Analyse the Mission, enviroment factors which can affect Nestley and the information technology required to help Nestley successful

University Degree Business and Administrative studies

“The Nestle Company's priority is to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives.” ()

Nestle is one of the largest food companies in the world. The company’s credo is to make life better by offering costumers only qualitative products. History of Nestle Company rooted in 1996. At this particular time Henry Nestle made decision to overcome and invented Farine Lactee – first in the world and turned a hand to manufacture. From that time the of Nestle is constantly widening and at the present time to estimate over 8000 brands of s, which well known by costumers in all five continents. Among all other food traders Nestle company with largest in research activities and development works. This reflects aims of company to produce products not only with good eating qualities and well performed but also healthy. The Nestle fields of concern connected with producing of foodstuff. Furthermore, Nestle company is hold sharer of some perfume-cosmetic and pharmaceutical industries. Today, Nestle has become the world's biggest producer of food in the world, 7th biggest company in Europe and also 26th biggest company in the world.253000 people are working for Nestle world. Nestle owns 511 factories and industrial enterprises in 86 countries of the world.

Mission statement

In 1867 Henry Nestle for the first time in the history created milk-based nutrition for infants. From the very moment of the company's foundation, Nestle has been building its business based on the common human principles and values.

Despite the fact that "The business principles of Nestle" are revised to adjust the changes happening in the world, key principles of our company remain the same and reflect such human principles as honesty, decency and mutual care about customers.

Nestle Company undertakes to apply the following activities in all countries, considering the local legacy as well as cultural and religious factors of each country:

Commercial aims of Nestle company, its management and employees is the production and marketing of company products in order to provide long term profits for the stockholders, employees, consumers, business partners and for the economy of the country where it is operating.
Nestle is not aiming for short term profit, as well as for the profit gained from damaging successful long term development, however, it recognizes the necessity of annual profit making in favour of the stockholders, stability of financial markets and realisation of necessary investments
Nestle company understands that the customers show sincere interest toward the moral principles and core values the companies base their businesses upon, and toward the brands they trust, and realizes that the company would not exist without its customers
The Nestle company believes that the legislature is the most effective way to ensure the responsible management, though it admits that in some regions it is necessary to introduce additional instructions for the company's management and staff in the form of the document describing key business principles. The purpose of such document is the compliance with the core ethic norms in all divisions of the company
Nestle company realise that success of any corporation is established on professionalism, abidance by code of conducts and responsibility its management and employees to basic principles, therefore believed that recruitment, training and staff development is one of the main aims of company.
The Nestle Company operates in the countries with different cultures and traditions. Such cultural diversity is an invaluable source of our leadership. It is impossible to take into account all legislative issues of different countries. Legal requirements in different countries may conflict with each other. The Nestle Company assures to respect and comply with the local legal requirements at all markets where the company operates. If any of the principles of this document is interpreted as conflicting with the local legislature, it is not applied in a given country.

Considering the mission and principals of the company Nestle, we should point out the following facts: it is highly focused on factors as: staff development, researches and constant improvements of their products. We can also see that Netsle treats respectfully all the rules and conditions and law regulations of the countries where they have offices. Probably all these important factors could be a reason of the leading position of the company for so many years.

Environmental Analysis

Economic – influence by domestic economic policies or world economic trends

The interest rates can be effect Nestle because if the interest rates were high then Nestle would not want to borrow as much money for expansion. In addition, if consumers had loans they would again have less disposable income to by luxury items. This can be a reason make the sale of Nestle’s product will be decrease. If the minimum wage were brought down this would mean more money for Nestle but would also result in low sale from the consumers and vicar versa.

Moreover, the tax can be also raise by the government and it would bring a decrease in the sales of chocolate, milk, ect. There could be a tax put on sweets to encourage customers to eat the healthier food.

Further more, advertisement cost could rise on television due to increase costs form taxes, interest rate on unrelated business like the media. We all know that to

compete with the other competitions like Cadbury, Mac Nestle have to increase their appearance on television, newspaper or internet . Moreover, advertisement is the best way to introduce a new product to the customers so if the advertisement cost increase , it will be a problem with the company.

One more factor in economic can be affect to Nestle is a high unemployment rate which would mean employees could be obtained more easily and could be paid cheaper wages. However, on the other hand unemployment could low therefore employees are hard to be obtain and to attract the right people higher wages must be paid.

Social environment

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Social environment

Nestle has many factories in many countries which is serve for producing products, for example in 1902 Nestle opened its first factory in UK. But if Nestle factories do not control their pollution levels or have a big building destroying the landscape with noise and traffic congestion then the local resident would complain to their local council resulting to possible incentives for bringing in jobs for the community being stopped.

On the other hand, local resident with small businesses near to Nestle Factories would benefit due to the money being brought in by workers at factory.

