INTRODUCTION

Balanced scorecard was designed by Kaplan and Norton as a framework to measure the
performance of an organization by using a more balanced set of performance measures.
The balanced scorecard is a strategic planning and management systems that
organization use to communicate what they are trying to achieve, align the day-to-day
work that everyone is doing with strategy, prioritize projects, products, and services and
also measure and monitor progress toward strategic targets. The balanced scorecard is
divided into four perspectives which include financial, customers, internal business
process and learning and growth perspectives. Each perspective must have two to three
measurements and must link the strategy within overall performance measures. Below is
the balanced scorecard our group created for Nestle:

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Nestle’s Balance Scorecard

Perspective Objectives/Goals Measures

Financial  Limiting expenses.  Cost per unit
 Increasing revenues.  All expenses included
(packaging) per unit.
 Expand revenue  Percentage of revenue
opportunities. new products.

Customer  Providing nutritious products  Key Performance

that deliver real health
benefits to consumers.
 Making the products more
affordable and accessible.
 Reducing complaint about the
product.
Internal process  Increase productivity to
improve efficiency.
 Improve the quality of
production processes.
 Expand product diversity
(Milo)
Indicators
 Percentage of customer
satisfaction.
 Supplier’s raw
materials quality.
 Percentage of
capacity utilization.
 Equipment reliability
and availability.

Learning & Growth  Improve or maintain high-  Percentage of

caliber and talented
employees.
 Improve farmer development.
 Develop customer data.
employees with
capabilities and skills.
 Supplier Management
Program.
 Customer database.

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 The Strategy Map of Nestlé’s Objectives

Increase shareholders value

Increasing Expand revenue

Financial Reduce expenses
revenues opportunities

Reducing Providing Products more

Customer complaint about nutritious products affordable &
the product accessible

Internal Increase Improve the quality Expand the

productivity to of production product diversity
Process
improve efficiency process

Learning Maintain high-caliber Improve farmer Develop customer

& talented development database
& Growth
employees

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LINKAGES 1

An employee is a key to the nestle to being a success. It is because their

commitment to the company to make the company achieve the goal. Maintain high-
caliber and talented employees will help the company in show or give the true picture of
their performance and important to maintain a good attitude of employees. Nestle is a
one of the successful organisation is having highly skilled and motivated employees. Other
than that, to face new challenges nowadays, we need the attracting, retaining and
engaging the best talent to drive higher productivity to compete in global market.
Therefore, it is necessary to seek high caliber employees, develop, and nurture the right
talent to address the organization’s global needs.

In addition, talented and caliber employee is a precious asset for the company.
Employees also can we clarified as investments that will give benefit in the long term
reward to the organization to link with the greater productivity and improve the efficiency
in term their works whether to manage and developed that will effect to sale, especially
for milo product. The employees that have experience and qualification we should give
priority to them such as reward in term of benefit and retirement based on their best
performance. According to the Nestle Total Rewards programmes, which is the manager
should propose the remuneration of their employees within the framework of company
policy.

Other than that, employee which has qualification and experience that means
talented employees will help the management of the company to increase productivity
that will improve the efficiency of the workers in terms of handle the machine, expertise
to repair the machine that will cut the cost of the production. Therefore, it will effect the
whole operation of the company. Furthermore, with the ideal employee which is talented
and high-caliber will increase the productivity in terms of sales, because of good attitude
that employees have shown to attract more client and investor to invest in the nestle
company. It shows that nestle was provide training and care for their employees to
increase the sales.

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 When a worker wants to improve their efficiency when handling a problem,
customer, machine their will reducing a complaint about the product. The customer is an
important consumer that all the product nestle dependent on. The complaint regarding
the fake product of milo, it shows the role of the employee and management of the nestle
company to handle it. They have upload image of milo on its official Facebook page which
is Nestlé’s Facebook page to help their customer differentiate between the original and
fake product. The action indicates that the employees know their responsibilities to avoid
the negative complaint regards to product nestle.

According to the nestle Philippines was stated that they have received the
complaint regarding to the milo product which is ready to drink milo product that had
fungi. Efficiency of their employees in laboratory tests by quality assurance show that the
fungi were coagulated milk, it happens when air and heat enter to the inside of the box,
with the expertise the employees have get reduce and solve the complaint regarding to
the product and can gain back the trust of the product to the customers and will link to
increasing the revenues.

