nestle tnc case study

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TNCs independent research project (Nestle case study)

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3.1 Development (TNC (case study: Nestle ( Nestly's relationship with…

• a company that operates in 1+ countries
• Nestly's relationship with India as the Nestle Anglo-Swish Condensed milk LTD dates back in 1920
• Nestle India is a subdistry of Nestle S.A Switzerland
• Nestle India's production facility was set up i 1961 at Moga followed by severals plants and factories
• Nestle has been a partner in India's growth for 9 decades
• over the years has been a relationship of trust and commitment with the people of India
• https://www.slideshare.net/Nikki015/the-role-of-multinational-corporations-a-case-study
• research and development activists developing countries lack in research and development area. Expenditure and research and development is essential for promotion of technology. TNC has greater capacity for research in comparison to national companies. TNC survive in the international market through their advanced research and development activities
• employment opportunities increase in scale of production results in more job opprotinies. the entry of TNC helps in creating employment opportunities in production and marketing activities
• lower cost of production TNC carry on operations on a large scale, which ensure economic's material, labour and overhead costs
• potential source of captial and advanced technology economically backward countries invite TNC to generate economic growth and create job opportunities
• technological superiority TNC can participate in the industrial development programs of underdeveloped countries. they can produce goods having International standards and quality specialization by adopting the latest technology
• boot up basic income
• MNC may transfer technology which has become outdated in home country. Obsolete technology may be used in host country
• TNC does not operate with national autonomy, they may pose a threat on the economic and political sovereignty of host country
• TNC may kill domestic industry by monopolizing the market
• in·dis·crim·i·nate·ly lead to depletion of natural resources
• a large sum of profit flow to foreign countries, in terms of payments towards profit, dividends and royalties
• remittance of profit leads to net outflow of capital
• offer high wages to home employees
• TNC engages in antidumping activities such as formation of cartels and dumping
• loss of jobs
• loss of tax revenue
• competive advantages over domestic firm
• FDI ( Foreign Direct Investment ) Foreign direct investment is money spent by a foreign company in a country.
• improved transportation
• communication
• growth of TNC #
• cultural exchange
• increasing interconnection of the world
• Gross Domestic Product (GDP) - the total value of goods and services produced by a country in a year.
• Economic structure shows the division of a country's economy between primary, secondary and tertiary industries.
• GNP per capita is a country's GNP divided by its population. (Per capita means per person.)
• Demographics study population growth and structure. It compares birth rates to death rates, life expectancy and urban and rural ratios. Many LEDCs have a younger, faster-growing population than MEDCs, with more people living in the countryside than in towns. The birth rate in the UK is 11 per 1,000, whereas in Kenya it is 40.
• Gross National Product (GNP) measures the total economic output of a country, including earnings from foreign investments.
• Inflation measures how much the prices of goods, services and wages increase each year. High inflation (above a few percent) can be a bad thing, and suggests a government lacks control over the economy.
• life expectancy
• access to technology
• number of doctor per 1000
• literacy rate
• access to healthcare
• access to basic service
• governmental spending priorities
• to balacne inaccuracies HUMAN INDEX INDICATOR - mixture of indicators
• indices do not always reveal substantial inequalities between different segments of society.
• Some countries do not wish to have certain index data collected e.g countries do not publish statistics about the no of immigrants/ migrants.
• colonization
• natural hazards
• natural resources
• landlocked countries

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a case study on the TNC nestle

• Created by: Hannah-may
• Created on: 24-05-13 19:00
• The economy and global superpowers

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TNC Case Study - AQA A Level Geography

Subject: Geography

Age range: 7-11

Resource type: Worksheet/Activity

Last updated

4 February 2022

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Lesson 9 for AQA A Level Geography section A. This is the ninth lesson in section A, a core human geography module to be taught alongside modules from section B and C. This lesson covers Walmart.

All lessons are designed in the same signature style and come with worksheets and exam questions to match the specification. No other resources are needed.

For more resources visit This is Geography . Full SoW for all new GCSE specifications - AQA , Edexcel , OCR , CIE IGCSE , Edexcel IGCSE and Eduqas . As well as over 200 lessons for KS3 and KS2 . Want something bespoke designing? Email us for further details [email protected]

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Global Systems and Governance - Section A - AQA A Level Geography

12 part lesson series for section A (human geography) of the AQA A Level. This unit covers globalisation, TNCs, governance, global commons, trade and systems. All lessons are designed in the same signature style and come with worksheets and exam questions to match the specification. No other resources are needed. Lesson sequence: 1 - Globalisation 2 - Factors affecting globalisation 3 - Global systems (1) 4 - Global systems (2) 5 - International trade (1) 6 - International trade (2) 7 - Coffee trade 8 - TNCs 9 - TNC case study 10 - Global governance 11 - Global commons 12 - Impacts of globalisation For more resources visit [**This is Geography**](http://thisisgeography.co.uk). Full SoW for all new GCSE specifications - [AQA](https://thisisgeography.co.uk/gcse/), [Edexcel](https://thisisgeography.co.uk/edexcel), [OCR](https://thisisgeography.co.uk/ocr/), [CIE IGCSE](https://thisisgeography.co.uk/igcse/), [Edexcel IGCSE](https://thisisgeography.co.uk/edec/) and [Eduqas](https://thisisgeography.co.uk/eduqas/). As well as over 200 lessons for [KS3](https://thisisgeography.co.uk/ks3/) and [KS2](https://thisisgeography.co.uk/ks2/). Want something bespoke designing? Email us for further details [[email protected]](https://thisisgeography.co.uk/bespoke-modules-2/)

