NESTLE – Change Management Assignment Help

Introduction

Changes for organizations have become a necessity for their survival in this competitive global environment. In order to be able to improve business and at the same time to retain stability amongst competitors, organizations regardless of their size have to go through ‘change management’ process.

For the overall smooth and hurdle free operation of any organization, the top management and leaders has to perform certain changes. However such changes before implementation should be well planned and also needs to be well organized, keeping in mind the impact of changes that may have on the organization. Nestle in a multinational packaged food and beverage company that was founded and headquartered in Vesey, Switzerland. By 2000 the company was considered as one of the world’s largest food company with over 500 factories around the world.

Such large organizations operating on global level have their advantages and disadvantages; one of the core issues with such organizations is managing the change in that organization.

Problem Identification

Change management

Organizational change management is generally considered as a basic skill for which most managers and leaders need to be competent about. The overall process of identifying organizations, immediate and long-term objectives require specific strategies to be monitored regularly (Cairns, 2011).

Back in the days, when Nestle started its operation it only used to sell through sales agents to other foreign countries, later in 1900s, the company changed its approach towards global expansion that resulted in purchasing local subsidiaries in other foreign markets. Managing change in any organization is challenging and if change has to be implemented and managed in large organizations like Nestle then it becomes more complicated.

 

First order or Second order change

Nestle took an approach in order to implement changes, such approach can be considered as second-order change according to the case. The difference between first order and second order change is such that in first order companies usually refers to an extension of past practices and mainly focuses on doing a better job. Whereas in second order change that was implemented by Nestle is more related to complex changes that result in exceeding existing paradigms and also require new knowledge and skills. In second order change it mainly involves behavioral changes and individual belief systems that may impact on the relationship within the organization.

Peter Brabeck

Under the leadership of Peter Brabeck, Nestle adapted second order change, which in the case of Nestle can be describe as to do something significantly different as compare to what the company has been doing. Such change process is irreversible, once its been implemented then its really hard to return to the previous stage (Lund. T, 2006). However Nestle went for both the first-order and the second-order change.

In the beginning Nestle adapted first order strategic change, in 1900s Nestle only sold through agents to countries that were outside of its home market. However the company soon changed its approach to expand globally by purchasing local subsidies in international markets. With the implementation of this change it helped Nestle in maintaining goals and other organizational purposes.

Another strategic change that Nestle adopted was during the WWI, due to the increase in demand for dairy products, the company took the advantage to expand its operations in U.S., by acquiring various factories that were already established in that market. Later on the company realized that it has to move its managers to other locations, after the WWII, the expansion of Nestle took place. During this time the company had a feeling of seclusion, as for this reason Nestle started to move its executives from the home base location of Switzerland to other offshore markets. This step was initially taken in order to improve the efficiency and productivity of the company.

Under second order change it fundamentally alters the organization to its core, few strategies that Nestle adapted clearly highlights below that few of the changes made in Nestle were second order.

 

 

Second order change for Nestle first took in 1974, when the company decided to diversify its products after acquiring a cosmetic company; such decision resulted in the transformation of products of Nestle as it became a major shareholder of the L’Oreal company. The next venture was when the company acquired Alcon laboratories, a pharmaceutical company. Mainly because of such decisions that were made by the company, Nestle is still facing the consequences, as the shareholders now believe that by making such acquisitions the company over extended it financially.

Incremental approach to change

Brabeck Letmathe the CEO of Nestle at the time when Nestle went through various changes, as a leader and CEO of the company his believes and opinions were a bit different as compare to the previous CEO’s of Nestle. At the time when Mr. Brabeck joined Nestle, he thought that by bringing changes within the structure of the organization, the company will perform better and will achieve results more efficiently and for this reason Nestle spent almost $300 million on yearly basis. According to his approach his main focus was on the strengths of the organization and how can such strengths can be further developed. Under the leadership of Brabeck Letmanthe, a lot of emphasized was put on the need for incremental approach to change in Nestle. As he believed that with such incremental approach extra expenses could be reduced, which is acceptable from the management point of view. Peter Brabeck, thoughts and decisions regarding incremental changes that took place in Nestle were primarily based on his leadership mindset. According to literature, it wont be wrong to say that Peter Brabeck took incremental approach which previous CEO’s resisted.

Implication for Change Managers

Keeping in mind the change that Nestle implemented, the first implication for change managers within the company would be the need to be accountable for their roles and at the same time being transparent and focused on how best to create trust among themselves and other departments of the organization (Busco. C, 2006). With such foundation of trust among front line managers, it will be easier for the company to implement both first order and second order change. With such focus on being transparent it will eventually help employees from resisting from such change rather encourage to accept such changes with comfort.