Question: Where is the multinational Nestle based?
Answer: Switzerland

Nestlé S.A. (;,,) is a Swiss transnational food and drink company headquartered in Vevey, Vaud, Switzerland.  It is the largest food company in the world measured by revenues,   and ranked #72 on the Fortune Global 500 in 2014. 

Nestlé’s products include baby food, medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine of Nestlé’s brands have annual sales of over CHF1 billion (about ),  including Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Stouffer’s, Vittel, and Maggi. Nestlé has 447 factories, operates in 194 countries, and employs around 339,000 people.  It is one of the main shareholders of L’Oreal, the world’s largest cosmetics company. 

Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company, established in 1866 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri Nestlé (born Heinrich Nestle). The company grew significantly during the First World War and again following the Second World War, expanding its offerings beyond its early condensed milk and infant formula products. The company has made a number of corporate acquisitions, including Crosse & Blackwell in 1950, Findus in 1963, Libby's in 1971, Rowntree Mackintosh in 1988, and Gerber in 2007.

Nestlé has a primary listing on the SIX Swiss Exchange and is a constituent of the Swiss Market Index. It has a secondary listing on Euronext. In 2011, Nestlé was listed No.1 in the Fortune Global 500 as the world’s most profitable corporation.  With a market capitalisation of , Nestlé ranked No.11 in the FT Global 500 2014. 

History

Nestlé’s origins date back to 1866, when two separate Swiss enterprises were founded that would later form the core of Nestlé. In the succeeding decades, the two competing enterprises aggressively expanded their businesses throughout Europe and the United States.

In August 1867 Charles (US consul in Switzerland) and George Page, two brothers from Lee County, Illinois, USA, established the Anglo-Swiss Condensed Milk Company in Cham, Switzerland. Their first British operation was opened at Chippenham, Wiltshire, in 1873. 

In September 1866 in Vevey, Henri Nestlé developed milk-based baby food, and soon began marketing it. The following year saw Daniel Peter begin seven years of work perfecting his invention, the milk chocolate manufacturing process. Nestlé was the crucial co-operation that Peter needed to solve the problem of removing all the water from the milk added to his chocolate and thus preventing the product from developing mildew. Henri Nestlé retired in 1875 but the company, under new ownership, retained his name as Société Farine Lactée Henri Nestlé.

In 1877 Anglo-Swiss added milk-based baby foods to their products; in the following year, the Nestlé Company added condensed milk to their portfolio, which made the firms direct and fierce rivals.

In 1879 Nestle merged with milk chocolate inventor Daniel Peter.

In 1904 François-Louis Cailler, Charles Amédée Kohler, Daniel Peter and Henri Nestlé participated in the creation and development of Swiss chocolate, marketing the first chocolate - milk Nestlé. 

In 1905 the companies merged to become the Nestlé and Anglo-Swiss Condensed Milk Company, retaining that name until 1947, when the name ‘Nestlé Alimentana SA’ was taken as a result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding company, Alimentana SA, of Kempttal, Switzerland. Maggi was a major manufacturer of soup mixes and related foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company was operating factories in the United States, the United Kingdom, Germany, and Spain. The First World War created demand for dairy products in the form of government contracts, and, by the end of the war, Nestlé’s production had more than doubled.

Nestlé felt the effects of the Second World War immediately. Profits dropped from US$20 million in 1938, to US$6 million in 1939. Factories were established in developing countries, particularly in Latin America. Ironically, the war helped with the introduction of the company’s newest product, Nescafé ("Nestlé’s Coffee"), which became a staple drink of the US military. Nestlé’s production and sales rose in the wartime economy.

After the war, government contracts dried up, and consumers switched back to fresh milk. However, Nestlé’s management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestlé’s first expansion into new products, with chocolate-manufacture becoming the company’s second most important activity. Louis Dapples was CEO till 1937, when succeeded by Édouard Muller till his death in 1948.

The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and numerous companies were acquired. In 1947 Nestlé merged with Maggi, a manufacturer of seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby’s (1971) and Stouffer’s (1973). Diversification came with a shareholding in L’Oreal in 1974. In 1977, Nestlé made its second venture outside the food industry, by acquiring Alcon Laboratories Inc.

In the 1980s, Nestlé’s improved bottom line which allowed the company to launch a new round of acquisitions. Carnation was acquired for $3 billion in 1984 and brought the evaporated milk brand, as well as Coffee-Mate and Friskies to Nestlé. The confectionery company Rowntree Mackintosh was acquired in 1988 for $4.5 billion, which brought brands such as Kit Kat, Smarties and Aero.

The first half of the 1990s proved to be favourable for Nestlé. Trade barriers crumbled, and world markets developed into more or less integrated trading areas. Since 1996, there have been various acquisitions, including San Pellegrino (1997), Spillers Petfoods (1998), and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002 – in June, Nestlé merged its US ice cream business into Dreyer's, and in August a  acquisition was announced of Chef America, the creator of Hot Pockets. In the same time-frame, Nestlé entered in a joint bid with Cadbury and came close to purchasing the iconic American company Hershey's, one of its fiercest confectionery competitors, but the deal eventually fell through.  Another recent purchase included the Jenny Craig weight-loss program, for .

Nestlé sold the Jenny Craig business unit to North Castle Partners in 2013. 

In December 2005, Nestlé bought the Greek company Delta Ice Cream for €240million. In January 2006, it took full ownership of Dreyer’s, thus becoming the world’s largest ice cream maker, with a 17.5% market share.  In November 2006, Nestlé purchased the Medical Nutrition division of Novartis Pharmaceutical for , also acquiring, in 2007, the milk-flavoring product known as Ovaltine.

In April 2007, returning to its roots, Nestlé bought US baby-food manufacturer Gerber for .    In December 2007, Nestlé entered into a strategic partnership with a Belgian chocolate maker, Pierre Marcolini. 

Nestlé agreed to sell its controlling stake in Alcon to Novartis on 4 January 2010. The sale was to form part of a broader  offer, by Novartis, for full acquisition of the world’s largest eye-care company.  On 1 March 2010, Nestlé concluded the purchase of Kraft Foods's North American frozen pizza business for .

Since 2010, Nestle has been working to transform itself into a nutrition, health and wellness company in an effort to combat declining confectionery sales and the threat of expanding government regulation of such foods. This effort is being led through the Nestlé Institute of Health Sciences under the direction of Ed Baetge. The Institute aims to develop “a new industry between food and pharmaceuticals” by creating foodstuffs with preventative and corrective health properties that would replace pharmaceutical drugs from pill bottles. The Health Science branch has already produced several products, such as drinks and protein shakes meant to combat malnutrition, diabetes, digestive health, obesity and other diseases.  

In July 2011, Nestlé SA agreed to buy 60 percent of Hsu Fu Chi International Ltd. for about .  On 23 April 2012, Nestlé agreed to acquire Pfizer Inc.'s infant-nutrition, formerly Wyeth Nutrition, unit for , topping a joint bid from Danone and Mead Johnson.   

In February 2013, Nestlé Health Science bought Pamlab, which makes medical foods based on L-methylfolate targeting depression, diabetes and memory loss. 

In February 2014, Nestlé sold its PowerBar sports nutrition business to Post Holdings, Inc.  Later, in November 2014, Nestlé announced that it was exploring strategic options for its frozen food subsidiary, Davigel. 

In recent years, Nestlé Health Science has made several acquisitions. It acquired Vitaflo, which makes clinical nutritional products for people with genetic disorders; CM&D Pharma Ltd., a company that specialises in the development of products for patients with chronic conditions like kidney disease; and Prometheus Laboratories, a firm specialising in treatments for gastrointestinal diseases and cancer. It also holds a minority stake in Vital Foods, a New Zealand-based company that develops kiwifruit-based solutions for gastrointestinal conditions. 

In December 2014, Nestlé announced that it was opening 10 skin care research centres worldwide, deepening its investment in a faster-growing market for healthcare products. That year, Nestlé spend about $350 million on dermatology research and development. The first of the research hubs, Nestlé Skin Health Investigation, Education and Longevity Development (SHIELD) centres, will open mid 2015 in New York, followed by Hong Kong and São Paulo, and later others in North America, Asia and Europe. The initiative is being launched in partnership with the Global Coalition on Aging (GCOA), a consortium that includes companies such as Intel and Bank of America. 

Products

Nestlé has 64 brands, with a wide range of products across a number of markets, including coffee, bottled water, milkshakes and other beverages, breakfast cereals, infant foods, performance and healthcare nutrition, seasonings, soups and sauces, frozen and refrigerated foods, and pet food.

Corporate affairs

Nestlé is the biggest food company in the world, with a market capitalisation of roughly 231 billion Swiss francs, which is more than US$ 247 billion as of May 2015. 

In 2014, consolidated sales were CHF 91.61 billion and net profit was CHF 14.46billion. Research and development investment was CHF 1.63billion. 
* Sales per category in CHF  
** 20.3 billion powdered and liquid beverages
** 16.7 billion milk products and ice cream
** 13.5 billion prepared dishes and cooking aids
** 13.1 billion nutrition and health science
** 11.3 billion petcare
** 9.6 billion confectionery
** 6.9 billion water
* Percentage of sales by geographic area breakdown 
** 43% from Americas
** 28% from Europe
** 29% from Asia, Oceania and Africa

According to a 2015 global survey of online consumers by the Reputation Institute, Nestlé has a reputation score of 74.5 on a scale of 1100. 

Joint ventures

Joint ventures include:
* Cereal Partners Worldwide with General Mills (50%/50%) 
* Beverage Partners Worldwide with The Coca-Cola Company(50%/50%) 
* Lactalis Nestlé Produits Frais with Lactalis (40%/60%) 
* Nestlé Colgate-Palmolive with Colgate-Palmolive (50%/50%) 
* Nestlé Indofood Citarasa Indonesia with Indofood (50%/50%) 
* Nestlé Snow with Snow Brand Milk Products (50%/50%) 
* Nestlé Modelo with Grupo Modelo
* Dairy Partners America Brasil with Fonterra (51%/49%)

Safety of food products

Maggi noodles

In May 2015, Food Safety Regulators from the Uttar Pradesh, India found that samples of Nestlé's leading noodles Maggi had up to 17 times beyond permissible safe limits of lead in addition to monosodium glutamate.    

On 3 June 2015, New Delhi Government banned the sale of Maggi in New Delhi stores for 15 days because it found lead and monosodium glutamate in the eatable beyond permissible limit.  The Gujarat FDA on 4 June 2015 banned the noodles for 30 days after 27 out of 39 samples were detected with objectionable levels of metallic lead, among other things.  Some of India's biggest retailers like Future Group, Big Bazaar, Easyday and Nilgiris have imposed a nationwide ban on Maggi.  Thereafter multiple state authorities in India found unacceptable amount of lead and it has been banned in more than 5 other states in India. 
On 5 June 2015, Food Safety and Standards Authority of India (FSSAI) orders banned all nine approved variants of Maggi instant noodles from India, terming them "unsafe and hazardous" for human consumption. 
In June 2015 Nepal indefinitely banned Maggi over concerns about lead levels in the product.  On the same day Food Safety Agency, United Kingdom has launched an investigation to find levels of lead in Maggi.  Maggi noodles has been withdrawn in five African nations- Kenya, Uganda, Tanzania, Rwanda and South Sudan by a super-market chain after a complaint by the Consumer Federation of Kenya, as a reaction to the ban in India. 

