Analysis of Nestl

5817190051

Liang Long
Shaoliang

5817190052 Chou Zhi qing

5817190053 Ou

5817190054 Huang Yuli

Part1: Introduction of Nestle

estl founded in 1866 by Henry. Nestle, is
headquartered in Vevey, Switzerland with more
than 500 factories worldwide, and has been one of
the world's largest food manufacturers which
originally is the baby food production and now
known as the production of chocolate bars and
instant coffee.
n 1864, Henry. Nestle invented the baby nutrition
cereal against the high infant mortality and its
good utility spread quickly. In 1866, Henry
designed the company established the nestle
brand in his own name. In 1868, Henry. Nestl set
up outlets in France, Germany, and Britain to begin
the Nestls internationalization. In the early 20th
century, Nestle had factories in Europe and The
Americas, merged other food companies at the
same time,. Nestl gradually grow into a worldclass food companies. Now, Nestl has more than
500 factories in the world and products are
speeded all over the world. Nestl also have more
then 330000 employees and got the sale revenue
of 92 billion Swiss francs in 2013.

Part 2:

Products
N

estl is the biggest food company in the world.

Nestl have many branch companies and holding a
lot of food Companies. Nestl has 64 brands, with a
wide range of products across 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 pet food
.

Product list
Water

Yogurt

Coffee

Chilled

Other drinks

Shelf stable

baked
goods

Ice cream

Infant foods

Performanc
e nutrition

Healthcare
nutrition

Seasoning
s

Frozen food

Refrigerated
products

confectionery

petcare

Foodservice
products

Chocolate,

1.Water Nestl is mainly engaged in the bottled

water and bottled water production and sales,
giving priority to low-end products, and sales in
many countries such as China and Thailand.

.Yogurt Y
enterprise,

.Coffee C
order to gua

.Infant foo
healthy gro

Part 3: Foreign market expansion

rom Switzerland to Norway, from England to

Australia to China, nestle, effort on a global scale
to any one who has a potential of emerging
markets with great determination and patience.
And from the perspective of business strategy,
nestle can own the steady development and
expansion of the success in the world market to
the three important measures including: the
localization strategy of all-win development, capital
operation and excellent market promotion and
evaluating cultural affinity of the brand.

1. The localization
development

strategy

of

all-win
F

rom human resource development and market

cultivating to solving the raw material supply,
Nestl evaluates the long-term interests of the
enterprise, and is willing to pay the huge
investment. And then nestle show the world
Business legend. The localization strategy of allwin development makes it get the admittance and
quickly join into the emerging markets in many
countries.
I
n India, in order to make the dairy factory have
reliable product quality, Nestle loans to local
farmers to dig a well and seed grass and provides
free veterinary medicine and veterinary technology
which makes the farmers provide plenty of enough
milk for nestle.
In China, the backward Heilongjiang shuangcheng
nestle when entering, for example, in order to
solve the problem of milk supply, nestle not only

sent to a specialist team from Europe, professor

farmers take care of cows and milk collection
technology, for farmers to pay interest for the loan.
In this way, the nestle in local farmers to get stable
income at the same time; also can effectively solve
the supply of raw materials. Nestle to help farmers
increase income development way soon get highly
praised the Chinese government, to nestle won a
good social image. The localization strategy in
advance, also make nestle in the case of industry
competition pressure increasing and sustained and
rapid development.

2. Capital operation
N
estle knew that if a enterprise wants to compete
constantly breakthrough of resistance, quickly join
into emerging markets with the advantages of
stable position in the competitive market ,it needs
continuous investment in mergers and acquisitions
which are the only way and effective method.
According to statistics, from 1985 to 2000, 15
years, Nestl has spent $26 billion to buy other
businesses. From 1999 to 2003, Nestle acquired at
least 32 water companies. By controlling the
leading enterprises, Nestle can control the market,
and get a huge basic customer, and make the
enterprise to obtain rapid growth. In 2001, Nestls
spent $10.3 billion to merge the North America's
second largest pet food enterprises, at the same
year in August, Nestl hold the Americas third
largest ice cream companies - (Dreyer) with for
$2.8 billion.

