.

Presented by: Joseph Albanese, James Kenney, Matt Sedgeman,& Megan Martinez

Nestlé S.A.:The International Management Plan

.

Nestlé Company Highlights

Objective

Description

Locations In Region

Annual Revenue

Employees

.

Company Type

Products

Key Officers

Key Competitors

Company Perspectives

Nestlé Company Highlights

.

Time Line• 1866: The Anglo-Swiss Condensed Milk Company is founded in Cham,

Switzerland. • 1867: Henri Nestlé begins selling cow's milk-food in Vevey, Switzerland. • 1900: Nestlé opens a factory in the United States. • 1905: Nestlé and the Anglo-Swiss Condensed Milk Company merge. • 1938: Nestlé introduces Nescafe. • 1974: Nestlé enters the nonfood business, becoming a major shareholder of

the cosmetics company L'Oréal. • 1979: After numerous name changes, Nestlé S.A. is adopted as the official

corporate title of the company. • 1985: Nestlé acquires Carnation and Hills Brothers Inc. • 1992: Nestlé acquires Perrier. • 1998: Nestlé acquires the Spillers pet food business belonging to Dalgety

PLC, making it the second largest pet food maker in Europe. • 2002: Nestlé acquires Ralston-Purina to become co-leader in the global pet

food business. • 2003: Nestlé acquires Dreyer's Grand Ice Cream. • 2005: Chief executive officer Peter Brabeck-Letmathe is named

chairman of the board.

.

International Strategy

.

Significance of International Strategy

“Companies operating internationally often face a diverse quilt of cultures, values, and practices. In addition, companies typically encounter an array of opportunities and threats in foreign countries. Consequently, figuring out the best way to operate in various markets around the world can be a very complicated matter. That said, developing an overall plan for competing abroad and choosing market entry options that make sense for the firm can mean the difference between success and failure when operating internationally.” (pg. 258)

.

Basic Strategies

Basic Strategies

Business-Level(pg.261)

– Differentiation

– Cost Leadership

– Niche Strategy

International (pg. 265-268)

- Multidomestic

- Global

- Transnational

- Regional

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Major Implications in Strategy Development

Theory of National Competitive Advantage

Corporate Structure

Management Processes

Human Resources

Corporate Culture

.

Nestlé S.A.’s Strategy

Basic Business-Level– Differentiation

Basic International– Multidomestic

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Our Ideal Strategic Areas for Nestlé S.A. Management

Leadership

Local Savvy

Communication

Functional

Competitiveness

.

International Management Plan

Chairman

Corporate Governance

Compliance & Corporate Services

CEO

Operations Finance & Control

Nestle Nutrition Nestle Waters

Zone EUR:Europe

Zone AOA:Asia/Oceania/ Africa

Zone AMS:Americas

Nestle Professional

Strategic Business Unites, Marketing

and Sales

InnovationTechnology and

R&D

Corporate Communications

Pharma& CosmeticsHuman Resources

.

International Management Plan

Nestle offers competitive compensationPay structure implemented by president of each zone– Laurent Freixe

Benchmarking used to verify plan

Position Average Annual Salary

CEO$1,132,475.00

Corporate Governance Compliance $556,286.00Corporate Communications $351,374.00Human Resources

$432,479.00Innovation, Technology and R&D $371,142.00Marketing and Sales $431,737.00Finance & Control

$542,537.00

*Information based on National Average Statistics for Switzerland

.

United States vs. Western EuropeCultural Factor United States Western Europe

Religion Christianity Christianity

Education Important          College Degree Important                 No Advanced Degree Necessary

Economics Dollar European Union

Politics Democratic European Union

Family Important Most Important Factor In Life

Class Structure Live in Suburbs Live in Urban Area

Languages Predominately English.              Increase in Spanish

Varied: English, French, Spanish, Portuguese, Italian, German, Dutch, Swedish, Norwegian, Finnish Gaelic, Welsh, Catalan, Flemish

History Relatively Young Extremely Patriotic Very Important to Cultures, Extremely Old

Natural Resources / Geography Varried Terrains, Many Resources Varried Terrains, Many Resources

International Management Issues

.

International Management Issues

Culturally Different– Different Cultures– Different Customs– Different Languages

• English, French, Spanish, Portuguese, Italian, German, Dutch, Swedish, Norwegian, Finnish Gaelic, Welsh, Catalan, Flemish

Strong Competition– Due to diversified products

.

