Nestlé Pakistan

Table of Contents

1. History....................................................................................................................3

2. Global Structure…………………………………………………………………3

3. Organization Structure……………………………………………………….....3

3.1. Human Resource Department……………………………………………...4

3.1.1. Shared Services……………………………………………………………4

3.1.2. Centre of Expertise………………………………………………………..4

3.1.3. Business Partners………………………………………………………….4

3.2. Brands Department…………………………………………………………5

3.2.1. Dairy……………………………………………………………………….5

4. Mission Statement……………………………………………………………….5

5. Vision & Strategy………………………………………………………………..6

6. Core Business Activities………………………………………………………...6

7. Consumer Service……………………………………………………………….6

8. Corporate Social Responsibility………………………………………………..7

8.1. Social Investments………………………………………………………….7

8.2. Creating Shared Value……………………………………………………..8

9. 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

10. Interview with the Human Resource Manager……………………………....10

10.1. Tasks & Responsibilities of the Manager……………………………....10

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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. Training & Development of Employees………………………………11

10.1.6. Ensuring Motivation & Communication with Employees………......12

10.1.7. Nestlé as a Global Entity……………………………………………….12

10.1.8. Providing Guidance…………………………………………………….12

10.2. Observations & Evaluation………………………………………………12

10.3. Application of Mintzberg’s Roles……………………………………......12

11. 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 & Evaluation………………………………………………15

11.3. Application of Mintzberg’s Roles………………………………………..15

12. Observations & Findings……………………………………………………….16

13. Exhibit 1…………………………………………………………………………17

14. Exhibit 2…………………………………………………………………………18

15. Exhibit 3…………………………………………………………………………19

16. Exhibit 4…………………………………………………………………………20

17. Exhibit 5…………………………………………………………………………21

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18. Exhibit 6…………………………………………………………………………22

19. Exhibit 7…………………………………………………………………………23

20. Exhibit 8…………………………………………………………………………24

21. Exhibit 9…………………………………………………………………………25

22. Exhibit 10………………………………………………………………………..26

23. Sites Used………………………………………………………………………..27

History

It all began from a little venture by a Swiss pharmacist, Henri Nestlé, 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 world’s largest food and beverages company. To this end, Nestlé soon added chocolate, milk, and Nescafe coffee to its line of items through mergers and research. Nestlé kept increasing the length and width of its product lines to cater to a wide range of consumer needs. As Nestlé was making its operations global, it found an eager market in Pakistan. Nestlé has been serving Pakistani consumers since 1988, when its parent company, the Switzerland-based Nestlé SA, first acquired a share in Milkpak Ltd. Few of the milestones achieved by Nestlé 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. Nestlé employs bottom-up as well as top-down reporting. For yearly budgeting, each territory reports next year’s 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).

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Organization Structure

Nestlé 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 Nestlé 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 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.

Human Resource Department

The Human Resource Department is subdivided into three branches:

Shared Services Centre of Expertise Business Partners

Shared Services

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Shared Services are responsible for data and record collections of all the employees of Nestlé 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 Nestlé’s 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 Manager–Commercial 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 Company’s goals and policies.

Brands Department

The department for Brands has been subdivided into departments for each product line that Nestlé 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.

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The Category Manager’s job is to form a link between the Brand Manager and the Sales Manager from the Sales Department.

Mission Statement

“At Nestlé, 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, Nestlé products bring consumers the vital ingredients of taste and pleasure.  As consumers continue to make choices regarding foods and beverages they consume, Nestlé helps provide selections for all individual taste and lifestyle preferences.

“Research is a key part of our heritage at Nestlé 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.”

Vision & Strategy

The Nestlé global vision is to be the leading health, wellness and Nutrition Company in the world. Nestlé Pakistan subscribes fully to this global vision along with its national vision to become a Rs. 100 billion company by 2014. It envisions to:

Lead a dynamic, motivated and professional workforce. Meet the nutritional needs of consumers of all age groups – from

infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality.

Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country.

Nestlé milk collection and agri-services will continue to play the primary role in development of the dairy sector in rural Pakistan.

Fully integrated systems (Nestlé Pakistan, suppliers, customers) ensure efficient business processes.

Non-strategic activities and products are outsourced or discontinued.