3. Excellent market promotion

n China, Nestle has emphasized to offer Chinese

the suitable taste food with high quality.
Cooperating
with
the
company's
overall
development strategy, nestle joined into China
since the 80 s to the present, and products from
milk powder, coffee, to the drinking water, ice
cream, and other fields. However, Nestle in the
field of production and sales, doesnt pursuit the
short-term profit, but a long-term, which also is the
profound and original ideas of sustainable
development.

art4: Ana

. Introduct
ultidivisional Structure, also known as the division
system or multi sector structure sometimes refers
to as the product of the structure or strategic
business units. This structure can be targeted to a
single product, service, product portfolio, major
projects or projects, geographic distribution,
business or profit center to organize the division.

E
nterprises in the implementation of M structure can be divided
into three types according to the functional structure of the set
level and division to obtain supporting service from functional
departments:

1)Product division structure

(
T

he company set some functional departments as

research, development, design, procurement, sales

and others. The division mainly engaged in
production,
while
the
related
functional
departments of general company provide the
required support services to the division.

2)Multi division structure

T
he general company has set up a number of
departments and all departments have set up their
own functional departments to provide research
and development, design, procurement, sales and
other supporting services. Each division will
produce their own design products, buying and
selling by themselves.

3)Matrix structure

I
t is a form of management which integrates the
two forms of functional department and product
department. Through the use of which double
authority, information and reporting relationship
and network, the function design and product
design are combined, and the vertical and
horizontal connection is realized.
2.
Analysis
on
Nestle
Organization Structure

System

and
A

ccording to Williamson's division method, Nestle

should be identified as M type matrix structure.
Nestle group's organizational structure is a typical
M type matrix structure: in the horizontal, the
organization in accordance with the functions and

products divided into multiple divisions; in the

vertical, it is divided into EUR, AMR and AOA (AsiaOceania-Africa) three area (AOA), which is divided
into greater China, Middle East, Oceania and Africa
ar
N
estle Greater China area as the example, the broad
China region has 24 enterprises (including Hong
Kong and Taiwan), headquartered in Beijing, on
behalf of Nestle headquarters in the Greater China
region, which operates 21 companies, including
two R & D center, a sales company, and its more
than 18 factories. But on the water business,
China's water business unit from Nestle China, it is
to seek support from Nestle China's other
functional departments, although its own business
needs, to meet the needs of production and sales
business and to achieve production and sales
targets, in strategic decision-making needs to
listen to Nestle China's instruction, while it also
needs to be reported to the headquarters of Nestle
water and follow instructions. This is the functional
departments of the two forms of integration and
product integration organization structure.

Part5:About the corporate

governance of Nestle
1.Multinational

company "global
village"governance
N
estle shares listed on the Swiss stock exchange, over-thecounter ADR in the United States. The nationality points,
according to the Stockholders most Swiss (nearly 40%),
followed by Americans (nearly 30%), British, German,
Norwegian, French and Belgian each own 5%. From the

point

of

shareholder

identity

type,

proportion

of

institutional investors is close to 80%.The board of

directors is the highest governing body of nestle
company, responsible for the final supervision and
management for the whole group. Board care company is
not legal, the company's articles of association, and the
internal rules and regulations as belonging to the
company general meeting of shareholders or other
administration power range of all matters.

he board of directors is the highest governing body

of nestle company, responsible for the final
supervision and management for the whole group.
Under the authorization of the board of directors,
the nestle by the management committee is
responsible for the daily management, at present a
total of 14 management committee members, from
eight countries, including four people in the United
States, Switzerland, 3 people, 2 people, Canada,
Belgium, Germany, Spain, France and India and
other five countries in various 1 person. As a global
company, nestle not only embodies in shareholder
base and sales distribution, the members of the
board of directors and management committee
(executive) also fully reflected on the nationality of
the distribution, from 10 countries of 29 members
in group control and manage the nestle.