Revenue is an important indicator that shows the benchmark for any company
whether success or not then it relates to the attitude of the employees that also provide
a contribution to the company. According to the nestle financial report, the revenue for
the main product is powdered and liquid beverages in 2016 were RM 19 792 million
compare in the year 2015 the revenue get was RM 19 245 million. It shows that the
increment of the revenues because of the customer believe and loyal with the powdered
and liquid beverage products such as Milo, Nescafe, Coffe Mate, Bliss, Omega Milk
powder, Everyday Milk, Nespray and many more that contribute to the revenue.It is also
because of the staff well doing their work when reducing the negative complaint about
the products.

When the company can increase the revenue it will link to the increase
shareholders value. It is because of the employee's caliber and talented to change the
perception of the customer to the product and can maintain the performance of the

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company. Other than that, the duty as good employees will improve the business
performance in term of product development to enhance more revenues and also to
attract more shareholder to invest in the company. Hence, the expertise of their
employees will gain benefit to the company and sales itself. Develop a good culture
between management and employees will lead to the employee’s engagement to the
business planning in the future that can be effected to the revenue company and increase
the shareholders’ value.

Linkages 2

Next, Nestle should improve farmer development to produce agricultural raw

materials for their product on a high quality food and beverages because it is rely on
more than 5 million farmers. Nestle should avoid lack of investment in social and
agricultural infrastructure because it affect the quality and quantity of the raw materials
that Nestle rely on. The largest quantities that most important raw materials sourcing by
farmers are cereals, cocoa, coffee, dairy, fish and seafood, hazelnuts, meat, poultry and
eggs, palm oil, pulp and paper, soya, sugar and vanilla. The measures will be on Rural
Development Framework (RDF). With this program, Nestle will be supervise the farmers
in the rural development and enable to gain what farmers’ need and challenges faced by
them. For example if they faced poor infrastructure, Nestle will provide technicians or
facilities to help farmers enhance their efficiency. Besides, Nestle also provides suppliers
by tree plantation help.

The linkages from the improve farmer development, with this improvement Nestle
will have huge opportunities or automatically have improvement in the quality of raw
materials provided by suppliers or farmers. Quality raw materials due from good farmers’
development of facilities even though Nestle have to incurred costs. The measures will
be on how many rejected product because of defects after the farmers supply the raw
materials to use for manufacturing process. If the products have defects more than

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percentage of Nestle, then Nestle may be failed to lead the way on improve supplier’s
development.

Human nowadays really choosy to buy the products and of courses they will
choose the nutritious one for their family. One of the Nestle’s products, which are Milo,
is the choice of household and consumer believed that Milo can give energy for them.
Due to customer trust, Nestle should maintain with the nutrition included in the Milo itself.
The linkage from quality of raw material provides nutritious products produced by Nestle.
Nestle believed that consumer choice is based on nutritional awareness and the desire
by them to improved health and wellness. That is why Nestle want to maintain high
quality products to produce healthy food and drinks to consumer. In addition, linkage
from the quality of raw materials also can reduce complaint about the product because
when there is no defect product that handed to consumer, the complaint will be does not
arises. The bad complaint from consumer will give negative effects to the brand’s name.
Nestle have to avoid the complaints from early stages, that is why from the learning and
growth Nestle should have core objectives to achieved.

Lastly, from the financial perspectives all of above customer perspective may
increase revenues due from variety of products sold by Nestle because of high quality
raw materials and produced nutritious products. It will increase the customer’s
satisfaction and trust and the linkages are finally contributes to revenues for the company.
Automatically, the increased revenues will increase shareholders value.

Linkages 3

Learning and growth perspectives is about identifies the objectives for the people,
information technology, and organizational alignment that will drive improvement in the
various process objectives. For Nestle, our group think develop customer database is
important in the learning and group perspective. Customer is the most important asset
for a company because they purchase the product or service offered by the company.

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Customer care is a crucial element for the company to success. Therefore, customer
database plays an important role in marketing strategies and business sales in all the
organization. An organization must have customer database to handle customer
relationships and increase sales and also customer satisfaction. It is also easier to
examine and identify the most gainful customers and their characteristics through a
database.

Nestle should develop their own customer database to make sure they have up to
date details of their customer, retain existing customers and build loyalty through provide
personalized services, generate referrals from satisfied customers and also to follow and
track potential customers easily. Customer database refers to the collection of information
collected from each person. In the database ,Nestle can include contact information for
the customers such as customer’s name, address, age, telephone number and email
address. Besides, the database can include past purchases and future needs of the
customer. From the customer database, Nestle can know how many customers purchased
their product and also get feedback about their products.