On 3 June 2015, Nestlé India's shares fell down 11% due to the incident.  Continuously on the second day, Nestlé's share fell down by 3% over concerns related to its safety standards. 

As of August 2015, India's government made public that it was seeking damages of nearly $100 million from Nestlé India for "unfair trade practices" following the June ban on Maggi noodles.  The 6,400 million rupee suit was filed with the National Consumer Disputes Redressal Commission (NCDRC), regarded as the country's top consumer court, but was settled on 13 August 2015.  The court ruled that the government ban on the Nestlé product was both "arbitrary" and had violated the "principles of natural justice."  Although Nestlé was not ordered to pay the fine requested in the government's suit, the court ruled that the Maggi noodle producers must "send five samples from each batch of Maggi [noodles] for testing to three labs and only if the lead is found to be lower than permitted will they start manufacturing and sale again." Although the tests have yet to take place, Nestlé has already destroyed 400 million packets of Maggi products.  Although the ban has been repealed by the Government of India, with effect from the end of 2015, a few states still needs to lift their versions of the ban, after newer tests.

Milk products and baby food

In late September 2008, the Hong Kong government found melamine in a Chinese-made Nestlé milk product. Six infants died from kidney damage, and a further 860 babies were hospitalised.   The Dairy Farm milk was made by Nestlé's division in the Chinese coastal city Qingdao.  Nestlé affirmed that all its products were safe and were not made from milk adulterated with melamine. On 2 October 2008, the Taiwan Health ministry announced that six types of milk powders produced in China by Nestlé contained low-level traces of melamine, and were "removed from the shelves". 

In another incident weevils and fungus were found in Cerelac baby food.    

Nestlé has implemented initiatives to prevent contamination and utilizes what it calls a “factory and farmers” model that eliminates the middleman. Farmers bring milk directly to a network of Nestlé-owned collection centers, where a computerized system samples, tests, and tags each batch of milk. To reduce further the risk of contamination at the source, the company provides farmers with continuous training and assistance in cow selection, feed quality, storage, and other areas. 

In 2014, the company opened the Nestlé Food Safety Institute (NFSI) in Beijing that will help meet China’s growing demand for healthy and safe food, one of the top three concerns among Chinese consumers. The NFSI will work closely with authorities to help provide the scientific foundation for food-safety policies and standards. Support will include early management of food-safety issues and collaboration with local universities, research institutes and government agencies on food-safety. 

Cookie dough

In June 2009, an outbreak of E. coli O157:H7 was linked to Nestlé's refrigerated cookie dough originating in a plant in Danville, Virginia. In the US, it caused sickness in more than 50 people in 30 states, half of whom required hospitalisation. Following the outbreak, Nestlé voluntarily recalled 30,000 cases of the cookie dough. The cause was determined to be contaminated flour obtained from a raw material supplier.  When operations resumed, the flour used was heat-treated to kill bacteria. 

Sponsorships

Animation
In 1993, plans were made to update and modernise the overall tone of Walt Disney's EPCOT Center, including a major refurbishment of The Land pavilion. Kraft Foods withdrew its sponsorship on 26 September 1993, with Nestlé taking its place. Co-financed by Nestlé and the Walt Disney World Resort, a gradual refurbishment of the pavilion began on 27 September 1993.  In 2003, Nestlé renewed its sponsorship of The Land; however, it was under agreement that Nestlé would oversee its own refurbishment to both the interior and exterior of the pavilion. Between 2004 and 2005, the pavilion underwent its second major refurbishment. Nestlé’s withdrawal from the Land dates back from 2009.[http://disneyparkhistory.com/the-land.html The Land - Disney Park History]

Music festivals
On 5 August 2010, Nestlé and the Beijing Music Festival signed an agreement to extend by three years Nestlé's sponsorship of this international music festival. Nestlé has been an extended sponsor of the Beijing Music Festival for 11 years since 2000. The new agreement will continue the partnership through 2013. 

Nestlé has partnered the prestigious Salzburg Festival in Austria for 20 years. In 2011, Nestlé renewed its sponsorship of the Salzburg Festival until 2015. 

Together, they have created the "Nestlé and Salzburg Festival Young Conductors Award," an initiative that aims to discover young conductors globally and to contribute to the development of their careers. 

Sports
Nestlé's sponsorship of the Tour de France began in 2001 and the agreement was extended in 2004, a move which demonstrated the company’s interest in the Tour. In July 2009, Nestlé Waters and the organisers of the Tour de France announced that their partnership will continue until 2013. The main promotional benefits of this partnership will spread on four key brands from Nestlé's product portfolio: Vittel, Powerbar, Nesquik or Ricore. 

In 2014, Nestlé Waters sponsored the UK leg of the Tour de France through its Buxton Natural Mineral Water brand. 
In 2002 Nestlé announced it was main sponsor for the Great Britain Lionesses Women's rugby league team for the team's second tour of Australia with its Munchies product. 

On 27 January 2012, the International Association of Athletics Federations announced that Nestlé will be the main sponsor for the further development of IAAF's Kids' Athletics Programme, which is one of the biggest grassroots development programmes in the world of sports. The five-year sponsorship started in January 2012.  On 11 February 2016, Nestlé decided to withdraw its sponsorship of the IAAF's Kids' Athletics Programmes because of doping and corruption allegations against the IAAF. Nestlé followed suit after other large sponsors, including Adidas, also stopped supporting the IAAF. 

Nestlé supports the Australian Institute of Sport (AIS) on a number of nutrition and fitness fronts, funding a Fellowship position in AIS Sports Nutrition; nutrition activities in the AIS Dining Hall; research activities; and the development of education resources for use at the AIS and in the public domain. 

Controversy and criticisms

Nestlé baby formula boycott

A boycott was launched in the United States on 7 July 1977, against the Swiss-based Nestlé corporation. It spread in the United States, and expanded into Europe in the early 1980s. It was prompted by concern about Nestlé's "aggressive marketing" of breast milk substitutes, particularly in less economically developed countries (LEDCs), largely among the poor.  The boycott was officially suspended in the U.S. in 1984, after Nestlé agreed to follow an international marketing code endorsed by the World Health Organization.    The boycott was also ended in the UK by several organisations including the General Synod of the Church of England in July 1994,  the Royal College of Midwives in July 1997,  and the Methodist Ethical Investment Committee in November 2005 and the Reformed Churches in November 2011   as a result of the company’s inclusion in the responsible investment index FTSE4Good Responsible Investment Index. 
Since 2011, Nestlé is the only infant formula manufacturer to have met the 104 criteria on the marketing of breastmilk substitutes (FTSE4Good BMS Criteria) of the FTSE4Good Responsible Investment Index.   Nestlé’s inclusion in the index is based on results of independent and transparent verifications conducted by Pricewaterhouse Coopers every 18 months.   Every year since 2009, Bureau Veritas - one of the world’s leading verification and auditing firm - conducts independent assurance of compliance with the Nestlé Policy and Instructions for Implementation of the WHO International Code of Marketing of Breastmilk Substitutes.  Their Assurance Statements are transparently available in the public domain. 

In May 2011, the debate over Nestlé's unethical marketing of infant formula was relaunched in the Asia-Pacific region. Nineteen leading Laos-based international NGOs, including Save the Children, Oxfam, CARE International, Plan International and World Vision have launched a boycott of Nestlé and written an open letter to the company.  Among other unethical practices, the NGOs criticised the lack of labelling in Laos and the provision of incentives to doctors and nurses to promote the use of infant formula.  In November 2011, Bureau Veritas, commissioned by Nestlé S.A. to provide independent assurance of Nestlé Indochina’s compliance with the Nestlé policy for the implementation of the World Health Organisation (WHO) International Code of Marketing of Breast Milk Substitutes (1981). There were no significant evidence that indicated Nestlé Indochina was systematically operating in violation of the WHO Code and Lao PDR Decree in Lao PDR. The presence of promotional materials in retail units constituted a non-conformance and Bureau Veritas recommended that the Nestlé’s Policy and Procedures Manual on the Marketing of breastmilk substitutes be reviewed and updated to ensure consistency against the more stringent requirements of the Lao PDR Decree.  Ernest W. Lefever and the Ethics and Public Policy Center were criticized for accepting a $25,000 contribution from Nestlé while the organization was in the process of developing a report investigating medical care in developing nations which was never published, in an alleged deal to minimize Nestlé's marketing of infant formula in many of these countries. 

Bottled water

At the second World Water Forum, Nestlé and other corporations persuaded the World Water Council to change its statement so as to reduce access to drinking water from a "right" to a "need." Nestlé chairman and former CEO Peter Brabeck-Letmathe stated that "access to water should not be a public right." Nestlé continues to take control of aquifers and bottle their water for profit.  Peter Brabeck-Letmathe has later changed his statement. 

Ethiopian debt (2002)

In 2002, Nestlé demanded that the nation of Ethiopia repay US$6 million of debt to the company. Ethiopia was suffering a severe famine at the time. Nestlé backed down from its demand after more than 8,500 people complained via e-mail to the company about its treatment of the Ethiopian government. The company agreed to re-invest any money it received from Ethiopia back into the country.  In 2003, Nestlé agreed to accept an offer of $1.5 million, and donated the money to three active charities in Ethiopia: the Red Cross, Caritas and UNHCR. 

Child labour

In 2005, after the cocoa industry had not met the Harkin–Engel Protocol deadline for certifying the worst forms of child labour (according to the International Labour Organization's Convention 182) had been eliminated from cocoa production, the International Labor Rights Fund filed a lawsuit in 2005 under the Alien Tort Claims Act against Nestlé and others on behalf of three Malian children. The suit alleged the children were trafficked to Ivory Coast, forced into slavery, and experienced frequent beatings on a cocoa plantation.   In September 2010, the US District Court for the Central District of California determined corporations cannot be held liable for violations of international law and dismissed the suit. The case was appealed to the US Court of Appeals.   The Ninth Circuit Court of Appeals reversed the decision.   In 2016, the U.S. Supreme Court declined to hear Nestle's appeal of the Ninth Circuit's decision. 

The 2010 documentary The Dark Side of Chocolate brought attention to purchases of cocoa beans from Ivorian plantations that use child slave labour. The children are usually 12 to 15 years old, and some are trafficked from nearby countries.  The first allegations that child slavery is used in cocoa production appeared in 1998.  In late 2000, a BBC documentary reported the use of enslaved children in the production of cocoa in West Africa.   Other media followed by reporting widespread child slavery and child trafficking in the production of cocoa.   In September 2001, Bradley Alford, Chairman and CEO of Nestlé USA, signed the Harkin–Engel Protocol (commonly called the Cocoa Protocol), an international agreement aimed at ending child labour in the production of cocoa.

In 2012, Nestlé became the first company in the food industry to join the Fair Labor Association (FLA). This followed collaborations with the FLA on special projects to assess labor conditions and compliance risks throughout Nestlé’s supply chain of hazelnuts and cocoa. As a Participating Company, Nestlé has committed to ten Principles of Fair Labor and Responsible Sourcing, and to upholding the FLA Workplace Code of Conduct throughout their supply chains, starting with farms. 

The 2014 Assessments of Shared Hazelnut Supply Chain In Turkey published by the  Fair Labor Association identified "a total of 46 child workers younger than 15 years" as well as  "a total of 83 young workers (between 15 and 18 years of age) working the same hours as adults and performing similar hazardous
and strenuous tasks, such as carrying heavy bags of
hazelnuts weighing up to 70 kilograms". 

