We at Nestle

QURAT-UL-AIN SHARIF
MBE-09-56
Organization
Structure & Design
NESTLE
Organizational Structure & Design 21 , Jan , 2011
Group Members
1. QURAT-UL-AIN SHARIF MBE-09-56
2. MUSARRAT SANA MB-10-10
3. HUMAIRA RAFIQUE MALIK MB-10-63
4. SAAD SHEIKH MBE-09-58
5. FATEYMA WYNE MB-10-18
6. QURAT-UL-AIN SAFDAR MB-10-45
7. MEHWISH RASOOL MB-10-12
8. ZEESHAN FARUQI MBE-09-37
9. EHTISHAM RAFIQUE MB-10-40
10.NADIA FAIZ MB-10-08
11.FATIMA ZAHID Mb-10-13

What is Organization Structure
An organizational structure consists of
activities such as task allocation,
coordination and supervision, which
are directed towards the
achievement of organizational aims.

What is Organization Design
Organization Design is a formal,
guided process for integrating the
people, information and technology
of an organization.

Relation between Organization Structure
and Design
Two important factors

• Organizational structure
• Organizational Design
These two components work together, they
create a productive and efficient working
environment where employees are
motivated and customers are satisfied.

Let’s take a look at “NESTLE” Company

“NESTLE” Company Introduction
“Nestlé” is a Swiss-German word which means
“Little Nest” which is its trademark
Nestlé is the worlds’ number one food company

5th largest company of the world according to its
turn over
2 million 31 thousand people employed from all
over the world
Present in 81 countries of the globe having 522
factories
Over 700 products renovated or innovated in the
past five years.
“NESTLE” in Pakistan
Nestlé MilkPak Limited (NML) was incorporated in
Pakistan under the Companies Ordinance, 1984 & listed
on Karachi and Lahore stock exchanges since 1980.
Joint venture between Nestle Switzerland and MilkPak

Limited came about in 1988.
Nestlé Pure Life was launched in Pakistan in 1998

Nestle has two factories in Pakistan for the production
of different food items.
1. Sheikhupura near Lahore

2. Kabirwala near Multan

“NESTLE” Company Mission Statement
" At Nestlé, we believe that

research can help us make better
food so that people live a better
life”.

“NESTLE” Company’s offerings:

Elements of organization structure
 Work Specialization.
 Departmentalization.
 Chain of command.
 Span of control.
 Centralization.
 Formalization.

MUSARRAT SANA
MB-10-10
Work
Specialization

What is work Specialization
It refers the degree in
which tasks in an
organization are
subdivided into separate
jobs.
• Also known as Division of
Labor.

• Adam Smith
• One of the Henry Fayol’s 14 principles
• People considered it as an unending
source of production

POSITIVE ASPECTS
• Increased efficiency
• Increased output
• Less wastage
• Time saving

NEGATIVE ASPECTS
• Narrow outlook
• Bore down
• Absenteeism
• Increased turnover

Today`s view
• Important mechanism of an organization
• Not considered as an unending source of
productivity
• Intense use creates problem
• Applied in health care centers

NESTLE`
• Broadened scope of employees
• Cross functional movements

Conclusion
Theory of Work Specialization
is widely used in every aspects
of production and even in the
service Industry

HUMAIRA RAFIQUE MALIK
MB-10-63
DEPARTMENTALIZATION
process in which an
organization is structurally
divided by combining jobs in
departments according to some
shared characteristics or basis.

FORMS OF DEPARTMENTALIZATION
FUNCTIONAL GEOGRAPHICAL
PRODUCT PROCESS
CUSTOMER

FORMS OF DEPARTMENTALIZATION
• Process
Functional
– Grouping jobs on
by functions
the basis of
performed
product or customer flow
• Customer
Product
– Grouping jobs by type
product
of customer
line and needs
• Geographical
– Grouping jobs on the basis of territory or geography
10–26
Functional Departmentalization Structure
Nestle`
Public
Manufacturing Finance
Relations
Human
Purchasing Distribution
Resources

Functional Departmentalization
ADVANTAGES
• Efficiencies from putting together similar
specialties and people with common skills,
knowledge, and orientations
• Coordination within functional area
• In-depth specialization
DISADVANTAGES
• Poor communication across functional areas
• Limited view of organizational goals

Geographic Departmentalization
NESTLE`
Islamabad Karachi Kabirwala Sheikhupura

Geographical Departmentalization
ADVANTAGES
• More effective and efficient handling of specific
regional issues that arise
• Serve needs of unique geographic markets better
DISADVANTAGES
• Duplication of functions
• Can feel isolated from other organizational areas

