Final Project

Nestlé Company
 Content Index

Overview
About Nestlé 2
Financial Data 3
Vision, Mission, Objectives 3
Nestlé Corporate Business Principles 4

Business Analysis
SWOT Analysis 5
BCG Matrix 7
Porter’s 5 forces Analysis 9

Nestlé Strategies
Low-Cost Leadership Strategy 13
Differentiation Strategy 13
Focus Strategy 14

Leadership at Nestlé
Lead for Winning 15
Managing for Results 15
Grow teams & talents 16
Competing & Connecting 16
Diversity 16

Motivation at Nestlé
Financial Motivators 17
Non-Financial Motivators 18

Suzanne Sobhy Gharib

Contemporary Management by Dr. Kholoud 1Hossam
OVERVIEW:
Nestlé is a Swiss multinational food and drink processing conglomerate
corporation headquartered in Vevey, Vaud, Switzerland. It is the largest food
company in the world, with a market capitalization of roughly 231 billion Swiss
francs, which is more than US$247 billion as of May 2015.
Nestlé's products are over 2000 brands include baby food, medical food, bottled
water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream,
frozen food, pet foods, and snacks  including Nespresso, Nescafé, Kit
Kat, Smarties, Nesquik, Stouffer's, Vittel, and Maggi. In 2019, the company entered
the plant-based food production business with its Incredible and Awesome Burgers
(under the Garden Gourmet and Sweet Earth brands). In 2020, Nestlé announced
additional plant-based products including bratwurst that is soy-based and chorizo-
like sausage. Nestlé has 447 factories, operates in 189 countries, and employs
around 339,000 people. It is one of the main shareholders of L’Oréal, the world's
largest cosmetics company.
Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company,
established in 1866 by brothers George and Charles Page, and Farine Lactée Henri
Nestlé, founded in 1866 by Henri Nestlé. The company grew significantly during
the First World War and again following the Second World War, expanding its
offerings beyond its early condensed milk and infant formula products.
Nestlé products have been present in Egypt since 1870 and the company started its
operations in Egypt in 1988. Regrouping 3 countries; Egypt, Libya and Sudan,
today, NEAR (North East Africa Region) is headquartered in Cairo, Egypt. The
company employs today more than 3000 employees in 7 business units and 3
factories dedicated to the manufacturing of Dry Goods, Ice Cream and Water
products.
Nestlé products have been present in Egypt since 1870 and the company started its
operations in Egypt in 1988. Regrouping 3 countries; Egypt, Libya and Sudan,
today, NEAR (North East Africa Region) is headquartered in Cairo, Egypt. The
company employs today more than 3000 employees in 7 business units and 3
factories dedicated to the manufacturing of Dry Goods, Ice Cream and Water
products.
According to a 2015 global survey of online consumers by the Reputation Institute,
Nestlé has a reputation score of 74.5 on a scale of 1–100
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 Financial data in CHF billions

Year 2013 2014 2015 2016 2017

Revenue 92.158 91.612 88.785 89.469 89.791

Net income 10.015 14.456 9.066 8.531 7.183

Assets 120.442 133.450 123.992 131.901 130.380

Employees 333,000 339,000 335,000 328,000 323,000

As nutrition, health and wellness company, Nestlé, is committed to the

improvement of value of life by helping community in which it operates to meet
basic and necessary human needs.

Over the years Nestlé has used its resources, skills and technology to help find
solutions to the many socio-economic challenges facing communities. Many of the
communities are confront by challenges such as poor cleanliness, lack of clean
water, poverty, diseases, underfeeding, food security and many others.

Mission:
Positively influence the social environment in which we operate as responsible
corporate citizens, with due regard for those environmental standards and societal
aspirations which improve quality of life.” 

Vision:
To be a leading, competitive, Nutrition, Health and Wellness Company delivering
improved shareholder value by being a preferred corporate citizen, preferred
employer, preferred
Objectives
To increase Nestlé’s favorability, by continuing to:
1. Drive Nestlé’s Expertise and Leadership in nutrition
2. Improve Nestlé’s perception as a key player in Creating Shared Value 

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Nestlé Corporate Business Principles will continue to evolve and adapt to a
changing world, the basic foundation is unchanged from the time of the origins of
the Company, and reflects the basic ideas of fairness, honesty and a general concern
for people. 

