Nestle Australia is a public listed company which as of 2017 ranks 195 out of 2000 top listed companies in Australia (Ibisworld.com.au, 2018). The major resource of income for the company is its varieties of foods and beverages which also include coffees, processed milk, infant foods, infant drinks, chocolate & confectionery, culinary products, pet foods, nutritional snacks and accessories (Ibisworld.com.au, 2018). Mr. Trevor Clayton is its chief executive officer (CEO). Few of its brands operating in Australia are Nespresso, Maggi, Nescafe & Nescafe Dolce Gusto, Kit Kat, Allen’s, Cerelac and others (Ibisworld.com.au, 2018).
The first quarter of 2018 has witnessed a growth in respect to profits, inventories and wages in comparison to the figure it was in December 2017 (Business Insider Australia 2018). The retail industry is one of the sectors to be benefitted mostly by this trend. Growth in inventories and profits as well is an indication that firms can keep experimenting with bringing new products to market. Growth in wages is mainly due to the increasingly growing fresh hiring. Those who are the existing workers have had a very minimal growth in their wages in the past two years (Business Insider Australia 2018). It can be said that manufacturers do still have the favorable condition of business in the country. The growth in the economy and the wages will surplus the buying capacity of customers (Zervas, Proserpio and Byers 2017). Hence, Nestle will continue to have favourable market competitions provide that it effectively applies its capabilities to bring new ideas and become more competitive.
Nestlé’s Kit Kat faces stiff competition from Cadbury, Mars Bar, Snickers and Bounty. However, it has to impose a strong fight to Cadbury in order to attain the top position in the list of top chocolate manufacturers in Australia (Delforce, Dickson and Hogan 2015). The Australian infant formula is growing in the Chinese market. Bellamy’s Organic in particular has had the maximum benefits of the incrementing demands. The high-quality food and effective formulas have worked for Australia (The Sydney Morning Herald 2018). There are opportunities; however, Nestle must learn from the mistakes and the others like Bellamy doing exceptionally well. The task does not look impossible indeed as Nestle has already been voted by Access to Nutrition Index (ATNI) as the world’s biggest company to have the best nutrition policies, delivery of appropriate & affordable products, product formulation and positive impact on consumer behavior (Buchler, Smith and Lawrence 2014).
The fourth industrial revolution is there and expected to bring a lot more in terms of advancement in manufacturing technologies. An Industry 4.0 is a new manufacturing era where physical things in connection with the internet over the IoT platform will produce large-scale data. Manufacturing in this way is expected to produce big data which will impact the product relevancy (Lee, Kao and Yang 2014). Hence, this will eventually impact the customer satisfaction level. However, it is extremely challenging to access every single data in real time. In addition, managerial skills can be tested for addressing to the change. The managerial skills needed to support the automation process are still unknown (Almada-Lobo 2016). In the likewise manner, Nestle is into the similar kind of situation. Firms those are equipped with the skills to handle the automation process with its effective managerial and decision-making skills will hold the competitive advantage.
Some of its global collaborations are with Global Road Safety Partnership, International Cocoa Initiative (ICI), International Federation of Red Cross and Red Crescent Societies (IFRC), Stockholm International Water Institute, Sustainable Fisheries Partnership, Swiss Development Corporation, UNESCO, World Animal Protection, World Business Council for Sustainable Development (WBCSD), WWF and World Health Organization (WHO). Regional collaborations include the Environmental Protection Agency and Pan-American Health Organization. The list of trade associations and membership include the Fair Labor Association (FLA), World Economic Forum (WEF), Global Reporting Initiative (GRI) and Fairtrade International (Nestle.com 2018).
Nestle uses the locally sourced materials for producing the variety of products. The list of suppliers includes the local farmers and the communities it operates around. Nestle provides financial assistance to its farmers, so that, they have adequate resource to farming and have their personal requirements fulfilled as well. They get milk from their surrounding communities. Nestle also has to rely on its certified suppliers to get the other ingredients required for the food processing. In souring the required materials, Nestle ensures that no damage happens to the existing rainforests (Nestle.com.au 2018).
