Impact of Nestle's Business Strategy on Multinational Network System

This report provides an in-depth analysis of Nestle's global business strategy, examining its organizational approach, marketing tactics, and the evolution of its multinational network system. The analysis begins with Nestle's initial focus on decentralization and local taste preferences, particularly exemplified by Nescafe's adaptation to local markets. The study then explores Nestle's shift towards a less homogeneous business strategy, driven by technological advancements and changing customer demands, including the implementation of marketing mix strategies and cost-efficiency measures. Furthermore, the report discusses Nestle's knowledge transfer strategies, such as the transformation of Nestle Purina PetCare, and the impact of subsidiary networks on management hierarchy and customer service. Finally, the report evaluates the transition from hierarchical structures to network hubs, emphasizing the role of technology and automation in streamlining operations and enhancing internal relations. The report concludes by highlighting the importance of employee training in adapting to technological advancements within the company.

Running head: GLOBAL BUSINESS STRATEGY
Global Business Strategy
Name of the Student
Name of the University
Author’s Note

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GLOBAL BUSINESS STRATEGY
Question 1:
As per the initial organizational approach of Nestle, decentralization of local taste along
with providing minor importance on technology was the primary concern. As per marketing
strategy and policy of Nestle Nescafe is reared as per the local needs and demands of the
customers1. For an example, Russian taste and flavor of Nescafe is very different from the taste
of Eastern Europe. As a result, organizations are successful enough in fulfilling the current trends
of demands of local customers. On the other hand, the current case study ensures that Nestle
never intends to implement information technology within the entire operation process.
Question 2:
In this specific question, several eminent scholars have opined various points of views.
As emphasized by Kim et al., Nestle at the initial stage intended to follow homogeneous
business strategy rather than multi-dimensional approach. It is however undeniable that with the
advancement of technology the needs and demands of the customers are changing gradually. In
this kind of situation, Nestle with the upgrading progress of globalization has rendered their
business strategy towards less homogeneous. Business leaders by applying marketing mix
strategy have identified the current market demand.
In order to maintain cost efficiency Nestle has streamlined its back office activities. The
number of factories has been reduced on behalf of the business executives2. Marketing managers
have invested sufficient number of budget for advertising and promotional activities with the
help of which the number of target market has been circulated all over the World. The use of
1 Berthon, Pierre R., et al. "Marketing meets Web 2.0, social media, and creative consumers: Implications for
international marketing strategy."Business horizons 55.3 (2012): 261-271.
2 Baker, Michael J. Marketing strategy and management. Palgrave Macmillan, 2014.

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information and technology has been raised within the entire operation process. Naturally, the
entire service process of Nestle has become very much dynamic as well as rhythmic.
Question 3:
Nestle is at the current scenario transferring knowledge beyond going the strategic
subsidiary. As an example, Nestle Purina PetCare was the market leader in the year 2004 with
the 31 percent market share of complete food sales. In order to catch the entire market demand,
business managers of Nestle started to apply in the concept of small serving3. The transformation
from multi serve can to small serve can became very much popular. Therefore, people belonging
to different geographical boundaries showed their interest in purchasing the products as well as
services of Nestle. As a result, the range of target customers has also been raised after the
transformation of knowledge.
Question 4:
The overarching term subsidiary network implies that a business partially or entirely owned by
parent company. At the initial stage Nestle was under control of CEO as well as chairman. After
2007, the company announced that the role of CEO and the chairperson would be different for
keeping a constant control over the entire process of business. At the initial stage, Nestle failed to
control a proper balance between customers’ demand and supply. After the implementation of
subsidiary network, the entire management hierarchy has been separated from a different level.
The business managers are successful enough in controlling the entire business after
3 Armstrong, Gary, et al. Marketing: an introduction. Pearson Education, 2015.

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implementing subsidiary network4. The customers are getting superior quality of service at the
proper time.
Question 5:
After evaluating the current business scenario, it has been observed that the business
executives have changed the typical hierarchical strategy to network hubs. The entire operation
process is not dependent on the higher authority. With the advancement of technology, the
automation system has been implemented within the business5. Therefore, the employees tend to
keep a constant update on the overall business process with the help of this network hubs. On
one hand, Nestle does not have to invest large amount of money for the cost of labor. On the
other hand, the employees do not have to invest sufficient time for maintaining manual database.
This particular study has focused to make an in-depth analysis on the overall impacts of Nestle’s
renewed implementation of multinational network system. With the help of this network,
implementation customers are getting services within time6. The internal relation between the
service roviders and the service users has become very much effective. Some of the eminent
scholars have pointed out in this regard that Nestle should focus on providing a training and
development session to its employees so that they can become habituated with the advancement
of technology.
4 Morgan, Neil A., Constantine S. Katsikeas, and Douglas W. Vorhies. "Export marketing strategy implementation,
export marketing capabilities, and export venture performance." Journal of the Academy of Marketing Science 40.2
(2012): 271-289.
5 Eggers, Fabian, David J. Hansen, and Amy E. Davis. "Examining the relationship between customer and
entrepreneurial orientation on nascent firms’ marketing strategy." International Entrepreneurship and Management
Journal 8.2 (2012): 203-222.
6 Kim, K. H., Jeon, B. J., Jung, H. S., Lu, W., & Jones, J. (2012). Effective employment brand equity through
sustainable competitive advantage, marketing strategy, and corporate image. Journal of Business Research,65(11),
1612-1617.

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GLOBAL BUSINESS STRATEGY
Reference List:
Armstrong, Gary, et al. Marketing: an introduction. Pearson Education, 2015.
Baker, Michael J. Marketing strategy and management. Palgrave Macmillan, 2014.
Berthon, Pierre R., et al. "Marketing meets Web 2.0, social media, and creative consumers:
Implications for international marketing strategy."Business horizons 55.3 (2012): 261-271.
Eggers, Fabian, David J. Hansen, and Amy E. Davis. "Examining the relationship between
customer and entrepreneurial orientation on nascent firms’ marketing strategy." International
Entrepreneurship and Management Journal 8.2 (2012): 203-222.
Kim, K. H., Jeon, B. J., Jung, H. S., Lu, W., & Jones, J. (2012). Effective employment brand
equity through sustainable competitive advantage, marketing strategy, and corporate
image. Journal of Business Research,65(11), 1612-1617.
Morgan, Neil A., Constantine S. Katsikeas, and Douglas W. Vorhies. "Export marketing strategy
implementation, export marketing capabilities, and export venture performance." Journal of the
Academy of Marketing Science 40.2 (2012): 271-289.