Evaluation of Corporate Entrepreneurship Within Nestlé Nigeria
An independent, analytical essay evaluating corporate entrepreneurship within Nestlé Nigeria Plc.
Nestle Nigeria Plc is a Nigeria-based company which is an active player in the food and beverage industry. It deals with the manufacturing, marketing and distribution of goods such as, cereals, beverages, confectionery, bouillon, and table water. Nestlé Nigeria Plc is a part of the Nestle group. They are the well renowned nutrition, health, and wellness organisation for their unbeatable high-quality products. They began trading in Nigeria in 1961 and have now become a leading food manufacturing, marketing and distribution company.
This study assesses how Nestle Plc has been operating in the past and the challenges they may be facing innovations and techniques of competing companies. Also, in this study, tactical and strategic decisions would be highlighted to show how the company may have an edge over their competitors. The methods suggested in this study include the use of business intelligence, interview method of selecting applicants, quality upgrade and branding, commitment to social responsibilities and the use of social media platforms.
When Nestle maintains the tactics indicated by standard corporate entrepreneurship, it will be seen that through the proper activities of Nestle leaders, employees will continue to help build competitive advantage through their innovativeness, imaginations, effective skills, and insights. And as such, they maintain their leading legacy in the industry.
According to Wolcott and Lippitz (2007), the term corporate entrepreneurship is defined as the process by which teams within an established company conceive, foster, launch and manage a new business that is distinct from the parent company but leverages the parent’s assets, market position, capabilities or other resources. It is a situation whereby the company, rather than its employees are entrepreneurial. The company gathers strengths of its employees at innovation, pro-activeness and risk-taking. The description of the environmental trend or potential disruption and the opportunities corporate entrepreneurship presents to the competitive landscape is examined in this paper. The paper also attempts to examine how corporate entrepreneurship changes the organisation’s competitive position if the organisation does not respond to its trend. Efforts are also made to discuss how organisations respond to corporate entrepreneurship trend. It is well known that the more understanding an employee has about the corporate environment and safety, the more effective and efficient their skills will be. Nestle needs to develop healthy, affordable, and sustainable products that the consumers want. Nestle has been leading its rival companies in the past decades. But as time evolves, some of its competitors have adopted new techniques, innovations and Business Intelligence. This makes Nestle up its corporate activities to compete and continue leading in the industry. This study outlines every aspect Nestle is responding to the ever-rising competition in the industry, considering what some other companies have embarked on recently.
NESTLE NIGERIA PLC
Nestlé is a company that believes in equal opportunities and aims at operating a diversified organisation and it is considered by the management that the versatile employees are behind the remarkable growth and development of the organisation. Nestle’s watchword “Our differences make us stronger” really buttresses it. Nestlé opines that individuals that have different or unique qualities tend to portray these same characteristics. Nestle is publicly owned with over 250,000 shareholders, each of which individually owns less than 5% of the shares. In terms of geographic location, Swiss investors have the lion’s share of the stock (35.28%), followed by the US (28.53%), the UK (6.17%), Germany (4.51%), Belgium (3.49%), Luxembourg (3.00%), Japan (2.33%), Canada (2.13%), China (2.04%), and France (1.91%) (Nestlé Global, 2020). Nestle has established itself as a company “committed to enhancing people’s lives by offering tastier and healthier food and beverage choices at all stages of life and at all times of the day” (Adhikari & Roy, 2017). Nestle Plc is a multinational company which is committed to enhancing the quality of life for their consumers through nutrition, health and wellness. Nestle’s mission of “Good Food, Good Life” is to provide the ever tasty, sweet nutritious choices in a wide range of good food and beverage categories and eating at every convenience, from morning to night (Tong, 2015).
Nestle Nigeria Plc is a manufacturing company that started trading in Nigeria in 1961, they also deal with the distribution and marketing of water, beverages, etc. Nestlé Nigeria Plc was listed on the Nigerian Stock Exchange on April 20, 1979. As at December 2012, the number of shareholders was more than 30,000 (Ikpefan & Owolabi, 2014). Nestle distributes a wide range of products and this includes baby food, cereal, chocolate, sweets, coffee, frozen food, pet food, and healthcare nutrition. Nestlé was listed on the Nigeria Stock Exchange in 1979, 43% of its equity is owned by Nigerian shareholders, while Nestle S.A. of Switzerland owns 57%. The Company’s Head Office and Registered Office are located at Ilupeju, Lagos State. The Board of Directors are responsible for formulating policies for the establishment of the aims and objectives of the company. (Nairaproject.com, 2020)
This company, being a Food and Beverage industry has its main objective to satisfy the requirements of consumers with high-quality food products, mainly by processing agricultural raw materials into finished products; and has adapted to the taste and nutritional habits of consumers. (Rahmat, 2019). There are more than 2000 brands with their products at sales through seven product categories in 191 countries, and the full understanding and expectation of consumer needs in an ever evolving and competitive environment is imperative for Nestle’s long-term business success (Namy, Karen & Sofiane, 2018).
