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Nestle

History
1867 Henry Nestle launched Farine Lactee Nestle 1905 merged with Anglo-Swiss Condensed Milk Company 1907 Warehouses in Asian market 1920 Factory in Brazil 1937 Nescafe 1948 Chocolate powder Nesquik After world war II Merged with Maggi 1974 - Entered Cosmetics Loreal 1977 Acquisition of Alcon Laboratories

Helmut Oswald Maucher

CEO of Nestl SA from June 1990 to June 1997. Now Honorary Chairman nestle

The Maucher Years 1980-1997


Become CEO in 1980-a critical time Undertook radical change
Shed several underperforming brand, slashed inefficiencies, revived cash flows, reorganized top management, culture of quality

Extended the reach of the company new product and new corner of the globe
Two primary objectives Improve market share in the United States
World leader in certain high-growth market segment

Takeover of the American food giant

Peter Brabeck-Letmathe

CEO of nestle from 1981 to 1997 Now : Chairman of the Board of Directors, Nestl

The Brabeck Era


Become CEO in 1997 worldwide sustainable competitiveness through four strategic pillars( inagural speech)
1. 2. 3. 4. Low-cost, highly efficient operations Renovation and Innovation Universal availability Improved communication

Restructured R&D program 60/40 preference rating system Initiated GLOBE Moved away from its basic agricultural and processing root major acquisitions- solidified position Known for his vocal dismissal of two management popular paradigms of
Focus and radical change

Nestl's New Vision


Fundamental change in vision
From a process driven F&B to nutrition, health and wellness.

Created new division of nutrition Acquisitions


Novartis, jenny craig (chain of weight loss centers)

NHW not limited to single division 60/40+

Taking out things and putting other things


Sugar,salt, fat calcium,omega 3,antioxidents

Other target areas:


1. Functional benefits
BAB (new functional benefits to main products)

2. Specialty nutrition products


Scientifically proven products for people with special needs eg:infants, athletes, cancer patientsetc

3. Service
Wieght loss area, nutrition counseling sessions

Product and brand portfolio


Baby food to coffee and ice cream to pet foods 70% sales from 29 billionaire brands More than 8000 products Brands customized to local taste and preference. 5 main business categories and 2 global divisions

1. Beverages powdered & liquid


Coffee,tea, water,malt based drinks- Nescafe,nesquick,nestea,milo

2. Milk products and ice cream


Powderd and condensed milk-Nido Ice cream- carnation,Dreyers Edys,Movenpick

3. Prepared dishes & cooking aids


Frozen food Soup pasta - Maggi Sauces

4. Confectionary
nestle,crunch,kitkat, milkybar

5. Pet care purina 6. Pharmaceutical- Alcon and L'Oreal

R&D efforts to move towards pharmaceutical model.


Patent to protect core technologies Clinical trials Claim development Regulatory approval

Globally managed business


Nestle waters
72 brands of bottled water Billionaire brands Nestle pure life & Poland spring

Nestle nutrition
1. Infant nutrition (70% of sales) 2. Performance nutrition 3. Health care nutrition 4. Wieght loss Eg: NAN , Gerber

Organization
275000 employees - 130 countries Structure Decentralized, flat

Board of directors

Executive committee

Nestle nutrition

Nestle waters

Nestle professional

Zone America

Zone Europe

Zone asia Oceana africa

Country managers- large degree of autonomy


Local mgmt. has better understanding of customer taste &traits.

Nestle considered as a local company in many countries. Policy of developing local management Moving up the ladder

HQ as a platform for shaping defining ,thinking No contract negotiations in HQ providing guidance to where the journey is heading

Unwritten culture
we rely more in this than on management systems Top management exp > 25 years with nestle Time facilitates Alignment with nestle principles No external hiring for top management posts.

