Professional Documents
Culture Documents
Nestle Pakistan Research Project
Nestle Pakistan Research Project
Table of Contents
History....................................................................................................................3 Global Structure3 Organization Structure.....3 3.1. Human Resource Department...4 3.1.1. Shared Services4 3.1.2. Centre of Expertise..4 3.1.3. Business Partners.4 3.2. Brands Department5 3.2.1. Dairy.5 Mission Statement.5 Vision & Strategy..6 Core Business Activities...6 Consumer Service.6 Corporate Social Responsibility..7 8.1. Social Investments.7 8.2. Creating Shared Value..8 Human Resource Function..8 9.1. Shared Services (SS).8 9.2. Centre of Expertise...8 9.2.1. Hiring & Recruitment...9 9.2.2. Training Programs....9 9.2.3. Remuneration....10 Interview with the Human Resource Manager....10 10.1. Tasks & Responsibilities of the Manager....10 10.1.1. Chain of Command and Span of Control.............10 10.1.2. Strategic Vs Operational Roles..10 10.1.3. Role as a Business Partner..11 10.1.4. Ensuring Coordination & Integration.......11 10.1.5.
Nestl Pakistan Training & Development of Employees11 10.1.6. Ensuring Motivation & Communication with Employees......12 10.1.7. Nestl as a Global Entity.12 10.1.8. Providing Guidance.12 10.2. Observations & Evaluation12 10.3. Application of Mintzbergs Roles......12 Interview with the Category Manager...13 11.1. Tasks & Responsibilities of the Manager.13 11.1.1. Sales Situation in Different Regions...14 11.1.2. Market Research..14 11.1.3. Shopper Segmentation.14 11.1.4. Promotion Design.14 11.1.5. Determining Stock outs...14 11.1.6. Penetration Data Analysis...15 11.2. Observations & Evaluation15 11.3. Application of Mintzbergs Roles..15 Observations & Findings.16 Exhibit 117 Exhibit 218 Exhibit 319 Exhibit 420 Exhibit 521 Exhibit 622 Exhibit 723 Exhibit 824 Exhibit 925 Exhibit 10..26 Sites Used..27
Nestl Pakistan
History
It all began from a little venture by a Swiss pharmacist, Henri Nestl, to develop an alternative for infants who cannot be breastfed, with a combination of milk, wheat flour, and sugar. Not only did this formula help reduce infant mortality from malnutrition across Europe, but also formed the basis for the worlds largest food and beverages company. To this end, Nestl soon added chocolate, milk, and Nescafe coffee to its line of items through mergers and research. Nestl kept increasing the length and width of its product lines to cater to a wide range of consumer needs. As Nestl was making its operations global, it found an eager market in Pakistan. Nestl has been serving Pakistani consumers since 1988, when its parent company, the Switzerland-based Nestl SA, first acquired a share in Milkpak Ltd. Few of the milestones achieved by Nestl Pakistan and Milkpak Ltd. are mentioned in Exhibit 1.
Global Structure
At the international level, the world is divided into four parts, each reporting to the world headquarters in Switzerland. Nestl employs bottom-up as well as top-down reporting. For yearly budgeting, each territory reports next years forecasted sales to its Area Manager who after gathering all these reports sends a summary for his area to the Regional Manager. Regional and Zonal Manager do the same process until National Sales Manager has the forecasted sales for the entire country. Target sales are then reported down to each zone, from where it is sent to each region, and the process continues until each territory has its target sales (Exhibit 2).