CORPORATE ENTREPRENEURSHIP IN NESTLE NIGERIA PLC
Asabi (2017) defined corporate entrepreneurship as a term used to describe entrepreneurial behaviour within established organisations. According to Ikpefan & Owolabi (2014), corporate entrepreneurship is described as the sum of a company’s efforts aimed at innovation, pro-activeness and risk-taking. These efforts offer a crucial means of resuscitating and renewing established companies and improving their performance.
According to Rahmat (2019), Nestle has an important research and development (R&D) strategy under an Integrated R&D Network. Much has been invested on the Nestlé Research centre as records show that they invested more and more years to reach $1837.5 million in 2007. A very vital notification is that Nestlé has a low research and development intensity of 6% which is, more or less, the same in comparison with other research and development integrated network companies like IBM. Being very renowned for nutrition, wide product portfolio and strong brands, Nestlé Nigeria Plc appears to be emplaced to continue in contributing meaningfully to the development and growth of the food industry in Nigeria (Ikpefan & Owolabi, 2014). The turnover of the company in the year 2012 was N116.7billion and profit after tax was N21.1billion as seen in the study of Ikpefan & Owolabi (2014). Business intelligence (BI) has aided Nestle Plc in playing a vital role in the manufacturing industry by supporting its decision-making strategies and performance enhancement. BI systems store, retrieve and analyse information about the operation of an organisation which empower them to improve their tactical and strategic decisions and give them an edge over their competitors. (Rahmat, 2019).
The Nigerian Nestle Plc had an impressive first quarter in 2016. The company performed poorly in the half-year ended June 30, 2016 which resulted in the loss of the possibilities of them receiving higher dividends. They also recorded a 94% decline in profit after tax due to the fall of naira. The company reported a faster increase in operating expense +17.3% relative to sales with both selling & distribution expenses +11.3% and admin expenses +49.2% rising double-digit during the period. The sharp increase in admin expenses was due to an upward review in staff salaries, reflecting the strong union to which its staff belong to. Consequently, the operating expense to sales ratio rose 21%. The foregoing combined with margin contraction on both gross and operating level underpinned the 23% drop in before-tax earnings.
BI utilises advanced and quick tools of analysis, which is expected to help corporate organisations like Nestle Nigeria Plc make timely and urgent decisions to achieve organisational objectives. Also, business intelligence provides opportunities for corporate organisations to control and track key processes that serve as the basis of effective decision making by the management. (Rahmat, 2019).
It is interesting to know that the technological component of BI can be used to respond to online trends, especially in this digital era. It also allows the marketing managers and other officials of Nestle Nigeria Plc like their key distributors (KD) and high net worth individuals (HNI) the opportunity to track the time and location of customers as they interact via a website (Rahmat, 2019). Customers on the website can also take advantage of special promotional offers made available online in real-time. And as such, balanced lifestyle, a good level of general and professional education, responsible behaviour are the key characteristics of managers at Nestle such that when they lead by example, it is reflected on the employees on every level. All of such actions and demonstrations make it possible to lead for winning (Leadership at Nestle, 2020).
THE CHALLENGES FACED BY NESTLÉ NIGERIA PLC
This section investigates the challenges faced by Nigerian based companies practising corporate entrepreneurship, using Nestle Nigeria Plc as a case study. The determining factor of how an organisation manages her working capital is evident in the policies adopted by such an organisation (Ikpefan & Owolabi, 2014). The result from the study of Ikpefan & Owolabi (2014) reveals inefficiency in the working capital management of Nestle Nigeria PLC because when the trade receivables collection period reduced, the trade payable payment period increased much more. It is quite evident that keeping and increasing competitive advantages in a relatively long period has become a tedious task and also relatively challenging for businesses; and for organisations to survive in a very turbulent business environment, large organisations, in this case of Nestle Nigeria PLC, are under the pressure of constant alterations while struggling to supersede the achievements of the near past (Bennett, Adekunle, Emmanuel & Azeez, 2018).
