Global Expansion of Nestle

Nestle has been called the most multinational of multinational companies. So ubiquitous is the Nestle brand name in the United States that most consumers assume it is an American firm. The Swiss-based giant has established manufacturing operations in all major markets, with a concentration of facilities in Europe, North America, and Latin America. Only a fraction of Nestle's sales are made in its home market.

Nestle has more than 400 plants in 60 countries and employs almost one-quarter of a million employees. The company's origins can be traced back to 1866 with the Anglo-Swiss Condensed Milk Corp. (the first condensed milk factory in Europe) and 1867 with the Nestle manufactured infant milk food company. The two companies merged in 1905. The company immediately embarked on its global expansion agenda, establishing operations in Europe, the United States and Latin America between the 1900s and the 1930s.

Nestle is Switzerland's largest industrial company and the world's leading food processor. The food giant ranks as one of the 100 largest companies in the world. Its principal products include beverages (coffee, chocolate drinks, mineral water, and soft drinks), dairy products, infant formula, culinary products (soups, seasoning, condiments), frozen foods and ice cream, refrigerated products (yogurt and chilled desserts), chocolate and confectionary, pet foods, restaurants and hotels, pharmaceutical products, and cosmetics.

Nestle is the world's market leader

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itain), and Perrier (France). Where Nestle cannot acquire a competitor, the Swiss giant overpowers it. An example is Japan, where Nestle enjoys an astounding 70 percent share of the coffee market: "Nestle long ago trounced a joint venture between General Foods (now Philip Morris) and Ajinomoto" (Marcom, 1990, p. 118). But competitors have demonstrated resilience, even in markets dominated by Nestle. For instance in Japan, Coca Cola sells a canned coffee and Kirin Beer sells tea. Nestle's success is attributed to its ability to adapt to local conditions. The company's organizational structure is highly decentralized: "Nestle describes itself as a kind of 'confederation' in which 200 operating units of different sizes are associated with one another. This structure is compatible with the diversified nature of their activities and it enables the companies to remain relatively small" (Stafford and Purkis, 1989, p. 877). Nestle executives, notoriously loyal, spend years in the countries to which they are assigned. Until recently, Nestle has eschewed the American management ideal of rotating executives on a regular basis to broaden their experience of global operations: "Central to [Nestle's] success is understanding local

Category: Business - G