Description of the Business

Introduction to Nestle
Name of Company: Nestl S.A. Nestl AG Nestl Ltd. Nestl Caribbean Inc. Nestl Trinidad and Tobago Ltd.

Motto: Good Food, Good Life

Brief History
The Multinational Corporation known globally as Nestl Limited was founded in 1866 by Henri Nestl and is today the world's biggest food and beverage company. In 1905 Nestl, the Swiss infant formula producer merged with the Anglo-Swiss Condensed Milk Company and by 1914 the company was operating factories in the United States, Britain, Germany and Spain. Finally, in 1957 the

Nestl and Anglo-Swiss Condensed Milk Company (new name after merger) commenced its operations in Picton Street, Port of Spain, Trinidad. In 1962 the Anglo-Swiss Condensed Milk Company founded the Trinidad and Tobago Food Products Ltd. and has made many breakthroughs since then. Up until 1991 the Anglo-Swiss Condensed Milk Company changed its name to Nestl Trinidad and Tobago Ltd. Since 1866 Nestle has established 495 branches to date and Nestl Trinidad and Tobago Ltd. ranks within the first 10 in the Nestle worldwide rankings. In conclusion Nestl Worldwide Ltd. is a private limited multinational corporation with Sales of CHF 98.5 billion, with a net profit of CHF 9 billion. It employs around 265,000 people and has factories or operations in almost every country in the world

Report
Analysis Multinational Corporations

Nestl Ltd. is a Multinational Corporation, A company that operates globally through branches with their headquarters in one country (Stimpson& Singh, 2007, p.65). This is made possible through Globalization and Trade Liberalization which encourages companies to expand globally with fewer restrictions. Internal Factors that have led to Nestls global growth are; Nestl continues to maintain its commitment to follow and respect all applicable local laws in each of its markets. Nestl has positioned itself as a company promoting health and dietary preference to its consumers. Nestl acquires dependable worldwide brands to build up its product range. The Multinational Corporation chosen to be assessed is Nestl Trinidad and Tobago Ltd. (NTTL), a branch of the Nestl Worldwide Corporations with its
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head office in Switzerland and regional office in Dominica (Nestle Caribbean Inc.). Decentralization will occur in NTTL operating in Trinidad and Tobago because according to their International Corporate Business Principles located in appendix #2, it states that Nestle as a consumer driven company it allows the countries local, cultural desires to reflect the products and services they provide. Resulting in different decisions to be made by the manager of NTTL compared to other regional managers. The selection of host countries is important because the head office will want to maximize productivity and obtain a thriving global market share. The factors that led to Nestl Caribbean establishing a base of operations in Trinidad and Tobago are; Demand for products that catered to nutrition and dietary preference among consumers Geographical growth of the region

Local market and the purchasing power held by the consumer

Economic stability because of petroleum base

Liberalized Economy

Productive capacity

Natural resource over ability

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Firstly, like most economies operating in the Caribbean region, Trinidad and Tobago is a mixed economic system. Meaning there is both private and governmental influence on economic activity in the country resulting in significant fluctuations in the level of economic activity. Reasons for Multinational Corporations establishing bases of operations in Trinidad and Tobago are; to establish a thriving world market share and because of its natural resources. According to Questionnaire and interview information, go to appendix #1, operating within Trinidad and Tobagos mixed economic environment NTTL experiences several problems. These problems are centralized around the competition that a mixed economy allows from imported products. This causes NTTL to be more efficient in terms of pricing; the price must be right, effective and competitive, and productive efficiency must be right. This problem is a result of Secondary companies who because of an open market are able to export goods at a lower price and escape high labour cost. This also benefits NTTL because as part of the Nestl Worldwide group they use the liberalized environment to import their products and sell at competitive prices. Change in economic climate can greatly affect the size and growth of businesses operating within the environment. Inflation has been fluctuating within the Trinidad and Tobago economy. Presently Trinidad and Tobago is in an economic Boom due to the rising prices of oil, natural gas, petroleum and also its investment into infrastructure but it experienced a recession in the late 1980s

and medium 1990s. Nevertheless, NTTL has been operating within Trinidad and Tobago since 1957 and has continued to fortify its growth locally through the expansion of its manufacturing facility and its product range shown in appendix #3. NTTLs growth has been exceptional despite the many problems associated with operating as a Multinational Corporation within Trinidad and Tobago. These problems include environmental legislations that are forced on Multinational Corporations to regulate their activity, the lack of skilled labour and the lack of technology within Trinidad and Tobago. These cause many issues for new Multinational Corporations looking to invest in the Trinidad and Tobago business environment.