International Management Issues

Similarities simplify Issues

– Political Structure– Economic Laws– Trade Agreement– Freedom to Move Labor

.

Nestlé is a human company

Develop long-term relationships

Continuous training and improvement of skills

Committed to continuous, long-term improvement

Policies

.

Policies

Respect for cultural differences and diversityShould integrate into society as much as possibleDiscrimination will not be toleratedShould integrate into local society as much as possibleManagers should internalize and promote Nestle core valuesOpen minded new ideas and develop a pragmatic approach

.

Descentralized

Flattened managerial structure

Promoted communication and information sharing across thecorporation

Impact of Policies

.

Personal Required

40000

25000

20000

8001400

200

Administrative Service Sales People Local Managers

Professional Trainers International Managers International Executives

.

Local Training Programs consistent of:– Regionally developed training programs– Programs delivered by the International Training Center to different

regionsInternal International Training Program at the Rive-Reine International Training Center made up of:– Management courses– Executive Courses

External International Training made up of courses from– The International Institute of Management Development (IMD)– Institut Européen d'Administration des Affaires - European Institute of

Business AdministrationHarvard Business School (INSEAD)– Wharton Business School– Other business schools in the local area of managers

Internet Course TrainingOn the job experience & trainingMentor & Coaching ProgramsSeminars

Methods for training & developing managers

.

International Manager Development Process

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Performance Metrics

Benefits– Supports strategic planning and goal setting– Tracks products progress towards goals– Improves accountability, increases transparency– Combat performance gaps

.

Key Measures of Success

Profitability– ROE: 37.5– ROI: 27.43

Customer Retention– Acquisition & Existing

Employee Satisfaction– Work environment

Operating ExpensesCompany Wide Goals– IMC

 

 

International Management Plan For Nestlé Corporation

Joe Albanese, James Kenney, Megan Martinez, Matt Sedgeman

12/9/2009

 

 

Company Overview

Company Name: Nestlé S.A.

Objective: To manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners.

Description: Nestlé is a diverse company that’s involved in many industries and segments. Nestlé is a large multinational company that focuses on improving health and wellness through nutrition. “Good Food, Good Life.”

Locations In Region: Vevey, Switzerland (World Headquarters); Austria; Belgium; Denmark; Finland; France; Germany; Greece; Ireland; Italy; Netherlands; Norway; Poland; Portugal; Spain; Sweden; United Kingdom (Operates in more than 70 countries total)

Annual Revenue: 28,153,000,000 CHF in Western European Region (of 109.908B total sales in 2008)- 2nd biggest only behind Americas Region (~33B)

Employees: 1600 at Corporate Headquarters in Switzerland (of 283,000 Employees Worldwide)

Type of Company: Manufacturing (Food and Nutrition), Consumer Goods

Products: Bottled Water, Baby foods, Breakfast Cereals, Chocolate and Confectionary, Coffee, Dairy Products, Drinks, Ice Cream, Pet Care, Pharmaceutical Products

Key Officers: Chairman: Peter Brabeck-Letmathe CEO: Paul Bulcke EVP Operations, GLOBE: José Lopez

Key Competitors: ConAgra Foods, Inc., Groupe Danone, Kraft Foods Inc.

Company Perspective: Quality is the essential ingredient in all of our brands and the reason why millions of people choose Nestlé products every day. Our consumers have come to trust in Nestlé’s commitment to excellence and turn to Nestlé brands to maintain nutritional balance in a fast paced world.

 

 

Timeline of Key Dates:

• 1866: The Anglo-Swiss Condensed Milk Company is founded in Cham, Switzerland.

• 1867: Henri Nestlé begins selling cow's milk-food in Vevey, Switzerland.

• 1900: Nestlé opens a factory in the United States.

• 1905: Nestlé and the Anglo-Swiss Condensed Milk Company merge.

• 1938: Nestlé introduces Nescafe.

• 1974: Nestlé enters the nonfood business, becoming a major shareholder of the cosmetics company L'Oréal.

• 1979: After numerous name changes, Nestlé S.A. is adopted as the official corporate title of the company.

• 1985: Nestlé acquires Carnation and Hills Brothers Inc.

• 1992: Nestlé acquires Perrier.