Nestle gives efforts to create a great knowledge in generating an environment which is not only benefitting to its employees and stakeholders but also the customers. One of the ways to generate such an environment is the use of technology. Nestle is in agreement with SAP to effectively take care of its ERP. It pays SAP for up gradation, consultation and maintenance of ERP. The system is able to keep the records. It has helped Nestle to decrease the overstocking. Buying expenditures are controlled with SAP as costing data can be shared along the network. It continues further and deploys intranet, extranet and web links at the global level to create a global learning environment. Those who are working in the company can access the extensive library being loaded in such platforms. E-commerce is also used as a mean to educate its customers and other stakeholders. Knowledge sharing in this ay has helped Nestle to further classify its SAP into six more components such as the follows: (Dupre and Gruen 2014)
Nestle is constantly engaged in applying ideas to improve its innovating capabilities. One of such ideas is the use of the digital acceleration team (DAT) which helps to drive the company capabilities of internal innovation. It is the influence of a few of the most top rated global companies such as Google and Facebook. In DAT, employees are needed to work for a period of eight to twelve months in one go. Those who are the members of DAT take part in numerous activities like immersive training gives the effort to learn the strategic ideas, intense problem-solving thirst and participation into hackathons (Brem, Maier and Wimschneider 2016). External innovation is conducted by partnering with emerging technology partners. One of such examples is its collaboration with Amazon and its technology ‘Alexa’. In needful times, Nestle also takes up the help of external entrepreneurs to solve out a different issue (Espinoza-Orias, Cooper and Lariani 2018).
Shared vision, the desire to innovate and leadership
Nestle believes in doing well for the business and also for the community. It means that the company is focussed on the areas which produce long-term values for both shareholders and the community.
The desire to innovate gets evident in a fact that it operates into three layers of innovation to use the emerging innovating trends and also have a competitive advantage. The internal layer is supported by the DAT program where the members work for a stretched period of 8 to 12 months on different activities to bring in the innovating ideas. Externally, they innovate by collaborating with emerging technology partners and also by hiring the external entrepreneurs (Espinoza-Orias, Cooper and Lariani 2018).
Nestle is an aligned and decentralized organization which work upon a few principles to ensure an effective leadership and productive workforce as well. Some of the leadership features at Nestle Australia are as follows: (Bauer 2014)
The organizational structure as discussed is flat and flexible. It is spread across a very minimal number of management layers reducing the accessibility burdens from employees to a significant amount. The structure does not only help to enhance the speed of communication between the management and employees but also encourage an optimally handling of situations. Such a narrow gap between the management and the workforce has helped Nestle to share its vision with employees (Nestle.com.au, 2018).
|
Name |
Designation |
|
Trevor Clayton |
CEO |
|
Evan GonGolidis |
General Manager (Beverages) |
|
Therese Kallie |
Director of Communications & Marketing Excellence |
|
Martin Brown |
General Manager for Confectionary & Snacks |
|
Andrew Allshire |
Director of Finance & Control |
|
Tim Plummer |
Director of Supply Chain Operation |
|
Graeme Toft |
General Manager for the Pacific Islands area |
|
Patrick Stobbs |
Country Business Manager |
|
Biplab Baksi |
Director of Human Resources |
Table 1: Key Individuals
(Source: Nestle.com.au, 2018)
Nestle is more concerned with its people and brand value than the system. This is why it works hard to ensure that its employees are satisfied. Teamwork is important for Nestle from a perspective that it wants to nourish its talents and bind them all in a shared thread (Nestle.com.au, 2018). It ensures that the spirit of teamwork is encouraged at the organizational level. For the fulfillment of the purpose, it follows a flat structure which is more flexible and contains a very limited number of management layers. They are not needed at all the time to reach to the top management for their queries. Most of the time, employees can solve their queries by interacting with the available management person.