Nestlé is committed to the following Business Principles in all countries, taking into
account local legislation, cultural and religious practices:

1. Nutrition, Health and Wellness

Our core aim is to enhance the quality of consumers lives every day, everywhere by
offering tastier and healthier food and beverage choices and encouraging a healthy
lifestyle. We express this via our corporate proposition 'Good Food, Good Life'. 
2. Quality Assurance and product safety
Everywhere in the world, the Nestlé name represents a promise to the consumer that
the product is safe and of high standard.

3. Consumer Communication
We are committed to responsible, reliable consumer communication that empowers
consumers to exercise their right to informed choice and promotes healthier diets.
We respect consumer privacy.

4. Human rights in our business activities

We fully support the United Nations Global Compact’s (UNGC) guiding principles
on human rights and labor and aim to provide an example of good human rights’
and labor practices throughout our business activities.

5. Leadership and personal responsibility

Our success is based on our people. We treat each other with respect and dignity
and expect everyone to promote a sense of personal responsibility. We recruit
competent and motivated people who respect our values, provide equal
opportunities for their development and advancement, protect their privacy and do
not tolerate any form of harassment or discrimination.

6. Safety and health at work

We are committed to preventing accidents, injuries and illness related to work, and
to protect employees, contractors and others involved along the value chain.
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7. Supplier and customer relations
We require our suppliers, agents, subcontractors and their employees to
demonstrate honesty, integrity and fairness, and to adhere to our non-negotiable
standards. In the same way, we are committed towards our own customers.

8. Agriculture and rural development

We contribute to improvements in agricultural production, the social and economic
status of farmers, rural communities and in production systems to make them more
environmentally sustainable.

9. Environmental sustainability
We commit ourselves to environmentally sustainable business practices. At all
stages of the product life cycle we strive to use natural resources efficiently, favor
the use of sustainably-managed renewable resources, and target zero waste. 

10. Water
We are committed to the sustainable use of water and continuous improvement in
water management. We recognize that the world faces a growing water challenge
and that responsible management of the world’s resources by all water users is an
absolute necessity
supplier selling preferred products.

SWOT ANALYSIS

The acronym SWOT stands for strengths, weaknesses, opportunities and threats.

The significance of SWOT analysis is that it provides a good way for companies to
examine both positive and negative attributes within a single analysis, determining
how best to compete in the market at large

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 INTERNAL FACTORS
STRENGTHS (+) WEAKNESSES (-)
 Reputed brand name – Nestlé is the most renowned  Price fluctuations by retail giants – Nestlé’s
brand in the world. It has developed a respected grocery sales are achieved majorly through
reputation in the food and beverages sector offering huge retail giants like Walmart, Tesco, and
high-quality products for everyday use across the
Kroger. Any reduction or increase in prices by
globe.
 Globally recognized brand – Through its effective these retailers can affect Nestlé’s sales.
 Span of control and organizational structure –
advertising and branding strategies, it has created
Nestlé is organized in a matrix structure. That
significant awareness and developed a successful brand
means a large number of brands are under the same
image around the world. According to the Fortune umbrella group which makes it somewhat
Global 500, Nestlé is among the world’s largest challenging to manage the large Administrating
corporations and is ranked at 69th position in 2018 list. such a large number of individual brands can often
 Highly diversified company – Nestlé sells its products result in discord and conflict of interest.
in 189 countries Instead of relying on a few markets, it  Water controversy – Recently, Nestlé was accused
has captured the sizeable market in a lot of developed
of illegally pumping millions of liters of water in 6
and developing countries to earn most of its revenue. In
2017, it generated CHF 26.7 billion from the US market nations where residents are deprived of drinking
alone. water. Social criticisms –Nestlé has become a
 World’s most valuable brand – According to 2018 target of media attention many times. The claim to
Forbes Global, Nestlé is among the top as the world’s privatize water, misleading labeling, and a lawsuit
most valuable company in regards to highest revenue, for chocolate making using child and slave labor
profits, assets, and market value. are some of the examples that have to weaken its
 Extensive product portfolio – Nestlé owns more than market reputation.
2000 brands globally and renovated over 8000  Maggi Noodles controversy – In 2017, Nestlé failed
products for nutrition and health considerations, to clear a laboratory test in India. This created a
according to its Annual Review 2017. It is one of the publicity hype as people boycotted Nestlé, leading
worlds’ biggest companies with the broadest product to the loss of 80% of market share in the country.
portfolio. Nestlé claimed ‘No added MSG’ in the Noodles
 Well-established relationships and popular brands– packets. However, 1000 times more lead was found
Nestlé has some of the world’s most recognized brands in the product after testing.
under its name such as Nescafe, Kit Kat, Gerber, Milo,
and Maggi. Besides, it has well-established
relationships with other trusted and powerful brands
like Colgate Palmolive, Coca Cola, General Mills, and
L’Oréal.
 Efficient R&D system – Nestlé has the world’s largest
food and nutrition research organization with 21 R&D
centers its research and development capability are one
of its key competitive advantages. There are more than
5000 employees involved in R&D operations. It spent
nearly 1.72 billion Swiss Franc on R&D in 2017.
 Environmental sustainability practices – Nestlé puts
substantial efforts in environmental sustainability
practices and take innovative initiatives in improving
its quality of products. It optimizes advanced solutions
to reduce waste, water usage, non-renewable energy
use, and packaging material usage. In 2017, 253 of
Nestlé factories reached zero waste production.
 Large distribution system – Nestlé owns an extensive
and diversified distribution system that is not only
penetrated in urban areas but also rural regions. It has
adapted local distribution methods and decentralized
approach to run the business efficiently in respective