• 1998: Nestlé acquires the Spillers pet food business belonging to Dalgety PLC, making it the second largest pet food maker in Europe.

• 2002: Nestlé acquires Ralston-Purina to become co-leader in the global pet food business.

• 2003: Nestlé acquires Dreyer's Grand Ice Cream.

• 2005: Chief executive officer Peter Brabeck-Letmathe is named chairman of the board.

 

 

Structure of Company Operations

Chairman

Corporate Governance Compliance & 

Corporate ServicesCEO

Operations Finance & Control

Nestle Nutrition Nestle Waters

Zone EUR:Europe

Zone AOA:Asia/Oceania/ 

Africa

Zone AMS:Americas

Nestle Professional

Strategic Business Unites, Marketing 

and Sales

InnovationTechnology and 

R&D

Corporate Communications

Pharma& CosmeticsHuman Resources

 

 

P. Brabeck‐Letmathe

D.P. Frick P. Bulcke

J. Lopez J. Singh

R.T. Laube J.J. Harris

L. Freixe F. van Dijk L. Cantarell

M. Caira

P. Heynike W. Bauer

R.Ramsauer F. Castaner

 

 

International Management Strategy

In all companies today, businesses choose, develop, and implement various strategies according to their industry and business. Incorporating an international strategy, as well as a basic business-level strategy, isn’t a simple task. This is emphasized in the textbook, through the statement, “Companies operating internationally often face a diverse quilt of cultures, values, and practices. In addition, companies typically encounter an array of opportunities and threats in foreign countries. Consequently, figuring out the best way to operate in various markets around the world can be a very complicated matter. That said, developing an overall plan for competing abroad and choosing market entry options that make sense for the firm can mean the difference between success and failure when operating internationally.”1 To develop their strategies, most multinational companies first establish their basic business-level strategies, then develop their international strategies. Even when their strategy is adopted, the company must be prepared to adjust them frequently and accordingly in order to. They “must be able to anticipate and react quickly to changes in markets and technology or lose their ability to compete effectively.”2 To begin developing their strategies, companies typically choose a basic business-level strategy to pursue. The three basic business-level strategies are differentiation, cost leadership, and niche strategies. Differentiation strategies involve providing a unique or superior product than their competitors to their consumers and are less concerned with their pricing. The cost leadership strategy simply means undercutting competitors and providing their goods or services at lower costs than their competitors. The third type, niche strategies, focus on a more specific line of products or services than its competitors.3 However, in international companies, such as Nestlé, this is only the first step. To both guide the basic business-level strategies and succeed internationally, these companies must develop their international strategy. Although the majority of companies mix strategies or use multiple strategies, there are four primary strategies. There are four basic strategies used by Multinationals: Multidomestic, Global, Transnational, and Regional.4 The first, the Multidomestic strategy, is an approach where universal business goals are developed for the company, but implemented independently for specific countries. This allows the company to respond to local needs. Next, the global strategy is an approach where business goals are universally set on a worldwide basis. This allows for the most central control over the organization where response to local differences are not typically needed. The next strategy is the transnational strategy. In this strategy, organizations move key activities to wherever they can be done best while still adapting to local product/service preferences. In a way, this strategy aims to combine both the Multidomestic and global strategies. The last basic international strategy is the regional strategy. This strategy is an approach that gives managers in particular geographic areas the freedom to make decisions, set goals, and be free to respond to specific customer needs. This strategy is the least centralized, but allows for the most local adaptations and freedom. As stated previously, successfully developing these strategies, and even more so,

                                                            1 McFarlin/ Sweeney, International Management, pg 258. 2 Ibid. 3 Ibid., 261. 4 Ibid., 265‐268. 

 

