Discuss the Organization Change That Nestle Has Undergone

1. Discuss the organization change that Nestle has undergone.

By 2000 Nestle was one of the world’s biggest food companies with 500 factories operating in 80 countries employing 224,000 people with annual sales of $47 billion.

Nestle has long been known as a worldwide leader for manufacturing products such as chocolates and different cosmetics. Nestle has undergone through a huge number of transformations throughout the years. (Palmer, Dunford & Akin, 2009).

In 1974 Nestle diversified outside the food industry in order to increase its growth in operations. It became a major shareholder in the cosmetic company L’Oreal. . This move was a bit challenging as many experts believed that Nestle may have overextended itself with acquiring L’Oreal. One of the reasons being that L’Oreal had large amounts of debt. Later on, Nestle made a second foray outside the food industry after acquiring Alcon Laboratories, a U.S manufacturer of pharmaceuticals products.

2. Identify whether the changes were first-order and/or second-order changes and the rationale for your decision.

According to the case the answer would be both. In the past Nestle underwent through several second-order changes. For instance, by the 1900’s it changed its approach to global expansion and started acquiring local subsidiaries in foreign markets. When there was a demand for more dairy products Nestle went into that market. Later on it became a major shareholder in L’Oreal. And then it acquired Alcon Laboratories. Our book mentions that second order changes are those that are transformational and radical in nature and since Nestle went into different industries those would more likely fit into that. However the CEO Brabeck-Letmathe has stated his desire to implement slow and conscious changes instead of undergoing radical changes. As a result CEO Letmathe seems to be implementing

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