Monday, June 2, 2008

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?

In the past, Nestle allowed each local organization to conduct business in its chosen manner. This decentralized approach allowed for differences in culture and language between each branch. At one point, there were eighty different information technology systems utilized. However, Nestle decided to abandon that traditional approach in managing a multinational company. It wanted to standardize all business processes globally to better serve its customers. It wanted to adopt a single set of business processes and systems for procurement, distribution, and sales management. They wanted to operate as a single country globally.

According to the norm, this was not the appropriate strategy for Nestle's business model. However, it seems to be working despite IT budgeting, data capacity, and delays in implementing the system across all branches. Nestle has achieved better operational efficiencies and is much closer to standardizing all processes, data, and systems. I really didn't think this would work as I read the case study, but it looks like Nestle could reach this goal in the near future.

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

Nestle had the overwhelming task of merging eighty different information technology units into one designed system. None of its products are considered to be a truly global brand, so standardizing its processes and systems is quite complex. The biggest challenge Nestle faced was not technical, but personal. Previous attempts in developing cooperate standards had mixed results, most branches responded to the idea in a negative manner. Branches stated how a standard system wouldn't work globally. Branch managers feared the loss of decision-making power. Initially, the project staff was not large enough to design such a system.

Then there was the time challenge, the deadline for the rollout of the new standardized IT system was changed several times. This was also a large financial investment to embark on. Nestle had to invest billions of dollars in this project and still had the challenge to stay in budget. It was challenged to implement the new business processes concurrently with the new systems while not making it noticeable to anyone outside of the company. Managers and workers had no time to train on the system before it was deployed. Finally, Nestle had to deal with some technical issues as the system rolled out across the globe. Specifically, Canada had a problem with the amount of data storage it was allotted to allow for promotion data.

No comments: