102KM

International Business And Information Management

Alastair Chan
Student ID: 4076797 102KM
Business Information Technology

102KM International Business & Information Management

Contents Business Information - Company Background .... 4 - Industry Sector .... 5 - Company Products .... 6 Additional Information Organisational Structure Organisational Culture Business Strategy Product Development Process ... 7 ... 8 ... 9 . 10

Recommendations

.... 5

Alastair Chan

102KM International Business & Information Management

Introduction
The following constructed report will be centered on one of the Food and Beverages Industries leading company of Nestl, in particular describing and analyzing with great interest and depth into the companies background, industry in which they operate and with particular interest into the industry and of a

Additional information Organizational structure Organizational culture Business strategy Product development process

Recommendations

Exploit E-Commerce advancements and developments by expanding into the e-commerce market and online environment

Alastair Chan

102KM International Business & Information Management

Business Information
- Company Background
In 1866, Nestl started off from one mans single idea, of a developed milk food formula for infants who were unable to drink their mothers, this was the idea of Henri Nestl. This product became an instant success where soon after, demand throughout Europe started to develop. Nestls popularity continually grew, where this encouraged a series of mergers from existing business such as Crosse & Blackwell, Libbys Fruit Juices and Findus Frozen Food, all of which becoming business partners to Henri Nestl. Due to the number of mergers from 1866 onwards, Nestl experienced a series of name changes ranging from Anglo-Swiss Condensed Milk to Nestl & Anglo-Swiss Holding Co. Ltd, but finally in 1977 when Nestl had merged with Alimentana S.A. (a manufacturing company specialising in soups and seasonings), Nestl adopted the name Nestl SA. Founded in Vevey, Switzerland with headquarters in Paris, France; today Nestl is the worlds leading and largest nutritional, food and wellness company. With a motto of Good Food, Good Life, Nestl currently operates in 86 different countries and approximately employs over 280,000 people worldwide. In 2010, Nestl reported sales of CHF 104.6 Billion (Swiss Franc) and produced a net profit of CHF 34.2 Billion (Swiss Franc); it is continually increasing in size and reputation. As well as being a highly established company specialising in food and beverages, Nestl decided to expand further into other industries, when in 1974, Nestl became the major stockholder in the worlds largest cosmetic and beauty company LOral, holding shares of up to 26.4%. As the worlds leading nutrition, health and wellness company, Nestl has a core aim of providing Good Food, Good Life to its customers through the most nutritious and best tasting ranges of food and beverages. Since its establishment providing the best nutrition has been core to the business (although lately greater emphasis has been placed on this), in addition to both health and wellness. Due to various studies, scientific results and recent history, it is now firmly believed that ones diet is essential to their lifestyle and health, upon this it has now become essential to Nestls Research and Development that when new products are created, they are applied with a high nutritional science and expertise in order to combine both pleasurable tastes and nutritional benefits. This is the foundation of Nestls promise of Good Food, Good Life as they put good nutrition and health at the forefront and heart of their business. Nestls reputation of the largest nutritional, food and wellness company maybe tarnished and overlooked by their past history of being unethical. In 1977, one of the most controversial stories involving Nestl began to surface, concerning the marketing of Nestls infant formulas in developing countries (particularly in the south) and infant mortality. As a result, this caused many people to boycott Nestl products in disapprovement of their behaviour. This ended in 1984, although it is believed that this is still on going. Furthermore, Nestl is continually receiving criticism that they are in breach of the 1981 World Health Organisation (WHO) code, which regulates the advertisements of formula milks. In their own defence, Nestl have stated that breast milk is the best form of milk for young infants and should this be substituted for other substances, it can have hazardous effects on an infants health. Nestl have also stated that women who choose not to, or are unable to breast-feed, have the next best alternative available to them to ensure their child is receiving the nutrition they need.

