Nestle
Nestle
Nestle
RESPONSIVENESS
1.0 INTRODUCTION
1.1 Origin
This report was orally authorized by Ms. Mahjabeen Ahmad, Associate Professor of IBA ,
Dhaka University, to a group of MBA students of MIST, Mirpur Cantonment. Group consists
of five members, all of whom are defense services officers. The report is submitted on July 1,
2001.
1.2 Problem and Purpose
1.3 Scope
This report discusses NESTLE’s basic management culture, its products and social
responsiveness. In broader aspect the report covers Nestle’s organizational structure,
management and leadership principles including corporate business principles, different
products and its social contributions all over the world. Besides this, NESTLE in
BANGLADESH is also discussed in short.
1.4 Limitations
Because of the usual huge commitments NESTLE officials were very busy. Therefore,
taking interviews with the managers and collection of other information regarding employees
were very difficult. For better understanding of Nestle’s management policy certain
information regarding the wages policy, promotion policy, career programme etc were
required. But those informations are treated as organization secret by the organization. So
those information could not be collected. However, after strong persuasion some relevant
information could be collected. Besides, maximum information used in this report is collected
from Nestle’s brochures and web pages available in internet. But again the information
available in organization’s brochures were very brief and lacked depth in contents.
1.5 Historical Background
Henri Nestlé,
scientist and businessman,
founded Nestlé over
130 years ago.
In 1867 Henry Nestle, a chemist from Frankfurt who had settled in Vevey, became interested in
infant feeding. To satisfy a clear need , he developed and produced a milk-based food for babies
whose mothers could not nurse them. The new product soon became well-known worldwide under
the name of “Farine Lactee Nestle ( Nestle Milk Food )”.In order to expand into a broader category
and meet more people’s needs, the Nestle Company’s first diversification occurred in 1905 when it
merged with the Anglo- Swiss Condenced Milk Company (1866). Today, processing milk food is still
the company’s chief activity together with the other products of Nestle family such as chocolates,
instant milk-based drinks culinary products, frozen foods, ice cream, dairy products and infant foods.
Nestle is still primarily concerned with the field of nutrition, but it has also acquired interest in
pharmaceuticals and cosmetics industries. As a result of the company’s initiative and bold activity, it
has grown into a huge organization, employing almost 230,000 people in nearly 500 factories
worldwide. Nestle products are now widely distributed on all continents and sold in more than 100
countries.
Popular Nestle brands entered this part of the sub continent during British rule and the trend
continued during pre-independence days of Bangladesh. After independence in 1971, Nestle World
Trade Corporation, the trading wing of Nestle, sent regular dispatches of Nestle brands to
Bangladesh. By that time some of the brands such as Nespray, Cerelac, Lactogen, Blue Cross etc.
became household names. In the early eighties Transcom Ltd. was appointment the sole agent of
Nestle products in Bangladesh. In 1992 Nestle and Transcom Ltd. acquired the entire share capital of
Vita Rich Foods Ltd. Nestle took 60 percent while Transcom Ltd. acquired 40 percent. The name of
the company was also changed at this time to Nestle Bangladesh Limited. In 1998 Nestle took over
the remaining 40 percent share from Transcom Limited. Today Nestle Bangladesh Ltd. is a solid
based enterprise.
1.6 Sources and Methods of Collecting Information
Information used in this report is collected from both primary and secondary sources. For primary
data collection, interview technique was used. NESTLE officials were interviewed at NESTLE’s
Gulshan Branch of Dhaka. As secondary sources, Nestle’s brochures were consulted , Besides, a
handsome amount of information is gathered from internet.
• Nestle is as decentralized as possible within the limits imposed by basic policy and
strategy decisions, as well as the group-wide need for co-ordination and management
development.
.
• Nestle is committed to the concept of continuous improvement of its activities, thus
avoiding more dramatic one-time changes as much as possible.
Nestle is in favour of :
• Flat organizations with few levels of management and broad spans of control, including
project teams and task forces. Networking and horizontal communication are encouraged
without blurring the authority of the managers in the decision-making process. These
principles aim to make the organizational structure and working methods more flexible
and efficient, without undermining the basic hierarchy.
• Clear levels of responsibility in the management structure. It is to avoid too many
hierarchical levels and limit staff work to those tasks necessary for the support of line
management.
• Well defined ling and function responsibilities and their inter-linked character. Nestle
gives line responsibility the edge over functions in order to assure operational speed and
responsibility. However, if functional departments are overruled and feel strongly about a
line decision, both parties should discuss the question or refer it to the next higher level
for resolution.
