Managerial Report On Nestle

Submitted to: Sir Mohsin Zeb

Group Members:

Minhaj Ashraf (13782)

Azad Imran Tahir (14421)

28/12/2011

Acknowledgement

We are very grateful to the Almighty God, who have bestowed us the will to complete our project about “Nestle” which is connected to our scheme Principle Of Management. Here, we would like to take this opportunity to express our highest gratitude and compliment to the people who are involved directly or indirectly in this project especially to our Sir Mohsin Zeb who is our Principle of Management lecturer.

In this report, we examine the management of the international firm like Nestle. Among the BBC global top 30 brands, we have analysis of effective management in a firm. Besides, that we have studied the management levels of Nestle & its different types of strategies i.e. corporate and business level. In the end we have discovered some areas in which Nestle can improve to increase its sale.

Thank you to all people who are involved in making our report a successful one and may all your help and effort are blessed.

Thank you!

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Table Of Content:

Executive Summary 03

Introduction 04

Objective 04

Corporate Philosophy 05

History Of Nestle 05

Organizational Structure (Flow Chart) 14

Core Values 15

Nestle in Pakistan 16

Corporate & Business Level Strategies 19

Centralization & Decentralization 20

Employee Relations 20

Nestle Culture 24

Management Hierarchy 25

Company Structure 26

S.W.O.T Analysis 28

Area Of Improvement 28

Executive summary

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The main aim of international marketing is to provide solid foundations that are useful for

explanation, prediction and control of the international business activities. We are not an expert

in Nestle but we have analysis the firm’s global managerial strategy in the field of their brand

awareness, products and system design, and customer service. We have notice that the firm

utilized generic managerial strategy such as low cost leader in business, differentiated good and

services satisfy the needs of customers through a sustainable competitive advantage.

International marketing refer to using common products, price, promotions and distribution

program on a world basis.

Our secondary data is the most of important for our research and we contributed in the area such

as Nestle area of improvement.

That is why we effectively utilized the periodical articles which can be a great source of product,

management and industry information. (Periodicals refer to magazines, journals and

newspapers). Although we are living in an electronic age, there is still much information that can

only be or best be found in print resources or books at library.

Nestle management level is a decentralized as possible, within the framework compulsory by

fundamental policy and strategy decisions requiring increasing flexibility and operational

efficiencies, as well as the group-wide need for alignment and people development, may also set

limits to decentralization.

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Introduction

Nestle SA , the world’s leading food manufacturer and the market leader in both coffee and

mineral water, produces a wind range of products including prepared dishes and cooking aids,

milk-based products, cereals, instant coffee, pharmaceuticals and baby foods. Nestle SA is a

publicly owned company, with subsidiaries across the world. It website addresses in 104

countries. It is also the world largest food and beverage company with $71 billion in annual sales

and almost 230,000 employees around the world. It markets some 8000 brands that include

instant coffee.

Remarkably, its products are sold in every country in the world, including in North Korea.

Nestle coat of arms, the bird’s nest, which refers to his name, has become a symbol for the

products being a safe care for their consumer product safety and quality. Research and

development based innovation capacity and strong brands are priority for Nestle.

Objective of Nestle

“ Nestle business objective is to manufacture and market its products in a way that creates value

that can be sustained over the long term for shareholders, employees, consumers, business

partners and national economies in which Nestlé operates”.

The aim of the creating values for the company include with improve business condition for the

firm. To obtain more reliable and high qualify source of raw materials, improved government

functioning and regulatory, employed skill and loyal workforce and superior quality products

which successfully complete.

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Nestle Corporate Philosophy

• Be the leading multinational company in food, nutrition and wellness.

• Produce and sell world-class products of the highest consistent quality, reliability and

convenience based on business excellence principles throughout our operations.

• Maximizes the use of good quality local raw materials.

• Be an exemplary employer with a progressive human resource and social policy; with a

management style that is based on "Management Commitment and People Involvement"

• Be a responsible corporate citizen, fulfilling all obligations to Government, shareholders,

customers, communities and consumers.

• Protect the environment by being committed to environmentally sound business practices

and taking into account the need to preserve natural resources and save energy.

• Guarantee that all products manufactured, imported and distributed by Nestlé Malaysia

are certified HALAL by authorised Islamic certification bodies.

• Deliver shareholder value through the achievement of sustainable and profitable long-

term growth

History Of Nestle

1866-1905

The key factor which drove the early history of the enterprise that would become the Nestlé

Company was Henri Nestlé's search for a healthy, economical alternative to breastfeeding for

mothers who could not feed their infants at the breast.

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In the mid-1860s Nestlé, a trained pharmacist began experimenting with various combinations of

cow's milk, wheat flour and sugar in an attempt to develop an alternative source of infant

nutrition for mothers who were unable to breast feed. His ultimate goal was to help combat the

problem of infant mortality due to malnutrition.

