MGT790

Individual Assignment 1

1. Discuss the Vision, Mission, Value proposition, Objectives and current strategy in
place.
2. Identify specific threats and opportunities faced by this organization especially in this
digital era. Ideas here must be given enough thought and must relate directly to the
industry the organization is operating in.

Nestlé

Introduction

The organization in Malaysia that I had chosen is Nestlé.

The vast Nestlé Group started humbly ~ with the vision of one Swiss chemist, Henri Nestlé.
At a time when there was high infant mortality in Europe due to malnutrition, this dedicated
man began experimenting with nutritious food supplements to overcome the problem. In
1867, he was approached to help an ailing premature infant who was unable to accept his
mother's milk or any of the conventional substitutes. The infant began to take the milk food
supplement he had developed, and a life was saved. The product, called Farine Lactée
Nestlé, was soon marketed throughout much of Europe, and a new brand name began to
take on life.

The Nestlé Coat-of-Arms

Henri Nestlé adopted his own coat of arms as a trademark in 1867. Translated from German,
Nestlé means little nest and the now-famous symbol is universally understood to represent
nurturing and caring, security, nourishment and family bonding. These attributes are still the
guiding legacy for the company Henri Nestlé founded as it fulfills its commitment to 'Good
Food, Good Life.'

In 1905, the Nestlé Company merged with the Anglo-Swiss Condensed Milk Company, the
first condensed milk factory which opened in Switzerland in 1866. Nestlé entered into the
milk chocolate business in 1904 when Peter & Kohler Swiss General Chocolate Company
produced milk chocolate under the Nestlé trademark. The chocolate company later joined the
Nestlé Group in 1929.

While the original business was based on milk and dietetic foods for children, the new Nestlé
grew and diversified its range of products, through acquisitions and mergers with the better
known brands of the time. For example: The manufacturing of LACTOGEN began in 1921,
and in the same year, a beverage containing wheat flour was marketed under the brand
name MILO. In 1938, NESCAFÉ, the world's first instant coffee was introduced. Then, in
1947, the MAGGI Company, manufacturer of soups and bouillon invented by Julius Maggi
merged with Nestlé.Nestlé continued to expand through the years with some major
acquisitions.

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Today, the Nestlé Company still adheres to its founder's beliefs and principles therefore, they
very much people-oriented, and committed to understanding its consumers' needs
throughout the world in order to provide the best products for their lives.

Nestlé, Bringing 'Good Food, Good Life'

As the leading Food, Nutrition, Health and wellness Company, Nestlé is the provider of the
best food for whatever time of day and for whatever time of your life. Nestlé has grown to
become the world's largest food company offering more than 8,500 brands and 10,000
products. With its headquarters in Vevey, Switzerland, Nestlé has more than 456 factories
spread over 80 countries, and employs more than 283,000 people.

Nestlé in Malaysia

Nestlé's commitment to providing quality products to Malaysians dates back almost 100
years ago. Nestlé began in Malaysia in 1912 as the Anglo-Swiss Condensed Milk Company
in Penang and later, growth and expansion made a move to Kuala Lumpur necessary in
1939.

Since 1962, with its first factory in Petaling Jaya, Nestlé Malaysia now manufactures
its products in 7 factories and operates from its head office in Mutiara Damansara. The
Company was publicly listed on the KLSE now known as Bursa Malaysia Berhad on 13
December, 1989. Today, the Company employs more than 5000 people and manufactures
as Nestlell as markets more than 300 Halal products in Malaysia. Its brand name such has
MILO®, NESCAFÉ®, MAGGI®, NESPRAY® and KIT KAT® have become trusted household
names and enjoyed for generations.

Vision

“To be a respected, trustworthy food, nutrition, health, and wellness company”

A vision statement for a company or organization focuses on the potential inherent in the
company's future, or what they intend to be. Thus it is their priority to make sure the
organization whether the organization in the headquarters or throughout the world, they need
to make this vision statement get understand and across the entire organization in order to
achieve it.