 

maintaining their success, is not an easy thing to do. There are many implications involved in the development of these strategies. First, when doing business in international countries, managers must understand the theory of national competitive advantage. This theory attempts to explain how nations become competitive and why they produce firms that are very successful in specific industries. The theory outlines four factors that shape the context of success or failure for companies in certain geographic locations. These four factors are factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. Factor conditions identifies if a nation offers all the components (such as raw materials and the necessary labor skills) necessary for the particular industry or company to succeed. Demand conditions identify what the nature of the market is like in a particular country. If firms can identify these specific demands of the country before their competitors can, they will gain a huge advantage over them. The next factor of this theory is the related and supporting industries. This factor explains that if a large amount of supplier or related industries already exist in the country, it’s easier to move in. There’s much easier access to components, technology, and innovation when the industry is already present in a country. The final component of the theory of national competitive advantage is firm strategy, structure, and rivalry. This include things such as making sure that the company is a suitable match for all the country’s laws, cultures, and business practices. It also includes the fact that if rivals already exist in the location, the company will be forced to be more innovative, productive, and cost conscious, which will all be beneficial in these international markets.5 Beyond understanding the significance of the four factors within the theory of national competitive advantage, it’s essential to take into account other implications when creating an international strategy. A few of the most important ones include corporate structure (the way reporting relationships and business units are organized), management processes ( the planning, budgeting, coordination, and performance appraisal activities and systems used to run the firm), human resources (the people who staff the firm worldwide), and the corporate culture (the expectations, values, beliefs, and unwritten rules that guide employee behavior in the company).6 Similar to other companies, Nestlé S.A. has designed and implemented a strategy that best fits their company. In terms of their basic business-level strategy, Nestlé S.A. goes with a differentiation approach. Rather than attempting to sell their products at the lowest costs, relative to their competitors, Nestlé S.A.’s focus is on brand awareness, reputation, and quality. Nestlé S.A.’s strategy aims to attract and maintain their international customers through these things to stay successful. In developing their international strategy, Nestlé S.A. first understands and uses the implications discussed, to locate the best countries to operate and succeed in. They do so through a Multidomestic strategy. Although they sell many different products, this is the main strategy. In their industries, such as candy and ice creams for example, local responsiveness is crucial to success. Many countries prefer different tastes, appearances, packaging, sizes, and prices than others do. Therefore, rather than introducing one type of product that is desired in France, for instance, and using it universally, they allow their managers and individualized operations to base their products on the local needs. This strategy is very successful for companies like Nestlé S.A. , where centralization in a global strategy wouldn’t allow them to offer their array of product lines to fit the specific needs of each country or culture. After researching the strategies of Nestlé S.A. , we decided to create our ideal model of

                                                            5 Ibid.,263‐264. 6 Ibid., 281. 

 

 

the necessary strategic areas that should be in place for Nestlé S.A’s managers. We thought that managers of the company (in different countries) should consist of around 25% leadership skills, to take charge in their specific country, 25% local savvy and expertise on the local markets, so they can gain the largest edge possible, 25% communication skills, to be able to work with their company well, their specific customers, and successfully report back to upper management, 18% functional skills, to successfully operate the everyday business activities required, and finally 7% competitiveness, which would create not only a competitive drive between themselves and their competition firms, but also between themselves and Nestlé S.A. management in other locations. This competitive drive, we feel, would encourage a little friendly competition and would increase the success of Nestlé S.A.’s operations. Ideal Strategic Areas for Nestlé S.A. Management

Leadership

Local Savvy

Communication

Functional

Competitiveness

 

 

International Management Department Plan

Position Average Annual Salary

CEO $1,132,475.00Corporate Governance Compliance $556,286.00Corporate Communications $351,374.00Human Resources $432,479.00Innovation, Technology and R&D $371,142.00Marketing and Sales $431,737.00Finance & Control $542,537.00

*Information based on National Average Statistics for Switzerland

Executive Board

Zone EuropeLaurent FREIXE

Beverages

Manager A

Milk, Nurtition, Ice Cream

Manager B

Prepared Dishes, Cooking Aids

Manager C

Chocolate, Confectionary, Biscuits

Manager D

Pet Care

Manager E

Pharmaceuticals

Manager F

 

 

International Management Department Plan (Cont).

Nestle, as a whole, has an extremely rigid corporate structure. The responsibility of enacting and maintaining the corporate structure for the company is reliant on the CEO, P. Bulcke. He ultimately determines the structure and direction of the company. Laurent Freixe controls Nestle Europe, which is the particular region of study. Laurent Freixe then has managers below him that will run each segment of the company.

Nestle’s policy in terms of compensation is to stay competitive through benchmarking. According to Nestle, “each operating company will establish a compensation practice taking into account relevant external compensation levels” (Nestle Website). The head of the European zone Laurent Freixe “reviews its competitive position with other companies to keep in line with market trends” (Nestle Website). This is an interesting piece of information because Nestle is showing its employees that they will always be compensated appropriately.