Regardless of the fact that Nestle has to come up with healthy, affordable, and sustainable products for the consumers, they should have inculcated the incremental approach of optimizing one element at a time. Thus, this has quickly shown its limitations because Nestle operates in a complex environment (Namy, Karen & Sofiane, 2018).
TACTICS TO ATTENUATE THE EFFECTS POSED BY THE CHALLENGES
Innovations, ideas and strategies are part of corporate entrepreneurship and are imperative and relevant in Nigeria, especially in the food and beverages industry. According to Asabi (2017), corporate entrepreneurship can be used to improve competitive advantage to reposition the company in the market. For companies grow and be more productive, they have to imbibe corporate entrepreneurship into the work environment. Nestle Nigeria PLC can manage their working capital more effectively and efficiently. For instance, the quality of assets could be upgraded, and obsolete inventories should be written off (Ikpefan & Owolabi, 2014). The company needs to communicate its information to consumers about their products.
Apropos of selecting appropriate advertising campaigns, the selection of favourite celebrity to promote a brand is also pertinent especially when it is selected on the demand of customers. (Akhtar, Xicang & Iqbal, 2017). Most customers now rely on word of mouth and the observational learning which they get from other customers in purchasing a product. This results in some of the customers changing their decisions after getting information by word of mouth while some persist. Although, the monetary value of word of mouth has been discussed in very few studies (Akhtar, Xicang & Iqbal, 2017). The use of social media platforms is now becoming the most important one to make different pages or digital posts instead of printed ones. The company provided with the opportunity to reach thousands of consumers and immediately receive their feedback. However, the demerit emerges in that account hackers may utilise the media upon their access to such.
According to Tong (2015), employers can use an interview to examine the various aspects and abilities of the applicants to determine whether or not the candidates are the appropriate candidates for the vacant positions. Unfortunately, in reality, many companies do not have a strategic and concise process of interview. Some interview arrangements are not reasonable, of low efficiency and poor quality. In the interview process, questions may be asked randomly, and the problem may not be targeted. Excellent talents will be like other people, nervous during the interview. Recruitment result is not a depiction of the company and does not directly affect their development. The quality of the recruitment process has an effect on the company’s staff turnover and expenses. Effective recruitment helps the company to obtain long-term competitive advantage and acquire considerable economic benefits. Nestle is very successful as a result of its grand recruitment techniques.
With regards to the corporate field, Nestlé continually seeks to improve the employee’s knowledge, understanding and engagement with the corporate business principles. It is evident that when employees are conversant with the business principles as much as required, the working environment and safety issues will be handled more effectively due to the apt level of understanding. The employees are constantly in the quest developing their skills and knowledge.
Nestlé Nigeria PLC should make an effort to increase their commitment to social responsibility activities such as environmental protection and community projects order. Ensuring such commitment will facilitate a peaceful and cordial relationship with their host community. Information is very vital for the smooth running of any organisation in every sector of an economy be it science, education, healthcare, administration of the state and other business areas (Rahmat 2019). Nestle Nigeria Plc solely depends on its corporate BI systems in real scenarios. It applies this in updating its demands, supplies, prices, quality management and customer service quality. Government has a vital role to play in working with the company to formulate policies that will create enabling business environment for the implementation of sophisticated business intelligence.
When Nestle maintains the tactics indicated by corporate entrepreneurship, it will be seen that employees will continue to help the company gain and build competitive advantage through their energy, imagination, effective skills and local insights. The company can remain responsive to a rapidly changing world when the employees are rewarded competitively and investment is made in favour of their development (Tong, 2015).
There is need for both management and BI managers to work on quality products to meet up with expected standard, if this can be done, it will help promote good organisational image and global brands which will eventually lead to increase in turnover and result to positive impact on the value created in the company (Rahmat, 2019). The business units which occurs at a local level, regional level, corporate and global level requires synergy which demands a deep level of proactive cooperation among all of them.
It can be conclusively stated that the length of operations in Nestle Nigeria Plc can pave way for other organisations to benefit from the proper application of BI constructs. With the advancement of BI systems in its implementation and innovation in terms of technologies, organisations can ensure optimal maximization of utilizing BI. Upon the evolution of time, customisation of BI constructs may be provided, and this can impact on organisational value and make Nestle Nigeria Plc gain a competitive advantage over its contemporaries in the industry. Although, Change is inevitable but managing the consequences of change is the responsibility of every leader and the effective management results in managing the change in a way that yields beneficial results for an organisation like Nestle. All the above leadership practices will result in achieving business objectives in a way that the compliance is maintained with sustainable practices.
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