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 countries. Nestlé has strong relationships with
suppliers, retailers, vendors, and distributors.

EXTERNAL FACTORS
OPPORTUNITIES (+) THREATS (-)
 Venturing small food start-ups – Nestlé has a fantastic  
opportunity to grow the number of small food start-ups
under its popular brand name. Nestlé can also  Illegal rainforest destruction controversy – In
collaborate with the new start-ups to promote its brand 2017, Nestlé was alleged of involvement in the
name. destruction of Sumatra’s last tract of rainforest. It
 Online shopping – Nestlé has a remarkable opportunity faced severe criticisms from NGOs and
to boost its e-commerce sites and online shopping environmentalists in this regard.
platform. A very few CPGs are offering online services  Water scarcity –Nestlé’s production is highly
to make the shopping experience more comfortable and dependent on water usage. Accessing the clean
pleasant. Although Nestlé has its online stores in a few water through less costly sources has become
countries, expanding its online services to more areas difficult for the company due to many reasons.
will prove a rewarding decision for the company. These include increasing population, climate
 Market penetration for breakfast cereals – Nestlé’s change, growing demand for food and water,
cereals and oats market have shown fast growth in increasing pollution, water wastage, and
recent years. Thus, penetrating this market more
overexploitation of resources.
would be highly lucrative for the company.
 Rising competition – Many CPG companies like
 Expanding ready-to-drink tea and coffee market – The
Mondelez and Unilever offer similar food and
demand for tea and coffee is continuously on the rise,
rendering a profitable opportunity for Nestlé to groom beverage products. It is hard for Nestlé to compete
this market more. in such a situation where the substitute products are
easily accessible.
 Partnerships – Strategic alliances with other food and  Government regulations and prices – Government
beverage giants are also a great opportunity for the regulations can affect the business operations of
company to increase its revenues and profits. Authentic Nestlé. Additionally, the increasing prices of
labeling – Nestlé has already been criticized for giving commodities force the company to increase the
misleading nutritional information on its labels. So, prices of its products. It will lead to sales reduction
there’s an opportunity to improve its practices by giving as consumers can switch to other brands which are
trustworthy information and accurately labeling its available at low costs
products

BCG MATRIX
The encyclopedias put forth the BCG matrix’s definition as a theory of business that
helps business owners decide which products to roll back and which to invest in
more for the future. It is thus, in essence, like a roadmap that helps a business
identify its strong suits while keeping an eye out for the weak links.

Businesses need to break down their trade of products into four quadrants when
using the BCG matrix analysis. The dividing line for each quadrant differs for
different types of businesses. Factors such as competition and the performance of
each product need to be taken into consideration for this one. The four quadrants of
the BCG matrix are as follows.