• Having at every level of the organization a team with a leader and not a team as a leader
(teamwork with responsible leadership).
Nestle Organization
2.3.1 Nestle Global Organization Structure
BOARD OF DIRECTORS
AND
OFFICERES
Chairman
Vice Chairman
Secretary
general
CEO
GM GM GM
Members of the Nestle management at all levels are more concerned with continuously adding
value to the company than exercising formal authority. They can delegate all without abdicating
their proper responsibility.
3.2 Qualities And Characteristics of A Nestle Manager
The higher the levels of the position and the responsibility of a Nestle Manager, the more he/she
should be selected on the basis of the following criteria (in addition to professional education, skills
and practical experience) :
In addition : broad interests, a good general education , responsible attitude and behavior and
sound health.
3.3 Nestle Corporate Business Principles
The Nestle Corporate Business Principles” issued in 1998, reveals the basic rules that company
follow in order to ensure the highest standards of conduct. Areas covered include consumers, the
environment and the manner in which employees are to be treated. These principles have been
translated into over forty languages and are distributed to and discussed with all Nestle managers
3.3.1 Leadership and Development
The “basic Nestle Management and Leadership Principles” describe the culture. It
emphasizes that respect for the individual is a non-negotiable requirement in all dealings with
people. Therefore, it sets the tone of mutual respect that flows throughout the organization.
Nestle believes that its culture contributes to a stimulating working environment which is a
catalyst for strong individual performance. This capacity to enhance human energy is an
essential component to ensure the long term competitiveness of the company. The leadership
style and the dynamic approach to objectives ensure that there is no room at Nestle for
complacency.
The company believes that an individual’s contributions to the organization should match to
the equal amount of inducement given by the organization. The benefit of a job can be
enjoyed by all from a shared distribution of knowledge. The flat structures which are being
implemented across the company and the creation of common business processes will speed
up the sharing of the know-how and intellectual capital across the group.
Nestle gives due importance to working and employment conditions in all countries where it
operates. It says health and safety at the work place are prime requirement and each
individual is responsible to maintain it everywhere in the world. Independent surveys have
shown Nestle have outlined position in respect of the various employment issues in the
“Corporate Business Principles”.
3.3.3 Remuneration
Product innovation and renovation ensures that, portfolio of products is continually refreshed
through new technologies and creative ideas. It includes new products and brands, derivatives
, existing products, brands extensions or packaging innovations . Innovation and renovation
is an important dynamic relationship with the major international retailers. As such,
innovation and renovation is a key contributor both to the improvement in real internal
growth and to the increase in selling prices that are achieved.
Apart from the international attitude and respect for diversity, Nestle is committed to a
number of basic cultural values. These values developed during its long history and
proved useful and appropriate for its type of business. They can be summarized as
follows :
• A more pragmatic than dogmatic approach to business
• Being realistic and basing decisions on facts rather than dreams or illusions
• Commitment to a strong work ethic, integrity , honesty and quality
• Relations based on trust, expecting mutual integrity and rejecting intrigues
• A personalized direct way of dealing with each other, thus trying to reduce
bureaucratic procedures to a minimum.
• Nestle people do not show off but are conscious of their worth and take pride in the
positive image of the company. Basically they are modest but not without style and
sense of quality
• Nestle people are open to dynamic decisions and future oriented. They maintain respect for
basic human values, attitudes and behavior.
Henri Nestle was a German enterpreneur and a pharmacist, living in Vevey, Switzerland . He
was worried by the high level of infant mortality at that time.He created a revolutionary
product “Farine Lactee Nestle” (Nestle Milk Cereal”) which has helped to save the lives of
many children world over. Since then, product quality, innovative capacity and strong brands
have been a priority for Nestle. From the very beginning , Henri Nestle adopted his personal
coat of arms, the nest, as a strong identity for the Company (“Nestle” in Germany means
“little nest”).
4.3 Respect Of Other Culture And Traditions
From its inception, Nestle developed its business internationally. Nestle was always
aware of the fact that food products have to be closely linked to local eating and social
habits . That is why Nestle from the very start always made an effort to integrate itself as
much as possible into the cultures and traditions of the different countries where it
operated. This adaptation is continuing and Nestle accepts cultural and social diversity
and does not discriminate on ethnic, religious or any other basis. Nestle believes that its
activities can only be of long-term benefit to the company if these are, at the same time,
beneficial for the country in question. In short, one can say : global thinking and
strategies but local action and commitment.