Alastair Chan

102KM International Business & Information Management

Business Information
- Industry Sector
Within the Food and Beverage Industry lays a key and major operating organisation, this organisation is Nestl. With its vast market share and huge product range, combined with the food and drinks necessity to our living, Nestl and grown vastly within this industry sector and will continue to grow within the both long and short term. Currently, the Food and Beverage Industry is very broad and expanding at a vast rate. Within the UK, there are approximately over 30,000 food and beverage businesses, with over half a million people working in the industry and has a turnover excessing 70 billion. In total the food and beverage industry represents 17% of the manufacturing industry and around 13% of people within the UK, of which are working within the manufacturing industry, work in the food and beverage industry. Despite the small percentile quoted, this industry is the largest in the manufacturing sector in the UK. There are two halves to the food and beverage industry consisting of two segments, which includes production and distribution. Production includes the processing of foods and the creation of beverages, in addition, the production segment excludes any foods that have been directly produced through farming. The distribution segment involves the delivery of completed foods to consumers, for example restaurants. Due to the ever developing and continual expanding of the Food and Beverage Industry, this market has seen a number of competitors arise, with some organisations taking advantage of the mass market and continual expansion and therefore expanding further, becoming cult figures within the industry. Within this industry US Foodservice, McLane Company and SYSCO are the major organisations in the distribution segment, and for the production segment Nestl, PepsiCo, Kraft and Frito-Lay are the major organisations. However, due to expansion, innovation and diversification this led to many of these named companies to operate in a number of different markets. Over the last decade the food and beverage industry has seen a rapid increase in competition, causing existing businesses and future competitors to operate in a perfectly competitive market structure, where there are many competitors with buyers and sellers having much knowledge on the industry. With this increase in competition, creating any competitive advantage has become limited and difficult for competing businesses, as only brand image and innovation are some of the only methods in creating competitive edge. Recently consumers have become increasingly concerned and aware of a companies reputation, especially if this is negative, where their products have been named as unsafe and poor quality, which can impact the business negatively where consumers choose to shop elsewhere (Competitors), decreasing both the businesses sales and its revenue. Therefore having a good brand image is integral in this industry as the way a business is perceived by the public, can an impact on its performance. An increase in innovation, can also create competitive advantage for a single business, as this causes them to stand out from its competitors, for example, unique and exclusive products and services and lower cost of production, this can then cause a business to see an increase its revenue and profit margins. During the previous years, the food and beverage industry has seen inconsistent activity, particularly in sales and as a result the industry has seen profit margins decrease, however, due to factors such as falling costs for commodities, profit margins should see an increase in the coming years. In addition, other factors such as yearly product availability, health issues, the increased popularity of cookery programmes and organic and pre-made products are continually aiding this markets development, combined with the necessity of food and drinks to our living, this industry will continuously be marketable in both the short and long term.

Alastair Chan

102KM International Business & Information Management

Business Information
- Company Products

Currently operating in the Food and Beverage industry, Nestl has a very broad and diverse range of products where one of their main business strategies, is to maintain their growth through innovation and renovation, this has allowed Nestl to diversify their products, enabling them to enter various market segments, to meet several customer demands. This wide range of products includes cereals (Shreddies), yogurts (Munch Bunch), ice cream (Hagen-Dazs), water (Buxton), chocolate (Milky Bar), frozen food (DiGiorno Pizza), baby food (Own branded), pet food (Felix) and its most famous coffee (Nescaf). Nestls 2010 financial statistics were recently produced, which present a sales breakdown, showing the sales for its diverse product range and a geographical breakdown of its operating countries. Nestl sales breakdown included Drinks (27%), Food and Dairy Products (26%), Frozen Food (18%), Chocolate (12%), Pet Food (11%) and Baby Milks (2%). Its geographical sales breakdown included Europe (32%); America (31%) of this 26% came from the US, Asia (16%) and 21% from the rest of the world. Nestls ever-continual innovation and renovation can be due to their history of merging with a series of businesses, as when businesses merge, resources and knowledge is shared throughout the organisation and can be used to its benefits. For example, Nestls continual innovation and renovation has given them a competitive advantage over its competitors, as their ability to continually create new products and renovate existing ones, enables Nestl to trade on their well-established and recognised brand name; creating an extension to their product life cycle and giving them added value. In addition, continual innovation enables Nestl to stand out from its competitors, as they are able to offer exclusive and unique products, enabling Nestl to be one step ahead of its competition.

