nestle. Since 1912, they have been nourishing Malaysians
through their quality brands and products like MILO, MAGGI, NESCAFE and
KIT KAT, whilst maintaining their HALAL excellence and integrity. This is in
line with their promise of delivery “GOOD FOOD, GOOD LIFE” to all.

 Product of services
  Nestle-cereal
- Made with whole grains suitable for breakfast (Koko crunch, corn flakes)
 Dairy
- Milk products (Milo, Nestum)
 Coffee
- Was approached by the Brazilian Coffee Institute to seek a way to preserve the
huge coffee surpluses (Nescafe)
 Foods
- (Maggi, seasonings, culinary sauces)
 Drinks
- (Milo can, Nescafe can, Milk)
 Ice-cream
- (Cremeria, MatKool)
 Confectionary
- ( Kit Kat, Crunch)
 Chilled Dairy
- (Bliss, yogurts)
 Junior foods
- (Lacto-Kid, Mom and Me)
 Type of business
  Our global business portfolio includes a wide range of brands from food and
beverages to health care nutrition, skin health and pet care.
I. Cereal partners worldwide
- Cereal Partners Worldwide (CPW) is a joint venture which combines the expertise
of two companies: Nestlé and General Mills.
II. Nestle Health Sciences
- Nestlé Health Science is a company engaged in advancing the role for nutritional
therapy in the management of people’s health through investing in innovation and
leveraging leading edge science.
III. Nestle Nespresso
- The Nespresso story began in 1986 with a simple idea: enable anyone to create the
perfect cup of espresso coffee – just like a skilled barrista.
IV. Nestle Purina Pet Care
- Nestlé Purina Pet Care has been advancing pet nutrition for over 80 years. Their
team of over 18,000 employees and 400 scientists, including nutritionists, aim to
develop products that deliver comprehensive nutrition to help ensure the long healthy
lives of pets and make discoveries that can further enhance the lives of pets
everywhere.
V. Nestle Skin Care
- Nestlé Skin Health’s unique holistic approach will help to protect, nourish and
enhance skin health, while working to preserve and, when needed, to treat, correct
and restore damaged skin back to its healthy state.
VI. Nestle Waters
- Nestlé Waters are the world’s leading producer of bottled water, employing more
than 34,000 staff at 100 production sites in 35 countries globally.
 Organisational Chart

 Vision - 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, Nestlé products bring consumers the vital ingredients of taste
and pleasure

 Mission - Make better food so that people live a better life.

 Objectives - To manufacture and market the Company’s products in such a

way as to create value that can be sustained over the long term for
shareholders, employees, consumers, and business partners.
2) Description on the sources of power that can influence
industrial relation in the organisation.

 Harmonious industrial relations can bring prosperity and success to an organisation.

 Conflicts in industrial relation can arise if the parties involved have different
perceptions regarding basic concepts and values that are important in industrial
relations.

Role of Government
 Judge and jury
 Legislator
 The biggest employer in the public sector (participant)

Role of Employer
 Provide job to worker
 Dismiss or threaten to dismiss a work man
 Discusses important mater within organisation

Role of Trade Union

 Promoting good industrial relation between employees and employers
 Representation of either employees or employer in trade dispute
 Provide training and skills development
 Relationship between Government/Trade union/ Employer
 The industrial relation processes, and the relationship between employees and
employer are influenced by the government and its agencies through the government
construction, passing an implementation of relevant industrial relations law, policies,
and regulations. The government can also become directly or indirectly involve in the
industrial relation processes when boundaries are over stepped or negotiations go
awry.
 The trade union can influence the employees by improving employee working
conditions such as better wages that is sustainable, giving proper training and skills
development to keep up with trends in the workplace. Unions can organize strikes,
boycotts, go-slows, sit-ins and formal protests in order to get the employers’ attention
and urge them to consider matters from the perspective of the employees that the trade
union represent.
 The employees influenced by the employer by using employee welfare. For example
the union exist in order to protect employee’s basic rights such as the right to access
healthcare and be protected from accident and injury in the workplace.
can influenced

Description of power sources in industrial relation.