Linkages from develop the customers database, Nestle company can improve their
product by increase the quality of raw material supply. It is important for Nestle to avoid
the quality and safety problem of product that may affect consumer confident to Nestle
product especially for Milo. It’s also help management to control and protect the internal
process from wastage. Customer relationship through complaint, feedback or any
recommendation could assist company make proper decisions due to customer’s
necessities.

Linkages to improve the quality of the raw material directly can reduce a complaint from
customers about the product. Customer’s complaints are part in doing a business. It helps
company to discover customers need and taste. So that, it will attract customer attention
to the product and will not divert to other competitors' products also help company
maintain in the market. Other than that, when the complaint from customers reduces it

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shows that customers satisfied with company product and also will increase a customer
loyalty.

Based on review from customer demand has increase, indirectly will increasing the
revenues and reduces expenses in company financial. The company also can generate
more revenue and income from existing customers. Refer to Nestle annual report, its
shows that the comparison total sale for milo product between two years which is 3.7%
in 2015 has increase to 4.6% in 2016. It shows the positive changes of 0.9% in that year.

Linkages 4

Nestle can obtain the information to be included in the customer database from
receipts, feedback forms and other resources representing customer choice or a tendency
to buy a product. For instance, Milo held redemption programme through collect Milo’s
packaging and redeem it when enough 30 points to get limited jacket or flask. Therefore,
Nestle can get the customer information from the redemption form and can use that
information to be included in the customer database.

Product diversification is the process for a company to expand their business

opportunities through additional market potential of existing product. Diversify can be
achieved by entering additional markets or pricing strategies. The product can be
improved, altered or changed, or new marketing activities are developed. Product
diversification also provides opportunities to grow the business by increasing sales to
existing customers or entering new markets.

As we know, Nestle is responsible for manufacturing brands such as Milo, Nescafe,

Maggi, Kit Kat and Nespray. Our group focused on Milo product. When Nestle already
develops their own customer database, Nestle can expand their product diversity in the
internal process perspectives. It is because Nestle already has their customer data and
the data can be use during making their product. For example, Nestle can look at the
most preferred Milo purchased by the customer and Nestle should be produced the

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product in a large quantity to fulfill the demand from customer. In Malaysia, Milo comes
in various forms which are in powder (common and 3 in 1), liquid (bottles, cans, packs),
cereals and ice cream. In addition, Nestle diversity the product based on the age of their
customer to make sure that the product is suitable for all customer.

There are several types of Milo sold in the market. For example, Mydin sold variety
types of Milo such as for Milo Breakfast, there are Milo Breakfast Cereal 500g, and 330g;
Milo Activ-Go in 400g, 200g, 1kg and 1.5kg; Milo Energy Cube;Milo Nuggets 90g; for
drinking are nutritious Chocolate Milk Drink in 8 x 33g and 30x33g, Milo Active Go
Chocolate Malt Drink; for ice-cream, Mydin have Milo Chocolate Malt Ice Cream 750ml
and Milo Chocolate Malt flavoured Frozen confection 4x 105 ml. However, only a certain
product that sold in the small shop. For instance, Milo Nuggets, not all shop sold that
product.

It is important for Nestle to develop customer database to make sure that their
product expands diversely in every place. In the internal process, Nestle should deliver
goods responsively to customers. Therefore, Nestle should maintain a good relationship
with their distributor or retailer to make sure that all types of Milo available at every place.
In addition, Nestle should make sure that they always improve their innovation process
to produce product diversify. Through innovation process, Nestle can develop new
products to penetrate new markets and customer segments. When Nestle success in the
innovation, it can drive customer acquisition, loyalty and lead to enhanced operating
margin. In the year 2016, Nestle makes innovation on Milo product such as for a new Milo
to Go ready-to-drink, as well as the Milo Champions pack to help families inspire health
and fitness throughout their child’s life.

According to Peter R. Vogt, Nestle Malaysia managing director, in the year 2011,
Nestle already spent a substantial amount of research and development (R&D) through
its 29 R&D centers around the world. He also said that innovation is a continuous effort
and he mentions that Nestle has around 50 ongoing innovation projects in different area
and categories. It is also on-going process because each category has different plans.

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Besides, he said with the continuous innovation efforts, the company can be sustaining
its brand name in the market and remain profitable in the long term. Nestle need to
always improve and maintain their innovation process to make sure that they can expand
the product diversity based on the customer database.