Alastair Chan

102KM International Business & Information Management

Additional Information
- Organisational Structure An organisational structure outlays a businesses hierarchy broken down into a series of levels and (depending on the business) sections, with each level having more responsibility and authority over the level below. This also displays further features of a business, including an illustration of who has the most authority within the business and who employees are accountable to and responsible for. In addition, if the business requires to be divided into different sections, then the organisational structure would display the functions of each section, for example, Marketing and Accounting Department. Evidently, the structure of a business depends on a numerous of factors, including size, organisational culture and the type of product or service in which they offer, therefore different businesses can entail various organisational structures, including Simple, Functional, Product, Multidivisional, Matrix, Centralised and Decentralised structures. Currently Nestl entail features of a decentralised structure (where authority and responsibility is delegated throughout the organisation), as the organisation distributes a high autonomy level to its subordinates, although, bold and major strategic decisions are still made at headquarter level through Annual General Meetings (AGM) of its shareholders. However, daily operational decisions are implemented by its subordinate organisations.

Alastair Chan

102KM International Business & Information Management

Additional Information
- Organisational Culture
Large and multinational organisations such as Nestl encourage certain cultures towards its employees, where these cultures comprises of values, beliefs and understandings, which is shared throughout the organisation, with any new recruited employees encouraged to follow these beliefs. The culture is taught throughout the whole organisation, and is the spine towards its operations and motivating its workforce, it is highly regarded as it can act as an organisations competitive advantage (any quality which gives an organisation an advantage over its rivals, for example, Economies Of Scale), through several factors such as increasing communication pathways and regularity throughout the organisation, and therefore benefiting the organisation, through an increase in Chain Of Command and efficiency. Furthermore, an encouraged culture amongst an organisation can motivate employees by creating a Them Vs. Us approach, overall increasing morale amongst employees and enabling the organisation to remain competitive. Moreover, this can lead to surges in creativity within the workforce and possibly leading to higher innovation. As one of the largest organisations within the food and beverage industry, Nestl intend to remain at the top through their firm aims and expressions of providing the most nutritious and best tasting ranges of food and beverages to its consumers. Its core aim of Good Food, Good Life is expressed thoroughly throughout the organisation and is at the forefront of their business aims, leading to Nestl becoming the worlds leading Nutrition, Health and Wellness Company within the food and beverage industry. As Nestl strive to remain competitive and be one step ahead of its competitors, Nestl have not forgotten the importance of the manner in which business is conducted, as all employees are reminded of core aims of providing high quality products combined with high levels of service, this is conveyed continuously and is followed by every employee. Nestl state that their organisational culture is constantly voiced through their Aspirations & Beliefs doctrine, which is mutual towards all employees. Nestl aspire to be the best food and beverage organisation, aiming to achieve this through building customer loyalty, achievement of key business objectives, encouraging employee commitment and passion and portraying an Entrepreneurial company spirit. Nestls beliefs are based upon a strategic framework for their decision making process, acting as a guidance to employees when faced with difficult decisions, ensuring Nestls core aims are fulfilled through high ethical means. These beliefs include, a constant respect for consumers, the environment and the community, complete honesty and integrity and continual teamwork. Aspirations define what Nestl are currently striving for and is also a method in which progress is monitored, where as beliefs act as a guidance for decision-making, this is all strongly encouraged throughout Nestl and is at the heart of Nestls business principles.

