MULTINATIONAL COMPANY.

GROUP 1 Topic: Choose a famous foreign MNC doing business and owning branches in Vietnam and analyse its business management strategies. Outline I. Introduction the company : NESTLE 1. The parent company: office, founder, total capital, sales,position, 2. Subsidiaries/Branches in the world, in Vietnam. 3. Nestle Vietnam 4. Reasons to choose NESTLE 5. Analyse the business environment in Vietnam= > pros, cons company deals with when joining in Vietnam. BUSINESS STRATEGY AND MANAGEMENT (Focus on HR Management.) A. Introduce the HR of Nestle: the total number of workers in Vietnam Main jobs the attitudes of employees towards the company B. HR Management Policies of Nestle 1. Types of Staffing Policy a. Geocentric approach b. Some key positions in Nestle Vietnam 2. Training and Development of Nestle Vietnam a) Training policies for expatriates b) Training on cultural issues/ cultural chage c) Developing Local Talent 3. Reward and compensation in Nestle Remuneration Promotion Rewards and intentives Benefits 4. Employee Relations 5. Some Achivements and Drawbacks of Nestle Vietnam in HR management

II. -

a) b) c) d)

III.

CONCLUSION: - Evaluate the strategies of Nestle - Some solutions for the development of Nestle relating HR in Vietnam

I.

INTRODUCTION 6. Parent company

Nestl is a Swiss company, founded in 1866 by Henri Nestl. Nestl invests around CHF 1.5 billion in Research and Development every year. Nestl markets its products in 130 countries across the world. Nestl manufactures around 10,000 different products and employs some 250,000 people. Nestl sells over a billion products every day Nestl is more than just the largest food and beverage company in the world. Increasingly, Nestl is becoming the worlds leader in nutrition, health and wellness.

2011 consolidated (In millions of CHF) Sales(a) Trading operating profit(a) as % of sales Profit for the period attributable to shareholders of the parent (Net profit) as % of sales Equity attributable to shareholders of the parent before proposed appropriations of Nestl S.A. Market capitalisation, end December Operating cash flow Free cash flow(b) Capital expenditure as % of sales Net financial debt Ratio of net financial debt to equity (gearing) Per share data (CHF) Total basic earnings per share Underlying(c) Dividend as proposed by the Board of Directors of Nestl S.A. 2.97 3.08 1.95 83 642 12 538 15.0% 9 487 11.3% 56 797 171 287 9 763 4 491 4 779 5.7% 14 319 25.2%

7. Branches in the world Nestl has its own local companies in most countries. The Head Office in Switzerland works very closely with them, and sets overall strategy which is directed via Zone Management and the Strategic Business Units (SBUs). Geographically, Nestls three Zones (Europe; the Americas; Asia, Oceania, Africa and the Middle East) work closely with the local markets and the SBUs. Their primary role is that of enablers, acting as the voice of the centre to the markets, and the voice of the markets to the centre. They share Nestls vision so that everyone around the world understands the direction to take and how to get there with common tools, common strategies and common values. This ensures that our people around the world know how to act, and have a very strong framework of values and a clear reference point for fast decision-making. The SBUs specialise in a particular category, for example Coffee and Beverages, or PetCare, or Chocolate and Confectionery. They work with Research and Development (R&D) to ensure that everything the company produces is led by consumer insights and relevant innovation; and they help the markets to achieve their business and brand objectives. To make it all happen, there are just under 500 factories in 80 countries, and 17 Research Centres. There are a number of separate companies within the Group such as Nestl Waters and Nestl Nutrition. Nestl also owns Alcon, a pharmaceutical company that is the world leader in eye care, preventing vision loss from glaucoma, treating eye infections and restoring vision through cataract surgery. Nestl also has a significant share of LOral, the world leader in cosmetics. 8. Nestle Vietnam Vietnam is a country in which Nestl has established a branch only recently. It is a challenging country in which to start operations. In the first instance, it is a communist country with a state controlled market. Additionally, the cultural ethos and ambience of Vietnam are quite unique. When Nestl started its branch in Vietnam, it had to embed and institutionalize its core values there from scratch. Nestl's initial step was to translate the two documents, Nestl Management and Leadership Principles, and Nestl Corporate Business Principles, into Vietnamese. Some milestones of Nestle Vietnam 1912: First office in Sai Gon, Vietnam established 1992: Set up La Vie Company, a joint venture company between a Perrier Vittel under Nestl and Long An Coorperation. 1995: Nestl Vietnam founded. Started to build Dong Nai factory. 2002: The second Lavie factory went into operation in Hung Yen. 2008: Departmen of Special Nutrition established. 2011: August, Tri An factory built, November Bnh An (Gannon) Factory in Dong Nai bought again.

