Nestle Pakistan Ltd. is a subsidiary of a Swiss food-and-drinks firm—Nestle S.A. The company launched its operations in Pakistan in 1998 “under a joint venture with Milk Pak Ltd. and took over management in 1992” (Nestle, n.d., para. 2). The aim of this paper is to analyze the company’s financial information over the last two years and assess its financial health.
Analysis
Nestle Pakistan Ltd.’s revenues from sales totaled ₹112, 392, 654 in 2016 and represented 8.3 percent increase of the company’s total revenue in 2015—₹102, 985, 916 (Nestle, 2016). The rapid rate of revenue growth shows that the company is quickly expanding. This trend is positive for Nestle Pakistan Ltd. because more revenue can translate into more working capital, thereby increasing the efficiency of the business.
In order to understand the company’s overall profitability, it is necessary to consider its net income, which for fiscal 2016 was ₹11, 846, 973 (Nestle, 2016). Nestle Pakistan Ltd.’s net income for the previous year was ₹8, 760, 930, which represents an impressive 35.2 percent increase (Nestle, 2016). Net income is a company’s total revenue without all expenses (Robinson, Henry, Pirie, & Broihahn, 2015). The fact that the firm shows double-digit growth of net income is positive and important for investors because it represents a critical dimension of the company’s financial health.
Profitability ratios measure a company’s ability to earn a meaningful return, and they are among the most important financial metrics. Gross profit margin, net profit margin, and return on assets will be calculated to better understand the company’s ability to use its investments to earn a profit.
Gross profit margin can be defined as “a company’s cost of sales, or cost of goods sold and represents the expense related to labor, raw materials and manufacturing overhead involved in its production process” (Loth, n.d., para. 9). By dividing the company’s gross profit by its revenues, it is possible to arrive at the gross profit margin. In 2015, the company’s gross profit margin was 35.3 percent, which is 2.2 percent higher than the figure for the previous year (Nestle, 2016). Both numbers represent a healthy gross profit. Also, the growing gross profit indicates that the company was capable of making more sales and lower its production costs in the period from 2015 to 2016.
Net profit margin is a financial metric that shows “the ratio of net profits to revenues for a company” (Loth, n.d., para. 7). Nestle Pakistan Ltd.’s profit margin in 2015 was 8.5 percent (Nestle, 2016). The company’s net profit margin in 2016 was 10.5 percent which constituted 2 percent increase from the previous year (Nestle, 2016). The increase in the net profit margin shows that Nestle Pakistan Ltd.’s current business practices are efficient.
Return on assets (ROA) is a metric that shows how much profit a company generates in relation to its total assets (Robinson et al., 2015). As of December 31, 2015, Nestle Pakistan Ltd. had a net income of ₹102, 985, 916 and average total assets of ₹49, 267, 464 (Nestle, 2016). By dividing the net income by the average total assets, it is possible to arrive at ROA of 209 percent. ROA for 2016 was even more impressive 221 percent. The increasing trend is positive for the company and shows that the company is efficient in converting its investment into profit.
Liquidity ratios are an important metric that helps to assess a company’s ability to honor its debt obligations as well as its margin of safety (Robinson et al., 2015). The current ratio and quick ratio will be calculated to better understand the company’s liquidity.
The current ratio is a “liquidity ratio that measures a company’s ability to pay short-term and long-term obligations” (Investopedia, n.d., para. 12). In 2016, the company’s current ratio was equal to that of the previous year—0.59. The ratio is under 1, which means that Nestle Pakistan Ltd. was not capable of paying off its obligations.
The quick ratio is a reliable indicator of a company’s ability to meet its short-term obligations (Robinson et al., 2015). In 2015, the company’s quick ratio was 1.3, whereas, in 2016, it was only 0.7, which means that its liquidity position substantially diminished over a period of one year. This is a negative trend for Nestle Pakistan Ltd. because it means that the company will not be able to meet its short-term obligations if the need arises.
Market ratios relation of a are valuable metrics for measuring a company’s financial health. Price to earnings and dividend yield will be assessed to understand whether Nestle Pakistan Ltd.’s current share price is undervalued or overvalued.
The price to Earnings or P/E ratio is a metric for assessing how one share of stock stacks up to the earnings of a company (Robinson et al., 2015). The company’s P/E ratio in 2016 was 34.27, which represented 26 percent growth from the previous year (Investing, 2017). The increasing trend is positive for the company and means that investors expected higher earnings in 2016 than they did in the previous year.
The dividend yield is a metric that shows the relation of a company’s dividends to its share prices and helps an investor to compare the merits of different investment opportunities. In 2015 and 2016, dividend yields were 1.9 percent and 2.2 percent, respectively (Trading Economics, 2017). The increasing trend is positive for the company and suggests that investors were more willing to add the company’s stock to their portfolio in 2016 than they were in the previous year.
Earnings per share can be defined as “the portion of a company’s profit allocated to each outstanding share of common stock” (Investopedia, 2017, para. 1). Nestle Pakistan Ltd.’s earnings per share in 2015 and 2016 were ₹193.18 and ₹261.23, respectively (Nestle, 2016). The growth of earnings per share is a positive trend for the company because it means that the company’s profitability substantially increased over the one-year period.
Debt measures are metrics for assessing a company’s amount of leverage. Long debt to equity for 2016 was 101.48 percent, which represented 23.12 percent decrease from 2015 (Standard Capital, 2017). Long debt to assets also decreased from 21.24 percent in 2015 to 17.61 percent in 2016 (Standard Capital, 2017). These are positive trends for the company that indicates that the company becomes less leveraged.
The debt to asset ratio is a metric for assessing the relation of a company’s amount of debt to its assets (Robinson et al., 2015). In 2016 and 2015, total debt to assets ratios were 0.82 and 0.91, respectively. These are high numbers that mean that the company has a low degree of financial flexibility.
Summary and Conclusion
Nestle Pakistan Ltd. had an excellent fiscal year. The company improved its ability to generate profit by an impressive 35.2 percent. Gross profit margin, net profit margin, and ROA have increased over the one-year period, which means that the company has started using its resources more efficiently. However, the company’s liquidity ratio is a weak aspect of its operations. Also, Nestle Pakistan Ltd. has a high degree of leverage. It can be concluded that despite the minor shortcomings, the future financial health of the company is going to improve.
In this paper, we seek to ascertain the reasons why Nestlé decentralized structure, which had brought the company success in the past. In the following section, we will analyse the main objectives of Global Business Excellence program that Nestle launched in an effort to counter the increasing global competition. Lastly, the paper will identify why the GLOBE program is more than just a SAP change.
Why was the decentralized structure of Nestlé that had brought the company success in the past no longer fit the new realities of increasing global competition?
Traditionally, the structure of Nestle was that of a surging pyramid of major zones and markets, which are usually countries. Each business is essentially local and orderly aggregated to larger geographical units all in the end coming together in the corporate centre. Operating alongside this large organization in a synchronizing role involved half dozen strategic business units like beverages, infant nutrition, and dairy products. Decentralization refers to the reallocation of decision-making authority, assignment of accountability and responsibility for results. Decentralization comes with the delegation of commensurate power to units or individuals at all the heights of an organization even those which are away from the headquarters or other authority centres.
The new realities of increasing global competition paralysed the decentralization structure of Nestle as it came with several challenges. The responsibility of the business unit managers was to enhance integration across regions with attention on new product development. However, this was without loss of responsibility and profit. In the increasing global competition, this did not happen to other competitive firms, which were in a disadvantage comparing to the Nestle firm. The decentralized structure worked against the object of profit making, which was normally the aim of all the firms as they were incurring losses, and no one took responsibility.
Focusing on the decentralization structure, the company’s main attention on product customization to local tastes was the basis of Nestlé’s victory. However, this was the rise in inefficiencies and duplications that marked that the company could no longer meet its expenses as the sales overhead costs were higher than those of its competitors were. This meant that the decentralization was working against their initial goal, and the competitors were benefitting from their ideas. Another notable reason to why the decentralized structure of Nestlé is not working currently is because the splintered supply chain has not given the wished economies of scale. Decentralization meant that different regions had their powers, and this affected the bargaining power with cross border retailers and suppliers negatively. The most esteemed customers had more pricing information concerning the Nestle products in various markets around the globe than the Nestle headquarter office had (Evans, Pucik & Björkman, 2009).
In addition to the above reasons, decentralization worked against Nestle Company as internal coordination was complicated because each regional firm and system was running independently. Similar products had different product codes in various regions, and there was no universal grading and compensation system of the human resources. This meant that it was hard to grade personnel who were in the same hierarchy, but, in different countries, in turn, it was difficult to compare senior personnel bonuses and salaries.
What were the objectives of GLOBE program?
GLOBE refers to the Global Business Excellence program that Nestle Company launched to introduce the idea of centralization. Initially, Nestle ran on a decentralized structure whereby the companies in different regions operated independently. The idea of GLOBE was to change this decentralization to centralization where the operations of all the Nestle companies were to be centred on one major place. In the founder’s words, GLOBE was to change Nestle Company from a loose federation of independent markets into an organization with a similar face in all its branches. This is because the decentralization structure did not work to their success anymore as the new realities of global competition had been set in the market.
GLOBE’s main idea was to come up with common business processes in all its branches in the regions it was located. This is to enable it to have similar procedures as common business. In addition to this, GLOBE will create standardized information and a common information technology infrastructure connecting all its operations. In other words, this introduced centralization in the operations of Nestle to replace the initial decentralization structure in use.
How was GLOBE more than just a SAP change?
