Florida Atlantic University
Dr. Mantha Mehallis
July 19, 2009
Table of Contents
Nestle Company History 3
Nestle: Challenges in Latin America 4
Venezuela: History of Cocoa 5
Venezuela: Background and Political-Economic Situation 6
Venezuela:Exchange Rate Regulations 6
Chavez’s Socialist Reform 7
Chavez and Nationalization 8
Chavez threatens Nestle 10
Nestle Going Forward …..11
Conclusions and Recommendations 11
Companies undergo challenging situations across the world, including economic crises, political issues, social difficulties, cultural differences, and environmental forces; but at the end ofthe day, the strongest companies survive and continue their business. The strongest companies are those that learn how to manage these difficulties and blend into the cultural, social, political, economic conditions of each country they do business.
Nestle has been a global company for over a century, and it has survived wars, depressions, political uprisings, social revolutions, culturaldiversity, and environmental catastrophes. In this paper, Nestle’s global background is discussed by focusing on Venezuela. Discussions include Nestle’s global history and its challenges in Latin America, Venezuela’s history of cocoa, background on its political-economic situation, and exchange rate regulations, President Chavez’s socialist reform, nationalization of private sectors, and his threatsto Nestle, Nestle going forward, and finally closing recommendations. In general, the paper discusses Nestle’s history in Venezuela and all the challenges it faces today considering the country’s political, economic, and social conditions.
Nestle Company History
In 1860, a Swiss pharmacists named Henri Nestle developed a special baby food for infants who could not drink breast milk. By1867, Henri Nestle was selling Farine Lactee Henri Nestle baby food at a rapid growth rate all over Europe (Russell, 2006). Demands grew bigger than production, and in 1905, Nestle joined its direct competitor the condensed milk company Anglo-Swiss Milk Company. By 1921, the company had factories in most of Europe, Australia, United States, and Latin America. The first Latin American factory wasopened in 1920 in Araras, Brazil (IDCH, 2005).
The company overcame the two World Wars, the Great Depression in the United States, and numerous political uprisings worldwide. While the stock market panicked, Nestle reinvented itself to overcome the hardships of its reported losses in 1921. Nestle’s success can be attributed to such actions as hiring financial experts to improve accountingpractices and financial investments, closing factories at times when demand was lower than production such as during the wars, and creating new products to adapt to different cultures and social environments.
By the 21st century, Nestle was recognized as the world’s leader in food and beverage with over 8,500 brands in more than 78 countries in diverse categories such as chocolate, breakfastcereals, bottled water, dairy products, pet food, and baby foods. Nestle’s decentralized structure helps target different cultures and “cater to local markets and tastes” (IDCH, 2005). Globally, Nestle’s direct competitors include ConAgra Foods, Inc., Groupe Danone, and Kraft Foods Inc. (IDCH, 2005).
Nestle: Challenges in Latin America
Carlos Represas became the first Latino to be president ofNestle America responsible for business from Alaska to Argentina. Represas was born in Mexico and started in Nestle 1968 becoming the Head of the Americas by 1994. His experience ranges from being CEO of Ecuador to working in almost all of Latin America including Brazil, Chile, Venezuela, Mexico, and Colombia. He faced many challenges such as “befriending both Ecuador’s last dictator and its first...