9. Reasons to choose Nestle Nestl, one of the world's leading food and nutrition brands, was ranked among the top 20 brands in the world for the best reputation following a study carried out in over 28 countries by the Reputation Institute of Boston College Centre USA. The research found that quality and innovation are the values that consumers most appreciate in a brands - two values which Nestl has always kept at the heart of all its operations. Over the past few years Nestl has been one of the world leaders when it comes to innovation, with studies and various corporate exercises undertaken to improve its manufacturing processes all over the world such that not only the group's work becomes more efficient but also with the aim of reducing its impact on the environment and helping the workers and the community it works in, all the while keeping its focus on customer and consumer satisfaction. Nestl has also kept its focus on its responsibilities towards society and has embarked on various projects in this respect. One such endeavour was the renovating of 7252 products for nutrition or health considerations, as well as training and wellness programmes for its workers and educational campaigns for consumers. Customer and consumer satisfaction have always been, and will continue to be, one of Nestl's main focuses as it continues to retain its placing as one of the world's top brands, as the results of this study continue to prove. It is for this reason that Nestl invests heavily in research and innovation, in spheres varying from its environmental impact, its work processes, the wellness, welfare and empowerment of its employees, the bettering of the societies it operates in and is part of, the improvement of its products, and the care of consumers' well-being. 10. Some Advantages and Disadvantages when Nestle penetrates and operates in Vietnam: a) Advantages: - Vietnam is located on the eastern margin of the Indochinese peninsula, its considered as the gateway of Southeast Asia areas which is also the center of business. Vietnam is a country of tropical lowlands, hills, and densely forested highlands, with level and covering no more than 20% of the area. The country is divided into the highlands and the Red River delta in the north; and the Giai Truong Son (Central Mountains, or the ChaneAnnamitique, sometimes referred to simply as "the Chaine."), the coastal lowlands, and the Mekong River Delta in the south. It helps Nestle have competitive advantages in transportation and distribution. - Vietnam is a developing country with the highest economic growth rate in recent year, expanding naturally at 5-8.5 percent. The growing economy will result in peoples increasing consumption demand; therefore, facilitate Nestls operation to become stronger in the Vietnamese market. Moreover, Vietnam has joined WTO; this is a good chance for many enterprises to compete in a good and fair condition, including Nestle. There is no afraid that Nestle will be less favored. - Compared to other countries in the world, Vietnam is a country with political stability, where there are also many incentives for foreigninvestment enterprises. Thanks to the preferences, Nestle will definitely grab the opportunity of rapid development in Vietnam. Besides, Nestle

also supports the sustainable economic development of Vietnam and helps to improve of living standard as well as the condition of the poor. In support of the Government's efforts to combat non-communicable diseases in the country, Nestle collaborated with relevant NGO to promote good nutrition in the community. In addition, Nestle is in full support of the Government's efforts to encourage healthier diets and active lifestyles to help counter problems associated with obesity, diabetes and cardiovascular diseases. They have made significant change to improve their products' profile to create a healthier population, encourage the integration of Vietnam in the world economy by bringing it into the worldtrading system and support the process of economic and social reforms.

b) Disadvantages
Although there are many advantages, Vietnamese business environment also create many difficulties for Nestle. - Because of the position and tropical climate, Vietnam is also one of many countries which are dealing with climate change. Vietnam is influenced by a monsoon climate, with four distinct seasons and high humidity. Therefore, Nestle have to put many efforts to adapt and overcome this issue, especially in term of protection product. - Nowadays, global economy has many changes, affecting Vietnamese economy. The economic factors have large impacts, especially in times of economic downturn. This difficulty reduces the consumption of customer, leading to decreasing revenue. Therefore, Nestle had to make adjustments for variations in demand fluctuations and price sensitivities in Vietnam.