Product Departmentalization Structure
Nestle`
Dairy
Bottled Prepared Baby foods
products
water food

Product Departmentalization
ADVANATGES
• Allows specialization in particular products and
services
• Managers can become experts in their industry
• Closer to customers
DISADVATAGES
– Duplication of functions
– Limited view of organizational goals

Customer Departmentalization Structure
Nestle`
Retail On-Line Institutional Government

Mail Order
Stores Sales Sales Contracts

Customer Departmentalization
ADVANTAGE
• Customers’ needs and problems can be met by
specialists
DISADVANATAGE
• Duplication of functions
• Limited view of organizational goals

NESTLE`
Nestle` do not follow process

departmentalization.

Process Departmentalization
Plant Superintendent
Planning & Lacquering Inspection &

Sawing Assembling Finishing
Milling & Sanding Shipping
Department Department Department
Department Department Department
Manager Manager Manager
Manager Manager Manager

Process Departmentalization
ADVANTAGE
• More efficient flow of work activities
DISADVANTAGE
• Can only be used with certain types of products

SAAD SHEIKH
MBE-09-58
Chain of Command
The continuous line of

authority that extends
from upper levels of
an organization to the
lowest levels of the
organization and
clarifies;
who reports to
whom

Chain of Command
• Authority
– The rights inherent in a managerial position to
tell people what to do and to expect them to do
it
• Responsibility
– The obligation or expectation to perform.
Responsibility brings with it accountability (the
need to report and justify work to manager’s
superiors)

Chain of Command
• Unity of Command
– The concept that a person should have one boss
and should report only to that person
• Delegation
– The assignment of authority to another person
to carry out specific duties

Here the Hierarchy is given in detail

FATEYMA WYNE
MB-10-18
Span of Control
• Number of subordinates that can be

adequately supervised by one
supervisor
• Span of control consists of two

dimensions
– Narrow Span of control
– Wide span of control

Narrow Span of control implies
– tall structure
– vertical organization

Narrow span of control
The Manager supervises a small number of
people or subordinates
Manager 1
Employee Employee
Employee
Employee Employee
THE SPAN OF CONTROL IS AT LEAST 2

Advantages of Narrow Span of control
• Close supervision
• Chance to grow
• Control employees
• boosts a high level of management skill
• Group cohesiveness
• Degree of specialization

Disadvantages of Narrow span of control
• Decisions can take a long time to

reach bottom of hierarchy
• Coordination Gap between
managers and subordinates
• High costs due to many levels

WIDER SPAN OF CONTROL
implies
– Flat structure
– Horizontal organization

Wide span of control
The Manager supervises a large number of
people
Manager 1
Employee Employee Employee Employee Employee Employee
Employee Employee Employee Employee Employee
THE SPAN OF CONTROL IS AT LEAST 5

Advantages of Wide span of control
• No ambiguity in message hearing or

confusion in understanding
• the message reaches more
employees faster
• It costs less money to hire less
managers
• Subordinates are highly trained

Disadvantages of wide span of control
• BURDEN OF DECISION MAKING
• LOSS OF CONTROL
• LACK OF PERSONAL CONTACT

Factors determining span of control
• Competence of Manager
• Skill of employees
• Technology
• Preferred style of manager
• Job Complexity
• Job Similarity
• Physical Proximity

Nestle`
Nestle has a hybrid span of control.
We observe a trend of
• narrow range in Lower level
management
• wide range in upper level
management
As in Nestle Pakistan ,hierarchy is as
follow

Managing Director
Head
of Marketing
Head
of sales
Zonal Manager Zonal Manager Zonal Manager

North Central South
10 RSM 10 RSM 10 RSM 10 RSM 10 RSM 10 RSM
20 AM 20 AM 20 AM
30 TI 30 TI 30 TI

QURAT-UL-AIN SAFDAR
MB-10-45
Centralization and Decentralization

Organization Structure (cont’d)
• CENTRALIZATION
• The degree to which decision-making

is concentrated at a single point in the
organizations.
.

• DECENTRALIZATION
– Organizations in which decision-making
is pushed down to the managers who
are closest to the action.
– EMPLOYEE EMPOWERMENT

Factors that Influence the Amount of
Centralization
 MORE CENTRALIZATION
 Stable Environment .
 Inexperienced Lower-level managers
 Low employee empowerment
 Significant decisions
 risk of company failure
 Large company

Factors that Influence the Amount of
Decentralization
 MORE DECENTRALIZATION
 Complex Environment
 experienced lower level management
 Lower-level managers want a voice in decisions.
 Minor Decisions
 Open Corporate culture to managers
 Geographically dispersed

Decentralized
High employee
empowerment
‘’Nestle on the
Move’’
Mehwish Rasool
MB-10-12
What is Formalization?
• How standardized organization's
jobs are
• extent to which employee
behavior is guided by rules and
procedures

When there is high formalization
• Explicit jobs descriptions
•Numerous rules
•Clearly defined procedures for work
processes
•Little discretion
-what's done
-when it's done
-how it's done.