Globalization and Trade Liberalization

An assessment of how Globalization and Trade Liberalization affect the decision-making process and growth of Multinational Companies in Trinidad and Tobago cannot be made without first defining the terms. Globalization is defined as The integration of economic, cultural, political, religious, and social systems reaching the whole world and practically all human beings. (WorldTradeOrganization.org, 2007, Globalization). Also, Trade Liberalization can be defined as A market model in which trade in goods and services between or within countries flow unhindered by government-imposed restrictions to trade like taxes, legislation, tariff and non-tariff trade barriers (WorldTradeOrganization.org, 2007, Free-trade). Firstly, the effect of Globalization and Trade Liberalization on the Trinidad and Tobago economy causes changes in governmental policies, consumer wants and competition among businesses.

Trade Liberalization removes environmental protectionist policies placed by the government of Trinidad and Tobago, and where the laws are present it is difficult to enforce them.

Consumer wants change drastically because of the wider range of goods offered from foreign suppliers causing consumers to live above their means.

Local businesses are forced to increase the quality of goods and services that they provide due to foreign competition. This will increase their cost of production and may eventually lead to closure of the business.

These changes in The Trinidad and Tobago economy brought upon by Globalization and Trade Liberalization will affect NTTL as a Multinational Corporation operating in the business environment. In relation to economic changes NTTL operates on a survival of the fittest policy. In accordance to this policy NTTL has continued to improve its, quality, productivity and competitiveness since its manufacturing facility opened in St.Augustine in 1962. An example of this can be seen in their production methods implemented since 1972. The process is called the UHT (Ultra high Temperature) which allows dairy and juice products to be stored without freezing for long periods of time. Other processes used are Tetra Packing; this is a cheap, lightweight, efficiently sealed container. NTTL was the pioneer of these processes in the Caribbean region and it allowed NTTL to produce at a greater scale. As a result of Globalization and Trade Liberalization commercial economies of scale occurs and large organizations like NTTL can benefit from the cost reduction per unit it offers when it produces large outputs . This in turn makes NTTL more competitive and can import the products the consumer wants. Recent changes in consumer wants caused by the rapid exchange of free information which Globalization allows is a cause of concern for Multinationals in Trinidad and Tobago, particularly NTTL. Being a supplier of food and beverage, NTTL has to be conscious of both the ageing and growing population.

Consumers today are more health conscious than they were 20 years ago so more focus would be held on products that contain dietary fiber and anti-oxidants
(Medical healthJournals.com, 2008, Conclusion section, para. 1). In remedy to this

NTTL has added to their Corporate culture, innovate and renovate, this meaning a continual research and development of their products to suit changing consumer interests. This led to the creation of their Skim milk brand and other health awareness products, which can be found in appendix #3. NTTL has a stable approach to the policies imposed by the Government of Trinidad and Tobago, meaning NTTL has an agreement with the government to produce its goods with few or little restrictions and regulations. Trinidad and Tobagos economy is developing due to Multinational involvement so Government policies will aim to satisfy all four macroeconomic objectives and maximize taxation according to Dearden (1994). Therefore only environmental policies like the Consumer Protection Act (amended 1998) will affect how NTTL does business because they have been responsible for years of wealth to the local economy. Finally, CARICOM (Caribbean Community) and the introduction of the CSME (Caribbean Single Market and Economy) would have affected NTTLs operations. CARICOM promotes locally manufactured products when companies use local inputs in its production. Without Globalization and Trade Liberalization, CARICOM and the CSMEs function would not be possible. When NTTL sponsors activities in Trinidad and Tobago like their annual aerobics competitions or

endorses local dairy farms to improve their level of activity the government provides NTTL with tax breaks for their assistance in the local economy. Complying with the many effects and changes brought upon by Globalization and Trade Liberalization NTTL continues to maintain quality, innovative and positions itself as the number one food and Nutrition Company locally and globally.