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 Star Question Mark
The business units that are deemed as stars hold a large market The business units that are identified as question mark are
share as well. However, the point of difference between cash those who do not have a large market share, despite the
cow and star is that the industry has a faster growth rate and is industry holding growth opportunities for the specific
still in the phase of development. The mineral water packaged business segment. They are not able to deliver the results
by Nestlé is the business unit which is operating in an industry that are expected in the high potential offered by the
that has the potential to grow further. Even though new mineral industry. There is a great deal of uncertainty attached with
water brands have been introduced by other companies, the these business segments as they can become stars and cash
mineral water produced by Nestlé has maintained a significant cows if progress is made. On the other hand, they can
position. The brand Nestlé pure life is currently being supplied decline and become a source of liability for the company.
to 40 regions across the globe. It has been further mentioned Maggi noodles has become a question mark for Nestlé as the
that the bottled water is likely to gain an increased market share negative information pertaining to the brand has resulted in
in the coming years due to the rising number of consumers a decline in its sales. In 2015, the brand has gained negative
purchasing mineral water. Therefore, it can be seen that the reputation due to the violation of food safety law, as the
mineral water brand has to potential to become a cash cow in products was assumed to contain significant amount of lead
the next 10 years. Since the rise in population and increased traces, the negative impact of this information had on the
urbanization leads to increased consumption, Nestlé water is company sales, as shown by the decrease of $302 million in
expected to become a sustainable source of earnings for the the revenue. As a result of this news, the company had to
company. Another factor that has contributed in making it a sustain significant losses due to recall of the Maggi noodles
star is the potential for growth in the emerging markets, which product from the market. Moreover, the sales in the region
offer significant growth opportunities to the business on a have dropped up to 20% following the scandal about the
global scale. noodles. Based on this background, it can be stated that the
Maggi noodles brand is operating as a question mark. Nestlé
will have to work towards improving the brand reputation
and restore the consumer trust to regain its sales in this
domain. Inability to handle the challenge in an effective
manner can lead to the noodles becoming a dog. Other
brands can take benefit from this situation and strive to gain
a larger market share and highlight the food safety of their
own products.
Cash Cow Dogs

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The cash cow is denoted by a high market share; however, the The business units that are seen as Dogs are operating in an
growth rate of the industry is slow as the market has grown to industry that has reached the stage of maturity. These
the point of maturity. As a result, the pace of growth has business units tend to hold a small market share in the
declined. Despite the slowdown of market growth, the business industry and with the low potential of growing into high
units identified as cash cows continue to be lucrative for the market share businesses, an organization may decide to
organization due to the large market share. The brand Nesquik withhold future investment in them. The last component in
can be regarded as a cash cow as it is one of the leading milks
the BCG matrix of Nestlé is brands that can be identified as
flavor powder brands on a global scale. In 2014, the brand was
dogs. Nestlé had launched a brand for people who were
able to generate a sale of US$850 million, which indicates the
market share captured by this business unit (Lee, 2015). Along living an active life style and engaged in sports. The brand
with the chocolate powder, the brand also offers other flavors named Powerbar aimed to target this market and generate
for consumers. Moreover, the brand has established a prominent sales by selling the products that were packed with the
position in the flavored milk category as well. Even though the nutrition needed for such an active lifestyle involving
industry has grown over the years, reaching a point of maturity, intense physical activity. The management expected the
Nesquik continues to be a source of revenue for Nestlé. Another brand to gain market share with the passage of time,
product that can be identified as a cash cow is the coffee brand, however, the business unit was unable to deliver the
Nescafe which is being sold in a mature industry. According to expected level of performance. The brand was not able to
Gretler (2016), the coffee brand has illustrated a strong hold a significant amount of market share despite the
performance over the years. marketing initiatives taken on by the company. A viable
course of action for brands that are under performing and
show no significant growth chances in the future is to
liquidate them.

PORTER’S FIVE FORCES ANALYSIS

This model, known as Porter's Five Forces Model is a strategic management tool
that helps determine the competitive landscape of an industry. Each of the five
forces mentioned in the model and their strengths help strategic planners understand
the inherent profit potential within an industry. The strengths of these forces vary
across the industry to industry, which means that every industry is different
regarding the profitability and attractiveness. The structure of an industry, even
though it is stable, can change over time. These Porter’s five forces are as follows:

 Threat of New Entrants

 Bargaining Power of Suppliers
 Bargaining Power of Buyers
 Threat of Substitute Products or Services
 Rivalry Among Existing Firms