Nowadays, more and more people like to use the diet food which is less risk for their healthy so this is one of the factors make the sales product of Nestle go down. Consumers will eat less chocolate because of healthy risks or their weight. That means people lifestyle changed for example more people want to get fit and lose weight so they will stop eating chocolate and spend their money on gym membership or diet food.

Moreover, if the population size decreased then they would be less people to buy chocolate or the others product therefore sale and profit will also go down.

Political environment

Political decision can effect Nestle in two side : good and bad because if the government decide to increase the taxes in confectionary , the price of products will be also increase so the high price will make the consumers decrease and sale and stock go down. However, if the taxes decrease, consumers will buy more.

If government has a decision to stop producing and selling the products with high level of cholesterol or sugar like chocolate, it will be a big trouble with the company.

Raw material is one of the most important things for producing of the company and if it war breaks out, supply could be short and cut back on production. There could also be imports restrictions bought in by the government.

What’s more, if the government continues to not lower petrol taxes, Nestle will have to use more money in expense and of course the benefit will go down.

There could be ban, quotas or high tariff on import to the other countries i.e., there where trick standard that English chocolate had to meet before it could be imported into Holland few years ago.

Technological environment

If the cost of machinery rises, it will due to increase the cost of producing and products. This is a factors make sale and profit goes down. However, there could be new machine enter the market that allows production to be carried out more effective and efficient than before, which saves the labour cost.

It may be necessary for Nestle to upgrade old machines to improve the company efficiency in producing new products but in the other hand, employees need to be training for using those machines and of course, company will have to pay the expense for training their employees.

Internet marketing has become the way of future, with successful business using it to advertise, promote, sell and undertake public relations. Nestle and Cadbury advertise their products through internet. They built up a website for people who want to know the latest news form them. They also use the high technology to produce more chocolate and cheaper cost chocolate and will increase profit of Nestle.

SWOT ANALYSIS

Strengths

Strong brand portfolio

Nestle has a strong brand portfolio. Many of Nestle’s brands are associated with quality and are global leaders in their respective markets. Apart from a strong corporate brand, Nestle has a large ownership of product brands. The company owns 21 brands which are known around the world and generate annual sales of over CHF1 billion ($760 million) each. A strong brand portfolio allows the company to address varied age groups and customer profiles. Strong brands also provide a competitive advantage and ensure steady revenues.

Ability to customize products to the local market

One of Nestle's key strengths, unmatched by any competitor in the industry, is its ability to customize global products according to consumer preferences in the local market. Nestle believes that there are no global consumers and the markets are psychologically and culturally separated. It, therefore, generates brand loyalty and association in the minds of the customer by using local brand names.

Strong management initiatives

Nestle continues to focus on optimizing its operations. This has contributed to a reduction in cost of goods sold from 51.8% of sales in 1996 to 41.3% in 2006. A key contributor to those savings has been Nestle's major initiative, GLOBE (Global Business Excellence), which was set up in 2000 to leverage the company's size as a strength and to enable the company to manage products, channels and geographic spread) with operational efficiency. Cost savings through management initiatives would improve margins.

Weaknesses

Product recalls

Nestle has a history of recalling a number of products from the market. In March 2006, Nestle's subsidiary, Purina Pet Care recalled some of its pet products from the market as it contained contaminated wheat gluten tainted with melamine, a substance used to make plastic kitchen utensils and fertilizer.

In November 2005, Nestle UK recalled two batches of their promotional packs containing 10 bars of two finger milk chocolate Kit- Kat due to the possibility of the product containing small metal particles. Also in 2005, Nestle recalled the company's infant milk product in France, Portugal, Spain and Italy after traces of isopropylthioxanthone (ITX), a photographic chemical was found in the milk products.

Several product recalls indicate inadequate quality assurance and quality control systems for Nestle.

Limited presence in organic foods market

The company has not acquired any organic brand companies nor has it launched organic products like its competitors. Moreover, large private label manufacturers are also offering organic versions of their best-known products.

Limited presence in a fast growing product segment like organic foods would put the company at a competitive disadvantage.

Opportunities

Transition to a 'nutrition and well-being' company

Nestle is increasingly putting efforts to transition into a 'nutrition and well-being' company.

In June 2006, Nestle acquired Jenny Craig, a weight management company offering consumers a range of branded nutritional products and services in the US, Canada, Australia and New Zealand. Lastly, in December 2006, Nestle acquired the entire medical nutrition business of Novartis for $2.5 billion. The move propelled Nestle into a number two position in the fast growing and profitable healthcare nutrition segment, where Nestle used to play only a minor role. Nestle's strategy to strengthen its position as a nutrition and well-being company comes at a time when consumers are increasingly become health conscious. Rising health awareness among consumers is leading to higher demand for low carbohydrate and low calorie foods worldwide.

