Essay: Nestle overview

Nestle is widely known as the world’s largest multinational food and beverage company, with a 148-year history and operations in virtually every country in the world. Nestle was founded in the year 1866 by Swiss pharmacist Henri Nestle in Vevey, Switzerland. With successful product expansion and business strategies, Nestle now employs roughly 339000 people and has factories or operations in almost every region. Nestle owns a variety of major consumer brands such as Nescafe, Kit-Kat, Carnation, Power Bar and so forth that has a dominant position in a variety of markets. The industry leadership of Nestle largely depends on the company’s Research and Development (R&D) networks and activities. This enables Nestle to provide high quality, safe and healthy food and beverage categories for worldwide consumers on a continuous basis. Aiming to become the food industry leader in nutrition, health and wellness, Nestle is committed to promote corporate common goals and create shared values within a decentralized organizational model. The company typically implements differentiation and low-cost leadership strategies to occupy or retain the target markets. They also established a global hybrid or mixed structure that empower regional managers, who report back to the headquarters, to have autonomy for their specific business operations and decision-making processes. Although Nestle has certain competitive advantages for persevering in the market, the company still faces challenges due to external environments and internal factors in today’s dynamic and high velocity global markets. With a general understanding of Daft’s (2009) concepts, this report attempts to discuss the organizational theory and design through the business stories of Nestle. We will start with the company overview, followed by a thorough analysis of organizational strategies and structure, as well as the external and internal environments that will affect Nestle’s business operations. We will also examine what and how Nestle is doing in the area of product portfolio, technology and innovation, control systems, corporate cultures and politics. In the end, this paper will summarize Nestle’s experience and conclude with a few strategic recommendations to the company on how to sustain a solid position with robust development in the global market. Nestle S.A., headquartered in Vevey, Switzerland, is the largest global food and beverage company in the world. It is well recognized for its efforts in becoming a world leader in Nutrition, Health and Wellness. Founded in 1866 by Henri Nestle, the company developed significantly during the First and Second World Wars, and expanded its offerings beyond its early condensed milk and infant formula products. In order to enlarge its product portfolio and business scope, the company has made a number of corporate acquisitions through the years of 1950 to 2007.1 Nestle owns a wide range of brands and manufactures abundant products in a number of markets, including coffee, bottled water, milkshakes and other beverages, breakfast cereals, infant foods, performance and healthcare nutrition, seasonings, soups and sauces, frozen and refrigerated foods, and petcare. Among these products, Nestle’s best-known brands, for instance Nespresso, Nescafe, Kit Kat, Smarties, Nesquik, Stouffer’s, Vittel, and Maggi, generate annual sales of over 1 billion Swiss francs (about $1.1 billion). Each year, the company invests around CHF 1.5 billion in Research and Development, aiming to continuously provide better quality products to shrewd customers in global markets.2 As the world’s largest food and beverage company, Nestle has 465 factories operating in over 150 countries, and employs around 339,000 people worldwide. Based on the statistics of Financial Times, Nestle was listed No. 1 in the Fortune Global 500 as the most profitable corporation in the world in 2011. And with a market capitalization of $233 billion, Nestle ranked No. 9 in the FT Global 500 2013.