Core Business Activities

Nestlé Pakistan is in the business of manufacturing food items. It seeks to provide products that have quality, taste, variety, convenience and nutrition. It caters to the needs

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of infants to young people, providing foods for both nutrition and pleasure. It has several product lines, namely: Milk, dairy and chilled dairy products, e.g. Milkpak, yogurts; Beverages, e.g. juices; Bottled water i.e. Nestlé Pure Life Water; Baby food, e.g. Nido; Prepared meals, e.g. Maggi noodles; Breakfast cereals, e.g. Kokocrunch, Honey Stars and Chocolate and confectionary, e.g. Kit Kat. Apart from that, Nestlé also provides food services, i.e. food and beverage solutions, to out-of-home establishments, including restaurants and hotels. The Boston Consultancy Group Matrix in Exhibit 4 analyzes Nestlé’s dairy products in terms of their market growth rate.

Consumer Service

Nestlé 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 Nestlé, 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.

Nestlé’s 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.

Corporate Social Responsibility

Nestlé understands its role as a corporate entity in the socio-economic demographics of Pakistan, for which it performs social investments and realizes and promotes the positive impacts while at the same time restricts the negative impacts that occur as a result of its operations in the value chain.

Social Investments

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Nestlé Pakistan complies with Environment Act (1997), and tries to ensure that at every stage of its operations, the environmental impact is minimal. All Nestlé factories are eco-efficient (more production for less resource consumption, waste, and emissions) and have environment committees that manage and review environment issues.

Nestlé 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.

Nestlé 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 School rehabilitation and education advancement Research and development initiatives

Creating Shared Value

Nestlé realizes that every business is dependent on the society it operates in. For a business to prosper, it’s imperative for the society to be a part of that success. Therefore, Nestlé creates shared value at every step of its value chain under the framework demonstrated in Exhibit 6.

Human Resource Function

Shared Services (SS)

As explained in the organization structure, this department is responsible for maintaining the data and records of the employees to decide about their pays, allowances etc. The department is also supposed to carry out the performance appraisals (PA) with the help of the line managers. The SS sets guidelines and provides the line managers with tools, systems and processes to evaluate their subordinates. Based on these evaluations, pays and remunerations are decided. (Remunerations are done by the Centre of Expertise). The pay and compensation strategy is tied to the achievement of the business objectives and helps them build a growth-oriented culture.

Apart from payrolls, SS is in-charge of administration of employee funds. It is supposed to decide that which employee gets which fringe benefit, and to what extent, for example,

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medical allowances, travel allowances etc. The provident funds for employees are also calculated by SS.

The SS is a vital department for maintaining employee motivation and loyalty to Nestlé. It needs to be ensured that all data collection and PAs are done correctly, and in line with the procedures and guidelines set by the organization. It also needs to give enough allowances and leverages to the employees to allow them to balance their personal and professional life.

Nestlé believes that employee’s private and professional life should have a good balance. In the same spirit, Nestlé encourages flexible working conditions whenever possible and encourages its employees to have interests and motivations outside work.

This not only maintains satisfaction with the job, it also increases loyalty, productivity and provides motivation for better performance in the future.

Centre of Expertise

The Centre of Expertise is the department in Human Resource Function which is responsible for recruitments, organization development (training programs) and remuneration.

Hiring & Recruitment

Hiring and requirement is the most important task performed by Centre of Expertise. It is the process on which the entire company’s future and performance relies upon. The Business Partners are supposed to communicate the staff requirements of different departments, and set the job description and requirements. Contacts with universities and recruitment events are maintained to have good visibility of the Company and recruitment sources.

The recruitment office looks for three key characteristics: knowledge, personality and motivation. For managerial positions, specific leadership qualities and business acumen is required. Even when promoting employees from within the organization, it is their role to keep an eye on valuable candidates.

Those who meet the essential requirements are then evaluated through a series of screening tests, interviews and group discussion sessions to gauge their suitability for the job. It is extremely important to hire the right person, not just for Company’s objectives, but to help integrate newcomers in the organization so that their skills and behavior can merge smoothly with the company culture.

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At Nestlé the recruitment is done keeping the objective of diversification in mind. The organization has a global mindset which involves diversity to encourage and foster creativity and new ideas, which forms the unique selling proposition of a business.

Training Programs

Training is seen as an ongoing process. It doesn’t 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, Nestlé 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.

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

Nestlé’s 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 manager’s 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 manager’s 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 company’s growth, but motivation for individual growth as well.

Interview with the Human Resource Manager

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Name: Omar Hassan JanjuaDesignation: Human Resource Manager-Commercial

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.

Strategic Vs Operational Roles

He is more involved in strategic decision making as opposed to making tactical and operational decisions. His role can be interpreted as a link between the departments and the centre.

The Human Resource Department is responsible for providing tools, processes and procedures to the managers and then it’s their responsibility to apply it according to the demand of the situation. He ensures those tools are being used and implemented effectively.