 

 

Company International Management Issues

Within Europe, there is a wide spectrum of cultures. These cultures range from the rugged Germanic culture to the more gentle and welcoming Italian culture. The Germanic culture dominates the nations around the Baltic Sea. The Germanic culture is based on efficiency and independence. On the other hand, the Italian culture is the opposite of the characteristics exhibited by the Germans. The Italians as are the other cultures that possess the romance languages, are more affectionate and open. In comparison, the United States is a mix of both cultures. There many different languages spoken within these cultures. As Nestle, a major management obstacle is being able to manage the differences in culture as well as language. In terms of the workforce, Nestle does not need to be too concerned. In the southern culture such as Spain, France and Italy, it is common for the workers to strike if they believe they are treated unfairly. As a manager, one needs to keep open channels of communication between the unions and Nestle to ensure that the workers are happy and productive. The European Union works with the International Labour Organisation to implement their regulations regarding labor. People can also cross national border without visas to work in a different country. According to Article 39 Freedom of Movement to Work; any EU citizen can move across national borders to work and cannot be discriminated for it. A benefit of being in the European Union is that the laws can be applied to each country. This means that there doesn’t need to be a different management team for each country. Economically, Western Europe is a great region to be located. Western Europe is great because it is where all of the European economic powerhouses are such as the UK, Germany, France, and Spain. The major benefit of practicing business within much of Western Europe is the fact that it is mostly the same currency, the euro. There are some countries in Western Europe that do not use the Euro such as the UK and Switzerland. With the majority of the European Union using the Euro, it makes it easier to set a standard pay rate across comparable nations. In addition, the European Union has a free trade agreement that allows for shipment of goods across a national border to be without tariffs. This allows companies to still produce the goods in the country with the lowest production costs and then transport across Europe. In a more financial basis, the corporation needs to report all financial data in the International Financial Reporting Standards (IFRS) guideline for reporting financial data that is presented on the EU stock markets. Politically, there is little turmoil in the European Union. The great thing about the European Union is that the common laws are applicable to each country. There are different local laws but the major framework for the political laws are all centered around the EU’s framework of laws. Everything mentioned above such as the free trade agreements and the currency was all decided through diplomatic meetings as opposed to being mandated by the various government structures. The European Union believes that companies should regulate themselves in a way that stimulates growth for the company and the surrounding areas. The European Union also

 

 

ensures that when it creates treaties with others, the foreign country works to meet the EU standards regarding labor. Nestle has many competitors in their market. The reason being is that Nestle operates in many different business sectors. Nestle needs to deal with competitors in the range of products from pharmaceuticals to drinking water. This provides a large challenge. This could be a problem because each strategic business unit works independently within each zone. For example, Nestle drinking water does not communicate with Nestle pharmaceuticals within the European Zone.

 

 

Cultural Differences Between United States and Western Europe

Cultural Factor United States Western Europe

Religion Christianity Christianity

Education Important College Degree

Important No Advanced Degree Necessary

Economics Dollar European Union

Politics Democratic European Union

Family Important Most Important Factor In Life

Class Structure Live in Suburbs Live in Urban Area

Languages Predominately English. Increase in Spanish

Varied: English, French, Spanish, Portuguese, Italian, German, Dutch, Swedish, Norwegian, Finnish �Gaelic, Welsh, Catalan, Flemish

History Relatively Young Extremely Patriotic

Very Important to Cultures, Extremely Old

Natural Resources / Geography

Varried Terrains, Many Resources

Varried Terrains, Many Resources

 

 

Nestlé’s Corporate International Management Policies: Nestlé has become the world’s leading food company by its ability to continuously adjust to various international markets, while continuously sticking to its core believes and values, in order to achieve long-term success.