Alastair Chan

102KM International Business & Information Management

Additional Information
- Business Strategy Essential to the achievement and completion of business objectives and aims, is a series of strategies, which can be implemented in order for aims to be accomplished. Business strategies, act out as tactics and plans, to ensure that aims, objectives or targets are worked towards and completed, acting as a vital component in the functioning of an organisation, as thorough analysing and research is constructed when strategies are created, in time for implementation when new and existing operations are performed. Organisations set various targets (Both Long and Short term) for themselves, but essentially its core aim will be looking to build for the future and maintain a sustained growth throughout its operating years. These strategies, which can occur, include Delayering and Downsizing, an approach in which reduces overall costs, through the removal of sections of an organisations structure, commonly resulting in staff redundancies (Delayering). Downsizing occurs when organisations are operating significantly under full capacity (sales are reducing and costs are becoming harder to manage), therefore downsizing, which can occur through relocation to smaller premises or reductions in staff, reducing costs and saving the organisation money. Furthermore, strategies can also occur through marketing, where marketing strategies can be deployed when entering new areas of a market, For Example, An increase in online activity to target the rising E-Commerce market. As a global organisation, it is unsurprising that Nestls international strategy is at the core of its business aims, where one of its main competitive strategies occurring in foreign investment into other food and beverage businesses. Nestl have recognised the opportunity for growth and possible profitability in developing countries such as China and India, and therefore have decided that their current aims lay in the balance of sales in low risk but high growth developing countries of Asia, Africa and Latin America; although, Nestl have specified that they will not pledge to unnecessary risks for the sake of their own growth, stating that this will sustain their growth and keep shareholders happy. Furthermore, successful strategies, which have been, implemented by Nestl in the past involves their 1990 partnership with Coca-Cola, where an alliance was agreed to provide ready-to-drink coffees and teas, to benefit from Coca-Colas worldwide reputation and expertise in the beverage industry. Over the years, Nestl have seen high levels of competition within the American and European markets and therefore have decided to target new and developing markets to aid their growth and expansion. For example, in Asia, Nestl aimed for a series of takeovers over local companies as a means of recruiting the services of regional managers, as a way of gaining knowledge of local cultures and behaviors and therefore, to enter Asian markets Nestl deployed a wide area strategy, where different products where created for each country such as Soy Milk For Indonesia, Soybean Flour for Singapore and Cereal for the Philippines.

Alastair Chan

102KM International Business & Information Management

Additional Information
- Product Development Process
A fundamental factor when determining the success of a business lays in its products or services that it offers, as offering unique products brings in customers and increases revenue, satisfying the organisations financial objectives. Product Development has been defined as the creation of new or modification of existing products, which offers new characteristics for the benefit of the consumer. In addition, it brings new products to the market and enhances the organisations product range. Within organisations, product development is seen as the first steps to commercializing and producing new products, overall extending their product life cycle and expanding its market share. As earlier stated, Nestl have a diverse product range, where one of its main objectives is to maintain its growth through the renovation and innovation of existing products, which has aided Nestls diversification and allowed freedom, to enter various market segments. Due to Nestls history of takeovers and mergers, innovation and renovation has become easy to come by, due to an increase in shared knowledge and resources through each takeover and merger, causing Nestls workforce to expand and increase. As a result of this, Nestl have now gained a competitive edge over its competitors as the ability to innovate new products and renovate existing ones, enables Nestl to trade on their well-established and recognised brand name, adding an extension to their product life cycle. Recently, Nestls product development has been centered on its aim of providing Good Food, Good Life, to its consumers through the most nutritious and best tasting ranges of food and beverages. Upon this and in light of various studies, scientific results and recent history, it is firmly believed that ones diet is essential to a healthy lifestyle and because of this, it is becoming increasingly important to Nestls Research and Development that when new products are created, they are applied with high nutritional science and expertise to combine both pleasurable tastes and nutritional benefits. This is a critical factor in the development of new products for Nestl, as good nutrition and health has been placed as the foundations of its business. With over 140 years of research, scientific know-how and development in its knowledge, there is still currently a great deal of research taking place at Nestls Research and Development centers, with Nestl investing approximately CHF 1.5 Billion (Swiss Franc), into its research and development each year, combined with an estimated 3,500 employees from 50 countries worldwide, all working in Nestls worldwide network of 17 research and development and product testing centers. These research and development centers are part of Nestls continuous source of innovation and renovation, which feeds its pipeline of a continuous product range, in addition to specialising in several professional areas such as production processes, ingredients, nutritional science and raw materials. Beyond nutritional benefits and health, it seems the future of our foods will be increasingly in the hands of science, where Nestl are scheming for the future, aiming to transform food science and nutrition through 2 ways of turning consumer needs into research priorities and from emergent sciences into consumer services and benefits.

Alastair Chan

10

102KM International Business & Information Management

Recommendations
Write beginning of product development keep short Add to company products maybe if I able to. Finish organisation structure Recommendations e-commerce Add images references

Alastair Chan

11