II.

Human Resources management of Nestle Vietnam A/ Introduce the HR of Nestle Vietnam

Nestle is one of large multinational corporation in the world with more than 280,000 employees working in over 100 countries. During the time of the global financial crisis, Nestle still attempt to focus on sustainable development and stability, and ensure adequate supply of human resources for current and future needs. Particularly, Nestle Vietnam has about 500 1000 staffs. Nestl Job Areas includes - Nestl Academy - Corporate Affairs - Consumer Services - Customer Marketing - Customer Services - Finance - HR - IT - Legal - Marketing - Pensions

- Procurement - Production and Technical - Research and Development - Sales - Supply Chain - Veterinary The most typical attitudes of employees towards company is: Loyalty The companys criteria: the employees are the most important asset in the company, Nestle takes the initiative to create linkages at all levels of staff with all activities of the organization, makes the highest commitment to all of the employee. Nestle HR model can be described by the following three characteristics: - High performance - High Involvement - High Commitment With good remuneration, friendly and safe working environment, Nestle Vietnam has made a trust for employees. They are fundamental to create the success of the company. Nestle owns a team of over 300 qualified and experienced scientists active in 17 R&D centers around the world. This team dedicated, built reputation of the companys scientific intellectual ability and gave the most advanced solutions and technologies in the field of food to support for the business and the companys competitive strategy .Chief Technical Officer Mr. Werner Bauer stated that: "if there is no R&D, Nestle cannot become a leader on food nutrition, health and well-known. With good remuneration, friendly and safe working environment, Nestle Vietnam has made a trust for employees.In the company, all employees have a positive attitude, set criteria for labor productivity and quality product on top.

B/ Human Resources management policies of Nestle Vietnam 1. Types of Staffing Policy Nestle uses the approach: a) Geocentric approach: An approach to managing an international subsidiary in which nationality is deliberately downplayed, and the firm activelt searches on a worldwide or regional basis for the best people to fill key positions. Its mentioned in the Nestle Management and Leadership Principles, only relevant skills and experience and the adherence to Nestles principle will be considered in employing a person. No consideration will be given to a candidates origin, nationality, religion, race, gender or age. It is as important to hire the right person as it is to integrate newcomers in the organization so that their skills and behavior can merge smoothly with the company culture.

b) Some key positions in Nestle Vietnam

Rashid Aleem Qureshi, Managing Director of Nestle Vietnam comes from Paskistan. Mr. Rashid Aleem Qureshi is a graduate of IBA University of the Punjab.

Pierre J. Magne Finance Manager

H Thy Nhn Khanh Head of Employment Department V Quc Tun, Head of External Relations Nestl Vit Nam Nguyn Th Thanh Vn Senior Brand Manager, Nestle Nutrition Vietnam Sakurboni Chaiyong, who comes from Japan is Marketing Manager of Nestle Viet Nam L Th Hong Yn, Director of Marketing and Communications

V Qu

Head of Marketing and Communications Department

2. Training and Development of Nestle Vietnam a) Training policies for expatriates Engineers at Nestl make a long-term commitment to carry out a series of two to three year assignments abroad, moving from one country to another. How an engineering career works at Nestl When you join Nestl you would typically have an initial four to six months' training and orientation programme in three or four different Nestl factories. You would also be coached by specialists at the Headquarters. The aim of this initial period is to help develop your professional skills before you take on your first expatriate assignment. You would also have the opportunity to attend courses at the Nestl International Training Centre at Rive-Reine in Switzerland, so that you become familiar with various Nestl technologies and practices. Following a thorough initial evaluation, and based on your individual training experiences, you would then start your first assignment. b) Training on cultural issues/ cultural chage Features of Nestls approach to communication that are conducive to intercultural management: Intercultural exchanges and the development of intercultural relationships are encouraged. Thus the Nestl International Training and Conference Centre brings together managers from branches around the world to attend lengthy training programmes. At these programmes, Nestl managers are encouraged to form friendships with people from diverse backgrounds through face-to-face contact and communication. The content of important messages is reinforced periodically at all local branches. This ensures that the same message is communicated worldwide and internalized, despite differences in the process of communication. Nestl has found that there need be no fixed or right method for communicating. The objective is to create a connection between people. Managers with intercultural skills are better able to connect with people from other cultures. Nestl believes that periodic communication at regular intervals is necessary to keep branches worldwide aligned to organizational goals. It also ensures that managers from all cultures experience a sense of belonging to the organization. When Nestl introduced the Principles, headquarters received periodic reports documenting the efforts of local branches to disseminate the Principles. Headquarters responded to these reports so that two-way communication between headquarters and local branches was maintained.