 There are five sources of power which can influence industrial relation :
i. Reward – Reward power is the ability of a person to influence the allocation
and motivation in an organisation. These include wages increment, bonuses,
paid leave, company sponsored vacation, and also promotion. The
management has the power to control the employee’s job activities. Reward
power can make the employees to work harder and smarter at the same time it
can severely harm the morale of employees and reduce their productivity.
ii. Coercive - Coercive power is used as a threating method. It is use to enforce
strict deadlines and punishable actions to be taken at workplace and scare the
employees. For example salary cuts, leave cuts, or job terminations are used
by the employer to the work done by their employees. This power helps to
control the behaviour of employees by ensuring that they attached to the
organisation’s policies and regulations.
iii. Expert – Expert power is a knowledge power which is used by people who
have expert power to perform critical tasks. For example an opinion to the
point that can influence another party to change the decision that has been
taken.
iv. Legitimate – Legitimate power is known as positional power. The power that
a person in the organisation holds because of their position and that is
considered to be legitimate. For example required junior workers to report to
managers and give managers the power to assigned duties to their juniors.
v. Referent – Referent power is gained from the interpersonal relationship that a
person maintains with other people in the organisation. For example whatever
problems exist regarding the employment, the employee has to refer to the
human resources manager because they have the power to make decisions

.
 3) Explanation on how the sources of power influence the
organization in industrial relation

There are some sources of powers will influences an organization in industrial relation.
Below are some of the examples that the Nestle company influenced by the sources of power.

a) LEGITIMATE POWER (child labour issue)

- One of the source which has been influenced the nestle organization is legitimate power.
This was shown when the Nestle Company faced the cocoa and child labour issued. Nestle
was been accused for using child labour and other abuses against children in part of cocoa
supply chain. This issued happened because of the poverty and lack of schools in those days.
The children who needed money was been used as a man-power to supply the cocoas.
Besides, they were also accused for violation of this child labour law. As a solution to
overcome this issue, Nestle used legitimate power. The manager needed nestle supplier code
to guide and maintain the relationship between supplier and company. Moreover, a special
training was given on how to address child labour problem. This shows that the manager had
played a major role to solve this issue by using his power or can called rightfulness.

b) REFERENT POWER (restructuring the organization)

- Besides, Nestle company also used referent power in their organization to solve one of their
problem. The problem was based on restructuring the organization. Top-down approach may
serve on organization well but nestle organization feel that it is not suitable for uneducated
and uniformed employees who need supervisors to manage them carefully. They identified
significant problems with the pyramidal model and developed the “Nestle on the Move”
program. As a solution, Nestle Company used referent power to solve this problem. This is
because the Nestle had use the image of their manager as a coach. The manager was taken
some initiatives and coaches his organization to solve this problem. He had encourages
employees to work with people from many different countries and culture in course of their
career. The manager also had promoted opportunities to develop employee’s skill that will
enable them to move to different area of the business. Moreover, to change the culture and
spirit of the organization, the manager had promoted a common set of values in this case.
Coaching and references of manager helped the organization in this case to solve their
problem.
c) EXPERT POWER (boycott issue)
- In the year 1977, the first boycott against the Nestle was launched in the United State. It was
due to the concern about Nestle aggressive marketing of breast milk substitutes. The boycott
is based on the claim by the organizers that the use of breast milk substitutes represents a
health risk for infants as they encourage breast milk for new-born. To solve this issue, the
suitable source of power to influence the Nestle organization is the expert power. This is
because the experts who came up with the idea of breast milk substitutes has all the relevant
information and knowledge to influence and change the decision or acquisition made about
breast milk substitutes. The expert power helps to control and provide the appropriate
information, in format that people or the organizers are unaware of. It is consists of the
organizational rules and legislation to ensure compliance and non-violation of the law. This
proves that Nestle stands by the law and to ensure the best product for their customers. By
applying the expert power, Nestle is able to provide the best possible information and
relevant data to create awareness to all that breast milk substitutes does not pose ant health
risk to infants. As an example breast milk substitutes are used until this present moment.
Nestle was able to change the decisions and mind set as well as the false acquisition by
providing the right proof and information to influence the thoughts and decisions of others
that breast milk substitutes does not pose any risk.

d) REFERENT POWER (raw material)

- In additional, again referent power which has been influenced the nestle organization to
solve one of their problem. This was shown when the Nestle Company faced problems based
on raw materials which were unexpected demand by customers and inaccuracy of orders
receives in inventory to stocks in hands. The Nestle Company solved this problem by using
referent power. As a solution the manager build multiple relationships with other raw
materials suppliers. Then, he planned to sell the surplus products with promotion to clear
stock. He also build the Dealer Management System (DMS). Actually DMS is software for
solutions that provide tools for managing sales, services, parts and inventory management,
business management, integration, and core architecture. DMS also was built to maintain the
relationship between dealers and consumers. In this case the organization refers to the
manager to solve this problem and being a caretaker. This is shown because the manager
control is severely impeded by a variety of internal and external forces beyond their and this
is to prevent the poor relationship from happens among the Nestle dealers and consumers.
 4) Suggestions on the best possible sources of power for the
organisation in industrial relation.