Nestle produces a wide variety of food products. A list of products is attached to this report as
appendix 2. The major products are described below:
The production of infant food goes right back to the origins of the Nestlé Company. Henri Nestlé’s
‘Farine Lactée’ was the first product to bear the Nestlé name; it was the first industrially-produced
infant food, based on ‘wholesome cow’s milk’ mixed with cereals. In the middle of the nineteenth
century, one in five children born in Switzerland in the working class died before the end of their first
year. Increasing numbers of mothers were going out to work, and had no time to breast feed.
The First Cereal for Infants
It was against this background that Nestlé had developed his infant food for young children. In 1867 for the first
time Nestle’s new infant food was tested on a 15-day old boy who was very ill. The boy was born prematurely
and was refusing his mother’s milk and all other types of nourishment. Nestlé’s new food worked, and the boy
survived. From the very beginning, Nestlé’s product was never intended as a competitor for mother’s milk.
Nestle believes that during the first months, the mother’s milk will always be the most natural nutrient, and
every mother able to do so should herself suckle her children.” By the end of nineteenth century the demand for
infant food was so great that it was soon being sold throughout Europe, Russia, USA and Australia. The
factors that made it a success then — quality and nutritional value — are still as valid today for the
wide range of infant formula, cereals and baby food manufactured by Nestlé. The World Health
Organization (WHO) recognizes that there is a legitimate market for infant formula, when a mother
cannot or chooses not to breast feed her child. Nestlé conforms its infant food formula to the
principles and aim of the WHO. Nestlé’s expertise as the world’s leading infant food manufacturer,
gained over more than 125 years, is put at the disposal of health authorities, the medical profession
and mothers and children everywhere.
Cereals have been a crucial part of mankind’s morning meal since time immemorial. It wasn’t until
the 19th century that scientific research and technological innovation, and the influence of a group of
American health reformers, gave rise to the crunchy foodstuff known as breakfast cereal. Cereals and
milk are still a firm base for good nutrition.
The need for easy to prepare food was felt back more than a century. With industrial revolution
women got more involved in jobs and found they have less time to prepare meals. So an
alternative was needed. Julius Maggi, an inventive and capable businessman created a vegetables
food product that was quick to prepare and easy to digest. That product is widely known as
‘Maggi’ which proved to be the best- known brand in the history of the food industry. Maggi
merged with Nestle in1947. Now Nestle is producing not only powdered soups but also “Bouillon
Cubes”, Sauces, flavorings and a wide variety of condiments
factory in 1843 were carbonated mineral water and carbonated lemonade. For the production of this
mineral water a spring at vergeze had been utilized for more than two thousand years.
The proprietorship of this products passed from owner to owner and became a part of the nestle
company in 1992.
milk is highly perishable, the storage and shipping of dairy products was always a problem. An
American, Gail Borden changed this concept inventing sweetened condensed milk. Soon after,Henry
Nestle launched his company into condensed milk business. Nestle’s rival Anglo- Swiss company
merged with Nestle in 1905.
5.7 Pet Care
Nestle entered the pet care business with the purchase of “Carnation” in 1985 and consolidated its
position in Europe with the acquisition of the “Spillers” brand in 1998. “Friskies” a product by
Carnation developed in USA since 1930 and in Europe and Asia since 1960’s. Nestle’s
international network in technology, distribution and investment has helped expand the Friskies
brand in the international market widely. Today Nestle’s global market for cat and dog food
exceeds $25 billions.
powdered coffee product. It was introduced in 1938 under the brand name Nescafé. It
became so popular during World War II that for one full year the entire output of the Nescafé
plant in the USA (more than 1 million cases) was reserved for military use only. Since then,
Nescafé has become one of the world’s best-known brands. With more than 3,000 cups
consumed every second, Nescafé has become the world’s leading coffee brand. In addition,
Nestlé is a major producer of chocolate-based and malted drinks. Its leading brands, Nestlé
Nesquik, Nestlé Milo and Nescau are very popular with a growing number of young people
in both developed and emerging markets. The Company’s other beverage products include
roasted coffees — for example Dallmayr, Zoegas and Loumidis in Europe — as well as fruit juices.
Nestlé’s ready-to-drink beverages Nestea and Nescafé are sold in various forms (cans, bottles)
frequently associated with the Coca-Cola company.
Nestle made a mentionable amount of social contributions in helping the distressed and maintaining
good environment all over the world. Few of those are discussed below:
Nestle’s principle contribution to the many communities is made in terms of long term
investment of capital, transfer of technical know -how , job training and development of
infrastructure. The end product is a better food supply in terms of quality, quantity, and
safety. Nestle has the largest private nutrition research capability in the world. It develops
food products with a well researched nutritional content and worldwide standards for food
safety.
