Developing people from acquired companies. However, due to Nestlé’s realisation of “consumers being increasingly aware of the link between food, health and personal wellbeing”, there has been more of a shift away from a technology and processing-driven image towards health and wellness (Bell and Shelman 2009). It is structured in four main sections. Nestlé could use the BCG growth-share matrix to depict its 3 SBUs and over 10,000 brands in relation to its market share. Specifically, by leveraging on its core competencies (product knowledge, distribution channels, factory network, etc. Their objectives are to deliver the very best quality in everything they do, from primary produce, choices of suppliers and transport, to recipes and packaging materials. Major brands such as Crémo, Migros, and Emmi compete directly with Nestlé products on price (Nestlé 2017). Nestlé currently has operations in 130 countries in three zones (Varma & Ravi 2017). However, the current players have reported good performance in this industry with significant market shares. Another of the future strategies initiated by Bulcke is to shift the structure of Nestlé from an “organisation by country” to an “organisation by business” through sharing best practices using GLOBE (Bell and Shelman 2009, p.10). One of the future strategies of Nestlé is to grow internally instead of growing through mergers and acquisition. Source: Authors’ own creation based on information from Bell and Shelman (2009) and Lasserre (2012). Nestlé spends about CHF 941million on supplies sourced from local farmers for production in its Swiss factory (Varma & Ravi 2017). Offering healthy, convenient product for conscious consumers to meet their needs of a time constrained lifestyle. – Democratic leadership style: managers are given autonomy to take decisions. Nestlé sells over 10,000 products with distinctive features, including nutritional value, packaging, labelling, etc. Need a custom Essay sample written from scratch by However, growth in internet retailing and cross-border buying exposes consumers to wide array of similar packaged goods (Euromonitor International 2017). Therefore, few smaller entrants succeed in this industry; hence, the threat of new entrants in this industry is low. Secondly, Nestlé’s current strategy was focused on renovating and innovating its product line through reorganizing its R&D. Strategic Business Value/Supply Chain Analysis: Table of Contents Section 1 – Executive Summary3 Section 2 – Introduction 4 Section 3 – Nestlé Background 5 3.1 Brief History 5 Section 4 – Literature Review – The Value Chain 6 4.1 The Value Chain 4.2 Nestle and Porter’s Value Chain6 Section 5 – Nestlé Strategies 7 5.1 Creating Shared Value7 5.2 Sustainability8 5.3 International Competitive To achieve the objective of … Instead they should focus on being more of a healthier food and beverages company as a cost leader with its current Nestlé model. IvyPanda. Another group of strategic possibilities for Nestlé is portfolio analysis. 15, no. Schneider, M 2017, Nestlé: strong foundation, clear path forward, bright future, Web. They understand the Swiss market well and enjoy consumer loyalty. The production of chicken bouillon cubes by Nestlé is widely used to enhance the flavour of dish in developed countries; however, the low income groups in Africa directly mix rice with this cube. We also announced the sale of our U.S. ice cream business to Froneri, our global strategic partner in ice cream. As a result, a lot of their organizational requirements such as organizational structure and management control systems are stuck in the middle for example the fact that certain products need to be managed globally especially in the nutrition division while others are locally managed. – It has a pool of experts- its staff consists of scientists, technologists from top universities (Bell and Shelman, 2009, p. 6). These factors are described below using Nestlé as a case study. What’s your deadline? – “4 strategic pillars” (“low cost, efficient operations, renovation and innovation of the Nestle product line, universal availability and improved communication with consumers through better branding”) (Bell and Shelman, 2009, p. 3). 1. It could use concentric diversification to offer products closely related to its current portfolio or the horizontal option to provide new brands (Hill, Schilling & Jones 2017). Nestlé Entreprise Under Strategic Analysis Essay. An example would be the fact that Nestlé exited from cocoa roasting but still carried on producing chocolate. This report discusses the strategy of Nestlé, a multinational enterprise (MNE) with a broad brand portfolio in the processed food industry. The agent further sent works to the distributor. Doole, I, Lowe, R & Kenyon, A 2016, International marketing strategy, Cengage Learning, London. Nestlé should teach its people to move from a management style of taking control and matters into their own hands to a style of sharing control and producing decisions globally and collectively. A good example would be the fact that the Globe system allowed for a synchronization of data leading to an improvement in order fulfilment between manufacturers and retailers. Each SBU concentrates on a specific product line, e.g., coffee and beverages, and cooperates with the firm’s R&D department to ensure consumer-driven strategy and innovation. However, they may reduce the quality of the products because of using lower quality raw materials. A way in which this issue could be overcome is by applying both strategies. Consequently Brabeck made the strategic decision of initiating the GLOBE system. Reducing unnecessary costs in Nestlé’s SBUs will result in lower prices relative