Chocolate price fixing

In Canada, the Competition Bureau raided the offices of Nestlé Canada (along with those of Hershey Canada Inc. and Mars Canada Inc) in 2007 to investigate the matter of price fixing of chocolates. It is alleged that executives with Nestlé, the maker of KitKat, Coffee Crisp and Big Turk, colluded with competitors in Canada to inflate prices. 

The Bureau alleged that competitors' executives met in restaurants, coffee shops and at conventions and that Nestlé Canada CEO, Robert Leonidas once handed a competitor an envelope containing his company’s pricing information, saying: "I want you to hear it from the top – I take my pricing seriously."

Nestlé and the other companies were subject to class-action lawsuits for price fixing after the raids were made public in 2007. Nestlé settled for $9 million, without admitting liability, subject to court approval in the new year. A massive class-action lawsuit continues in the United States.

Former Nestlé Canada CEO Robert Leonidas is under threat of a criminal charge for his role in the price fixing of chocolates in Canada when he was at the helm of Nestlé Canada from 2006 to 2010.

Packaging claims (2008)

A coalition of environmental groups filed a complaint against Nestlé to the Canadian Code of Advertising Standards after Nestlé took out full-page advertisements in October 2008 claiming that "Most water bottles avoid landfill sites and are recycled", "Nestlé Pure Life is a healthy, eco-friendly choice" and that "Bottled water is the most environmentally responsible consumer product in the world."   A spokesperson from one of the environmental groups stated: "For Nestlé to claim that its bottled water product is environmentally superior to any other consumer product in the world is not supportable." In their 2008 Corporate Citizenship Report, Nestlé themselves stated that many of their bottles end up in the solid-waste stream, and that most of their bottles are not recycled.  The advertising campaign has been called greenwashing. Nestlé defended its ads, saying they will show they have been truthful in their campaign. 

Water bottling operations in California and Oregon

Considerable controversy has surrounded Nestlé's bottled water brand 'Arrowhead' sourced from wells alongside a spring in Millard Canyon situated in a Native American Reservation at the base of the San Bernardino Mountains in California. While corporate officials and representatives of the governing Morongo tribe have asserted that the company, which started its operations in 2000, is providing meaningful jobs in the area and that the spring is sustaining current surface water flows, a number of local citizen groups and environmental action committees have started to question the amount of water drawn in the light of the ongoing drought, and the restrictions that have been placed on residential water use.  Additionally, recent evidence suggests that representatives of the Forest Service failed to follow through on a review process for Nestlé's permit to draw water from the San Bernardino wells, which expired in 1988.   The former forest supervisor Gene Zimmerman has explained that the review process was rigorous, and that the Forest Service "didn't have the money or the budget or the staff" to follow through on the review of Nestlé's long-expired permit.  However, Zimmerman's observations and action have come under scrutiny for a number of reasons. Firstly, along with the natural resource manager for Nestlé, Larry Lawrence, Zimmerman is a board member for and played a vital role in the founding of the nonprofit Southern California Mountains Foundation, of which Nestlé is the most noteworthy and longtime donor.  Secondly, the Zimmerman Community Partnership Award - an award inspired by Zimmerman's actions and efforts "to create a public/private partnership for resource development and community engagement" - was presented by the foundation to Nestlé's Arrowhead Water division in 2013.  Finally, while Zimmerman retired from his former role in 2005, he currently works as a paid consultant for Nestlé, leading many investigative journalists to question Zimmerman's allegiances prior to his retirement from the Forest Service.

In April 2015, the city of Cascade Locks, Oregon and the Oregon Department of Fish and Wildlife using water for a salmon hatchery, applied with the Oregon Water Resources Department to permanently trade their water rights to Nestlé, which does not require a public-interest review. Nestlé approached them in 2008 and they had been considering to trade their well water with Oregon's Oxbow Springs water, a publicly owned water source in the Columbia River Gorge National Scenic Area, and to sell the spring water at over 100 million gallons of water per year to Nestlé. The plan has been criticized by legislators and 80,000 citizens.   The 250,000-square-foot, $50 million Nestlé bottling plant in Cascade Locks with an unemployment rate of 18.8 percent would have 50 employees and would increase property-tax collections by 67 percent.  The Oregon Water Resources Department is expected to issue a proposal in 2015, that would allow Nestlé to utilise spring water for its bottling operation. 

Boycott Nestlé products manufactured in Russia

In August 2015 the Ukrainian TV channel "Ukrayina" refused to hire a worker of the weekly magazine "Krayina", Alla Zheliznyak, as a host of a cooking show because she speaks Ukrainian. The demand to only hire a Russian speaking host was allegedly set by a sponsor of the show - "Nesquik", which is a brand of "Nestlé S.A."   Activists of the Vidsich civil movement held a rally near the office of the company in Kyiv accusing Nestlé for discriminating against people who speak Ukrainian and supporting russification of Ukraine.  They also added that goods sold in Ukraine are manufactured in Russia. Activists threatened to start a boycott campaign against Nestlé if they will not fulfill their requirements. In September 2015 there were "Russian kills!" flashmobs protesting against Nestlé products that are manufactured in Russia. 

Forced Labour in Thailand Fishing Industry

At the conclusion of a year-long, self-imposed investigation in November 2015, Nestlé disclosed that seafood products sourced in Thailand were produced with forced labour. Nestlé is not a major purchaser of seafood in Southeast Asia but does some business in Thailand, primarily for its Purina cat food. The study found virtually all U.S. and European companies buying seafood from Thailand are exposed to the same risks of abuse in their supply chains.  This type of disclosure was a surprise to many in the industry because international companies rarely acknowledge abuses in supply chains. 

Nestlé is expected to launch a yearlong program in 2016 focused on protecting workers across its supply chain. The company has promised to impose new requirements on all potential suppliers, train boat owners and captains about human rights, and hire auditors to check for compliance with new rules. 

Corporate social responsibility

World Cocoa Foundation
In 2000, Nestlé and other chocolate companies formed the World Cocoa Foundation (WCF). The WCF is an international membership organization representing more than 100 member companies across the cocoa value chain. It is committed to creating a sustainable cocoa economy by putting farmers first, promoting agricultural & environmental stewardship, and strengthening development in cocoa-growing communities. 

Sustainable Agriculture Initiative
In 2002 Nestlé, Unilever and Danone created the Sustainable Agriculture Initiative (SAI) Platform, a non-profit organization to facilitate sharing of knowledge and initiatives to support the development and implementation of sustainable agriculture practices involving the different stakeholders of the food chain.

The SAI Platform has more than 60 members, which actively share the same view on sustainable agriculture seen as "the efficient production of safe, high quality agricultural products, in a way that protects and improves the natural environment, the social and economic conditions of farmers, their employees and local communities, and safeguards the health and welfare of all farmed species.”

Among the latest deliverables produced, the SAI Platform developed (or co-developed) Principles and Practices for sustainable water management at farm level; recommendations for Sustainability Performance Assessment (SPA); a standardised methodology for the dairy sector to assess green house gas emissions; an Executives Training on Sustainable Sourcing; and many more. 

A case of Nestlé's impact on sustainable agricultural practices has been documented in academic literature. 

Creating Shared Value
Creating Shared Value (CSV) is a business concept intended to encourage businesses to create economic and social value simultaneously by focusing on the social issues that they are capable of addressing. In 2006, Nestlé adopted the CSV approach, focusing on three areas – nutrition, water and rural development – as these are core to their business activities.

Nestlé now publishes an annual progress report on its goals. 

Nestlé CEO Paul Bulcke describes CSV as follows: “Creating Shared Value, these three words, are the fundamental way we want to behave as a company, and by nature, also as persons; it is the fundamental way we want to go about our activities; it also is linked with the conviction that in order to be meaningful and successful, a company must intersect with society in a very positive and constructive way.” 

Nestlé has also established the Creating Shared Value Prize, which is awarded every other year with the aim of rewarding the best examples of CSV initiatives worldwide and to encourage other companies to adopt a shared value approach. These initiatives should take a business-oriented approach in addressing challenges in nutrition, water or rural development. The winner can win up to CHF 500,000. Nestlé was an early mover in the shared value space and hosts a global forum, the Creating Shared Value Global Forum.
  

Nestlé Cocoa Plan
In October 2009, Nestlé announced "The Cocoa Plan." The company is working to get 100 percent of its chocolate portfolio using certified sustainable cocoa. For third-party certification, Nestlé has partnered with UTZ Certified to ensure that best practices are being used. Many of Nestlé’s efforts are focused on the Ivory Coast, where 40 percent of the world’s cocoa comes from. The company has developed a higher-yielding, more drought- and disease-resistant cocoa tree; and they have given 3 million of these super trees to farmers thus far and plan to give away 12 million of them in total. They are also training farmers in efficient and sustainable growing techniques, which focuses on better farming practices, including pruning trees, pest control (with an emphasis on integrated pest management) and harvesting, as well as caring for the environment. In addition, they have built 23 new schools so far and plan to build 40 in total by 2015. 

Another important part of the plan has been to address child labor. Nestlé says that according to U.S. statistics, there are about 800,000 children who work the cocoa supply chain. With this in mind, Nestlé approached the Fair Labor Association to map out strategies to help curb child labor in the cocoa sector, and these efforts – including community education and the building of schools – have become a focus of the Cocoa Plan.

Ecolaboration
On 22 June 2009, Nestlé Nespresso and Rainforest Alliance signed a pact called "Ecolaboration". One of the shared goals is to reduce the environmental impacts and increase the social benefits of coffee cultivation in enough tropical regions so that 80 percent of Nespresso's coffee comes from Rainforest Alliance Certified farms by the year 2013. Certified farms comply with comprehensive standards covering all aspects of sustainable farming, including soil and water conservation, protection of wildlife and forests, and ensuring that farm workers, women and children have all the proper rights and benefits, such as good wages, clean drinking water, access to schools and health care and security. 

The Nescafé Plan
In 2010, Nestlé launched the Nescafé Plan, an initiative to increase sustainable coffee production and make sustainable coffee farming more accessible to farmers. The plan aims to increase the company’s supply of coffee beans without clearing rainforests, as well as using less water and fewer agrochemicals. According to Nestlé, Nescafé will invest 350 million Swiss francs (about $336 million) over the next ten years to expand the company's agricultural research and training capacity to help benefit many of the 25 million people who make their living growing and trading coffee. The Rainforest Alliance and the other NGOs in the Sustainable Agriculture Network will support Nestlé in meeting the objectives of the plan. 

Committed to Health Care and Nutrition
In September 2010, Nestlé announced to invest more than $500 million between 2011 and 2020 to develop health and wellness products to help prevent and treat major ailments like diabetes, obesity, cardiovascular disease and Alzheimer’s, which are placing an increasing burden on governments at a time when budgets are being squeezed. Nestlé created a wholly owned subsidiary, Nestlé Health Science, as well as a research body, the Nestlé Institute of Health Sciences. 

Member of Fair Labour Association
In 2011, Nestlé started to work with the Fair Labor Association (FLA), a non-profit, multi-stakeholder association that works with major companies to improve working conditions in their supply chains.

On 29 February 2012, Nestlé became the first food company to join the FLA. Building on Nestlé's efforts under the Cocoa Plan, the FLA will send independent experts to Ivory Coast in 2012 and where evidence of child labour is found, the FLA will identify root causes and advise Nestlé how to address them in sustainable and lasting ways. 

Rural Development Framework
In 2012, Nestlé developed the Rural Development Framework, which supports farmers and cocoa growing communities.  It is an investment program aimed at improving infrastructure, increasing access to safe water, address financing and market efficiency gaps and improving labor conditions. 

