Total quality management essay

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 Lasserre (2012) suggests that organizations such as Nestlé could be trying to gain a critical mass advantage. He further explains that in order to achieve this, a minimum amount of resources needs to be mobilized for an activity to perform efficiently and effectively. Hence, nestlé's shift from "decentralized units of r d to few large resource-intensive centres." As a result of its r d centralization, nestlé was able to reinvigorate old brands; an example was finding multiple uses of the nesquik brand from not only being a powder. However, this strategy came at a disadvantage to nestlé as they lost the benefits of decentralization. These benefits include proximity to markets which gives a firm the ability to create products that fit local customer specificities, gaining access to geographical clusters of knowledge creation and development access to good-quality scientists and the capability of a firm to learn from different market. Therefore, in terms of its r d strategy, it could be argued that Nestlé will have trouble sustaining its competitive advantage in the future since part of its future strategy is to expand to other markets. Thirdly, with the introduction of globe in the mid-2000s, nestle initiated an era of capturing data by tying all of Nestlé's entities together under a common technological platform. This led to the company standardizing its data to manage its vast information and create and share knowledge among its Strategic business units, manufacturers and retailers.

Current strategy nestlé's current strategy was to achieve worldwide sustainable 'competitiveness through four strategic pillars "low cost, efficient essay operations, renovation and innovation of the nestle product line, universal availability and improved communication with consumers through better branding." They also had a vision of transforming the. Nestlé's current strategy of reorganizing its operations did come as an advantage as in some cases moved away from its "agricultural and processing roots" to buying the ingredients from outside suppliers (Bell and Shelman, 2009). This can be argued on the basis of Nestlé reducing the steps of its value chain activities as Brabeck explained some of these activities could not add value to some businesses. An example would be the fact that Nestlé exited from cocoa roasting but still carried on producing chocolate. This in turn reduced the costs and made the value chain more efficient. In fact, in terms of strategic operations, lasserre (2012) argues that making fundamental changes in the value chain can lead to developing new products and services which can help a company sustain its innovative advantage. Moreover, to enhance the reliability of its suppliers, nestlé implemented a strategy of forming partnerships with its suppliers by creating direct links with them and providing them with support and technical advice. This helped the company cope with the volatility of the supply market and enhance its operations. Therefore, in terms of operational efficiency, nestlé can be seen to be sustainably competitive. Secondly, nestlé's current strategy was focused on renovating and innovating its product line through reorganizing its.

total quality management essay

Strategic Analysis Of Nestle company management Essay

Restructuring of Research and development Unit Nestlé also made a strategic decision of restructuring its r d unit to satisfy customer needs and internal growth. This was by shifting away from small decentralized units set up globally to limited large "resource-intensive" centres. This was done dubai to renovate old brands by finding multiple uses for its product. Under Brabeck's tenure, a 60/40 preference rating system was introduced where products were either discontinued or sold if they did not achieve the 60 level. This was done in order to ameliorate the company's performance and market orientation (Bell and Shelman, 2009). to what extent is the current strategy of nestle competitively sustainable in the future? How should it be rationalised and what new strategies ought to be developed in the future?

total quality management essay

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This highlights the fact that Nestle was seeking to establish its value chain activities, or Global business system, earlier on in its history (see value chain above). According to hill and Hill (2009 this type of model has the capability of reinforcing a company's competitive advantage as it is able to overcome barriers to integration, better respond to delivery speed, simplify sharing of information and reduce costs of production (Bell shakespeare and Shelman. Adapting to a global Role nestle recognised that for it to sustain its competitive advantage it needed to establish a global technological platform to capture data, manage information and create knowledge (Bell and Shelman, 2009). Consequently Brabeck made the strategic decision of initiating the globe system. Using this common technological infrastructure, it would be able to share information amongst all Nestlé's businesses and allowed for a synchronization of data in its supply chain (Bell and Shelman 2009). Refocused Strategy: Nutrition, health and Wellness Nutrition has always been an integral part of Nestlé's vision, dating back to its first nutritious infant formula. However, due to nestlé's realisation of "consumers being increasingly aware of the link between food, health and personal wellbeing there has been more of a shift away from a technology and processing-driven image towards health and wellness (Bell and Shelman 2009). Under Brabeck's tenure, a nutrition Strategic Business division was created, along with the acquisitions of Proteika, musashi (nutrition business jenny Craig (diet centres) and novartis Medical Nutrition (Bell and Shelman 2009).