SAP refers to System Application Program, which has a relation to an information technology. GLOBE was an initiative that meant to transform not only the IT infrastructure but also similar business processes and standardized information. This program was to affect all the departments in the Nestle Company including human resource, supplies, production, marketing, and many other sections of the company. GLOBE’s purpose was to come up with a way in which Nestle as a company with branches all over the globe would have had common features in the eyes of its customers and suppliers. The program was to transform Nestle Company from the decentralized structure to a centralized structure, and this did not happen in the information technology alone.
Changes that GLOBE program was to bring were to have an impact not only on IT department but also on all the functional departments of the company. The CEO of Nestle makes this clear by stating that GLOBE program is not just an IT initiative. The program is meant to change the way Nestle has operated by ensuring that they have a common centre where all its operations can be decided.
Reference
Evans, P., Pucik, V., & Björkman, I. (2009). The Global Challenge: International Human Resource Management. New York: McGraw-Hill Higher Education. Web.
Nestle’s baby formula marketing in Third World countries has become a conventional case which illustrates social responsibility and business ethics. The company entered the market of Third World countries without changing its strategies and marketing techniques. This was one of the company’s major faults which led to the international scandal and boycott of Nestle’s products in Third World countries.
The company was accused of promotion of its products and discouraging breastfeeding among woman in developing countries (Davidson 2009). Various reports and surveys were conducted. Health care employees reported that the use of Nestle products led to malnutrition and even deaths in many cases (Cateora 2011).
Nestle’s Responsibility
It is necessary to note that even though the products were boycotted, many people advocated Nestle’s products. For instance, these people claimed that malnutrition and high rate of infant deaths was caused by social and economic situation in the countries, rather than by the use of Nestle products. Nestle also argued that in many cases women misused Nestle products which led to health problems or fatal cases.
Besides, Nestle also stressed that the company never discouraged breastfeeding among woman in any country. On the contrary, the company always articulated the idea that breastfeeding is the best option. Nonetheless, Nestle also admitted that some of their marketing techniques needed rethinking (Frederick 2002, p.233). For instance, such practice as distribution of free products among women or nurses was seen as inappropriate.
It goes without saying that Nestle can be regarded as an example of the multinational which can be socially responsible. Thus, when the company acknowledged that some of its practices were unethical or wrongful, it started reshaping its marketing strategies.
Nestle followed the rules set by WHO and made a decision to start marketing its products only when particular laws and regulations would be enacted. Admittedly, this is an ethical and responsible position.
Recommendations to Nestle
However, the contemporary world brings new challenges to the fore. Thus, spread of HIV infection in Third World countries is the issue which needs drastic measures. In this respect, Nestle’s products can become one of the strategies which can reduce the rate of this infection spread. Reportedly, breastfeeding is one of the ways of HIV infection transmission.
This matter has been one of the most disputable issues during the past decades (Moland et al. 2010). Scientists try to discover new ways to prevent this kind of transmission (Iliff et al. 2005). Apparently, there is one easy step to be undertaken.
Thus, Nestle can address world public and assure Third World countries as well as WHO and developed countries that the company will start a campaign aimed at raising awareness concerning proper use of Nestle’s baby formula. For instance, the company can start up an advertising campaign. However, the major attention should be paid to the proper use of the product rather than the product itself.
It is also essential to stress the benefits of breastfeeding. Admittedly, the company should present new ways of its products marketing. Nestle should initiate new discussions concerning distribution of its products in Third World countries. It can be helpful to implement new surveys in the area.
The company should also provide reports on its products safety. In this way the company can contribute to prevention of HIV transmission. It will also help to rehabilitate baby products worldwide.
Reference List
Cateora, PR, Gilly, MC, and Graham, JL 2011, “Ch. 5. Culture, management style, and business systems,” in Cateora et al. (eds), International Marketing, McGraw Hill, Berkshire, UK, pp. 146-148.
Davidson, K 2009, ‘Ethical concerns at the bottom of the pyramid: where CSR meets BOP’, Journal of International Business Ethics, vol. 2 no. 1, pp. 22-32.
Frederick, R 2002, A companion to business ethics, John Wiley & Sons, Oxford.
Iliff, PJ, Piwoz, EG, Tavengwa, NV, Zunguza, CD, Marinda, ET, Nathoo, KJ, Moulton, LH, Ward, BJ, the ZVITAMBO study group, & Humphrey, JH 2005, ‘Early exclusive breastfeeding reduces the risk of postnatal HIV-1 transmission and increases HIV-free survival’, AIDS, vol. 19 no. 7, pp. 699-708.
Moland, KM, Paoli, MM, Sellen, DW, Esterik, P, Leshabari, SC, & Blystad, A 2010, ‘Breastfeeding and HIV: experiences from a decade of prevention of postnatal HIV transmission in sub-Saharan Africa’, International Breastfeeding Journal, vol. 5, no. 10, pp. 1-7.
Procter & Gamble (P&G) is a financially stable company that offers a wide variety of high-quality products that range from fitness items to household and hairstyle products. P&G is a renowned brand in the international market, and it ranks highly among the companies offering quality household products.
P&G Products and Services
Procter & Gamble operates in five international divisions and produces the widest variety of consumer goods. The company also manufactures acerbic reflex drugs, animal feeds, and aquatic sieves. Procter & Gamble is dominant in the household care industry where it sells products such as Pampers, Charmin and Bounty, Dawn, Downy, Duracell, Tide, and Gain. The company also sells items such as Braun, Crest, Fusion, Gillette, Olay, Oral-B, Wella, and Pantene that attract many customers from the grooming and beauty industry. Procter & Gamble offers these products in more than 180 regions in the international market.
Customers
Procter & Gamble manufactures essential products that appeal to a wide variety of customers. Procter & Gamble has succeeded in capturing a wide consumer base by offering basic and indispensable household items such as baby care products, beauty and grooming items (Dyer and Olegario, 87).
Competitors
Procter & Gamble receives competition from many companies because it operates in a lucrative segment. Consumers spend a lot of money on baby care and beauty products, and this market attracts competition from Walmart, Nestle, and Unilever. Other companies competing against P&G include Colgate-Palmolive Company, Avon Products Inc., Pfizer Inc., Johnson & Johnson, Bath & Body Works LLC, Alticor Inc., Kimberly-Clark Corporation, and Bristol-Myers Squibb Company among others.
Financials
P&G generates 40% of its revenue from operating in the United States and Canadian markets. Sixty percent of the company’s revenue comes from its operations in the Western Europe, Asia, Latin America, Central and Eastern Europe/Middle East/African (CEEMEA) markets. Procter and Gamble recorded increased profit margins between 2010 and 2013 although the company realized a 1% decrease in profitability in 2014. The company attributes the profitability decline to low sales volume in its beauty division and diversification of its Pet Care operations.
Human Resources
P&G invests significantly into its human resources and collaborates with major multinational companies to improve its service delivery. Procter & Gamble also offers internship programs to improve students’ understanding of the company.
Geographical Presence
P&G operates in more than 70 countries in all the continents, and the company selectively markets its products in the different regions based on the preferences of consumers.
Unilever
Background Information
Unilever is a unique company that has two headquarters in London and Rotterdam. The company is a major manufacturer of consumer products and started in 1929 after the merger of Butter Unies and Lever Colleagues.
Products and Services
Unilever operates in four major segments that include appetizers, home-based maintenance, individual care, and foodstuffs and drinks. The company is renowned for selling products such as Omo/Surf, Lux/Radox, Knorr, Hellmann’s, Ben & Jerry’s, Magnum, and Dove among other products to the international market.
Customers
Unilever receives commendable customer loyalty in its global market due to the high quality of its products. Some of Unilever’s leading products by sales volume include Oxo, Royco, and Batchelors, and the company attracts consumers who like mustard and affiliated products. The company appeals to its customers by offering customary-milled mustard products such as Radox, Badedas, and Duschdas.
Competitors
Unilever receives competition from local and multinational companies who use environmental issues to gain competitive edge. Previously, Unilever received poor reviews on its Corporate Social Responsibility (CSR) activities and slow response to environmental concerns. However, Unilever introduced an environmental footprint program that will allow the company to assist approximately one billion individuals in each decade it conducts its operations (Lopes and Duguid, 1). The company’s competitors argue that Unilever has a poor record in the conservation of the environment and blame the company for deforestation.
Financials
Unilever is among the largest companies producing consumer goods, and the company has significant operations in the American and European markets. Unilever’s revenue during the 2012 financial year was $65,992 million, and this represented a significant increase from the 2011 financial year. Unilever’s financial records suggest that the company is operating at profit margins that exceed $8,986.5 million, and this represents an 8.6% increase in the company’s profitability.
Human Resources
Unilever’s long-term commitment is to enhance its operations in the international market. Consequently, the company implements a culture and structure that allows its employees to adapt to dynamic environments. Unilever ensures that it follows stringent recruitment processes to ensure that it has talented and qualified employees capable of meeting the company’s objectives. Successful recruits at Unilever undergo company orientation to ensure that they understand the company’s activities before receiving their assignments. Unilever offers attractive rewards to the employees who perform their duties according to the company’s expectations.
Geographical Presence
Unilever is a renowned brand, and the company ensures that its products and services are accessible to its customers in all major international markets. The company distributes its products to Asia, the Latin America, Africa, Europe, and Canada. However, Unilever sold some its businesses to several companies such as Wilmar International, Olam International, SIFCA, Palmci, and PHCI. Unilever continues to invest in enhancing the quality of its services and products to meet the consumers’ demands in different international markets.
