EXPERIENTIAL LEARNING ASSIGNMENT

PRINCIPLES AND PRACTICES OF MANAGEMENT

NAME – JAHANVI SINGH

PRN – 20020191020
NESTLE

Nestlé S.A. is a Swiss-based multinational food and drink conglomerate corporation. Founded
in 1866 by Henry Nestlé, the company is considered the largest food company in the world,
producing a range of food and drink products including baby food, powdered milk, tea, coffee,
cereals, dairy products and pet food.

Nestlé is today regarded as one of the world’s most successful and profitable food companies.
Operating in more than 86 countries worldwide, Nestlé is responsible for more than 2,000
brands internationally. This is largely due to the creation of a consistent approach to marketing
and brand strategy that concentrates on the slogan ‘good food, good life’.

MISSION VISION AND VALUES

Nestle’s mission statement is: “The world’s leading nutrition, health, and
wellness company. Our mission of "Good Food, Good Life" is to provide consumers
with the best tasting, most nutritious choices in a wide range of food and beverage
categories and eating occasions, from morning to night.

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Nestlé's vision statement is: “To be a leading, competitive, Nutrition, Health, and
Wellness Company delivering improved shareholder value by being a preferred
corporate citizen, preferred employer, preferred supplier selling preferred
products.” By being the market leader, they (Nestlé) ensure that shareholders make
money. So, it is safe to say that the company’s core vision is to be profitable.
Nestlé’s core values are: “full legal compliance, honesty, fair dealings, integrity,
and respect.” Nestlé’s core values are all directed towards being a company that is
credible. So, by being trustworthy, not only is the company able to get into new
markets but quickly evolve into a large business because the company is so well
trusted by everyone.

ORGANIZATION STRUCTURE AND CULTURE

Nestle Company is a decentralized and aligned organization that is organized

according to the matrix structure. The decentralized organization permits to
subordinate branches to enjoy a proportionately high -level of independence.

In Organization structure, we can see that the management of Nestle is also divided
into 3 types:

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 ❖ Top Level of Management:
It contains of board of directors, chief executive or managing director. The top
management is the final source of authority and it manages aims and policies for an
initiative. It dedicates more time on planning and coordinat ing functions.
❖ Middle Level of Management
The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the operative of their department. They devote
more time to directional and organizational functions.
❖ Lower Level of Management
Lower level is also known as operative/supervisory level of management. It contains
of supervisors, superintendent section, officers etc. Their activities include assigning
of jobs and tasks to various workers. They instruct and guide workers for day-to-day
activities. They are responsible for the quality as well as quantity of production. They
help to solve the complaints of the workers.

CULTURE
Diversity and Inclusion are an integral part of the Nestlé culture. Their aim is to
provide a workplace culture that generates equal opportunities for everyone, where
people are treated with dignity and respect. Individuals working in a culturally diverse
environment also report feeling more fulfilled – be it intellectually, emotionally or
spiritually.
The management is of the opinion that diverse employees are the reason behind such
a tremendous success of organization.
In Nestle the voice of every individual from every background is not only heard but
also appreciated. The goal of company is to attract the best workforce from diverse
backgrounds and retain them. The company believes that these employees can create
such products which are liked by the customers all over the world. Having the diverse
workforce like Nestle has not only benefits the company but also the employees and
the societies from which they belong to.

TOP LEADERS AND THEIR STRENGTHS

Henri Nestle invented the first infant food in 1867 his company had the iconic nest logo.
In 1905, the company Henri had found merged with Anglo-Swiss to form the Nestle
Group. Henri Nestlé’s sense of scientific innovation, combined with an instinct for
marketing and a global ambition continues to shape and drive the company today.
The chairman of Nestle is Peter Brabeck-Letmathe who leads the 14 Board of Directors. The
CEO of the company is Paul Bulcke.

