Organizational analysis of Nestle wit respect to HRM

1. Organizational Analysis

2. Food and Beverage Industry of Pakistan
 Industry Profile
 2nd largest industry of Pakistan
 27% of the value-added production
 16% of employment
 Food and beverage sector
 Processing, packaging and distribution of raw food ingredients
 Fresh, prepared meals, packaged foods, drinks
 Powdered and liquid beverages, dairy and nutrition products
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3. Nestlé Pakistan
 Company Profile
 1988, Joint venture with Milk Pak Ltd
 1992, assumed full control
 100% owned subsidiary of a Nestlé SA
 Based in Vevey, Switzerland
 Enlisted in Pakistan Stock Exchange
 Ranked 3rd in PSX w.r.t. Market Cap (2021)
 i.e. share price x number of shares outstanding
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4. Nestlé Pakistan
 Company Profile Contd…
 Based in Lahore (308 Road ،Upper Mall Scheme, Lahore)
 4 production units
 Sheikhupura and Kabirwala (multi product units)
 Islamabad and Karachi (bottled water units)
 In 2020, 3784 direct employees
 Top food and beverage company
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5. Nestlé Pakistan
 Company Profile Contd…
 Nutritional, health, and wellness products
 Active in dairy, confectionery, coffee
 Beverages, infant nutrition
 Bottled drinking water
 Largest milk collection network
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6. Nestlé Pakistan
 More Than 2000 brands
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7. Nestlé Pakistan
 Competitors
 Unilever
 Engro Foods
 Pepsi Co.
 Cocacola
 Gourmet
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8. Nestlé Pakistan
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 Organizational Hierarchy
CEO
Waters Nestlé
Professional
Coffee,
Culinary &
Juices
Nestlé
Nutrition
Legal Communicatio
ns
Corporate
Affairs
Finance,
Controls &
Director
HR
Sales
Strategy &
Business
Development
Supply
Chain
Technical
 Matrix-based
 Decentralized
 Function & Product wise
 Multiple leaders

9. Nestlé Pakistan
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 Key Players in Organization:
 Mr. Syed Yawar Ali (Chairman)
 Mr. Samer Edmond Chedid (CEO & Dir.)
 Mr. Syed Saiful Islam (CFO & Exec. Dir.)
 Mr. Amr Rehan (Exec. Dir. & Head-Technical)
 Mr. Babar Hussain Khan (Head-Sales & Marketing)
 Ms. Samra Maqbool (Head-Strategy & Business Development)

10. Nestlé Pakistan
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 Vision:
 Leading, competitive, Nutrition, Health and Wellness
Company delivering improved shareholder value by being a
preferred corporate citizen, preferred employer, preferred
supplier selling preferred products.
 Mission:
 Unlocking the power of food to enhance quality of life for
everyone, today and for generations to come.”
 Slogan:
 “Good Food, Good Life"

11. Nestlé Pakistan
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 Objective:
 Globally, we have defined the ambitions for 2030 which
guide our work and support the achievement of the United
Nations Sustainable Development Goals (Annual Report ,2020)
 Help
 50million
 children live healthier lives
 Strive for
 Zero environmental impact
 in our operations
 Help to improve 30million livelihoods
 in communities directly connected to our business activities

12. Nestlé Pakistan
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 Our Values:
 Creating shared value for the communities, in
which it works and operates, as a key component
of its business strategy.

13. Nestlé Pakistan
 STEPLE Analysis
 Socio-Cultural Factors
 Changing consumer attitudes
 Health consciousness
 Generalized products
 Breaking down of old traditions (Kohli, et. al., 2020)
 Technological Factors
 World's largest R&D network
 Sustainable packaging solutions
 Cutting-edge machine systems (nestle.pk)
 Plant-based foods and infant or maternal nutrition products
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14. Nestlé Pakistan
 STEPLE Analysis
 Economic Factors
 COVID-19 (Lock downs)
 GDP 5.37% (2021) 3.9 %( 2020)
 Inflation Rate 12.3% (2021) 9.3 %( 2020)
 Per Capita Income $1,666 (2021) $1543 (2020)
 IMF conditions
 Source: National Accounts Committee (NAC) Document, 2021
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15. Nestlé Pakistan
 STEPLE Analysis
 Political Factors
 Political instability
 Protests, terrorism etc.
 Environmental protection laws
 SC PKR 1 Re / Ltr Tax on all bottled water companies (2019)
 Labor Laws
 Minimum labor wage increment PKR 20,000 (Budget: 2021)
 Tax policy
 Government withdraws tax exemption from milk processing,
preserving equipment and major inputs (Suppl. Fin. Bill 2021)
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16. Nestlé Pakistan
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 STEPLE Analysis
 Legal Factors
 Adherence to global regulations
 Compliance with Government regulations
 Labor laws, Child labor
 child labor abuse, Cocoa, West Africa 2012,
 Social security and benefits
 Harassment at workplace
 Health and safety
 Employees as well as customers
 Food safety, Maggi Noodles 2015