Nestlé Porter’s Five Forces Analysis

Threat of New Entrants - Low

 The economies of scale are fairly difficult to achieve in the industry in which Nestlé
operates. This makes it easier for those producing large capacitates to have a cost
advantage. It also makes production costlier for new entrants. This makes the
threats of new entrants a weaker force.
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 The product differentiation is strong within the industry, where firms in the industry
sell differentiated products rather a standardized product. Customers also look for
differentiated products. There is a strong emphasis on advertising and customer
services as well. All of these factors make the threat of new entrants a weak force
within this industry.
 The capital requirements within the industry are high, therefore, making it difficult
for new entrants to set up businesses as high expenditures need to be incurred.
Capital expenditure is also high because of high Research and Development costs.
All of these factors make the threat of new entrants a weaker force within this
industry.
 The access to distribution networks is easy for new entrants, which can easily set up
their distribution channels and come into the business. With only a few retail outlets
selling the product type, it is easy for any new entrant to get its product on the
shelves. All of these factors make the threat of new entrants a strong force within
this industry.
 The government policies within the industry require strict licensing and legal
requirements to be fulfilled before a company can start selling. This makes it
difficult for new entrants to join the industry, therefore, making the threat of new
entrants a weak force.

How Nestlé can tackle the Threat of New Entrants?

 Nestlé can take advantage of the economies of scale it has within the industry,
fighting off new entrants through its cost advantage.
 Nestlé can focus on innovation to differentiate its products from that of new
entrants. It can spend on marketing to build strong brand identification. This will
help it retain its customers rather than losing them to new entrants.

Bargaining Power of Suppliers - Low

 The number of suppliers in the industry in which Nestlé operates is a lot compared
to the buyers. This means that the suppliers have less control over prices and this
makes the bargaining power of suppliers a weak force.
 The product that these suppliers provide are fairly standardized, less differentiated
and have low switching costs. This makes it easier for buyers like Nestlé to switch
suppliers. This makes the bargaining power of suppliers a weaker force.
 The suppliers do not contend with other products within this industry. This means
that there are no other substitutes for the product other than the ones that the
suppliers provide. This makes the bargaining power of suppliers a stronger force
within the industry.

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 The suppliers do not provide a credible threat for forward integration into the
industry in which Nestlé operates. This makes the bargaining power of suppliers a
weaker force within the industry.
 The industry in which Nestlé operates is an important customer for its suppliers.
This means that the industry’s profits are closely tied to that of the suppliers. These
suppliers, therefore, have to provide reasonable pricing. This makes the bargaining
power of suppliers a weaker force within the industry.

How Nestlé can tackle the Bargaining Power of Suppliers?

 Nestlé can purchase raw materials from its suppliers at a low cost. If the costs or
products are not suitable for Nestlé, it can then switch its suppliers because
switching costs are low.
 It can have multiple suppliers within its supply chain. For example, Nestlé can have
different suppliers for its different geographic locations. This way it can ensure
efficiency within its supply chain.
 As the industry is an important customer for its suppliers, Nestlé can benefit from
developing close relationships with its suppliers where both of them benefit.

Bargaining Power of Buyers - High

 The number of suppliers in the industry in which Nestlé operates is a lot more than
the number of firms producing the products. This means that the buyers have a few
firms to choose from, and therefore, do not have much control over prices. This
makes the bargaining power of buyers a weaker force within the industry.
 The product differentiation within the industry is high, which means that the buyers
are not able to find alternative firms producing a particular product. This difficulty
in switching makes the bargaining power of buyers a weaker force within the
industry.
 The income of the buyers within the industry is low. This means that there is
pressure to purchase at low prices, making the buyers more price sensitive. This
makes the buying power of buyers a weaker force within the industry.
 The quality of the products is important to the buyers, and these buyers make
frequent purchases. This means that the buyers in the industry are less price
sensitive. This makes the bargaining power of buyers a weaker force within the
industry.
 There is no significant threat to the buyers to integrate backwards. This makes the
bargaining threat of buyers a weaker force within the industry.

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How Nestlé can tackle the Bargaining Power of Buyers?

 Nestlé can focus on innovation and differentiation to attract more buyers. Product
differentiation and quality of products are important to buyers within the industry,
and Nestlé can attract a large number of customers by focusing on these.
 Nestlé needs to build a large customer base, as the bargaining power of buyers is
weak. It can do this through marketing efforts aimed at building brand loyalty.
 Nestlé can take advantage of its economies of scale to develop a cost advantage and
sell at low prices to the low-income buyers of the industry. This way it will be able
to attract a large number of buyers.

