PAMANTASAN NG LUNGSOD NG MAYNILA (University of the City of Manila) Intramuros, Manila GRADUATE SCHOOL OF MANAGEMENT

BUSINESS POLICY December 08, 2012

MNCs Nestle

Prepared By:
GILBERT G. ASUNCION, JR.

Submitted to:
Dr. Ma. Geraldine Reyes

Professor

MNC means MultiNational Companies which deals with private companies. By private company we mean controlled and operated by private individuals i.e. not by government employees. Multinational corporations have played an important role in globalization.MNC offers jobs to the candidates who are fresher as well as experienced holders.

They provide with all allowances with a good salary package in their hometown as well as in any part of the world. MNCs today have broken all the records and employees have been satisfied with their placements
Though the American companies - the majority of the MNC in India, account for about 37% of the turnover of the top 20 firms operating in India

International marketing has become more important to companies as the world shifts from distinct national markets to global markets. Globalization brings homogenization of consumer needs, liberalization of trade, and competitive advantages of operating in international markets.
Companies are now forced to think and act globally in order to survive in such a dynamic environment. In todays global market many companies are finding that there are great opportunities abroad. Companies are challenged to design new marketing programs/strategies that will work across many countries with different economic, political, social, and cultural characteristics.

ABOUT THE COMPANY

Founded by Henri Nestl
Worlds biggest Food and Beverage Company Developed first milk product in 1867

Merger with the Anglo-Swiss Condensed Milk Company.

Role of Marketing research in Global expansion of MNCs

Nestle Nestle was found by Henri Nestle in 1867 had become the worlds largest food processing company that had revenues of more than $10 billion in 1977 and with sales greater than Coco-Cola and Pepsi combined.
One of these products that generated so many sales for Nestle was its infant formula. These infant formulas were in high demands by mothers; it gave them an alternative feeding method for mothers who cannot, or choose not to breastfeed. But the idea behind the baby formula is to acts as a supplement for babies experiencing a nutrition gap.

ABOUT THE COMPANY

Nestl's first expansion into chocolate activity Introduction of Nescafe, a staple drink of US Military In 1947 came the merger with Maggi seasonings and soups. Acquisition of American Food Giant and Dreyers

PRINCIPLES AND OBJECTIVES

To create value Nestle does not favor short term profit

Create trust among the customer

Ensures that the highest standards are met throughout the organization. Recruitment of the right people & on going training & development Continue to maintain its commitment

Nestle started marketing its infant formula in the 1970s to many underdeveloped countries. They had imagined that profits would be greatly in countries such as Africa, the Philippines, Mexico and other underdeveloped countries; due to the infants who are missing that nutritional gap and for mother who chose not to or cannot breastfeed. But its dreams of making such profit failed terribly when their methods of marketing the products were criticized.
Nestle s marketing techniques were later accused of bribing doctors, nurses, and many other medical officials to help promote the infant formulas. Milk nurses who were professional salespeople often dressed in white went from door to door selling and educating the new mothers about the infant formula. In these underdeveloped countries, professionals in uniforms are highly respected. For these milk nurses to imitate as professionals, proves that Nestles misleads and uses unethical marketing techniques to promote its infant formula.

The real problem in these Third World countries was being nutritional. It became a debate whether not to give infants breast milk or formula; how to supplement the mothers milk with adequate nutritional foods when needed. Although this is the primary problem, the way Nestle approached a country and promoted its infant formula to uneducated mothers, was what made this a horrid issue. As a result, the misuse of the formula was said to be a contributing factor to the deaths of many Third World infants whose mothers were incompetent of using them properly. However, Nestle denied the accusations of their unethical and immoral behavior after the company came under fire. One recommendation should have research the target market in which its products will be introduced. They should not have just transfer their marketing strategy in the United States to Third World countries but adapted and focus their strategy to fit the targeted environment better. Since Nestle was introducing a new product, they could be more considerate of the cultural factors in countries where the practical or dysfunctional changes occurred as a result of the new product introduction. Therefore, it was their responsibility to make more ethical, thought-out decisions regarding the introduction and promotion.

BUSINESS LEVEL STRATEGY

Wide range of products (over 20 categories: coffee, milk, mineral water, pet foods, cereals) Nestl Nutrition Strengthening their leadership in this market is the key element of their corporate strategy. Deliver superior business performance by offering consumers trusted, science based nutrition products and services.

Strives to closely align Nestls scientific and R&D expertise with consumer benefits.
Addressing current customer concerns as well as anticipating future consumer trends.

PROBLEM IDENTIFICATION

230,000 employees and 500 facilities in 80 countries

to support the decentralized strategy it has 80 different information technology units thats runs nearly 900 ibm as/400 mid range computers ,15 main frames , and 200 Unix system despite its size the company has had no corporate computer center local difference created inefficiencies and extra costs that could prevent the company from competing effectively in electronic commerce. the lack of standard business processes prevented it from obtaining lower prices for its raw material. at first project decide not to use saps supply chain software because that module was brand new and appeared to be risky the staff that would be directly affected by the changes were not included in the key stake holder team. the lower level worker did not understand how to use the new system and also did not understand the changes ,nobody was prepared for the new ways of doing things. Turnover among the employees who were to use the Manugistics software to forecast product demand reached 77 percent. Those who remained found it easier to use their familiar spreadsheets. the simultaneous installation of the y2k changes also caused some trouble.

