report of nestlés management

Nestlé's Hybrid Model: Leveraging the Strengths of Global Product and Global Geographic Structures 00.0.... Structure: Nestlé organizes its product portfolio into global business units f

VIETNAM NATIONAL UNIVERSITY UNIVERSITY OF ECONOMICS AND LAW

1 Đặng Quốc Trung K234101314

2 Đinh Nguyễn Quốc Hưng K234101288

3 Nguyễn Hoàng Ngọc Anh K234101279

4 Trần Hoài Phương K234101258

5 Lê Nhật Tân K234101264

4 Nguyễn Hữu Nguyên K234101254

TABLE OF CONTENTS

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I Four functions of Management in Nestlé

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L'Oréal After acquiring Alcon Laboratories in 1977, Ralston Purina in 2001, and Nestlé Health

Science in 2012, the company proceeded to diversify Recent actions include the 2020 purchase

of Freshly, a prepared meal delivery service, and the 2018 selling of its American confectionery

success story is a testament of management strategies

Il Four functions of Management in Nestlé

2.1, Planning

2.1.1 Logo Evolution

The lone bird on a nest from Henri Nestlé's family's coat of arms served as the inspiration for his first Nestlé logo To assist establish a connection between his name and the items he had developed, Nestlé eventually included three baby birds being fed by a mother

There have been numerous alterations to the Nestlé logo since it was first trademarked in

1868 But the famous nest is still a staple of Nestlé products all over the world

and improve the environment, and provide substantial returns for our stakeholders and shareholders

2.1.3 Vision Statement

Nestlé operates with the slogan ‘Good food, Good life’ It always adapts its product lineup to satisfy customer demands and spark their interest The goal is to achieve balanced financial growth by means of efficient operations, quick innovation, and resource management The long- term plan guarantees that Nestlé will succeed consistently and sustainably

2.1.4 Values

Respect has a unique and significant connotation at Nestlé It significantly affects how they operate and manage their company Respect lies at the core of their principles: A regard for itself, for other people, for variety, and for the future generations that will carry on their legacy Determining values is important, but what really matters is embodying them Nestlé is driven

to innovate, serve with zeal, and construct with the long term in mind The business works to

improve so that it may advance and prosper as a team

2.1.5 SWOT Analysis

Strengths Weaknesses

- Unmatched research and development capability

- Strong geographic presence, with one of the best

geographically diversified revenue sources

- Unrivaled product and brand portfolio

- Environmental sustainability efforts

- Criticism over high water usage, selling

contaminated food, anti-unionism, forced

child labor and using other unethical practices

- Contami180nated food recalls

- Transparency in material sourcing

- Growing number of small Silicon Valley based

food startups

- Growing ready-to-drink (RTD) tea and RTD

coffee markets

- Poor quality water and its scarcity

- Increased competition in the beverage

and food industries

- The price of coffee beans could significantly rise due to major weather

disasters

2.1.6 Nestlé’s business strategy: Creating shared values

Nestlé's worldwide strategy is not limited to financial gain The business is guided by a concept known as "creating shared value," which places an emphasis on generating gains for both shareholders and society This strategy acknowledges that a business's performance is correlated with the health of the communities it serves and the surroundings in which it

functions

Another important component of Nestlé's strategy is sustainability Nestlé wants to establish a sustainable future for its company and the communities it works with by generating shared value Nestlé is positioned as a significant player in the worldwide food and beverage market because

to its emphasis on social and environmental responsibility, high brand awareness, and innovative product development

2.2 Organizing

As multinational corporations (MNCs), Nestlé’s structure is based on the global organizational

structure, which 1s:

2.2.1 Global Product Structure (later is referred as GPS)

This structure emphasizes standardization of products and services across all geographical markets It is characterized by a centralized decision-making process for product development and marketing, with production facilities located to optimize costs and efficiency

Structure: Nestlé organizes its product portfolio into global business units focused on specific categories, such as: Nestlé Waters (e.g., bottled water brands), Nestlé Nutrition (e.g., baby food, infant formula), Nestlé Health Science (e.g., medical nutrition products)

Responsibilities: Maintaining brand consistency and product quality across regions; Developing and managing global product strategies; Setting standards for product specifications and marketing campaigns

Benefits of a GPS: Addressing specific customer needs, Specialized and well-trained management, Targeted Marketing strategies

However there are some challenges to GPS: The first challenge is that there would be increased resource requirements since a global product structure necessitates more personnel and resources compared to other structures The second matter is integration of operations as coordinating the activities of different product divisions within a global product structure can be challenging