What we become in future will be driven by our ability to innovate today


1.75% of revenue (in 2007) in r&d
60%- food, nutrition, health & wellness 40%- pharmaceutical

Nestle Research Center in Switzerland


700 staff

23 Product technology centers 20-25 R&D conference per year Network of volunteered experts

Nestle Research Centre

Video 2

Raw material sourcing


480 factories in 86 countries we dont open a factory in a cheap place to
produce products to sell to an expensive place
Eg:- 90% of nestle products produced in china were sold in china only

Direct sourcing from farmers Creating shared value Volatility Reacting to globalized markets

Paul Bulcke

CEO Nestle since April 2008

Paul Bulcke, future plan and emerging market


April 2008 appointed as a new CEO of Nestle a Nestle veteran Importance on Nestle culture, long term performance Saw a different path for the company Emphasis on internal growth R&D aligned to consumer preference GLOBE- as a vehicle of continuous improvement

Growth Platforms identified:


1. 2. 3. 4. Health, nutrition and wellness Emerging Markets Out-of-home consumption Premiumization

Recipe of Nestles consistent success


The historic success of nestle was built on deep agricultural supply chains Strong local teams Strategic acquisitions Constant development of new products & product adaptation to suit changing customer taste Economies of scale R & D capability Decentralization- autonomy to the country heads Creating long term relation with suppliers

Should Nestl move towards pharmaceutical model? What are the implications?

Clashes with Nestles history of successful acquisitions to add profitable brands and product groups Pharmaceutical model can be characterized as time consuming, costly, and risky. Different markets have differing needs and preferences. Patents may be ineffective across geographies based on culture, customs, and regulations

How long will food patents last? Will it be enough to cover high R&D costs or will Nestle need to pass on costs to consumers thereby breaking its goal to keep products affordable? Is it possible to find a universal blockbuster product given the differences between food/nutrition and drugs/diseases? Competitors may be able to develop products faster and or outspend on R&D (arms race?)

GLOBE systems
Global Business Excellence in July 2000. Information system Unified data standard and tech infrastructure purpose - maximize operational efficiency, flexibility and competitiveness within the company. GLOBE is basically a re-engineering program designed to standardize data and information systems in all Nestl factories, sales offices and distribution centers.

What does GLOBE really mean?


Centralization
centralized control over purchasing ,production and distribution in all factories instant decision making

Internal Market
affects internal purchasing within Nestl faster transfer of production within the Nestl system

Internal Competition
comparing individually factories internationally all benchmarking will be product-specific intensifying competition between each factory globally

Outsourcing
enables increased outsourcing of production, how? exercise the same levels of monitoring and control in factories that are not owned by nestle GLOBE had been implemented in 170 factories in 17 countries. But only 83 of these were Nestl factories

From F&B towards health, wellness and nutrition


Nestl presently is to develop a strategy on 'wellness that builds on its tradition of producing nutritional products. Was based on market research it was observed that the customer focused more enhancing his/her health, by means of a physical state which is maintained by good diet, exercise and life habits. To address these needs of the market, the strategy on developing wellness products were identified.

Evaluation of overall strategy implementation


We will use Mckinseys 7s model

The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. Hard Elements
Strategy,Structure,Systems

Soft Elements
Shared Values,Skills,Style,Staff

Shared values of Nestle:


To create value that can be sustained over the long term for shareholders, employees, consumers, and business partners. Does not favour short-term profit at the expense of successful long-term business development. Nestl recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the company. The success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Continues to maintain its commitment to follow and respect all applicable local laws in each of its markets.

Structure of Nestle:
Nestle has a decentralized and flat form of organizational structure. It has its operations divided worldwide on the basis of 3 zones of continents.

Strategy of Nestle:
'four pillar' strategy: 1. Operational efficiency 2. Innovation and renovation 3. Whenever, wherever, however 4. Consumer communication To enhance its strength the company focused on limited number of brands and on brand innovation. It also wants to shift its focus from a low-growth premium product portfolio to a higher volume-based growth portfolio.

Skills/key competency areas in Nestle


Nestl's key competency area lies in its technology & process part. There is continuous improvement in technology and work processes to meet International Standards. A series of sophisticated lab test / analysis are conducted in the Quality Assurance Department at various stages of production to ensure the Quality Products of International Standards

Staff in Nestle
Our employees help us to gain and build competitive advantage through their energy, imagination and local insights. Its essential that we reward them competitively and invest in their development to ensure that we remain responsive to a rapidly changing world.

Style/Management style
Top management free from operational aspects and negotiations Decentralized decision making Democratic leadership style
For any advice and decision Nestle depends on its employees

Systems in Nestle
Unique routines and procedures grounded in nestle culture. Globe system

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