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 SIGNIFICANT STRENGTHS OF NESTLE

STRENGTHS:
1. Unmatched research and development capability
2. Strong geographic presence, with one of the best geographically diversified revenue
sources
3. Unrivalled product and brand portfolio
4. Environmental sustainability efforts
5. Ownership of some of the most recognizable brands in the world

1. UNMATCHED RESEARCH AND DEVELOPMENT CAPABILITY

According to Nestlé, one of its key competitive advantages is research and
development (R&D) capabilities. The company spent CHF1.678 billion or US$1.697
billion on R&D in 2015. This accounted for 1.89% of the total revenue.
In comparison, The Coca Cola Company spent 0% of its revenue on R&D and
PepsiCo, Nestlé’s chief rival, spent only 1.2% or just US$754 million of its revenue
on R&D.

Figure 1. R&D spending by the largest food and beverage companies (in US$ billions)

R&D expenditure Revenue % of revenue

Nestlé S.A. 1,697 89.772 billion 1.89%

PepsiCo 0.754 63.056 billion 1.20%

Mondelēz 0.409 29.636 billion 1.38%

Coca-Cola 0 44.294 billion 0%

Nestlé’s R&D capabilities also stem from its R&D network. The company has the
largest R&D centres’ network of any food or beverage company in the world, with 34
R&D facilities and over 5000 people working in them.
Nestlé’s superiority in R&D against its rivals provid es a sustainable competitive
advantage and long-term success.

2. STRONG GEOGRAPHIC PRESENCE, WITH ONE OF THE BEST

GEOGRAPHICALLY DIVERSIFIED REVENUE SOURCES

Nestlé operates and sells its products in 189 countries, reaching almost the entire
world. The company has divided its operating segments into 3 geographic areas:

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 • The Americas (AMS)
• Europe, Middle East and North Africa (EMENA) and
• Asia, Oceania and sub-Saharan Africa (AOA). None of the regions earn over
50% of the total revenue.

Nestlé, unlike most of its rivals, does not rely on any single country or a few different
countries to generate most of its revenue.

3. UNRIVALLED PRODUCT AND BRAND PORTFOLIO

Nestlé’s product portfolio is wider than any of its rivals in the industry. The company
offers over 2000 different product choices in 7 main categories:

• Powdered and liquid beverages. Brands include: Nescafé, Nescafé Dolce Gusto,
Nespresso, Nestea.
• Milk products and ice cream. Brands include: Nestlé, Dreyer’s, Movenpick.
• Prepared dishes and cooking aids. Brands include: Maggi, Chef , Stouffer’s,
Wagner.
• Nestlé Nutrition. Brands include: Wyeth, Nan, S-26 Gold, Lactogen.
• Pet Care. Brands include: Purina, Friskies, Pro Plan, Felix, Gourmet.
• Confectionary. Brands include: Nestlé, KitKat .
• Water. Brands include: Pure Life, Vittel, Perrier.

Wide product portfolio allows Nestlé to better satisfy various consumers’ needs and
target wider consumer segment. The company is also less affected by the changing
consumer tastes or consumer backlash against one of its brands.

4. ENVIRONMENTAL SUSTAINABILITY EFFORTS

Nestlé prides itself on company’s sustainability efforts. The company’s en vironmental

initiatives have helped to reduce waste, packaging material usage and to keep the
environment cleaner.

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Since 1991, the company has saved 500 million kg of packaging material by
redesigning its packages. Nestlé uses recycled materials and choose s materials from
renewable source whenever possible.

Few of the company’s rivals could match the company’s efforts in sustainability,
which result in lower production costs, cleaner environment and happier communities.

5. OWNERSHIP OF SOME OF THE MOST RECOGNIZABLE BRANDS IN THE

WORLD

Nestlé owns and markets a few well recognized brands, such as Nestlé, Nescafé,
Maggi, Purina, KitKat and Nan. According to Forbes and Interbrand, Nescafé brand
is the 32nd and 36th most valuable brand in the world, and is worth US$16.3 billion
and US$12.5 billion, respectively. Nestlé brand also ranks as the 49th and 56th most
valuable brand in the world in Forbes’ and Interbrand’s lists.
Brand value is closely related to brand recognition. Nestlé’s brand recognition is also
increased by its presence in 189 countries. Brand awareness helps the company to
introduce new products and sell the current products more easily.