Nestlé is first and foremost a human company. Part of Nestlé’s goal is to provide for people’s needs and to promote their well-being throughout the world. This includes both consumers and employees, and management policies should be reflective of this. Since people are the strength of the corporation international management policies should be focused on developing long-term relationships with its employees. These relationships require investment on both sides. Nestlé requires employees whom committed to its values and to helping it continuously meet its long-term goals. Nestlé should be committed to the long-term development of its employees, to promote their personal progress and to enable them to further aid the company. Individuals need to be involved in this process at all levels of the company. Therefore, the dissemination of appropriate information and proper communication need to encouraged throughout all levels and individual business units.7

As a food company Nestlé has realized that food products are closely connected to individual societies. Food products are closely linked to local habits, cultural traditions, and social norms. Because of this management policies should have a high respect for the various cultures and countries that Nestlé caters too. Managerial processes should encourage individual Nestlé business units to integrate into local cultures as much as possible. However, Nestlé should not remain as a simple bystander in the various cultures it operates in. It should also promote the core values that the Nestlé Corporation believes in. Therefore, Nestlé management should promote social and cultural diversity in all areas in which it operates. Management should never discriminate based upon a person’s nationality, place of origin, religion, race, age, or gender.8

While Nestlé management should respect different cultures as much as possible, they should also promote the core values which make up the Nestlé culture. The Nestlé culture is originally rooted in Swiss values and has evolved over time as the company has grown around the world. The values of the Nestlé culture that managers should promote include the following: a commitment to a strong work ethic, integrity, honesty, and quality; personal relations based on trust and mutual respect; a personalized and direct way of dealing with each other; a more pragmatic than dogmatic approach to business; openness and curiosity for dynamic and future trends in technology, changes in consumer habits, new business ideas and opportunities, while maintaining respect for basic human values, attitudes and behaviors; pride in contributing to the reputation and performance of the company; loyalty to and identification with the company.9 Managers in Nestlé’s various business divisions are required to posses certain attributes                                                             7 The Nestlé Management and Leadership Principles. Nestlé.com/Resource.   8 Nestlé Corporate Business Principles. Nestlé.com/Resource.   9 The Nestlé Management and Leadership Principles. 

 

 

in order to add value to corporate leadership. Of course all managers must have professional skills, practical experience, and be result oriented. A manager needs qualities above just these alone in order to fit into the global orientation of the company. This includes initial international understanding and experience, along with a high level interest and open-mindness in other cultures and life-styles. In order to share knowledge and express ideas with their colleagues and employees from various backgrounds managers are required to continuously improving their learning of other cultures. They must also have the ability to motivate and develop people within their work environment. This includes all types of people from various nationalities. Managers must also be creative and adaptable to new ideas, new ways of thinking, and new environments. This is required of managers who may find themselves working outside their home culture, or find themselves charged with importing new innovations to their work area.10

                                                            10 Ibid. 

 

 

Impact of Nestlé’s International Management Policies: Within in recent years Nestlé has moved toward a new managerial structure and processes. This new management organizational structure moves away for the traditional pyramid structure found in many large international corporations to a more flat and flexible structure. It is Nestlé’s goal to have a managerial structure that is made up of more independent, single business units that are focused upon operations within the local country they reside in. The lower employee levels of these different SBUs should consist of more local people than previously, while upper management should be a mix of local managers with international expertise and foreign managers with an in-depth understanding of local culture. This new structure better employs Nestlé’s managerial polices of integrating into the local culture as much as possible. By having the different SBUs operate more independently management will be able to align its company with local laws and customs. Also, by having SBUs employ more local employees with additional foreign upper management it allows different Nestlé branches to better integrate into their local operating country,11 The new managerial structure that Nestlé is currently creating is also focused upon flattening and vertically integrating management within all of the different Nestlé SBUs. These flatter structures will allow for clearer path for managers and employees to converse and share ideas. This is in line with Nestlé’s policy of disseminating information and communication throughout all levels of the corporation and its units. Furthermore the flattening of Nestlé’s organizations will enable lower level employees and upper management to better communicate and interact with one another. This is congruent with Nestlé’s policy of developing relationships based upon trust, while also promoting the policy of having employees communicate with each other in more personal and direct ways. This flattening also further emphasizes Nestlé’s policy of promoting respect and equality among its employees.12 When creating the processes of a development program for international management Nestlé’s policies of having its managers continuously develop both their professional and their cultural expertise has been put front and center. Nestlé has divided its international management training program into to two branches, internal and external. Considering that Nestlé’s international management policies are centered on the expansion of employee knowledge, it is mandatory that all international managers undergo both internal and external management development programs. The internal training for international mangers at Nestlé has been centered on its Rive-Rine International Training Centre for the past thirty years. This centre has goal is to bring up-incoming international managers from all points of the globe Nestlé operates in together to learn from veteran senior members and from each other. By bringing together up-incoming international managers from over the one-hundred different countries Nestlé operates this centre has created a functioning network of managers based upon the learning experience they shared together. This is consistent with Nestlé’s policy of creating companies were information and communication is disseminated throughout all business units.

