Nestle’: The Infant Formula Incident
Describe, in general, Nestle’s strategic orientation toward international business. Would you characterize Nestle as following a home replication, multi- domestic, global or transnational strategy? Defend your answer.
Multi- domestic and Global strategy would characterize Nestle toward international business.
Why Multi- domestic, multidomestic strategy tends to be used when there is strong pressure for the corporation to become accustomed to its products or services for local markets. When Nestle reputation was going down because of the baby formula, many companies and people didn’t want anything to do with them. Local markets, stores and hospitals strayed away from using Nestle products because baby after baby was dying or becoming severely ill. In other countries, they started using unhygienic water to stretch out the formula for more use because they thought Nestle was against breast feeding. As said in the textbook, for example, Kentucky Fried Chicken outlets in china are highly popular because they are perceived to reflect American values and standards, something that might be lost if the company tried to adapt the stores and products to be more like other Chinese food outlets.
Nestle was once the worlds largest industry with many sales to infant feeding formula, but when they were attacked with this issue it made everything a complete mess. Nestle products had nothing to do with the issue; it was the mothers that was contaminating the product that made everything a catastrophe. Mothers were trying to stretch the formula so it wouldn’t be a hassle to get more and breast feeding didn’t have to take place.
Why Global strategy? Global strategy is used when a company faces strong pressures for reducing costs and limited pressure to adapt products for local markets. Nestle was a product that already adapted among everyone until one incident happen. Nestle had... [continues]
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