He called the new product Farine Lactee Henri Nestlé. Nestlé's first customer was a premature

infant who could tolerate neither his mother's milk nor any of the conventional substitutes, and

had been given up for lost by local physicians. People quickly recognized the value of the new

product, after Nestlé's new formula saved the child's life and within a few years, Farine Lactee

Nestlé was being marketed in much of Europe.

Henri Nestlé also showed early understanding of the power of branding. He had adopted his own

coat of arms as a trademark; in his German dialect, Nestlé means 'little nest'. One of his agents

suggested that the nest could be exchanged for the white cross of the Swiss flag. His response

was firm: "I regret that I cannot allow you to change my nest for a Swiss cross .... I cannot have a

different trademark in every country; anyone can make use of a cross, but no-one else may use

my coat of arms."

Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by Americans Charles

and George Page, broadened its product line in the mid-1870s to include cheese and infant

formulas.The Nestlé Company, which had been purchased from Henri Nestlé by Jules Monnerat

in 1874, responded by launching a condensed milk product of its own. The two companies

remained fierce competitors until their merger in 1905.

Some other important firsts occurred during those years. In 1875 Vevey resident Daniel Peter

figured out how to combine milk and cocoa powder to create milk chocolate. Peter, a friend and

neighbor of Henri Nestlé, started a company that quickly became the world's leading maker of

chocolate and later merged with Nestlé. In 1882 Swiss miller Julius Maggi created a food

product utilizing legumes that was quick to prepare and easy to digest.

His instant pea and bean soups helped launch Maggi & Company. By the turn of the century, his

company was producing not only powdered soups, but also bouillon cubes, and sauces and

flavorings.

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1905 - 1918

The Company formed by the 1905 merger was called the Nestlé and Anglo-Swiss Milk

Company. By the early 1900s, the Company was operating factories in the United States, Britain,

Germany and Spain. In 1904, Nestlé added chocolate to its range of food products after reaching

an agreement with the Swiss General Chocolate Company.

Condensed-milk exports increased rapidly as the Company replaced sales agents with local

subsidiary companies. In 1907, the Company began full-scale manufacturing in Australia, its

second-largest export market. Warehouses were built in Singapore, Hong Kong, and Bombay to

supply the rapidly growing Asian markets.

Most production facilities remained in Europe, however, and the onset of World War I brought

severe disruptions. Acquiring raw materials and distributing products became increasingly

difficult. Fresh-milk shortages throughout Europe forced factories to sell almost all their supplies

to meet the needs of local towns.

Nevertheless, the war created tremendous new demand for dairy products, largely in the form of

government contracts. To keep up, Nestlé purchased several existing factories in the United

States. By war's end, the Company had 40 factories, and its world production had more than

doubled since 1914.

1918-1938

The end of World War I brought with it a crisis for Nestlé. Government contracts dried up

following the cessation of hostilities, and civilian consumers who had grown accustomed to

condensed and powdered milk during the war switched back to fresh milk when it became

available again. In 1921, the Company recorded its first loss. Rising prices for raw materials, the

worldwide postwar economic slowdown, and deteriorating exchange rates deepened the gloom.

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Nestlé's management responded quickly, bringing in Swiss banking expert Louis Dapples to

reorganize the Company. He streamlined operations to bring production in line with sales and

reduced the Company's outstanding debt.

The 1920s also saw Nestlé's first expansion beyond its traditional product line. The manufacture

of chocolate became the Company's second most important activity. New products appeared

steadily: malted milk, a powdered beverage called Milo, a powdered buttermilk for infants, and,

in 1938, Nescafé.

The Brazilian Coffee Institute first approached Louis Dapples in 1930, seeking new products to

reduce Brazil's large coffee surplus. Eight years of research produced a soluble powder that

revolutionized coffee-drinking habits worldwide. Nescafé became an instant success and was

followed in the early 1940s by Nestea.

1938-1944

The effects of the onset of World War II were felt immediately by Nestlé. Profits dropped from

$20 million in 1938 to $6 million in 1939. Neutral Switzerland became increasingly isolated in a

Europe at war, and the Company transferred many of its executives to offices in Stamford,

Connecticut.

The first truly global conflict ended forever the traditional Company structure. To overcome

distribution problems in Europe and Asia, factories were established in developing countries,

particularly in Latin America.

Ironically, World War II helped speed the introduction of the Company's newest product,

Nescafé. After the United States entered the war, Nescafé became a staple beverage of American

servicemen serving in Europe and Asia. Annual production levels reached one million cases by

1943.