to those of rival firms. – Comprehensive information system: the GLOBE. The company is in the position to adopt new technology to learn more about what their consumers want, but if they don’t … The paper demonstrates the competitive position of the company, and how well it fits in a competitive market of food and beverages industry. – Decentralised and relatively flat organisational structure which helps to cater for local needs thus increasing flexibility. Instead of holding on to unrealistic goals, the company could reposition itself in the market as becoming ‘healthier’ than the competition. More than 275,000 employees. With many years of pursuing growth by acquisition strategy, Nestlé now owns 2,000 brands of products. Some of Nestlé’s well-known brands include Nescafe, Kit-Kat, Purina, Aero, Butterfinger, Maggi, and Haagen-Dazs. This helped the company cope with the volatility of the supply market and enhance its operations. He further explains that in order to achieve this, a minimum amount of resources needs to be mobilized for an activity to perform efficiently and effectively. – Focus on nutrition, health and wellness. Company: Nestle AG CEO: Ulf Mark Schneider Year founded: 1905 Headquarter: Vevey, Switzerland Number… Critically analysing the internal workings of the firm, this report presents a SWOT analysis to reveal an identification of the internal strengths, weaknesses, opportunities and threats seen within Nestlé. The different markets are used to operating as “small kingdoms” (Bell and Shelman 2009, p.10). This is IvyPanda's free database of academic paper samples. PESTLE analysis is important in strategic management. The competitive analysis is done to understand the relative positioning and market share of the company's direct and indirect competitors. 34, no. 1631-1654. It should try and follow Unilever’s example of focusing on its core products. ⏰ Let's see if we can help you! -Partnership with local farmers -providing advice and support. In this paper, the outer-organisational analysis using Porter’s five forces reveals that the threat of substitutes, buyer power, and competitive rivalry are high in Nestlé’s industry. Implementing the GLOBE is not enough to implement the new strategy, a culture of sharing information and best practices should also be introduced and reinforced. The company seems to be achieving its objective as it has slightly improved its earnings before interest and taxes as seen in exhibit 6; it has slightly made progress in its capital management through its improved return on capital employed as seen in Appendix 2; and it has been able to achieve its objective of organic growth between 5% and 6% except for 3 years between 1996 -2007 years also indicated in Exhibit 6. It could also utilise these strategies to expand into new industries or locations to avoid bottlenecks associated with market saturation and intense rivalry. Nestle: Strategic Management and Swot Analysis 1862 Words | 8 Pages. 3, no. ), Nestlé can use concentration (vertical and horizontal strategies) to enter related industries, e.g., chocolate confectionery, to address high buyer power through variety. Do you have a 2:1 degree or higher? ... Our NESTLE Case study writer at onlineassignmentwriter.com is providing you with … Therefore, in order to maintain a strong position, Nestlé should carry on with mergers and acquisitions as well as growing internally. It contains thousands of paper examples on a wide variety of topics, all donated by helpful students. Porter’s Five Forces Model gives a framework for analysing a firm’s internal and external environments and strategy development (Hitt, Ireland & Hoskisson 2017). It uses demographic, geographic & behavioural segmentation strategiesto cater to the changing needs of the most competitive industry. Nestle recognised that for it to sustain its competitive advantage it needed to establish a global technological platform to capture data, manage information and create knowledge (Bell and Shelman, 2009). Therefore, a unique brand image based on quality will result in competitive gains for Nestlé. This could also be Nestlé’s way of differentiating its products by taking advantage of its reputation in the marketplace as a leading company in its industry. Thus, Nestlé is an ideal trading partner for suppliers, which gives it considerable bargaining power in the supply chain. Greater vertical integration with farmers or partners can fortify its supply network and reduce supplier power. Hence, Nestlé’s shift from “decentralized units of R&D to few large resource-intensive centres.” As a result of its R&D centralization, Nestlé was able to reinvigorate old brands; an example was finding multiple uses of the Nesquik brand from not only being a powder but to also present it as syrup and into ready to drink varieties. Therefore, given that country managers in the different countries were used to be given a great deal of freedom especially when dealing with issues related directly to the customer, this new strategy can produce some internal problems for Nestlé. However, a cost leadership strategy has limitations, such as potential imitation by competitors and the possibility of strategy-consumer taste mismatch (Kim & Wang 2014). This statement shows a pledge to offer superior nutritional products. This indicates that the company has the resources needed to deploy this repositioning strategy. This is referred to as their “milk district model” which allows farmers to supply milk to the company directly and in exchange Nestle provides its resources and know-how, such as providing storage and chilling facilities (Nestle, 2012). One such strategic option proposed in this paper is low-cost leadership.