Partnership with IFRC
In 2014, Nestlé renewed its long-standing partnership long with the International Federation of Red Cross and Red Crescent Societies (IFRC) to increase access to safe water and sanitation in rural communities. In recent years, the partnership has brought clean drinking water and sanitation facilities to 100,000 people in Ivory Coast’s cocoa communities. Nestlé has committed to contributing five million Swiss francs over the next five years to the IFRC. 

Recognition and awards

* In May 2006, Nestlé’s executive board decided to adapt the existing Nestlé management systems to full conformity with the international standards ISO 14001 (Environmental Management Systems) and OHSAS 18001 (Occupational Health and Safety Management Systems), and to certify all Nestlé factories against these standards by 2010.  In the meanwhile a lot of the Nestlé factories have obtained these certifications.
* Nestlé Purina received in 2010 the Malcolm Baldrige National Quality Award for their excellence in the areas of leadership, customer and market focus, strategic planning, process management, measurement, analysis and knowledge management, workforce focus and results. 
*  In March 2011, Nestlé became the first infant formula company to meet the FTSE4Good Index criteria in full. 
* In September 2011, Nestlé occupied 19th position in the Universum's global ranking of Best Employers Worldwide.  According to a survey by Universum Communications Nestlé was in 2011 the best employer to work for in Switzerland. 
* The International Union of Food Science and Technology (IUFoST) honoured Nestlé in 2010 with the Global Food Industry Award. 
* In May 2011, Nestlé won the 27th World Environment Center (WEC) Gold Medal award for its commitment to environmental sustainability.  
* On 19 April 2012, The Great Place to Work® Institute Canada mentioned Nestlé Canada Inc. as one of the '50 Best Large and Multinational Workplaces' in Canada (with more than 1,000 employees working in Canada and/or worldwide). 
* On 21 May 2012, Gartner published their annual Supply Chain Top 25, a list with global supply chain leaders. Nestlé ranks 18th in the list. 
* In September 2012, Nestlé was among the top-scoring companies on the Climate Disclosure Leadership Index (CDLI)
* In 2013, Nestlé retained its number one position in charity Oxfam’s sustainability scorecard, and improved its ratings on the issues of land, workers and climate. 
* In 2014, Nestlé received the Henry Spira Corporate Progress Awards for altering its policies and practices to minimize adverse impacts on animals. 
* In March 2015, Nestlé ranked second in Oxfam’s Behind the Brands scorecard, where the NGO ranks the world’s ‘Big 10’ consumer food and beverage companies on their policies and commitments to improve food security and sustainability. Nestlé assumed the number one ranking for land rights, while the company also outperformed its peers on transparency and water. 

Bibliography

* La stratégie Nestlé (Nestlé Strategy), Helmut Maucher, French translation by Monique Thiollet, Maxima Ed., Paris, 1995,  ISBN 2840010720

Why Nestle Is Multinational Corporate Marketing Essay
Why Nestle Is Multinational Corporate Marketing Essay
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23rd March, 2015
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Introduction to MNC (Multinational Corporate)
MNC (Multinational corporate) known started from 17th century which traces origin from Dutch East India Company. And this corporate structure more widely functioned in 21th century.
According to Stuart Wall, Sonal Minocha and Bronwen Rees (2010), MNC (Multinational corporate) is a company that has headquarters in one country but has operations in other country. MNC had defined by Dunning (1993) MNC are engages in FDI (Foreign Direct Investment) and owns or controls value-adding activities in more than one country. Typically the multinational would not just own value-adding activities, but might buy resources and create goods or services in a variety of countries. Multinational Corporate in 2007 an estimated 79000 multinational corporate, collectively controlled a total of around 800000 foreign affiliates, employed almost 82million people worldwide and accounted for sales revenue of over $31 trillion, some 11% of world GDP. . (Stuart Wall;SonalMinocha and Bronwen Rees. 2010. pg. 31).
Foreign Direct Investment (FDI) is any forms that investor earns interest in corporation which functions outside of the domestic territory of investor. Besides that, foreign direct investment needs a relationship between a parent company and it foreign subsidiary. It is also gives rise for multinational corporate based on their report Economy Watch (2010).
What is Globalization?
Globalization means businesses transaction around the world.
Research (Global Education, 2009) has shown that globalization have many meanings and definitions, but mostly known as the greater movement of people, goods, capital and ideas affected by the increments of the economic integration which in turn is propelled by the increasing trades and investments. It is like moving towards living in a borderless world. There has always been a sharing of goods, services, knowledge and cultures between people and countries. In recent years, the improvement of technologies and a reduction of barriers mean the speed of exchange is much faster. Globalization provides lots of different types of opportunities and challenges (Global Education, 2009).
Why Nestle is Multinational Corporate?
Nestle is a multinational corporate since the headquarter is located in Switzerland but operates businesses in the many other countries over the world such as Europe, United State, China, Malaysia, Hong Kong etc. As we know, Nestle is an infant's product. Besides producing infants, Nestle has also produces some other products such as chocolate, yogurt drink, cornflakes, ice-cream etc which can easily found in supermarkets all over the world.
Introduction to Nestle
In 1860s, a pharmacist named Henri Nestle had succeeded developed a food for babies whom are unable to breastfeed. And his first success was to be able to feed a premature infant who could not tolerate his mother's milk or any of the usual substitutes. (Nestle, 2010)
In 1867, he adopted his own coat of arms as a trademark in 1867. In German Nestle means little nest. The Nestle symbol is universally understood to carry the meaning of nurturing and caring, security, nourishment and family bonding. These attributes are still the guiding legacy for the company Henri Nestlé founded which fulfills the commitment to 'Good Food, Good Life.
The Nestlé Coat-of-Arms
Sources: Nestle Sdn Bhd  2010
In 1905 Nestlé work together with the Anglo-Swiss Condensed Milk Company, the year after Nestlé added chocolate to its line of foods. The newly formed Nestlé and Anglo-Swiss Milk Company had factories in the Spain, Germany, United States and Britain. Soon, the company had full-scale manufacturing in Australia with warehouses in Hong Kong, Singapore and Bombay. Most production still took place in Europe. (English Tea Store, 2004-2009)
At first, Nestle business was mainly based on milk and dietetic foods for children. Then, Nestlé grew and diversified its range of products, through acquisitions and mergers with the already famous brands of that time. For example, the manufacturing of LACTOGEN began in 1921, and in the same year, a beverage containing wheat flour was marketed under the brand name MILO. In 1938, NESCAFÉ was introduced to the as the first instant coffee. Then, in 1947, Nestlé merged with the MAGGI Company.
Currently, Nestle is still having their principles, which to provide the best products throughout the world. As the leading Food, Nutrition, Health and Wellness Company, Nestlé provides the best food for anytime of day and for anytime of your life. Nestlé has grown to become the world's largest food company which offers more than 8500 brands and 10000 products throughout the whole world. With its headquarters in Vevey, Switzerland, Nestlé has more than 456 factories in more than 80 countries and having more than 283,000 employers. (Nestle Products Sdn Bhd , 2010)
Actual impact of globalization on Nestle
PESTLE analysis which contains of political, economic, social, technology, legal and environment analysis which consist of external environmental. It is a useful analysis to understanding the situation of a company in an industry.
Political analysis
The stability of political in a country will be under the consideration by NESTLE to build a plant that can operates NESTLE's factories that considering the country's political stability, good tax incentives as well as its skilled workforce, NESTLE chose Malaysia to be the site of another regional manufacturing centre for NESCAFE (Mr. José Lopez, Executive Vice President, Nestle S.A. responsible for global operations and GLOBE (Nestlé's Global Business Excellence Programmer)).
Economic Analysis
The important of economic factors will leads to the strength of consumer spending. For example, in recession economy, people might cut of their budget to consume household stuff rather than unnecessary stuff such as chocolate. Americans likes luxury chocolates, a new premium line of cacao which is called Nestle Treasures God had launched in order to cash in on the recession.
Social Analysis
Even though Nestle as a multinational corporate which operates their business in the other country, but do respect to people's culture and traditional which is a corporate that think global, act local by working hard to integrate itself into the cultures and traditions of the country. For example, Kit-Kat's formula is almost different everywhere. A Russian Kit-Kat is smaller than a Bulgarian, but less sweet than Germany's Kit-Kat. While in Japan, the strawberry Kit-Kat is all the rage.
Technology Analysis
As the technology of recently changed rapidly in global, Nestle have attracted people to purchasing their products by using advertising. For example, Kit-Kat have been advertised by attracting youngster or child because it is a sweeten tid-bits. Infants food's advertisement is to attracted housewife to purchase it to given their child a healthy life.
Recent research on technology analysis (Nestle Policy and Environmental sustainable) (2008) reports shown that during the manufacturing process, Nestle had using efficient technologies to ensure that there is no wasted energy while producing products. In addition, to control the eliminate emission including the greenhouse gases.
Legal Analysis
In 1996, Nestle was the first multinational corporate that voluntary for Halal certification for its own food products. Those food products that exported to the other countries were certified as Halal products. As a global food company like Nestle, hygiene is a must. Since Nestle has the Halal certification and hygiene was the procedure which contain in that certificate.
Besides that, health and safety were the principle that keeps by Nestle. While provided employees to minimize risks in their personal lives, Nestle had always emphasize each of their employees about to change the employee's attitudes towards personal safety.
Environmental Analysis
Nestle always committed to people to produce the best quality to their consumers. Besides that, Nestle also prevented the wasted food by reduced the material's weight and volume, yet supported initiatives of recycle from used packaging. Nestle have also use recycled materials to produce its products.
But, Nestle had done a fact that will cause of the lost of the home for orangutan. According to Heidi Marshall (2010), Nestle's product-Kit Kat is a product of environmental destruction. This is because of the material that used in the candy bars and for the other Nestle products as well was comes from a palm oil that get from by destroying Indonesia rainforests.
The strategy that used by Nestle to actual impact of globalization are included:
Market Penetration Strategy
Market penetration strategy is which to refer to increase market share of the current products. A firm using this method by raises their sale revenue without any changing of their existing products. Nestle may try to use the promotion which is buy 1 free 1 for its products. For example, buy 2 packs of 1kg Milo free a 10 pack of instant Nescafe.
A market penetration will also involve the 4ps which is products, price, promotion and place. According to (Stuart Wall; SonalMinocha and Bronwen Rees, 2010), the product in international marketing is the extent to which a standard and differentiated product should be provided. For example, Nestle is using the differentiated products since it produce its products Kit-Kat in different flavor. A Russian Kit-Kat is smaller than a Bulgarian, but less sweet than Germany's Kit-Kat. While in Japan, the strawberry Kit-Kat is all the rage.
The international price is related to the account market different between countries, exchange rates, difficulties of voicing and collecting payment across borders, the effects of tariffs and purchase taxes on competitiveness, governmental regulations of the host country and the long term strategic plan of the company in the different markets in which it operates.
For the promotion, it is often expressed to attracted people to consume their products and yet to capture a new consumer to purchasing their products. Nestle is always advertise their products thru media ways. To make sure that people know their products yet to pursuing people to make a purchase on their products. For example, Nestle advertise its products thru the television advertisement. This can make sure that children will attracted by its advertisement while it advertise.
A place or distribution it is difficult to control from outside the overseas country itself. A company will solve this problem by its own subsidiary. In addition, if the products are being imported, a multinational company will recruit a local agent to ensure that there is safety, cheapest and quickest way is using. For example, Nestle might recruit a people that located outside of overseas of it country to solve the problem such as a warehouses, the selling markets and etc.
SWOT Analysis of Nestle
As Dr. Jill Novak, (2009) commented that:
Strength
Nestle is a global food producer since it located in over 100 countries.  It is consistently one of the world's largest producers which with global sales in 2008 topped $101 billion. In addition, Nestle was named one of "America's Most Admired Food Companies" in Fortune magazine.  Furthermore, Nestle provides quality brands and products and line extensions that are well-known, top-selling brands including: Maggi, Haagen Dazs, Kit Kat, Nescafe, CoffeeMate, prepared baby foods, yogurt, foods for infants and many more.
Weakness
Most of the products have their own weaknesses. For Nestle, it was not as successful as the other country in France. Nestle could not compete against a strong and established brand which is Dannon that entered into France earlier than Nestle which is top selling of health yogurt. Besides that, since 2004, Nestle has been forced to reduce the amount of sugar in their products that may cause of diabetes among American children. In addition, Nestle has been removed the packaging and advertising that false claims of "heart healthy" and "lower cholesterol" which is an order from FDA(Food and Drug Administration) and American Medical Association which is the under fire of the breakfast cereal industry.
Opportunities
In today, everyone hope and needs to have a healthy life, as a producer like Nestle, it has an opportunities to raise their selling profits with producing health-based products. Since Nestle was a well-known branded, for sure, it will be easy to attract people to purchase their products. Further, they launched a new premium line of cacao called Nestle Treasures Gold, in order to cash in on the "recession economy" in which consumers cut back on luxury goods, but regularly indulge in candy and chocolate. Americans want luxury chocolates, and high-end chocolate is immune to the recession (so far), because it is an inexpensive indulgence.
Threats
Even though Nestle was a big producer in the world, but it still has its competitor, such as Hershey's, Cadbury-Schweppes (owned by Pepsi), Kellogg's, Starbucks, , Quaker, Kraft Foods, Danone, , Heinz, Unilevel and many more. Furthermore, any contamination foods supply especially e.coli which causes the recalled of their brand-Toll House cookie dough. Outbreaks were linked to 28 states and the product had to be recalled globally. Nestlé has yet to find out how this happened, and is still investigating (Dr. Jill Novak, (2009).
Potential impacts of globalization on Nestle
Nestle corporate have its own potential in globalization since it is a big foods producer in global.
Technology
In the world of today, technology will be changing rapidly in global. And this will leads a good improvement in all type of products that will be produce around the world. A research and development department will be a part of Nestle from today towards future achievement by gaining profits without wasting the raw material in manufacturing process. Besides that, by using a developed technology may reduce the effects that will occurs greenhouse effect.  For example, use of plastics packaging in every single of Nestle products improve to recycled paper packaging, used of plastic bottle in filling the Nestle beverage into tin that can recycle use.
On the others side, a case that occurs in India, which is Nestle chocolate, will be melted before its eyes. This is because there are lacks of distribution and the heat temperature in India will make the chocolate melted. By using the technology that can solve this problem that is using the technology to change its chocolate ingredients so that can afford India heat temperature.
Environmental
As the info below, Nestle's Kit Kats was made from a palm oil that came from by destroying the rainforest in Indonesia. This is cause of the pollution in Indonesia.  To solve this problem, Nestle corporate should consider using the palm oil from the other countries by not destroying the rainforest of the country.  On the other side, there is another solution too. That is, refining the vegetables oil that can out inside the ingredient of making chocolate.
Social
As a food producer in global, Nestle may do some different in their products. Such as, a new flavor of the chocolate could be launch. This is because different country has a different taste towards foods. For Malaysia, a durian can be a part of the ingredient in the making of Kit-Kat.  For Korea, a Kim chi flavor Kit-Kat can also create. This is a try for Nestle to attract people by producing different flavor but same products around the world.
The strategy that might use by Nestle in the potential impacts on globalization is:
Diversification strategy
According to Stuart Wall;SonalMinocha and Bronwen Rees diversification strategy involve the company branching out into both new products and new markets. For example, from the info that I mention below, Nestle might create a different flavor of Kit-Kat to attracted new customer. For Malaysia, Nestle may create a durian flavor Kit-Kat to attracted those customer who are not chocolate lover but is a durian lover to purchase this products.
Conclusion
On the day Nestle was introduced, it was only food for infants. As time goes, Nestle has grown to be more famous in brand name and focus in widen its product line. Today, Nestle is one of the most famous and successful foods and drinks producer. Furthermore, Nestle had expands to globalization which consist of factories around the world. Besides that, Nestle will always try counter threats and competitor, such as the current products or new product entrants. Therefore, Nestle still has the potential to grow more and continue to be the one of the leader in the market share.

