Introduction

Nestle is one of the largest food processing companies in the world. Founded in 1866 in Switzerland, Nestle has diversified its range of products to coffee, processed foods, and has several products held under the brand’s name (Nestle, 2023). As a food and beverage company, Nestle has been making efforts into streamlining their global supply chain operations, production and packaging for purposes of sustainability, and promote community well-being around the world.

External Trends Impacting Nestle

Technological Trends: Technological trends like advanced production technologies (automation, Artificial Intelligence), digital technologies, data forecasting and analytics, and online retail or e-commerce technologies can impact managerial decisions at Nestle (Nestle, 2023). Technologies like automation and AI are used as production technologies, while digital and social media tools are used by Nestle for online marketing and advertising, increase brand awareness, customer engagement, and boosting overall sales for the company (Fig. 1). The increasing popularity of online retail platforms requires Nestle to use e-commerce technologies that can support their online sales and marketing strategies (M & Baskaran, 2020).

While Nestle continues to take advantages of major technological trends, the same can have certain constraints on managerial decisions. Managers are required to make investment decisions for digital technologies as well as other advanced technologies for production and packaging, further highlighting the need to implement cybersecurity practices for data protection (Nestle, 2023). The utilisation of e-commerce technologies requires managers to deploy stringent policies for data security and protection. This can restrict Nestle’s abilities to collect and store customer data safely, further influencing their marketing and product development decisions (Adams et al., 2022). There might be changes required in production processes and employee training requirements due to increasing technological implementations, which may constrain managerial decisions (Achtenhagen & Achtenhagen, 2019).

Environmental Trends: Operating specifically in the food processing sector, Nestle is vulnerable to environmental and sustainability trends. Growing environmental concerns among consumers requires Nestle to focus on sustainable outsourcing, production and processing of food items. The impact of sustainability trends is very high on the food processing industry as companies are involved with production and manufacturing, causing waste disposal issues and depletion of resources (Giacomarra et al., 2019). Climate change risks also require Nestle and other food packing and processing companies to comply with environmental and sustainability regulations (Figure 2).

Managers at Nestle need to focus on aligning sustainability goals with the overall organisational goals, while complying with regulatory requirements. To meet consumer expectations, Nestle’s managers must focus on eco-friendly outsourcing as well as manufacturing of eco-friendly products. It is important to identify opportunities and alternatives to make production, packaging, and designing of products more sustainable and environment-friendly (Gangi et al., 2020). Managers need to consider minimising waste/plastic disposal, reducing carbon emissions, and utilising fewer resources during manufacturing. Managers can also consider using sustainable materials for packaging products, but the same relies on research and development that could increase business costs (Fig. 3). Focusing on sustainable sourcing will require Nestle to modify existing supplier relations, increasing costs as well. Despite Nestle’s commitment to reduce carbon footprints, it may result in increased operational costs as the company may need to make changes to the organisation’s operations, production process, and eco-friendly initiatives (Nestle, 2023).

Figure 2: Cost of Envinromental Damage linked to Nestle

Source: (Naik, 2020)

The Impact and Interest of Nestle Stakeholders

Nestle caters to the needs and interests of a large number of stakeholders, such as customers, communities, suppliers, non-governmental organisations (NGOs), the government/regulatory, employees, industry and trade associations, reporting agencies, and the financial community or shareholders (Yoo, Lee, & Jeon, 2020). As a food processing company, Nestle’s two most important stakeholders would be its customers and suppliers.

Customers: Customers as crucial stakeholders of Nestle have a wide range of interests in the business and its offerings. Customers are interested in affordable products that can bring more value for money, while not compromising on safety and quality standards. Nestle needs to continuously introduce new product offering by innovating as customers are always on the lookout for variety, with a diverse range of preferences and tastes (Giacomarra et al., 2019). Offering products that promote health and well-being are important to customers as they align with varying dietary and nutritional requirements. Customers also expect a level of transparency and trust in the company’s offerings and initiatives, while wanting to stay informed about the environmental impacts of the products, ethical and sustainability practices, and sourcing methods of Nestle (Nestle, 2023). Nestle also caters to a wide range of customers by diversifying its range of products as well as improving its digital experience to maximise reach (Suchánek & Králová, (2019). Based on the Normative Stakeholder Theory, Nestle has a responsibility towards its customers to increase engagement, and to ensure that they meet the interests of their customers around the world (Fiandrino et al., 2019). Nestle’s moral and ethical responsibility require the business to interact with customers in a way that can help them ascertain the needs and interests of one of the key stakeholder groups for the company.