Nestlé
Background Information
Nestlé is an internationally recognized company that has its headquarters in Vevey, Switzerland. The company is the largest food distributor based on its sales volume and revenue generation (Thompson, 2).
Products and Services
Nestlé manufactures and sells products such as baby foods, bottled water, beverages, dairy products, breakfast cereals, ice cream, confectionery, snacks, frozen foods, and pet foods among others.
Customers
Since its inception, Nestlé continues to target a wide diversity of customers of all ages. The company focuses on customers in the middle- and low-income classes and the company offers its products at prices affordable to such individuals. Nestlé also targets middle-aged consumers who have young children by offering a wide diversity of baby foods. Infants and children represent a significant portion of the Nestlé’s consumer base, and the company responds by offering numerous products that needed by this consumer base.
Financials
Nestlé manages to operate with a big financial budget due to its financial endowment. The company received more than $65,992 million during the 2012 financial year, and this represented an increase of 10.5% from the 2011 financial results.
Human Resources
Nestlé considers its employees essential to all its operations, and the company focuses on attracting dedicated employees. The company ensures that its recruitment process is transparent and fair to all applicants regardless of their ages, gender, race, or skills. Nestle encourages its employees to develop long-term attachments with the company, and this eases the company’s ability to open new outlets in the international markets.
Geographical Presence
Nestle has retail outlets in all the major international markets, and the company operates more than 450 factories. Nestlé sells its products in almost 200 countries across the globe. Nestlé’s pricing strategy enables the country to operate in many countries regardless of the socioeconomic statuses of the citizens.
Works Cited
Dyer, Davis, and R. Olegario. Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble. Boston, Massachusetts: Harvard Business Press, 2004. Print.
Lopes, Teresa and P. Duguid. Trademarks, Brands, and Competitiveness. Abingdon, UK: Routledge, 2010. Print.
Thompson, Stephanie. “Nestlé Warns Stores: Prove It or Lose It.” Advertising Age, 13.2 (2004): 1-21. Print.
Nestle Coffee is the company which requires top quality raw material to produce the coffee which may compete with other brands at the international market. The competency at the coffee market is too high, therefore, Nestle manages to remain one of the leaders of the coffee niche.
Producing different types of coffee, the company need top quality beans. The procurement of Nestle Coffee’s coffee bean products is based on the direct purchase of the beans with the farmers. It allows the company to follow the quality of the raw materials. However, there are situations when direct procurement is impossible and the purchase with dealers takes place.
Procurement of Nestle Coffee’s Coffee Bean Products
The procurement of Nestle Coffee’s coffee bean products is provided on the basis of the Nestle corporate business principles, quality policy and Nestle procurement policy.
According to the Nestle Corporate Business Principles (n.p.) and the quality policy (n.p.) the company procurement programs are based on (1) consumers, their nutrition, health and wellness, quality assurance and product safety and communication; (2) human rights and labor practices in business activities, (3) staff when the advertising dwells upon the leadership and personal responsibility along with safety and health at work; (4) suppliers and customers, their relations and agriculture and rural development, and (5) the environment which bothers people from different parts of the world. The procurement strategy is based on these principles in order to satisfy the needs of the most demanding consumers.
The procurement of the Nestle coffee beans is based on the direct purchase of the product from the farmers. However, sometimes the purchase from dealers takes place, specially in such companies as UK, where it is impossible to find the farmers who will be ready to satisfy the needs of the country (Nestle 2).
The company tries to offer the best prices for the farmers and it is aimed at engaging the farmers in niche markets. This will allow the coffee makers to increase their production. The company tries to make sure that the farmers are given an opportunity to diversify the product (the green beans are used as one more source of income for farmers). Nestle refers only to direct procurement, which helps the farmers to retain more value of the sold coffee.
The company cares for the quality of their product, therefore, they feel responsibility in assisting the farmers (“What can be done?” 5). To make sure that procurement is based on the quality, the Nestle company financed the farmers and delivered to the farmers it worked with 220 million high-yield disease-resistant plants in 2010 (Thong “Nestle pumps up coffee supply chain” n.p.). This year Nestle is going to help farmers with managing the crops in such regions as India where conditions are different (Thong “Nestle India stirs up a plan” n.p.).
Demand Management of Nestle Coffee
Nestle demands from the farmers top quality products which correspond to their policy. The management strategy is based on the principles of quality and mutual exchange when the company supports the farmers financially and with the technologies and the farmers offer the company top quality products. The raw material is to be of top quality, Nestle cannot allow itself to use bad quality beans which may result in poor quality final product.
It seems that Nestle is interested with working with the farmers they have used to, therefore such strategies as postponement and support are not new for the company. The farmers make sure the company that they will be able to support Nestle with the specific amount of the product while the company makes sure that hey will buy all the beans of the corresponding quality which are going to be produced.
Working in a highly competitive environment, the company managers understand that without close collaboration with the farmers they are unable to make sure that the quality of their raw material is high enough and the price is appropriate. Investing in farming, the company makes sure that the outcome of the collaboration is going to be rewarded. It has been stated that supporting the Indian farmers the company has developed a specific strategy which may help the farmers to work in the strange climate environment.
The demand management of the company is based on the activities of the previous year. Moreover, the company tries to support the farmers and make sure that the raw materials, beans in this case, are going to be delivered on tie. The contracts are signed and the demand is predicted. Such huge company as Nestle cannot work without strong support from the side of the farmers without being sure that the volume of the required raw material is to be met.
The information technology plays an important role as living in the world where information plays vital part of the development of the society Nestle company tries to be at the same raw. The information technologies are used by both the company managers and farmers as the contemporary world is impossible without those.
Works Cited
Nestle Corporate Business Principles, 2010. Web.
Nestle. “Coffee – The Supply Chain.” The Times 100 1999. Web.
Modern globalization and increased level of competition encourages many companies to become multinational to win the world markets and remain at the top positions in sales, spread, customer appreciation, etc. Before getting down to the analysis of the competitiveness and the global spread of Nestle, Bartlett and Ghoshal’s definitions of global, multinational, international and transnational organisations should be considered.
According to Bartlett and Ghoshal’s typology, there are three types of multinational companies, global, multidomestic and transitional.
Global company combines “high integration with low responsibility”, multidomestic one comprises “low integration with high responsibility” and transitional company comprises “high integration with high responsibility” (Harzing, 2000, p. 3). Nestle is a transitional multinational company with the representations in many countries which products are manufactured and sold internationally.
Operation in the Country of Residence and Abroad
Nestle is a multinational company which has manufacturing plants in many countries of the whole world. The company has plants in Europe, Asia, Oceania, and Africa however, most of the manufacturing is concentrated in the USA. Switzerland, Germany, and India have some of the largest manufacturing plants which produce foods and beverages with the company label.
Having conducted SWOT analysis it becomes obvious that the company has many opportunities with its international plants and manufacturing (Company Spotlight, 2006).
Having various products lines, starting with baby nutrition and other products and finishing with cosmetics and pharmaceutical products, Nestle has an opportunity to satisfy the needs of the customers by means of manufacturing specific product types which appear under demand in a particular country.
Presence at Home and International Markets
Operating worldwide, having presentations in various parts of the world and manufacturing plants, Nestle has an opportunity to save and increase its competitiveness among the companies whose world presentation is lower.
Dwelling upon the scope of sold Nestle products worldwide, it is important to divide world market into several niches where Nestle’s products are present, food, beverages, baby nutrition, cosmetics, pharmacy, etc. Nestle is guided by local market and according to customers’ preferences creates worldwide distribution (DATAMONITOR, 2011).
Global spread of Nestle
Looking at the United Nations list of countries and the American intelligence service, it may be concluded that most of these countries have Nestle products at heir markets. Moreover, some of those countries are the leading manufacturers of Nestle products.
Depending on the country’s needs, Nestle tries to provide the clients of this or that country with the particular products, trying to reduce the distribution of the products to the country where they are of no demand (Nestle, 2011).
Major Markets
Considering the major markets of Nestle, it is important to mention the USA and Europe. The competitors at these markets are Nestle, the Coca Cole Company and PepsiCo. However, these companies are Nestle rivals only in beverages segment.
Nestle products are various, “powdered and liquid beverages, water, milk products and ice cream, nutrition, prepared dishes and cooking aids, confectionery, pet care and pharmaceutical products” (‘Soft Drinks Industry Profile, 2011, p. 32). Thus, it has more chances to be recognized at the international market.
Conclusion
Therefore, Nestle is a multinational transitional company with representation in different countries of the world which occupies leading positions in sales. Having many rivals, Nestle remains leading among other competitors due to the variety of products and global manufacturing presentation that helps the company coordinate its business.
Reference List
Company Spotlight: Nestle, 2006. MarketWatch: Drinks, 5 (6), pp. 21-31.
Datamonitor: Nestlé SA, 2011. Nestle SA SWOT Analysis, pp. 1-10.
Harzing, A., 2000. An empirical test and extension of the Bartlett and Ghoshal typology of multinational companies. Journal of International Business Studies, 31 (1), pp. 101-120.
Nestle: Good Food, Good Life, 2011. Nestle. [online] Available at: <https://www.nestle.com/> .
Soft Drinks Industry Profile: Global, 2011. Soft Drinks Industry Profile: Global, p. 1.
This essay applies different diagnostic instruments in the analysis of Nestle Company case study. It aims at encouraging students to discuss company cases provided. It also provides students with an opportunity to utilize the diagnostic processes along with change factors in the evaluation of change impacts on an organization.
The essay identifies the main possible causes of change in Nestle Company, and the reasons for reaching at such conclusion. It uses the guide questions to discuss the types of change that have occurred in this company.