Role as a Business Partner

His tasks and responsibilities can be clearly explained with his position in the business as a Business partner. A business partner is a link between the whole of the organization and the Human Resource Department. His main focus is on coordinating and integrating the strategies and plan of actions of different departments in line with the whole organization. He ensures that the growth objectives and plans of the departments don’t come into conflict with the mission of the organization as a whole. The Centre of Expertise is concerned with making changes and finding new ways of operating to increase the efficiency of the whole organization. Mr Janjua has to be careful in maintaining a balance between innovation and business objectives.

His role is not transactional and he is not involved in the paper work For example, if there is a need to recruit people in a department, he doesn’t advertise the job description himself. Instead he communicates the needs of the particular department to the Human Resource Department. He then actively participates in the selection process i.e. selects the right person from a pool of applicants through interviews and assessments.

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In contrast to the Centre of Expertise which requires specialists, Mr Janjua is a generalist; he doesn’t have to be an expert but has to be aware of everything that is going around in the organization.

Ensuring Coordination & Integration

Different departments come up with different plans which need to be evaluated not only on terms of finance but also in terms of the business entity as a whole. This places a lot of emphasis on the decision making ability of Mr Janjua. Authority is delegated so that others are involved in making changes and plans but he has to remain involved at all times with the concerned department. He has to remain continuously in touch with the departments and has to remain updated about their future growth objectives. Communication has to be ensured on a regular basis.

Training & Development of Employees

Mr Janjua placed special emphasis on the need for training in an organization so that the employees can handle their delegated responsibilities well. Training can be seen as a tool to support them in their tasks and responsibilities and to motivate them to perform outstandingly. The Organization Development Department is responsible directly for the training needs of the employees. They hire trainees and then Mr Janjua communicates the 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.

Ensuring Motivation & Communication with the Employees

After the line manger he is responsible for ensuring that the staff is motivated and committed to their work. He believes in keeping an interactive relation with the employees and to intervene anytime there is a conflict between two parties. He has also been involved in conducting road shows and meetings to encourage a spirit of participation and belongingness in the employees.

Nestlé as a Global Entity

Nestlé is a global organization so ensuring that the operations and objectives of Nestlé Pakistan are in coordination with the global image is important. Mr. Janjua keeps this in mind while evaluating projects and plans before implementation. Like other training projects, he nominates people, for Nestlé’s international training programmes.

Providing Guidance

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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.

Observations & Evaluations

It can be evaluated from his interview that he has the legitimate power and a direction to ensure coordination and consistency in the organization. He has to optimize and maintain a balance. He can be referred to as following a middle of the road management system to keep a balance between control and delegation.

His functions basically include decision making and planning (to evaluate plans), leading (to ensure motivation and good communication) and controlling. As he can be seen as a middle manger, human skills are important for motivating, Conceptual skills are necessary to ensure consistency between objectives of different departments and the organization as a whole and some technical skills to provide guidance when needed.

Application of Mintzberg’s Roles

Role DescriptionInterpersonal

Figurehead He is involved in the UNDP project in collaboration with Nestlé for the empowerment of women in rural areas. He intervenes in case decisions are being taken without keeping the organization objectives in mind.

Leader 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.

Liaison His role doesn’t 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 Nestlé’s 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.

DecisionalEntrepreneur He is continuously involved with different departments while

making future plans or changes in the way things work.Disturbance In order to ensure that department’s objectives are in line with the

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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 Allocator

He matches the supply of labor with the demand of different departments. He is also involved in the selection process of the potential employees.

Interview with the Category Manager

Name: Fuad Ghazanfar SaqibDesignation: Category Manager

Tasks and Responsibilities of the Manager

The Category Manager’s job is a transitional one. He identifies different channels and shoppers (who ultimately purchase the product). Nestlé Dairy provides its products to approximately 270,000 shops within Pakistan alone. There are 8-9 channels through which products are provided to customers:

Large groceries Super markets Small stores Khokhas ( cigarette/ pan shops) Bakeries Pharmacies Wholesalers Rural channels.

Sales Situation in Different Regions

Mr Saqib is responsible for the daily sales situations in different regions. By reviewing the daily sales situation in different regions of the country, he analyzes which regions are worthy of more effort, thus assisting in formulating tactics helpful for the company’s growth. Moreover, a daily analysis also helps in evaluating whether the adopted strategy is able to achieve the desired results.

Market Research

Mr Saqib’s 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 company’s goals and objectives. In this era of fast changing trends it has become almost impossible

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for an organization to survive without being aware of the consumers’ needs. Market research helps to serve the organization’s 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 Al-Fatah 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 channel’s 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.

