Nestle Final Case Study 5v124j

Q:-1

A:-

What have been the key success factors for Nestle? E

Key Success Factors of Nestle

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Key success factors are significant to future success of industry firms. These factors encom competencies, market achievements, resources, competitive capabilities and product attributes etc. It is most important for the strategists to be familiar with the surroundings of sector in order to distinguish the most important competitive success factors. The KSFs of Nestle are given below:

1. Localization amidst Globalization: • Successfully achieving localization in the increasingly globalized food industry • Product planning, production, marketing and services form a strategy of successful localization of a global company • Nestle has 2 organizations that focused on leveraging its global reach to achieve operational efficiencies: GLOBE and GNBS provide the process, organization and technology infrastructure to allow Nestlé to leverage its global size • GNBS will enable Nestlé to leverage its scale to increase the efficiency and effectiveness of its "back office" whilst enabling the markets and businesses to focus on demand generation and profitable growth • Nestle’s Swiss sales is only 2% of their total global sales

2. Global Brand Strategy: • Nestle has products that resonate all over the world under a unified brand • These brands are unified under the Nestle banner, which delivered a value and reputation of a “global food company” while the products delivered its own specific attributes • The global corporate brand was the brand platform for delivering localized products and brands • Nestle has built global brands such as Nescafe, Nesquik, Nestea, Taster’s Choice, Haagen-Dazs

3. Successful M&A: • Nestle has grown thru organic growth but really thru successful M&A • Nestle has acquired to enter both emerging and developed markets, and new product categories • Clear strategic focus: Food & Beverages, Nutrition, Health & Wellness, adjacencies to existing core businesses o Within these strategic focuses, 12 of their brands represent 70% of sales, most are #1 or #2 in Market Share (4 of these brands are billion dollar brands) • Clear criteria for transactions: Enhancing key metrics, strong market positions, brands, capabilities, ease of integration (culture) • Global scope but focus on bolt-ons: both emerging and developed markets • M&A drives profitable growth thru competitive advantages, growth drivers, and operational pillars.

Q:-2 Where is Nestle vulnerable? what should it watch out for? A:-

NESTLE’S VULNERABILITIES

Nestle is an established company almost all around the world. Below are the few vulnerabilities:-

• Hovering over the stats of 2008, the food industry grew 8.9% but Nestle lacked the potential to raise their sales in the organic food division that lay flat. • Regulators like FDA and AMA (American Medical Association) are pressing on the firm for removing tags that hold no ground such as ‘low cholesterol’ or ‘heart healthy’. Parents have also reported diabetic epidemic due to the consumption of such goods, in children especially. Promoting infant milk products comparing to breastfeeding. Slaves in African countries that are working under it. It holds up a negative effect regarding the whole brand. • Retailers do not get to set high margins to indulge more in sales. • Logistics cost is quite high. • Many products are not understandable in different countries. It did not make much of an impact in with their LC-1 (food commodity). • Coordination between country specific plants with the Center, due to which some plants are running exceptionally smooth while operations in other countries lack effectiveness. • Transportation as well as storage (proper warehousing) problems. • Supply Chain having a complex stature (India plant transitional traceability). • The immense diversification portfolio of the firm makes it impossible to run every division smoothly. • Russia being an unstable market for Nestle which cuts a big chunk from Nestle’s bite. • It is also perceived that Nestle puts profit first.

Nestle should watch out for: • Contamination of products should be regarded strictly (Cookie Dough, March 2009). • The company has a not so pretty history with the FDA. Pet Food contamination 2007 (imported from China, the vegetables contained rat poison). • Inflation rise is giving birth to high prices. Raw chocolate prices are jumping, along with the Dairy costs; which leaves heavy cuts in the margin in order to make the customers brand loyal. They have also shrink the packaging which is not really noticeable, so the customers are paying the same amount for a lesser product.

• Competitors like Cadbury Schweppes, Hershey’s, Quaker, Heinz, Del Monte, Kellogg’s, and Kraft Foods are also well established. It’s a tough market with a tougher competition for gaining market share. • Market is quite mature and the competitors specialize in a certain product that can hit hard on Nestle. (Yogurt Market US: General Mills) • In the Indian market, fresh food is preferred than ready-to-eat meals. • In still developing countries as well as underdeveloped countries, Nestle will face a large competition in market both domestic and unorganized sectors. • Poverty sector in developing countries is also a lacking that must be watched over for. • Malnutrition and obesity are yet another burden faced by the developing countries.

Q:-3 What recommendations would you make to senior marketing executive going forward? What should the company be sure to do with its marketing ? A:Execs

Recommendations to Nestle’s

Slogan Change A recommendation for Nestles would be to keep the "good food, good life" for other sections of the company but change the slogan for confectionary. Something like "The Home of Chocolate" or anything else would be more beneficial to Nestles as Chocolate is an indulgence food which most people really don't worry if good for them.

Think Globally Act Locally Nestle should ‘think global and act locally”. Nestle should apply “think globally act locally” as well as thinking out of the box idea in their product and distribution with the help of strategic global marketing.

Foreign Talent Investment Nestle has encountered foreign competition because foreign competition has acquired its own domestic talent. Nestle should invest heavily into establishing its brand name in foreign countries to attract talent.

For Marketing Nestle should be sure to:-

1. Recent advertising has proved that pushing new products is hard therefore Nestles should re-think there strategy and promote there old reliable sellers. Perhaps instead of Nestles continue to develop already made brands such as Kit Kat Truffle they could promote the old brands but also come with new products altogether, not by-products. Nestles could return to old advertising campaigns such as “Nestles Milky Bar” commercials that although old led to large sales yet Nestles has stopped the Milky Bar commercial campaign in 2001 and Milky bar sales have declined 13.1%.

2. A good way for Nestles to infiltrate the European market would be by appealing to Soccer fans by sponsoring a soccer side. Sponsorships can be quite extensive but by doing it makes the brand much more easily recognisable. Because confectionary is so often impulse buying (28.0%) often consumers will choose the brand they know which will be the brand they have seen the most. So by advertising more effectively like sponsorships. Overall for Nestle to stay competitive it must stay in touch with what Cadbury and other chocolate brands are doing. Nestles must compete with Cadburys re-introduced best selling blocks otherwise they are losing a large percentage of the market. It must also make its brand more recognisable by Sponsoring sport clubs so public awareness grows.

References At a glance; Main brands. Retrieved http://www.nestle.com/All_About/Glance/Main_Brands/Main+brands.htm

September

30,

2006

Nestle: 2005 Financial Statements. Retrieved http://www.nestle.com/NR/rdonlyres/963007F1-571C-4F05-88FEFE4F3D22F47E/0/FS_WEB_E_060224a.pdf

September

29,

2006

Confectionary Market review 2003. Retrieved http://www.cadbury.co.uk/NR/rdonlyres/F29D2B3E-153F-4495-BA57594BD00BB217/0/ConfectioneryReview2003.pdf

September

25,

2006

Nestles Lc1 SWOT Analysis. http://articles.castelarhost.com/nestle_swot_analysis.htm ********

Retrieved

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2006