Organization Structure
Nestl Pakistan follows a flat, matrix organizational structure (Exhibit 3). The departments are divided function-wise and product-wise. All the products use different functional departments, and all the functional departments have specific product departments within them. The span of control is wide, as each department head has many direct and indirect reporting relations with his subordinates. Also, as in a pure matrix form, nearly all employees have two or more departments to report to, directly or indirectly. The Managing Director of Nestl Pakistan reports directly to the Head Office in Switzerland, and gets guidance and objectives from them. Directly under the Managing Director are different functional departments: Business Executive Managers Head of Human Resource Department Head of Sales Department Head of Supply Chain
Nestl Pakistan Head of Food Services Department Head of Technical Department Head of Finance Department Head of Corporate and Legal Department
The following departments have an indirect reporting relationship with the Managing Director: Head of Nutrition Head of Waters UNDP Project The first two departments are required to report directly to the Head Office, while the UNDP Project comes under the United Nations. Since this paper aims to analyze the Human Resource Function and the Brand Function in detail, the following is the departmental structure of the aforementioned functions.
Shared Services
Shared Services are responsible for data and record collections of all the employees of Nestl Pakistan. They handle the payrolls, division of provident funds, medical allowances, travel allowances, and all other administration of the employee funds.
Centre of Expertise
The Centre of Expertise is the department responsible for recruitments, remunerations and organization development through Nestls training programs, both local and international.
Business Partners
The Business Partners form the link between different human resource activities of the organization, and the functional departments they are working with. The Human Resource ManagerCommercial is a Business Partner for Sales and reports to the Head of Sales Department. He is supposed to form a link between the Human Resource Department and the Sales Department, making sure all decisions made by the Sales Department are in line with the Companys goals and policies.
Nestl Pakistan
Brands Department
The department for Brands has been subdivided into departments for each product line that Nestl produces. Each of these product lines comes under a Business Manager, who has two Brand Managers under him. Each Brand Manager is responsible for specified products under a certain product line, and has two Assistant Brand Managers reporting to him. In each of the units that are under the Business Managers, there is a Category Manager, who is equivalent in position to the Brand Manager. A Category Manager reports indirectly to the Business Manager, and directly to the Head of Sales Department.
Dairy
Dairy is the chosen product line for the project. Dairy is divided into four different product lines, which are further divided into units each headed by a Business Manager. The product lines of dairy are: Child Nutrition Tea Creaming Adult Health and Wellness Chilled Dairy
The first two are responsibilities of one Business Manager and the last two of the other. The Category Managers job is to form a link between the Brand Manager and the Sales Manager from the Sales Department.
Mission Statement
At Nestl, we believe that research can help us make better food so that people live a better life. Good Food is the primary source of Good Health throughout life. We strive to bring consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological needs. In addition to nutrition, health and wellness, Nestl products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestl helps provide selections for all individual taste and lifestyle preferences.
Nestl Pakistan Research is a key part of our heritage at Nestl and an essential element of our future. We know there is still much to discover about health, wellness and the role of food in our lives, and we continue to search for answers to bring consumers Good Food for Good Life.
Consumer Service
Nestl Pakistan Nestl believes in providing efficient consumer service as part of its strategy. And this consumer service is not only limited to handling consumer complaints, rather it revolves around building a long-term holistic relationship with consumers. In fact, for Nestl, the organization chart (Exhibit 5) is upside down. The consumers, and not the managers, lie at the top of the hierarchy. Thus all the activities aim to provide timely and efficient response to consumer needs and fulfilling their wants in the best possible manner. Nestls advanced consumer contact management system CONSO+ helps it in customer relationship management, and forging close, long term and trustworthy ties with its consumers. Apart from the more formal lines of communication, the company also has the human element-the field staff, which remains in contact with the consumers. Thus efficient consumer service goes a long way in ensuring consumer loyalty, as well as guaranteeing higher revenues per consumer, from more consumers.
Social Investments
Nestl Pakistan complies with Environment Act (1997), and tries to ensure that at every stage of its operations, the environmental impact is minimal. All Nestl factories are ecoefficient (more production for less resource consumption, waste, and emissions) and have environment committees that manage and review environment issues. Nestl Pakistan responded immediately to the earthquake that struck Northern Pakistan in October 2005 by providing its infra-structure and resources to work in the affected areas in collaboration with Pakistan Air Force to distribute goods worth over Rs. 20 million. Nestle and its employees together also donated about Rs. 36 million for the rehabilitation process. Nestl Pakistan has wide range of activities under its social investment programme. A brief outline of each activity is as follows: Nutrition program for mothers and children Financial support to victims of natural disasters Well and hand pump installation projects Help centre for farmers 8
Nestl Pakistan School rehabilitation and education advancement Research and development initiatives
Centre of Expertise
Nestl Pakistan The Centre of Expertise is the department in Human Resource Function which is responsible for recruitments, organization development (training programs) and remuneration.