Rivalry Among Existing Firms - High

 The number of competitors in the industry in which Nestle operates are very few.
Most of these are also large in size. This means that firms in the industry will not
make moves without being unnoticed. This makes the rivalry among existing firms
a weaker force within the industry.
 The very few competitors have a large market share. This means that these will
engage in competitive actions to gain position and become market leaders. This
makes the rivalry among existing firms a stronger force within the industry.
 The industry in which Nestle is growing every year and is expected to continue to
do this for a few years ahead. A positive Industry growth means that competitors
are less likely to engage in completive actions because they do not need to capture
market share from each other. This makes the rivalry among existing firms a
weaker force within the industry.
 The fixed costs are high within the industry in which Nestle operates. This makes
the companies within the industry to push to full capacity. This also means these
companies to reduce their prices when demand slackens. This makes the rivalry
among existing firms a stronger force within the industry.
 The products produced within the industry in which Nestle operates are highly
differentiated. As a result, it is difficult for competing firms to win the customers of
each other because of each of their products in unique. This makes the rivalry
among existing firms a weaker force within the industry.
 The production of products within the industry requires an increase in capacity by
large increments. This makes the industry prone to disruptions in the supply-
demand balance, often leading to overproduction. Overproduction means that
companies have to cut down prices to ensure that its products sell. This makes the
rivalry among existing firms a stronger force within the industry.
 The exit barriers within the industry are particularly high due to high investment
required in capital and assets to operate. The exit barriers are also high due to
government regulations and restrictions. This makes firms within the industry
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 reluctant to leave the business, and these continue to produce even at low profits.
This makes the rivalry among existing firms a stronger force within the industry.
 The strategies of the firms within the industry are diverse, which means they are
unique to each other in terms of strategy. This results in them running head-on into
each other regarding strategy. This makes the rivalry among existing firms a strong
force within the industry.

How Nestle can tackle the Rivalry Among Existing Firms?

 Nestle needs to focus on differentiating its products so that the actions of

competitors will have less effect on its customers that seek its unique products.
 As the industry is growing, Nestlé can focus on new customers rather than
winning the ones from existing companies.
 Nestle can conduct market research to understand the supply-demand
situation within the industry and prevent overproduction.

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NESTLÉ GROWTH STRATEGY

The growth strategy of Nestlé is to enhance the quality of consumers’ lives by

offering tastier and healthier food and beverage choices to consumers. It needs to be
specific nutritional needs. Nestlé has to create its popularly positioned products for
consumers with low incomes, bringing its brand promise and quality towards
consumers.

Successfully achieving localization in the increasingly globalized food industry

Product planning, production, marketing and services form a strategy of successful
localization of a global company. Nestle has 2 organizations that focused on
leveraging its global reach to achieve operational efficiencies: GLOBE and GNBS
provide the process, organization and technology infrastructure to allow Nestlé to
leverage its global size GNBS will enable Nestlé to leverage its scale to increase the
efficiency and effectiveness of its "back office" whilst enabling the markets and
businesses to focus on demand generation and profitable growth.
Besides that, the main business level strategies that are used by nestle are cost
leadership, differentiation and focus strategy. These are discussed as follows:
Low Cost Leadership Strategies:

 Nestle is a leading manufacturer of quality foods and beverages. It purchases the

highest quality of raw materials from different suppliers from the market.
Therefore, the cost of production of nestle is comparatively higher than small scale
businesses, due to this nestle was unable to maintain low cost leadership strategy in
industry, but their business level strategies are largely focused on achieving this
goal through cost efficient operations, quality assurance and effective inventory
management. Furthermore, the company management is now emphasizing on
controlling the unnecessary costs in all the major functional areas. This includes
inventory management, manufacturing, marketing, research and development,
strategic investment and customer services. The current strategy of nestle is to
purchase high quality of raw materials of reliable suppliers that provides them high
quality of raw materials in best prices and then use those raw materials to
manufacture quality foods and beverages in the most advanced production plants.

