SUBJECT: Proposal for restructuring Zone III operations to allow for greater cultural sensitivity that will in turn increase sales of Nestle products in that zone.
This memo outlines an action plan to increase Nestle product sales (particularly its Maggi line) in the individual markets of Zone III. The plan focuses on a redirection of organizational alignment, which will increase the market penetration desired by headquarters.
Zone III, as organized by Nestle headquarters in Switzerland, encompasses the geographical territories of Mexico, Central America and South America. This organizational structure is convenient geographically but lacks strategic soundness because of the nature of the markets. Any comments such as those found in the case that pertain to transferring, in whole or in part, concepts and products that have worked well in one market (West Germany for example) into another market suggests a lack of global sensitivity.
Nestle could show more global sensitivity by separating Zone III into sub zones, and giving each of these zones equal representation on the board in Switzerland. This is because the same food product (standardized by Nestle) cannot successfully be sold in differentiated markets by using standardized marketing techniques.
What works well in Northern Mexico, for instance, would not work in Eastern Brazil, while using the same marketing techniques in Chile that are used in Brazil are equally futile. In fact, the geographical territory that Nestle is calling "Zone III" is considered by most marketing experts to comprise at least 200 different markets, both culturally and economically.
Exhibit I attached to this memo shows the recommended restructuring of Zone III that might be of use in your presentation of this proposal. Now, what benefits could be gained by such an organization?
3. BENEFITS OF ZONE III REORGANIZATION
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