The Organization Change – Nestle | Student Simple
The Organization Change – Nestle
by student simple | Mar 17, 2014 | Uncategorized
Nestlé is a multinational packaged food and beverage company founded and headquartered in Vesey, Switzerland. Nestlé Company is the world’s first company to make infant cereal. Henri Nestlé is the chemist who starts to do research on baby food in year 1867. His products soon became known worldwide after introducing a baby drink, which is his new product. In 1905, Nestlé Company merged with Angle-Swiss Condensed Milk Company and after that Nestlé Company produced milk chocolate.
Nestlé has a wide range of products across a number of markets including coffee, bottled water, other beverages, chocolate, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food. Because of its variety production, now Nestlé becomes of the largest food companies in the world, marketing over 8500 brands and 30,000 products.
Nestlé has almost 500 factories around the world and employs more than 200,000 employees worldwide. Nestlé operates in nearly 100 countries across 5 continents and the brand is trusted and confident for its customers to consume.
Under the leadership of Peter Brabeck- Letmathe, Nestle went through second-order change. According the National Academy for Academic leadership “Second-order change is deciding – or being forced – to do something significantly or fundamentally different from what we have done before. The process is irreversible: once you begin, it is impossible to return to the way you were doing before. Second- order, discontinuous change is transformational, radical, and fundamentally alters the organization at its core. Second- order change entails not only developing but transforming the nature of the organization. Below I have listed a few examples of this second order change:
•    Nestlé only sold through sales agents to countries outside of its home market.
•    Its launch into the American market was initiated when the First World War increased demand for dairy products. Nestlé took this opportunity to establish its presence in the United States by acquiring several existing factories.
•    In 1974 Nestlé diversified for the first time out-side the food industry in order to promote growth.
•    It became a major shareholder in the cosmetic giant L’Oreal.
•    Nestlé later made a second foray outside the food industry with the purchase of Alcon Laboratories Inc.,
Brabeck- Letmathe emphasizes the need for an incremental approach to change. However, I don’t think he actually follows this process all the time. Even though he says “Why should we manufacture dramatic change? Just for changes sake? To follow some sort of fad with-out logical thinking behind it? We are very skeptical of any kind of fad.” He initiated a complete overhaul of the executive board, replacing it with 10 new executives. He claims that change is incremental; however he is making a radical change.
 
Change may mean adding on to, and integrating, rather than removing and replacing current practices. What this reminds the managers of change is that they need to assess how carrying out a change will impact upon current practices and the extent to which a change will create ripple effects on practices and routines that they need to retain. So instead of removing the technological policy of the firm, they can try to improve it.
Nestle can also downsize their firm. Downsizing is the intentional process of permanently reducing staff numbers in an organization. Since they are unnecessarily big and invested every single sector, they can sell some of their industries and focus on most profitable ones.
There are three examples of lessons from the front line that are evident in the Nestlé case. They are:
•    There is a dramatic pace of change in Nestle. This has to be slowed down.
•    There is high risk in its investments; the firm has to hedge its risks.
•    There is a wrong policy in technology. Care needs to be taken in assuming that types of organizational changes can be neatly categorized as small, adaptive, and incremental compared to those that are large and transformational. Mental frameworks, individual perspectives, the extent to which a change is directly relevant to a person and his or her activities, and the degree to which he or she accepts the need for change