Suppliers: Suppliers are a crucial and primary stakeholder for Nestle, with a wide range of interests that support the company’s goals and operations. Suppliers are interested in fair dealings while ensuring transparency and fairness in negotiated terms, contractual agreements, competitive prices, and clearly-defined expectations and standards of quality (Giacomarra et al., 2019). Suppliers also want fair and reasonable payment for the goods or services they provide. They anticipate Nestlé to provide prices that are commensurate with industry norms and the caliber of their products. In order to prevent production delays or overcapacity problems, they want Nestlé to offer constant orders. Suppliers may benefit from long-term contracts since they provide security and future business assurance (Banaeian et al., 2014). In its supply chain, suppliers anticipate that Nestlé will uphold moral and conscientious business principles, such as fair labor, environmental sustainability, and social responsibility. Suppliers' aims in reducing their environmental impact can coincide with Nestlé's dedication to sustainability and eco-friendly measures (Gangi et al., 2020). As such, suppliers become highly important to Nestle’s sustenance based on the Resource Dependency Theory. The Resource Dependency Theory highlights the need for organisations to rely on external resources, like suppliers, to ensure organisational success (Rodriguez Serna et al., 2022). Nestle must continue to build and strengthen their relationships with suppliers by effective managing dependencies associated with resource utilisation and allocation.

Nestle’s primary means of sustaining Competitive Advantage

As compared to competitors, Nestle’s has managed to build a very strong online presence for its brand through its online/e-commerce websites, as well as through the adaption of advanced technologies for production. Digitalisation has also enabled sustainability at Nestle, focused on responsible sourcing, packaging and distribution of products.

Nestle’s top competitors like Mondelez, Unilever and Heinz are behind on the number of fans that follow these companies, further increasing Nestle’s popularity across digital platforms. However, despite the largest online/social media influence, Nestle’s online engagement with users falls short as compared to Mondelez’s efforts, which highlight a huge engagement rate of 0.332% with its online users or customers (Fig. 4). Currently, Nestle competes with the largest food and beverages brands across online platforms, hihgloghting the need for more proactive strategies by Nestle to increase online engagement, either by posting more and/or increasing interaction through their social media posts.

Digitalisation for Sustainable Processes

The use of digital technologies at Nestle has enabled the company to improve its greenhouse gas performance systems, helping them reduce carbon footprints in production and packing processes. Nestle’s efforts to integrate digital technologies for sustainability led to the company investing in a new technology in 2022 by partnering with OpenSC, with the aim to improve end-to-end traceability and transparency in supply chain operations (Nestle, 2023). With OpenSC, Nestle was able to bring more transparency and efficiency in supply chain operations for Reviving Origins coffee, as a part of the Nespresso AAA Sustainable Quality Program. The implementation of this technology helped Nestle and OpenSC ensure that they smallholder farmers receive premium grade coffee either via cash or mobile money (Nestle, 2023). The system used QR Codes and smart devices to link suppers and farmers, and provide them more information on how the supply chain systems work. For the future, it will be important for Nestle to efficiently utilise AI technologies to support their existing supply chain networks, and also improve transparency and traceability with their suppliers (McFarlane et al., 2020). In line with Nestle’s sustainability agenda for the present and future, the company’s attempts to adopt digital technologies to make supply chain processes more sustainable and transparent can help them collect primary data on emissions from farms and suppliers, further improving their systems and efforts towards sustainability (Nam et al., 2018).

