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ByPinal Basarani 12

Jayesh Budhrani 20

Pawan Lilani 52
Vinita Makhija 55

Nestl: Good Food, Good Life

The worlds leading nutrition, health


and wellness company

MISSION STATEMENT

Good Food, Good Life" is to provide


consumers with the best tasting, most
nutritious choices in a wide range of food
and beverage categories and eating
to night.
Customersoccasions, from morning
Yes
Products and Services

Yes

Markets

No

Technology

No

Concern for survival, growth and


profitability

No

Philosophy

No

Self-concept

Yes

Concern for public image

No

Concern for employees

No

Nestl at a glance

Found in 1866 by Henri Nestl at. Switzerland


Over 280,000 employees
Nestl sales for 2009 were CHF 108 bn.
456 factories in 84 countries
24 R&D Centres worldwide.
10,000 different products

Sales by rgion
Percentage of total sales in 2008

Europe
36.0%

Americas
42.2%
Asia, Oceania, Africa
21.8%

Excluding globally managed businesses (Pharmaceutical, Nestl Waters, Nestl Nutrition)

Nestl: Presence In India

Nestl India has presence across India with 8


manufacturing facilities and 4 branch offices.
Nestl India manufactures products Nescaf, Maggi,
Milkybar, Milo, Kit Kat, Bar-one, Milkmaid And Nestea
BRANDSMilk products and Nutrition
Beverages
Prepared dishes and Cooking Aids
Chocolates and confectionery

STRATEGIES OVER THE YEARS

Nestle Nutrition-a global business organization.


Corporate Wellness Unit was designed to integrate
nutritional value-added in their food and beverage
businesses.
Competitive Strategies associated with FDI.
It aims to balance sales between low risk but low
growth countries of the developed world and high risk
and potentially high growth markets of Africa and
Latin America.
Another Strategy-Striking Partnership with other large
companies.
It employed wide-area strategy for Asia

FOUR STRATEGIC PILLARS


1.
2.

3.
4.

low-cost, highly efficient operations


renovation and innovation of the Nestle
product line
universal availability
improved communication with consumers
through better branding

NESTLE MODEL

The Nestl Model seeks to achieve the


following every year:
5-6% organic growth
Improved trading operating profit margin
Improved underlying earnings per share
Improved capital efficiency

PROBLEM OF NESTLE CO.

CHILD LABOUR ISSUE


PROBLEM
The use of child labor in cocoa production
Because of the poverty and a lack of schools

Violation of child labour law

Enslaved children and child trafficking

SOLUTION
Introduces the nestle supplier code
Monitoring all participants in its supply chain and set clearer labor standards.
Give special training on how to address child
labor problem

RECOMMENDATION
Monitoring all of process for recruitment of child labor
Working with government

IMAGE OF CHANGE (CARETAKER)


The manager control is severely impeded by a variety of internal and external
forces beyond their.
The manager had create Nestle Supplier Code to guide and maintain the
relationship between supplier and company.

RAW MATERIALS
PROBLEM
1.
Unexpected demand by customers
2.
Bad weather and natural disaster
3.
Inaccuracy of orders receives in inventory or stocks in hands

SOLUTION
1.
Manager build multiple relationship with other raw materials suppliers
2.
The surplus products will be sell with promotion to clear the stock
3.
Build the Dealer Management Systems (DMS)
- Dms is a software for solutions that provide tools for managing sales, services,
parts and inventory management, business management, integration, and core
architecture
- Dms was build to maintain the relationship between dealer and consumers

RECOMMENDATION
Import inventories from other region
Not all region has similar demographic factor such as race.

IMAGE OF CHANGE (CARETAKER)


The manager control is severely impeded by a variety of internal and external
forces beyond their.
The manager had build Dms software to guide and maintain the relationship
between dealer and consumers.
This can prevent the poor the relationship from happens among the Nestle dealers
and consumers

Business-level strategy

Nestle business-level strategy is integrated


cost leadership/differentiation
-Wide range of products (over 20 categories:
coffee, milk, mineral water, petfoods, cereals)
-Low cost operators.

Competitors
Many competitors
The same qualities
The same prices
Unilever, Kraft, Master foods
High pressure

Problem

High market share


Low growth
Competitive pressure
Want to expand
Dont have enough resources

Solution

Cut investment budgets, overheads, frill


Maximizing existing assets, capacity,
distribution
Target internal growth rate
Improve supply chain, productivity,optimize
planning

ANALYSIS

1.
2.
3.
4.
5.