Structures which are followed down to improve the innovating capabilities of Nestle make it one of the very few companies in the world to have the high innovating desires. The digital acceleration team (DAT) at Nestle Australia is motivated to work hard and take part in a number of activities recognized by the company for the innovating excellence. One of its weapons of innovation is to collaborate with emerging technology firms. Additionally, it also takes the help of entrepreneurs specialized in different divisions (Miah et al. 2015). It just shows a very good way towards the innovating excellence. The future will only tell how Nestle manages the industrial automation.
The biggest example of the creative environment at the Nestle Australia is the creation of “DAT” following the footsteps of Facebook and Google. It is an environment where employees are asked to work on a stretch for eight to 12 months. Notably, they work as well. During that span of time, employees are constantly exposed to immersive training, problem-solving activities and hackathons.
As stated earlier, Innovating excellence at Nestle Australia is divided broadly into two categories such as internal and external focus. In the context of external focus, Nestle is one of the very few global companies which successfully integrate its business with emerging technology firms. Additionally, it takes care of the different issues by taking the assistance from the relevant entrepreneurial business.
Nestle Australia follows an incrementalist approach to effectively respond to the external changes. Nestlé’s competitive advantage is its ability to maintain the nutritional values in its products. They constantly seek to improve the process, people and system. It ensures that its stakeholders follow the company’s framework.
Hindustan Unilever is a subsidiary business of Unilever. HUL’s products include foods, cleaning agents, beverages, water purifiers and personal care products. Few of its famous brands are Brooke Bond, Kissan, Lipton, Kwality Wall’s, Magnum and Modern Bread. It was being recognized as the 6th most innovative companies for the year 2012 Forbes list of top companies. It was at that time was the highest rank achieved by any FMCG Company (Hul.co.in 2018).
Market forces
It gets affected by economic challenges such as the one it happened after ‘demonetization’ in India. The sales got dipped down and also impacted its stocks. Economic issues such as those directly affecting the buying capacity of customers will remain an issue. People living in rural areas are the most affected group from such economic blow. It exerts an inverse impact on the company’s ability to sustain a successful business. However, it has now a revival from that blow in the first quarter of 2017. The sales for HUL rose by 7% and registered a record high in company shares on the Bombay Stock Exchange (The Economic Times 2018). Personal care business which holds half of its overall sales also grew by 8% (The Economic Times 2018). The biggest possible economic threats could be the demand slowdown in particular in rural markets and price hikes in few product lines.
Competitive forces
The list of HUL’s competitors in different product line includes but not limited to such as Godrej Consumer, Dabur India, P&G, Colgate, Gillette India, Bajaj Corp, Emami and Marico. Dabur India mainly deals with cosmetic products and medicines based on Ayurvedic principles of treatment. Medicine is one of the areas where HUL is behind to many such as Dabur, Himalaya and Patanjali. One of the fiercest competitions is with P&G. Both of the companies operate in more or less the same product line in India. However, HUL has so far managed a leading position in the Indian circuit (Economictimes.indiatimes.com 2018).
New technology
Hindustan Unilever uses new technologies to improve its operational efficiencies and its brand image as a socially responsible body. One of such technologies used by Unilever is CreaSolv® Process which is earlier being used in Germany for the recycling of TVs (Hul.co.in 2018). The technology is being developed and processed in Germany. HUL used this technology for the recycling of sachets which left becomes a very good source of greenhouse gas emissions. Sachets will be converted into plastic and will be reused in the supply chain (Hul.co.in 2018). Unilever has committed to manage a 100% recycling of the used sachet.
