Analysis of Nestles Position in India
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Published: Mon, 5 Dec 2016
Nestle is one of the largest companies in the world. It produces different types of products and was based in different parts of the world. It was started in 1868 by Henri Nestle, who set up a sales office in London. The company went under the new ownership when Henri Nestle retired in 1875.Nestle opened its first factory in 1901 in UK and got merged with the Anglo-Swiss milk company which was founded by Charles and George page. It has acquired its own brand image over the years by innovating new products and attracting people all over the world with its quality products. Nestle became one of the leading companies in the world when it started producing chocolates. The chocolate production began at Hayes in 1913 and the famous white chocolate Milky Bar was released into the market in 1937. The other products of Nestle are coffee, milk, chocolates etc. The company has its branches in 86 countries like India, Pakistan, US, South Africa, brazil, Sri Lanka, France , Middle east countries etc all over the world and nearly employs 283,000 people. It has over 250,000 shareholders, while most of them are from Swiss. Nestle products are well known in the whole word for their wide range of products which include coffee , infant nutrition, baby products ,chocolates , milk products etc. Nestle products are cheaper when compared to other milk products and chocolates and the reputation in the market is good which makes the company to release wide range of products in the market across the whole world. Nestle is the world leader in the categories of coffee, infant nutrition, chocolates etc. The company respects the opinions of its customers and makes sure that the products are manufactured according to their interests.
FIVE COMPONENTS OF ARMSTRONG’S MODEL:
BASIS: the environmental factors that are to be taken into account as the essential background for the organisation’s HR strategies. These factors can be analysed by using SWOT or PESTLE analysis.
CONTENT: the details of the proposed HR strategies of an organisation must be included
RATIONALE: the business case for the strategy.
IMPLEMENTATION: finding the ways and plans to implement the proposed HR strategies.
COST AND BENEFIT ANALYSIS: analysing the benefits and costs of implementing a strategy and acting according to the outcomes that may occur.
NESTLE follows the strategies like commitment strategy, developing trust, culture management etc. By following and implementing these type of strategies, NESTLE has innovated and developed itself throughout the years.
Let us evaluate the HR strategy of NESTLE organisation using Michael Armstrong’s model for the strategy’s design.
BASIS: the environmental factors of the NESTLE organisation are evaluated using the SWOT analysis.
The company has a great support from its parent company which has a great influence all over the world. It has huge brand strength all over the world. The brands like NESCAFE, MAGGI and CERELAC which are generic to their product categories are very strong in the Indian market. Around 67% of the population use Nescafe, Maggi and Cerelac for their daily uses.
Another main Strength of the company is, it continuously introduces new products in to the market with innovative thoughts and attracts people towards it. It makes sure that its products are manufactured with quality. There are nearly 3500 scientists in the company’s R&D department to innovate new thoughts and ideas. It is a truly global company which is operated in 77 countries. The competition from other organisations doesn’t affect Nestle because of the low cost and high quality it maintains. It has a very strong work force unlike the other organisations.
Because of the uneven nature of the Indian market, the things get more complicated. It is very much important to maintain good hygiene standards, talented personnel in the food industries like Nescafe. It is very difficult to maintain these standards in the big countries like India which has a complex supply chain management.
There are lots of opportunities to the company in the huge country like India. There are lots of towns in India where the products of Nescafe are not available. It can extend to those towns and villages and can increase its market. The company can extend its product folio by introducing new products into the market.
As India is a huge country with lots of resources and manpower, it can be made as the export hub to achieve better results. Everyone is becoming a health freak now days, including the United States. So, health based products are having great opportunities in the global market.
The main threat for any organisation is its competitor. There is a huge competition among the organisations. Nestle faces huge competition from the organised and unorganised sectors. Moreover, the Indian government has decreased the import duty of food products, making the things worst. The organisation does not have any threats from the small scale industries but it will have threats from the organisations which are established with large investments and big brand value.
The performance of FMCG sector is very less in the past 2-3 years, even though there is a decent pace of growth in the economy of the organisation. Some of the markets in which the company is about to enter, are already mature regarding these products.
The main principle of HR strategies of the NESTLE organisation is its product’s growth through innovation and renovation. The other important strategies are
Attracting dynamic employees and giving training to them
Developing the management
Respecting other cultures and traditions
Providing training to the new comers
Some other principles of proposed HR strategies are maintaining diversity in the manufacturing of products, despite of introducing several products in to the organisation.
Let us have a look on the business case of proposed HR strategies of NESTLE organisation.