GLOBE SYSTEMS & NESTLE

GLOBE (Global Business Excellence) Its objective is to improve the efficiency of performance of the businesses on a global scale

The GLOBE programme is based on three main principles:

Good Practice. Standardisation of Data and Management. Information Systems and Common Technologies.

facilitate better cross functional communication and knowledge management and help in standardizing products.

WHATS AN ERP?
Enterprise Resource Planning (ERP) systems seem to be the silver bullet for every companys problems.
Enterprise Resource Planning is MIS that integrate and automate many of the business practices Attempts to integrate all departments and functions into one computer system A system that standardize and coordinate Information systems

ERP AT NESTLE
In 2000 Nestle SA signed a $200 million contract with SAP to roll out an ERP system. Nestle SA also committed to an additional $80 million to be spent on consulting, maintenance, and upgrades. Keeps track of customer orders reduce overstocking Enables group buying of materials data sharing among subsidiaries

MANAGEMENT PROBLEMS
Employees thought it to be a software project rather than a business process re-organization. Failure on the part of stakeholders to realize the feasibility of the project. Inability to understand the usage of the new system by the workers. Failure to integrate various modules. Delay in the project due to employees resistance to change inefficiency on the part of project co-leader to handle situations.

IMPLEMENTATION STRATEGY
Involvement of right individuals from the beginning. Avoid heavy customization. Defining the business goals of the project and then create a timeline. Time should be spent evaluating the business process re-engineering that will be done in conjunction with an ERP implementation. Provide training to employees throughout the project

RESULTS
All of Nestl USA are using the same software and data. Producing better sales forecasts Costs were cut down and had already saved $325 million by spring 2002. Nestl SA has learned from that project and expects to have an easier success with its project.

By the end of 2004, about 10% of Nestls global food and beverage business was operating with standard processes, datas and systems.

STRATEGIC BUSINESS DECSIONS AND MIS

Load Control Center(LCC): Was introduced to streamline and standardize processes, reduce costs and gain control over transportation operations By centralizing control, they could manage transportation and logistics costs, live up to carrier expectations about freight volumes and improve customer service. Improvement in on-time delivery, maintain stable costs while business increased, better manage carrier activity, and reduce the number of carriers used to a small fraction of the original number. Load planning, carrier selection, scheduling and real-time communication of that information is virtually automatic in the LCC.

Red Prairie's DLx[R] Transportation TMS software-Modules of the software in use include Load Builder, Matcher, Asset Manager, Assign, Offer, Rate and Pay, Routing Manager and Status

MARKETING AT NESTLE
Marketing strategy Setting of objectives Production Communications Supply chain and information systems Sales administration Trade marketing Key account management Regional Sales

Marketing information systems

Divided into four subsystems:1. Internal accounting systems- Order shippingbilling 2. Marketing intelligence systems- A user oriented system 3. Marketing research systems- improving timeliness of sales reports 4. Analytical systems- Horizontal Marketing Ex. Collaboration of Coke and Nestle

Marketing and Nestle

Nutrition Chocolate and confectioneries

Marketing strategy?

Core Marketing Units?

Dairy Coffee and beverages Food Pet care

Marketing and Nestle

Nestle uses the World Wide Web/Intranet/Extranet Nestle E-commerce- Increased Effieciency Nestle- Interactive Marketing Nestle- EIS Nestle implemented six -SAP modulespurchasing, financial, sales and distribution, accounts payable, accounts receivable and advanced planning and optimization.

Integrating Internet Strategy

Looks after buying of raw materials such as cocoa to producing, marketing and selling products such as Kit Kat chocolate biscuits and instant coffee, every business process of the organisation has seen change.

Since July 2000, store owners in the US order Nestle chocolate and other products at NestleEZOrder.com -Helps slash order processing costs and cut inventories. Example:- Sainsbury and Tesco

Integrating Internet Strategy

Within 2 years, 20 %of annual advertising budget will be spent on the Web. - It will be used to fund sites such as VeryBestbaby.com, which offers articles about parenting and baby nutrition, as well as banners advertising baby foods. Nestle also has a site for coffee lovers, and a Club Buitoni site, for lovers of Italian food. - These sites will help Nestle discover more about their consumers, a practice which may further help to kick start innovation when it comes to marketing.

Nestle on . Net Enterprise Servers

Nestl now is using the Internet to collect and leverage information about consumers and drive new marketing initiatives.
The flexibility of the Microsoft platform allowed Nestl to develop component-based Web architecturethe Nestl Internet Resource Framework (NIRF). Standardization of the platform is allowing Nestl to gather consumer information -Enables nestle to know about common trends for marketing initiatives.

Benefits: Increased productivity - Helps eliminate tedious and repetitive tasks associated with campaign planning and execution Reduced costs - Has given companies insight into campaign effectiveness, so they can abandon unsuccessful initiatives before they drain financial resources. Enhanced flexibility - Has made marketing teams more agile;react instantly to changing marketplace conditions and shifting communication strategies. Advanced intelligence - It provides timely, valuable information that can be analyzed to determine what works, what doesn't, and most importantly, why. Improved personalization - marketing teams have the tools they need to launch initiatives based on the specific needs and wants of a target audience, so content is more targeted and more relevant.

CONCLUSION
first deal with organizational issues, including having the right people in the right places. Second, look at the processes and then choose and implement the right technology to achieve objectives executive level sponsorship and ongoing support is critical. Processes and people's mindsets must be changed first, supported by technology