Npi Is Robust And Stable Organization Management
Nestle Philippines, Inc. is a robust and stable organization which brings the best food and beverage throughout the stages of the Filipino consumers lives. It is the top companies in the entire Nestle world, and is among the country's Top 10 Corporations. Its products are No. 1 or strong No. 2 brands in their respective categories.
The reasons that Nestle enter into Philippines are population of Philippines. According to Central Intelligence Agency (CIA), the total estimated population of the Philippines in year 2012 is about 103,775,002. Compared to the population of other countries, Philippines ranks as the 12th most populated country in the world. (World population review, 2012) Because of the market base of Philippines is very huge, Nestle decided to enter this country and provide them food and beverage to continue their daily lives. Nestle Philippines, Inc. is located at the city of Makati. With a population of 529,039, Makati is the 16th-largest city in the Philippines. (National Statistical Coordination Board, 2010) Although Nestle Philippines Inc. didn't full locate at the biggest city, but Makati also is a potential city to enter.
Besides that, geographical location also is one of the reasons that Nestle enter Makati, Philippines. The city of Makati in the Philippines is one of the sixteen cities that make up Metro Manila and one of the most populous metropolitan areas in the world. Makati is known for its developed business district, making it one of Asia's important financial, commercial and economic centers. Major shopping centers, condominiums, financial hubs, hotels, and entertainment hubs are located around the city. Thus, Makati is a strategic location for Nestle to enter and continue their businesses at there.
Furthermore, cost is one of the reasons that Nestle enter Philippines. Philippines is one of the low cost country in the world. The latest value for Cost to export (US$ per container) in Philippines was 630.00 as of 2011. Over the past 6 years, the value for this indicator has fluctuated between 771.00 in 2009 and 630.00 in 2010. (Trading Economics, 2012) It means that Nestle can export their products into Philippines by low cost. It can minimize the cost and save the money to do other things.2.0 ANALYSIS2.1 GAINS2.1.1 Sales Increased
Nestle successfully enters into Philippines country and made its presence in 1911. The company has been able to generate profit while they run the business in Philippines. Nestle is well positioned to carry the increasing affluence of emerging markets with its strong presence throughout the emerging markets. For 2011 the Nestle Group reported sales of CHF 83.6 billion and 7.5% organic growth on top of good growth in recent years. The organic growth was composed of 3.6% pricing and 3.9% of real internal growth. Nestle continued to grow in all regions of the world, 13.1% in Asia, including Philippines. (Annual Report Nestle Inc., 2011). By entering into Philippines market, Nestle achieved their new high sales record and racked up sales of P92 billion and in 2009 generated sales of P86 billion.2.1.2 High Market Position
As we know, Nestle has the advantage in their beverage products such as Milo, Nescafe, Nido, Coffee-mate and Maggi. These products become icon of sorts in Philippines. Hence, strong brand name of Nestle successful brings it to a high market position. Because of the beverage products and the strong brand name, Nestle can easily enter into Philippines market and generate more sales. And the brand which is generated highest sales is their second-biggest-selling brand, Nescafe, but there was a time when the Philippines used to be self-reliant on coffee. The local coffee growing industry in the Philippines actually declined over the years. What Nestle are trying to do is work once again with the farmers and the government and they have just signed Memorandum of Agreement (MOU) with the government recently to start to drive once again the Philippines to be a major coffee producer. The key point here is Nestle obtain the greater control in Philippines market and it becomes a very good business arena to Nestle to expand their business. Nestle keep continuing invest in Philippines by using direct investment in the form of new factory to make coffee products and creamer products such as Coffee-mate Non-Dairy Creamer at the new P5-billion factory in Tanauan, Batangas. And these products are Nestle locally produced, which used to be imported from Malaysia, Mexico and Thailand.2.1.3 Gained Better Market Information
Third, Nestle gained better market information from Philippines market. A company requires current, dependable, constructive information to make effective decisions (A Morris, 2012). Philippines market posses large population consumer, and the information collected are more complete. Therefore, Nestle can understand their target market better including the direction of consumer purchase. The company also can get more feedback from every segment of consumer with different age, group, education, occupation, etc. The feedbacks help Nestle divide the market clearly and understand the global markets' need and what consumer wants. For example, Milo is one of the brands from Nestle that is consists of chocolate malt beverage that can be prepared with hot or cold water. Through the all information get from the market, Nestle understand its target market of Milo is the kids. Therefore, Nestle mention that the Milo is helpful in kid's development. And also, Milo has long been known as an energy beverage strongly related with sports and good health. Hence, the advertising of Milo is focusing on the kids and sports field.2.1.4 Fully Utilized Human Resource