Transnational Corporations - AQA A Level Geography

Lesson 8 for AQA A Level Geography section A. This is the eight lesson in section A, a core human geography module to be taught alongside modules from section B and C. This lesson covers key terms, links, economy and supply chains. Lesson 9 for AQA A Level Geography section A. This is the ninth lesson in section A, a core human geography module to be taught alongside modules from section B and C. This lesson covers Walmart. All lessons are designed in the same signature style and come with worksheets and exam questions to match the specification. No other resources are needed. For more resources visit [**This is Geography**](http://thisisgeography.co.uk). Full SoW for all new GCSE specifications - [AQA](https://thisisgeography.co.uk/gcse/), [Edexcel](https://thisisgeography.co.uk/edexcel), [OCR](https://thisisgeography.co.uk/ocr/), [CIE IGCSE](https://thisisgeography.co.uk/igcse/), [Edexcel IGCSE](https://thisisgeography.co.uk/edec/) and [Eduqas](https://thisisgeography.co.uk/eduqas/). As well as over 200 lessons for [KS3](https://thisisgeography.co.uk/ks3/) and [KS2](https://thisisgeography.co.uk/ks2/). Want something bespoke designing? Email us for further details [[email protected]](https://thisisgeography.co.uk/bespoke-modules-2/)

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Nestlé’s vs Hershey’s ERP Failure: A Tale of Two Kit Kat Distributors

by Bill Baumann | Aug 29, 2024

When ERP implementations fail, the consequences can be significant and far-reaching.

Two global giants in the confectionery industry—Nestlé and Hershey’s—have each experienced their own tumultuous journeys with ERP (enterprise resource planning) systems. Both companies sought to revolutionize their operations by adopting new ERP solutions, yet both faced unexpected challenges and severe disruptions.

This post explores the ERP failures of Nestlé and Hershey’s, highlighting key lessons that organizations can learn to avoid similar pitfalls.

An Overview of Nestlé’s and Hershey’s ERP Implementations​

Nestlé and Hershey’s both embarked on ambitious ERP projects to streamline their operations, enhance efficiency, and boost competitiveness. However, their paths were marred by various challenges, leading to significant operational and financial consequences.

A Failed Payroll System Implementation

Panorama’s Expert Witness team was retained to provide a forensic analysis and written report to the court regarding the failed implementation of a major software developer’s ERP/payroll system.

Nestlé’s ERP Journey

In the late 1990s, Nestlé initiated a $210 million project to unify its various business processes across different regions by implementing SAP’s ERP software.

The company aimed to consolidate its 29 different business units, each of which had its own distinct processes, into a single standardized system. The goal was to achieve better data visibility, more accurate forecasting, and streamlined supply chain management.

Despite its ambitious vision, the project faced challenges right from the start. Misalignment between business processes and ERP capabilities, resistance to change, and communication breakdowns led to delays, cost overruns, and frustration among employees and stakeholders.

The project, originally slated for completion in two years, took nearly five years and cost over $500 million—more than double the initial estimate.

Hershey’s ERP Journey​

Hershey’s embarked on its ERP journey in 1996 with an even more aggressive timeline. The company aimed to implement a new ERP system, combined with supply chain and customer relationship management (CRM) software, within 30 months.

Hershey’s goal was to improve its order processing capabilities and overall supply chain efficiency. However, the rush to meet the critical go-live date ahead of the Halloween and Christmas seasons in 1999 led to severe complications.

The system went live in July 1999, but Hershey’s immediately encountered major issues: order processing slowed to a crawl, shipments were delayed, and inventory levels could not be managed effectively. The end result was a 19% decline in quarterly profits, a drop in stock price, and a significant loss in market share. The timing of the ERP failure, coinciding with peak demand periods, amplified its negative impact.

4 Lessons Learned from Nestlé’s and Hershey’s ERP Failures

These two cases of ERP failures reveal several key lessons for organizations embarking on similar IT projects. Both Nestlé and Hershey’s ERP failures were driven by a combination of factors, including inadequate planning, rushed implementations, misaligned processes, and poor change management.

1. The Importance of Realistic Timelines and Phased Implementations​

Hershey’s ERP project was characterized by an overly ambitious timeline. By attempting to implement multiple systems (an ERP, CRM, and SCM system ) simultaneously within a 30-month period, Hershey’s set itself up for failure.

The company’s aggressive timeline did not account for the complexities of integrating multiple software solutions, leading to rushed testing phases and insufficient preparation for the system go-live.