When there is low formalization
In such organizations employees have

more discretion in how they work.

Why formalization is necessary?
For consistency and control.
But many organizations today rely

less on strict rules to regulate
employee behavior

• There are numerous situations in which
rules may be too restrictive, many
organizations have allowed employees
some latitude, giving them sufficient
autonomy to make decisions that they
feel are best under the circumstances.
• This doesn't mean throwing out all
organizations rules.

Nestle
• Factory Act is used for labors
• For other employees, there are
company policies.
• Three core documents
1. Misconduct
2. Grievances
3. National corporate

Nestle
• Nestle continues to maintain its
commitment to local culture
• It follows key PRINCIPLES such as:
• Fair Code of conduct
• No technical theft
• No formula theft
• No blood relations in the same department
• No discrimination of gender, race and
religion

story
Nestle believes in the
quality control and never
compromise on it.

Zeeshan Faruqi
MBE-09-37
Organizational Designs
 The objective of organizational design is

to provide, maintain, and develop
organizational structures that work
toward the achievement of corporate
goals.
 The selection of an organization structure

that best fits the strategic goals of the
business.

Organizational Design
Decisions
MECHANISTIC ORGANIC
A rigid and tightly controlled Highly flexible and
structure adaptable structure
• High specialization • Non-standardized jobs
• Rigid departmentalization • Fluid team-based
structure
• Narrow spans of control
• Little direct supervision
• High formalization
• Minimal formal rules
• Centralization
• Decentralization
• Limited information
• Open communication
network (downward)
network
• Low decision participation
• Empowered employees

Conti ngency factors
• Appropriate structure is depends on
four contingency variables:
1. The organization’s strategy

2. Size
3. Technology
4. Degree of environment uncertainty

Contingency Factors (cont’d)
• STRUCTURAL DECISIONS ARE INFLUENCED BY:
– Overall strategy of the organization
• Organizational structure follows strategy.
– Size of the organization
• Firms change from organic to mechanistic organizations
as they grow in size.
– Technology use by the organization
• Firms adapt their structure to the technology they use.
– Degree of environmental uncertainty
• Dynamic environments require organic structures;
mechanistic structures need stable environments.

• STRATEGY FRAMEWORKS:
– Innovation
• Pursuing competitive advantage through meaningful
and unique innovations favors an organic
structuring.
– Cost minimization
• Focusing on tightly controlling costs requires a
mechanistic structure for the organization.
– Imitation
• Minimizing risks and maximizing profitability by
copying market leaders requires both organic and
mechanistic elements in the organization’s structure.

• STRATEGY AND STRUCTURE

– Achievement of strategic goals is facilitated
by changes in organizational structure that
accommodate and support change.
• SIZE AND STRUCTURE
– As an organization grows larger, its structure
tends to change from organic to mechanistic
with increased specialization,
departmentalization, centralization, and rules
and regulations.

• TECHNOLOGY AND STRUCTURE
– Organizations adapt their structures to their
technology.
– Woodward’s classification of firms based on the
complexity of the technology employed:
• Unit production of single units or small batches
• Mass production of large batches of output
• Process production in continuous process of outputs
– Routine technology = mechanistic organizations
– Non-routine technology = organic organizations

• Environmental Uncertainty and Structure
– Mechanistic organizational structures tend to
be most effective in stable and simple
environments.
– The flexibility of organic organizational
structures is better suited for dynamic and
complex environments.

Nestle
• Nestlé adopted Organizational Designs focused
on Mechanistic approach because
– The PURPOSE of organizational design is to
create structures that work well in diverse
locations, while aiding coordination, and
allowing for quick responsiveness to market
demands.
– Organizational design helps to create a
workable structure of tasks and positions
that create the physical organizations and
jobs efficient and effective.

Nestle Achievement
• Today we are fully integrated in Pakistani life,
and are recognized as producers of safe,
nutritious and tasty food, and leaders in
developing and uplifting the communities in
which we operate.
• We at Nestlé Pakistan ensure that our products

are made available to consumers wherever in
the country they might be. Convenience is at
the heart of the Nestlé philosophy, and our aim
is to bring products to people's doorsteps.