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Decision Making Process

In accordance to the Globalized and Liberalized market in which Trinidad and Tobago operates, NTTL has to make decisions to uphold and further develop Nestls worldwide market share. These decisions must be accurate, timely, relevant and cost effective based on internal and external business information gathered. The branch manager for NTTL has to make decisions in accordance to the vision Nestl Worldwide has set for its companies. NTTL engages in the decision making process and has to follow the stages involved in decision making, these are; 1. Problem Analysis 2. Data Collection 3. Analysis and Evaluation of Data 4. Formulate and Test Alternative Strategies 5. Implement The Decision 6. Evaluate The Decision Following the decision making process will benefit NTTL when making future important, strategic decisions. NTTLs objective is to think local, get global, since the organization is decentralized from its head office in Switzerland, this method of decision-making makes the act of decision-making slower as it will take time to run through the department heads. In the event that an important structural change happens, NTTL carries out that decision in a structured and
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systematic manner and communication comes after according to questionnaire information, go to appendix #1. Also, operating within the Trinidad and Tobago economy there are other factors which affects how NTTL makes its decisions. NTTL makes its decisions by looking at the long-term benefit of these decisions. A factor affecting decisionmaking in Trinidad and Tobago will be the lack of Technology available for mass production. This affected NTTL until they decided to upgrade to Tetra packing in 1972, this was costly, but it increased production to 20,000 quarter-litres tetra packs per hour. This decision resulted in a future of large scale production for NTTL. Another factor affecting decision-making in NTTL is the social and cultural constraints of Trinidad and Tobago. According to the Nestl Corp orate Business
Principles, go to appendix #2, NTTL sup ports the United Nations Global Comp acts two guiding principles on human rights. Therefo re NTTL sup ports the p rotectio n of human rights within Trinidad and Tobago. These human rights laws forces NTTLs employees to comply with the laws Trinidad and Tobago. This therefo re imp acts on the social and cultura l decisions made by their Human Resourc e Dep artment as NTTLs rec ruitment and selec tion methods must be in comp liance with the traditions of Trinidad and Tobago but to maintain standa rds of other Nestls op erati ng worldwide.

NTTL is aware that increasing globalization is leading to the development of more international recommendations to developing countries. These recommendations are addressed to governments; they inevitably have an impact on a firms decision-making. Trinidad and Tobagos government in an attempt to
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cure unemployment increased spending in the areas of construction, education and healthcare in the past few years. This results in an increase in wages and higher national income. This is beneficial to NTTL because of the income elasticity of demand for the goods that they provide within Trinidad and Tobago. The manager has to make strategic decisions to supply goods that cater to consumers increasing income and spending patterns. NTTL has maintained its low income elasticity through its attempts to sustain a competitive price therefore making it recession proof to allow for clearer planning and steady growth. Questionnaire data has concluded, go to appendix #1, that NTTLs manager uses various decision-making tools, these include;

Critical Path analysis (CPA); This assesses the shortest possible time in which a product can be completed

Cost-Benefit Analysis (CBA) - a measure of the costs paid alongside with the benefits gained of completing a product.

Decision Trees- a quantitative decision-making approach of tracing the alternative outcomes of any decision.

These decision-making tools are a quantitative approach as NTTL focuses more on profit based objectives. The manager of NTTL also believes that there isnt one way of doing things and applies contingency theories to his decision-making focusing at the micro and macro economic elements aiming at both market and consumer interests.

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Evaluation
Based on objective one outlined earlier in the internal assessment on Multinational Corporations, NTTL has done a considerable amount in the development of Trinidad and Tobagos food and nutrition industry; see NTTLs timeline of important events in Appendix #4.The timeline shows how NTTL has continued to fortify its size, growth and profitability as it became one of the worlds largest Multinational Corporations and the largest food and beverage company by maintaining its standards worldwide. NTTL continues to uphold its customer protection, labour and an environmental standard stated in its Corporate Business Principles, go to appendix #2, and is one of the most ethical companies operating on the global market. Compared to other Multinational Corporations operating within Trinidad and Tobago NTTL has grown to be a part of the daily life of citizens creating goods like Orchard, Nestum and Nescafe to satisfy all age and ethnic groups within Trinidad and Tobago. Based on objective two on the effects of Globalization and Trade Liberalization, NTTL has been operating effectively despite the disadvantages like competition associated with free trade. NTTL reaps the benefits of economies of scale allowing it to produce a lower unit cost compared to other small organizations operating within Trinidad and Tobago. Based on objective three in this internal assessment on Decision-Making NTTL continues to make important strategic decisions which help it operate on the long14