NESTLE’S SUCCESS STRATEGY

PLANNING

Nestle plans to offer a portfolio of products and services that evolve with consumer
demands. They strive to create products that are right for consumers and that
contribute to public health and a sound environment.
We are managing our coffee, pet care, infant nutrition and bottled water categories
with an emphasis on growth. Nestlé has a significant global market share in these
categories. We have some of the world’s leading brands,
including Nescafé, Purina, Gerber and Nestlé Pure Life. Furthermore, we have
science and technology-based competitive advantages across these categories. Nestlé
is also pursuing growth opportunities in consumer healthcare to complement our focus
on these key food and beverages categories. As a result, we are expanding our presence
across the pharmacy channels in both emerging and developed markets.

ORGANIZING
Organizing involves the establishment of the organizational structure of the company.
Under this function, emphasis is mainly on the division, coordination, and control of
tasks and information within the organization.

Nestle has successfully built an organizational culture, which improves employees’

creativity and motivation. Organization of operations within the company promotes
empowerment and delegation within the franchise, enhancing its competitive
advantage.

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The collaborative management approach used by Nestle ensures that all its
subsidiaries located in different regions operate smoothly and collaboratively .

CONTROLLING

Control is a regulatory process of establishing standards to achieve organiz ational

goals, comparing actual performance against the standards and taking corrective
action when necessary.

Feed forward controls are helpful to managers because they allow a manager to plan
work effectively; they can regulate resources like employees, raw materials and capital
ahead of time. The company ensure that all Nestlé units have the necessary systems in
place to deliver the same level of basic safety and health protection for all employees
to avoid incidents. Nestle follows their slogan of “good food, good life” by training
their employees to produce high quality products.

LEADING

Leading also contributes to achievement of organizational goals. Nestle practices

“DEMOCRATIC LEADERSHIP STYLE”. In Nestle, they emphasize on respect and
faith. So, they adopt democratic leadership. However, democratic leadership is a good
leadership style but also is a significant issue in Nestlé’s management. Nestle adopt
democratic leadership needs total trust between the employee and manager One of the
key features of leadership planning at Nestle is that leadership positions are filled
internally through a planned succession pipeline. External hiring takes place only
when absolutely necessary.

NESTLE INDIA

It first arrived in India in 1956. Since then, from selling its first milk product in the
1960s to offering a wide range of quality products in the Indian market, Nestle has
grown exponentially in India.
It offers products in beverages, breakfast cereals, chocolates and confectionery, dairy,
nutrition foods as well as vending and food services. Popular products such as Maggi,
Kit Kat, Polo, Milkmaid, and Nescafe fall under Nestle India’s portfolio.

Today, Nestle India has a significant presence in the FMCG sector and enjoys a
healthy market share in the food and beverage industry.

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Nestle’s Target Audience in India
Nestle India has positioned its wide range of product offerings in such a way that it
covers audiences beginning from 2-year-olds to working-class professionals.

CONCLUSION

Nestle aims to make value for consumers that can be sustained over the long term by
offering a broad assortment of high quality, safe nutrient merchandises at low -cost
monetary values.

The company continuously focuses its attempts to better understand the altering life
styles of modern India and anticipate consumer demands in order to supply
convenience, gustatory sensation, nutrition and health through its merchandise
offerings.

Nestle had been ranked at significant position in the list of 10 most admired
companies in the world for four consecutive years, making it the only food giant to
hold such a place. Nestle believes in the branding that connects with the masses and
their needs in everyday life. A simple idea to make daily routine better now turned
into a billion-dollar enterprise.
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