Case Study of Nestl

How Nestle transform from multi-domestic to transnational

corporation
Group 2:
Jingling Hu
Goh Ling Yi
 In 1866, Anglo-Swiss Condensed Milk
Company set up the first European
condensed milk factory in Switzerland.
Company overview
In 1905, Henri Nestl's founded firm
merged with Anglo-Swiss (Currently,
Nestl)

Nestl started off by producing infant

food and condensed milk.

Now, Nestl sells baby food, bottled

water, cereal, confectioneries, dairy
Vision: products, health and sports nutrition, pet
To be the worlds leading Nutrition Health care etc.
and Wellness company, and the industry
reference for financial performance, trusted
by everyone.
Nestl's brands
Malaysia vs Singapore

MILO Van Advertisement: https://www.youtube.com/watch?v=TXGPxaV9848

Bartlett & Ghosals Framework (1989)
High

Global Strategy Transnational Strategy

Global Integration Country-centred
manufacturing

Multi-domestic
International Strategy
Strategy
Country-centred offices

Low High
Local Responsiveness
Nestl Multi-domestic vs Transnational strategy
Advantages Advantages

- Quick customers responsiveness - Attain cost efficiency

- More receptive by customers - Locally responsive

Disadvantages Disadvantages

- Limited scale of economy, e.g. less
demand for market-specific customization
- Lack of national control
- Incur higher cost
- Possibly being stuck in the middle, difficult
to transfer distinctive competencies
between countries
- Issues arising from implementation
complexity
Configuration of activities
- Development of technological and operational tools
For instance, customer-relationship management (CRM) to monitor customers interactions and data
in different locations

- Relocate operations in favourable places keeping in mind costs, maturity of

labour, political stability
- Establish communication networks among branches around the world
- Reorganisation of strategic management
- Involving local management in central decision making
Local adaptation
Most food & beverages business managed by geographies
Zones EMENA (Europe, Middle East, North Africa)
Zone Americas
Zone AOA (Asia, Oceania, South Africa)

Suggestion: each zone has to focus on one main production.

Americas PetCare
Europe Powdered and liquid beverages, confectionary
AOA Milk products and Ice cream (66% powdered milk in Philippines)

In Eastern Europe, Asia and Latin America, it optimizes ingredients and processes
technology to local conditions, e.g. new delivery system (milk road) in China
Standardisation
Increase international standardisation of products and services
- the same process of production activities
- centralized capabilities in R&D

Improve global-scale efficiency

- standardised distribution networks, data collection
- centralized decision making
-
Cross-business Synergies
R&D
Nescafe (a soluble instant
coffee) in Europe, USA
Nestea (instant lemon tea
and milk tea) in Asia
Chocolate powder Nestquik
stylish, ready to use, tastier
GLOBE
Global Business Excellence:
a comprehensive
information system
Bring different businesses
and units together by
capturing data between
manufacturers and retailers
Invention of new nutrition
Basic scientific research and
state of art tools, e.g. nutrition
compass
Improve consumer healthcare
and weight management
Coordination and Control

E.g. A world class

research laboratories
require the strong
coordination of
resources, activities,
product offerings,
integration of different
business units
Nestl Organizational Structure in 1983

More
decentralized
structure:
country manager
operates highly
independently

Think Local
Act Local

geographic area division

 Nestl Current Organizational Structure

More flexible
approach:
standardize where
feasible, adapt
where appropriate

Think Global
Act Local

a matrix of geographic, product and functional area division

Implementation
Technology & Greater Consumer
Emerging Integration
Communication Convenience

Extended reach & Integrating with other firms Retain certain products
Communication
Acquiring good human Product reformulations
Bridged countries, people, talent, quality equipment of (including salt, sugar, fat
products and services the competitors reduction)
e.g. Global Product Developing attractive
Launching new products
Technology Centre product lines.
with scientifically proven
e.g. integration with nutritional benefits.
Rowntree Mackintosh in
1980, adding KitKat
 During the transformation from
multi domestic to transnational
corporation, Nestle operates in

- high level of local

Conclusion responsiveness

- high level of global integration

by creating low-cost sourcing
opportunities and factor cost
efficiencies
Thank you!
Reference

http://www.scoop.it/t/business-case-studies/p/3998550667/2013/03/19/nestle-s-growth-strategy

http://www.ukessays.com/essays/marketing/cross-business-synergies-relation-to-the-nestle-company-
marketing-essay.php

http://www.nestle.com/aboutus/history/nestle-company-history#tab-1948

http://businesscasestudies.co.uk/nestle/responding-to-changing-customer-requirements-the-drive-
towards-wellness/implementing-the-strategy.html#axzz3xfrkGqLG

https://www.nestle.com/asset-library/documents/library/documents/annual_reports/2014-annual-report-
en.pdf

http://www.ukessays.com/essays/marketing/cross-business-synergies-relation-to-the-nestle-company-
marketing-essay.php