Nestle Case Study
Question 1: Analyze Nestlé using the competitive forces and value chain models. What challenges did Nestlé face?
Nestlé is the largest food and beverage company in the world. His turnover is around $70billions and nearly 250,000 employees all over the world.
Forces and Value Chain Model
His mains forces are principally that Nestlé try and do, to be the more adapted to his market, anywhere they implant a branch, they sell products, adapted to the local consumption!
Secondly, as a main force, is that they adapted themselves, however, they did a different approach for the adaptation, even they design new product for new market, they adapted ...view middle of the document...
Indeed, products and services on sales in different countries were adapted to suit local market conditions. That can be explain by the fact that Nestlé didn’t necessarily believe in the concept of the global consumer (except Nescafe of which 100 million cup are served around the world each year).
However this strategy cost extra funds and caused issues between its branches all over the world. Thus this strategy was not appropriate for Nestlé’s business model because of the inefficient coordination in different countries which used an older resource planning system which prevent the development of the company.
When Nestlé realize that this system was not working, it decide to centralize the company’s operation : production, sale and marketing, finance… First, this new system, GLOBE, was not considered appropriate for Nestlé business model because of the particularity of each region’s culture and local market preferences and considered as too expensive. But, at the end of the implementation, this global system shows is efficiency working well with the firm budgeting and data streams allowing Nestlé to make savings in buy raw material, to have information available quicker and make better decisions. Now, Nestlé remains the leading food and beverage company in the word so its strategy is effective, centralized system was a good choice.
Question 3: What management, organization, and technology challenges did Nestlé have to deal with to standardize its business process and systems?
Several years ago Nestle embarked on a program to standardize and coordinate its information systems and business processes. There have been many challenges with the new standardization process. At first they installed SAP's R/3 in an attempt to coordinate Information System and the business processes. All of Nestle's worldwide business units were to use the same processes for making sales, commitments, establishing factory production schedules, billing customers, compiling management reports, and reporting financial units. This coordination leads to many issues because of the gathering of 14 countries that ran the software. They did not work in harmony, it was being ran differently in the different locations : the cost of the maintenance increased. Upon discovering this issue they rolled out the GLOBE initiative. Personal challenges were becoming apparent, many managers viewed this system as a nuisance and a work creator. Johnson realized that he had some major challenges ahead, but he put his excellent leadership skills to the...