SWOT Analysis
Porters Five Force Model
PEST Analysis
IFE
EFE

SWOT ANALYSIS
STRENGHTS
Unmatched product and brand portfolio.
R&D capabilities.
Distribution channels and geographic
presence.
Competency in mergers and acquisitions.
Brand reputation valued at $7 billion.
Ability to customize and localize products

WEAKNESSES

Inability to provide consistent quality in


food products.
Weak implementation of CSR.
Allegations of unethical conduct
Product concentration in many areas
which might be viewed as unhealthy.

OPPORTUNITIES

Increasing demand for healthier food


products.
Acquiring startups specializing in
producing well-being products.
Establishing new joint ventures.
Opportunity to further expand into new
markets (geographic and product)

THREATS

Food contamination.
Trend towards healthy eating.
Growth of private labels.
Rising raw food prices.

INTERNAL FACTOR EVALUATION

EXTERNAL FACTOR EVALUATION MATRIX

Porters Five force Model

1.

Keeping in mind the global market in which Nestle


operates, the porters five force analysis will be
carried out keeping a general view of the entire
world as the potential market for Nestle.
Threats of New Entrants: Nestle threats to entry
exists because its barriers to entry are very low.
For instance, Nestle in India there are low barriers
to entry and many small domestic players can
enter the market and challenge the market of
nestle through their product or pricing offering
which is tailored to the local culture and tastes.

Bargaining Power of Suppliers


The bargaining power of suppliers of Nestle is
very low especially in regions where the
countries are economically backwards such as
Pakistan or Bangladesh. That is because Nestle
being such a giant in the market has the ability
to bring lots of new business to the suppliers and
therefore the suppliers have to produce the raw
materials according to the outlines set by the
company or they can be replaced.

Bargaining Power of consumers:


The bargaining power of the customers of Nestle is
high. That is because it is a brand which greatly
relies on consumer appreciation for the product. If a
product is launched in any part of the world where
the consumers do not like the taste, they will refuse
to buy it. Similarly in third world countries the
consumer base is very price sensitive. This raises
their bargaining power if Nestle wants to penetrate,
then it will have to reduce its prices to their
affordability level.

Threat of Substitutes:
Threat of substitutes for Nestle is also very high.
In all areas of its operations there are multiple
other firms that are offering either similar
products or substitute products. For this purpose
Nestle has to ensure that it offers a product
experience that cannot be imitated and is
demanded by its consumers.

Industry Rivalry:
Industry rivalry for Nestle is very high in no
matter what part of the world it operates in. In
United Kingdom it faces threat of competition
from brands like Kellogs, in India it faces
competition from local brands and brands such
as Knorr which are starting to venture into the
food industry

BCG Matrix
Thus, when all the products of the company are put in
four cells (thus it actually provides an opportunity to
reassess the entire position of the company in terms of
all the products it offers to the market), the market
standing of the company can be analysed in four
different classes namely, stars, cash cows, dogs and
question marks.
Each of these classes have a different meaning
attached to them and can be represented on the matrix .

BCG MATRIX
HIGH
LOW

BUSINESS GROWTH RATE

STARS
Nescafe
Maggi Noodles

QUESTION MARKS
1.
2.
3.
4.
5.
6.
7.

Milo
Nestle Kitkat/Barone/ Munch
Maggi Sauces
Maggi Soups
Nestle Butter
Nesvita
Milk

1. Nestle Maggi Pickles


2. Nestle Butter

CASH COWS
Ceralac

DOGS
1. Nestea
2. Milky Bar
3. Nestle Crunch

HIGH

LOW
MARKET SHARE

Product: Nescafe
Position: Star

Reasons for present positioning:


(1) Nescafe is one of the leading coffee
brands in the Indian market.
(2) It has find a dominance which is
unparalleled by any other brand in the
country.
(3) Not only does it have a high market share
but it growth rate is also significantly
high.
(4) The name Nescafe has become generic
with coffee.

Product: Maggi Noodles


Position: Star
Reasons for present positioning:
(1) It is surprising to note that Maggi Noodles, which
has found more households of consumption in India
than any other country in the world and has become
the first preference of Indian children in terms of instant
food, but with other competition prospects are
changing
(2) The reason essentially lies in the fact that though
Maggi Noodles has a significantly high market share in
the Noodles market in India, the market growth rate of
Noodle consumption is growing very high.
(3) Though the number of repeat purchasers is high in
case of Maggi, the rate of increase among the new
purchasers is also growing.

