Nestle. corporate managment

1. INTRODUCTION

Nestle is not just the biggest food company in the world; it is also in the way of being a worlwide leader in nutrition, health and well-being. Nestlé sells more than 1.000 million products per day; invests approximately 1.500 million CHF in Research and Development; commercializes 10.000 different products in 130 countries around the world and employs 250.000 people aprox.The sales in 2009 during the crisis is around 80.000 billions Euros. People could think that this is normal for a company with such size, resources and capacity. What not many people know, is the continuous restructuring and changes, especially planning, organizational strucutre and structural transformations that the company had realized in the last 20 years to come to these numbers.But all this started in 1867. Nestlé was created in Switzerland by Henri Nestlé's, In 1867, Henri Nestlé, launched the Farine Lactée Henri Nestlé. This first product was a healthy and economical alternative created for mothers and babies unable to breastfeed.

Nowadays, Nestle is the world leader in instantaneous coffee, is also Nº 1 in infantile nutrition, in confectionery, in lactealproducts, and in chocolated drinks. Nestlé sells 14 % of the world volume of bottled water and it have got a 25 % share market in the United States. It is the number 1 pet cares and also it is a number 2 in Ice creams and Cereals.

It is impossible not to wonder: Which is the key of the Nestle´s success? How is structured and managed? How do they create value? Which is their strategy ofexpansion?

This report will do a strategic analysis structured in 4 main points: the cross-business synergies within the organisation throughout its history; the corporate growth directions of the company; the corporate management mechanisms used by Nestle to leverage its synergies; and the future scenarios for Nestle’s corporate-level strategy, based on the integrated organisation and portfolioorganisation perspective. (Nestlé, 2010), (De Wit and Meyer, 2010) (Corporate Communications Nestlé, 2010).

2. STRATEGIC ANALYSIS.

Nestle, had such a wide range of brands, so that, it takes advantages of the synergies that are generated between them to reduce costs, to improve the positioning, to improve the bargaining power, to improve processes, to share resources, personnel,knowledge, machinery, logistics …

Synergy is the state in which two or more agents, entities, factors, processes, substances, or systems work together in a particularly fruitful way that produces an effect greater the sum of their individual effects. Expressed also as 'the whole is greater than the sum of its parts.' 2+2=5 (Business Dictionary, 2010)

Synergy and relatedness are twoterms that must be joint. There are three categories depending on the areas of relatedness that have the potential for creating synergy: Resource relatedness, product offering relatedness and activity relatedness. (De Wit and Meyer, 2010).

Nestlé has got three cateogries of synergies, the first synergy that we could find in the case study is between Nescafé and Nestea ahieving resourcereplication through sharing the same drying process. A few years later they also launched Nesquick under the same synery of using the same knowledge and capabilities between diferent business units.

In 2002, Brabeck, a Nestle CEO, initiated GLOBE (Global Business Excellence). This is a commun technology infraestructure with the objective of capture data, manage information, and createknowledge wich could be shared between the businesses units. This was an excelente tool to improve the production, the sellings, the distribution, and the customer managment because GLOBE could also manage data between manufacturing and retailers. Definitively, it brings the business units together, improves the process of purchase and sale of products and in addition, they share knowledge between all...