Personalized services - 24/7 service though telephone and internet help line for Nestlé's premium products. Marketing sales Positioning the company as healthy Strong brands - product and brand differentiation. Dealing directly with consumers. Medical nutrition: market to professionals Outbound Logistics Synchronization of data between manufacturing and retailers- through the globe system. Introducing new distribution channels for some brands (e.g. "Nespresso corners boutiques and home delivery) Inbound Logistics Ware- housing Operations -manufacturing, food processing plants -Producing locally -about half of the factories are in developing countries/ production for the local market. partnership with local farmers -providing advice and support -Implementing quality control processes. Moreover, nestle made the strategic decision of establishing local supply chains which meant deploying its agricultural capabilities down to the farm level through strategic alliances. This is referred to as their "milk district model" which allows farmers to supply milk to the company directly and in exchange nestle provides its resources and know-how, such as providing storage and chilling facilities (Nestle, 2012).

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total quality management essay

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Thus, it can be assumed that Nestlé's strategically unrelated acquisition of Alcon and partial acquisition of l'oreal between 19, contributed to a decline in profits between 19Supply Chain Rationalisation As Nestle grew and entered new markets, they worked towards horizontally integrating their supply chain. According to Christopher (2005 companies such as Nestle seek to spread and geographically, whilst reducing costs through economies of scale by prioritising manufacturing and operational processes. This can be seen throughout the 1900's as Nestle invests in its value chain by: opening processing plants within the. S., Britain, germany and Spain; manufacturing in Australia; warehouses in Singapore, hong Kong and Bombay; and factories in the. And Brazil (Bell and Shelman 2009) (see nestlé's value chain). Firm infrastructure decentralized organization Executive committee consists of the ceo and 12 top managers The company is structured through 43 regional organisations reporting to directors of three geographic zones (zone europe, asia/Oceania/Africa and zone Americas). Country managers are given a large degree of autonomy when dealing with customer matters.

Nestlé's Value chain Human Resource management Focus on developing local management Investment in training and providing cross experiences people start from the bottom and move their way up in the organisation Unique culture/ focus on long term results developing people from acquired companies. Technology development Strong r d platform/ "open innovation" model Big investment in r d (investment to support pharmaceutical businesses and food, nutrition, health and wellness) Creating an "innovation acceleration team" to support rapid product introductions. Initiating a common technology infrastructure/ a comprehensive information system named the globe. Margin Procurement Purchasing some raw materials instead of processing them in-house. 60 of materials purchases from emerging economies Direct sourcing -In developing countries agricultural commodities are bought from local markets and often directly from farmers- rather than on the world market Service jenny Craig -personal nutrition counselling / Jenny direct website and phone /Home delivery.

Table: Nestlé's m as and their value created. Source: Authors' own creation based on information from Bell and Shelman (2009) and Lasserre (2012). Furthermore, the relationship between Nestle and l'oreal developed further when they created two joint-ventures: Galderma and Laboratories Inneov. According to barney (2011 joint ventures are undertaken in order to manage risk, share costs, and enter into new markets and industries. It is assumed that Nestle saw the benefits of alliances rather than acquisitions into the cosmetics market due to its lack of knowledge on the industry. Once nestlé diversified its portfolio, they followed-up by expanding brands through what Ansoff (1965) refers to as market penetration.


In order to utilise its current resources, and take advantage of the market opportunities created by milo and Nescafe, nestle developed new brands such as Nesquik and Nespresso (Bell and Shelman, 2009).  Additionally, nestlé acquired more brands consistent with its presence in the water and pet foods market:. According to Ansoff (1965 market development is the introduction of existing products into new markets. This can be seen through Nestlé's acquisitions of Stouffer, which enabled the company to sell its food products to different markets: frozen prepared meals. Lastly, nestle used product development to introduce new products such as buitoni, carnation, and Kit Kat to grow within its existing market of food, powdered drinks and confectionary. Nestlé's diverse portfolio provides it with a competitive advantage, and has enabled the company to become the world's largest food and beverage company (Bell and Shelman, 2009). However, it seems that some product diversifications through mergers and acquisitions led to the downfall of its profits; especially visible in the years leading up to maucher's administration (Bell and Shelman, 2009). Barney (2011) suggests that mergers and acquisitions between strategically unrelated businesses do not necessarily create significant economic profits.