In addition, it is also operating the Connected 4 Growth (C4G) strategy to leverage data management and technology solution. C4G has helped to make faster decisions in terms of internal innovation and the use of intelligent analytics. With intelligent analytics, it is improving the work standard of teams operating at the back-end. Due to few of such innovating ideas, the service delivery system has now improved to a new height. There is a considerable reduction in the operational costs. The figure is approximately close to 10% (Mani et al. 2016). Moreover, in collaboration with other technology partners, HUL is planning to enhance its e-commerce capabilities. A specialist team has been appointed to look after the entire possibilities for an e-commerce success. The maker of Kissan and Dove soaps are also into it and making the significant investments (Qasim and Agarwal 2015).
Partnerships at Hindustan Unilever do mean partnering with the different business-based solution provider. It works with cosmetic partners to offer the top quality products at the most effective prices. They are working with medical solution providers to offer a healthy range of skincare, baby care and personal care products. HUL works with medical experts to produce the effective infant formula (Hul.co.in 2018). Innovation in HUL can be classified into two categories such as internal and external communication. Internally, they promote innovation through extensive learning environment. Innovation excellence is one of the five future strategies of Unilever. Those strategies are as follows: (Hul.co.in 2018)
HUL follows a very unique way to retain the existing and attain the new suppliers. It does so with the help of ‘Partner to Win Program’. The program is being hosted to acknowledge the excellent performance of its suppliers spread across the South Asia region. This is a good way to close the distances between suppliers and the company which is also why HUL is able to work closely with its suppliers. It gives the opportunity to promote shared values in collaboration with suppliers. Suppliers are acknowledged into a certain area such as innovation, business integration, sustainability, service excellence and capacity & capability development (Hul.co.in 2018).
Knowledge resources are being created by retaining the skilled & experienced professionals and attracting the fresh & creative Millennials. Moreover, experienced professionals will help in critical situations and will show the ways to follow to handle it. On the other hand, Millennials will bring in the fresh ideas and creative way of working. There are other policies in place to support the learning process such as job rotations, training, networked organization, knowledge communities, culture change and e-learning (Hul.co.in 2018).
As stated earlier, HUL maintains its innovating excellence in a number of ways like motivating the experienced professionals for sharing knowledge with their peers, hiring the fresh Millennials, giving the extensive training programs, agile work culture and others.
Shared vision, the desire to innovate and leadership
The company encourages its people to take actions on a daily basis to keep things moving. The company is aimed at finding new ways of doing business to grow in size and reduce its environmental impacts as well.
Structure
HUL follows a flat structure to reduce the communication gap between the management and workers. It means that there are very few numbers of management layer working above the workers. Workers can effectively reach to the available managerial person and get their work done. However, critical situations will definitely be escalated to the top management and will also consume comparatively more time to get the things resolved.
Key individuals
|
Name |
Designation |
|
Mr Sanjiv Mehta |
Chairman & Managing Director |
|
Mr Srinivas Phatak |
CFO and Executive Director of IT and Finance |
|
Mr Pradeep Banerjee |
Executive Director of Supply Chain |
|
Mr Aditya Narayan, Mr S. Ramadorai, Mr. O.P. Bhatt, Dr Sanjiv Misra and Ms Kalpana Morparia |
Independent Directors |
|
Mr Dev Bajpai |
Executive Director of Corporate & Legal Affairs and also the Company Secretary |
|
Mr BP Biddappa |
Executive Director of Human Resources |
Table 2: Key Individuals
(Source: Hul.co.in 2018)
The benchmark set for the overall company’s performance indicates the importance of teamwork at Hindustan Unilever. The benchmark has three-level linkage attached to it such as the follows:
The first preference is given to the overall business if that does not click then there won’t be any rewards for the individuals. An individual is eligible to be rewarded provided that the team scores as well.
High-involvement innovation
Connected 4 Growth (C4G) is an environment where Hindustan Unilever supports and promotes the desire to innovate among the workers. It uses the emerging technologies such as the one used for recycling of sachet. It also implements intelligent analytics at the back end operations to leverage its innovating capabilities (Hul.co.in 2018).