In recent years a class at the Rive-Rine International Training Centre has consisted of fifteen to twenty different nationalities, 95% of them from outside Switzerland (Nestlé home country). The up-incoming-managers sent to the training centre have been selected by local

                                                            11 Perspectives for Managers: Nestlé on the Move.  IMD.com. 12 Perspectives for Managers: Nestlé on the Move. 

 

 

country managers. At the centre 75% of the teaching is done by experienced international managers who have worked for the corporation with usually over twenty years of experience, with the rest taught by outside professionals. The reason why the majority of classes are taught by experienced managers is to transfer Nestlé values to the new up-in-coming managers from the old guard. This is in line with Nestlé’s policy of having all of its managers exemplify its core values.13

The development programs at Rive-Reine can be divided between two groups, management course and executive courses. Management courses usually consist of participants who have come to the company in the last five years, with the primary goal of teaching them Nestlé’s core business approaches and values. The executive courses are usually made of managers who attended the management courses four to five years earlier. The courses are centered around managers representing Nestlé to the external community, taking into the international management policy of having Nestlé exist in harmony with the local cultural as much as possible.14 The external management training has had growing international managers study at outside business schools. The schools include the International Institute of Management Development (IMD) in Lausanne, INSEAD in France, and Harvard or Wharton in the United States. The goal of having international managers study at these various schools is to fulfill Nestlé’s policy of continuously developing the professional skills of its managers. The other primary reason for having international managers receive external training is to avoid Nestlé management becoming locked into a single corporate mind set. By having managers also trained outside the company Nestlé is able to fulfill its cooperate policies of having its management open to new business ideas and opportunities, as well as dynamic and future trends in technology.15 Nestlé’s external international management training is chiefly centered in collaboration with IMD. At IMD Nestlé managers enter into the program for executive development (PED). PED is divided up into two five-week modules that are twelve to eighteen months apart. The PED program is usually used to prepare an up-in-coming manager for his or her first foreign assignment. The PED program is also supplemented by INSEAD, Harvard, Wharton, and other business school in the country a manager may be working in. This is to expose Nestlé managers to business thought that is outside of Switzerland. This is done in regards with Nestlé’s managerial policy of having its managers learning about the business culture of various countries, including the one they are currently living in. 16

                                                            13 The Nestlé People Development Review. Nestlé.com/Resource.   14 The Nestlé People Development Review. Nestlé.com/Resource.   15 Ibid. 16 Ibid. 

 

 

International Management Plan

I. International Management Development A. Personnel Required

B. Methods used to train and develop mangers. 1. Local Training Programs consistent of: a. Regionally developed training programs b. Programs delivered by the International Training Center to different regions 2. Internal International Training Program at the Rive-Reine International Training Center made up

of: a. Management courses b. Executive Courses 3. External International Training made up of courses from a. The International Institute of Management Development (IMD) b. Institut Européen d'Administration des Affaires - European Institute of Business

AdministrationHarvard Business School (INSEAD) c. Wharton Business School d. Other business schools in the local area of managers 4. Internet Course Training 5. On the job experience & training 6. Mentor & Coaching Programs 7. Seminars

40000

25000

20000

8001400200

Administrative Service Sales People

Local Managers Professional Trainers

International Managers International Executives

 

 

International Manager Development Process:

 

 

Success for International Management Activity Metrics

I. What are the overall performance criteria for the International Management Plan? II. How will each activity be measured?

Measuring the success of a business has many benefits that are vital for the continued

profitability of a corporation. Measuring business performance supports strategic planning and goal setting, tracks products progress towards goals, improves accountability and increases transparency, as well as facilitates actions to combat performance gaps.

The key measures of success include profitability from a financial standpoint to increase the company value. The value of Nestle can be measured by the return on equity of 37.5, and the return on investment of 27.43, both well above the industry average. To facilitate the increase in the value of Nestle, there should be monthly strategy meetings implemented to insure the progress of Nestle to achieve company goals. Additionally the sales growth is extremely important; over a 5 year period Nestle has grown by 4.55. To increase revenue growth, Nestle should develop a plan to increase the sales for two particular products. In terms of profitability, the gross margin for Nestle is 57.06 and a net income of 18,039, well above the industry average of 9,197.