Determining Stock outs

The Category Manager makes sure that there is no instance of stock outs at each channel the product is being distributed because a stock out damages the company’s reputation and sales. For instance, if a consumer doesn’t find a Nestlé Milkpak of 250 ml, he will buy Olpers or Haleeb. Thus, it’s pivotal for the company’s 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 mind…the fault can be at your own end too.’

Penetration Data Analysis

This task requires Mr Saqib to pin-point lapses in different situation across different channels and get to the root cause of the problem.

Observations & Evaluations

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The Category Manager is not directly involved in the planning management function. Though he is involved in collecting data that helps develop strategic plans but his role in the planning function is limited.

The Category Manager’s role as an organizer is essential. He needs to allocate human and non-human resources to various channels. To ensure that no stock outs occur he needs to arrange his resources in a manner so that each product is available at each channel. Moreover, an excellent coordinator and communicator are essentials of a Category Manager. He coordinates with the sales, finance and the marketing department constantly. Moreover, to ensure that everything is running smoothly at each channel he needs to maintain regular contact with the relevant person at each channel.

Since there are not much people working under Mr Saqib, the leading management function doesn’t really come into play. But still he has to guide people on how to analyze each area and how to collect the data relating to each region.

The Category Manager’s role as a controller is vital. He makes certain that each activity being carried out is in conformance with the organization’s requirements and standards. He has to ensure that efficient allocation of funds is being made. Moreover, he has to control human resources so that each individual is working in the best interest of the organization and for this purpose he provides guidelines to each employee.

Application of Mintzberg’s Roles

Role DescriptionInterpersonal

Leader Though the Category Manager is not directly leading a group of people but he has to deal with subordinates in the sales and distribution department. For this purpose he provides them guidelines for various activities they are required to carry out and is in continuous contact with them.

Liaison 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.

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

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Business Manager all the information gathered from either the personnel at various channels or the personnel working in the sales and distribution department.

DecisionalDisturbance

HandlerIn times of difficulty, the Category Manager takes steps to take the organization out of trouble. For instance, when Olpers came into the market, it turned out to be a strong competition for Nestlé. The Category Manager analyzed the strategy adopted by Olpers and took appropriate steps to counter it.

Observations & Findings

Nestlé is the pioneer company in introducing several products in this country. It is a leading multinational corporation. Upon studying its operating practices, we concluded that many of the principles that we studied in class have been applied by Nestlé. However, the efficacy of these principles is completely dependent on the way in which they are implemented and the context in which they are applied. Nestlé managers have carefully evaluated their environment, the challenges they are facing and the situation they are in, and then they have chosen the practices they employ. For example, for many companies, matrix organization presents the solution to integrating the product departmentalization and the cost savings ensured by the functional approach. However, Nestlé has implemented the matrix successfully by having several liaison and coordinating officers in between such as its Business Partners and Category Managers. Similarly they have also implemented the performance appraisal system effectively to reap its full benefits.

It is for this reason that today Nestlé is the fastest growing company in Pakistan today, and more is on its way as it aims to achieve the Rs. 100 billion mark by 2014. It can continue to expand by employing its favorite principles of innovation, research, introducing new products, exploring new and finer market segments, and venturing into unknown territories. Further diversification and introduction of greater value added products will help it realize its ambitious goals.

Exhibit 1 (Milestones achieved by Nestlé Pakistan & Milkpak Ltd.)

1979 Milkpak Ltd. is founded by Syed Babar Ali. It manufactures UHT milk cream and butter as well as fruit juices.

1981 Production of long shelf life UHT milk begins at Milkpak Ltd. Sheikhupura factory.1988 Nestlé SA acquires 40% share in Milkpak ltd.1990 Sheikhupura factory starts the production of Nestlé Nido milk powder and cereals. A

new plant is acquired at Kabirwala in the Punjab

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1992 Nestlé takes over the running of the company and begins to develop its milk collection network. A maggi noodles plant is installed at the Kabirwala factory.

1996 Milkpak Ltd. is renamed Nestlé Milkpak Ltd.1997 The Kabirwala plant becomes a fully owned unit of Nestlé Pakistan Ltd.1998 Nestlé pure life bottled water is premiered in Pakistan. Within a few years it becomes

one of the world’s leading brands of bottled water. Meanwhile, Nestlé’s milk collection system in Punjab matures and the company is able to buy all its milk from farmers instead of relying on contractors.

2001 Nestlé Pakistan acquires the Fontalia and AVA water companies which specialize in supplying water to homes and offices.