Mission

“Nourishing and enhancing the lives of Malaysians for generations to come”

Since the company Nestle is operated in Malaysia, their focus or mission would be
Malaysian-centric whereby it is their mission to give back to the community that they had
operated in. It is also their mission to actually think globally but act locally which means as a
global company, they think as globally, but still they want to cater to the local demands or
market.

Corporate Philosophy

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

 Manufacture and produce world-class products of the highest consistent quality,
reliability and convenience based on business excellence principles throughout the
operations.
 Maximise the use of good quality local raw materials.

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  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

Value Proposition

Since Henri Nestlé first developed his successful infant cereal Farine Lactée, the company
have built the business on the conviction that to have long-term success for the
shareholders, Nestle not only have to comply with all applicable legal requirements and
ensure that all the activities are sustainable, but additionally Nestle have create significant
value for society.

As of 2011, a modular training programme will be rolled out on the various components of
the Corporate Business Principles. The depth and focus of the trainings will be established in
accordance with the materiality for the different functions within the company. For example,
the training on the human rights components will focus on managers and employees in
countries of higher human rights risks as a priority, with the aim to having completed the first
training cycle by the end of the year.

The 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

The 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. Nestle
express this via the 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

Nestle are committed to responsible, reliable consumer communication that consumers can
exercise their right to informed choice and promotes healthier diets. Nestle respect consumer
privacy.

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4. Human rights in the business activities

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

5. Leadership and personal responsibility

The success is based on the people. Nestle treat each other with respect and dignity and
expect everyone to promote a sense of personal responsibility. Nestle recruit competent and
motivated people who respect the 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

Nestle are committed to preventing accidents, injuries and illness related to work, and to
protect employees, contractors and others involved along the value chain.

7. Supplier and customer relations

Nestle require their suppliers, agents, subcontractors and employees to demonstrate

honesty, integrity and fairness, and to adhere to the non-negotiable standards. In the same
way, Nestle are committed towards the customers.

8. Agriculture and rural development

Nestle 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

Nestle commit themselves to environmentally sustainable business practices. At all stages of

the product life cycle Nestle strive to use natural resources efficiently, favour the use of
sustain ably-managed renewable resources, and target zero waste.

10. Water

Nestle are committed to the sustainable use of water and continuous improvement in water
management. Nestle recognise 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.

Nestlé continues to maintain its commitment to follow and respect all applicable local laws in
each of its markets.

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Objectives

As Nestle move forward, Nestle will continue to innovate and renovate the product
portfolio to cater to evolving consumer preferences, providing Malaysians with great value for
wide range of great-tasting, high quality, nutritious products.

Nestle have been successful as a company in Malaysia for over a hundred years, and next
year will mark the 150-year milestone for Nestlé, globally. Ultimately, Nestle are committed
towards maintaining their business strategy of prudent cost management, coupled with
proactive investments for the future. Through steady and continuous investments over the
long-term and delivering solid results over the short-term, Nestle are confident that they will
able to capitalise on the vast opportunities in Malaysia.

Current Strategy

A major highlight was the Nestlé Promosi ‘Lebih Kebaikan Lebih Nilai’, in March – a key
campaign building on our Nutrition, Health and wellness platform. The Sales Team supported
this campaign by executing over 23,000 in-store displays across various channels
nationwide.

In September 2015, Nestlé carried out another major corporate campaign, ‘Lebih Nilai, Lebih
Funtastik’ Promotion, offering value packs and a chance to win holiday packages. This was
supported by a comprehensive marketing campaign, which included multi-brand displays and
in-store sampling as well as advertisements in the mainstream and digital media. Both the
promotions resulted in successful sales uplift and increased market shares.

Total carbon footprint was reduced through initiatives such as recycling campaign for
packaging materials, market trial for natural gas refrigerant freezers, and embarking on the
Zero Landfill journey. On-going efforts to reduce carbon dioxide (CO2 ) emissions in the
Supply Chain were also successful in minimising impact on the environment, as well as
reducing distribution expenses per kilogramme of delivery.

In addition to the environmental factors, the sustainability of the company is also very much
dependent on the workforce, as it is people that will drive the business forward. Thus it is
critical that the company not only attract the best talents but also retain current ones. Efforts
to do this include ensuring safety at the workplace and providing career opportunities through
various training programmes, as well as continuing with initiatives to tap fresh talent from
universities and relevant agencies, such as Talent Corp Malaysia.