Customer retention is another important measure of success. Customers seek high quality products at reasonable price points. With a focused marketing plan Nestle can monitor a percent increase in the product line, as well as increasing internet sales. Measuring the customer acquisition and retention rate by developing a marketing plan to acquire new customers and upsell to existing customers will increase internal success throughout Nestle. With regard to e-commerce, the number of hits on the website as well as the internet sales revenue is a good indication of success, as well as a great opportunity to increase profitability.

Employee satisfaction is another key measure of success which is achieved through effective management. It is extremely important for management to create a work environment that is conducive to productivity and rewards employees for hard work, thereby increasing the rate of retention as well as the ability to acquire quality employees. The percentage increase of sales achieved by employee upselling is a good measure of productivity. Nestle can train employees on the merits of upselling. In addition to measure employee capacity, employee processes can be documented and monitored to increase accountability.

Costs can be reduced by evaluating operating expenses and restructuring the organization by creating policies for inventory management and purchasing. Creating companywide goals also provides direction and focus while ensuring that all components of Nestle are moving towards a common destination. Once objectives are set, the key performance measurements track and assess progress.

 

 

Executive Summary Nestlé S.A. is a very diverse company with many different locations worldwide and

within the Western European region. They’re headquartered in Vevey, Switzerland. Through its large number of product lines, they manufacture, produce, and sell a variety of products, including food items, and more recently, non-food products such as pet care products and pharmaceutical products. They are very successful in their goals to maintain and sustain market share, offer high quality products, and retain an edge over their competitors, such as ConAgra Foods Inc., Groupe Danone, and Kraft Foods Inc. In their mission to continually grow and prosper, Nestlé S.A. developed a basic business-level strategy of differentiation and a multidomestic strategy as their basic international strategy. Brand image and reputation are very high priorities of the company. They chose to institute these strategies based on their particular business and industry, where they find it crucial to be able to adapt to local preferences and demands to meet the varying desires in different locations. Nestlé S.A. understands the implications involved with adapting these strategies into their business, which is shown by their strong ability to profit, grow, and gain market share.

Nestlé Corporation’s management structure is a rigid hierarchy designed to highlight the specific strategic business units of the company. Due to the many strategic business units, Nestlé emphasizes running each zone like a subsidiary of the main company. The management plan was created by the CEO of the company and needs to be enacted in each business unit. Nestlé Europe’s president, Laurent Freixe, is responsible for maintaining the corporate structure of Nestle Europe. He is also responsible for the compensation that occurs at Nestlé. Each employee is compensated fairly according the benchmarked standards.

Nestlé has few issues in terms of management. At Nestlé, the major predatory issue is that of culture throughout Europe. Nestlé’s management team needs to ensure that products will be enjoyed by the consumers no matter which country and that the workers are treated fairly and motivated properly due to their national cultures. Aside from that, the creation of the European Union has created a more lax business environment allowing the flow of people and goods to move freely. This has created more opportunities than issues in the management community.

Nestlé’s international management policies are focused around people, rather than processes. This is due to its belief that its core competencies lie within its employees. Because of this, Nestlé’s international management policies center on the belief that it needs to develop a long-term relationship with both managers and employees, providing them with ongoing education and training. Another pole of its management policy is that each Nestlé branch should respect differences in cultures and aim to integrate within the local country. In order to better integrate into various countries, Nestlé corporate structure should be decentralized. However, Nestlé international managers shouldn’t compromise core corporate values while trying to integrate. The development program for international managers reflects Nestlé’s international management policies. It’s focused on developing managers whom have started at various regions and training them over a long period of time to turn them into international managers. The development program has both an internal and external learning aspect due to Nestlé’s beliefs in being open to new ideas from all over the globe, while sticking to its core beliefs.

The final component of Nestlé‘s international business plan included is the international management metrics integral for success. Measuring business performance supports strategic planning and goal setting, tracks products progress towards goals, improves accountability and increases transparency, as well as facilitates actions to combat performance gaps. Key measures of success include profitability, customer retention, employee satisfaction, operating expenses, and companywide goals. Each metric is vital in evaluating the progress of company objectives to ensure success.