Changes in Nestle Company
In looking at change in Nestle Company, the six-box organisational model will be used. This model was developed by Marvin Weisbord with the aim of assessing organizations’ functioning. This is a generic model that can be applied across wide varieties of companies (Hughes, 2007).
This framework was chosen as it represents particular means of analysing the company design and structure. It concentrates mainly on issues such as planning; roles played by support functions like personnel, remuneration standards, competition in company units, partnerships, control of organizations, accountability as well as performance assessments. In addition, the framework has the ability of following basic systems approach to the functioning of any company.
Some of the factors that have led to change in Nestle Company history include purpose, relationships, helpful mechanisms and leadership. Concerning purpose, the company had to undergo changes for it to experience growth. It reached a point the company’s infrastructure had to change to take in the expanding client base and industry changes.
The company had to look for markets particularly in the U.S., improved technological ways of reaching the target markets, like moving manufacturing plants outside production markets to replace sales agents. Change was also driven by helpful mechanisms to maintain competitive advantage.
The company merged and acquired other companies for it to be dominant hence enjoying low production costs. In addition, acquisition helped the company to diversify its production lines from food industry to non-food industry. This enabled the company to diversify its risks.
Relationship is another factor. The corporate culture embraced by the company’s management is one that embraced change. This aimed at gaining the employees’ confidence hence having free flow of ideas (Feldman, 2000). This is because there was need for the company to embrace good relations between employees, departments and the management. Lastly leadership did contribute to change since there was need for the company to have leaders who can apart from defining the purpose can also embody purpose in their programs. This is the reason the CEO Brabeck-Letmathe overhauled ten executive from the board.
Nestle company has undertaken both first and second order changes. In the first-order change, there are some changes which can be termed as being reversible. These changes have paved way for old stories to continue being told; for instance organizations’ strength development, changes within existing structures like overhauling the executive board and replacing it with ten members. Another example includes managements’ longevity maintenance other than improving short term operation profits.
The second-order change includes gear shifting, like changing from the use of sales agents in markets outside home markets to global expansion as well as the purchase of local subsidiaries in foreign countries. Another example is transforming to something different from previous operations like diversifying from food industry to non food industry.
The specific transformational change experienced at Nestle Company is type 1 transformation. This is based on the fact that, the organization transformed from entrepreneurial management structure to professional management structure.
For instance, the change of management structure by CEO Helmut Maucher focused mainly on financial improvement by the use of diversification strategies as well as acquisition strategies. This type of management ended up selling lots of nonstrategic and non-profitable businesses, and emphasized on acquisitions like the purchase of Carnation Company in 1984. This has been transformed to professional management structure under Brabeck-Letmathe.
This management structure emphasizes on critical thinking before making any change in the Company. This makes the company to depend much on managers’ commitment on corporate culture, instead of improving the organization’s short-term operating profits; the management has preferred maintaining organization’s longevity. This management structure concentrates on different ways of reinforcing and sustaining company strength other than ways of changing the company strength.
To some extent, I tend to agree with CEO Brabeck-Letmathe that he has used incremental approach in the companies change. I concur with him when he claimed that change should only occur gradually and where necessary. Companies should not just change because there is change, but they should change with reason.
The issue of introducing corporate culture in the organization is fundamental for incremental approach. It is true that for incremental approach the company should not focus on short-term profit operations rather long-term operations. This proves his fact that changes at Nestle are much focused and conscious. This is the best way of carrying out incremental changes.
However, I beg to differ with him on matters concerning the implementation of new technologies as being the company’s central direction. This is based on the fact that, the role of technology can only be realized after a certain period of time so rejecting its implementation currently, will mean that at one time the company will have to make a drastic change in technology if not it will be left behind by other companies (Hughes, 2007).
Lessons from Frontline
The three major lessons are as a result of downsizing as being organizational form of restructuring, new technology implementations along with acquisitions & mergers. First downsizing entails the process of reducing the number of employees in an organization permanently.
This process might be achieved through various techniques like retrenchments, down-scoping and downscaling as witnessed in Nestle case. The reasons firms might take such action include closure or sell of particular business units that seem to be unprofitable, restructuring, reducing as well as saving costs, greater efficiency and effectiveness leading to higher productivity. It also aims at dealing with external pressures like stiff competition and change in technology.
However, it should be learned that downsizing by itself will not lead to productivity gains, when it has not been associated with other forms of change in business strategies. In addition, downsizing might be much expensive. This process might end up having some impacts on social as well as the psychology of employees remaining as well as those leaving. In addition, the process might make the company to lose very significant and skilled workers.
This is because by the time peers are leaving, the remaining employees will start doubting their future in the organization, and this might make them seek for secure jobs elsewhere (Hughes, 2007). In overcoming downsizing issues, managers have to ensure that they have addressed right issues in the right manner before thinking of job jettison. Managers have to explore all other ways of reducing costs before embarking on downsizing.
Another lesson is learnt from company’s technological change. Companies have introduced technological change in their operations as an effect of various reasons. Some have taken it as being a way of change facilitating tool and production increase due to communication coordination. Others have introduced technology since their business units have created their own systems, which need to be, synthesized (Cascio, 2002)
However, it should be learnt from Nestle company that, implementation of new technologies is not always a straight forward concept. This rests on various researches that indicate that most of expenditures on the implementation of new technologies do not attain their intended goal. In addition new technologies effects might end up taking lots of time before being seen. This is because during implementation, there is need for training, typical advice and consultancy (Cascio, 2002)
To overcome this issue of new technology, company managers have to pay more attention on long-term effects of new technology, other than basing on short-term profitable operations. Managers should be in a position of taking advantages of technological crisis like Y2K to alter their systems for long-term effects.
Concerning the issue of mergers and acquisition, though in some circumstances companies might be left to operate the way it used to operate before merging or acquisition, in most cases such companies might be subjected to “a complete overhaul in its governance structures, human resource systems, financial systems, and other operating systems, bringing these in line with the acquiring company” (Feldman, 2000). This is because; one company might be much more influential as compared to the other.
In dealing with such a situation before entering acquisition or any merger managers should first deal with serious issues that might affect the merger or acquisition. They should ensure that they have dealt with issues like merger and acquisition pricing, merger and acquisition consolidation as well as cultural alterations (Hughes, 2007).
Implications for Change Managers
By looking at Nestle Company, there are some implications that ought to be considered by change managers. First, there needs to take extra care when categorizing organizational change as being small, incremental and adaptive, as compared to transformational and large ones. It is the affected person who knows the real pain or advantage of such a change.
As an interpreter, the change manager states that “whether a change is adaptive, reactive, or transforming is not necessarily an objective “given” but will depend upon the perspective of the person doing the considering” (Wetlaufer, 2001). When reacting to such an implication, the management team should mould such perception in a manner that will bring sense for the company participants, to have an idea of what is going on in the company.
Secondly, the company has been concentrating on single organizational change, not putting in mind multiple changes that might occur at the same time. Apart from this, there are some changes which might require other changes to boost their efficiency and effectiveness. For instance, empowering staffs, calls for “changes in decision making routines, among others.
Singly, might be perceived as being small, however, collectively, have lots of impacts” (Feldman, 2000). In reacting to such a case, “whether a change is adaptive, reactive, or transforming is not necessarily an objective given but will depend upon the perspective of the person doing the considering” (Wetlaufer, 2001). Meaning, management team ought to avoid putting lots of concentration on a single change.
Change managers should have an idea that at an individual level, changes might have very small consequences but putting them together, the results might be unanticipated consequences in the company.
As a coach, there are chances that the management team just like a team coach might assume that in case employees have been coached well, then people might take the initiatives of altering the company’s routine practices (Maiese, 2003). However, in dealing with such a situation, the management team should provide conditions for exercising personal initiatives.
Lastly, at first sight managers might see what is happening as a paradox, as change is much important, for the company’s stability. This might end up framing the basic stability and change paradox, where “change may be needed to preserve or re-establish stability and stability must include change mechanisms to be adaptable” (Cascio, 2002).
When dealing with such a situation, change managers and directors, opt to provide directions for stability. They have to inform people things that will be changing, and those that will not be changing (Taylor, 1911).
Conclusion
In conclusion, this essay has analysed reasons for changes in organizations and different change orders that Nestle Company has undergone till now. The essay has also shown the implications which company managers can face, in case they fail to understand the significance of images as well as mental frames. Images in the essay include the director, navigator, interpreter and coach. Finally, the paper has also explored the three frontline experiences as a result of three major changes in big organizations like Nestle.
List of References
Cascio, W. 2002. Strategies for responsible restructuring. Academy of Management Executive .16(3): pp. 80–91.
Feldman, M. 2000. Organizational routines as a source of continuous change. Organization Science. 11(6): pp. 611–29.
Hughes, M. (2007). The tools and techniques of change management. Journal of Change Management, 7(1): 37-49.
Today’s business environment presents numerous challenges for new and existing organizations. As such, business entities have had to come up with effective and efficient operational strategies in order to remain relevant and profitable in an increasingly competitive arena.
To achieve this aim, marketing tools and strategies have been used extensively to ensure that a business meets the needs of the customers, has a competitive edge over its rivals and remains profitable in aggressive market situations.
Kotler et al (2005) define marketing as the process through which a business plans and executes its concepts regarding products, prices, promotion and distribution of goods and services in order to facilitate exchanges that optimally satisfy the consumer’s and organizational needs, goals and objectives.
Marketing Mix: 4 P’s of Marketing
The marketing mix is arguably the mot important aspect in marketing. This is attributed to the fact that it covers the basic concepts (4 P’s) of successful marketing. These concepts are price, place, product and promotion.