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Diversification and global reach were the main values created for Nestlé in its acquisitions. For example, carnation enabled Nestle to extend not only in its product range but also to reach new william areas around the world. The following table outlines the values created through Nestlé's m a's. Nestlé's m as, value created, anglo-Swiss Condensed Milk company. Consolidation, maggi, diversification, acquisitions in canned and frozen foods, water, ice cream and pets food. Diversification, alcon Laboratories, diversification, options (to monitor the evolution of the technology). Carnation, global reach, diversification, ralston-Purina, diversification, jenny Craig. Diversification, novartis's Gerber, global reach, options (to monitor the evolution of the technology).

total quality management essay

Mergers and Acquisitions are essentials also beneficial. In increasing market share, for industry know how and positioning. For Financial leveraging (see appendix 3). Reasonable for this industry, to improve profitability and eps (see exhibit 2007). Source: Lasserre (2012 according to lasserre (2012 m as can also create several types of values for a company. He argues that they are justifiable if the economic value of the two entities is worth more combined than the sum of independent values before the merger (2012). Thus, the businesses must create shared economic values through synergy by increasing revenues whilst decreasing costs. Lasserre assumes these created values can be both short-term (one-off value) and long-term synergistic' effects).

market extension mergers which involve gaining entry into complementary markets through acquisitions (Barney, 2011 whereby nestle entered the confectionary, coffees, cereals, soft drinks, ice cream, water and prepared foods markets (see ansoff Matrix below). Ansoff (1965) would argue that Nestlé uses four different approaches to grow its products and markets. To explain the reasoning behind Nestlé's past m as they can be assigned into these categories of growth which include: market penetration, product development, market development and diversification (see ansoff Matrix above). During the 1920's, nestle diversified its portfolio from infant formula to include milo. This was its first powdered drink not created for infants. Spanning from 1938 to 1948, nestlé made the decision to enter into coffee and tea sector with the launch of Nescafe and Nestea. Nestle also diversified into the confectionary market, prepared foods, water, pet foods, energy bar and weight loss markets with the acquisitions of Peter, cailler, kohler Swiss Chocolate company, maggi, vittel, Friskies, powerbar and Jenny Craig respectively. Diversification outside the food and drink industry to enter pharmaceuticals and cosmetics was executed in the 1970's when it became a minority shareholder of l'oreal (25) and later acquired Alcon Laboratories. Barney (2011) highlights that acquiring new companies leads to reduction in production or distribution costs through economies of scale and vertical integration.

Nestlé's future strategies paperless were also scrutinized and possible solutions given to overcome some of the strategic implementation issues the organization is likely to face. evaluate the strategic decisions that have occurred over the corporate history of nestle mentioned in the case and to what extent has Mergers and Acquisitions and Strategic Alliances played a role in nestle's strategy in that period? According to bell and Shelman (2009 nestlé's sales expanded rapidly across Europe a few years after its inception. The company started developing an international reputation, and in 1905 it took the strategic decision of acquiring its main competitor, the Anglo-Swiss Condensed milk company (Bell and Shelman, 2009). The federal Trade commission refers to this as a horizontal merger where a firm acquires a former competitor allowing for a consolidation of companies in the same industry (Barney, 2011). As a result, nestle in the early 1900s began positioning itself as a powdered milk, and infant food company. Furthermore, the combined companies through the nestle brand name continued to grow through product and market extension mergers.

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Print, reference this, published: 23rd March, 2015, the purpose of this paper is to critically evaluate the strategic decisions that have occurred over the corporate history of Nestle mentioned in the case and to what extent has Mergers and Acquisitions and Strategic Alliances played. In order to evaluate these strategic decisions, the paper shall outline nestlé's historical strategic decisions; give a brief description of each decision and how mergers and acquisitions contributed to the growth of the company. The paper goes on to explain the current strategies of Nestlé and how sustainable these strategies may be in the future. It explains the rationalisation of these current strategies and the new strategies that ought to be developed. The paper then looks at the future strategies of Nestle to outline the issues that are likely to be faced when these strategies are implemented. Likely actions are then suggested which may help give solutions to problems faced by nestle on implementation of its future strategies. The strategic decisions involve new product development, extensive research development and entry into new product category which were mostly achieved through mergers and acquisitions. The current strategy was noted as unsustainable in the long term due to the fact that most of the products of Nestlé cannot be classified as healthy. The suggestion made twist was that Nestle should come up with strategies that will make them healthier than their competitors.


total quality management essay
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