Organizational Structure of a Multinational Company

Organizational Design and Structure of Nestle

Nestle S.A., a Swiss multinational company based in Vevey, is the world's largest beverage and food company. It is renowned for its attempts at leading the world market in Nutrition, Wellness and Health. The company owns numerous brands, manufacturing diverse products, including beverages like bottled water, coffee, and milkshakes, infant formula, breakfast cereals, seasonings, healthcare and performance nutrition, sauces and soups, refrigerated and frozen food items and pet foods, in several world markets (Lee, 2014).

Organizational effectiveness represents a sum total of company goodness and factors like production, turnover, output quality, cost performance, efficiency, and profitability (Katz & Kahn, 1966). Effectiveness denotes the organization's ability to accomplish its aims and fulfill needs of different stakeholder's (Khandwalla, 1995). Nestle's official website claims that stakeholders of the company include company employees, suppliers, distributors, investors, partners, shareholders, customers, regulatory authorities, etc. (Lee, 2014).

Organizational Structure

In the contemporary global business scenario, several international companies employ a mixed or hybrid structure, where two, or multiple, structures are used, or different structures' elements are combined (Daft, 2012, p180). Nestle generally displays distinct traits of an international matrix structure. It owns local firms in a majority of countries. Nestle Group divides its companies by geographical zones (America, Europe, Asia, Africa, and Oceania) for the major part of its business in foods and beverages, with the exception of globally managed divisions, including Nestle Waters, Nespresso, Nestle Professional, Nestle Health Science and Nestle Nutrition. Nestle, being the world's largest food brand, discards the notion of one single, global market, making use of geographic structure for focusing on each country's local requirements and competition present. Nestle lays particular emphasis on regional manager's autonomy, as they are familiar with local cultures. Local managers are authorized to determine the portion size, flavoring, packaging, and other elements of a given product. Several of Nestle's 8000 brands have single-country registration (i.e. are not made and marketed elsewhere) (Lee, 2014).

Because of its advanced technologies and firmly entrenched product lines, Nestle can make the most of an international geographic structure, dividing its global marker based on geography, and aiming for lower manufacturing costs in different countries, while meeting diverse sales and marketing needs across different regions. With total control over functional activities, all regional divisions have to report to the chief executive officer (Lee, 2014). The Swiss headquarters, typically, work in unison with each geographic unit, establishing an overall company strategy that guides the SBUs (Strategic Business Units) and Zone Management. The three business zones of Nestle geographically work in collaboration with SBUs and local markets. They play the basic role of business enablers, linking business centers with the market. A common vision enables the global employees of Nestle to comprehend company direction, as well as how to accomplish the collaboration through common values, tools, and strategies. Additionally, SBUs specializing in a certain category, for instance, Chocolate, Beverages and Coffee, or Pet Care, work in collaboration with the Research and Development department (R&D) in order to ensure that all foods and beverages the company produces are new and innovative, and satisfy customer expectations. They also assist markets in accomplishing brand and business goals (Lee, 2014).

Nestle has also instituted Beverage Partners Worldwide, Cereal Partners Worldwide and other joint ventures, while owning a pharmaceutical firm, Alcon, which leads the world in the eye care sector. Nestle also owns a considerable share of the global cosmetics leader, L'Oreal. The aforementioned facts illustrate that the global hybrid / matrix structure of Nestle enables it to work efficiently and effectively. This is best evidenced in the balance achieved between geographic localization and product standardization, and when resources are allocated with effective coordination (Lee, 2014).

Does the organizational structure of this corporation work? Are there things that could be improved?

National Culture Practices

Cultures of different nations shape leadership styles and strategic decisions (Schneider & DeMeyer, 1991), in addition to employee performance appraisal and other human resource practices (Luthans, Welsh & Rosenkrantz, 1993). Cultures that have high power distance necessitate obedience and loyalty to higher authority. Management, in such cultural settings, often appraises employee performance on grounds of behavior-based, not results-based, criteria. Moreover, in view of Hofstede typology, one can easily understand impact of culture on performance-related practices in the nation (Dartey-Baah, 2013).

Nestle could gather, process and offer information on its complete operation, including product design, manufacturing, inventory, order processing, purchasing, human resources (HR), payment receipts, distribution, and future demand forecasts through its ERP (Enterprise Resource Planning) system (Lee, 2014). Organizational culture's relationship with HR practices may be understood by studying the interplay of employee behavior in firms despite prevailing organizational cultures or rules. When the organization's members acknowledge and adopt organizational culture, they can choose behavior and strategy that matches both organizational activities and their personality (Dartey-Baah, 2013).

Diverse cultural categories imply individuals managing their life in entirely different ways. All are human beings; however, they fundamentally differ from one another in behavior, in the same way as three different animals (e.g. A cat, a horse and a dog) would. The above statement is a simple means of explaining cultural diversity. It is just as hard, in certain situations, for one personnel category to comprehend the hopes or targets of another category, as it will be for cats to comprehend the disappointments or dreams of horses (Lewis, 2012).

Nestle, with a well-defined socio-cultural image, captures consumer behavior, and plans effective, smart global business strategies. One example of the effectiveness of Nestle in respecting African nation's socio-culture is its chicken bouillon cube, popular in developed nations for enhancing dish flavor; in low-income African countries, however, the cube is mixed directly with rice and consumed (Lee, 2014).

Organizational revitalization in strategy and structure