Is used wisely, the marketing mix leads to successful marketing strategies, which in turn guarantees profitability, consumer loyalty, competitive advantage and increased market share for an organization.
This paper shall set out to analyze the market mix of Canada based Nestlé company. The strategies used to determine the product, price place and promotion of goods and services offered by this company shall be discussed and an analysis of the Strengths, Weaknesses, Opportunities and Threats affecting the company’s market provided. The effects of using social media in Nestlé’s marketing plan shall also be evaluated.
Nestlé Canada: Company overview
Nestlé Company was founded in 1867 after the founder saw an untapped opportunity in the production of milk-based baby formula. The product quickly gained prominence due its nutritional value and acceptability by the target population. Since then, the company has been actively involved in the production of nutritional food and beverages.
Nestlé Company is the largest Food and Beverage Company in the world with an employee base of over 280, 000 employees working in the company’s factories in almost every country in the world (Nestlé Canada, 2012). As a result of this global reach, high reputation and quality products, Nestlé Canada Inc. records over $1 billion in sales.
Nestlé Canada marketing mix Assessment
Products
Kotler et al (2005), state that the product aspect of the marketing mix refers to the total concept being offered to the consumer. As such, product consist s of the intangible aspects of the product (brand name, product line and customer services) and the tangible aspects such as raw materials used, features and accessories.
Nestlé Canada offers a variety of products that cater for different needs of the target consumers. The variety of products offered to consumers enables the company to reach a larger market base since they have different products for everyone.
The table below shows the product line and products offered to cater for different needs of the consumers in the Canadian market (Nestlé Canada, 2012).
Table showing products and services offered by Nestlé Canada
From this table, it is evident that Nestlé Canada offers a variety of products brands that cater for different needs of various clients. Having such a wide variety of products has played a pivotal role in ensuring that the company stays ahead of competition and has a wider market share.
Consumers have a wide range of products to choose from. As such, the need to get substitutes from other companies is minimized.
Price
Arguably, one of the selling points of Nestlé Canada has been its ability to consistently provide quality products to its clients at competitive and affordable prices. Price is mainly determined by the cost of production, quality of the product and availability of substitutes.
However, Nestlé Canada has had a competitive advantage in this regard due to its reliance on the vast resources and skills acquired by the parent company over the century.
This enables Nestlé Canada to produce quality products at low costs, thereby enabling the company to avail its products to clients at an affordable price. While some of the substitutes offered by competing firms are cheaper, the quality of Nestlé Canada’s product still remain unmatched.
Place
Nestlé Canada has forged strategic alliances with various retail and wholesale vendors and distributors. As such, the products of the company can easily be found in all locations through various outlets such as convenience stores, drug stores, grocery outlets, vending machines, discount stores and supermarkets among others.
This distribution strategy enables Nestlé Canada to reach its clients far and wide. In addition, it fosters consumer loyalty since the products are easily accessible and constantly available to clients everywhere.
Promotion
Nestlé Canada uses various advertising and promotion strategies such as TV and radio advertisements, print media and online advertising in various websites. In addition, the company uses discounts and special offers to attract more consumers.
To promote various brands, Nestlé Canada uses witty slogans on their products packaging and advertisements that seek to raise the image and lifestyle positioning represented by the product.
These strategies have seen products such as KitKat and Nestlé’s Smarties record strong brand loyalty and market positioning over the past few years (Nestlé Canada, 2012). This is attributed to the implied message this promotional strategies send to target markets.
SWOT Analysis of Nestlé Canada
Strengths
Nestlé Canada provides its market with strong brands that offer consumers unique tastes unmatched by rival companies. The products are made from the finest raw materials and subjected to intensive research in order to guarantee safety and quality for consumers.
Due to its access to vast resources owner by Nestlé Company, Nestlé Canada has adequate resources for research and technology, which enables the company to continue being creative and innovative.
With such resources, Nestlé Canada is better placed to improve on their products, come up with new products and offer competitive prices to consumers. This minimizes competition and boosts profitability since Nestlé Canada rides on the good reputation developed over the years by the parent company.
The efficiency of the selected distribution channels ensures that Nestlé Canada’s products reach more consumers and are readily available. This guarantees consumer loyalty and market expansion.
Weaknesses
Most of the products produced by Nestlé Canada target consumers between the ages of 16 and 24 years old. This market segment consists of people that do not have a lot of disposable income, work part-time and are cautious about what they eat.
This means that the majority of the populations are not well represented. Competitors who offer more products for these market segments may therefore use this weakness to their advantage and displace Nestlé Canada’s market position. In addition, some of the brands produced by Nestlé Canada have little dominance in the Canadian market.
This is an indication that Nestlé Canada’s brands campaign is not as effective as it ought to be. Due to this weakness, competitors such as Cadbury and Hershey Canada have launched substitute products that are increasingly dominating the market.
Opportunities
As mentioned earlier, Nestlé Canada has access to vast resources attributed to the parent company’s pool of international branches. These resources can be directed towards training and retraining marketing personnel to facilitate marketing efficiency.
Market segmentation in the food and beverage market is not fully exploited in Canada. As such, Nestlé Canada can come up with more products that service the needs of potential consumers within the ignored product lines (baby nutrition, healthy nutrition and sport nutrition).
Threat
The main threat for Nestlé Canada emanates from the fact that the company is in its maturity stage in the production cycle. This means that not much can be done to improve the products since they have attained the best level of quality and consumer loyalty is high for these products.
With this in mind, competitors may come up with products that are similar to those produced by Nestlé Canada because they are certain that consumers prefer those products.
Solutions to the negative aspects of Nestlé Canada’s market mix
As has been mentioned herein, the main threat to Nestlé Canada marketing mix is competition from new and existing companies through product differentiation. This can be solved by developing and marketing new products that attract new market shares.
In so doing, the company will be able to maintain its reputation, all the while providing new and existing consumers with more products. In regard to poor brand campaign strategies, training may help the marketing department develop up to date strategies for effective marketing.
In addition, adopting sales maximization strategy rather than a profit maximization strategy while marketing the less dominant brands may influence more consumers into buy them. This can be done by reducing the prices and providing special offers for such brands.
Impact of social media to Nestlé Canada’s marketing mix
Social media have been instrumental to the marketing strategy of Nestlé Canada. This is attributed to the fact that social media outlets provide a cheap and convenient platform through which market, product and pricing research can be done.
Through various websites, marketers can get feedbacks on how a product is or how it can be improved. In addition, consumers can comment on what they want in new products. Also, companies can get valuable information about competitors through social media forums.
Conclusion
This paper set out to assess the marketing mix of Nestlé Canada. To that end, the product, price, promotion and place aspects of the company’s marketing strategy have been discussed and an analysis if the strengths, weaknesses, opportunities and threats of the same offered.
Solutions on how the flaws in the company’s marketing strategy can be alleviated have also been provided. The impacts of social media as marketing channels have also been highlighted. If used wisely, the marketing mix can enable companies market their products and services efficiently and successfully.
References
Kotler, P. et al. (2005). Principles of Marketing, Sixth Canadian Edition. New York: Pearson/Prentice Hall.
Being characterised by its innovative approach, Nestlé has been popular since the day of its creation. Even the imminent change in the information management ensuing from the technological breakthrough of the 21st century did not make the organisation shrink away from the spotlight.
Nowadays Nestlé remains a big name in the food industry, and the company obviously owes its success to the specific management approach that it adopts in order to market its services to the target audience, as well as the approach towards motivating the staff towards a better performance and a set of strategies aimed at innovativeness.
However, it seems that Nestlé should put a stronger emphasis on its network strategy used as the framework for its R&D approach, as it allows for making the company even more conspicuous in the realm of the global market and attract new customers.
Nestle Management Introduction
If there was a list of the companies that should have become a household name decades ago, Nestlé would definitely top it. Founded in the 19th century (1866, to be exact) (Ryland 2013), the organisation evolved very soon and very smoothly into a powerful conglomerate with millions of customers, thousands of opponents and very few honestly successful rivals (Boyd 2012).
Nestlé has never evolved intermittently; apart from the 2010 crisis (Coombs & Holladay 2011, p. 411), the company has been known for its steady pace of development. As a result, Nestlé remains unmatched to date in terms of its power, marketability and unforgettable brands.
While some assume that a set of clever marketing strategies is the key to understanding the company’s efficiency, and others believe that the company’s HRM system is the superior element that defines its triumph, it will be reasonable to say that Nestlé owes its success to marketing, R&D approach and leadership strategies. When combined, the three serve as a powerful enhancer for Nestlé’s further progress (Rae 2007).
Company Evaluation
Even though the progress of Nestlé has been comparatively smooth, the transition from one type of environment into another one, i.e., the transfer from the traditional market into the globalised environment, has had a major impact on Nestlé. The organisation was to be inured to facing extremely harsh competition and tread the precarious track of creating international partnerships.
It would be wrong to claim that Nestlé’s leaders never carried out similar steps before; it was that the relationships of such type were not common for the organisation and, thus, viewed as precarious at first (Ryland 2013). However, a closer look at the assets and problems that the company displays in the global economy realm will reveal that Nestlé, in fact, entered the global market quite prepared.
SWOT
A brief SWOT analysis of the organisation will reveal that the company’s ability to incorporate modern tools into its production and marketing process, as well as the aptitude for galvanising the employees with new ideas, is an obvious asset of Nestlé.
