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Experiencing Globalization Benefits


In the mid- 1860s Nestle, a trained pharmacist, began experimenting with various combinations of cows milk, wheat flour and sugar in an attempt to develop an alternative source of infant nutrition. His ultimate goal was to help combat the problem of infant mortality due to malnutrition. He called the new product Farine Lactee Nestle, which was being marketed in most parts of Europe. In 1882, Swiss miller Julius Maggi created food product utilizing legumes. In 1904 Nestle added chocolate to its range of food products after reaching an agreemant with Swiss General Chocolate Company.

In 1905 Nestle and Anglo- Swiss Milk company get merged. In 1907, the company began full-scale manufacturing in Australia and warehouses were built in Singapore, Hong Kong and Bombay to supply to the rapidly growing asian market. World war I brought severe disruptions and acquiring of raw material and distribution of products become difficult. By wars end, Company had 40 factories, and its world production had more than doubled since 1904. The end of war brought a crisis for Nestle, as it recorded its first loss due to rising prices of raw materials and global economic slowdown.

In 1920 Nestle added new products like malted milk, powdered beverage called milo, powdered buttermilk for infants. In 1930 Nescafe was added in its product line which was followed by Nestea in 1940s. In 1974, company become major shareholder in LOreal, one of the worlds leading makers of cosmetics. In 1997 it acquires Italian mineral water concern San Pellegrino. In 1998 it acquires Spillers Petfoods of UK In 2002 it acquires Ralston Purina


The core competency of the company appears in its technology-bound customer services. Nestle operates more than 470 factories and having around 350 million customers in some 95 countries. Nestle World Trade Corporation (NWTC) based in Switzerland, helps in exporting products to those countries where the Nestles factories are not present. NWTC has three core functions: -Product Sourcing -customer Service -Financial Services

Prominent products of company are: Baby foods, Dairy products, Breakfast cereal, Ice-creams Chocolates & Confectionary, Pet care, Beverages, Bottled water, Prepared food. Nestles sales for 2001 amounted to 84,698 million. EBITA was around 9,713 million. Earning per share was 17.25 % RIG was 4.4 % Strong progress was recorded in Eastern Europe and in Asia.

With the total savings of 4 billion, Nestle launches three new initiatives in the areas of production, trade spend and white collar productivity. Then Nestle announced the purchase of Brazilian chocolate and confectionary manufacturer, having staff of around 2500 people.