c) Developing Local Talent Local Training

Two-thirds of all Nestl employees work in factories, most of which organize continuous training to meet their specific needs. In addition, a number of Nestl operating companies run their own residential training centers. The result is that local training is the largest component of Nestls people development activities worldwide and a substantial majority of the companys 240000 employees receive training every year. Ensuring appropriate and continuous training is an official part of every managers responsibilities and, in many cases; the manager is personally involved in the teaching. For this reason, part of the training structure in every company is focused on developing managers own coaching skills. Additional courses are held outside the factory when required, generally in connection with the operation of new technology. The variety of programs is very extensive. They start with continuation training for exapprentices who have the potential to become supervisors or section leaders, and continue through several levels of technical, electrical and maintenance engineering as well as IT management. The degree to which factories develop home-grown specialists varies considerably, reflecting the availability of trained people on the job market in each country. On-the-job training is also a key element of career development in commercial and administrative positions. Here too, most courses are delivered in-house by Nestl trainers but, as the level rises, collaboration with external institutes increases. Virtually every national Nestl company organizes management-training courses for new employees with High school or university qualifications. But their approaches vary considerably. In Japan, for example, they consist of a series of short courses typically lasting three days each. Subjects include human assessment skills, leadership and strategy as well as courses for new supervisors and new key staff. In Mexico, Nestl set up a national training center in 1965. In addition to those following regular training programs, some 100 people follow programs for young managers there every year. These are based on a series of modules that allows tailored courses to be offered to each participant. Nestl Pakistan runs 12-month programs for management trainees in sales and marketing, finance and human resources, as well as in milk collection and agricultural services. These involve periods of fieldwork, not only to develop a broad range of skills but also to introduce new employees to company organization and systems. The scope of local training is expanding. The growing familiarity with information technology has enabled distance learning to become a valuable resource, and many Nestl companies have appointed corporate training assistants in this area. It has the great advantage of allowing students to select courses that meet their individual needs and do the work at their own pace, at convenient times. In Singapore, to quote just one example, staff is given financial help to take evening courses in job-related subjects. Fees and expenses are reimbursed for successfully following courses leading to a trade certificate, a high school diploma, university entrance qualifications, and a bachelors degree.

3.

Reward and compensation in Nestle a) Remuneration

Nestl favors competitive, stimulating and fair remuneration structures offering an overall competitive and attractive compensation package. Remuneration includes salary, any variable part of remuneration as well as social, pension and other benefits. Nestls policy is to strive to position itself as an employer offering remuneration levels above the average of the relevant benchmark. Nestl reviews regularly its competitive position with other companies so as to keep in line with the market trends. However, the evolution of remuneration is in the first instance determined by the capacity of the Company to improve its productivity o o o o o - Performance management Formal assessment by Line Managers and HR once in a year with feedback. Subordinate can question an unfair evaluation. Specific Key Performance Indicators have been enlisted by the HR department. One of the important key performance indicators is achievement following the Nestle management and leadership principles. Remuneration structure and promotion criteria take into account individual performance. - Emphasis on individual achievement

Nestls emphasis on individual achievement is evident from the kind of pay structure HR has designed for its employees and the company also incorporates practices like Job Enrichment and Job Enlargement, to motivate employees and to break the monotony of their job tasks. The correspondent herself works in both sales and brand management departments, which is an example of job enlargement. - Pay Structure o Nestle strives to offer fair remuneration. Remuneration level is above the average in industry. o The variable component of the salary is comparatively big to reward individual performance. o In case of higher management level, the variable part is linked to individual & team target achievements. Comments: Nestle expertises in Recruitment Services, Talent Management and International HR, Learning and Development, Information and Administration, and Reward and Employee Relations. Nestle Vietnam is recognized as one of the most advanced HR functions within Nestl globally. Before implementing the HR practices/policies, Nestle get to the crux of the business issue and then find an HR solution. While practicing the HR policies, Nestle is focused more on people and organization strategies. b. Promotion Promotions will exclusively be based on competence, insight, performance and potential with the exclusion of any consideration for origin, race, nationality, gender, religion or age.