Table 1. SWOT Analysis of Nestlé
Strengths:
Strongly positive reputation and huge popularity all over the world;
R&D system that is beyond compare within the target market;
Existence of numerous affiliates in more than a hundred countries in Europe, North and South America, Africa and Oceania;
One of the most impressive records in the history of food and beverage production in terms of product diversity;
The policy of merger and acquisition allowing for building up great competitiveness.
Weaknesses:
Several major scandals related to the quality of the product due to careless experiments in the R&D department;
Child labor issue, which has resulted in a significant drop of the company’s popularity in 2010;
Lack of persuasion in the leadership model chosen.
Opportunities:
Recent shift towards healthy products and the consequent opportunity for the company to fill the niche with the corresponding brand product;
Enhancement of Nestlé’s popularity through partnership with other powerful conglomerates, including Coca Cola and others, i.e., a shift to the policy of mergers and acquisitions;
Design of a new brand product that will respond to the needs of the target demographics (i.e., a healthier product created with the help of a sustainable production process) (Doppelt 2010).
Threats:
Incurring major losses due to the company’s carelessness in terms of its R&D processes and the resulting quality of the final product, which may entail complaints and even lawsuits;
Increase in costs for production, logistics and information acquisition coupled with the tighter margins.
Target customers refusing to buy the company’s products due to their obvious threat to people’s health (i.e., chocolate products, which may trigger obesity or diabetes, etc.).
Porter’s five forces (Hales 2001).
Threat of new entrants: low Nestlé being a powerful competitor, new entrants rarely succeed.
Threat of substitute goods: high What used to be the clones of Nestlé’s products have developed into high quality substitutes.
Bargaining power of suppliers: high Nestlé has developed strong relationships with a range of suppliers.
Bargaining power of customers: high The quality of Nestlé’s products defines its position in the global market.
Competitive rivalry within the industry: low Holding colossal power in the food and beverage industry, Nestlé has very few competitors.
Value chain
Picture 1. Value chain (Nestlé n. d.)
The company leader explains that the value chain provided above specifies the key stages of food production process in the organisation (Nestlé n. d.). More to the point, the process of food creation is coupled with the concepts of “innovation, creation and development” (Nestlé n. d., para. 2). As a result, the final product is characterised by a distinct set of unique gustatory characteristics and is destined to leave an impact on the consumer.
It should also be born in mind that the stock share price of the organisation has been remaining consistent throughout an impressive amount of time. Even the imminent crisis that followed the scandal related to the dubious ethics of the company and the use of improper components for children food did not make the situation as dreary as it might have been for any other organisation.
Indeed, one may notice that the stock shares price moved to 49.34 on October, 3, 2010 (‘NESTLE N’ 2014), yet the prices for the stock shares did not get any lower, which was quite an accomplishment for the organisation in the food industry.
As the table above shows, except for the 2011 FDA related issue, the price for a Nestlé stock share has only been rising. It would be wrong to attribute this phenomenon to mere luck; Nestlé’s success was far from inadvertent. What seemed an accidental chance that the leader of the firm managed to use to his advantage turns out to be a well thought out plan and a result of the chemistry between the three key components of the company’s management.
Company’s Management Analysis
Though Paul Bulcke, the company’s CEO, is very reticent when it comes to determining the marketing strategies of the company, claiming that Nestlé’s marketing approach is based on the idea of segmentation almost entirely would not be a mistake. The company’s vision determines complete customer satisfaction and meeting the demands of every single buyer the firm’s main concern, which defines the methods of marketing extensively.
Largely presupposing that an in-depth analysis of the customers’ preferences and desires should be conducted on a regular basis (Vevey 2014), the above-mentioned approach has become the trademark asset of the company; however, in the modern environment of global economy, the company obviously finds it hard to split the target audience into groups that could share similar tastes in food.
The incorporation of the geographic principle of segmentation, however, prevents the exacerbation of the problem at the given point in time. Combined with the behavioural, demographical and psychological bases for segmentation, the aforementioned approach proves to be rather efficient even in the diversified realm of the global market (Hassan & Craft 2012, p. 346).
Research and Development Managing
The fact that Nestlé puts the stake on research and development shows clearly that the company is ready for entering the realm of the global market (Lasserre 2012). Reports show that the R&D department of Nestlé swarms with ideas concerning the improvements to be made to the company’s brand goods, as well as the creation of new brands (Fu et al, 2006).
The scale that the R&D department of Nestlé has gained is beyond impressive. Integrating the concept of information technology into its operations, the R&D department of the organisation has been the basis for Nestlé to grow and become more influential in the global market (Barnard et al. 2014).
The fact that the company was among the first organisations to introduce food science and technology into its R&D operations (Nestlé 2014) speaks for itself; Nestlé is clearly ready to come up with original inventions and experiment with flavours and ingredients for its products. However, corporate ethics has been left out of the organisation’s focus a few times, which nearly doomed the company (Boyd 2012).
Leadership Management
However, when it comes to choosing the feature that characterises Nestlé in the most positive light, one must recall its unique leadership strategy. The transformative leadership approach, which Bulcke prefers, proves rather efficient in terms of galvanising the staff members for efficient performance.
The official statement of the company’s employee relations policy incorporates the idea of togetherness and cooperation, therefore, making it clear that the leader and managers of Nestlé treasure relationships with their customers and co-workers the most: “Nestlé is committed to promoting a greater knowledge and understanding as well as an integral implementation of its Corporate Business Principles as the basis for being trusted by employees and stakeholders” (Nestlec, Ltd. 2010).
Management Issues Viewed from a Theoretical Perspective
The choices that Nestlé has made over the years of its development, especially the ones that relate to 2000s–2010s, may seem sporadic. A deeper insight onto the changes, which the Nestlé Company has undergone over the course of its existence, however, will show that the organisation leader has been quite consistent in his choice of the road that the organisation development should take. The further evaluation of the alterations, which Nestlé has suffered, as well as the principles which the firm is guided by, will shed some light on the specifics of Nestlé’s management specifics.
Emergent thinking as the key tool for Nestlé to evolve
When analyzing the concept that the company’s management is guided by, the theory of emergent thinking should be brought up. Defined as the aptitude to carry out the analysis of the existing assets and disadvantages and the following transfer from the process of understanding to actual action taking for addressing a specific issue (Torkar & McGregor 2012, p. 67), the theory in question allows one to get a deeper insight on the mechanism of Nestlé’s operations. In other words, Nestlé displays the ability of not merely evolving, but also to be conscious of the processes that it undergoes, as well as taking a firm grip over these processes, thus, making them controllable.
From differential to aggregation advantage
In its attempt to cater to the needs of much more diverse demographics, Nestlé has conjured a peculiar strategy based on aggregation as the key to shaping the firm’s value proposition. Though the company attempted at attracting customers from different tiers of society and different cultures in the past as well, this is an impressive foot forward for Nestlé, as it involves the transfer from a differential marketing strategy to an aggregation one.
Much to the credit of Bulcke, the company’s CEO does not pursue the goal of assimilation, allowing the company to retain its unique culture. However, the fact that the company is targeted at various cultures now is a sufficient proof for a major change.
Industry structure and government policy
Because of the need to transfer its production and organisation processes into the globalised environment, Nestlé has also experienced the necessity to shift from maintaining a strong industry structure to keeping an eye on the adherence to the government policies. In a retrospect, the progress that the company has made in terms of reconsidering its values and getting its priorities straight is truly fascinating.
It is hard to adapt towards the new requirements and, therefore, alter the traditional production process and marketing principle. However, Nestlé has handled the challenge that it was facing with impressive dignity and came up with a viable strategy for its further operations within the EU environment.
Particularly, the need to alter the retail system, as well as incorporate the principles of diversity into the corporate values of the firm and adopt the concept of shared value (Porter & Kramer 2011), deserves to be mentioned as the key steps towards entering the global market freely.
Resource disposal
The shift from the traditional to the globalised market environment has also heralded the era of a new approach towards resource disposal for Nestlé in accordance with the theory of emergent thinking. While previously preferring to state the possession of specific resources, Nestlé has shifted towards seeking new and more sustainable ways of resource disposal; the improvisation approach was the result (Campbell et al. 2011). Consequently, the company is fully capable of adopting a teleological approach towards the acquisition and the further use of resources
Network theory as a framework for evaluating Nestlé’s strategy
Seeing that Nestlé’s current strategy revolves around the usage of modern media as the tool for maintaining research and development processes at a decent level, it is pertinent to talk about the R&D approach from the perspective of the network theory. In accordance with the latter, the R&D department must be characterised by a well developed system of collaboration and are “represented by a network” (König, Liu & Zenou 2012).
It is only with the help of efficient cooperation with other departments and by feeling the pulse of the current R&D tendencies that an R&D department may succeed in designing the product that will become easily recognisable and popular among the target audience. Given the plenteous realm of the food industry, this is a very hard task, yet Nestlé manages to revive whenever its brand product becomes stale.
The company owes this aptitude of quick resurgence to its R&D strategy, which is obviously based on the tenets of the network theory. According to the official reports issued by the organisation, Nestlé has given its R&D centres the “global role” (Nestlé 2014, para. 9) in exploring new opportunities, particularly, the technological ones. With its zeal in providing “scientific expertise in plant science” (Nestlé 2014, para. 6), the organisation has found a way to vivify its R&D potential on a regular basis.
Key tool for keeping the sustainability rates intact
Thought the idea of synapse between the networking approach adopted by the company and the sustainability of Nestlé might seem somewhat farfetched, the connection established between the departments of the company, as well as between the organisation’s R&D departments all over the world, does affect the integrity of the corporate mechanism.
