Nestle Case Study
1. The company of Nestle had undergone both the first order change and second order change. In a first order change, the company underwent some changes in terms of transactional and organizational climate change. On the other hand, Nestle also underwent second order change wherein there are changes in terms of transformational change. This order second-order type of change is more evident. Below are the snippets organizational change that occurred at Nestle according to its order:
* Nestle began expanding globally and begun to purchase local subsidiaries in local markets.
* Offshore transfer of Executive from Switzerland to United States
* ...view middle of the document...
Involved in producing pharmaceutical and ophthalmic products.
During the course change, the company applied some “mid-management change theory” without destroying employee’s loyalty, impression, motivation, self belongingness and positive behaviours.
Lastly, acquisitions and mergers was also a big part of Nestlé’s second order type of change. This provided them accelerated growth (but other critics had viewed it as negative), increase in popularity and maintained organizational reputation.
2. Peter Brabeck-Letmathe line of thought regarding incremental change that occurred in Nestle is based primarily in his leadership mindset whose focus is on substance over style which includes a strong dedication to discipline and long-term approach to growing a business. Peter, according to literatures, took a conservative approach than his predecessor to improve Nestlé’s business. During the early days of his tenure, he slashed cost by increasing the efficiency of manufacturing operations, got rid of mature businesses with little potential for profit growth, and focused investment on fast-growing fields. Contradicting to Peter’s concept of incremental change on Nestlé’s overall business, incremental change (as what he thought it was be), is not incremental after all. The aggressive acquisition of a number of food/beverage industry (Ralston Purina, Chef America and Dreyer’s) expanded its market. In addition, the direction of the company to spend over $1B to automate and integrate all of its worldwide operation, from procurement through production to distribution including the revamping of Nestlé’s research and development unit to facilitate better coordinating among the group’s different businesses is an aggressive strategic move. This centralization allowed him to unify the company’s wide ranging negotiation and contracts with suppliers, and as a result, better centralize production. The move had closed 38 factories and cut $1.6 billion in cost while improving the company’s ability to obtain volume discounts.
3. Listed are the following specific implications that manager’s from Nestle had encountered:
vii. Bridging cultural gaps in bringing together people from different cultures together.
viii. Creating a winning corporate culture through reinforcement and sustenance of company’s strength
ix. Having to manage people through the trauma of change and deal with their fears and concerns when Nestle centralized its IT.
x. Dealing within and outside of the organization
xi. Difficulty in building relationship per region per product line.
In summary, there are three (3) environmental pressures for change that manager’s faced during the process. First is the geopolitical pressure in the form of emergency situation during the world wars that requires immediate action or a long-term geographical realignment. At the end of the WW1, Nestle have experienced financial losses due to price increase in raw...