Flexibility is a requirement for ensuring a positive professional evolution. Staff may be requested to move to other positions. Managers, especially international staff, may be asked to move to other locations. International experience and participation in group development initiatives such as GLOBE, SMPT and others can be acquired in all countries of the Group and are a requirement for holding highlevel positions. The development of expertise in specific areas of competence is determinant for Nestles success. c. REWARDS & INCENTIVES o Passion to Win awards- These quarterly awards have been institutionalized to reward those who over-achieve their targets. o Long-service Awards- To recognize employees who have been with the company for more than 30 years. o Nestle Idea Award- It was found from the correspondent that the company institutes Nestle Idea Award every quarter to recognize and award employees who come up with relevant and innovative ideas which have the potential of being implemented at Nestle. For all aspects of Reward Nestle apply the fundamental principles outlined below. Reward Principles

Performance Driven - The level of your Reward is linked to your performance, hence the highest performers will see the greatest Reward. There is also a direct link between the performance of the business and the Reward we're able to offer Competitive - We benchmark all aspects of Reward to ensure we offer all our employees a competitive Reward package Inclusive - Our Reward programme is designed to reflect the valuable contribution which every employee makes, not just senior managers Flexible - We've made it our top priority to allow you to tailor the Reward you receive to your circumstances, whenever possible or practical

d. Benefits The following benefits are provided to all employees, with no discrimination - Leave-Personal & Medical (fixed no. per year) - Children Education Assistance Scheme

- Provident fund - Retirement Gratuity Scheme - Group Insurance & Accidental Insurance Scheme - Conveyance Reimbursements - Residential Accommodation - Monthly health check-ups & free consultation for self & family etc. 4. Employee Relations Nestle provides a very healthy working environment which is one of the reasons why Nestls employees state their commitment level to be very high. o Employee turnover is less than 5%., which is considered to be very low for a multinational corporation. o Nestle has an open culture & upward communication especially in case of grievance redressal is encouraged. o Work/Life balance is given importance, as illustrated in the Nestle Human Resource Policy document. o Nestle Family annual events are organized by their HR department whereby employees along with their families are invited. o Emphasis is laid on safety of employees (Nestle Policy on Health and Safety at Work). 5. Some Achievements and Drawbacks of Nestle Vietnam in HR management Achievements Nestl is today the worlds leading food company, with a 135-year history and operations in virtually every country in the world. Their principal assets are not office buildings, factories, or even brands. Rather, it is the fact that they are a global organization comprised of many nationalities, religions, and ethnic backgrounds all working together in one single unifying corporate culture. Their culture unifies people on all continents, with roughly half their factories and people located in the developing world. A qualified workforce, trained by Nestl Vietnam or emerging from a strong educational and industrial context, strongly influences the companys ability to be globally competitive. The fair treatment and development of company staff and the strengthening of the local workforce are essential long-term investment. Nestl Vietnam offers employees an attractive and dynamic working environment where they will find constant opportunities for development: a place where they can grow, learn, and fulfill the companys potential to the utmost. They reinforce the conditions for growth and sustained