2. Module combination marketing

he Nestle is a form of marketing portfolio. The

company is located in Geneva, Switzerland, a small

city headquarters on the production process,
brand, quality control and the main raw materials
to make strict rules. The line of political power,
which is the head of the company, has the right to
decide the final form of each product according to
the requirements of the state. This means that the
company should maintain the principle of a
comprehensive and decentralized management,
but also pursuit a greater consistency. To achieve
the dual purpose, the inevitable requirement is to
maintain a delicate balance. This is a balance
between international operations and local state
operations. What is more, it is also the balance
between international spread and the spread in
local country. In order to correctly implement the
new policy to inform the branch how to implement,
Nestle has proposed three important documents
including (1)Labeling standards (2)Packaging
design manual (3)Brand strategy . The details
involve the company's strategy and brand
marketing strategy and product presentation.
(1) Labeling standards .
It is just a guide file which make a clear
stipulation on the various elements of the design
of the label . Such as the identity of the Nestle
coffee, the font and the use of color, as well as
the ratio between the various details of each
other. This document also lists the various
product label legend, suggesting that the
company should use these tags as early as
possible.
(2) Packaging design manual.
It is a file with more flexible use which propose
the various ways to adapt the standard . For

example, the use of packaging materials and

packaging form.
(3) Brand strategy .
It is the most important document. It includes
some details of the marketing principles, the
background and the main characteristics of the
brand. These main features include: brand
personality; the desired image; company; other
two documents related to the visual features;
and the development of brand use. The
executive of the company has realized that the
economic globalization has made the enterprise
marketing activities and organization mechanism
change from the past "large" structure into a
"module" structure. So that the focus of the work
move
to the combination module, the
implementation
of
modular
combination
marketing.
he modular combination marketing mode of Nestle
enterprise settles the contradiction brought by the
development of enterprise. Market changing is
mainly reflected in the division of the market which
is more and more detailed and personalized .From
the
perspective
of
marketing,
corporate
opportunity to profit follows the consumer demand,
and therefore, the change in consumer demand is
considered
to
bring
potential
business
opportunities. Nestle Company's each module
(Branch) is independent basing on their own
market, but also related with other modules to
make up a "large" structure of the enterprise.
Nestle Company divides its general market into
different modules which is in charged by the
corresponding module, and it can hold the market

dynamics more accurately and

improve the
accurate grasp and meet in the market demand .
At the same time, each module has the ability to
operate the market independently and conducts
the right to adjust, and take appropriate strategy
according to the change of the module market
without affecting the total strategy of the
enterprise. Nestls modular strategy is an optional
way considering the ability to resist risk from the
perspective of enterprise organization. Module
combination emphasizes the relative independence
of each module in the respective market and adjust
according to the respective market from
competitors, customers and other aspects, while
the other parts of the enterprise doesnt need to
adjust, which makes it have a flexible, strain, anti
risk.
he combination marketing of Nestle, which makes
the structure of network organization, also makes
the company have the characteristics of network:
One is to use the special market method to replace
the administrative means to contact the various
business units and its relationship with the
headquarters of the company. The market
relationship in the organization structure of the
network is a full range of market relations, which
includes the transfer of property rights basing on
capital input , the flow of personnel and the
relatively stable commodity trading relationship.
Another one is a powerful virtual function based on
the
organization
structure
network.
Every
independent business entity in the network
organization structure can use the external
resources in all kinds of ways, and recombinants
the external resources to create a huge
competitive advantage.

Part 6: the recent financial

performance
Two major mergers and acquisitions
F
ebruary 19
2015, Nestle released its 2014
performance with full year sales of 91.6 billion
Swiss francs, the annual sales growth rate of 4.5%.
At the same time, Nestle also announced the 2015
expectation, hoping to have about 5% of organic
growth, and improve the profit rate.
th

I
t is worth attention that, Nestle development in
China market is of slowdown. According some
report, we can observe from the region that last
year's organic growth rate of 5.4% in the Americas,
1.9% in Europe, Asia, Oceania and Africa is
5.7%.But the actual internal growth rate of these
regions is 2.4%, 2.3% and 2.4% respectively. And
there are media reports data show that in 2013
Nestle China sales growth of 27.6%, in 2012 Nestle
China's sales growth of 91.4%.
n recent years, Nestle in the global M & a path has
been playing a role of food and predators,
constantly in the global market mergers and
acquisitions and divestitures, and in China, the
most attention was undoubtedly the in 2011 in a
large-scale annexation of the two major domestic
food enterprises Yinlu and Hsu Fu Chi. "
verall, Nestle business growth in China market
appears decelerated growth,

in addition to infant nutrition, Nestle drinking

water and nestle professional plate. And both of
Yinlu and Hsu Fu Chi which are merged by Nestle
appear weak increasing performance of different
degree. It also reflects food and beverage market
weakness in China's which has not yet shown
some signs of improvement .So in the future,
Nestle in Chinese market is still facing a tough
fight.