There are three recommended sources of power for organisation, among those
three sources are:

1) Reward power
 Nestle management can apply the reward power to enhance the organisational
ability to upgrade and improve themselves in every aspect that could help
them to achieve their company’s objective and goals. Every individual is
different in their own way, some requires more motivation than other to
perform better. This can be done by evaluating the worker’s performances and
their behaviour. Once completion of evaluation the organisation can take
action to enhance the workers or employees ability to perform more
efficiently. The organisation can do so by inspiring and motivating the
workers by rewarding them for their efforts and contribution to the
organisation. This in return will boost the employee’s confidence and allowing
them to perform better and efficiently. For example, Nestle will reward their
employees by offering a range of work-life and employee benefit programmes
with flexible choices to cater to different needs, such as a guaranteed 14
weeks’ paid maternity leave. Besides, they offer many opportunities for
personal growth and development to help the employees to reach their full
potential, such as an internationally mobile career that truly broadens their
experience and knowledge. Their total rewards package varies locally to
reflect differing candidate aspirations and to respond to what their employee’s
value around the world.
2) Coercive Power
 Nestle management can apply coercive power to control their working
condition among their employees by preparing a set of disciplinary action and
procedures. It can make their employees more responsible and professional.
This will also improve the employee’s personal behaviour and skills. By
having these kinds of responsible and professional employees, Nestle will
have an increase performance in their production and will help to boost their
products in the market. Eventually, they can build the trust to the customer
that, Nestle will produce the best quality products as stated as their company’s
objective “GOOD FOOD, GOOD LIFE” For example, Nestle has their own
set of policies, procedures, goals and regulations to be followed. Disciplinary
action will be taken against employees who do not cooperate with the
company’s terms and conditions. This is because to up hold the reputation and
standard of their organisation.

3) Referent power
 Nestle management can relate referent power to their organisation. Referent
power refers to the relationship that a person such as an employee has with
other people in the organisation such as their supervisor and managers. For
instance, whatever issue an employee is facing with their job such as
unsatisfactory with the job they are doing, they can consult their supervisor or
manager to request for a change in job task or change in department because
the supervisor and manager have the power to do so. For example, this can be
seen as Nestle applies the same concept to achieve this type of power which
employers or superiors entrust their employees by giving them new
responsibilities and allowing them to complete a task on their own. The
organisation can apply the same concept of referent power within their work
environment. The employee of Nestle can seek help or assistance from their
superior or top manager in term of changing job task because the managers
has the power to do so.
5) CONCLUSION

Nestle is the world’s largest food and beverage manufacturer. The global business
portfolio includes a wide range of brands from food and beverages to health care
nutrition, skin health and pet care. There are some sources of powers influenced
Nestle Company in industrial relation such as reward power, referent power,
legitimate power, expert power, and coercive power. Below are some of the examples
that the Nestle company influenced by the sources of powers. Nestle Company faced
the cocoa and child labour issued. As a solution, Nestle used legitimate power to solve
this problem. The manager needed nestle supplier code to guide and maintain the
relationship between supplier and company. This shows that the manager had played
a major role to solve this issue by using his rightfulness. Then, in restructuring of
organization issue the manager had promoted a common set of values to change the
culture and spirit of the organization. Coaching and references of manager helped the
organization in this case and it is indicates that the company used referent power.
Next, the suitable source of power to influence the Nestle organization is the expert
power. This is because in the boycott issue of Nestle the experts who came up with
the idea has all the relevant information and knowledge to influence and change the
decision or acquisition made. In addition, there are three recommended sources of
power for Nestle organization. First, reward power that organization can do so by
inspiring and motivating the workers by rewarding them for their efforts and
contribution to the organization. Besides, Nestle management can apply coercive
power to control their working condition among their employees by preparing a set of
disciplinary action and procedures. It can make their employees more responsible and
professional. Lastly, Nestle management can relate referent power to their
organization. For instance, whatever issues an employee is facing with their job, they
can consult their supervisor or manager to request for a change. As a conclusion,
sources of power are the ability to influence an organization. By learning how power
operates in organizations, we will be better able to use that knowledge to become a
more effective leader.
 REFERENCES

 https://www.nestle.com.my/brands
 https://www.nestle.com.my/nestle_research/our_vision
 https://www.google.com/search?
q=nestle+malaysia+organizational+structure&sa=X&tbm=
isch&tbo=u&source=univ&ved=2ahUKEwjG59Gt1vHcA
hXMNo8KHSQvCiIQsAR6BAgEEAE&biw=1366&bih=
662#imgrc=-Uk3OG6cyPhpFM:
 https://smallbusiness.chron.com/5-sources-power-
organizations-14467.html
 https://www.slideshare.net/arif587/management-of-
change-a-study-of-problem-and-challenges-in-nestle
 https://www.scribd.com/document/262584254/Problems-
and-Challenges-in-Nestle