EHTESHAM RAFIQUE
MB-10-40
Common Organizational Designs
1. TRADITIONAL ORGANIZATIONAL
DESIGNS
– Simple Structure
– Functional Structure
– Divisional Structure
2. CONTEMPORARY ORGANIZATIONAL
DESIGNS
– Team Structures
– Matrix and Project Structures
– The Boundaryless Organizations

Common Organizational Designs
• TRADITIONAL DESIGNS
– Simple structure
• Low departmentalization, wide spans of control,
centralized authority, little formalization
– Functional structure
• Departmentalization by function
– Operations, finance, human resources, and product
research and development
– Divisional structure
• Composed of separate business units or
divisions with limited autonomy under the
coordination and control the parent corporation.

Organizational Designs (cont’d)
• CONTEMPORARY ORGANIZATIONAL DESIGNS

– Team structures
• The entire organization is made up of work groups or
self-managed teams of empowered employees.
– Matrix and project structures
• Specialists from different functional departments are
assigned to work on projects led by project managers.
• Matrix and project participants have two managers.
• In project structures, employees work continuously on
projects; moving on to another project as each project
is completed.

An Example of a Matrix Organization

Organizational Designs (cont’d)
• CONTEMPORARY ORGANIZATIONAL
DESIGNS (CONT’D)
– Boundary less Organization
• Flexible organizational designs
• Unstructured organizational designs
• Removes INTERNAL boundaries:
– Eliminates the chain of command
– Team Empowerment
• Removes EXTERNAL boundaries:
– Uses virtual, network, and modular organization

NESTLE` IS A
BOUNDARYLESS
ORGANIZATION

NADIA FAIZ
MB-10-08
The Learning Organization
• ‘’An organization that creates an
environment conducive to learning
and problem solving’’
• Capacity of continuously
-learning
-adapting
-changing

The Learning Organization (cont’d)

Organizational Design
• Boundary less
• Teams
• Empowerment

Organizational Culture
• Strong mutual relationships
• Sense of community
• Trust

Leadership
• Shared vision
• Collaboration

Information Sharing
• Open
• Timely
• Accurate

Nestle
• A Boundary less organization
• High employee empowerment
• Strong mutual relationships among
employees and within managers
• Trust on employees
• Team work

Fatima Zahid
Mb-10-13
Today’s Organizational Design Challenges
• Keeping Employees Connected

– Widely dispersed and mobile
employees
• Building a Learning Organization
• Managing Global Structural Issues
– Cultural implications of design
elements

Keeping employees connected
To keep widely dispersed and mobile
employees connected to the
organization.
IT ’s impact.
• Hand held devices

• Video conferences using web cam
• Cell phones
• wireless networks

SECURITY ISSUE
• Companies must protect their
important and sensitive
information.
• Software and other disabling

devices have minimized security
issues.

Building A Learning Organization
• It’s a major challenge

• The only sustainable source of
competitive advantage

MANAGING GLOBAL STRUCTUAL ISSUES
• CULTURAL ISSUES
“Issues regarding d ifference in patterns of

behavior/ways and norms of living.”

Cultural issues
Tailoring of products according to regional

market.
Change in customers prefrences according

to their culture.
• All nestle products are HALAL in middle east and other
Muslim countries.

NESTLE CORPORATE RULE
• Nestlé continues to maintain its

commitment to follow and respect
all applicable local laws in each of its
markets.
• Nestlé is committed to the following
Business Principles in all countries,
taking in to account local legislation,
cultural and religious practices.
At the end--------- count on your people
(NOT Organization Structure!)
Remember – you can change all the
deck chairs on the Titanic (as many
Time as you want), the boat will
Still sink!!

THE END

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QURAT-UL-AIN SHARIF

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Two important factors

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Nestlé is the worlds’ number one food company

Joint venture between Nestle Switzerland and MilkPak

Nestlé Pure Life was launched in Pakistan in 1998

1. Sheikhupura near Lahore

Organizational Structure & Design 21 , Jan , 2011

" At Nestlé, we believe that

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Islamabad Karachi Kabirwala Sheikhupura

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Retail On-Line Institutional Government

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Nestle` do not follow process

Organizational Structure & Design 21 , Jan , 2011

Planning & Lacquering Inspection &

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

The continuous line of

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

• Number of subordinates that can be

• Span of control consists of two

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

THE SPAN OF CONTROL IS AT LEAST 2

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

• Decisions can take a long time to

Organizational Structure & Design 21 , Jan , 2011

Organizational Structure & Design 21 , Jan , 2011

Employee Employee Employee Employee Employee Employee

Employee Employee Employee Employee Employee