| MBA 640- Organizational Management and Change Lecturer: Dr. Masroor,PhD How Nestle Manages Its Global Environment Prepared by: Luminita Maria Birza Student ID: 1465 INDEX Read the case study “How Nestle Manages Its Global Environment” page 89 in your textbook and answer the following questions: 1. List various ways in which Nestle has attempted to manage its environment over time. 2. Why did Nestle change the methods it used to manage its environment?
Nestle, the world’s largest food and Nutrition Company, it enjoyed record profit on sales of over $ 100 billion in 2007 (1) Today the company operates in 86 countries around the world, and employs over 280,000 people.
Nestle was founded and headquartered in Vevey, Switzerland, grew significantly during the First World War and again following the Second World War, eventually expanding its offerings beyond its early condensed milk and infant formula products. Nestle’s case is a good illustration of the many ways that the environment can be managed.
The various ways in which Nestle has attempted to manage its environment over time was through expansion of the product offering, expansion of the customer base, and by developing lower-cost ways to make and sell products.
The company is operated in a relatively decentralize manner, according to geographic zones and markets. The structure reflects the nature of Nestles’ value chain; which is most cases involves agricultural sourcing, manufacturing and consumption occurring in the same region or country. (2) The CEO, Peter Brabeck-Lathmate, who has been in charge since 1997, is the person responsible for Nestle’s improving global performance.
He worked to increase the revenue and profits by expanding into new markets, in both developing and emerging nations.
In the 1990’s, Nestle managed its environment by acquiring other companies for example in U. S , Nestle brought the food companies Carnation and Buitoni Pasta, the British chocolate maker Rowntree, the French bottled water company Perrier and the Mexican food maker Ortega. Brabeck’s strategy was not only to buy these companies, but also to customize the products according to customers taste.
Later, it managed the environment by increasing operating efficiencies and reduces the cost of managing its global operations. Hence, Brebeck cut the workforce by 20%, closed 150 factories and reduce operating costs by over 12%. He has also designed Nestles’ streamlined operating structure and IT to improve the information & communication between all the offices and suppliers across the globe. An organization’s environment is the complex network of changing pressures and forces that affect the way it’s operating. The environment is a major contingency for which an organization must plan and to which it must adapt.
Organizational environment refers to the forces that can make an impact. Forces made up opportunities and threats. An organization does not exist in isolation. It works with the overall environment. Nestle didn’t just change from an expanded product offering to acquisitions because it was a new management technique, but rather they did this in response to the environment they were facing. Environmental resource management is “a purposeful activity with the goal to maintain and improve the state of an environmental resource affected by human activities”.
It is not, as the phrase suggests, the management of the environment as such, but rather the management of the interaction and impact of human societies on the environment. (3) Nestle has always believed that for a business to be successful in the long term, it has to create value not only for its shareholders and consumers, but also for society. Changes in type of customers and customer taste another force that challenged Nestles. With customers around the world demanding healthier food and more nutritious food products, Nestle was forced to react by introducing organics products.
With the new “organic approach”, Brebeck claims his company is engaged in a transformation that will lead Nestle’s products to become the “world‘s leading nutrition, health, and wellness food company”. “Our nutrition, health and wellness strategy has two facets. The ? rst is our drive to achieve taste and nutritional superiority for all our products and brands relative to their competitor products. This we do through a proprietary process called 60/40+. The second focuses on consumers with de? ned nutritional needs who purchase our products for their speci? nutritional bene? ts; these make up the portfolio of Nestle Nutrition, a globally-managed division and the world leader with sales in 2008 of CHF 10. 4 billion”(4) With customers interested in health & safety products, Nestle’s Executive Board decided to adapt the existing Nestle management systems to full conformity with the international standards ISO 14001 (environmental management) and OHSAS 18001 (occupational health and safety management), and to certify all Nestle factories against these standards by 2010.
For Nestle, certification to ISO 14001 and OHSAS 18001 provides external recognition that their factories are complying with internal requirements in the areas of environmental sustainability and occupational health and safety, and that they meet a minimum, internationally recognized level of management systems implementation. (5) References (1) From Wikipedia, the free encyclopedia, http://en. wikipedia. org/wiki/Nestl%C3%A9 (2) Boston College Center for Corporate Citizenship, About Nestle, College Center for Corporate Citizenship 2Social Reporting case studies ,http://www. cribd. com/doc/26126236/Nestle-Social-Report (3) From Wikipedia, the free encyclopedia http://en. wikipedia. org/wiki/Environmental_resources_management (4) Nestle, 2008 Annual Management Report, http://www. nestle. com/Common/NestleDocuments/Documents/Library/Documents/Annual_Reports/2008-Management-Report-EN. pdf (5) Intertek, Global Management Systems Case Study, 2010, www. intertek. com/case-studies/2010/global-management-systems/pdf
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