For years Nestl$,$ the world$$s largest food and Beverage Company, operated with a highly decentralized organization. This organization reflected the company$$s belief that there is no such thing as a global consumer in the food and beverage business, and that the need to customize product offerings to local tastes and preferences required the creation of highly autonomous national subsidiaries. Recently, however, Nestl$$ has begun to move away from this structure. The catalyst has been falling trade barriers and the rise of more integrated regional and global markets where it faces aggressive competitors, such as Unilever and Procter & Gamble. Faced with increasing competition, Nestl$$ has realized that it needs to adapt its organization structure so that it can maintain local responsiveness, while at the same time realizing the cost savings that come from eliminating duplication of activities across subsidiaries. Progressively, the company has moved toward the creation of global business units that oversee the strategy for major product lines, and it is realizing cost economies by centralizing key functions such as purchasing, production, and R&D at favorable locations. At the same time, marketing and sales remain decentralized among national subsidiaries, where local managers configure the marketing and sales mix so that it best matches consumer needs and local distribution systems. This structure has now been adopted for Nestl$\text{'}$s water business, which includes the Perrier and San Pellegrino brands, and for Nestl$$s nutrition business, which includes the company$$s infant formula brands. The water business, for example, has centralized production in France and Italy to realize economies of scale. It has also developed a global brand positioning strategy. At the same time, national subsidiaries are given the ability to develop programs for implementing the global brand strategy in their own geographical regions, customizing their approach to local conditions.

Case Questions:

a$..$ Explain Nestle four major goals for its international Business strategy?

b$.$ Explain the issues faced by Nestle in global brand extensions.