Nestle Principles

Nestle

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Nestle Insight: Business Principles

Guidelines

At Nestl�, we try to take the mentality and customs of individual countries into account, but there are some general guidelines that we apply everywhere. Those include:

• A positive attitude toward work

• A pragmatic, realistic approach to doing business

• An open-minded approach to the world

• A minimal number of systems and written guidelines

• A personal style of management

• An atmosphere of mutual trust

• An avoidance of showing off, windy rhetoric and hypocritical remarks

• An emphasis on practical experience and on the setting of good examples.

Principles

People first

Employees, people and products are more important at Nestl� than systems. Systems and methods, while necessary and valuable in running a complex organization, should remain managerial and operational aids but should not become ends in themselves. It is a question of priorities. A strong orientation toward human beings, employees and executives is a decisive, if not the decisive, component of long-term success.

Quality products

Our focus is on products. The ultimate justification for a company is its ability to offer products that are appealing because of their quality, convenience, variety and price -- products that can stand their ground even in the face of fierce competition.

Long-term view

Nestl� makes clear a distinction between strategy and tactics. It gives priority to the long-range view. Long-term thinking defuses many of the conflicts and contentions among groups -- this applies to employment conditions and relations with employees as well as to the conflicts and opposing interests of the trade and the industry. Of course, our ability to focus on long-term considerations is only possible if the company is successful in the struggle for short-term survival. This is why Nestl� strives to maintain a satisfactory level of profits every year.

Decentralization

Switzerland is home to Nestl�'s Swiss subsidiary, its international headquarters and the registered office of Nestl�'s holding company, but Nestl� does not regard its Swiss headquarters as the center of the universe. Decentralization is a basic principle of Nestl�. Our policy is to adapt as much as possible to regional circumstances, mentalities and situations. By decentralizing operational responsibility, we create strength and flexibility and are able to make decisions that are better attuned to specific situations in a given country. Policies and decisions concerning personnel, marketing and products are largely determined locally. This policy creates stronger motivation for Nestl�'s executives and employees and a greater sense of identification with Nestl�'s business. It is not Nestl�'s policy to generate most of its sales in Switzerland, supplemented by a few satellite subsidiaries abroad. Nestl� strives to be an "insider" in every country in which it operates, not an "outsider."

Uniformity

A very important concern at Nestl� has to do with uniformity: how consistent Nestl�'s principles, policies, rules of conduct and strategies should be, and to what extent they should differ depending on the country, subsidiary, region, branch or group of products. In general, Nestl� tries to limit the uniformity of its policy to a requisite minimum. This minimum is then systematically enforced, unless there are compelling reasons in a given market that justify deviation from policy.

Diversification

Nestl� does not want to become either a conglomerate or a portfolio manager. Nestl� wants to operate only those businesses about which it has some special knowledge and expertise. Nestl� is a global company, not a conglomerate hodgepodge. We regard acquisitions and efforts at diversification as logical ways to supplement our business, but only in the context of a carefully considered corporate marketing policy.

Flexibility and simplicity

The public's sense of the power and size of a corporation is often inaccurate, for a company's power is limited by a host of factors including legislation, competition,