In the customer perspectives, linkage from expanding the product diversity, Nestle
providing nutritious products to the customer. Customer perspective should describe how
a company intends to attract, retain and deepen relationships with targeted customers
by differentiating itself from competitors. For Nestle, it has their own attractiveness which
is by providing nutritious products to the customer.

In addition, Nestle aim is to provide their customers with food and beverages that
not only taste delicious but are also healthy and nutritious. To achieve that aim, Nestle
uses science-based solutions to improve quality of life through food and diet, contributing
to health and wellbeing of consumers. Nestle also invest in better consuming
understanding, product innovation and renovation to create nutritiously, superior tasting
food products. The nutritional status and health of consumers vary widely because of
several factors including geography, socioeconomic status and age.

As we know, there are various types of Milo sold and each of the types have the
different function of nutritious products. It is due to the Nestle have their product diversity
in producing Milo. Milo was introduced in Malaysia as a Tonik Food Drink. In the year
1999, Vitamin B was introduced at Milo for energy release and improve in the year 2002
with the Actigen-E, a unique combination of 8 vitamins and 4 minerals, which assisted in
optimum energy release from food. Milo is an action full of natural malt benefits, skimmed
milk and cocoa for a great chocolate flavor. Milo with protomalt contains malt extract
which is a mixture of different types of carbohydrates that provide the energy and
nutrients needed by the body. Not only for adult, Milo also suitable for children. Milo helps
kids get essential vitamin and nutrients they need to take on the day. As we know, kids
always like to play and easy to tired, but, with drinking Milo, they can be more energy.

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 Milo products have its essential vitamin and minerals include calcium for strong
teeth and bones, iron to carry oxygen to the body’s cells, vitamin A for healthy eye
sight,vitamins B1 and B2 to help release energy from foods,vitamin C to keep skin and
gums in good shape. Therefore, in the customer perspective, Nestle can fulfill the
satisfaction of their customer by providing nutritious products in several types of Milo.
The customer can choose what types of Milo that they want to drink suitable for the
different nutrition.

In the financial perspectives, Nestle can expand revenue opportunity due to they
have trust and satisfaction of customer through providing nutritious products. Nestle can
generate more revenue and income from existing customer. It is because the existing
customer already believes with the nutritious of Milo’s product because they usually drink
it. Besides, Nestle can generate additional revenues by introducing new products, selling
to new customers and expanding the operation into new markets. In addition, Nestle
brand especially product Milo is well known around the world and if Nestle introduces
new products and sell the current products, the existing customer will easily purchase it
due to the trust of Milo’s product. For example, Nestle introduces new product of Milo ice
cream name Milo Frozen Confection in the year 2006 and it gets high demand from their
existing customer and also the new customer. Nestle introduce the product to continue
its mission of being the trusted brand in households nationwide. Even though it is a new
product, it has a high demand in the market because the ice cream has its quality and
not only passionate about nutrition but is also an ice cream treat that makes life a little
sweeter and refreshing. When the demand from the customer is high, Nestle can get
more revenue. Therefore, Nestle can expand more revenue opportunities because Nestle
providing nutritious products.

Linkages 5

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 Based on the learning and growth perspective Nestle should developing customer
database then it can be linkage with internal process perspective to expand more various
product especially for Milo. So that, it can expand their product diversity for their customer
needs. Example of product Milo that was diversity by Nestle which are milo powder and
liquid, milo cereal, milo snack bar and ice cream. Milo powder it’s was available from the
small packet with the weight start from 90g until 2kg in soft packs and it also provide in
tin for 500g and 1.5kg. Instead of milo liquid it’s provide in various exciting flavours such
as original, mocha and hi-cal to keep customer energized. Milo liquids also available in
three types of packing which is milo HT, milo bottle and milo can with different quantity.
Hence, for milo cereal, milo snack bar and ice cream also available in small and large
packet. Milo makes evaluation in the product to make it suitable for every gender and
aged.

Due to the internal process perspective which is expand the product diversity it
will linkages with customer perspective because milo product can be more affordable and
accessible for the specific customer that may be the average of their income is low.
Product more affordable and accessible means every milo products easy to customer find
and get it with reasonable price according to packaging size either in village or town. For
example for small packaging the price is lower than the biggest one, that’s why milo make
it in many size of packaging to give opportunities for all level age and income of their
customer. So that, the customer can make a right decision to buy the product based on
their affordability. Hence, if customer cannot find in the mini market or supermarket for
certain product of milo, customer can buy it from milo website or another online shop
such as Lazada. Milo products can be consume in many way whether with hot or cool
water and in many situation either breakfast, hi-tea or etc. In addition milo also available
in fast food restaurants. Hence, it can make customer be more loyalty and satisfied to
milo products because it is availability.