Differentiation Strategy:

The second business level strategy nestle uses is differentiation strategy. The main
purpose of this strategy is to create a brand image in the mind of their
customers/consumers and to differentiate their products from their competitors.
Nestle manufactures more than 10,000different products under 8,500 different
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brand names and most of their products are easily identifiable from their competitor
because of their features, quality, ingredients, packaging, pricing, labeling and other
attributes. These products are manufactured under strict quality and health standards
and maintain them. Not only that these products are sold and marketed with the
company’s promise to deliver real value for the customers money.
 While introducing new products in the market nestle ensures that it establish a
unique positioning in the mind of their consumers and their choice parameters.
They never compromise on the quality of their products to achieve economy of
scale or low-cost leadership to gain competitive edge over their competitors. Rather,
they strive to build as differentiated positioning among its industry rivals on the
basis of a product quality and associated health and nutrition benefits.

Focus Strategy:

The third most important business level strategy of Nestlé is to focus on the
differentiation and low-cost leadership in specific products, brands, or operational
areas. For example, it uses focused low-cost strategy to control the heavy
manufacturing and marketing costs of its top selling brands. This strategy is used in
order to lessen the financial burden that is put by these top brands on the overall
profitability of the company. Similarly, the focused differentiation strategy is to
give emphasis on making improvements and alterations of differentiating all the
products in the currently offered brands. Both these strategies enable the company
in generating more attractive revenues in its top-quality brands in a more
competitive fashion.

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LEADERSHIP AT NESTLÉ

Rather than maintaining the formal authorities given by organization, it’s the
responsibility of managers at Nestlé to inspire the people and add value for
company and add value for society at large which make them people oriented. Such
a motivation and commitment results in increasing the value for organization which
put Nestlé in” Team Management” leadership style as per leadership grid. Due to
rapid change in external environment and severe competition which was
unpredictable in past and requires the managers to develop some enhanced
capabilities which can be described in following principles formulated by Nestlé.

Lead for winning:

Credibility development through proper leadership style, achievement and coherent
action. Based on the nature of situation and culture of a particular environment
proper leadership styles are applied by managers in their different work units.
Managers at Nestle think about a phenomenon from different perspectives in a way
which leads toward innovation. Employees are provided with the opportunity of
taking risk and openness to new experiences which many times leads to the
mistakes but they are tolerate able if the mistakes are becoming the source of
learning and employees are committed to learn from them. Innovation needs
experiments and not every experiment brings favorable results, but some can
entirely change the way the work was done and managed. So, all these experiments
are possible when the management is ready to tolerate the results of failures, which
is the case of Nestle.

Management of expectations and alignment of every action with the overall or

corporate strategy of company is the key factor of success for company and the
importance of both of them is recognized on every level by Nestle.

Balanced lifestyle, good level of general and professional education, responsible

behavior are the key characteristics of managers at Nestle which when they lead by
example shifts toward the employees on every level. All of such actions and
demonstrations make it possible to lead for winning.

Management for results:

Maintaining exposure in the situations of intense pressure while in the same time
maintaining the temperament and capacity of taking initiatives and risks is most of
the times very difficult for managers. Effectively and efficiently managing between
these both extremes is the difference between being just a manager and being a
leader. Managers at Nestle are trained for managing them.
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Business units at local level, regional level, corporate and global level requires
synergy. Which is the result of deep level of proactive cooperation among all of
them. Leaders at Nestle are trained for creating synergy on all levels.

Change is inevitable and but managing the consequences of change is the

responsibility of a leader and the effective management results in managing the
change in a way that produces favorable results for organization like Nestle. All the
above leadership practices result in achieving business objectives in a way that the
compliance is maintained with sustainable practices.

Grow teams and Talent:

Nestle ensures personal commitment of its employees toward their work and
achieving their individual goals so that the overall goals of organization become
able to meet which results in promoting the organizational success.

Company develop the leaders of tomorrow by addressing them and allowing them
to progress in the area which provides them the opportunity to expand their
capabilities on individual and group levels. For developing the leaders of tomorrow
company understands the extent to which the continuous learning and sharing of
ideas in a free manner is important.

Employees can never know about their exact performance and until they are
provided with the honest and fair feedback from their managers which includes
performance appraisal in a way that respect of employee will never be shaken on
any step.

Doing all these leadership practices, management at Nestle is always conscious abut
maintain the exact balance of diversity and gender prevails in the organization.