As in World War I, production and sales rose in the wartime economy: Nestlé's total sales

jumped from $100 million in 1938 to $225 million in 1945. As the end of the war approached,

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Nestlé executives found themselves unexpectedly heading up a worldwide coffee concern, as

well a company built upon Nestlé's more traditional businesses.

1944-1975

The close of World War II marked the beginning of the most dynamic phase of Nestlé's history.

Throughout this period, Nestlé's growth was based on its policy of diversifying within the food

sector to meet the needs of consumers. Dozens of new products were added as growth within the

Company accelerated and outside companies were acquired.

In 1947, Nestlé merged with Alimentana S.A., the manufacturer of Maggi seasonings and soups,

becoming Nestlé Alimentana Company. The acquisition of Crosse & Blackwell, the British

manufacturer of preserves and canned foods, followed in 1960, as did the purchase of Findus

frozen foods (1963), Libby's fruit juices (1971) and Stouffer's frozen foods (1973).

Meanwhile, Nescafé continued its astonishing rise. From 1950 to 1959, sales of instant coffee

nearly tripled, and from 1960 to 1974, they quadrupled. The Company's total sales doubled twice

in the 15 years after World War II. The development of freeze-drying led to the introduction, of

Taster's Choice instant coffee, in 1966.

Finally, Nestlé management reached the decision to diversify for the first time outside the food

industry. In 1974, the Company became a major shareholder in L'Oréal, one of the world's

leading makers of cosmetics.

1975-1981

After the agreement with L'Oréal in 1974, Nestlé's overall position changed rapidly. For the first

time since the 1920s, the Company's economic situation deteriorated as the price of oil rose and

growth in the industrialized countries slowed. In addition, foreign exchange rates deteriorated

with the French franc, dollar, pound sterling, and mark all losing value relative to the Swiss

franc. Finally, between 1975 and 1977, the price of coffee beans quadrupled, and the price of

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cocoa tripled. As in 1921, the Company was forced to respond quickly to a radically changed

marketplace.

Nestlé's rapid growth in the developing world partially offset a slowdown in the Company's

traditional markets, but it also carried with it the risks associated with unstable political and

economic conditions. To maintain a balance, Nestlé made its second venture outside the food

industry by acquiring Alcon Laboratories, Inc., a U.S. manufacturer of pharmaceutical and

ophthalmic products.

Taking such a step in a time of increased competition and shrinking profit margins required

boldness and vision. Even more than the L'Oréal move, Alcon represented a leap into unknown

waters for Nestlé. But, as Group Chairman Pierre Liotard-Vogt noted, "Today we find ourselves

with a very wide range of activities, all of which have one thing in common: they all contribute

to satisfying the requirements of the human body in various ways."

1981-1995

Under a new Chief Executive Officer, Helmut Maucher, Nestlé approached the 1980s with a

renewed flexibility and determination to evolve. The Company's strategy for this period was

twofold: improve its financial situation through internal adjustments and divestments, and

continue its policy of strategic acquisitions.

Thus, between 1980 and 1984, the Company divested a number of non-strategic or unprofitable

businesses. At the same time, Nestlé managed to put an end to a serious controversy over its

marketing of infant formula in the Third World. This debate had led to a boycott of Nestlé

products by certain lay and religious organizations. This issue is still alive in some quarters, but

there is no longer any significant boycott activity.

In 1984, Nestlé's improved bottom line allowed the Company to launch a new round of

acquisitions, including a public offer of $3 billion for the American food giant Carnation. At the

time, the takeover, sealed in 1985, was one of the largest in the history of the food industry.

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1996-2002

The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers crumbled and

world economic markets developed into a series of more or less integrated trading areas. The

opening of Central and Eastern Europe, as well as China, and a general trend towards

liberalization of direct foreign investment was good news for a company with interests as far-

flung and diverse as Nestlé. While progress since then has not been as encouraging, the overall

trends remain positive.

In July 2000, Nestlé launched a Group-wide initiative called GLOBE (Global Business

Excellence), aimed at harmonizing and simplifying business process architecture; enabling

Nestlé to realize the advantages of a global leader while minimizing the drawbacks of size.

There were two major acquisitions in North America in 2002: in July, Nestlé announced that the

U.S. ice cream business was to be merged into Dreyer's, and in August, a USD 2.6bn acquisition

was announced of Chef America, Inc. , a leading U.S.-based hand-held frozen food product

business.

Also in 2002, the joint venture Dairy Partners Americas was set up with Fonterra; and

Laboratories innéov was set up, another joint venture, this time with L'Oréal.

2003-2009

The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers crumbled and

world economic markets developed into a series of more or less integrated trading areas. The

opening of Central and Eastern Europe, as well as China, and a general trend towards

liberalization of direct foreign investment was good news for a company with interests as far-

flung and diverse as Nestlé. While progress since then has not been as encouraging, the overall

trends remain positive.