NESTLE has its Kit Kat manufacturing plant in York England. Ian Jobson is the manger of that plant. For manufacturing a ton of Kit Kat chocolate, it used to take like 38 man hours. It is a waste of time and man power and even it costs a lot of money to the organisation. To overcome this problem, they have implemented new strategies in the manufacturing of the chocolate. They have innovated and renovated their strategies and came up with a new strategy.
They have decreased the human labour and introduced robotics to make the work easier. They used robotics, automated packaging, and production line improvements and they have reduced the manufacturing time to 23 hours.
NESTLE makes sure that the proposed strategies are implemented without any failure. It provides the necessary resources and necessary funds to the HR department to implement their strategies. It follows different strategies and concepts to reach the better heights and to sustain in this competitive world. It has a research & development department, who works on innovation of the new products and renovating the available products of the company.
It opens new branches every year to attain a greater grip on the market.
It commits to a strong work to achieve better results
NESTLE makes sure that it follows all the local laws and legislations, as reputation of the company affects the sales of the organisation
It gives rights to the employees to question their superiors about an unfair evaluation
It motivates its employees, train them in maintaining teamwork, cooperate and integrate with the organisation’s strategies.
COST AND BENEFIT ANALYSIS:
NESTLE tries to decrease the extreme utilization of natural resources. By doing this, it benefits in increasing the human resources, expands contact to the financial resources.
The managers and the individual employees are very benefited by the HR strategies of NESTLE. The company believes in the individual achievement of the employee’s plays a major role in the development of an organisation. To encourage its employees, the HR department has designed a pay structure to its employees. The company even introduced practices like job enlargement to encourage their employees and to break the limitations of their work.
Let us evaluate the pay structure of the NESTLE organisation:
NESTLE suggests reasonable remunerations to the employees. The level of remuneration is maintained above the average in the industry.
The unpredictable part of salary is relatively big in rewarding an individual performance.
The variable part of salary for higher management is based on the performances and achievements of the individuals and their team.
The employees can apply up to particular number leaves either personal or medical.
They can have the assistance scheme for their children’s education.
The organisation offers provident fund to their employees.
The other benefits for the employees include retirement gratuity scheme, conveyance repayments, insurance for accidents etc.
The other concepts that can be included are providing recruitment services, talent management and international HR etc. The recruitment services of NESTLE are very much recognised all over the world for their methods of recruitment. They don’t just try to fill the jobs but makes sure that the right person is selected for the right job. They select the people who are dynamic, hard working, flexible and honest. Those candidates are selected whose values are similar to the company’s culture. The HR officials are the one who takes the final decision in selecting a person.
The company even maintains a Rewards and Employee relations team, which provides guide lines to the employees in necessary situations. They provide guidance to the line managers, HR managers, research and development department etc. It provides a health environment to its employees. In a multi-national company like NESTLE, the employee turnover is less than 5%.
Nestle gives importance to the personal life of their employees. So, it makes sure that the work life and personal life of their employees is balanced. It maintains a separate policy in which work/life balance is given importance.
REWARDS AND INCENTIVES:
Nestle encourages its employees by giving rewards and incentives. By doing this, the employees who are eager to win awards will work hard for the development of the organisation.
Competitiveness among the employees will result in the growth of the organisation. So, the organisation even offers a competitive reward package to its employees.
The company awards ‘NESTLE idea award’ every quarter to the employees who come up with innovative ideas. These are the different concepts and theories of NESTLE.
Michael Armstrong gave a brief explanation on the components that are to be included in the Human Resource strategies of an organisation. He covered all the important aspects which play a major role in the development of an organisation. By evaluating the HR strategy of NESTLE using Michael Armstrong’s strategy model, we can understand that NESTLE is very keen and careful regarding the strategies it had implemented and it is going to implement in the future. NESTLE concentrated on its strengths, its weaknesses, the opportunities it has and the threats it has to face and planned strategies to face these problems. By the Michael Armstrong five components model the HR strategies are evaluated.
In the first component basis for the organisation, HR strategies are estimated using SWOT analysis and the strengths and weaknesses are evaluated and future opportunities and threats are analysed. In the second component content the innovation and renovation of the Nestle organisation are discussed where the strategies state the need for development in the management and opportunities for the skilled employees. In the third component, Rationale shows the reduced man power to increase productivity by using robotics as a strategy which gave good results by decreasing man power to 23 hours from 38 hours. In the fourth component implementation stated that the need for urgency for the development of organisation by increasing the branches of nestle every year. In the fifth component cost and benefit analysis states the remuneration of the employees it depends on the individual performance which reflects the NESTLE organisations growth.
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