Competing and connecting externally:

Continuously looking toward, the ways to satisfy the consumers in most innovative
way and attracting the new customers in a compelling way is also the part of
leadership practices at Nestle. Nestle believes in an outside in perspective for
customers and inside in for the employees of organization and seeks good business
relations with all the stakeholders.

Diversity:
Diversity is an important debate in organizational circles for a long period of time.
Some organizations try their best to increase diversity in their work settings while
others pose their every action against it. So, think that the diversity can enhance the
productivity because of many different ideas from different thinking while other
claim that due to diversity there are conflicts among employees which results in low

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productivity and wastage of time. Through empirical analysis Researchers declared
that the diversity is beneficial for an organization if the differences among the
employee are managed properly.

MOTIVATION APPROACH IN NESTLÉ

Nestle has put a significant importance on the motivation of employees because it

has been determined that employees will be more satisfied with their jobs and also
provide better customer service and higher volumes of sales. Organizations that
motivate their employees create job satisfaction for personnel allowing individuals
to feel empowered and encouraged to support the organization to the best of the
abilities. Job satisfaction through motivation also creates a lower turnover of
employees which provides a better work environment for other employees and also
saves organizations time and money in recruiting efforts.
Nestle sets high expectations for employees but also provides them with the tools
that they will need in order to be successful. Team building and special training
sessions are crucial to motivate employees. Training is completed online, on the job
training during normal working hours, and also through mentorship programs with
other employees. Employees must have a full understanding of the organization so
they are familiar with how the company was started, where the company currently
stands competively, and also what the future holds for the company. An employee
that is fully aware of the future will be more likely to stay for the long term which
makes turnover for the organization much less of a risk.
Nestle has conducted training sessions in the past that provided a guided discussion
through the mission statement of the organization, job skills for a variety of
positions so that each employee is aware of what others within the company do,
tastings of different items the organization offers the general public, detailed.
Nestlé’s motivation strategy includes financial motivators, recognition and
autonomy

FINANCIAL MOTIVATORS AT NESTLÉ

Pay Nestlé have done a lot of research into what motivates their employees and
have found that salary is not generally seen as the biggest motivator. Most of
Nestlé’s employees have a normal salary and a variety of fringe benefits. Nestlé
motivate their staff with a combination of nonfinancial rewards and performance-
based payments. Nestlé pay their staff based only on their performance, not on
hierarchy. Pay rises are based on performance evaluation and an annual salary
review. The department manager determines the percentage pay rise and if the
business is not doing as well as hoped then the pay increase will be low. Nestlé
ensure their salaries are competitive by employing an outside research firm to keep
track of competitor pay rates.
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Bonus scheme Nestlé has a bonus scheme for the employees and will pay a bonus
to all its staff members. The level of bonus depends on whether the overall business
achieves its profit goals, if the employee achieves their individual targets and lastly
what job role the employee has. Nestlé sets targets and goals for their staff that are
aligned to business objectives. Having a bonus scheme can encourage staff to
achieve certain goals. If the staff members achieve their targets, they receive a
bonus payment and the company will have achieved its goal. For a bonus scheme to
be effective, the targets and goals for the staff must be outlined clearly at the
beginning, making sure staff are motivated to achieve the goals that the company
has set. It is important targets are achievable otherwise staff may become
disillusioned.

NON-FINANCIAL MOTIVATORS AT NESTLÉ

Recognition was consistently the number one thing that stimulates staff. Nestlé
train their managers to recognize their employees’ performance. The company does
this by rewarding them with small gifts such as recognition cards, vouchers, etc.
Nestlé believes recognition is actually one of the most effective ways to motivate
employees. They do this through weekly huddles, calling attention in a staff
meeting to employee’s job performance or recent achievement, and using and
crediting staff members’ ideas when instituting changes or new policies.

Career opportunities Nestlé develop career plans for all their employees and then
make sure they are followed through. Through training, employees can learn new
skills and are always challenged to grow, as a beneficial result they work better as
both individuals and team members. Nestlé believes that giving employees the right
tools to achieve highly set expectations is very important. They do this by training
managers for new roles and they help pay for graduate studies. Autonomy Nestlé
promote a climate that encourages staff to show initiative and like to give staff the
ability to make their own decisions.

Nestlé believes that by motivating its employees it can increase sales, improve
customer service and increase productivity without significant costs and makes
employees more satisfied with their jobs.
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