A closer look at the way, in which the company operates, will reveal the ambivalent nature of the phenomenon: by enhancing the networking system within which the members and partners of the company operate, Nestlé galvanises the process of information transfer. As a result, conclusions and necessary decisions are made faster, which reinforces the development of new brands and the search for new solutions (Fu et al. 2006).
Modern media at the service of the company
Seeing that the R&D process is related closely to the information management process, it will be reasonable to touch upon the latter, outlining the essential elements of the company’s approach. Despite the fact that the company is much more famous for using modern media for marketing purposes, the incorporation of networking tools into the company’s operations and the creation of a single network, within which the organisation operates, may also be viewed as one of the key achievements of the company.
The specified approach complies with the basic tenets of the networking theory, which claims that innovation and a business model (BM) of networking must go hand in hand: “The traditional brain-storm can used to find idea for creating BM that cater to new value forms, by supposing that the BM research process is infinite and creative” (Fu et al. 2006, p. 83). It is the possibility for an immediate and efficient exchange of ideas facilitated by the corporate network that allows for the R&D department to thrive and produce fruitful ideas on a regular basis.
Possible issues – technology inhibiting creativity
One must admit, though, that relying on the technological progress solely may inhibit the creativity of the employees, thus, turning the company stale. Therefore, one must bear in mind that the technological update of the corporation is only one of the essential steps to reaching excellence in information management.
On the one hand, the idea of technology being the block on the path of the employees exploring their creativity seems absurd, as technology provides the staff with additional opportunities in terms of information retrieval and the following processing. However, technology also seems to simplify the process of data management to the point where it acquires the air of everyday routine and a commonplace procedure, which it should not. Consequently, additional tools for spurring the staff’s creativity are desirable for Nestlé at present.
Path–goal theory of leadership and Nestlé
The particular characteristics of the Nestlé Company and the leadership approach that its CEO adopts is that it is very malleable, which is a positive characteristics for a company, yet an annoying puzzle for researchers. Indeed, it is very hard to identify the company leadership style with any of the existing ones, which also complicates the choice of a theoretical framework to view it from.
A range of researchers blame the organisation for its inconsistent leadership manner and dubious leadership ethics (Jallow 2009), specifically, the lack of control over its Chinese affiliates (Zutshi et al. 2009, p. 48). Official papers report the use of child labor in the specified region (Alvarez et al. 2010). However, the strategy in question seems to fit the tenets of the path–goal theory rather well.
Leader’s Behaviour
One of the key elements that determine the efficacy of the management principles utilised by Nestlé, leader’s behaviour described above is beyond reproach. As it has been stressed above, a new organisational dimension, strategic transformation and organisational transformation are the key characteristics of the leadership style of the company’s CEO.
These features correspond to the key tenets of the path–goal theory of leadership in general and its first stage, i.e., the design of a leadership behaviour that is directive, supportive, participative and achievement-oriented (Wafler & Swierczek 2013), in particular (McFerran et al. 2014, p. 469). By creating a new organisational dimension, Nestlé’s CEO creates the environment appropriate for the redesign of the stale corporate model adopted by most organisations and the introduction of achievement-oriented behaviour.
The fact that the new leadership approach allows for steering the company towards nutrition, health and wellness serves as the breeding ground for the provision of support and encouragement to the staff, as well as inviting every member to participate in the decision-making process (Mullins 2010).
Finally, the imperious yet emboldening manner of giving directions, which the organisation’s CEO manifests in his action plan and which the company’s managers mimic, fits the definition of directness as spelled out in the part–goal theory (Beek & Grachev 2010, p. 323).
Employees’ Motivation
It is essential that the approach adopted by Nestlé’s leader allows for motivating the staff fast and efficiently. Even the staff members that are prepossessed for a certain model of organisational behaviour are provided with an opportunity to mould different behavioural and attitudinal principles in order to be compatible with the company’s standards for performance and organisational values.
The way in which the company motivates its staff is nothing new, but its simplicity and solidness creates the environment for the company’s staff to thrive and evolve. Unexceptionable in terms of ethics and efficacy, the approach adopted by the organisation aligns with the key tenets of the part–goal theory in that it represents a well thought out process of turning the employees into devoted and responsible staff.
Implementing a transformative leadership strategy, the company’s managers set an example for the employees, which aligns with the stage of exposing the employees to proper leadership behaviour (Malik et al. 2014). As a result, the personal characteristics of the subordinates are taken into account, and they are assigned with the roles and tasks that they can handle.
The amount of trust, which the company’s managers put into the staff, serves as a powerful incentive for the staff to be perceptive and motivated according to the third stage of the part–goal theory. As a result, the staff accepts the assignments and responsibilities handed to them and experience job satisfaction feeling needed and important. Thus, Nestlé’s idea of putting people before systems proves quite efficient in accordance with the part–goal theory.
Goals and Their Attainability
From the tenets of the part goal theory Nestlé’s approach towards motivating the staff seems immaculate. Cavilling for the disadvantages of the chosen approach, though, one may assume that the specified leadership approach makes it difficult for the members of the company to attain the goals that have been set.
While the idea of “leading to win” (Nestlec, Ltd. 2014, p. 3), which Paul Bulcke, the company’s CEO, promotes, is quite reasonable, its vagueness might make the company’s leadership concept seem somewhat commonplace. As a result, the actual ways of meeting the objectives set in the course of compiling an action plan may become far too general to be implemented.
While this might be a minor nitpick, the specified characteristics of the company’s leadership approach is a reason for concern. It seems that Nestlé could benefit from following the part–goal theory closer and spelling its goals to the company staff in a more detailed manner.
Nestle Management Conclusion
Judging by the fact that the company has been maintaining sustainability within the organisational structure, production process and leadership domains, it can be assumed that Nestlé is on the right track. Therefore, unless the current leadership model, which leads to questioning the efficacy of defining the roles of responsibilities of each staff member, invite the threat of a possible misinterpretation of what the brand product must look like.
The company may have made several wrong steps in defining the patterns of organisational behaviour, et the overall assessment of the current state of affairs within the firm does not display anything egregious; quite on the contrary, Nestlé seems to have been thriving since the day that it was founded and has entered the environment of the global market dominated by the impact of information technology rather surely.
Indeed, it is obvious that Nestlé should align its current leadership strategy in accordance with the path–goal theory so that no misunderstanding should emerge in the process. In addition, the lack of emphasis on the culture in general and the diversification of the company in particular should be noted and addressed.
Recommendations
Apart from the need to take a better care of the organisation culture issues and rethinking the process of roles and responsibilities distribution among the staff members, Nestlé needs to improve its reputation by raising its quality standards and taking a better control over the production processes in its different affiliates.
Specifically, the child labor issue in China must be addressed immediately for the company to get rid of the stain blemishing its reputation. This presupposes that the leadership model should be altered slightly; luckily, the current leadership model is quite malleable and can be enhanced with the help of several more stringent control strategies.
Moreover, it is advisable that Nestlé should update its segmentation strategy in accordance with the demands of the target audience. Seeing that a range of parents are concerned with the accessibility of some of unhealthy Nestlé products to their children, the company should split its target customers into more specific age groups. Nevertheless, one must admit that the aforementioned considerations are mostly nitpicking.
Nestlé is a prime example of an organisation that has its processes under control and maintains a consistent sustainability rate. In a retrospect, one must admit that the company has made a gargantuan progress in terms of transferring from the product-based to the customer-based economy, integrating both traditional and new media in order to attract new audience. Deserving the success and attention that it receives, Nestlé is bound to remain in the top list of the most efficient organisations of the 21st century.
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Competitive advantage and commercial success are very important aspects of modern day businesses and without this two factors, businesses often fail at some stage. Due to the volatile nature of the commercial environment businesses through their managers are required to be quite radical in the way they operate so that the current change management structures are able to assist the organization effect any strategic changes if necessary.
Nestle is a good example of an organization which put in place a good management structure that made it very possible for the organization to embrace change because the organization identified the exact needs that were to accompany the change and therefore when managers initiated the change the entire organization was able to swiftly adopt to the new strategic changes.
When Nestle finally discovered that change is part and parcel of the organization they put in place change management strategies and also assisted organizational members to accept change more effectively making change management efforts from managers more successful.
Introduction
The current business environment is very volatile and dynamic and what is happening today will most likely change tomorrow, hence every organization needs proper change management. Change is inevitable in an organization and organizational managers are expected to behave like change agents who champion and advocate for change within the organization.
Change must be accompanied by reason since organizations do not just change because other organizations are changing but because they need to change and if they do not change they will most likely not achieve their commercial objectives (Eden 2002, 804).
The nature of changes from organization to organization always varies and therefore every organization is expected to carefully monitor and manage the entire change process in order to ensure corporate, business and functional levels of strategies are not negatively affected (Wheelen & Hunger 2002, 76-78).
The main purpose of change in most instances is to rejuvenate the organization and improve its performance and hence managers are expected to ensure that the entire change process within the organization is quickly accepted within the organization so that both short-term and long-run performance is not affected negatively.
Change strategies therefore provide managers with numerous options which they can use to successfully marshal organizational members to quickly accept and adapt to strategic changes without negatively affecting the performance of the organization (Feldman 2000, 618).
Change management is consequently part of the current business atmosphere that commercial organizations exist in and this require that they dedicate significant resources and therefore it makes more sense if these organizations put up the necessary change management systems so that all organizational members can be in the same page as far as welcoming organizational change is concerned.
The nature and need for change within Nestle
The entire change process of Nestle was only successful because the organization identified the exact needs that initiated the change and also went forward to develop the appropriate change management strategies to usher in change. Emerging business trends and decisions have prompted Nestle to experience changes in its business model.