In July 2000, Nestlé launched a Group-wide initiative called GLOBE (Global Business

Excellence), aimed at harmonizing and simplifying business process architecture; enabling

Nestlé to realize the advantages of a global leader while minimizing the drawbacks of size.

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There were two major acquisitions in North America in 2002: in July, Nestlé announced that the

U.S. ice cream business was to be merged into Dreyer's, and in August, a USD 2.6bn acquisition

was announced of Chef America, Inc. , a leading U.S.-based hand-held frozen food product

business.

Also in 2002, the joint venture Dairy Partners Americas was set up with Fonterra; and

Laboratories innéov was set up, another joint venture, this time with L’Oreal.

2010+

The new decade began with Nestlé announcing the finalization of the sale of Alcon to Novartis

which was completed mid-year. This represented a remarkable investment on behalf of Nestlé

shareholders. Immediately following the Alcon announcement, Nestlé bought Kraft’s frozen

pizza business.

Further highlights were the launch of the Special tea machine system and the completion of the

CHF 25 billion share buyback programme – and the announcement of a new CHF 10bn

programme.

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The Nestlé Story – all the way to Nutrition, Health and Wellness

Table (Year-wise)

1866 Foundation of Anglo-Swiss Condensed Milk Co.1867 Henri Nestlé’s Infant cereal developed1905 Nestlé and Anglo-Swiss Condensed Milk Co. (new name after merger)1929 Merger with Peter, Cailler, Kohler Chocolates Suisse’s S.A.1934 Launch of Milo1938 Launch of Nescafé1947 Nestlé Alimentana S.A. (new name after merger with Maggi)1948 Launch of Nestea & Nesquik1969 Vittel (initially equity interest only)1971 Merger with Ursina-Franck1973 Stouffer (with Lean Cuisine)1974 L’Oréal (associate)1977 Nestlé S.A. (new name), Alcon (disposed in August 2010)1981 Galderma (joint venture with L’Oréal)1985 Carnation (with Coffee-mate and Friskies)1986 Creation of Nestlé Nespresso S.A. and Herta1988 Buitoni-Perugina and Rowntree (with KitKat)1990 Cereal Partners Worldwide (joint venture with General Mills)1991 Beverage Partners Worldwide (joint venture with Coca-Cola)1992 Perrier (with Poland Spring)1993 Creation of Nestlé Sources Internationals (2002: Nestlé Waters)1997 Creation of Nutrition Strategic Business Division (2006: Nestlé Nutrition)1998 Sanpellegrino and Spillers Pet foods, launch of Nestlé Pure Life2000 PowerBar2001 Ralston Purina2002 Schöller, Chef America and Dairy Partners Americas (joint venture with Fonterra)

Laboratories innéov (joint venture with L’Oréal)

2003 Mövenpick and Dreyer’s2005 Wagner, Protéika and Musashi2006 Creation of Foodservices Strategic Business Division (2009: Nestlé Professional)

Lactalis Nestlé Produits Frais (associate)Jenny Craig, Uncle Tobys and Delta Ice Cream

2007 Novartis Medical Nutrition, Gerber and Henniez2008 Ruzanna2010 Kraft Food’s frozen pizza, Waggin’Train, Malher, Technocom and Vitaflo

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Organizational Structure (Flow Chart)

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Nestle Core values:The Nestlé global vision is to be the leading health, wellness, and Nutrition Company in the

world. Nestlé Pakistan subscribes fully to this vision”.

In particular, NESTLE envision to:

Lead a dynamic motivated and professional workforce – proud of its heritage and bullish

about the future

Meet the nutritional needs of consumers of all age groups – from infancy to old age, from

nutrition to pleasure, through an innovative portfolio of branded food and beverage

products of the highest quality.

Deliver shareholder value through profitable long-term growth, while continuing to play

a significant and responsible role in the social, economic and environmental sectors of the

country.

They have profitable and diversified high quality food and beverage product portfolio,

delivering 60:40+ advantage to consumers, available across all sales channels.

Their brands are the preferred choice in their categories. Consumer insight drives all

aspects of our marketing and communication efforts.

Their communications to the consumer are relevant, cutting-edge, and adhere to the

highest standards of responsible communication.

Their company is seen as the No. 1 career destination for talented, motivated and

ambitious professionals.

Their result-oriented organizational structure ensures effective communication and

empowered self-management.

Their milk collection and Agricultural services will continue to play the primary role in

development of the dairy sector in rural Pakistan.

Their proactive innovation and renovation culture is the key to our success in the

marketplace.Fully integrated systems (Nestlé Pakistan, suppliers, customers) ensure

efficient business processes.

