Nestl Is The Most Successful Organization - Essay Example

Nestlé Is The Most Successful Organization Introduction Every organization exists to achieve a purpose. In order to attain organizational goals, a set of policies and strategies are defined and developed by management. One of the most successful organizations that employed strategic management decisions with explicit priority “to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives” is Nestlé (Nestle: Introduction, 2010, par. 2) Nestlé’s origin was traced in 1866 when a pharmacist, Henri Nestle developed an infant milk formula that revolutionized the health, nutrition and wellness industry. The company’s more than a century of challenging operations starting from Switzerland and expanding to more than 130 countries globally (The world of Nestlé, n.d., 8) has been continuing until today. In this regard, this essay aims to proffer an analysis of the performance of the Nestle with regards to fulfilling the needs within diverse societies. It would examine how Nestle’s global operations impact stakeholders and the global societies, in general. The implications of the company's actions in terms of employment and job creation, environmental concerns, equality and diversity issues and infrastructure development would likewise be determined. Brief Corporate Background Nestle boasts of manufacturing more than 10,000 different products and sells over a billion products daily (The world of Nestle, n.d., pp. 10 & 12). Despite the number of countries wherein Nestle operates globally, their awareness of the importance of integrating local culture in each host country’s operations contribute to their success. They averred that “there is no one single product for everyone - our products are tailored to suit tastes and habits wherever you are” (Nestle: Introduction, 2010, par. 3). The company’s focus and emphasis is strategically manifested in four words: “Good Food, Good Life” (The world of Nestle, n.d., 16). In order to sustain the organization’s capability to ensure that their products remain to give maximum nutritional benefits, their Research and Development (R & D) is allocated approximately CHF 1.5 billion annually to continually innovate and renovate existing products (ibid, 16). Accordingly, nutrition has been identified as Nestlé’s core competence with focus on food and beverages for a wide range of clientele: infants, growing children, senior citizens, and individuals with specific and unique dietary requirements (ibid, 18). Creating Shared Value (CSV) Nestle has instituted a unique program which combines financial success with corporate social responsibility. The company coined the program “Creating Shared Value” to encompass the following: “using our core business strategies and operations to create value for shareholders; serving consumers and the public by offering them nutritious products that are both enjoyable and contribute to their health and well-being; and seeking to improve the economic and social conditions for people and communities across our entire value chain – for farmers who supply us raw ingredients, for communities where our factories are located, for suppliers who work with us and for our trade partners” Nestle: Creating Shared Value, 2010, par. 4). The official website of Nestle divulged critical information attesting to management’s commitment for corporate responsibility by engaging in regular communication with its various stakeholders. The stakeholder engagement discourse revealed that “during 2008 and 2009, Nestlé continued its commitment to open dialogue with all stakeholders, including consumers, customers, employees, investors and others, using a wide variety of channels” (Nestle: stakeholder engagement, 2010, par. 1). This strategy is relevant as it solicits feedback and information from various stakeholders which the company can use to address contemporary issues in the supply chain. Any relevant changes in prices of raw materials and distribution due to the financial crisis could be immediately addresses. The effects of price changes would have repercussions in production volumes and costs which impact the company’s bottom line. By inputting forecasted price increases, Nestle would project areas that would be most affected by the financial crisis. In so doing, appropriate strategies could be designed: either enforcing cost control measures (cost-cutting on major planned expenditures, salary increases, expansion, etc.) or diverting revenue generating measures in countries least affected by the financial crisis. Nestlé’s incorporation of cultural diversity in the workforce encouraged a holistic approach to global strategy. Their competent leadership team understands components such as the intricate systems and processes of their core competencies, the functions they are to undertake, the culture of the target markets and the ability to change cultural framework in the targeted markets. Accordingly, Nestle emphasized that their diverse workforce is comprised of employment in the following percentages: “ 33.9% in Europe, 38% in the Americas and 28.1% in Asia, Oceania and Africa. During the global financial crisis, we have made every effort to focus on sustainability and stability, and ensure we have appropriate human resources for both our current and future needs” (Nestle: Our people, 2010, par. 1). In terms of addressing environmental concerns, Nestle has made tremendous investments in environmental sustainability programs amounting to as much as CHF 220 million in 2009 (Nestle: Water and environmental sustainability, 2010, par. 3). The objectives of these programs are: “to reduce our use of water, non-renewable energy and other natural resources, to reduce emissions of greenhouse gases (GHGs), to eliminate waste and to improve the environmental performance of our packaging” (ibid.). Finally, Nestle has also invested heavily in the