Nestle can be said is the world's leading buyer of coffee, purchase about more than 750,000 tonnes a year (Thomson Reuters, 2012). In this case, coffee plantations and the human resource is a very important dimension. It relates to the coffee production. Nestle had fully use the human resource in Philippines. To obtain the high quality coffee bean, farmers play an important role. Hence, Nestle provide farmer training to the farmers in Philippines. Nestle trained coffee farmers how to better prepare soil and prevent erosion, water conservation, responsible use of fertilizer, and how to set up community nurseries to grow young coffee plantlets. The company invest in the farmer training is to preserve the environment and also help farmers ensure their long term economic future. Nestle's plant selection and breeding programmes offer farmers a crop variety that increases the productivity and quality. When the productivity increased, it will affect the sales company also increased and the production process will become more efficiency.2.2 SHORTCOMINGS2.2.1 Boycott
The World Health Organization and Philippine Health Department find out average 16,000 babies die every year in the Philippine from diseases associated using breast-milk substitutes rather than breast-feeding during infant's first 6 months. (Cher S Jimenez, 2007) The advertisement and promotion of breast-milk substitutes are banned by Philippine Health Department. Some of the companies make untrue claims implying that formula protects babies and boots intelligence, while falling to provide adequate information on the risks to babies fed on formula or how to reduce the risks to babies who have to fed on formula. Nestle is the target of a boycott because it contribute to the unnecessary death and suffering of infants around the world by aggressively marketing baby foods in breach of international marketing standards (Baby milk action, 2010) For example the Gloria acted to stop the promotion baby milk promotion mislead others mother because she realized she was cheated by their promotion.(Baby milk action, 2012) From the 2010 to 2011 sales report, the total sales were dropped 172 million and 1.5% (Annual report Nestle Inc. 2011). When Nestle realize sold sugar water mixed with chemicals as juice for babies [a reference to the actions of Nestle-owned Beech-Nut]. Nestle still continues to dump supplies of infant formula onto hospitals which is provide free milk for the purpose of inducing sales which acted without conscience (John Summa,1988). Infant formula is nutrition but no immunological protection, high cost and lack of clean water for mixing formula. These shows that company concentrate profit rather than infant health. Nestle boycott news widely spread around the world through media which will affect the sales of Nestle.2.2.2 Strike
Furthermore, there are issues involved political are strongly restriction from government which is the workers of the two Nestle companies in the Philippine are took strike against their own company. The new Nestle management in the Magnolia factory refused to negotiate with trade unions, dismissed eight union officers along with two union members and then suspended 200 other workers then the union members of the Illawa at Bukluran ng Manggagawa (IBM) took the strike action and a group of workers and supporters illegal protest outside the factory at Quezon City (Richard Girard, 2006). Furthermore, Nestle abusing workers' rights in Philippines and ignoring Supreme Court rulings. More than 600 employees at Cabuyao factory of Nestle Philippines, Inc negotiate their retirement benefits. The surveillance, harassment and other forms were not ended which violently harm the Nestle reputation and business. Cabuyao factory of Nestle Philippines build up the razor wire and watch towers for protection. Not only that, the secretary of the Department of Labor and Employment (DoLE) ordering the Philippine National Police (PNP) to send 1000 PNP, 400 police and 300 Blue Guards to control the situation which is violently to remove the picket line of workers striking in front of factory gate. Lastly, there was 23 workers was sacrificed in this action will affect workers confidence towards to Nestle. Supreme Court rulings had ordering Nestle management to call back and re-hire its workers and return to the bargaining table (Cabuyao workers briefing-February 2009). Nestle was listed as the " Worst Company for Union Organizing" by the International Labor Rights Forum (ILRF) in Human Rights Day 2008 (Bulatlat.com, 2009) so that it will affect nestle reputation and the productivity because lack of workers.3.0 RECOMMENDATION
Nestle boycott has been running since 1977 and is still ongoing today. Boycotters claim that the promotion of infant formula over breast-milk has caused the illness and death of infants. Babies in Philippines die because of the diseases associated using breast-milk substitute that is infant formula. To overcome the boycott, the company has to organize some campaign regarding the infant formula. The campaign should specifically tell the customer that breast-milk is always the best and infant formula is just a substitute for breast-milk. These campaign need to organize at urban and also rural area. Nestle has to educate the society that breast-milk is the best and most natural food for babies. However, infant formula is specially design for mother who cannot breastfeed due to health problem and need a safe and nutritious alternative for their babies. Nestle can also provide games on the spot of campaign regarding their product, so that customer will be attract and easy to understand the product of Nestle. Nestle has to make sure that the campaign brings a positive impact for the company so that those boycotters will change their mind and buy the Nestle product. Therefore, the sale of the company will increase and bring profit to the company.