Online Recipe Platforms for Customers (Nestle Recetas)

Nestle has a huge brand presence online, as compared to its competitors. Nestle has a unique way of keeping its online customers hooked and engaged with its products. One such effective online activity deployed by Nestle is Nestle Recetas in North America, which gives its online customers access to a wide collection of over 20,000 recipes. This online platform has not only enabled Nestle to connect more closely with customers, but also helped them gain more insights on customers’ culinary experience, thus, increasing consumption rates of Nestle products (Nestle, 2023). By engaging directly with customers through culinary recipes, cooking tutorials, nutritional guidance/data, and connecting with chefs around the world, Nestle has been able to drive consumption sales in Brazil by 30% (Nestle, 2023). Such increased engagement through unique online campaigns increases Nestle’s brand reputation, while allowing such brands to connect with customers through effective communication strategies. However, Nestle’s ability to effectively engage with its online customers is still lower than what their competitors focus on, which requires Nestle to go beyond just attracting fans to their social media pages (Fig. 4). Nestle also needs to actively engage with their posts and online customers if the company wants to stay ahead in the online competition (Lutfeali et al., 2020).

Creating a Learning Organisation for Improvements in Sustainability

Employees’ Perspective

Nestle strives to establish an ethical, inclusive, diverse, and moral workplace that benefits people individually, empowers workers, and benefits our company as a whole. The organization is working to create a workplace that is gender-balanced and provides equal opportunity for individuals with disabilities, building on the success made in improving cultural diversity and inclusion thus making it an organic organisation. Nestle is currently focused on building a healthy and engaged workforce that is prepared for the future with the necessary digital and artificial skills because employee health and well-being are critical components of a successful business, especially in light of the growing trend of remote work (Nestle, 2023). The company's People Strategy 2025 report details its talent acquisition and retention strategy for developing a workforce prepared for the future. The organisation cultivates an agile and purposeful work culture and works to establish leadership and management styles that are inclusive, disruptive, and inspiring (Nestle, 2023). By emphasizing an inclusive culture, Nestle better represents the community and society by focusing on employee diversity. According to Battistella et al. (2020), organisations need to adopt strategies to infuse inclusivity and diversity in their workplace culture, which can make them more flexible and adaptable to changes. An inclusive and diverse workforce also needs to be guided through effective training programs to help them up-skill and build existing knowledge practices. As such, the company’s leaders and managers must focus on the individual growth and development of employees, and ensure their goals align with that of the entire organisation’s strategic goals and objectives (Han et al., 2022). While Nestle already focuses on creating an inclusive and innovative work culture, it will also be important for the company to focus on employee training and development, and employee agility to create an organisational culture focused on creativity and continuous learning (Sulaiman et al., 2019)

Facilitating Cross-Cultural Collaboration (Organisational perspective)

Nestle uses a matrix organizational structure that promotes cross-functional cooperation and accountability to create a learning organization from a sustainability standpoint. The supply chain, marketing, corporate responsibility, research and development, and other functional departments frequently contribute to and work together on Nestlé's sustainability projects. The implementation of a matrix structure guarantees that sustainability objectives are incorporated into the organization's core operations and taken into account by various business units (Hejase et al., 2018). Departments can work together on sustainability projects more productively thanks to the matrix structure. For instance, the supply chain team and the research and development division can collaborate closely to create environmentally friendly packaging materials. With such an organisational structure, Nestlé can respond to new sustainability opportunities or challenges more quickly and can adjust to changing consumer and regulatory demands (Aguilera, 2018). The company's promotion of sustainability as a core value is greatly aided by this culture. This culture is reflected in Nestlé's "Creating Shared Value" (CSV) approach, which emphasizes that value creation for shareholders should also benefit society and the environment (Nestle, 2023). Employees are encouraged by this cultural feature to think about the wider societal and environmental effects of their decisions in addition to profitability.

Conclusion 

The analysis of the internal and external elements affecting the company is the main goal of this report for Nestle. Through adapting to various technical and environmental developments, Nestle has been working to promote sustainability and provide customers worldwide with environmentally friendly goods. Nestle is a food processing company that works with a variety of stakeholders, including suppliers, customers, government agencies, and regulators. The company is currently working to build a healthy organizational culture, with a particular emphasis on worker development and training in order to ensure its long-term viability.

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