Related to customer perspective it can be linkages to the financial perspective for

milo to expand revenue opportunities, increasing revenue and reducing expenses. From
that, milo can generate additional revenues by introducing new product, selling the

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product for the new potential customer and expanding their operations into new market.
For example milo introduce milo snack bar, milo cereal duo and milo kosong, this product
customer easy to get because it was focus for all customer either new or potential
customer. Milo makes this new product that is suitable for the whole family. Nestle may
can increase sale as compared before. Hence for increasing revenue, milo can generate
more revenue and income from existing customers by selling additional products. Due to
diversity of products, automatically Nestle has a lot of production, so that Nestle can
reduced their expenses by creates products that more affordable and accessible by
lowering direct and indirect expenses. Such cost reductions enable a company to produce
the same quality outputs while spending less on people, materials, and supplies.
Therefore, Nestle can make reduce their expenses by manufacture the packaging by
itself rather than purchase the packaging from suppliers for all product made. So, the
reduction may cut the packaging cost instead buy it. Nestle can analyze this cost through
make or buy formula by costing method.

Conclusion

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 As a conclusion, Nestle should implement all of the objectives listed in the Balance
Scorecard and that have translated in the strategy maps to ensure maintain or increase
the shareholders value. When Nestle have properly organized the structure of strategy
maps, the management will decisive to make better allocation of time, manpower,
financial, technology, assets and have better initiative that help to meet goals as well as
enable organization allocating more efficiently their precious resources across their day
to day activities.

Simple example, learning and growth suggests that to maintain talented

employees (manpower allocation resource) that can lead to high productivity to improve
employees efficiency (time allocation resource), then can linkage to customer perspective
which is reduce compaint about the products, next company can link to financial as a
stable resources which reduce complaint may increase revenue because customer start
loyal with Nestle products and likely to buy the products when they starts to trust that
Nestle produced quality products as compared others brand. Finally, shareholders gained
value from good reputation, high profitability, strong brand’s name and many more
benefits if these goals are achieved.

All the perspectives which are learning and growth, internal process, customer and
financial are met or linkages and finally benefits the shareholders. Simply develop a
balance scorecard does not help the company execute the strategy, all stakeholders have
put an effort to make it successful. They may see the great outcome if integrate the
strategy throughout the entire organization, hold every report owner accountable for
being timely and accurate, report regularly, and make adjustments as needed. All the
objectives listed in the explanation above are definitely linkage each other and important
to implement it if the business want to increase shareholders value.

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REFERENCE(S)

Annual report nestle 2016

http://www.nestle.com/asset-
library/documents/library/documents/financial_statements/2016-financial-statements-
en.pdf

8 Simple Ways To Increase Shareholder Value. (2015). Jan 23

https://www.linkedin.com/pulse/8-simple-ways-increase-shareholder-value-damien-
pound

The Nestlé Sustainability Review. (2002)

https://www.nestle.com/asset-
library/documents/reports/csv%20reports/environmental%20sustainability/sustainability
_review_english.pdf

Nestle: Milo product in viral post has ‘coagulated milk,’ not fungi. (2015) August 4.

http://lifestyle.inquirer.net/202300/nestle-milo-product-in-viral-post-has-coagulated-
milk-not-fungi/

Milo Malaysia educates customers how to spot fake products. (2015) March 16.

http://english.astroawani.com/malaysia-news/milo-malaysia-educates-customers-how-
spot-fake-products-55725

Innovation drives Nestlé as leader in food and beverage. (2011, May 22). Retrieved
November 13, 2017, from http://www.theborneopost.com/2011/05/23/innovation-
drives-nestle-as-leader-in-food-and-beverage/

Mydin website. From

https://www.mydin.com.my/products/?keyword=milo&orderby=&size=&no=1#/close

Redemption Programme. (2017). From

https://www.milo.com.my/flaskjuara/FlaskJuara_FAQ_EN.pdf

The Importance of having a Customer Database. (2011, June 17). Retrieved November
13, 2017, from https://edenenterprises.wordpress.com/2011/06/17/the-importance-of-
having-a-customer-database/

What is the Balanced Scorecard?. Retrieved November 13, 2017, from

http://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard

William Gervase Clarence-Smith (2000) Cocoa/and chocolate,1765-1954.London

Rutledge

https://myassignmenthelp.com/free-samples/milo-a-chocolate-and-malt-powder

http://www.milo.com.my