Due to the fact that the organization is venturing into foreign markets and stepping out of isolation and venturing into new territories, this introduces a lot of complexities and may lead to ambiguity, which may often be fatal if not well managed. The nature of the change within Nestle involves divesture of Strategic Business Units (SBU’S), which are not profitable and serve as a disadvantage to the company.
Divesture normally requires organizations to sell existing business units and invest those funds in other more important business processes such as corporate restructuring or expanding to other business territories. Moreover, Nestle also considers growing its business structure by venturing into the pharmaceutical and cosmetic industry, and these kinds of changes are not easy.
Expanding businesses often require change in management structure and approach and that is why the organization is also dumping the entrepreneurial way of management and adapting a corporate management business format which heavily depends on managers (Wheelen & Hunger 2002, 244).
All these changes have been triggered by the organizations desire to grow in size by going multinational and stepping out of isolation. Moreover, the management desires to step up sales and revenue hence stepping of using sales agents in the global market and entering into agreements with local subsidiaries in foreign markets by acquiring them or entering into contracts.
The C.E.O, Brabeck-Letmathe, believed that change is very appropriate for the company because it will enable the company to realize efficiency and also increase productivity within the organization. Additionally, the entire corporate restructuring which costs almost $300 million annually is a type of change that is initiated by the need attaining a good and effective business structure whereby managers can be incomplete control of the entire businesses of the organization.
The C.E.O believes that the organization’s desire/need to have a competitive advantage, grow, become flexible and highly flexible within the market depends on how well the organization can be able to respond to change.
The nature of change requires the commitment of the entire organization and should therefore have a long-term approach therefore requiring managers to involve all organizational members. Moreover, managers are required to be highly critical of the nature of change and not just rush into changes such as technological change unless they are fully sure that the change is most likely to be for the benefit of the organization.
Challenges
Change in most instances within organizations, Nestle being an example in this case, is not always welcomed for the reason that it definitely demands that human resources and organizational personnel to commence a cultural change which is not easy because it involves removing people comfort zones to new unfamiliar territory and for an organization such as Nestle which has over 220,000 employees the entire change process should be a product of careful planning.
Change is not easy and simple and employees may often refuse or rebel against regimes that champion for change and this usually affects the performance of the organization. Additionally, change may end up being expensive and exhausting to organizations therefore affecting performance of the organization negatively (Eden 2002, 803).
Organizations and managers are faced with a lot of challenges especially during the change phase in organization especially due to the fact that employees often do resist then it automatically becomes hard to maintain the vigor and passion of employees all the way through the change process and this results to negative consequences within the organization.
Additionally, if all organizational members are not on the same page this may sabotage the entire change process because the organization may most likely backslide into old ways of operation (Hughes 2007, 41-43). Hence, change management is a must if an organization is to survive and ensure its objectives are met without compromising the stakeholders involved in the organization.
It is not easy managing cultural shifts within organizations and managers are required to come up with the most appropriate culture changing initiatives for organizational members to accept change.
Change is not only complex but also costly for organization restructuring and most of the time it becomes hard for managers to prioritize the numerous organizational projects and resources, and this is one of the reasons why the C.E.O Brabeck-Latmathe insisted that it is sometimes better to adopt a slow and steady approach when it comes to issues of expansion and divesture because nestle spent well over $300 million annually in restructuring costs (Steiner 1997, 128).
Prior to implementing change initiatives within organizations, it is vital that managers who are change champions/agents for the companies to understand the resulting effects and consequences of the changes process on the workers (Eden 2002, 805).
By doing so, the managers will appropriately prepare for any challenges and this will see the organization formulate better change policies and strategies in order to avoid many of the potential pitfalls that may arise as a result of the challenges which accompany the entire organizational change process. When managers get to comprehend the cognitive change process then they are likely to managing the entire process more effectively and marshal the corporation of other organizational members.
Change Management
Change is always received with hostility because it is accompanied by uncertainty and people usually fear uncertainty and the entire change process was not smooth and easy for an organization such as Nestle.
Therefore, this is the reason why managers such as the C.E.O Brabeck-Letmathe of Nestle become champions of change within the organization and hence come up with the more appropriate strategies that will make it possible for a smooth transition to take place to allowing organizational members gradually and successfully accept organizational changes and therefore welcome in the new era that will assist the organization become better in terms of performance.
Contemporary Management theories hold on to the belief that organizational change must take place whenever organization themselves in complex / ambiguous situations that necessitate the organization to move from ordinary ways of doing business to a much more radical business model in order to improve the performance of the organization (Wheelen & Hunger 2002, 78).
This fact was reflected in Nestle when the company decided to shift its focus from the local Swiss market to other parts of the world such as North America. The main endeavor during the organizational change phase is for the organizational change managers to maintain some balance and tranquility by working together with other organizational members so that the organization can ultimately progress (Steiner 1997, 203-204).
Current operations should be carried out in such a way that the organization will respond in the most effective way to unpredictable commercial and non commercial events when they occur according to the organization adaptation theory.
The organizational adaptation theory insists that organizations are more likely to become more successful only if the organizations gives up rigid business structures and decide to put in place the necessary framework to usher in change more effectively making them flexible. Managers often use numerous strategies to enable their organizations accept change within their organizations.
Figure 1. A pictorial diagram indicating what organizational change normally involves
Change Management Strategies
Whatever change management strategy is pursued by managers it is necessary that the organization dedicates the required resources that are required to implement the changes.
Implementing change is not simple for an organization such as Nestle as it expands and divest and therefore the organization should most of all make sure that it develops clear goals and communication systems and also go ahead to offer rewards and incentives in order to encourage organizational members to accept the change without altering their motivation (Tovstiga 2010, 49-54).
Despite stand of organizational members as the organization moves into North America and other non-related business industries a non biased support system should be formed, so that organizational members can get the necessary help as far as the change process is concerned.
Facilitation
Organizational change is not simple and managers are required to be change agents and also use other organizational members to bring about change. Often one of the best approaches that managers can use is to work hand in hand with other organizational members in the process of creating the change.
When managers decide to work hand in hand then the possibility of the change being successful goes up. Facilitation often involves educating employees and creating the best communication systems that encourage the flow of information and feedback loops (Wheelen & Hunger 2002, 38-44).
When managers decide to work together with other organizational members by communicating their intentions and vision and giving clear reasons why change is inevitable within the organization and the intentions of the change then organizational members will likely be more receptive to work with the manager.
Facilitation offers a good way under which when organizational members are willing to welcome change and desire collaborate but they lack the capacity to effectively blend in into the new change regime (Hughes 2007, 42).
Education
Often employees refuse change because of information asymmetry and it hence becomes necessary for management to educate them on the main reason why change is important. Education enables organizational members understand the reasons of the change, the benefits, and all variables of the entire change process.
As a result of proper education systems organizational members are able to rationalize change and what is expected for them (Eden 2002, 802). Because sometimes the resistance to organizational change is triggered by perceptual issues, the education programs can make employees less rigid especially if they understand that change can be rewarding.
Education offers an avenue under which employees can be empowered to understand what the entire change process entails and how it can be easy for both them and the organization (Cascio 2002, 84)
Involvement
Sometimes the change process within the organization does not only emanate from the higher levels of the organizational hierarchy. When organizational members are not involved physically or intellectually, or emotionally then they may feel as if their opinions are not respected and therefore this could ultimately affects their motivation and this may sabotage the entire change process.
Allowing organizational members offer their suggestions and become involved in the process of change offers an avenue under which all organizational members become change agents and own the change process (Wheelen & Hunger 2002, 243). When the change is a brainchild of the organizational members then there is no way that the employees themselves can sabotage the change process.
Negotiation
When management and the organizational change agents discover that the other party the other cannot easily be persuaded, it therefore becomes necessary to reach a consensus through negotiation. Organizational managers will hence be required to enter into conference/board rooms and ask them to discuss with each other in order to ensure that the change process is accepted (Eden 2002, 804).
Especially when change involves mergers and acquisitions in unrelated industries which are common for Nestle resistance to change is most likely to be very high and negotiation may often be the best way for change to be accepted. Negotiations are a way under which mutually agreeable solution that works for both the organization and organizational members can be arrived at (Wetlaufer 2001, 115).
Manipulation
Manipulation is an art used by managers and involves controlling a person’s environment so that a suitable outcome can be arrived at. Despite the fact that manipulation is considered as morally questionable, organizational managers are forced to use it especially when the stakes are high and change is required to take place quickly. Some ways of manipulating employees may involve using psychological and monetary awards to force them accept change regimes faster (Watson 2006, 72)
Coercion
Change management strategies fail managers are often forced to take extreme measures and often coercion is the only option. If manipulation fails those managers might decide to use threats and force to enable organizational members change. Some of the threats may involve threatening employees will lose their jobs, allowances and job related benefits (Wetlaufer 2001, 114).
Unorthodox managers may often go as far as humiliating and threatening employees or even public sacking in order to create fear and make examples out of organizational members who have not yet adopted change. This should only be used as a change management strategy of last resort especially when change is to be implemented in a hurry.
Conclusion
The role of change management in commercial organizations is directly related to the success of the organization. Managers are required to justify the need of the change, the nature of changes, the challenges that will accompany the change and pick the most appropriate strategy to implement change and make it acceptable among organizational members.
Managers should not ignore the important role that change management plays and therefore should dedicate the necessary resources and support to organizational managers in order for organizational members to accept change in the most appropriate timeframe.
References
Cascio, W., 2002. “Strategies for responsible restructuring.” Academy of Management Executive 16(3): pp. 80–91.
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