Nestle Case Study

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Managing Change MGT 420
Joselyn Ortiz
Nestlé Case Study
Did Nestlé undergo either first-order and/or second-order change according to the case? Answer, listing examples of types of change from the above story. From what I read the Nestlé company under went both the first-order and the second-order. In the First-order the strategic changes the company took string in 1900’s. The Swiss based company only sold its products through sales agents to outside countries. It soon changed its approach to global expansion by purchasing local subsidies in foreign markets. This changed maintained the companies’ goals and organizational purpose. The next strategic change was during the WWI with the increase demand in dairy products. Nestlé took this opportunity to expand in the U.S. by acquiring several already established factories. The most important change affecting the expansion of Nestle was WWII. During this time there was a feeling of seclusion for Nestlé as it’s based of operations were in Switzerland. They started to move the executives from the home base of Switzerland to offshore markets. The U.S. move was part of Nestle strategy of increasing the efficiency and productivity of the company. Second-order for change for Nestlé was in 1974. This is the first time the company diversifies its products by acquiring a cosmetic company, this was a transformation from the products of Nestlé. This acquisition alters the fundamental product line of the company. In 1974 the Nestlé Company became a major shareholder of the L’Oreal Company. Due to this choice Nestlé is still dealing with the consequences of the partnership. The company shareholders believed that Nestlé over extended itself financially with this acquisition and the debts that came with it. The next venture in diversification of Nestlé was the acquisition of Alcon Laboratories Inc. a pharmaceutical company. Maucher continued to improve the financial situation of the company in the 80’s. It made some strategic acquisitions to strengthen the company and let go any companies that didn’t make sense financially for them. Brabeck-Letmathe emphasizes the need for an incremental approach to change. Do you agree that this is what he has done? Discuss the differences and similarities between his view and your view of what has occurred at Nestlé, both historically and in recent times. I do agree that the incremental approached worked for Nestlé. Brabeck-Letmathe started by restructuring. The restructuring played a large part in the success of the company; he took small steps to achieve his goals. He overhauled the executives’ board by replacing them with 10 new executives, which I think was the right approach at the right time. I mean how was he going to implement any changes for the company with executives who are not necessarily willing to see his vision. Brabeck-Letmathe views his focus as developing the strengths of the organization and holds the view that radical changes is ideal for a crisis but if a company is doing well, then unnecessary change should be questioned.(Palmer) I think the small incremental changes that were taken were right for them. Just like we understand that if something is changed to quickly and time is not set aside to absorb these changes it may not work. Change itself is something that most people are not willing to do, so if you take small steps and take the time to absorb the change it will work. I mean if the company changes to rapidly it doesn’t have enough time to catch up, Nestlé had enough time to absorb the change and make any adaptations that were necessary. What implications for change managers would apply specifically to Nestlé? Outline how the Nestlé management team may have reacted to each implication. The implication of change manager that would apply to Nestlé would be the first change. “Care needs to be taken in assuming that types of organizational changes can be neatly categorized as small,...
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