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This structure divides the company into distinct regional units, each responsible for managing its own operations within its assigned geographical area Each regional unit has a degree of autonomy in decision-making, allowing for adaptation to local market conditions and preferences

Structure: Nestlé operates through geographically defined zones or areas, typically: North

America, Latin America, Europe, Asia, Oceania & Africa, Greater China

Responsibilities: Managing business operations, sales, and marketing within their assigned territories; Adapting product offerings, marketing campaigns, and pricing strategies to local market needs and preferences; Executing regional business plans aligned with global strategies; May be further divided into smaller geographic units for more focused management

Benefits of a GGS: Empowers regional managers, Local market expertise, Leverages

economies of scale

Some of the drawbacks of a GGS can be seen such as: Increasing in costs because adapting products to local tastes can be costly, potentially doubling the need for resources; Integration Challenges as integrating dispersed geographic regions into a cohesive overall strategy can be difficult; R&D adoption issues since companies that rely heavily on research and development for new product development may face resistance from regional units to adopt new products

2.2.3 Nestlé's Hybrid Model: Leveraging the Strengths of Global Product and Global Geographic Structures

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Nestlé has effectively combined the advantages of two organizational models which are Global Product Structure and Global Geographic Structure Nestlé has successfully applied the core strength of the GPS, which allows each product category to address specific customer needs, to adapt its products to different markets Nestlé has also embraced the key advantage of the GGS, which empowers regional managers to make quick decisions, enabling the company to respond promptly to the unique needs of each country or region

2.2.4 Overcoming Challenges through a Hybrid Approach

Nestlé's hybrid model not only capitalizes on the strengths of both structures but also addresses their inherent drawbacks The first one is addressing market needs as the GPS’s weakness of limited market adaptability is mitigated by incorporating elements of the GPS, ensuring that each product category continues to meet market demands The second matter is enhancing integration, the GPS’s challenge of integrating dispersed operations is overcome by leveraging the global product structure's strength in operating effectively in areas requiring

economies of scale

Nestlé's success lies in its ability to strike a balance between global standardization and local

responsiveness, allowing it to effectively cater to diverse consumer needs and market dynamics

across its global operations

2.2.5 Nestlé's organizational structure

Nestlé organizes its operations into three main geographic zones: Zone Americas: This zone includes North, Central, and South America It's one of the largest contributors to Nestlé's revenue; Zone Europe, Middle East and North Africa (EMENA): This zone covers Europe, the

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Middle East, and North Africa It encompasses diverse markets with varying consumer

preferences; Zone Asia, Oceania and sub-Saharan Africa (AOA): This zone includes fast-

growing emerging markets in Asia and Africa, as well as developed markets like Australia and

Japan

Market Structure: Each geographic zone is further divided into various markets or regions

For example, in Zone Americas, markets may include the United States, Canada, Mexico, and

several countries in South America These markets are managed by local teams familiar with the cultural, regulatory, and consumer landscape of each region

Strategic Business Units (SBUs): Within each market, Nestlé organizes its operations into strategic business units or product categories These SBUs are responsible for specific product

lines or brands Common SBUs include beverages, dairy, nutrition, health science,

confectionery, and pet care, among others Each SBU typically has its own management team, responsible for product development, marketing, and sales within their respective category Decentralized Decision-Making: Nestlé’s decentralized structure allows for greater flexibility and responsiveness to local market conditions and consumer preferences Decision-making authority is delegated to regional and local managers, who have the autonomy to adapt strategies and tactics to suit their markets This decentralized approach enables Nestlé to tailor its products, marketing campaigns, and distribution channels to meet the unique needs of diverse markets Corporate Functions: Alongside its geographic and product-based structure, Nestlé also has centralized corporate functions that support its operations globally These functions include finance, human resources, legal, supply chain management, research and development, and sustainability While day-to-day operations are decentralized, these corporate functions provide

2.3 Leading

When it comes to choosing the feature that characterizes Nestlé in the most positive light, one must recall its unique leadership strategy The transformational leadership approach, which Bulcke (CEO of Nestlé) prefers, proves rather efficient in terms of galvanizing the staff members for efficient performance

The main desire of transformational leadership is to get group members to assist one another, offering the encouragement, guidance, and support they require to work hard, produce high- quality work, and stay devoted to the group Transformational leadership’s primary objectives are to develop a high degree of trust among group members, foster a sense of loyalty, and promote self-assurance

Official declaration regarding the company's labor relations policy integrates the ideas of solidarity and cooperation, clarifying that Nestlé's leadership and management value relationships with customers and colleagues the most: ‘Nestlé commits to promoting

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understanding and implementing the integrated Corporate Business Principles as a basis for

trust by employees and shareholders’ (Nestléc, Ltd 2010)