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Non-strategic activities and products are outsourced or discontinued.

Nestle in Pakistan:

A consequence of joint venture arrangement between Nestle S.A. of Switzerland and

Milkpack Ltd. in 1988, the existing production facility of Milkpack in Sheikhupura

became a part of Nestle Milkpack. The Milkpak Sheikhupura factory commenced

operations in 1981 as a producer of UHT milk. By 1988, it had expanded its operation

and was also producing butter, cream, desi ghee - all under the brand name of

MILKPACK and juice drinks under the brand name FROST. To meet the demands of

the large food market that Pakistan offered, Nestle Milkpack reorganized and reinforced

the production of existing brands and gave shape to new production lines. The first to

come was a milk powder plant, which not only began producing NIDO in 1990 but was

also critical to the production of several milk-based products in the future. With the

installation of the roller dryer in 1990, the first such product to come was CERELAC - an

internationally recognized brand of infant cereal. This was followed by LACTOGEN 1

& 2 in 1991. The year 1992 saw the introduction of tea whitener EVERYDAY and milk

powder in bulk packing named GLORIA. MILO and NESLAC came under production in

1994 and MILO RTD in 1995. Local packing of imported coffee under the name of

NESCAFE 3 in 1 commenced the same year. In 1996, Nestle Pak Ltd first confectionery

plant of POLO Mint was installed and the production of NESTLE PURE ORANGE

JUICE commenced. Packaging of coffee under the brand name of NESCAFE CLASSIC

was undertaken the same year. In 1997 NESTLE WHEAT and two variants of POLO viz.

Strawberry and Orange was introduced. In 1998 a substantial capital investment was

made to launch several products and install two new state-of-the-art technologies.

SWEET TREETS were launched in early 1998. The addition of two flavors of POLO:

Blackcurrant and Strong Mint increased the number of POLO variants to five. A

new variant Lemony was added to the range of popular FROST fruit drink flavors and a

new 1-liter packing of FROST was introduced. Flavored milks under the brand FRESH &

FRUITY came under production on the new Tetra Filling Machine equipped with the

modern "slim" format. MILO RTD and UHT.

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Nestle Pakistan Products:We believe that food plays a key role in achieving a well-balanced person. And so our

philosophy is Good Food for a Good Life! At Nestlé, our products are developed keeping our

consumers, their preferences and health in mind. Millions of consumers the world over trust

Nestlé products for good reason: when they choose a Nestlé product they have the satisfaction of

choosing quality, taste, variety, convenience and the good nutrition. With over 140 years of

experience and expertise, we take great pride in bringing you a portfolio of health and wellness

because happy, healthy consumers are important to us.

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Sales Force Human Resource Management at Nestle:

A Company providing a response to human needs throughout the world with specific concern of

the well-being of both its consumers and its employees. This is reflected in its attitude and its

sense of responsibility towards people. Nestlé aims to increase sales and profits but, at the same

time, to raise the standard of living everywhere it is active and the quality of life for everyone.

Nestlé is also convinced that it is the people who form the strength of the Company and that

nothing can be achieved without their commitment and their energy, which makes people its

most important asset. Involvement of people at all levels starts with appropriate information on

the Company’s activities and on the specific aspects of their work. Through open communication

and active co-operation, everyone is invited to contribute to improvements enhancing Company

results and personal development. Therefore, we can conclude that the models that Nestle

follows are: - High Performance, - High Involvement &- High Commitment. NESTLÉ’S

SPIRIT

“Making Big Investments in People”

Nestlé Pakistan makes big investment in people, they are their top priority. For them, their

people are the key drivers for our success. Nestlé Pakistan provides its employees a dynamic

professional environment bound by one spirit,’ The Nestlé Spirit' and that makes Nestlé Pakistan

a great place to work. Nestle Pakistan is a vibrant company enhancing the quality of life of its

consumers by offering them world class food products driven by Nutrition, Health and

Wellness. At Nestlé Pakistan their integrity, professional skills and performance is what matters.

They trust their people and believe in giving early responsibilities and encourage them to

actively contribute to the long term sustainable growth of the business. At Nestlé Pakistan they

believe in building leaders who can take on challenges, innovate and write success stories.

Nurturing starts from day one on the job. Business dynamics and need directed training programs

offer employees with opportunities to acquire and develop desired functional, people

management and decision making skills enabling success at work.

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Nestlé’s Corporate Level Strategies:

Following are the corporate level strategies.

Product’s growth through innovation and renovation (while maintaining a balance in geographic activities and product lines).

Build business based on sound human values and principles.

Long-term commitment to the health and well being of people in every country in the scope of their operations.

Business should be conducted by adhering to the values and management principles of the organization.

Business Level Strategy:Following are the Business Level Strategy.

