Analyzing Nestle's Global Operations and Strategies

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GLOBAL BUSINESS ENVIRONMENT
PART 2

Table of Contents
INTRODUCTION........................................................................................................................2
LO3........................................................................................................................................... 3
EVALUATING THE INFLUENCE OF GLOBALISATION ON ORGANIZATIONAL GOVERNANCE
AND LEADERSHIP, STRUCTURE, CULTURE AND FUNCTIONS................................................3
EVALUATING THE INFLUENCE OF ETHICAL AND SUSTAINABLE GLOBALISATION ON
ORGANIZATIONAL FUNCTIONS.............................................................................................6
FORCE FIELD ANALYSIS TO ANALYSE THE DRIVING AND RESISTING FORCES AND HOW
THEY INFLUENCE DECISION MAKING...................................................................................8
LO4......................................................................................................................................... 10
THE DIFFERENT WAYS DECISION MAKING CAN WORK EFFECTIVELY IN A GLOBAL CONTEXT
........................................................................................................................................... 10
DETERMINING THE VARIOUS ROUTES TO INTERNATIONALIZATION AN ORGANIZATION
MAY ADOPT, INCLUDING KEY BARRIERS............................................................................11
THE KEY BARRIERS IN DOING BUSINESS INTERNATIONALLY AND HOW THEY CAN BE
OVERCOME.........................................................................................................................13
CONCLUSION.......................................................................................................................... 14
REFERENCES........................................................................................................................... 15
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INTRODUCTION
The global business environment is very complex and dynamic in the current scenario. The
different global factors such as political, technological, economic, social and legal factors
have a great influence on the strategies and performance businesses in the global
marketplace. In the context of an international organization nestle, this report would
attempt to discuss the key aspects of a global business organization and how it is influenced
by the globalisation. The business structure, culture, leadership and governance of the
global organization will be discussed here with the application of McKinsey’s 7s model along
with analysing how the organizational functions of the global company are affected by
ethical and sustainable globalisation. Furthermore, the report will also discuss the different
ways of decision making in global business. The different ways of internationalization will
also be analyzed along with analysis of the key barriers in the international market.
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LO3
EVALUATING THE INFLUENCE OF GLOBALISATION ON ORGANIZATIONAL
GOVERNANCE AND LEADERSHIP, STRUCTURE, CULTURE AND FUNCTIONS
Multinational business organizations are ones that directly impact the global business
environment and get affected by it. Due to expansive business operations, the
organizational structure, culture, governance, leadership, functions and all the other aspects
of Nestle have become more complex. The concept and influence of globalisation on such
different aspects of Nestle is discussed below:
Organizational Governance and leadership:
Organizational governance is a system that determines the direction and control to attain
optimal performance outcomes. Governance works towards maintaining the integrity,
accountability and reputation of an organization (Rugman and Verbeke, 2017). On the other
hand, organizational leadership is a way the leaders influence subordinates towards
organizational goals. Organizational governance and leadership is elusive and have a
symbiotic relationship that manages the company.
Structure:
Organizational structure means a system that outlines the line of authorities and leadership
for management and communication within the company with specific rights and duties.
Culture:
Organizational culture means underlying values, beliefs and way of interacting among the
members that create a unique social and psychological environment within an organization
(Rugman and Verbeke, 2017).
Functions:
Organizational functions are the core business processes that are carried out to manage
different aspects of the business such as finance, employees, operations etc.
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In order to evaluate the influence of globalisation the different aspects of Nestle, McKinsey’s
7s Model is utilized here (Singh, 2013).
[Source: Singh, 2013]
 Shared Value: in the global market, the core business objective of Nestle is to create
value for every stakeholder and focuses on long-term business development. The
company focuses on complying with all local and international law (Nestle, 2016).
 Structure: the organizational structure of nestle is based on decentralized and
functional form. The global operations of the company are divided into three zones
of continents.
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[Source: Nestle, 2018]
 Systems: the different functions of nestle works towards optimizing end-to-end flow
to bring value to the customers. It involves different systems for hire to retire, plan
to execute, the idea to launch, source to pay and record to report.
 Style: the leader and mangers of nestle adapt style according to the situation and
employee's nature. But the autocratic form of style can be seen throughout the
global operations of nestle (Nestle, 2016).
 Staff: in 2018, there were around 308,000 employees are working in Nestle in over
80 countries and more than 260 operating companies in the world. This shows that
nestle is highly globalized and one of the largest companies in the world.
 Skills: to meet global requirements ad international standards, nestle is highly
focused on technology improvement and innovation.
 Strategy: the business strategy of the company in the global economy is to deliver
sustainable returns through its four-pillar strategy involving operational efficiency,
innovation and renovation, consumer communication and whenever, wherever,
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however (Nestle, 2016). The company emphasizes on-brand innovation and keeps a
limited number of brand.
The above analysis has suggested that the organizational structure, culture, functions,
governance and leadership at nestle is designed to deal with the requirements of the global
economy.
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EVALUATING THE INFLUENCE OF ETHICAL AND SUSTAINABLE
GLOBALISATION ON ORGANIZATIONAL FUNCTIONS
Sustainable development simply means the development that lasts for a longer time
without causing any harm to anybody. Sustainable globalisation means making wider use of
global market along with harnessing new technologies and managing links to the global
economy (Beumer et al., 2018). On the other hand, ethical globalization means performing
global business practices by integrating human right norms and standards.
Nestle is upholding ethical and sustainable practices throughout its value chain expanded
across the globe. The key drivers of Nestle sustainability and ethical practices are;
 To ensure total compliance with all international to local laws and regulations in all
the countries where the company operates or offers its products.
 To provide a leadership role for establishing the benchmark for good business
practice (Nestle 2018).
To comply with the sustainable and ethical business policies the company has to make
several strategic business decisions that also affect its different organizational functions. The
influence of sustainability and ethical practices on the key business functions of the
company.
 Human resource: the HR function of Nestle emphasizes on complying with the local
and international standards as well as company’s culture throughout its global
operations. It focuses on compliance with Laws related to ways, leaves,
discrimination at the workplace as well as developing positive work culture (Sojamo
and Larson, 2012).
 Finance: the finance function of nestle focuses on preparing the budget to meet
sustainability plans and innovations within the company. The main proportion of the
company’s revenue accounts for innovation and R&D to develop sustainable
solutions. Marketing: for product branding and awareness Nestle uses different marketing
tactics in different economies. This supports the company to comply with cultural
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difference and adopt ethical marketing practices in the different economies of the
world (Sojamo and Larson, 2012). Production: the production and operations function of Nestle in every economy is
based on the principle of adopting sustainable business practices that do not harm
the environment and local communities. Research and development: Nestle strongly emphasizes on continuous research and
development to produce more sustainable and environment-friendly solutions that
do not harm the ecosystem and communities in different operational areas of the
globe (Sojamo and Larson, 2012).
The corporate governance framework of nestle based on strong principles is dedicated to
creating long-term sustainable value. It sets the guidelines for all the functions to attain
sustainable and ethical growth in the global market.
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FORCE FIELD ANALYSIS TO ANALYSE THE DRIVING AND RESISTING FORCES
AND HOW THEY INFLUENCE DECISION MAKING
In global organizations like Nestle, there are so many different factors that affect the
functionality of the company in the global market. Some factors act as driving factors
towards the achievement of organizational goals and growth while some factors hinder the
organizational performance and acts are restricting factors. In order to identify the driving
and restricting factors towards the achievement of objectives of Nestle, a force field analysis
model could be effectively applied.
Force field model is very useful in identifying the key factors that drive or restricts the
changes and growth within an organization (Trompenaars and Hampden-Turner, 2011). To
achieve the organizational objectives of sustainable global operations of nestle the key
driving and restricting forces are as below:
[Source: Author’s Work, 2019]
DRIVING FORCES
 Technological development: the rapid change and advancements in technology can
bring new opportunities for the growth of Nestle in the global economy. For
instance, the company can effectively develop sustainable alternatives to food
packaging and transportation with technological development (Trompenaars and
Hampden-Turner, 2011). This serves as the driving factor for Nestle. Cost and Quality of Products: the good market image, quality products and low-cost
pricing strategy of Nestle act as a key driving factor for the company in the global
market.
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Global economic
conditions
Unstable political scenario
Competitors
Technological
Development
Cost and Quality of
Products
Widespread supply chain
Restricting FactorsDriving Factors Nestle
Sustainable growth and
development in the global
business environment

