Aiming to become the food industry leader in nutrition, health and wellness, Nestl is committed to promoting corporate common goals and create shared values within a decentralised organisational model. The company typically implements differentiation and low-cost leadership strategies to occupy or retain the target markets. They also established a global hybrid or mixed structure that empower regional managers, who report back to the headquarters, to have autonomy for their specific business operations and decision-making processes. Although Nestl has certain competitive advantages for persevering in the market, the company still faces challenges due to external environments and internal factors in today's dynamic and high velocity global markets. So how does Nestl structure itself? Its corporate headquarters directly controls centralised functions, global product groups, R&D and five regional organisations: Centralised functions: finance and control, information systems, logistics, e-commerce, HQ corporate affairs. Global product groups: each product group is responsible for its own strategy, business development, mergers and acquisitions and market entry. R&D: this function covers and is located in 13 countries. Regional organisations: there are five which report directly to HQ. Each region has a number of countries reporting to it with each country manager responsible for sales in that country. This example tells us that no organisational form is ever the last word in organisation structure and new forms emerge as needs and requirements change. National and local context still influence greatly the way in which modern subsidiaries are organised. Contingency theory can be usefully applied to MNE organisations nowadays. Contingency means that different organisations are designed to fit different specific circumstances. In practice, MNEs have to search continually for better ways of accessing and utilising all their scarce resources within the company. Modern MNE organisational structures must now enable optimisation of integration mechanisms in order to operate effectively. Activity Look at the Nestl structure described above. Think through the factors, which led them to have this structure: 1. What are the roles of strategy, environment, local conditions and competition? 2. Why are some functions centralised? 3. Why have global product groups? 4. Why is R&D so centralised? 5. Why do regional organisations operate primarily as local sales functions?