Training Programs
Training is seen as an ongoing process. It doesnt only involve training sessions and lectures, but day-to-day interactions with the superiors and fellow employees, absorbing their knowledge and ideas: guidance and coaching by managers is a given. Knowledge also comes through the tasks assigned: simple learning-by-doing and on-the-job training. Apart from that, Nestl is committed to enhancing employee skills and competencies through formal training programs. These are selected according to individual requirements and the job they are working for. The candidates are selected based on their performance, potential and personal development goals and recommendations come from the Head of Human Resource Department and the Business Partners of respective departments. The Centre of Expertise is responsible for designing and providing the requisite training once the candidate and his needs are identified.
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Nestl Pakistan The programs are not just limited to functional specific training, for example sales training, but also for augmenting interpersonal skills and image building, in short, the softer skills. The training could be local, regional or international, based on need and performance. At the International Training Centre in Switzerland, the trainee has the opportunity to meet managers and leaders from all over the globe, getting training sessions from even the CEO, Peter Brabeck-Letmathe.
Remuneration
Nestls remuneration is benchmarked against other organizations and surveyed on a regular basis to ensure that it remains competitive and fair. The policy needs to be framed keeping local market, individual performance, skills and potential for development in mind. This is what they call the Total Competitive Remuneration. The managers task is to ensure that the remuneration structure facilitates the implementation of flat organizational structure and be flexible so as to be able to adapt to the evolution. It is also the managers task to evaluate remuneration of each staff member taking into account her/his professional performance and her/his specific responsibilities. These specialists need to know about stock options, and how to compare and compensate the employee payroll system. They need to make regular changes in their strategies and find new ways of operating to increase the efficiency of the whole organization. This helps ensure not just the companys growth, but motivation for individual growth as well.
Tasks and Responsibilities of the Manager Chain of command and Span of control
Mr Janjua is a two boss manager in the matrix structure. He has a dual chain of command and reports to the Head of Human Resource Department and the Head of Sales Department. Two people report directly to him. He also shares targets with the recruitment centre and can be held accountable for its actions. He comes to the forefront as the first line of contact person for the Shared Services and recruitment.
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Nestl Pakistan The Human Resource Department is responsible for providing tools, processes and procedures to the managers and then its their responsibility to apply it according to the demand of the situation. He ensures those tools are being used and implemented effectively.
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Nestl Pakistan objectives of the training plan to the trainees. For example, should the training be provided in interpersonal skills or should it be provided in specific functional skills. He then helps in identifying and nominating a pool of people who can benefit and implement the training practically in the near future so that the benefits are maximized for the organization as a whole.
Providing Guidance
His role also focuses on providing guidance to the employees when needed e.g. that when opinion surveys had to be filled out for all the employees; he provided them with an orientation to ensure there were no confusions as regards to the survey.
Nestl Pakistan Leader Liaison are being taken without keeping the organization objectives in mind. He is constantly involved in motivating and ensuring good communication with the employees and ensures they have a sense of direction and they feel part of the organization. His role doesnt directly deal with maintaining external relations. But in case of selection and assessment he can make better decisions with the help of his contacts.
Informational Monitor He has to monitor that the plan of actions and strategies of the departments are in line with Nestls vision i.e. he has to ensure consistency and coordination. Disseminator He communicates the recruitment needs of other departments to the Human Resource Department. Spokesperson He communicates the needs of the training programmes to the trainees. He acts as a link between the external environment and the organization. Decisional Entrepreneur He is continuously involved with different departments while making future plans or changes in the way things work. Disturbance In order to ensure that departments objectives are in line with the Handler organization, he may have to take drastic steps as he forms the link between the centre and the subunits. He may have to take decisions on a short notice as he is actively involved in decision making processes. Negotiator He intervenes in case of conflicts between two parties. Resource He matches the supply of labor with the demand of different Allocator departments. He is also involved in the selection process of the potential employees.