In an effort to enhance and further strengthen the work culture, Nestlé Malaysia organised
and conducted a Leadership & Personal Effectiveness Programme – LEAD PEP 2.1 – for its
senior managers, which included the Company’s Managing Director, as well as division
heads and business unit managers.

Implemented in collaboration with leadership experts from Mount Eliza Executive Education,
University of Melbourne and Melbourne Business School, the programme addressed topics
that are key and essential in becoming a good leader such as leadership, self-awareness,
motivation and engagement of employees, coaching, strategic human capital, cultural
sensitivity and awareness, global mindsets of leadership, navigating complex and abstract
challenges and marketing

It is also important for employees to embrace the Nutrition, Health and wellness (NHW)
lifestyle and the Company has several initiatives in place to promote this.

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On a regular basis, Nestlé carries out a training programme called Nutritional Quotient (NQ),
aimed at equipping employees with regular nutrition education sessions and empowering
them to apply NQ in their professional activities and day-to-day lives.

The company also organised and carried out health-related activities throughout the year to
encourage healthy eating and active lifestyles, and these include health and wellness tips via
e-mail, and programmes on fitness, health screening and stress management.

As further encouragement to employees, Nestlé teamed up with Fitness First to organise the
Nestlé Treadmill Challenge, which is aimed at encouraging employees to lead healthier
lifestyles and showing them that staying fit can also be fun. The Challenge, which is the first
of its kind for Nestlé, required participants, in teams of five, to run on the treadmill for 10
minutes.

With its significant investment in its people, Nestlé is widely acknowledged as a leading
employer and a great place to work, and this has been recognised with the award for the
Most Popular Graduate Employer in the FMCG/Retail category at the Malaysia’s 100
Leading Graduate Employers Award 2014.

Threats

1-Power of the consumers using social media

The most fatal threat in this digital era would be the social media made by the
consumers. Anything that goes viral in the internet can actually impact the business whether
it is a negative side or even a positive side. However, when the environmental activists had
made the claim that Nestlé, which makes Kit Kat, used palm oil from companies that were
trashing Indonesian rainforests, threatening the livelihoods of local people, and pushing
orangutans toward extinction. It was the realization of a huge shift in power in the marketing
landscape and that consumers had become empowered to make--or break--a brand.

With the emergence of the interactive web (or Web 2.0), social media applications gained
enormous popularity among internet users, forcing businesses to adapt their marketing
strategies and engage with social media as part of their marketing toolbox. Social media has
empowered the public and weakened the position of businesses by exposing them to
negative publicity, customer attacks and reputation damage.

2- Uncontrollable issues due to dependency to the technology

Nestlé produces hundreds of products, has a global network of suppliers, and multiple
distributions and selling channels. Hence, to anticipate and respond in this rapidly changing
in market demand condition is very difficult. Due to digitalization also it really hard to predict
the market demand because one day the company will face threat in terms of boycotting and
turmoil of a certain country which news travel fast. When forecasting a market demand,
Nestlé will need information to detect shifts in demand early so they could adjust for trends
and send the right messages to the suppliers, shippers, and distribution centres before they
are flood with unwanted or defective goods or shortages.

The weakest links are issues they are unable to control. For instance, dependency on
the technology also can create disasters that have been an issue affecting especially
materials due to when the machine breakdown. The inaccuracy of orders received in
inventory due to poor management system that does not integrating with the right people that
failed to function properly. No company can ever achieve the requirement of zero defects
especially in foods and beverages industry. For example, when the purchasing department of

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Nestlé ordered 10,000 of mixed berries yoghurt from its dealer, but what the retailer received
was only 8,000 of mixed berries yoghurt, or on another occasion they might received
defective inventories. Another example is, when Nestlé tells its dealer that they needed extra
orders of a particular product to be shipped right away because of unexpected increased in
demand, but in fact, the supplier may already has orders from other customers. This will
cause Nestlé to encounter a great loss because of inaccurate order of magnitude because
they could not produce the actual output needed.