Low cost - less price transparency is followed.

Differentiation - to reduce the risk of complexity of supply chain and lower attractiveness for discounters.

Competitive Advantage of Nestle:

Its Research and development (R&D) system.

Its product range.

Global reach and.

280,000-strong workforce.

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Decision Making in Nestle /Centralization & Decentralization:

Nestlé is as decentralized as possible, within the framework imposed by fundamental policy and

strategy decisions requiring increasing flexibility. Operational efficiencies, as well as the group-

wide need for alignment and people development, may also set limits to decentralization.

Decentralization: Nestlé recognizes that its consumers have a sincere and legitimate interest in

the behavior, beliefs and actions of the Company behind brands in which they place their trust

and that without its consumers the Company would not exist. Nestlé believes that, as a general

rule, legislation is the most effective safeguard of responsible conduct, although in certain areas,

additional guidance to staff in the form of voluntary business principles is beneficial in order to

ensure that the highest standards are met throughout the organization. Nestlé is conscious of the

fact that the success of a corporation is a reflection of the professionalism, conduct and the

responsible attitude of its management and employees. Therefore recruitment of the right people

and ongoing training and development are crucial. Nestlé continues to maintain its commitment

to follow and respect all applicable local laws in each of its transparent performance appraisal

systems and the freedom given to those to question their seniors benefit not only the employees

but even the organization as well.

Employee Relations in Nestle:Nestle provides a very healthy working environment which is one of the reasons why Nestlé’s employees state their commitment level to be very high.

Employee turnover is less than 5%., which is considered to be very low for a multinational corporation.

Nestle has an open culture & upward communication especially in case of grievance redresser is encouraged.

Work/Life balance is given importance, as illustrated in the Nestle Human Resource Policy document.

Nestle Family’ annual events are organized by their HR department whereby employees along with their families are invited.

Emphasis is laid on safety of employees (Nestle Policy on Health and Safety at Work(

Rewards and Benefits in Nestle:

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Rewards:

‘Passion to Win’ awards- These quarterly awards have been institutionalized to reward those who over-achieve their targets. Long-service Awards- To recognize employees who have been with the company for more than 30 years.

Nestle Idea Award’- It was found from the correspondent that the company institutes Nestle Idea Award every quarter to recognize and award employees who come up with relevant and innovative ideas which have the potential of being implemented at Nestlé. For all aspects of Reward Nestle apply the fundamental principles outlined below. Reward Principles.

Performance Driven - The level of your Reward is linked to your performance, hence the highest performers will see the greatest Reward. There is also a direct link between the performance of the business and the Reward we're able to offer.

Competitive - We benchmark all aspects of Reward to ensure we offer all our employees a competitive Reward package.

Inclusive - Our Reward programmed is designed to reflect the valuable contribution which every employee makes, not just senior managers.

Flexible - We've made it our top priority to allow you to tailor the Reward you receive to your circumstances, whenever possible or practical.

Benefits:

The following benefits are provided to all employees, with no discrimination:

Leave-Personal & Medical (fixed no. per year)- Children Education Assistance Scheme- Provident fund- Retirement Gratuity Scheme. Group Insurance & Accidental Insurance Scheme. Conveyance Reimbursement Scheme. Group Insurance & Accidental Insurance Scheme. Conveyance Reimbursement Scheme.

Corporate Social Responsibility:

They believe that every single company, no matter where in the world it operates, ought to be fully integrated into the local social, cultural & economic life. They must be good

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Corporate citizens, and give back to the societies to which they belong. There are two ways of fulfilling their responsibility and practicing corporate Social Responsibility:

Through social investments: giving to charities, leading and supporting cultural or welfare initiatives.

Through the realization that businesses create social and environmental impacts, both positive & negative, through the daily operations of their value chain.

Responsibility and Society:

Taking the Nestlé concept of corporate Social Responsibility to heart, they are deeply involved

in social investment and humanitarian aid. They are committed to Pakistan's long-term

betterment, and strictly follow the code Corporate governance: • They deal fairly with stakeholders.

• Serves there consumers through safe, high quality products & communicate with theResponsibility: • Adhere to environmentally safe industrial practices

• Actively involved in several social action programs (SAPs) to improve the lives of their

country's under-privileged people.

They adhere to the global Nestlé philosophy of Creating Shared Value. There dairy suppliers in

the Punjab's milk district can attest to the agricultural and technical support they offer them.

During their manufacturing process they are careful to minimize environmental impact and value

employee welfare highly. Finally, they try to benefit there consumers by spreading awareness

about healthy nutrition and lifestyles as well as constantly developing or improving existing

products for health, nutrition and wellness.