term and consumer-market based interests. This can be seen when NTTL upgraded to Tetra Packing in 1972. NTTL also continues to make decisions that benefit Trinidad and Tobagos economy like the sponsorship of local events, including the annual savannah run and assistance of local dairy farmers. In conclusion, based on observations of NTTL being a Multinational Corporation operating and making decisions in Trinidad and Tobago it has grown significantly. This is only possible because of the expert decisions made by the local manager to implement contingencies as remedies to situations which involve the local and global-liberalized market. This expertise decision making despite its decentralized nature has led NTTL to achieve a place in Nestls worldwide top ten rankings. With respect to Globalization and Trade Liberalization it does more good than harm. The changes encountered in the social, economical, international and cultural only elevate NTTLs competitiveness on the global market.

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Recommendations

From the analysis and evaluation I have concluded some recommendations which will help the business to achieve further profitability.

Invite more schools to test out new products, so culture developed products can be assessed.

Invest further into customer service to satisfy local consumers. More focus on environmental protection is needed. NTTL has to make their environmental protection policies more publicized.

Establish environmental objectives, monitor progress, checks results and define future actions.

Communicate decisions beforehand to employees, when a change is about to be made.

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APPENDIX #1

Questionnaire Thesis: An examination on how Trade Liberalization (TL) and Globalization (GL) affect the decision making process and growth of Multinational Corporations (MNCs) in Trinidad

Business and Economic Systems

1. What type of Company is Nestle?

2. How does operating in a mixed economic system affect the production of Nestls goods? .

3.

Are there any advantages of operating in Trinidads mixed economy?

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Also, are there any possible disadvantages to nestle, by operating in a mixed economy? ... 4. What are some of the advantages and disadvantages of operating in the Caribbean Business environment? ..

5. How have the economic practices of Trinidad and Tobago impacted on Nestle Trinidad in terms of size and growth?

. Multinational Corporations

6. What are the reasons that contributed to the growth of Nestle worldwide?

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 ..

7. Describe the disadvantages associated with Nestle operating on a global level. ..

8. What are the factors that have influenced Nestle to establish a branch of operations in Trinidad? ...

The Impact of Trade Liberalization and Globalization on Nestle 10. The impacts of Trade Liberalization and Globalization are as follows, how do these impacts affect Nestle? These impacts are: (a) Changes in the economy

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 ..

(b) International agreements

(c) Changes to governments policies .

(d) Changing consumer tastes and wants .. (e) Competition from other Multinational firms . 11. Does Nestle export its products to neighboring Caribbean territorities? Yes NO

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12. What major social and economic changes as a result of globalization and trade liberalization within Trinidad and Tobago, has the company experienced while operating? .. 13. What measure has been taken to adapt to these changes? .. 14. What approaches has Nestle taken to maintain global market share? .. 15. How have CARICOM and the introduction of the CSME affected Nestls operations? .. Decision Making process in Nestle 16. What type of decision making process is used by nestle? ..

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17. List the benefits and drawbacks of the decision making process used? .. 18. Does nestle practice centralized or decentralized decision making? 19. Are important decisions based upon market interest or consumer interest? 20. How has the decision making process in Nestle Trinidad Limited been affected by Government (political and Legal)

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Appendix#2 Nestl Corporate Business Principles

Nestl is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices: Nestls business objective, and that of management and employees at all levels, is to manufacture and market the Companys products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, business partners and the large number of national economies in which Nestl operates; Nestl does not favor short-term profit at the expense of successful longterm business development, but recognizes the need to generate a healthy profit each year in order to maintain the support of our shareholders and the financial markets, and to finance investments;

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 Nestl recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust, and that without its consumers the Company would not exist; Nestl believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization; Nestl is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Therefore recruitment of the right people and ongoing training and development are crucial; Nestl operates in many countries and in many cultures throughout the world. This rich diversity is an invaluable source for our leadership. No single document can capture every legal obligation that may be required in each of these countries. Indeed, there may be conflicting legal requirements. Nestl continues to maintain its commitment to follow and respect all applicable local laws in each of its markets. If an interpretation of anything contained in this document is construed as contrary to local laws, such interpretation should not be followed in that country.

