Nestlé Food Company
Nestlé was established during economic hardship, and due to its largest scale size or operation, the company survived by acquiring government contracts. By the time the war came to an end in 1918, the business had about 40 factories worldwide (Chung et al. 2020). Henri Nestlé developed food for babies who could not breastfeed, while high mortality and lack of suitable food replacement for infants motivated the founders. Initially, Nestlé focused on baby’s cereals but later diversified into chocolates, coffee, yogurts, frozen food, and soup. The nutrition health and wellness organization operate under a hierarchical structure where tasks are divided into units and grouped in functional departmentalization.
Global Market Influence
Nestlé makes use of the 7-S model to enhance and regulate performance on a global scale. The 7-S model is McKinsey’s approach that outlines elements to be focused on (Lecture 7, n.d). Global-market forces impact organization performance, forcing leaders to rethink strategies, systems, and structure to see business success. Competition, consumer demand, and regulations are examples of factors that force the company to consider clearly defining approaches, guide behaviors and improve organizational hierarchy. The company’s structure is shaped by interdepartmental collaboration, team dynamics, centralized and decentralized decisions (Giannoccaro, 2018). Global market forces compel the company to design tools and approaches to control, evaluate and assess performance.
Operating in a competitive global market requires the company to embark on the key pillars of success or performance. Nestlé markets to third-world countries in need of nutritious food at reasonable charges. The company has strong brand recognition, which offers a competitive advantage. However, upholding shared values, adequate skills, and diversity has influenced the company’s success. Global operation means embracing opportunities by ensuring an adequate competency level, sufficient employability, and effective team-leading style (Lecture 7, n.d). Nestlé’s participative leadership approach allows the attainment of goals and visions as workers feel part of the organization.
Nestlé Governance and Leadership
Corporate governance and leadership of multinational organizations enable the attainment of set goals. Corporate governance refers to practices, rules, and processes used to direct and control an entity. An organization’s board of directors is the primary force that influences governance (Lecture 9, n.d; Nestlé, 2020). In Nestlé, the internal leadership structure has a board of directors comprising of nominations and sustainability committee. Next in the leadership hierarchy is the CEO and chairman, followed by an executive board in charge of various organizational units.
Hofstede’s Dimensions of Culture
The most used framework to understand how culture varies across the globe is by Hofstede. The latter’s approach is vital in informing how individuals behave across various cultural settings. The six key dimensions stipulated include indulgence, masculinity, individualism or collectivism, long-term orientation, and uncertainty avoidance (Lecture 6, n.d). Since Nestlé operates internationally, it is possible to encounter cultural issues varying on the mentioned dimensions. For instance, in some nations where culture has a high-power dimension, status differences will exist in the organizational hierarchy, but superiors should treat those in lower ranks with dignity.
To deal with national cultural gaps requires a multinational company’s adequate knowledge about behaviors and awareness of values or assumptions. With that, Nestlé’s performance on a global level would be shaped by characterizing people in the area, whether they are buyers or employees (Lecture 6, n.d). For example, operating in a culture that values long-term goals would likely create opportunities for durability, unlike when individuals are short-term-minded.
Ethical and Sustainable Factors
As companies expand internationally, they are required to understand their mission, goals, or visions and take into account ethical and legal issues. Planning a long-term expansion into foreign markets requires tackling serious moral challenges and decisions to make the strategy successful. Common ethical situations to watch out for in global markets include outsourcing problems, employment conditions, diversity, human rights, environmental and political issues such as taxation (Salvioni & Gennari, 2017). A cultural consideration can as well make or break a business operating globally.
Decision Making in an International Context
With advancements in technology, communication, and transportation systems, multinational businesses such as Nestlé are in an excellent position to succeed internationally. With that, it means the company would work in different time zones learning languages and cultural norms. A global market is often uncertain, and to succeed, decisions have to be passed fast, taking every opportunity as a chance for success (Giannoccaro, 2018). Proactive decision-making includes foresting problems and determining alternatives.