Product: Ceralac
Position: COW

Reasons for present positioning:


(1) Ceralac has become one of the leading baby
food products
(2) It has witnesses quite a long hold in its
market share with its sales increasing on a
continuous basis for almost more than one and
a half decade.
(3) Its different variants have kept competitors
at bay and its finds a place easily at almost
every general or provisional store in the Indian
market.

Position: Question Mark


Intended Placement: Star

(The reason why these are is not placed as a dog is that it has the potential to
expand
and also because the product lies in a market with high business growth rate.
The retailers dont give much importance to these items as an item on the
shelf but they also do not completely disregard it off their stores.
WHY?
These might have not seriously taken promotional drive.
The main chunk of advertisements is seasonal
Extensive promotional exercise meant to place it in the mindset of the Indian
psyche.
It has huge avenues for growth especially analyzing the extending Indian
market.

Position: Question Mark


Intended Placement: DISINVEST
Reasons for present positioning:
(1) Maggi Pickles and, on account of its limited variety (especially in this
taste crazy country) and comparatively higher prices, has been unable
to acquire a market necessary for its bare minimum existence.

(2) The sales of Maggi Pickles has never really trigged since its launch.
(3) The placement of Maggi Pickles is doubted for the twin reasons of its
high price and packing, which seems to target it to the upper substrata
while the lack of a significant number of variants poses it a challenge to
maintain itself in such households.
(4) It is not a dog because it is not the market which has low growth
rate. In fact the market of packaged pickle is growing but it is Maggi
Pickles which is unable to gather a substantial share in this growing
market.

(1) Placing Maggi Pickles on the hearts and mind of the


typical taste centric and money conscious Indian
consumer will require an overhauling and huge
investment.
(2) Extensive price cuts are required but the matching
returns are doubtful.
(3) Pickles being a non-durable product and their
success essentially related to the taste of the consumer,
are not one of the core competencies of Nestle, which is
better known to introduce standard taste in the country
and get them approved by the consumers.
(4) Thus it is better advised to disinvest in the business
and focus on other brands.

Reasons for present positioning:


(1) Nestle Butter, though available in the market for some
time now, has not found much support from the consumers
primarily on account of the dislike of the taste of Nestle
Butter.
(2) Considered as salt less, Nestle butter again is yet to
grow from its pre-launch position on account of the huge
competition it faces from Amul, the market leader in this
field.
(3) Now, as the market growth rate is quite significant, yet
as Nestle Butter has not acquired a better share in the
market, it has been placed in the category of Question Mark.

1) Facts do not favor Nestle to continue with its butter.


(2) Instead of no response, a significant number of
retailers are of the opinion that Nestle Butter seems to be
rejected by the consumers for the reason that its taste
does not suit the Indian psyche.
(3) Thus it is advisable for Nestle to discontinue with
butter, as it did with its water brand, Pure Life. Also, it
would be better to concentrate on other brand than to go
in for a head on collision with Amul, the market leader,
which is inevitable on account of the same market which
both the products cater to.

Product: Milky Bar


Position: Dogs

Reasons for present positioning:


(1) It become quite popular in and around the year 2000 but it
never reached the stage of a power brand.
(2) Primary tried by the Indian consumer as a craze which laid
in trying the first no brown chocolate, Nestle Milky bar was a
sweet chocolate with cream color. Thus the primary
acceptance of Milky bar was not based on its core qualities
but on the basis of certain peculiarities which it contained,
differentiating it from other products in the same line.
(3) Milky Bar, as a chocolate, though has a growing market,
yet it has been placed as a dog on account of the inherent
lack of core quality which makes it generic with chocolates.
This was the main reason why it was never considered a
competitor by other chocolate manufactures and the
consumers also treated it so.

Intended Placement: Disinvest

Comments:
(1) Milky Bar has lost the primary battle which it had with
mindset of the unaware Indian consumers who could
never contemplate a non-brown chocolate.
(2) The market positioning of Nestle Milky Bar has been
only to children (as one can contemplate from the
advertisements which relate only to children in the age
group of 10 -15) and thus it has lost the adolescent
consumer, which is also a
major part of the entire consuming segment of chocolates.
(3) The promotion style of Milky Bar has disappeared. The
advertisements have been too soft and not too impressive.
Thus success of Milky Bar requires rebuilding the image of
Milky Bar.

REFERENCES

Nestle Annual Report 2013


http://www.articlesbase.com/managementarticles/strategic-management-at-nestle5907881.html
www.nestle.com
http://articles.castelarhost.com/nestle_competit
ive_strategy.htm

Thank you!

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