 Widespread supply chain: the business operations and supply chain of Nestle is
spread through the world that strengths the company’s abilities and acts as the
driving factor in its sustainable growth.
RESTRICTING FORCES
 Political scenario: an unstable political scenario in the major economies like the EU
can hinder the vision and growth of Nestle in the global business scenario.
 Economic conditions: the rising financial, environmental and social challenges are
affecting the global economy that may also hinder the growth and sustainable
business objectives of Nestle in the different economies of the world (Trompenaars
and Hampden-Turner, 2011).
 Competition: increasing competition is one of the biggest threats to nestle in the
global business environment. The key competitors of Nestle are Mondelez, Mars
Hershey’s and Kraft food.
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LO4
THE DIFFERENT WAYS DECISION MAKING CAN WORK EFFECTIVELY IN A
GLOBAL CONTEXT
The process of decision making is a cognitive process of selecting the best suitable
alternative among the several possible solutions. In a global business scenario, the process
of decision making becomes much more complex as it involves the factors of the wider
business environment. To make an effective decision in the global context the business
organizations can effectively utilize the following different ways of decision making:
 Majority decision-making process (vote): a majority decision is when the majority of
the involved person supports a particular decision through voting. This method is
useful to make quick decisions (Pettigrew, 2014). However, this process involves
certain limitations such as the majority is not always right. Hierarchical decision-making (Command): In hierarchical decision making, the
decision is taken by the higher authorities and the subordinates have to follow the
decision. It involves a top-down approach of decision making where the superiors
command the subordinates to follow the decision (Noman and Aziz, 2011). This may
affect relationships. Proportional decision-making (Consult): under this, particular person or group has
greater importance in decision making in specific areas and decision are made with
their consult. It results in better decisions and leads to greater trust. Consensus decision making (Consensus): under this, the decisions are made by
agreement rather than majority voting where everyone supports the proposed
decision ad agreed with it (Noman and Aziz, 2011). Its very time consuming and
complicated process but is very useful in making major decisions of the companies.
In Nestle decision making process are thoroughly planned and different ways of decision
making are adopted according to the severity and type of the issue.
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