economic development in the locations where Nestl operates. Nestl Vietnams ability to employ thousands of people each year is an important contribution the company makes towards future generations, providing income to families who can enhance their chances at better education, healthcare and standard of living for entire families and communities. Drawbacks The challenge for human-resource specialists in such an organization is not only in the geographically dispersed nature of the workforce, but also their different languages and cultures and, on an individual level, widely differing learning needs and styles. As a dynamic and flexible organization with around 280,000 people employed in some 500factories and offices across the globe, Nestl Waters North America recognizes that our workforce our human assets is one of the most important characteristics that differentiate us in the marketplace. Identifying, recruiting, and retaining top talent across our company are only the beginnings of the story. Nestl human resources teams cultivate our culture through employee learning and foster our sustained growth by ensuring employee passion is directed to help deliver on business goals. In concretely, Nestl Vietnam believes that life creates a climate of innovation. HR professionals should be able to inculcate the willingness to accept change and the ability to manage it. International experience and understanding of other cultures will prepare the employees to face the challenges in global markets. With human resource management viewpoint and system, Nestl Vietnam have brought suitable Communication Strategy and Entrepreneurship strategy, effective Training and Development, recruit purposefully, cut high HR operation costs. However, there are some limitations in human resources management: HRM department is not giving good salaries to the employees, so employees are demotivated and dont work with the company for very long. Staff is not as responsible as it should be. There are not much security measures in the office. A constant threat to the companys economic balance due to unstable government policies. Shortage of certain products like Nestle ghee, which is a significant demand in the market. The regional office is not managed properly e.g. no board is placed to mention the identity of the office. III. Conclusion

Solutions for Nestles HR To minimize above drawbacks and get the most effective operation, Nestl Vietnam should apply some solutions: Bonus packages and increment in salaries for as elective level of work and efficiency should be awarded to attract the employees concern. Staff should be made more responsible by implementing strict rules and regulations and taking disciplinary actions against any un-professional behavior.

Skilled workers of the company should join the security department to enhance the system. Long term agreements to be signed with governmental departments. A small part of the budget should be spent for the management of the office. Inventory should be maintained.

HR strategies that nestle should follow Nestle should practice following HR practices: i. Communication Strategy: Nestle should adopt an effective communication strategy because in todays changing scenario and in a dynamic organization like Nestle employees should be educated and trained about the changes taking place in the organization. This can be done through open house meetings and bulletins etc. Effective Training and Development: Training and development forms an important part of the practices followed at Nestle. It is an integral part of the corporate strategies. Most of the training programs conducted at Nestle are conducted by In-house trainers, whereas for some specialized training programs external trainers should be called. And employees should also be given the opportunity to attend the training programs abroad so as to give them a feel of global markets. Entrepreneurship strategy: Every employee needs to be an independent entrepreneur, who can generate ideas and bring them to reality by using the existing resources and support of the organization to create innovative and creative products and services. Recruit purposefully - The anticipated global shortage of workers has not gone away: it has just been postponed. The reason? Baby boomers are choosing to work a little longer because their retirement savings have been deflated. Once the market comes back fully, you should expect a mass exodus as the boomers leave the workforce. Companies who make severe staffing cuts and don't keep their HR people connected to potential hires will be caught severely short staffed. Savvy companies have a great opportunity right now to hire talented people who have been down-sized by other organizations. Cut High HR operation costs Leverage real time information for HR decisions: This would enhance the decision making process.

ii.

iii.

iv.

v. vi.

The Socialist Republic of Vietnam Independence- Freedom- Happiness o0o

MEETING MINUTES
Group 1 Class HP 1202BMGM 0621- Multinational Company

Content
Ni dung hp Define the topic, the outline and how to solve. Make work assignments for members. Collect information and documents. Prepare to present.

No

Time

Place

Members

27/09/2012 VCUs Library yard

9/9

2 3

07/10/2012 10/10/2012

9/9 9/9

H Ni, November 4, 2012 Nhm trng Th k

Hong Bo Chu

V Th Ngc Dim

GROUP 1s ASSESSMEN

No Group Member Role Task Present, Look for document Look for document Make slide Assessment A AA A+

1 2 3 4 5 6 7 8 9

Ng Th Th Ng

n nh nh nh

member member member

Ngu n Th o ng

o Chu

Th Ng c Di m Nguy n Th Dip Th ung o ng Th ng

Collect information, leader Comple the report, Present. Look for document, secretary write meeting minutes. Look for document member member member member Look for document Look for document Look for document

A AAAA-

Nguy n Th nh

H Ni, 04 , October, 2012

Group Leader

Secretary

Hong B o Ch u

Th Ng c Di m