Operational Strategy in Nestle

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The University of Nottingham The School Business Studies


Submitted by: Saad Ahmad Khan

The dissertation submitted in partial fulfilment of the requirements for the completion of MSc Operations Management

July 2007


Table of Contents
Topic 1) Introduction What is strategy? Rationale Research objectives Research questions Company background and products of focus Structure of the Report 2) 3) Methodology Literature review Manufacturing strategy Logistics strategy and Distribution Strategy Warehousing strategy Sales strategy Corporate strategy 3) 4) Existing Products in the Beverages Sector Existing operations strategy Manufacturing strategy Logistics strategy and distribution strategy Warehousing strategy Sales strategy Corporate strategy Page No# 5 5 7 8 8 9 11 12 14 15 23 30 36 42 47 48 48 50 54 58 60


5) 6) 7) 8) 9) 10) 11) 12) 13)

Competition in the beverages sector Competitor strategy Discussion and recommendations Conclusion Bibliography Appendix 1 Appendix 2 Appendix 3 Appendix 4 (Complete product list) (Warehouse Sheikhupura) (Warehouse Kabirwala) (Warehouse Lahore)

62 65 69 79 81 85 91 92 93


Introduction What is strategy?
Strategy from a traditional point of view can be divided into four main points Plan: It’s usually a top down traditional approach. It is developed consciously and implemented. It is derived through a rational and analytical process Ploy: It is a subset of plan involving a bit of game play. Usually it’s a manoeuvre threatening action with little intention of implementation. Position: This is the relationship of company with its environment. This usually includes strengths, weaknesses, Opportunities and threats Pattern: It’s usually a stream of actions which shows a consistency of behaviour and can be intended or unintended. Protective: is usually internally determined and involves culture, ideology, characteristics shared by members of company. This is usually what determines norms and values. What is operation strategy and how does it vary from operations management? In a traditional set up operations were related to the day-to-day activities while strategy addresses the issues involving long time planning. In the present set up the way a company handles its day-to-day operations has had increasing effect on its long-term performance thus developing the field of operation strategy. In the not so far past the issues related to operations were not given their due importance. With the introduction of new ideas such as Total quality management (TQM), ISO 9000, Supply Chain Management (SCM) it was realized that much if not all research was oriented towards operational functions. This on the one hand made managers realize how they could increase profit. On the other hand Managers realized


that getting operations to work efficiently not only increases the efficiency but also reduces cost while giving an improved quality and service. Now we come to the differences between operations management and operational strategy. The boundary between operational strategy and management is a little sketchy but they have different characteristics and deal with issues in different manners. Operations management is itself the activity of managing resources and processes that produce and deliver goods and services. Were, as operations strategy is not concerned with individual processes but the entire business transformation that comes about by change in them. So while Operations management deals issues that are relatively immediate, narrow, specific and mostly tangible. Operations strategy is far reaching, broader and generalized. Operational strategy is comprised of overall cooperate strategy as well as the emergent strategies that emerge through operational experience. Thus it can be said that it utilizes both top down and bottom up approaches. Operational strategy can be divided into two parts for any company. The...
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