Case Study: Nestle's Growth Strategy
Home » Management Case Studies » Case Study: Nestle’s Growth Strategy
Case Study: Nestle’s Growth Strategy
Nestle is one of the oldest of all multinational businesses. The company was founded in Switzerland in 1866 by Heinrich Nestle, who established Nestle to distribute “milk food,” a type of infant food he had invented that was made from powdered milk, baked food, and sugar. From its very early days, the company looked to other countries for growth opportunities, establishing its first foreign offices in London in 1868. In 1905, the company merged with the Anglo-Swiss Condensed Milk, thereby broadening the company’s product line to include both condensed milk and infant formulas. Forced by Switzer­land’s small size to look outside’ its borders for growth opportunities, Nestle established condensed milk and infant food processing plants in the United States and Britain in the late 19th century and in Australia, South America, Africa, and Asia in the first three decades of the 20th century. In 1929, Nestle moved into the chocolate business when it acquired a Swiss chocolate maker. This was fol­lowed in 1938 by the development of Nestle’s most rev­olutionary product, Nescafe, the world’s first soluble coffee drink. After World War 11, Nestle continued to expand into other areas of the food business, primarily through a series of acquisitions that included Maggi (1947), Cross & Blackwell (1960), Findus (1962), Libby’s (1970), Stouffer’s (1973), Carnation (1985), Rowntree (1988), and Perrier (1992). By the late 1990s, Nestle had 500 factories in 76 countries and sold its products in a staggering 193 nations-almost every country in the world. In 1998, the company generated sales of close to SWF 72 billion ($51 billion), only 1 percent of which occurred in its home country. Similarly, only 3 percent of its- 210,000 employees were located in Switzerland. Nestle was the world’s biggest maker of infant formula, powdered milk, chocolates, instant coffee, soups, and mineral waters. It was number two in ice cream, breakfast cereals, and pet food. Roughly 38 percent of its food sales were made in Europe, 32 percent in the Americas, and 20 percent in Africa and Asia.
Management Structure
Nestlé is a decentralized organization .  Responsibility for operating decisions is pushed down to local units, which typically enjoy a high degree of autonomy with regard to decisions involving pricing, distribution, marketing, human resources, and so on.  At the same time, the company is organized into seven worldwide strategic business units (SBUs) that have responsibility for high-level strategic decisions and business development.  For example, a strategic business unit focuses on coffee and beverages.  Another one focuses on confectionery and ice cream.  These SBUs engage in overall strategy development, including acquisitions and market entry strategy.  In recent years, two-thirds of Nestlé’s growth has come from acquisitions, so this is a critical function.  Running in parallel to this structure is a regional organization that divides the world into five major geographical zones, such as Europe, North America and Asia.  The regional organizations assist in the overall strategy development process and are responsible for developing regional strategies (an example would be Nestlé’s strategy in the Middle East, which was discussed earlier).  Neither the SBU nor regional managers, however, get involved in local operating or strategic decisions on anything other than an exceptional basis.
Although Nestlé makes intensive use of local managers to knit its diverse worldwide operations together, the company relies on its “expatriate army.”  This consists of about 700 managers who spend the bulk of their careers on foreign assignments , moving from one country to the next.  Selected primarily on the basis of their ability, drive and willingness to live a quasi-nomadic lifestyle, these individuals often work in half-a-dozen nations during their careers.  Nestlé also uses management development programs as a strategic tool for creating an esprit de corps among managers.  At Rive-Reine, the company’s international training center in Switzerland, the company brings together, managers from around the world, at different stages in their careers, for specially targetted development programs of two to three weeks’ duration.  The objective of these programs is to give the managers a better understanding of Nestlé’s culture and strategy, and to give them access to the company’s top management.
The research and development operation has a special place within Nestlé, which is not surprising for a company that was established to commercialize innovative food stuffs.  The R&D function comprises 18 different groups that operate in 11 countries throughout the world.  Nestlé spends approximately 1 percent of its annual sales revenue on R&D and has 3,100 employees dedicated to the function.  Around 70 percent of the R&D budget is spent on development initiatives.  These initiatives focus on developing products and processes that fulfill market needs, as identified by the SBUs, in concert with regional and local managers.  For example, Nestlé instant noodle products were originally developed by the R&D group in response to the perceived needs of local operating companies through the Asian region. The company also has longer-term development projects that focus on developing new technological platforms, such as non-animal protein sources or agricultural biotechnology products.
A Growth Strategy for the 21st Century
Despite its undisputed success, Nestlé realized by the early 1990s, that it faced significant challenges in maintaining its growth rate. The large Western European and North American markets were mature.  In several countries, population growth had stagnated and in some, there had been a small decline in food consumption. The retail environment in many Western nations had become increasingly challenging and the balance of power was shifting away from the large-scale manufacturers of branded foods and beverages, and toward nationwide supermarket and discount chains. Increasingly, retailers found themselves in the unfamiliar position of playing off against each other – manufacturers of branded foods, thus bargaining down prices. Particularly in Europe, this trend was enhanced by the successful introduction of private-label brands by several of Europe’s leading supermarket chains.  The results included increased price competition in several key segments of the food and beverage market, such as cereals, coffee and soft drinks.
At Nestlé, one response has been to look toward emerging markets in Eastern Europe, Asia and Latin America for growth possibilities.  The logic is simple and obvious – a combination of economic and population growth, when coupled with the widespread adoption of market-oriented economic policies by the governments of many developing nations, makes for attractive business opportunities.  Many of these countries are still relatively poor, but their economies are growing rapidly.  For example, if current economic growth forecasts occur, by 2010, there will be 700 million people in China and India that have income levels approaching those of Spain in the mid-1990s.  As income levels rise, it is increasingly likely that consumers in these nations will start to substitute branded food products for basic foodstuffs, creating a large market opportunity for companies such as Nestlé.
In general, Nestle’s growth strategy had been to enter emerging markets early – before competitors – and build a substantial position by selling basic food items that appeal to the local population base, such as infant formula, condensed milk, noodles and tofu. By narrowing its initial market focus to just a handful of strategic brands, Nestlé claims it can simplify life, reduce risk, and concentrate its marketing resources and managerial effort on a limited number of key niches.  The goal is to build a commanding market position in each of these niches.  By pursuing such a strategy, Nestlé has taken as much as 85 percent of the market for instant coffee in Mexico, 66 percent of the market for powdered milk in the Philippines, and 70 percent of the markets for soups in Chile.  As income levels rise, the company progressively moves out from these niches, introducing more upscale items, such as mineral water, chocolate, cookies, and prepared foodstuffs.
Although the company is known worldwide for several key brands, such as Nescafe, it uses local brands in many markets.  The company owns 8,500 brands, but only 750 of them are registered in more than one country, and only 80 are registered in more than 10 countries.  While the company will use the same “global brands” in multiple developed markets, in the developing world it focuses on trying to optimize ingredients and processing technology to local conditions and then using a brand name that resonates locally. Customization rather than globalization is the key to the Nestle’s growth strategy in emerging markets.
Executing the Strategy
Successful execution of the strategy for developing markets requires a degree of flexibility, an ability to adapt in often unforeseen ways to local conditions, and a long-term perspective that puts building a sustainable business before short-term profitability.  In Nigeria, for example, a crumbling road system, aging trucks, and the danger of violence forced the company to re-think its traditional distribution methods.  Instead of operating a central warehouse, as is its preference in most nations, the country.  For safety reasons, trucks carrying Nestlé goods are allowed to travel only during the day and frequently under-armed guard.  Marketing also poses challenges in Nigeria.  With little opportunity for typical Western-style advertising on television of billboards, the company hired local singers to go to towns and villages offering a mix of entertainment and product demonstrations.
China provides another interesting example of local adaptation and long-term focus.  After 13 years of talks, Nestlé was formally invited into China in 1987, by the Government of Heilongjiang province.  Nestlé opened a plant to produce powdered milk and infant formula there in 1990, but quickly realized that the local rail and road infrastructure was inadequate and inhibited the collection of milk and delivery of finished products.  Rather than make do with the local infrastructure, Nestlé embarked on an ambitious plan to establish its own distribution network, known as milk roads, between 27 villages in the region and factory collection points, called chilling centres.  Farmers brought their milk – often on bicycles or carts – to the centres where it was weighed and analysed.  Unlike the government, Nestlé paid the farmers promptly.  Suddenly the farmers had an incentive to produce milk and many bought a second cow, increasing the cow population in the district by 3,000 to 9,000 in 18 months.  Area managers then organized a delivery system that used dedicated vans to deliver the milk to Nestlé’s factory.
Although at first glance this might seem to be a very costly solution, Nestlé calculated that the long-term benefits would be substantial.  Nestlé’s strategy is similar to that undertaken by many European and American companies during the first waves of industrialization in those countries.  Companies often had to invest in infrastructure that we now take for granted to get production off the ground.  Once the infrastructure was in place, in China, Nestlé’s production took off.  In 1990, 316 tons of powdered milk and infant formula were produced.  By 1994, output exceeded 10,000 tons and the company decided to triple capacity.  Based on this experience, Nestlé decided to build another two powdered milk factories in China and was aiming to generate sales of $700 million by 2000.
Nestlé is pursuing a similar long-term bet in the Middle East, an area in which most multinational food companies have little presence.  Collectively, the Middle East accounts for only about 2 percent of Nestlé’s worldwide sales and the individual markets are very small.  However, Nestlé’s long-term strategy is based on the assumption that regional conflicts will subside and intra-regional trade will expand as trade barriers between countries in the region come down.  Once that happens, Nestlé’s factories in the Middle East should be able to sell throughout the region, thereby realizing scale economies.  In anticipation of this development, Nestlé has established a network of factories in five countries, in the hope that each will, someday, supply the entire region with different products.  The company, currently makes ice-cream in Dubai, soups and cereals in Saudi Arabia, yogurt and bouillon in Egypt, chocolate in Turkey, and ketchup and instant noodles in Syria.  For the present, Nestlé can survive in these markets by using local materials and focusing on local demand.  The Syrian factory, for example, relies on products that use tomatoes, a major local agricultural product.  Syria also produces wheat, which is the main ingredient in instant noodles. Even if trade barriers don’t come down soon, Nestlé has indicated it will remain committed to the region. By using local inputs and focussing on local consumer needs, it has earned a good rate of return in the region, even though the individual markets are small.
Despite its successes in places such as China and parts of the Middle East, not all of Nestlé’s moves have worked out so well.  Like several other Western companies, Nestlé has had its problems in Japan, where a failure to adapt its coffee brand to local conditions meant the loss of a significant market opportunity to another Western company, Coca Cola.  For years, Nestlé’s instant coffee brand was the dominant coffee product in Japan.  In the 1960s, cold canned coffee (which can be purchased from soda vending machines) started to gain a following in Japan. Nestlé dismissed the product as just a coffee-flavoured drink rather than the real thing and declined to enter the market.  Nestlé’s local partner at the time, Kirin Beer, was so incensed at Nestlé’s refusal to enter the canned coffee market that it broke off its relationship with the company. In contrast, Coca Cola entered the market with Georgia, a product developed specifically for this segment of the Japanese market.  By leveraging its existing distribution channel, Coca Cola captured a 40 percent share of the $4 billion a year, market for canned coffee in Japan.  Nestlé, which failed to enter the market until the 1980s, has only a 4 percent share.
While Nestlé has built businesses from the ground up, in many emerging markets, such as Nigeria and China, in others it will purchase local companies if suitable candidates can be found.  The company pursued such a strategy in Poland, which it entered in 1994, by purchasing Goplana, the country’s second largest chocolate manufacturer. With the collapse of communism and the opening of the Polish market, income levels in Poland have started to rise and so has chocolate consumption.  Once a scarce item, the market grew by 8 percent a year, throughout the 1990s.  To take advantage of this opportunity, Nestlé has pursued a strategy of evolution, rather than revolution.  It has kept the top management of the company staffed with locals – as it does in most of its operations around the world – and carefully adjusted Goplana’s product line to better match local opportunities.  At the same time, it has pumped money into Goplana’s marketing, which has enabled the unit to gain share from several other chocolate makers in the country.  Still, competition in the market is intense.  Eight companies, including several foreign-owned enterprises, such as the market leader, Wedel, which is owned by PepsiCo , are vying for market share, and this has depressed prices and profit margins, despite the healthy volume growth.
Discussions:
Does it make sense for Nestle to focus its growth efforts on emerging markets? Why?
What is the company’s strategy with regard to business development in emerging markets? Does this strategy make sense? From an organizational perspective, what is required for this strategy to work effectively?
Through your own research on NESTLE, identify appropriate performance indicators. Once you have gathered relevant data on these, undertake a performance analysis of the company over the last five years. What does the analysis tell you about the success or otherwise of the strategy adopted by the company?
How would you describe Nestle’s strategic posture at the corporate level; is it pursuing a global strategy, a multidomestic strategy an international strategy or a transnational strategy?
Does this overall strategic posture make sense given the markets and countries that Nestle participates in? Why?
Is Nestle’s management structure and philosophy aligned with its overall strategic posture?