The environment at Hindustan Unilever is now becoming creative as the management has decided to recruit the Millennials. Millennials those who are skilled and creative as well are given the opportunities. The use of CreaSolv® Process which is being discovered in Germany does also indicate its shifting towards the more creative paradigm (Walachowicz et al. 2017).
External focus
The list of brands as mentioned in this study indicates the HUL’s capabilities to identify the potential partners. The number of partners is so huge that it becomes very easier to figure out the focus which HUL has on external firms. The company has four of the biggest detergent brands names into its credit. It also has a very significant position in the skin care sector.
Innovative strategy
The innovation at HUL is driven both internally and externally. Internally, it is being conducted through intelligent analytics implemented to the backend. The creative environment with C4G is another potential type of internal innovation. External innovation excellence is driven by partnering with leading solution provider in the different market sectors.
The biggest innovation challenge for Hindustan Unilever is to do justice with every brand it works with. Some of its brands are topping the different market sectors while others not. It is, therefore, important to use more innovation into those sectors to create the required impact. Few of such products are Brooke Bond, Wheel, Sunlight and others (Hul.co.in 2018).
Another challenge will be to support the recycling program where it has committed to commence a 100% recycling of sachets into plastic. It is to be noted that the entire world has so far struggled to make an impact and could only cover a 14% recycling of sachets (Rybicka, Tiwari and Leeke 2016). Considering the fact, it looks evident that HUL Hindustan Unilever has tough tasks ahead to fulfill its commitment. This will require a constant exploration of the learning environment at the organizational level. An impactful collaboration between experienced and freshly recruited Millennials will also be required to support the program. Connected 4 Growth (C4G) will require an enhanced integration with emerging innovation such as the utilization of Industry 4.0 (Hofmann and Rüsch 2017).
A step wise comparison is being done in the appendix section. However, the section also present a few points of difference. Both of the companies are the big names; however, both differ from each other in regards to the product line. Nestle is more food and drinks oriented whereas Hindustan Unilever is in consumer goods. There is only a slight difference between the innovating capabilities and strategies of both the companies.
Both Nestle and Hindustan Unilever identifies innovation to be divided broadly into two types such as internal and external. In regards to external, the study has not found any notable difference between the two companies. Nestle is always eager to integrate with emerging technologies and entrepreneurial businesses such as it did with Amazon. Hindustan Unilever has used the CreaSolv® Process which has already been used in Germany.
There are a few differences between the ways both of the companies manage innovation at the organizational level. Nestle appears as the most effective in terms of creating a culture for creativity. They did it by forming ‘DAT’ where selected employees are positioned and are asked to work on a stretch for a close to 12 long months. During this span of time, they are constantly being exposed to immersive training, probe solving sessions and lot more. Employees have more chance to explore the creativity in them. On the other hand, Hindustan Unilever does also have an internal management strategy for innovating capabilities; however, it does not appear as equally good as that of Nestle. The internal innovation like the use of intelligent analytics is done to improve the operational process such as the backend operation. However, it does not involve the problem solving and the immersive training sessions.
There are a lot of similarities indeed like the shared vision. Both Nestle and Hindustan Unilever is aimed at fulfilling the needs and wants of its stakeholders, shareholders and the communities around. Both of the companies have a long-list of brands operating in the market. Both Nestle and Unilever is constantly working in a few areas such as knowledge management, innovating capabilities, collaborating with emerging technologies and more. Nestle give importance to its people but not the systems. Hindustan Unilever also knows the importance of having the skilled employees. This is why it retains its skilled and experienced professionals whereas it is also recruiting the Millennials seeking a more creative environment.
Conclusion
In summary, this can be concluded that multinational companies have more or less the similar approaches towards the innovating excellence and the use of emerging technologies. They keep up learning from their mistakes and continue to make the required changes. Nestle and Hindustan Unilever was being picked to understand such behaviors. Results are surprising from a perspective that there can be too many differences between Unilever and Nestle. However, it is not as surprising to see that there is a very minimal degree of difference between the two companies in regards to their innovating capabilities.
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