Responsibility to Environment:

In line with Nestlé's global commitment, Nestlé Pakistan is dedicated to playing its role in helpin

g to protect the environment. They comply with the Environmental Act (1997), and try to ensure 

that at every stage of their operations, the environmental impact is minimal.  

There Environmental Commitment in Action

 There environmental commitment extends to every part of their value chain. Thus, at the raw ma

terials stage, they support sustainable agricultural and dairy farming practices, including environ

mental protection. When it comes to production, all their factories try to maximize eco‐

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efficiency, i.e. increase production while minimizing resource consumption, waste and emissions

.  

There factories are equipped with complete testing and monitoring facilities for waste and air em

issions. To eliminate air pollution, they have stopped using heavy fuel oil in their factories, whic

h are now run on clean natural gas. This has reduced their emissions into the atmosphere to well 

below the legal limits.  There Sheikhupura & Kabirwala factories have elaborate water treatment 

systems to prevent wastewater from polluting the environment. In 2005, they upgraded their wast

ewater treatment plants in both factories. That's not all; they are continually reducing their consu

mption of raw water per ton of production. Irresponsible packaging can have a heavy impact on t

he environment. To reduce the amount of material used without jeopardizing the safety and quali

ty of their products, they are always working on new packaging solutions that have minimal weig

ht and volume and can be easily recycled. They even operate a collection system for used packag

ing. Solid waste is collected at source and then reused, recycled or disposed in an environmentall

y friendly way. Natural gas incinerators at their Sheikhupura & Kabirwala factories are used to s

afely dispose of material that cannot be recycled & dumped. There factories have environment c

ommittees to manage routine environment issues and review performance. Environmental impact 

assessment is done in advance for every new project and measures are adopted to minimize adve

rse impacts on the environment. There employees regularly undergo training to inculcate awaren

ess about environment friendly practices.  

Social Responsibility:

In October 2005, the biggest natural calamity in their history struck Pakistan. Thousands died an

d millions were left homeless after a massive earthquake hit their mountainous northern areas.  In 

step with the rest of the nation, Nestlé Pakistan responded immediately, putting its infrastructure 

and resources to work in the affected areas.

We support charities, education and training initiatives, art and cultural events, sport events and HIV/AIDS prevention.

Nestle Culture:

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Nestle has a very strong organizational culture. They believe in team work. The head office gives

the guide lines to the zonal managers and tells them their budget limitation. The zonal managers

are totally independent in making their plans and use their budget. Similarly, the regional

managers are independent in their areas. They are given a certain target and a fixed amount of

budget. This is their discretion to make plan and get the targeted result in the given budget. The

internal control system of the organization is also very tight and effective. The check and balance

system is also very strong. Due to this strong check and balance, they can make correction in

their plans. If at any time or at any place, the plan does not work properly, the manager knows it

at a right time and they can make it well. Nobody is allowed to violate his power. They are not

completely satisfied their current performance and work for the betterment and development of

the system. This is possible only through the collective commitment.

Management Hierarchy in Nestle Pakistan:

Managing Director

Marketing Manager

Zonal Manager

Zonal Manger

Zonal Manger

Production Manger

Finance Manager

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Company Structure:

Nestle head-office in Pakistan is in Lahore. It also has its registered office in Lahore.Nestle has divided the whole Pakistan in to three zones:

Northern Zone Central Zone Southern Zone

Regional Sales Manger

Sales Force

A/C Department

Assistant Sales Manager

Sales Department

Sales Promotion

A/c Department

Sales Department

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Nestle has 10 regional offices in all over the Pakistan. These offices work under their respective zonal offices.

Factories:Nestle has two factories in Pakistan for the production of different food items. One in Sheikhupura near Lahore and other in Kabeerwala near Multan.Location of Factories:

Sales Management Process of Nestle:

In Pakistan the management process is made by the management of Pakistan’s headquarters and approved by Verve’s headquarter.

Planning:

Firstly when a need is observed to launch any product here in Pakistan a plan is made by the process of market research. They observe the need; demand of the product, target market is settled. The cost and the expected profit that is their goal are being estimated. The promotional activities are made like posters and pamphlets and introductory samples are represented they define their goal to make and present value added products according to targeted market the staff hiring strategies and marketing strategies are planned.

Organizing:

After planning they organize the activities like which kind of people are required and the process

that would be controlled by them under which situations and how they would move. For example

“NESCAFE CLASSIC” was planned to be launched in urban area for young people so the

organized activities like the kind of brand managers, territory in-charges who inform Assistant

Sales Manager were to be selected? And where the tasks to be done?

