Nestle Tries for an All-For-One Global Strategy

Q2. What type of global business and systems strategy did Nestle adopt? Was this strategy appropriate for Nestlé’s business model?

Ans: The traditional strategy of decentralized strategy at Nestle had created inefficiency; preventing the company from competing successfully on e-commerce. Thus, in order to solve the problem, Nestle adopted the strategy of global standardization of operational process. This will help the company standardize and coordinate its information systems and business process rather than managing 80 different information technologies.

The adopted strategy was initially considered inappropriate for the wide spread business operations. Though at the end, it proved to be beneficial for the company in cost savings and increasing its overall productivity.


Q3. What management, organization, and technology challenges did Nestle have to deal with to standardize its business processes and systems?
Ans:
Management: The challenge faced was the decentralization of the business process. Each local organization conducted business in their own culture which prevented Nestle from leveraging worldwide buying power to obtain lower prices for raw materials.

Organization: The challenges Nestle faced in the organizational, was lacking truly global brand products. Its products were being rebranded, repackaged and reformulated according to the preferences of each region.

Technology: Technically, Nestle faced the challenges in supporting 80 different information technology units, running nearly 900 IBM AS/400 midrange computers, 15 mainframes and 200 UNIX systems. This prompted observers to describe Nestlé’s infrastructure as a Tower of Babel.