development of infrastructure in the respective host countries they operate it. In an article entitled “Nestlé celebrates a century of success in Australia” the scope of investment was revealed, to wit: “the company has 15 factories, eight distribution centres and more than 50 offices and 5,700 employees across the region. Annual sales revenue from Australia alone totalled A$2.8 billion in 2007” (Australian Trade Commission, 2010, par. 3). In this regard, it can be shown that the most obvious benefit that Nestle gives the host economy is a growth in economic indicators through the investment that they brought in. The amount of funds channeled to start a new enterprise entails building a structure, employing people, and bringing in capital. Building a new structure alone gives the economy enormous investment in the use of local resources, to wit: land, cement, machineries and equipment, etc. The employment of people would ensure additional income which would likewise be spent for personal commodities. In the process, the economy grows and prospers from increased foreign investment. Impact of CSV The program was reported to have positive impact on Nestle’s profitability in terms of growth in organic products and in according benefits to social and environmental factors. In the CSV report delivered by Peter Brabeck-Letmathe, company chairman and chief executive officer of Nestle, he averred that “this enables us to deliver five to six per cent organic growth while at the same time improving our environmental and social performance, thereby having a positive impact on millions of people across the world" (Decision News Media, 2008, par. 4). Nestle’s CEO, Paul Burke announced in the recent Press Release dated February 19, 2010 that despite the financial crisis that besieged the global market, the organization posted a growth in sales to CHF 108 billion representing a 4.1% increase in organic growth and 1.9% real internal growth (Nestle: Press Release, 2010, par. 1). The data proves that the organization’s support for social and environmental responsibilities contribute to strong financial success. Further, as organizations become more specialized in their respective core competencies, the mission and vision that each explicitly stipulates does not necessarily focus on the bottom-line. More contemporary organizations, like Nestle that include goals of social responsibility, service to the community, enhancement and encouragement of cultural diversity, among others, have proven that incorporation of these contribute to increased effectiveness and success in achieving their well defined goals. Negative Feedback Despite the successful financial and social responsibility performances reported of Nestle, there are still some organizations and groups of individuals who perceive threats in the organization’s products. The press release from Baby Milk Action in December 2006 reported “Nestlé’s record of aggressive marketing of baby foods, which contributes to the unnecessary death and suffering of infants around the world” (Baby Milk Action, 2006, par. 4). The report also revealed cases filed against Nestle on charges of “child slavery in its cocoa supply chain in the Ivory Coast” (ibid., par.8) and farmers unable to sell their produce with Nestle buying them at open market at relatively cheaper prices. In all the allegations, Nestle was firm in defending the organization through appropriate legal process. Conclusion The benefits that global corporations, like Nestle, give to host economies are enormous depending on the amount of funds they are willing to invest. Nestle cannot merely exist and survive by imposing its products and services to foreign markets. There is a need to closely examine, not only theoretical frameworks on economic growth, human development, risks associated with operating in the foreign land and even the cultural dimensions that affect global organizations. The effect of globalization on Nestle is in fact the creation of a globalized culture – recognizing cultural diversity and acknowledging that the uniqueness of traditional values must continue to exist. Global strategies designed by Nestle ensured incorporating the uniqueness inherent in every national culture and using these traits not only to their organizational and competitive advantage, but more so, to the benefit of the host economy it partnered to succeed. Nestle has existed in our world for almost 145 years. The corporation has managed to adapt and adjust to the demands of the changing environment through employing strategies that conform to the needs of their vast and diverse clientele. By understanding that it operates on a global scale, elements which are critical in understanding corporate culture in global markets are studied, evaluated, and incorporated as part of their corporate business principles. Finally, by merely existing for more than a century providing products in almost all the countries in the world is a milestone in itself. The fact that consumers from diverse walks of life patronize Nestle attests to its ability to abide by the four words it provides: “Good Food, Good Life”. Reference List Baby Milk Action. (2006). Demonstration at Nestlé book prize award ceremony over Nestlé targeting children. (accessed 09 April 2010) Decision News Media. 2008. Nestle report focuses on corporate responsibility. (accessed 09 April 2010) Nestle. 2010. Introduction. (accessed 09 April 2010). -----------. 2010. Creating Shared Value. (accessed 09 April 2010). ----------. 2010. Our People. < http://www2.nestle.com/CSV/OurPeople/Pages/OurPeople.aspx> (accessed 09 April 2010). ----------. 201). Press Release: Strong top and bottom line performance in 2009. (accessed 09 April 2010). ----------. 2010. Stakeholder engagement. (accessed 09 April 2010). The world of Nestle. < www.nestle.com/Resource.axd?Id=602C42FE-04D6-4669-BEE1> (accessed 09 April 2010). Read More