The second principal social contribution is sustainable long term economic development.
This leads to improvements in the standard of living of many people involved in the food
sector in each country, including the employees, and many thousands of farmers. Nestle
makes long term commitments to the economies of the countries.
Nestle also have extensive collaborations with local, national and international organizations
whose aim is to improve basic social conditions in the many countries where it operates.
6.2 Primary Health Care In South Africa
Nestle’ supports the development of a model rural health care and promotion system, under
the auspices of the Valley Trust in South Africa. The Valley Trust is developing a national
Reference and Training Centre For Comprehensive Primary Health Care including a strong
component of prevention of HIV/AIDS transmission.
Nestle has recently took up a programme named NUTRIR in Brazil where the employees of Nestle
voluntarily teach children better eating habits, using hands-on activities, including consuming more
fruit and vegetables. This is a major commitment, aimed at reaching hundreds of thousands of children,
funded by the company
6.4 Disaster Food Relief And Red Cross
The international federation of Red Cross /Red Crescent Societies and the Nestle Research
centre have developed a “food-baket” computer programme to be used in food relief
operations. The software aims to optimize the nutritional composition of food rations by
combining internationally donated foods with locally available foods. This will help to
achieve the best nutritional combination with the most efficient use of resources. The
programme is currently undergoing field testing and will be available for use shortly by
Headquarters, delegations and National Red Cross/Red crescent Societies early in 2002.
6.5 Improving Education Of Child In USA
In USA, Nestle operates a school programme where Nestle employees voluntarily help to improve the
quality of education in local schools. Nestle USA also supports “Reading is Fundamental”, the USA’s
largest non-profit organization committed to literacy. This is funded through company grants
o “Street Solutions, ” the largest charity in England for homeless and poorly housed
people is strongly supported by Nestle. It aims to reduce the number of people living in
the street, and works to involve young people in this cause.
o Nestle sponsored the Macmillan Cancer Relief ’s “World ’s Biggest Coffee
Morning”in 2000. The event was held on 29 September and raised fund $ 2.5
million .
Celebrating its 100 years in Thailand , Nestle focused its attention on CARE for the environment with
a major reforestation project in Nam Nao National Park. Over three years 300,000,0 trees were
planted and Nestle is continuing its commitment with a tree maintenance programme lasting until
2001. This was the first project of such magnitude in Thailand which is supported by a private
company. Nestle Thailand is sole sponsor of a radio programme “What you should know about food
and Drugs’.
6.9 Nestle And Global Environment
Nestle has made systematic efforts to account for environmental concerns of all its activities. In the
following paragraphs its activities concerning environment is discussed:
6.9.1 Nestlé Environmental Management System ( NEMS )
Nestle have appointed environmental officers, issued policies, conducted environmental surveys,
reinforced training efforts, developed environmental communications, and made many innovations in
packaging.To complement and integrate these efforts,Nestle created and implemented Nestlé’s own
Environmental Management System.The Nestlé Environmental Management System (NEMS) is an
essential corporate management tool that consolidates all organizational and technical measures taken
by the Group to achieve environmentally sound business practices. The NEMS objectives include the
following:
• To provide a systematic approach that ensures compliance with Nestlé’s environmental
policy, applicable legislation and Nestlé’s operational standards;
• To ensure the continuous improvement of Nestlé’s environmental performance, for example,
through the conservation of natural resources and minimizing waste;
• To achieve compatibility with international voluntary standards on environmental
management systems, such as ISO 14001 and the European Union Eco-Management and
Audit Scheme; and
• To build mutual trust with consumers, governmental authorities and business partners.
6.9.2 Creating Awareness Of Global Water Issues
Water is a key priority for Nestlé –for manufacturing Nestlé ’s food products, for their preparation by
consumers and for bottled waters. This is fully reflected in “The Nestlé Water Policy ” published in
Spring 2000.In support of the sustainable use of water, Nestlé participated in the second World Water
Forum in The Hague. The Forum brought together representatives from governments, non-
governmental organizations and industry, as well as water experts. Its purpose was to heighten
awareness of global water problems and to help ensure a sustainable supply of clean water worldwide
by 2025. During 2000,Nestlé continued to strengthen its commitment to environmentally sound
business practices. Major priorities were the sustainability of global water resources and the
improvement in measuring environmental performance in areas including water energy and packaging.
It also continued to foster environmental awareness and responsibility across the Group.
7.0 SUMMARY