World's biggest food and beverage companies - Rediff.com Business
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World's biggest food and beverage companies
Last updated on: April 16, 2012 14:56 IST
World's biggest food and beverage companies
There are some food and beverage companies that have more money than some countries of the world.
Let's take a look at some of the biggest food and beverage companies in the world.
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Image: Shoppers inside the Carrefour Planet in Lyon, France.
Photographs: Emmanuel Foudrot/Reuters
Nestle
Global rank: 1
Nestle is the world's largest food and nutrition company. Founded and headquartered in Vevey, Switzerland, Nestle originated in a 1905 merger of the Anglo-Swiss Milk Company, established in 1867 by brothers George Page and Charles Page, and Farine Lactee Henri Nestle, founded in 1866 by Henri Nestle.
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Image: Bottles of baby food are seen in the company supermarket at the Nestle headquarters in Vevey, Switzerland.
Photographs: Denis Balibouse/Reuters
PepsiCo
Global rank: 2
PepsiCo is an American multinational corporation headquartered in Purchase, New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products.
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Image: Bottles of Pepsi on display in New York.
Photographs: Mike Segar/Reuters
Kraft
Global rank: 3
Kraft Foods is an American multinational confectionery, food and beverage conglomerate. It markets many brands in more than 170 countries. Twelve of its brands annually earn more than $1 billion worldwide: Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oscar Mayer, Philadelphia, Trident and Tang.
Forty of its brands are at least a century old.
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Image: Kraft Macaroni and Cheese is displayed at the company's headquarters in Northfield, Illinois, US.
Photographs: John Gress/Reuters
Anheuser-Busch Companies is an American brewing company and a wholly owned subsidiary of Anheuser-Busch InBev.
The company operates 12 breweries in the United States and 18 in other countries.
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Image: A man walks past a logo at the headquarters of Anheuser-Busch InBev in St Louis, Missouri, US.
Photographs: Sebastien Pirlet/Reuters
Coca-Cola
Global rank: 5
The Coca-Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups.
The company is best known for its flagship product Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton in Columbus, Georgia.
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Image: Cases of Coca-Cola in a warehouse at the Swire Coca-Cola facility in Draper, Utah, US.
Photographs: George Frey/Reuters
JBS
Global rank: 6
JBS is the largest Brazilian multinational in the food industry, producing fresh, chilled, and processed beef, chicken and pork, and also selling by-products from the processing of these meats.
It is headquartered in Sao Paulo. It was founded in 1953 in Anapolis, Goias.
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Image: Beef cattle feed on the Wulf farm in Morris, Minnesota.
Photographs: Diane Bartz/Reuters
Global rank: 7
Archer Daniels Midland Company is an American global food processing corporation headquartered in Decatur, Illinois.
ADM operates more than 270 plants worldwide, where cereal grains and oilseeds are processed into products used in food, beverage, nutraceutical, industrial and animal feed markets worldwide.
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Image: Dan Lizee, operation manager, picks up a handful of wheat at the Alliance Grain Terminal in Vancouver.
Photographs: Ben Nelms/Reuters
Unilever
Global rank: 8
Unilever is a British-Dutch multinational consumer goods company. Its products include foods, beverages, cleaning agents and personal care products.
It is the world's largest maker of ice cream.
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Image: A worker scans barcodes by a chiller cabinet of Flora margarine at a Sainsbury's supermarket in London.
Photographs: Luke MacGregor/Reuters
Mars
Global rank: 9
Mars is an American manufacturer of confectionery, pet food, and other food products with $30 billion in annual sales in 2010, and is ranked as the fifth-largest privately held company in the United States by Forbes.
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Image: Packets of M&M's chocolates are seen at the production line of candy and chocolate maker Mars Chocolate France's plant in Haguenau.
Photographs: Vincent Kessler/Reuters
Tyson Foods
Global rank: 10
Tyson Foods is a American multinational corporation based in Springdale, Arkansas, that operates in the food industry.
The company is the world's second-largest processor and marketer of chicken, beef, and pork only behind Brazilian JBS, and annually exports the largest percentage of beef out of the United States.
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Image: Women buy eggs in a supermarket in Bucharest.
Photographs: Bogdan Cristel/Reuters
SABMiller
Global rank: 11
SABMiller is a global brewing and bottling company headquartered in London, United Kingdom. It is the world's second-largest brewing company measured by revenues (after Anheuser-Busch InBev) and is also a major bottler of Coca-Cola.
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Image: Barmaid pours a glass of beer in Sydney.
Photographs: Tim Wimborne/Reuters
Cargill
Global rank: 12
Cargill is an American privately held, multinational corporation based in Minnetonka, Minnesota. Founded in 1865, it is now the largest privately held corporation in the United States in terms of revenue.
If it were a public company, it would rank, as of 2011, number 13 on the Fortune 500, behind AT&T and ahead of JP Morgan Chase.
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Image: A man gathers bags of cocoa beans at the Cargill factory in Ivory Coast.
Photographs: Luc Gnago/Reuters

Complications of Nestle being a Global Multinational company
Complications of Nestle being a Global Multinational company
Published:
Last Edited:
23rd March, 2015
This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
Brief of company: Nestlé with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestlé and is today the world's leading nutrition, health and wellness company. Its sales for 2009 were $ 112.3 billion, with a net profit of $ 11.1 billion. They employ around 276,050 people and have factories or operations in almost every country in the world.
Reasons for selecting the company: Nestlé can trace back its origins to 1867, from selling milk-based baby foods and condensed milk as its primary products to a market leader in today's Food & Beverage Industry with more than 6000 brands under its belt ranging from coffee and candy to hotdogs and pasta. Instead of just reaping the profits from the market, Nestlé has given back to the community by adopting social responsibilities, showing above the bar ethical behaviour and in many cases raising the standards in the industry. Its founding ethos reflects the basic ideas of fairness, honesty, and a general concern for people.
Main strategic issues facing the company:
Nestlé has been facing 'Nestlé boycott' since 1977 due to its promotions of the use of artificial infant foods.
Growing resistance of consumers against the use of genetically engineered foods in Nestlé's products.
Increasing competition.
Increasing awareness in the consumers with the demand of being socially and ethically responsible increasing day by day.
Increasing control and regulations in the policies of the governments worldwide.
Company's contribution to the National Economy: Switzerland's GDP for the year 2009 was estimated at $522.4 billion with GDP growth rate of 2.8% (2010 estimate). Out of which Merchandise exports for 2009 were of $173 billion.
*Company's contribution to the regional economy: Nestlé employs around 280,000 people all over the world and have factories or operations in almost every country in the world. Nestlé's gross revenue for the year 2009 was $ 112.3 billion and R&D investment was $ 2.11 billion.Â 
*Recent strategic dilemma:
Environmental impact of palm oil and the role of multi-nationals such as Nestlé in this.
Recent strategic choice:
In March 2010, Nestlé purchased Kraft's North American frozen pizza business for $3.7 billion.
Nestlé has been heavily investing in Africa.
Source of Information on Company:
http://www.nestle.com
(334 words)
Executive Summary
This assignment analyzes Nestlé's current situation and strategies in context of Global Food & Beverage Industry and then recommends the key strategies Nestlé should use to be more successful and retain its status as the global market leader in future.
To analyze the F&B Industry on a higher level and examine Nestlé's external environment, the following business models are used in this assignment: Industry Life Cycle, Key Success Factors and Porter's Five Forces. And to analyze Nestlé's current status and its internal environment the business models used are: SWOT analysis, Strategic Factor Analysis, TOWS Matrix.
After analyzing the information based on the above mentioned models, Nestlé is currently facing issues like product recalls, stagnant growth, high logistical costs, negative publicity and false allegations which are damaging its image and goodwill in the market. To combat some of these issues Nestlé has introduced innovative and healthier food products to cater the rising number of health conscious consumers, started focusing on the rising middle class consumers in developing and emerging economies, which has helped Nestlé to increase their growth again post the 2009 Financial Crisis.
For further improvement in the market share and company image, key strategies recommended to Nestlé are Expansion strategy through strategically acquiring and merging with its competitors and investing in production facilities in developing economies and Growth through Innovation in health & nutrition food segment. One area that Nestlé has to care of immediately is improvement in its Public Relations management to create a high level of loyalty and trust in its customers by building and reinforcing the notion that Nestlé still follows its founding ethos of fairness, honesty, and a general concern for people.
(277 words)
Y
SALES
The Global Food, Beverage and Tobacco Industry's growth has slowed down in recent years. But all this is set to change due to the recent technological advancements, rapid globalisation and opening up of the many restricted markets worldwide such as India, China, African nations, etc. With the technological advancements in food processing, handling and storing capacity and the rapid emergence of organized retailing in Asia, Africa, and other third world countries, along with fast changing demographics and habits has changed consumption the patterns and is fuelling the next growth trajectory for the global food, beverage and tobacco industry.
The Global Food, Beverage and Tobacco Industry is in the High Growth stage of the growth phase as the increase in sales has slowed down in recent years. The global food, beverage & tobacco industry generated total revenues of $6,319.2 billion in 2009, growing at a compound annual growth rate (CAGR) of 3.4% for the period spanning 2005-2009. Food sales generated total revenues of $4,235.4 billion, equivalent to 67.1% of the industry's overall value and sale of beverages generated revenues of $1,581.7 billion in 2009, equating to 25% of the industry's aggregate revenues. The industry is forecasted to grow at CAGR of 3.8% for the five year period 2009-2014.
Nestlé recorded revenues of $99 billion in year ending December 2009, showing decrease of 2.1% compared to fiscal 2008. In 2009, Nestlé renovated 7,252 products for nutrition or health reasons, as health awareness among consumers is rapidly increasing and it wants capitalize on the health conscious trend. Nestlé has been active in Developing &Emerging (D&E) economies through its subsidiaries in Asia Pacific, Africa, the Middle East, Turkey and Latin America. Nestlé's sales in emerging countries accounted for almost 32.5% of total revenue and reached $32.32 billion in 2009. According to IMF, the advanced economies are set to grow at 2.1% and 2.4%, respectively, in 2010 and 2011, while the D&E economies are forecasted to grow at 6% and 6.3% in 2010 and 2011, respectively. Therefore in the future, Nestlé's growth will be driven by high-growth D&E economies.
Key Factors for Success
4.37
Key Factors for Success in the Food and Beverage Industry:
Branding in F&B industry is of utmost importance as people do not prefer to buy products that they are not familiar with; also in this industry brand image is everything as it can attract consumers to a company's new products if it is already reputable in the market. Diversification in F&B industry are almost always related as companies prefer to have a healthy portfolio of products while still maintaining their core competencies and using them in their related products; as by having a large range of products a company will be more competitive and would not have to rely on a single product.
Product quality is very important in F&B industry, as bad quality products can & will lead to consumer boycott of the company's products, health issues in consumers and lawsuits against the company. While quality of the products also have to justify their prices, such as normal milk chocolates (Nestlé, Cadbury, etc.) cannot be priced high while specialty chocolates (Lindt, Godiva, etc.) are high priced. A strong distribution network is a must in F&B industry as it gives the companies low costs operations, fast delivery, and optimal shelf presence in retail stores. R&D is vital for gaining market share for the companies as development of better tasting, more nutritional and new foods & beverages is the fastest way of capitalizing on the fast changing trends of the consumers (like current healthy & organic food trend).
Two of the many competitors that Nestlé has, I have chosen Kraft Foods and Unilever for the comparison of KFS. After analyzing the KFS it is clear that Nestlé's response to the current and expected key success factors is above the industry average, with Unilever quite close behind and Kraft Foods just managing the industry average. So the analysis of KFS also reinforces Nestlé's position as the largest F&B Company in the world.
Porter's Five Forces Model:
Analysis of Porter's Five Forces:
The Bargaining Power of Suppliers (Low):
The bargaining power of suppliers in F&B Industry low as the raw materials for this industry includes fruits and vegetables, meat and fish, dairy products and grains, tobacco, cereals and grains, etc which could be purchased in the open markets around the world. And some F&B producers have integrated backwards into producing their own raw materials, negating the need for suppliers. Also suppliers tend to be financially quite weak giving market players upper hand.
The Bargaining Power of Buyers (High):
The bargaining power of suppliers on the other hand is quite high as typical buyers are large retailers such as Wal-Mart, Carrefour, etc. who are financially very strong and usually make large purchases and enter into long term contracts with market players; as the profit margins for the buyers is quite low. So loss of one retailer could significantly impact upon a manufacturer's revenue. Buyers are frequently integrating backwards, with many retail chains offering their own branded packaged food goods usually referred to as Private label products.
The Threat of Potential New Entrants (Present):
The threat of new entrants is high for small players who only serve few products and few markets (regional or national players) but is low for highly diversified big market players such as Nestlé, Unilever, etc. who operate globally. Since it's a highly fragmented market small-scale entrance by occupying a niche in the industry is possible and high these days. But new entrants have to bear switching costs (which can be quite high) as it's very hard to convince consumers to try new brands/products. Also big players can restrict the access to distribution channels for new players through their contacts and power in the market.
The Threat of Substitutes (High):
The substitutes are often cheaper and just as popular with consumers in F&B Industry as most of the products in this industry are in a way a substitute of some other products, like Tea for Coffee, Coke for Pepsi, NutraSweet for Sugar, etc. These days private label products, organic foods; nutritional foods, etc. are also rapidly substituting the packaged foods. And there are almost no switching costs for end consumers as they just pick any new products instead of their regular ones if they want to experiment.
The Extent of Competitive Rivalry (High):
The competitive rivalry among the firms is quite high in this industry as the enormous size of the industry creates endless opportunities for the players to compete for. Large number of players, ready availability of substitutes, low entry barriers, low bargaining power of suppliers and fast changing customer tastes intensifies rivalry in the F&B Industry. And also slow down of sales in the industry in 2009 will intensify the competition in the market, as everyone would try and gain market share now by take sales away from other competitors.