17. Nestlé Pakistan
 STEPLE Analysis
 Environmental Factors
 Environmental concerns (CSR)
 Zero environmental impact in our operations
 Clean Hunza Project, 200,000Kg plastic waste, 2021
 Work life quality
 Help children to live healthier lives
 Improve livelihoods directly connected to business, in community
 Recycling
 waste-free future, vision 2025, 100% recyclable packaging
 Collaboration with external recycling company (Annual Report ,2020)
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18. Nestlé Pakistan
 SWOT Analysis
 Strengths
 Fortune global 500 parent company(ranked 82, 2020)
 Diversified brand portfolio(2000 brands)
 Strong brand image (60% market share)
 Largest milk processing plant
 2 000 villages
 135 000 dairy farmers
 half a million tones of milk a year
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19. Nestlé Pakistan
 SWOT Analysis
 Weaknesses
 Controversies
 Cocoa procurement
 “?” on nutrition value
 Maggi noodles
 Lactogen-formula milk
 Less Proactive w.r.t. Marketing
 Absence in media unless challenged
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20. Nestlé Pakistan
 SWOT Analysis
 Opportunities
 Ability to reach new consumer markets
 New products / Upgrade distribution channels
 Rural markets
 Farmers development program
 Value creation through
 R&D
 Tacit knowledge
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21. Nestlé Pakistan
 SWOT Analysis
 Threats
 Economic instability & recession
 Inflation
 Devaluation of currency
 Increasing input material prices
 High buyer power
 More choices availability
 Low customer loyalty
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22. Nestlé Pakistan
 Porter’s 5 Forces Model
 Threat of new entrants
 FMCG market, always attracts businesses
 Gourmet, Shezan, Engro Foods, Unilever etc.
 Nestle, a giant in its sector
 High benchmark standards to achieve
 R&D, Quality, Brand perception
 Strong parent company
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23. Nestlé Pakistan
 Porter’s 5 Forces Model
 Threat of substitute goods
 FMCG market is very competitive
 Brand loyalty is low due to variety of substitute goods
 Strong R&D gives edge to provide innovative product
 Power of buyers
 Buyer has substantive bargain power being FMCG
 Only solution is, differentiated product
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24. Nestlé Pakistan
 Porter’s 5 Forces Model
 Power of suppliers
 Suppliers also have good bargain power in FMCG
 Nestle held them close through
 Creating Shared Value (CSV)
 Financial support through banks
 BISP, Ehsaas program
 Farmer’s sustainable development
 Empowering women farmers
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25. Nestlé Pakistan
 Porter’s 5 Forces Model
 Competition among rivalry
 Good competition leads to tremendous success
 Rivalry among competitors is common
 Mergers and Acquisition
 Nestle acquired Pfizer formula milk in 2012
 Infant and Follow-On Milk (IFFO Milk) 0-12 months
 Growing-Up Milk (GUM) 12 months and onwards
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26. Nestlé Pakistan
 Management Strategies
 HRM
 Employees are the key to organization’s success
 Culture; based on the values of trust, mutual respect
 No gender discrimination, Women empowerment
 Head Strategy and Business Development
 Opportunity for everyone
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27. Nestlé Pakistan
 Management Strategies
 HRM Contd…
 Hiring through Campus Drives, Job Fairs
 Internship programs
 MTO program
 Apprentices program
 “Hai Tum Pe Yakeen”, 16 differently abled hired on 1 year
contract in 2021
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28. Nestlé Pakistan
 Management Strategies
 Administration
 Top level
 Key decisions
 Middle level
 Functional decisions
 Lower level
 Operational decisions
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29. Nestlé Pakistan
 Management Strategies
 Administration contd…
 Administrative tools
 360 feedback
 Employee Opinion Survey “Nestlé & I”
 “Human Rights in Nestlé”
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30. Nestlé Pakistan
 Management Strategies
 Decision Making
 Decentralized, flat, matrix based structure
 Function and product wise departments
 Multiple leaders
 Wide span of control
 Middle managers also enjoy decision making authority
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31. Nestlé Pakistan
 Management Strategies
 Total Quality Management (TQM)
 Certifications
 FSSC 22000 and ISO 9001, HALAL certified
 Pakistan National Accreditation Council (PNAC) on ISO
17025
 Customer Order Fulfillment (COF) of 99.6% (2020)
 Highest in the Zone Asia, Oceania and Africa (AOA)
 On-Shelf availability of products 97.4% (2020)
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32. Nestlé Pakistan
 Management Strategies
 Motivation & Incentive Techniques
 Through both Intrinsic & extrinsic factors
 Achievement, recognition, responsibility, growth
 Supervision, work environment, security e.t.c
 Employee assistance program (EAP)
 Incentives, bonuses, employee of month / year
 Employee discounts, scholarships, loans, Pick & Drop
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33. Nestlé Pakistan
 Management Stratégies
 Motivation & Inventive Techniques Contd…
 Employee Engagement sessions, Leaders
development
 “Global Connect & Learn” E-learning through global
participation
 Virtual recognition campaign, “Thumbs Up”, for frontline
staff during pandemic
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34. Nestlé Pakistan
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Geographic
World Region Asia & Oceania
Country Pakistan
Region North, South, Central
Metro Size More than 3,000,000
Climate Urban, Suburban, Rural