Strategic International Expansion Routes
Strategic progress at a global scale requires taking routes such as employing studies to know the market and spot influencers to develop a relationship with. For example, Nestlé can partner with nutrition agencies or healthcare organizations that would act as crucial agents expanding products. Prior market studies aid in focusing on delivering products to a new culture as it helps with the exploration of market needs. Entering a new market has obstacles such as language issues which multinational businesses must overcome to succeed (Autio, 2017). Communication barriers can make it difficult for a firm to position itself in international business.
Global Market Influence and Relevant Theories
One of the major factors that practically influence the international market is government policies. Carrying out business in the foreign sector is achievable if a company is flexible enough to accommodate local policies such as tax and labor guidelines. Nestlé’s leadership has to seek research and advice from legal counsel for overseas business operations regarding regulatory commitments. The other influence is social or environmental issues where customers, employees, and other stakeholders question the company’s response to rising concerns. Organizational culture theory in this context help understands how cultural differences in foreign markets influence business practices through varying people’s needs, values and norms (Felipe et al. 2017). A classical organization theory, on the other hand, explains the management approach adopted by companies and helps predict behavior patterns concerning firm structures.
International Business Barriers and Strategies
While setting and payments, approaches are major consideration by international firms. However, currency fluctuation is a significant threat and challenging to navigate. Global businesses such as Nestlé must therefore monitor exchange rates closely. Agreeing on prices in advance can help solve unpredictable currency instabilities. Nestlé can find the right partners to partner with and use the opportunity to penetrate the foreign market (Felipe et al. 2017). Since culture is a problem when operating in international business, organizations can embrace more diversity and inclusion approaches to maximize awareness.
Strategies of Organizations Operating Globally
A global organization such as Nestlé has been leading in market penetration through a multinational corporation approach. The strategy has enabled the company to become strong through brand creation and lead in food and beverages industry. With that, organizations operating globally may consider using a similar approach to adjust in the market and seek a competitive advantage. Decentralized decision-making is effective where international firms want to motivate workers because it makes them feel in control (Giannoccaro, 2018). However, firms should adopt a centralized approach when entering a new foreign market to remain accountable culturally and environmentally sensitive. Another way operational model that could be useful to a global organization is mergers and acquisitions. Nestlé has used merging as a successful method in European countries, and suggestively the company should maintain the approach to remain competitive.
References
Autio, E. (2017). Strategic entrepreneurial internationalization: A normative framework. Strategic Entrepreneurship Journal, 11(3), 211-227.
Chung, E. Y., Kee, D. M. H., Chan, J. W., Tiong, S. Y., Choke, Y. W., Low, J. S.,… & Motwani, H. (2020). Improving Food Safety and Food Quality: The Case of Nestle. International journal of Tourism and hospitality in Asia Pasific, 3(1), 57-67.
Felipe, C. M., Roldán, J. L., & Leal-Rodríguez, A. L. (2017). Impact of organizational culture values on organizational agility. Sustainability, 9(12), 2354.
Giannoccaro, I. (2018). Centralized vs. decentralized supply chains: The importance of decision maker’s cognitive ability and resistance to change. Industrial Marketing Management, 73, 59-69.
Lecture 6. (n.d). Hofstede cultural dimensions. PowerPoint, Slide 1-43.
Lecture 7. (n.d). Mckinsey 7S Framework. PowerPoint, Slide 1-34.
Lecture 9. (n.d). The governance of a multi-national organization. PowerPoint, Slide 1-38.
Nestlé. (2020). Corporate Governance. Nestlé Global.
Salvioni, D., & Gennari, F. (2017). CSR, Sustainable Value Creation and Shareholder Relations. Salvioni, DM & Gennari, F. (2017). CSR, Sustainable Value Creation and Shareholder Relations, Symphonya. Emerging Issues in Management (symphonya. unimib. it), 1, 36-49.