Introduction: Nestlé Was Founded in 1866 by Henri Nestlé And | Nestlé | Milk
Introduction: Nestlé Was Founded in 1866 by Henri Nestlé And
 
Introduction: -
 Nestlé was founded in 1866 by Henri Nestlé and is today theworld's biggest food and beverage company. Sales at the end of 2005 were CHF 91 bn, with a net profit of CHF 8 bn. Nestléemploy around 250,000 people from more than 70 countries andhave factories or operations in almost every country in the world.The history of Nestlé began in Switzerland in 1867 when Henri Nestlé, the pharmacist,launched his product Farine Lactée Nestlé, a nutritious gruel for children. Henri used hissurname, which means ’little nest’, in both the company name and the logotype. The nest,which symbolizes security, family and nourishment, still plays a central role in Nestlé’s profile.Since it began over 130 years ago, Nestlé’s success with product innovations and business acquisitions has turned it into the largest Food Company in the world. As theyears have passed, the Nestlé family has grown to include chocolates, soups, coffee,cereals, frozen products, yoghurts, mineral water and other food products. Beginning inthe 70s, Nestlé has continued to expand its product portfolio to include pet foods, pharmaceutical products and cosmetics too.Today, Nestlé markets a great number of products, all with one thing in common: thehigh quality for which Nestlé has become renowned throughout the worldThe Company's strategy is guided by several fundamental principles. Nestlé's existing products grow through innovation and renovation while maintaining a balance ingeographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company's priority is to bring the best and most relevant productsto people, wherever they are, whatever their needs, throughout their lives.Taste of Nestlé in each of the countries where Nestlé sell products. Nestlé is based on the principle of decentralization, which means each country is responsible for the efficientrunning of its business - including the recruitment of its staff.1
 
That's not to say that every operating company can do as it wishes. Headquarters inVevey sets the overall strategy and ensures that it is carried out. It's an approach that is best summed up as: 'centralize what you must, decentralize what you can'. Nestlé is a company which is present in all over the world but It has difference andunique motto to deal in all over the world. Nestlé believes that they should think abouttheir organizations globally but they deal with people by interacting with them locally.
“Thinking globally - acting locally”Evolution of Nestlé: -
1867

Multinational Corporations
Multinational Corporations
 
 Definition of MNC
Multinational firms arise because capital            is much more mobile than labor. Since cheap labor and raw material inputs            are located in other countries, multinational firms establish subsidiaries            there. They are often criticized as being runaway corporations.
Economists are not in agreement as to how multinational            or transnational corporations should be defined. Multinational corporations            have many dimensions and can be viewed from several perspectives (ownership,            management, strategy and structural, etc.)
The following is an excerpt from Franklin Root, International            Trade and Investment
Ownership criterion
Some argue that ownership is a key criterion. A firm            becomes multinational only when the headquarter or parent company is            effectively owned by nationals of two or more countries.
For example, Shell and Unilever, controlled by British            and Dutch interests, are good examples. However, by            ownership test, very few multinationals are multinational. The            ownership of most MNCs are uninational. (e.g., the Smith-Corona versus            Brothers case)
Depending on the production process, each is considered            an American multinational company in one case, and each is considered            a foreign multinational in another. Thus, ownership does not really            matter.
Nationality mix of headquarters managers
An international company is multinational if the managers            of the parent company are nationals of several countries. Usually, managers            of the headquarters (e.g., GM, Toyota) are nationals of the home country.            This may be a transitional phenomenon.
Very few companies pass this test currently.
Business Strategy
some are home country oriented,
others are host country oriented.
Successful firms:
Starkbuck shop in Qian Men street, Beijing
According to Franklin Root (1994), an MNC is a parent            company that
(i) engages in foreign production through its affiliates located in several countries,
(ii) exercises direct control over the policies of its affiliates, and
(iii) implements transnational            business strategies in production, marketing, finance and staffing            in a way that transcend national boundaries.
In other words, MNCs exhibit no loyalty to the country            in which they are incorporated. 
Example
has plants and offices in Greece, France,            Germany, Norway, Russia, Sweden, Turkey, US, and Mexico.
Wheat is purchased from around the world.
Reference 
Howard V. Perlmutter, "The Tortuous Evolution of          the Multinational Corporation," Columbia Journal of World Business,          1969, pp. 9-18.
 
2. Three Stages of Evolution
Export Stage
(i)  initial            inquiries ⇒ result in first export.
(ii) Initially, firms rely on export agents. ⇒ expansion of export sales
(iii) ⇒ foreign sales branch or assembly operations            are established (to save transportation costs)
Foreign production stage
(i) There is a limit to foreign exports, due to tariffs,            quotas and transportation costs.
(ii) Wage rates may be lower in LDCs.
(iii) Environmental regulations may be lax in LDCs (e.g.,            China). Itai-Itai (meaning: ouch ouch) disease in Japan since the 1920s            was caused by cadmium poisoning. Contaminated effluents leaked into            rice paddies and water source.) Watch the movie, Erin Brochovich.
(iv) meet Consumer demands in the foreign countries
 
DFI versus Licensing
Once the firm chooses foreign production as a method            of delivering goods to foreign markets, it must decide whether to establish            a foreign production subsidiary or license the technology to a foreign            firm.
 Licensing
 Licensing is usually the first experience (because          it is easy)
e.g.: Kentucky Fried Chicken in            the U.K.
Licensing does not require any capital expenditure
Financial risk is zero.
royalty payment = a fixed % of sales
licensor may provide training, equipment, etc.
Problem:
the parent firm cannot exercise any managerial control over the licensee            (it is independent)
The licensee may transfer industrial secrets to other            independent firms, thereby creating rivals.
In order to deter entry of copycat producers, MacDonalds            may supply American ingredients or raw materials (e.g., beef)
 Direct Investment
 It requires the decision of top management because            it is a critical step.
(i) it is risky (lack of information, large capital            requirement)
US firms tend to establish subsidiaries in Canada first.            Singer Manufacturing Company established its foreign plants in Scotland            and Australia in the 1850s.
(ii) plants are established in several countries
(iii) licensing is switched from            independent producers to its subsidiaries.
(iv) export continues (exports and FDI may be substitues            or complements)
 Multinational Stage
The company becomes a multinational enterprise when            it begins to plan, organize and coordinate production, marketing, R&D,            financing, and staffing.
For each of these operations, the firm must find the            best location.
 
A lion's share of MNCs are headquartered in the US:
Wall-Mart
How to tell whether a firm is multinational?
Rule of Thumb
A company whose foreign sales are 25% or more of total            sales. This ratio is high for small countries, but low for large countries,            e.g. Nestle (98%: Dutch), Phillips (94%: Swiss).
Examples: Manufacturing MNCs
24 of top fifty firms are located in the U.S.
9 in Japan (shrinking)
Petroleum companies: 6/10 located in the U.S.
Food/Restaurant Chains. 10/10 are headquartered in            the U.S.
US Multinational Corporations: Exxon, GM, Ford, etc.
 
3. Motives for Foreign Direct Investment (FDI)
 
Anecdote            on Sunzi , who wrote "The Art of War." Sunzi (544-496 BC)            was a native of Ch'i, but served under King of Wu during the Spring            and Autumn period (771-476 BC).
 
 New MNCs do not pop up randomly in            foreign nations. They are the product of conscious planning by corporate            managers. Investment flows from regions of low profits            to those of high returns.
 1  Growth motive
A company may have reached a plateau satisfying domestic            demand, which is not growing. Looking for new markets.
 2 Bypass protection in importing countries
 Foreign direct investment is one way to expand.              FDI is a means to bypassing protective instruments in the importing              country.
Examples:
(i) European Union: imposed common external tariff              against outsiders.
US companies circumvented these              barriers by setting up subsidiaries
. JBS USA is a subsidiary              of a Brazilian company, the world's largest meat processor of beef              and pork. (It kills 5000 head of cattle per day.)
(ii) Japanese corporations built auto assembly plants              in the US, to bypass VERs.
3. avoid high corporate tax
US corporate tax = 39.6%, Greece = 29%, France = 33%.            Corporate tax rates are lower in most other countries.
 4 avoid high transport costs
Build factories where consumers are.
 Transportation costs are like tariffs in that              they are barriers which raise consumer prices. When transportation              costs are high, multinational firms want to build production plants              close to either the input source or to the market in order to save              transportation costs.
Multinational firms (e.g. Toyota) are better off establishing              factories where consumers are located than shipping goods to faraway              counries.
 5 avoid Exchange Rate fluctuations
 Japanese firms (e.g., Komatsu) invest here              to produce heavy construction machines to avoid excessive exchange              rate fluctuations. Also, Japanese automobile firms have plants to              produce automobile parts. For instance, Toyota imports engines and              transmissions from Japanese plants, and produce the rest in the U.S.
Toyota is behind GM and Volkswagen in China, and plans              to expand its production in China (in addition to Tianjin and Guangzhou)              and has no plans to build more plants in North America. (China's autoparts              are cheaper.) It may have been a mistake for Toyota to overexpand              its plants in the US. GM and Volkswagen have expanded their production plants in Shanghai.
A Komatsu machine used in ethanol production in Ida              Grove, Iowa.
 6 reduce competition
 The most certain method of preventing actual            or potential competition is to acquire foreign businesses.
GM purchased Monarch (GM Canada) and Opel (GM Germany). It did not              buy Toyota, Datsun (Nissan) and Volkswagen. Subsequently, they became              competitors. Toyota is #1 in the car industry at present. Market shares              of car companies are:
Toyota: 12%, GM = Volkswagen: 11%, Hyundai-Kia: 9%.
World = 90 million cars. China = 24 million, US =12 million.
7 secure essential inputs
Transfer prices are the prices paid for            imports/exports between the headquarters and subsidiaries. 
 Why manipulate TP?
MNCs manipulate prices between the headquarter and              the subsidiaries so as to realize more profits in that profits may              be the highest in the countries with lower tax rates.
Purpose: to              minimize the total tax a multinational firm pays.
MNCs try to reduce their overall tax burden. An MNC              reports most of its profits in a low-tax country, even though the              actual profits are earned in a high tax country.
 Example
 tp = tax rate            in the parent country
th = tax              rate in the host country
If tp > th, then lower export              prices to the subsidiary in the host country, and raise import prices              from the subsidiary. => lower tax.
 
MNC's Goal: maximize profit in the country with the            lowest tax rate.
In High tax countries: To reduce MNC profits:
(i) lower selling price,              and
(ii) raise buying prices
In Low Tax countries, do the opposite
Total tax = $135 ($7000 × 15%)
Thus, a multinational company's overall tax could              be paid at the lowest tax rate of all countries in which it operates.
Abuses in pricing across national borders are illegal              (if they can be proved). MNCs are required to set prices at "arms              length" (set prices as if they are unrelated).
IRS argued that Toyota Inc. of Japan had systematically              overcharged its US subsidiary for years on most of trucks, automobiles              and parts sold to the US.
Because of abuses in transfer pricing, taxable profits              were shifted to Japan. The settlement Toyota offered to IRS reportedly              approached $1 billion.