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Appendix #3 Nestls Main Brands

Today Nestl is present in different markets with the following main brands: Nescafe, Nespresso,Tasters Choice, Ricor, Coffee Ricoffy, Bonka, Zogas, Loumidis Poland Spring, Nestl Pure Life, Arrowhead, Vittel, Deer Park, Levissima, Perrier, S.Pellegrino, Ozarka, Water Contrex, Ice Mountain, Zephyrhills, Nestl Aquarel, Hpar, Acqua Panna, Nestea, Nesquik, Nescau, Milo, Carnation, Other beverages Libbys, Caro, Nestomalt, Nestl Nestl, Nido, Nespray, Ninho, Carnation, Milkmaid, Dairy - Shelf stable La Lechera, Moa, Klim, Gloria, Svelty, Molico, Nestl Omega Plus, Bear Brand, Coffee-Mate Nestl, Sveltesse, La Laitire, La Lechera, Ski, Dairy - Chilled Ice cream Yoco, Svelty, Molico, LC1, Chiquitin Nestl, Antica Gelateria del Corso, Dreyer's/Edy's, Drumstick/Extrme, Maxibon/Tandem, Mega,
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Mvenpick, Sin Parar/Sem Parar/Non Stop, Delta Nestl, Nan, Lactogen, Beba, Nestogen, Cerelac, Infant nutrition Performance nutrition HealthCare nutrition Bouillons, soups, Nestum, Neslac, Guigoz, Good Start PowerBar, Pria, Musashi Nutren, Clinutren, Peptamen, Modulen Maggi, Buitoni, Thomy, Winiary,Torchin, Osem,

seasonings, pasta, sauces Totole, Haoji Frozen foods (prepared Stoufferss, Lean Cuisine, Hot Pockets, Buitoni, dishes, pizzas, small Maggi, Wagner, La Cocinera meals) Refrigerated products (cold meat products, Nestl, Buitoni, Herta, Toll House, Sabra dough, pasta, pizzas, sauces, snacks) Chocolate, confectionery Nestl Crunch, Cailler, Galak/Milky bar, Kit Kat, and biscuits Nestl Professional Pet care Smarties, Butterfinger, Aero, Polo Chef, Davigel, Minors Purina, Friskies, Fancy Feast, Alpo, Gourmet, Mon Petit, Felix, Dog Chow, Cat Chow, Pro Plan, Purina ONE, Beneful, Tidy Cats

Appendix #4 Nestl Trinidad and Tobago Timeline

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Key dates 1866 1867 1929 1934 1938 1947 1957 Foundation of Anglo-Swiss Condensed Milk Co. Henry Nestls Infant cereal developed Merger with Peter, Cailler, Kohler Chocolats Suisses S.A. Launch of Milo Launch of Nescafe Nestl Alimentana S.A. (New name after merger with Maggi) The Anglo-Swiss Condensed Milk Company commenced its

operations in Picton Street, Port of Spain, Trinidad. 1962 The Anglo-Swiss Condensed Milk Company founded the Trinidad

and Tobago Food Products Ltd 1948 1969 1971 1973 1974 1977 1985 1990 Launch of Nestea and Nesquik Vittel (initially equity interest only) Merger with Ursina-Franck Stouffer (with Lean Cuisine) LOreal (associate) Nestl S.A. (new company name) Carnation (with Coffee Mate and Friskies) Cereal Partners Worldwide (joint venture with General Mills)

1991 the Anglo-Swiss Condensed Milk Company changed its name to Nestl Trinidad and Tobago Ltd
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1991

Beverage Partners Worldwide (joint venture with Coca-Cola)

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GA Cole, (1997), Management Theory and Practice 5 t h Edition: London: Ashford Color Press.

Stewart R, (1994), Managing Today and Tomorrow. London: Macmillan. Dearden C& Foster M, (1994), Organizational Decision-Making. Singapore: Longman Singapore Publishers Pte Ltd.

Nestle. (2008). Corporate Business Principles. Retrieved January 18, 2008 3:28:48 PM from http://www.Nestle.com/CorporateBusinessPrinciples.pdf

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