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Market Research
Mr Saqibs job description also requires him to carry out market research on a regular basis. This helps in identifying the changing consumer demands and tastes. This also enables the company to review their strategy so that it synchronizes with the companys goals and objectives. In this era of fast changing trends it has become almost impossible for an organization to survive without being aware of the consumers needs. Market research helps to serve the organizations purpose in this regard.
Shopper Segmentation
An interesting task that is performed by the Category Manager is to analyze the shopper segmentation i.e. evaluating various customers according to their status, nutritional needs, age, gender etc and which channel are they prone to buy from. For instance, a huge percentage of population buying from the grocery stores such as H. Karim Buksh and AlFatah are working mothers. Thus products that cater to the needs of working mothers should be distributed to various grocery stores. Moreover, keeping in view the short shelve life of dairy products it becomes vital to distribute appropriate products to each channel, which meet the needs of each channels ultimate consumers.
Promotion Design
Moreover, the Category Manager also being responsible for analyzing the success of promotional activities has to evaluate the pre-promotion and the post-promotion scenario. This enables him to analyze the potential of a particular promotional activity and the impact it has on the sale of products, thus making certain that the promotional activity is not detrimental to the profitability of the product.
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Nestl Pakistan buy Olpers or Haleeb. Thus, its pivotal for the companys profitability and success to ensure that no stock outs occur. Mr Saqib has to figure out the source of the problem. He says, The strategy is not to find the solution to the problem but to find the person who has the solution. The idea is then to sit down and come to a mutual decision on how to go about solving it. One should have an open mindthe fault can be at your own end too.
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Nestl Pakistan activities they are required to carry out and is in continuous contact with them. The Category Manager has to maintain good relationship with the distribution department and with external retailers for the smooth running of the business operations. Moreover, maintaining a good relationship enables to gather relevant and significant information that bolsters the organization growth.
Liaison
Informational Monitor The main task of the Category Manager is to analyze the various factors affecting the consumer demands. For this purpose he seeks information from the relevant personnel at various channels. Moreover, he also coordinates with the sales and distribution department to gather information about the sale of a particular product. Disseminator As a disseminator, the Category Manager communicates to the Business Manager all the information gathered from either the personnel at various channels or the personnel working in the sales and distribution department. Decisional Disturbance In times of difficulty, the Category Manager takes steps to take the Handler organization out of trouble. For instance, when Olpers came into the market, it turned out to be a strong competition for Nestl. The Category Manager analyzed the strategy adopted by Olpers and took appropriate steps to counter it.
Nestl Pakistan
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Nestl Pakistan
NATIONAL
ZONAL
North
South
Center
Afghanistan
REGIONAL
Lahore
AREA
Muzang
TERRITORY
Samnabad
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Nestl Pakistan
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Nestl Pakistan
BOSTON BOSTONCONSULTANCY CONSULTANCYGROUP GROUPMATRIX: MATRIX: Analyzing Current Strategic Business Analyzing Current Strategic BusinessUnits Units
Relative Market Share
High Low
Stars
Milkpak Nesvita Everyday Yogurt Low
Dogs Dogs
High 21
Nestl Pakistan
Managers
Board of Directors
22
Nestl Pakistan
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Nestl Pakistan
Planning Planning Exhibit 7 (Use of Management Functions & Use of Key Management Skills)
Technical Skills
Human Skills
Conceptual Skills
Nestl Pakistan
External Analysis
OPPORTUNITIES Exemption of dairy sector from taxes Compliance with environmental laws Social responsibility & social investment programs to build a positive corporate image Partnerships with farmers for sustainable agriculture and providing farm assistance to create greater value for all High brand value of Nestl, which denotes quality; this cannot be matched by rivals such as Tarang A larger consumer base can be acquired as much population still uses Gowalla milk Entry into more niches possible by defining finer market segments. Like low cal milk, more innovative products can be launched, such as foods for cardiac patients, drinking yogurt, etc. These are value added products in the premium market that offer consumers more value for more money and can fetch higher revenues for the company. Furthermore, the more differentiated the products, the more difficult it is for rivals to copy.