Nestlé, although not as rushed as Hershey’s, also faced delays because of the underestimation of time required to align its multiple business units under a single ERP framework.

The Lesson :

Setting realistic timelines is critical for successful ERP implementation. Organizations must allocate sufficient time for planning, testing, and phased rollouts. Key strategies for avoiding IT failures include:

• Phased Implementation Approach : Implement the ERP in phases, starting with non-critical modules, to identify and resolve issues early. This approach minimizes risk and allows for smoother user adoption.
• Comprehensive Testing : Ensure that thorough testing is conducted at each phase of implementation to catch issues before they escalate. Include stress testing to determine how the system performs under peak loads.
• Adjusting Deadlines as Needed : Be prepared to extend project timelines if issues are identified. It’s better to delay the go-live date than to launch a misaligned or faulty system.

2. Align Business Processes with ERP Capabilities

Nestlé’s ERP failure was partly due to a significant misalignment between its existing business processes and the standardized processes embedded in SAP’s ERP system.

Instead of adapting its processes to fit the new system, Nestlé attempted to customize the software extensively to match its existing operations. This decision led to increased complexity, higher costs, and ongoing challenges in maintaining and updating the system.

Similarly, Hershey’s ERP project also struggled with aligning new software functionalities with existing business processes. In Hershey’s case, this misalignment resulted in significant order fulfillment delays and inventory management issues, ultimately impacting the company’s financial performance during a critical sales period.

To avoid ERP failure, organizations should focus on aligning their business processes with the capabilities of the chosen ERP system. Excessive customization can lead to unnecessary complexity and costs.

Our computer software expert witnesses have analyzed many ERP failure cases, and one of the pitfalls they frequently report is a failure to assess the software’s compatibility with existing processes. Key strategies for avoiding over-customization include:

• Process Standardization : Map out existing business processes and compare them with the ERP system’s standard functionalities. Identify areas where standard processes can be adopted. An independent third party can help you validate these processes against industry norms and highlight potential pitfalls.
• Minimizing Customizations : Limit customizations to those that are absolutely necessary to meet unique business needs, and adopt best practices already embedded in the ERP system where possible.
• Engaging Stakeholders Early : Involve stakeholders from different departments in process mapping and system selection to ensure alignment between the ERP solution and business needs.

3. Organizational Change Management is Critical to Success

Both Nestlé and Hershey’s underestimated the importance of organizational change management in their ERP implementations.

At Nestlé, resistance to change was a significant barrier. Employees were not adequately prepared or trained to use the new system, leading to confusion and frustration.

Hershey’s also faced change management issues, with employees struggling to adapt to the new system during a critical sales period, compounding operational disruptions.

A robust change management strategy is essential for the success of any ERP project. Organizations must proactively address the human element of ERP implementation by preparing employees for the transition and ensuring they are comfortable with the new system. Key steps include:

• Comprehensive Training Programs : Develop detailed training programs tailored to different user groups. Ensure that all employees understand how to use the system effectively.
• Clear Communication Plans : Communicate the reasons for the ERP implementation, its benefits, and what is expected from employees. Regular updates should be provided to keep everyone informed and engaged.
• Continuous Support : Offer ongoing support post-implementation to address any issues and reinforce learning. This support can include dedicated help desks, online resources, and regular refresher courses.

4. Strong Governance and Leadership are Non-Negotiable

In both cases, governance and leadership failures played a significant role in the ERP project breakdown.

Nestlé faced challenges in aligning its multiple business units under a single governance framework, leading to conflicting priorities and inconsistent decision-making.

Hershey’s leadership pushed for a tight implementation timeline to meet seasonal demand, prioritizing speed over project readiness, which led to disastrous results.

Effective governance and strong leadership are critical for steering ERP projects towards success. Leaders must establish clear governance structures and ensure consistent oversight throughout the project. Key success factors include:

• Establishing a Governance Framework : Develop a clear governance structure that defines roles, responsibilities, and decision-making processes. This structure should enable coordination among different business units and stakeholders.
• Consistent Leadership Involvement : Ensure that senior leadership is actively involved in project oversight. Regular updates should be provided to executives to keep them informed and engaged.
• Empowering Oversight Committees : Establish oversight committees that include key stakeholders from across the organization. These committees should be empowered to make decisions, intervene when necessary, and provide feedback on project progress.

The Ripple Effects of ERP Failure

The ERP failures of Nestlé and Hershey’s serve as stark reminders of the complexities involved in implementing large-scale IT projects. A computer software expert witness can discuss these complexities in detail, but for now, a “gut check” to keep you on the right track might be the only thing you need.

If your organization is facing ERP implementation challenges, contact us for a free ERP consultation and “gut check.” Our ERP implementation consultants can help you navigate the complexities and avoid the pitfalls of poor IT project management.

About the author

Bill Baumann

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Phân tích tác động của TNCs (Nestlé) đến tạo việc làm và phát triển nguồn nhân lực tại Việt Nam

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