Nestle has been facing a serious problem in the case of abusing workers' rights. As mentioned earlier, more than 600 employees of Nestle went on strike to enforce their right to negotiate the retirement benefits. Thus, it is important for Nestle to take care of the welfare of their employees. Nestle should prepare and plan for the retirement of employees by offering them the pension fund for the rest of their lifetime. For example, an employee who has reached the retirement age will receive three months' salary per year of service and thus help to provide the financial needs of employees at the time of their retirement. An attractive plan plays an important role in attracting and retaining skilled employees. By retaining employees, Nestle can minimize the hiring costs and improves the consistency of services. "The Watson Wyatt Retirement Attitude Survey" found that workers who value their retirement plans are more likely to stay with their employer. Therefore, by offering the pension fund, Nestle can able to keep and retain their skilled employees. It can also help to enhance employees' motivation and improve productivity. Besides that, Nestle should provide a good working environment which protects health and welfare of employees. A safe working environment will help employees to perform their job more efficiently and therefore increase the productivity. Each employee should not only care for their own safety but also that of his or her colleagues. But physical safety is not only one aspect of the working environment, and consideration should be given to other aspects such as industrial relations and encouragement of team spirit. Lastly, in most of the cases, employees will stay longer in a company who can provide them the full benefits.
In order to remains market leader, Nestle should aim to step up efforts to intensify their R&D activities and strive for innovation to improve products' quality. Without R&D, Nestle would never become the food industry leader in nutrition, health and wellness. In order to enhance its research base, Nestle should participate in exchanging technology with other research organization such us Unilever and Kraft Foods. Information and knowledge exchange should lead to enhance research capacity. Recently, Unilever have developed new technologies to improve the creaminess of their ice-cream without changing its calorie count. By exchanging the knowledge, Nestle can take the advantages to give customers a better experience and improve taste and quality of ice cream. Besides that, Nestle can able to modify existing machines and process system by exchanging technology, therefore increase efficiency and productivity. In addition, through R&D Nestle is able to build competitive advantage over its competitors by bringing innovative products to the market. More and more innovative products such as baby food and healthcare products should be made as they have strong R&D. For instance, adding healthful ingredients to improve taste and nutritional quality of their products in order to meet the highest nutritional standards. It can help Nestle enhance the company's innovative equipment for the purpose of new goods development. This also will help them to shape a proper competition to take advantage over their competitors and also to set up a better brand image.
Nestle sold their product by distribute their products to retail shop. Whenever customers want to buy Nestle products, they are required to purchase at particular retail shop. This has caused many inconvenient to Nestle's customers especially loyal customers. Many of the Nestle's customers are housewives and white collar workers. They are busy with their children and work all the time. Therefore, it is difficult for them to take out time to go retail shop especially for those who live far away from the retail shop.
Nestle should sell their product online though website. Many companies are selling their products online nowadays. Nestle should hire professional to help them create a website to sell their products online. Nestle can also provide hamper of Nestle for their customers so that it can be choice of customers for their partner, friend and family during festival such as Chinese New Year and Christmas. Furthermore, customers can also get discount if they purchase large amount of products online. Nestle also need to provide good after sales service for their customers. Fast and on-time delivery is one of the important factors to increase sales of the company. The company should has prepared ready stock and deliver to customer once they have made their payment online. Effective and efficiently of delivery would leave a good impression to the customer. Therefore, the customers will spread the positive word of mouth of Nestle Company. It is a free advertising for Nestle and the sales will eventually increases too.
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