Acquisition of Gerber

In April 2007, Nestle acquired the Gerber brand from Novartis for $5.5 billion. Gerber Products, with revenues of $1.6 billion, sells pureed carrots and strained peas in 80 countries. Gerber has a market share of 79% in the US. Nestle expects Gerber to generate sales of approximately $1.9 billion in 2007 and a 10% sales growth in the long run. The acquisition gives Nestle the number one position in the US, the world's single largest baby food market.

Threats

Allegations of unethical business activities

Nestle has been criticized by various social organizations for alleged unethical business activities. The company has faced warnings over the past several years as it sourced cocoa from farms in the Ivory Coast, which employed child labour. The charges against the company include trafficking, torture, and forced labour of children who cultivate and harvest cocoa beans, which the company imports from Africa. The public criticism Nestle has faced revolves around artificial infant milk substitute. A WHO study estimated that about 1.5 million infants die each year because they are not breastfed. Other criticisms include allegations of false labelling to promote unhealthy food such as cereals with high fat, sugar, and salt contents.

Such criticisms lead to negative publicity and may have a significant impact on customer loyalty and attitudes towards the company.

Increased competition from private labels, especially in the bottled water

Nestle's bottled water sales are rising but competition from both private labels and brands, as well as soaring plastics costs, are increasing pressure in the sector. Nestle Waters has 19% the global market share in the bottled water segment. Bottled water has seen renewed growth especially in Europe, US and Canada owing to increasing health-consciousness among consumers. However, the brand is constantly threatened by local label suppliers who supply substitutes at cheaper rates.

FDA regulations

In the recent times, the US Food and Drug Administration (FDA) have been keeping a strict vigil on the manufacturers of pet foods. FDA claims that some of the recalled pet food may still be on the shelves in some retail establishments. Strict vigilance by the FDA has increased the operating cost incurred by pet food manufacturers such as Nestle in maintaining the quality recommended by the FDA.

Any new regulations imposed by the FDA may increase the compliance cost of Nestle thus affecting its margins.

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Information systems

An information system is a system or process that provides the information necessary to manage an organization effectively. Information it generates are generally considered essential components of prudent and reasonable business decisions. IS is a critical component of the institution's overall risk management strategy. MIS supports management's ability to perform such reviews. Mostly it’s used to recognize, monitor, measure, limit, and manage risks.

There are four main elements that a good Information system should give a feedback on:

• Policies or practices.

• Operational processes.

• Staff and management.

• Feedback devices.

‘’Technology advances have increased both the availability and volume of information systems and the directors have available for both planning and decision making. Correspondingly, technology also increases the potential for inaccurate reporting and flawed decision making.’’ Because data can be extracted from many financial and transaction systems, appropriate control procedures must be set up to ensure that information is correct and relevant. Management Information Systems, 1995, Comptroller’s Handbook, Comptroller of the Currency Administrator of National Banks

As we have discussed, any modern company or organization, must have a certain information system, a strategy that’ll help it to achieve its goals. There are several key elements that organization stands on. They are:

People: Managers, knowledge workers, data workers, production or service workers
Structure: Organization chart , groups of specialists, products, geography

Operating procedures: Standard operating procedures (SOP, rules for action)
Politics: Power to persuade, get things done
Culture: Customs of behavior

Only maintaining the balance between these elements and managing them properly without interrupting them, an organization can be considered successful.

Management

The management of company plays important role in analysing the needs of new information systems and information technology. Let’s say a few words about the management itself. Mostly in every organization, management consists of three levels. They are:

Senior managers – ones who make long-range strategic decisions about products and services, take the responsibilities for them.
Middle managers carry out the programs and plans of senior management.

Operational managers monitor the firm’s daily activities.

Each level has its own independent role in the company. But management isn’t enough to make an organization work. There are certain tools, like: hardware, software, database and software storage, communications technology and networks. Using the right system and technology can make it much easier for the company to solve enrolled difficulties.

Far from being a single centre of scientific excellence, the Nestlé Research Centre is the hub of a worldwide research community, internally, with leading scientists from around the world, and externally, in collaboration with key international research institutions and universities. Product Technology Centres exist for each specific product category including: Dairy, Coffee & Beverages, Chocolate, Confectionery & Biscuits, Ice Cream, Prepared Dishes & Culinary products, Petcare and Food Services. PTCs also direct programs for product innovation and packaging. Nestlé S.A., Public AffairsConcept and design, 2004

Various units in nestle have used a wide range of type of proprietary and open systems. This approach helps the company to improve margins by generating improvements in logistics and operations and then adapting those improvements to other parts of the business. In the early 1990s it reformed the set of standards that support a distributed client-server system, including UNIX systems from IBM, Digital and HP, Oracle's Version 7 relational DBMS. The central IS staff declines the budget of any local IS organization that does not conform to standards. http://www.prenhall.com/divisions/bp/app/alter/student/useful/ch11nestle.html

In the following paragraph, we’d like to discuss one or two information systems and technologies that Nestle’s been using to improve quality, service and the technology of their goods.