35. Nestlé Pakistan
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Demographic
Age 04-50 years
Gender Male, Female
Occupation Teen Agers, Students, Job
holders, Self employed, House
wives
Income Students, Teen Agers,
Rs.10,000 per month To
250,000

36. Nestlé Pakistan
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Psychographic
Social Class Upper, Middle, Upper-Middle,
Upper Lower, Middle-Upper,
Middle-Middle, Middle Lower
Lifestyle Achievers, Strivers
Personality Ambitious, Compulsive

37. Nestlé Pakistan
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Behavioural
Occasions Regular, Special
Benefit Profit
User status Potential, Regular
Loyalty Medium

38. Nestlé Pakistan
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Over All Market Share

39. Nestlé Pakistan
 Competitive Analysis
 Primary Competitors
 Unilever, Pepsio Co, Cocacola, Engro Foods
 Secondary Competitors
 Shezan Foods, Gourmet Foods, Mitchell’s, Haleeb
Foods
 Indirect Competitors
 `All local brands of packaged food and beverages
 e.g. Sparkelet, Nurpur, Fruitien etc
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40. Nestlé Pakistan
 Main Marketing Strategies
 Sales promotion, Product Line Extension
 Publicity through the line (TTL) i.e. both ATL+BTL
 Community betterment and development activities
 Awareness campaigns, Public relations
 Market Positioning
 Market Leader in Food and Beverage Sector
 Among competitors in PSX w.r.t. Market Cap (2021)
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41. Nestlé Pakistan
 Control Procedures
 Marketing Control
 Demographic, Geographical, and Behavioral segmentation
 Nescafe Coffee, Nescafe Ice, Kitkat etc
 Market Leader, Challenger and Follower strategies
 Nestle Water, Milkpak, Lactogen etc.
 Differentiated, Concentrated and undifferentiated product
strategies
 Nescafe, Cerelac, Nestle Raita etc.
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42. Nestlé Pakistan
 Control Procedures
 Production Control
 Four manufacturing facilities
 Largest milk collection network
 Quality control department and procedures
 State of the art plant and equipment through R&D
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43. Nestlé Pakistan
 Control Procedures
 Quality Control
 Quality Control Review program
 International certifications
 OHSAS 18001(Occupational Health and Safety Assessment Series)
 ISO 9001 (Quality Management)
 ISO 14001 (Environmental Management)
 ISO 17025 (Testing and calibration laboratories)
 FSSC 22000 (Food Safety)
 HALAL Certified (Islamic Food and Nutrition Council of America)
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44. Nestlé Pakistan
 Control Procedures
 HR Control
 Centers of Expertise (Specialized Services)
 Business Partners (HR Strategies)
 Centers of Transactional Activity (Employee Services)
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45.  Control Procedures
 Finance Control & Taxation
 Taxes
 Pensions
 Risk Management
 Treasury and Acquisitions
 Business Growth
 Internal Controls
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46. Nestlé Pakistan
 Problem Identification
 Problems according to management
 Controversies (National & International)
 Raw material prices
 Fierce competition in milk procurement
 Problems according to my analysis
 Limited distribution channels at some areas
 Lack of communication for better brand image
 and food nutrition
 Worker Union; a pressure group
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47. Nestlé Pakistan
 Change Model
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48. Nestlé Pakistan
 Solution to Problems
 Build customer trust, meet expectations, brand image
 Introduce accessible, safe, and high-quality food to everyone
 Communicate CSR, CSV activities through electronic, social media
 Expand distribution channels & Explore untapped markets
 Conduct market surveys through education institutes
 Engage and encourage employees for being part of CSR
/ CSV activities
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49. Nestlé Pakistan
5-Years Plan Plan
1-2 Years
• Improve brand image through communication
• Eco-friendly activities, Bio-degradable material in the packaging
• CSR / CSV activities
• No added preservatives
• High quality nutrition food
• Start market surveys for betterment & more options
2-5 Years
• Launch innovative products, like plant-based drinks, low calorie
food options, low fat milk etc.
• Increase production capacity to cater for unaddressed and new
markets
• Create better quality products by removing high sugar and
cholesterol from their products
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50. Nestlé Pakistan
 Conclusion & Recommendation
 Emergence of consumer food items changed the public's eating
habits dramatically
 Nestle, as a global food giant and market leader, has done an
incredible job of increasing consumer satisfaction
 Their expertise and trustworthiness are critical factors in
determining the overall product quality
 Quality is important to a company's success and development.
 Introducing new products will help the organization cover product
gaps, improving consumer loyalty and maintaining existing clients
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51. Thank You