Chapter 15 Case Study: Nestle Tries for an All for One Global Strategy

2) What type of global business and systems strategy did Nestle adopt? Was this strategy appropriate for Nestle’s business model?

Nestle has not necessarily believed in the concept of the global consumer. None of Nestle’s products is considered a truly global brand, with perhaps the exception of Nescafe, of which 100 million cups are served around the world each year. Nestle does target the world market but does so by creating brand strength locally by each diversified region. Nestle's global strategy fits the multinational startegy which is characterized by decentralization of production, sales and marketing operations to units in other countries. This strategy works well for Nestle since they are in the food market which needs to take into consideration, differing business cultures and local market preferences. Nestle remains the leading food and beverage company in the world so their strategy is effective, however, their decentralization of operations makes it extremely difficult to mainstream IT systems.

3)What management, organization, and technology challenges did Nestle have to deal with to standardize its business processes and systems?

As complex as the challenge seemed, Nestle embarked on a program to standardize and coordinate its information systems and business processes through a system called GLOBE. The company initially installedSAP’s R/3 enterprise resource planning software to integrate material, distribution, and accounting applications in the United States, Europe, and Canada. Instead of technology managers, Johnson tried to build his team from a diverse group of business managers who had experience in a variety of business sectors including manufacturing, finance, marketing, and human resources. It became apparent to Johnson that the greatest challenge of GLOBE might not be technical, but was personal and organizational perhaps. Managers resisted the idea of giving up control over their business processes to particpate in a centralized solution.

4)What strategies did Nestle management use to deal with these challenges? How successful were these strategies?

The implementation of the GLOBE system was paramount to Nestle's global market approach and it required large scale company buy-in. By the end of 2005, Nestle had converted 30 percent of its business to GLOBE, and had the capacity for one major rollout every month. The 80 percent number by the end of 2006 was still looming but the company had learned how to operate as a single unit on a global scale. Nestle is much closer to achieving its goal of standardizing all processes, data, and systems. Chris Johnson was able to develop projections for his team that were both measureable and attainable. Such a large scale important project deserves adequate manpower, budget and time to allow for the system to be properly implemented.