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Behind Nestle's 'local multinational' image

N Madhavan     December 17, 2013
Nestle is the 12th largest company in the world in terms of market capitalisation. The 147-year old Swiss company is present in almost all countries of the world. About 45 per cent of its revenues come from emerging markets.

But in most of these countries it is often seen as a local company with a strong Swiss heritage. How did the company manage this image?

Nandu Nandkishore, Executive Vice President, Nestle S.A let the secret out. According to him it is just two qualities that helped the company build this image - Trust and Belongingness.

"We build trust every time someone buys our products. This happens at least one billion times a day," he said. There is more to it. Trust is also built by the way the company manages its employees, deals with the civil society and governments. Nestle, he said, is fanatical when it comes to ensuring quality and total compliance with ethics.

As regards belongingness, the company's focus on shared values comes in handy. The company's mission statement was modified recently to include 'sustainable value creation'. Its shared value philosophy rests on three axis - rural development, nutrition and water conservation.

It also has a clear way of doing things. "What a customer sees, feels or tastes will clearly be local and what he does not will be regional," Nandkishore said. When it comes to quality and nutritional standards everything is global, he added.

The Swiss major also learns from different markets. It has extensive programmes to cross-fertilise ideas. There are lots of transfers of personnel and training programmes. As a policy, only one-third of the top management (even at the board level) comprises expats. Local managers occupy the remaining slots.

What has it learnt from emerging markets?

"We learnt how to handle crisis. They know that better from experience. In fact, managers who have strong emerging markets exposure have an added advantage at Nestle." he said.

The company has also learnt how to deal with local competitors who are nimble, agile, focused and hungry. "Local players are our toughest competitors. We need to act fast to take them on. We have broken up our operations into small units with full access to global support to deal with this challenge better," Nandkishore said.

He added that Nestle uses its technology to add value to the product offering to stay ahead and invested in people.

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