3- Lack of improvement in logistics system

Even though Nestlé has a logistics department but it doesn't deal with transportation
logistics. Nestlé outsourced its supply chain transport to the third-party logistics (3PL) as
Nestlé tries to cut their supply chain costs and concentrate more on their in-plant operations.
Although they had the system to keep track of the logistics still it is a threat to the company if
no action taken to improvise the system or build a new system that can customize to their
own needs.

4- Retail business using technology

The most important threat in the digitalization would be the emerging and developing market
of the online business. There is a growing new channel of the retail business which the e-
retail that consists of products being delivered directly to consumers without the consumers
go to the traditional business store.

Besides, there are also many apps in the internet that are simplifying the hassle of the
consumers in their shopping experience such as product locator. It will become a threat if
there is no action or interest in placing their product into the technology bandwagon because
definitely other rival companies will lead if the consumers feel other companies can lessen
their hassle.

There are many rivals and threats in term of online business to Nestle. It is crucial for them
to create opportunities with the right channel in the industry.

Opportunities

1- Develop teams to counteract the reputation damage

Nestle need to develop a various of response strategies with different practices, especially
relating to each of the cause of the reputation damage such as creating the best policy for
the company to successfully manage their reputation and create teams or people capable of
managing the risks to their reputation arising from social media

2- Balance of technology

Nestlé could use both manual and automation system in managing sales, services, and
others. With the advance technologies and scientific expertise Nestle can carefully analyze
their raw materials and finished products and assure that they provide safe and healthy
product to all consumers in every part of the world and also believes that it is their
responsibility to protect consumers and maintain their trust in Nestle's products and brand.

The company should not too dependent on using the technology or machine only even
though adapting advanced technologies could help saving cost as labour cost is reduced, but
if there are still problems occur, it will affect the business such as loss of customers because
of the mistake. Therefore, Nestlé also must update the system software regularly and full

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utilisation of available technology as well as the manual operators, which will effectively
increase the efficiency and dependability of the supply chain systems.

3- Create their transportation model

Nestlé is a multinational company; it definitely has the capability in owning a transportation

logistics department which can have an improvised and customize model especially for
Nestle only. In Malaysia independently there are hundreds variety of Nestlé's products, 7
manufacturers as well as thousands of customers such as retailers, wholesalers, distributors,
therefore, Nestlé must handle its own transportation service. Nestlé could mould or build their
own model in such as mode selections, routing, and others. Besides, they could save the
cost in transportation compare to third-party logistics (3PL) because 3PL charges according
to the quantity, inventory storage space, value added processes such as special handling,
and more. It may benefit in the short run, but definitely not in the long run, as Nestlé strives to
achieve effectiveness and efficiency.

4- Jump into new technological trends

It has been a few years since companies began implementing mobile services to
complement functions such as customer service, call centers, etc. As brand marketers start
to truly realize the benefits (and cost savings) of their mobile investments, expect more
instances where companies bring a utility that was once served through a human to mobile.

Examples of mobile for utility include remote check deposit in financial apps, and mobile
banking as a whole, which has allowed banks to operate anywhere, even places where there
aren’t any branches, Product locators in retail apps are another good example since they
make it easy on sales associates in-store.

Conclusion

Despite the threats, Nestle still owns some of the world’s best-recognized and most
profitable food brands. Unfortunately, it faces a dramatically-changing grocery market in
which traditional brands are losing much of their effectiveness. Such brands are heavily
dependent upon traditional advertising and marketing strategies such as television
commercials, and just the media which are often ineffective in today’s world. In this digital
era, every little details need to be considered and robustly gone through.

References

Nestlé. (n.d.). Nestle Malaysia. Retrieved April 6, 2016, from http://www.nestle.com.my

Essays, UK. (November 2013). Brief History Of Nestle Malaysia Management Essay.
Retrieved from https://www.ukessays.com/essays/management/brief-history-of-nestle-
malaysia-management-essay.php?cref=1
Essays, UK. (November 2013). The Economic Globalization In Terms Of International Trade
Marketing Essay. Retrieved from https://www.ukessays.com/essays/marketing/the-
economic-globalization-in-terms-of-international-trade-marketing-essay.php?cref=1