THREATS The soaring inflation rate is eroding the purchasing power of consumers Dependent on distribution channels and supermarket shelves, which can be acquired by competitors as well, who can influence retailers The bargaining power of suppliers increases as demand for milk rises, so price rises. Engro offers subsidized fertilizers for providing milk to Olpers. The industry is fast growing; very low barriers to entry, new competitors are springing up everyday. Milk is not differentiated, in cost or product variety, so consumers are indifferent about buying a Milkpak or Olpers. After Nestl creates a market, rival firms move in, e.g. UHT milk was not widely used before Nestl,
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Nestl Pakistan
but then Olpers, GoodMilk all began to take advantage of Nestls marketing. Adverse public opinion possible due to links to Israel.
Exhibit 9
(Porters Model) Threat of New Entrants For value added products barrier to entry are higher because these products connect with the customer on an emotional level. Gaining confidence and trust of the customers is very difficult. Brand loyalty is very which means a new entrant will have difficulty in making a place for itself. Furthermore even if a new entrant does make some impact on its consumers it will have to sell at least 750,000 tonnes of milk to create one percent market share for itself. Nestl enjoys monopoly power over powdered tea whitener market because no company has yet been able to develop this technology.
Suppliers The un-processed milk is collected from farmers and gowallas from rural areas. There are many collection centers across Punjab. With the entry of new milk firms who are willing to pay higher prices and as well as provide them with other attractive incentives, the price of this milk is going up. An example of this is that of Olpers of Engro food Company who have had long standing relationship with these farmers and are willing to give them fertilizers at subsidized rates in exchange to their commitment to sell their milk only to Olpers.
COMPETITORS Haleeb(CBL Foods) Olpers( Engro) GoodMilk( ShakarGanj Foods) Threat of Substitutes The main substitute is the Farmers (Gowalla) milk U.H.T treated milk caters to only 9% of the populations milk needs. Nestle constitutes, 38% Olpers19%, and Haleeb 28% of that 9% of the total milk market.
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Customers Dependent on products. Young health conscious customers for Nesvita. House holds for milkpak and yougurt. Offices, institutions and households for Everyday 26 Infants and kids for Nido
Exhibit 10 (Minutes
the Meeting held on h May 2008)
Nestl Pakistan The group coordinator arranges meetings and holds voting in case of difference of opinions within the group. All the group members suggested different organizations for the project but we finally decided upon Nestl Pakistan. Till now we have had around three meetings in which we decided Name of the Organization Contacts within the organization and whom to interview. o Human Resource Manager o Brands Manager Coordinating amongst the team members for a feasible time for the interviews. Tentative dates are 14th May and/ or 15th May 2008. The way and structure of the interviews to be held. We have designed a tentative questionnaire.
Three people will be conducting interviews with the respective managers. We will then bring together all information and apply different managerial theories on them and critically examine the structure and functioning of different departments.
Sites Used
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Nestl Pakistan 1. http://www.nestle.pk/community/responsibility-to-environment.aspx 2. http://www.nestle.pk/community/earthquake-relief.aspx 3. http://www.nestle.pk/community/welfare-projects.aspx 4. http://www.nestle.pk/community/creating-shared-value.aspx 5. http://www.nestle.pk/index/nestle-pakistan-milestone.aspx 6. http://www.nestle.pk/index/strategies.aspx 7. http://www.research.nestle.com/tools/mission_statement.html 8. http://www.nestle.com/AllAbout/AllAboutNestle.htm
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