As you know, the brand nestle involves number of products highly recognized all over the globe. The management system of the company may seem flawless, however, few years ago, the company had to face serious problems related to the web service. The web presence was inevitably rising without any system or directives. The value of reinforcing only one direction of sales could have been the reason of loosing customers and reputation as a well managed object, so after considering UNIX-based alternatives, the new information system was introduced. It involved Microsoft.net enterprise servers, set of infrastructure for building, running, operating, and managing XML web services and applications. Microsoft's .NET My Services (formerly called Hailstorm) was a set of S2C (service to consumer) web services providing various utilities: 1) the .NET Framework and the Visual Studio® .NET suite of developer tools;

2) the .NET Enterprise Servers, which provide a robust infrastructure for Web services;

3) .NET devices and experiences;

4) .NET services. The new "HailStorm" technology is a result of work being done in the .NET Services Group, which is responsible for building XML-based Web services for businesses and consumers.

So nestle now uses internet to collect and use information about consumers as well as create and fulfill new marketing initiatives. The gained control over web properties made it easier to gather information from internet based servers and add value to enterprise.

Using the flexibility of the Microsoft platform, Nestlé to quickly developed its own component-based Web architecture — the Nestlé Internet Resource Framework (NIRF).

Nestlé’s decision to consolidate on a solution using the Microsoft .NET Enterprise Servers was driven by many factors. Among the reasons were cost, manageability, security, and confidence in Microsoft’s ability to provide enterprise-level solutions to large global companies like Nestlé.

Microsoft .NET Enterprise Server Customer Solution, january 2002

4 levels of information systems and their functions

There are four levels of information system. These are co dependant units, which have their own goals and missions in the company.

Operational-level Systems – analyze the elementary activities and transactions of the organization. Its purposes are to answer routine questions and maintain the flow of transactions.

Knowledge-level Systems support the organisation to discover, organise, upgrade and integrate new and existing knowledge in to the business.
Management-level Systems serve to monitor and control the activities in the company. These typically provide periodic reports rather than instant information on operations.
Strategic-level Systems help to develop strategic issues and long-term trends, both within the organisation and in the external environment.

So, as in most companies, for ‘’nestle’’ as well, operational level of management is the blood-flow to the system pyramid. Day to day actions, like ordering and supplying products needed a certain system of tracking allowing the control over products. In 2005, Radio frequency Identification-augmented labelling system was installed. The traceability solution applies to prospective shipping label

applications in the market. Most RFID tags contain at least

RFID TAG two parts. An integrated circuit for storing and processing information, modulating and demodulating a (RF) signal, and other specialized functions and an antenna for receiving and transmitting the signal provides the company with exact location, specification and information data on a product. http://www.technovelgy.com/ct/Technology-Article.asp?ArtNum=50 The system delivers high-quality throughput and handles complex labels in time-critical situations. Nestle will soon be able to track its merchandise anywhere in the world. Rfid system integration allowed the company to achieve following advantages:

Information stored on the tag can be updated on demand
Higher identification speeds
Ability to collect accurate data from multiple tags at a time
Greater reliability in harsh environments
Greater accuracy in data retrieval and reduced error rate
Labour costs are minimized Reduce product recall costs
Reduce opportunity costs by the improved buffer stocks, spoilage and stock-outs from better planning using reliable information

By integrating this system the management of a company has an access to decentralized data collection (as no database connection is needed) leading to lower infrastructure cost, and making the information available on demand.

Information Technology has given the opportunity to the organization at every level to new achievements and developments. The nature of information and its use in managerial decision-making, the role of the information system within organization strategy, the way that information is organized, stored and processed by modern information technology and how development in networks and the internet have made an impact on business are the main priorities, why the information technologies and systems have been the subject of many research activities.

Conclusion:

In this assignment, we’ve tried to underline the main priorities of the universal food company Nestle. In the first part of the work, we discussed the mission statement, the environmental factors which affect the company in terms of political, economic, social, ecological and technological factors, its strengths and weakness, threats and opportunities. Whereas, in the second part, we talked about the information technologies and systems in general, and later discussed the priorities that Nestle uses for further technical development.

In the essay we’ve provided the examples of modern information systems that help the company to improve the service and products. After underlining the difficulties that Nestle had to come up with, we focused on methods of solutions that the company filled out.

Nestle has made its way through the tough business of food manufacturing by providing only the high quality product, focusing on consumers satisfaction and health. That’s why, in 2002, Nestle USA became ‘’T3 Information Technology Enterprise of the Year’’ award winner.