2004 Afghanistan becomes the fourth sale zone of Nestlé Pakistan Ltd.2005 Nestlé Milkpak Ltd. is renamed Nestlé Pakistan Ltd. The GLOBE project is

successfully launched, and is intended to have further cooperation and information sharing with Nestlé companies around the world. Nestlé Pakistan responds swiftly to October’s devastating earthquake, using its own distribution channels to bring aid to the worst affected areas.

Exhibit 2 (Global Structure)

INTERNATIONAL

EuropeGreater China

Switzer-landAmericas Asia

Oceania Australia

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NATIONAL

ZONAL

REGIONAL

AREA

TERRITORY

National Sales

Manager

North South Center Afghanistan

Lahore

Muzang

Samnabad

Exhibit 3 (Organization Structure)

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Exhibit 4 (Analysis of Current Strategic Business Units)

BOSTON CONSULTANCY GROUP MATRIX:Analyzing Current Strategic Business Units

BOSTON CONSULTANCY GROUP MATRIX:Analyzing Current Strategic Business Units

MarketGrowth

Rate

High

Low

Question Marks Cream Raita Fruit yogurt

Question Marks Cream Raita Fruit yogurt

Stars Milkpak Nesvita Everyday Yogurt

Cash Cows Nido Neslac

Cash Cows Nido Neslac

Dogs Desi Ghee

Dogs Desi Ghee

Relative Market ShareHigh Low

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Customers

Sales People

Managers

Board of Directors

Nestlé Pakistan

Exhibit 5 (Organization Chart)

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Nestlé Pakistan

Exhibit 6 (Framework for Creating Shared Value)

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Planning

Organizing

Leading

Controlling

Planning

Organizing

Leading

Controlling

Mr Fuad Ghazanfar Mr Omar Hassan Saqib Janjua

Use of Management Functions

Mr Fuad Ghazanfar Mr Omar Hassan Saqib Janjua

Use of Key Management Skills

Technical Skills

Human Skills

Conceptual Skills

Nestlé Pakistan

Exhibit 7 (Use of Management Functions & Use of Key Management Skills)

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Nestlé Pakistan

Exhibit 8 (SWOT Analysis)

Internal Analysis External Analysis

STRENGTHS

Investment in R&D, and innovative products Market research about shopper segmentation and

distribution channels Integrated and centralized information systems Efficient consumer service builds loyalty Creating shared value for all strategic partners Flat structure and decentralized Matrix organization Coordination among departments achieved by

Business Partners, Category Mangers, etc Diverse workforce Effective and efficient HR systems Knowledge sharing and training programs Effective performance appraisals Achievement based compensation Competitive remuneration benchmarked against

industry Motivated workforce Growth oriented culture Monopoly in tea whitener because of technology Own distribution channels for bottled water; Home delivery increases customer satisfaction.

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 Nestlé, 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.

WEAKNESSES

Company image and consumer base can be adversely affected by stock outs, caused by either inefficient distribution or untimely delivery by suppliers

The Managing Director and Head of Finance are foreigners, which hinders effective communication

Multiple indirect reporting relationships might result in ambiguous accountability lines

More generalists than specialists in the matrix Produce products with short shelf life The common man perceives Nestlé as a premium

brand and thinks it is expensive.

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 Nestlé creates a market, rival firms move in, e.g. UHT milk was not widely used before Nestlé, but then Olpers, GoodMilk all began to take advantage of Nestlé’s marketing.

Adverse public opinion possible due to links to Israel.

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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. Nestlé enjoys monopoly power over powdered tea whitener market because no company has yet been

able to develop this technology.

COMPETITORS

Haleeb(CBL Foods)Olpers( Engro)

GoodMilk( ShakarGanj Foods)

SuppliersThe 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.

Customers Dependent on

products. Young health

conscious customers for Nesvita.

House holds for milkpak and yougurt.

Offices, institutions and households for

Everyday Infants and kids for

Nido

Threat of Substitutes

The main substitute is the Farmer’s (Gowalla) milk U.H.T treated milk caters

to only 9% of the population’s milk needs. Nestle constitutes, 38%

Olpers19%, andHaleeb 28% of that 9% of the total milk market.

Nestlé Pakistan

Exhibit 9 (Porter’s Model)

Exhibit 10 (Minutes of the Meeting held on 12th May 2008)

The group coordinator arranges meetings and holds voting in case of difference of opinions within the group. All the group members suggested different

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Nestlé Pakistan

organizations for the project but we finally decided upon Nestlé 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 Managero 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

1. http://www.nestle.pk/community/responsibility-to-environment.aspx

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Nestlé Pakistan

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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