Leading:

It Concern as they prefer their people as they say, ”PEOPLE FIRST” Nestlé is more people and product orientated than systems orientated And they are ass decentralized as possible The motivating activities are all around for their employees as they train employees for their education.Following motivations are given to people:

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Life cover Sick pay 25 days' holiday Mobile phone on a business need basis Company bonus scheme

Controlling:

Under this managerial activity they compare its manufactured products with standard products and after feed backs they made any change if required for example they maintain their labs in Sheikupra and Kaberwala according to Switzerland’s standard and the product from there is send by time so that the manufactured products are supposed to check it according to theses stuff. For example: “NESCAFE CLASSIC” was planned according geographically for urban areas and demographically college going young boys and girls after observing market interest and condition then Marketing strategies were according the target market so they ”GET STARTED WITH NESCAFE” The brand mangers and tertiary in-charges were hired according to the plan. And over all strategies were organized. The launched coffee samples were compared with the samples sent from headquarters VEVEY. And the required changes were made according to feedbacks.

SWOT Analysis of Nestle Pakistan:

Strengths:

Quality Service Brand name and image Less competitors

The strength of Nestlé's brands has given the company an unparalleled position on a global basis

across a wide range of product categories. Six worldwide corporate brands, Nestlé, Nescafe,

Nestea, Maggi, Buitoni and Friskies contribute about 70% of the group's total sales, with the

Nestlé brand itself contributing 40%.(globalize profit)The value added products. Research and

development department keeps nestle in continuous knowledge about itself and competitors. For

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launching new product they adopt 60% and 40% test method. Its unique features and technology

of brand stretching.

Weaknesses:

Less knowledge about the host country’s culture norms and values.

Opportunities:

To expand business in different countries.

Threats:

They see following threats in future coming time: Some other Multinational companies are also planning to enter the Pakistani market .e.g. beverages of Pepsi & Coke would can also be accepted by the people of Pakistan.

Area of Improvement & suggestions:

Although Nestle manufacturing operations are responsible for a relatively small proportion of the energy used across their supply chain, it is the area where they can most easily make a large impact through improved performance.

Nestlé aims at becoming the most efficient energy user among food manufacturers, and although increasing production volume by 6.2% in 2010, limited energy consumption to 88.6PJ [KPI], which equates to 2.03 GJ per ton of product [KPI], down 2.1% on the 2009 figure. On a constant production volume (adjusted) basis, this ratio remains unchanged. Indirect energy consumption, through the purchase of electricity, heat and steam, was 67.6 PJ in 2010 [KPI].

Since 2000, Nestlé has reduced its energy consumption by almost 3% while increasing its production volume by 73%. This reflects energy reduction initiatives at factory level, which form part of the continuous improvement efforts driven by Nestlé Continuous Excellence; changes in their product mix reflecting an overall strategy towards more value-added products; changes resulting from acquisitions and divestitures.

As they seek to achieve energy efficiency improvements of at least 5% in each of their key product categories over the next five years, they continue to investigate the setting of energy consumption targets by product category and exploring the viability of additional lead performance indicators.

Their Energy Target Setting Initiative completed 12 projects in 2010, during which they identified more than 200 projects for a total investment of about CHF 50 million. The annual

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savings of these projects include energy savings of about 1.3 million GJ and a reduction in CO2 emissions of approximately 88 000 tones. In addition, water savings of 1.9 million m3 were identified and the monetary savings totaled CHF 27 million.

Suggestion/ How they can improve more:

Energy-saving equipment

The worldwide consumption of fossil fuels is constantly increasing but the world’s resources are becoming more limited, and energy prices are rising. Therefore, they should look at investing in energy-saving industrial equipment, assuming that energy prices will continue to increase, and industrial equipment will continue to be used as long as the factory is operational.

Therefore investments made in energy-saving projects and renewable energy solutions do generally provide long-term benefits, and they should increase their investment in such schemes and extend the “return on investment” periods beyond their normal criteria.

To improve the energy efficiency in new milk factories, their Product Technology Centre has to develop a new concept for energy optimization for example by using “pinch technology”. Through the application of this concept, their production plant in Konolfingen, Switzerland, generated energy savings of 46%. The energy consumption per ton of product can be dropped from 3.42 MWh to 1.86 MWh and results in an annual reduction in CO2 emissions of 6780 tones.

Following the commitment to reduce energy consumption and reliance on fossil fuels, their Maggi production plant in Singen, Germany can significantly reduce its consumption of natural gas through an innovative partnership with a neighboring industrial site. To produce steam for the plant’s industrial processes, the factory sources energy via an adjacent foundry’s heat exchanger. Through a thermal oil connection, the previously lost process heat can be transferred to the plant where it is used to generate steam. By running it they can get about 60% efficiency, the factory will receive about 50 000 MWh of process heat from the foundry. Once the project is ramped up to full scale , this will reduce the plant’s natural gas consumption by more than 60% and save approximately 11 000 tons of CO2 per year.

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