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Pestle
Value Chain
Porter’s 5 Forces
Positioning Map & Benchmarking
VMOST
Stakeholder Analysis
Performance Review
VRIO
SWOT
Strategy Recommendation and Analysis
Reference List
Student ID; 20102947
VALUE CHAIN
Primary Activities
Inbound Logistics
Nestle provides support to farmers on a daily basis, and several sustainability projects, such as the Farmer Connect Program, which purchases coffee directly from farmers, have been launched as part of the Nescafé Plan (Nestlé SA, 2018).
Operation
In every department, Nestlé operates at a high level of efficiency and effectiveness.
Marketing and Sales
Nestlé's “Brand Building the Nestlé Way” is a unique business strategy that sets the corporation apart from the competition (Nestlé SA, 2018).
Support Activities
Technology
Nestlé's R&D is heavily dependent on technology. The R&D Network, which includes three Science & Research centres, 31 Product Technology centres, and R&D Partnerships around the world (Nestlé SA, 2018), and this is a fundamental competitive advantage.
Nestlé can benefit from, a large marketing budget, and well-established distribution networks. Established enterprises have created extensive distribution networks and economies of scale to manufacture and distribute items at low rates; new entrants, on the other hand, require a large initial investment to compete globally, although competing locally is easy due to cheap switching costs and little barriers.
Although Nestle is the largest food company, its competitors invest substantially in marketing and advertising, particularly at the launch of new products. Despite being the largest food company, its competitors are very successful and constantly compete for market share.
Competitive Rivalry- High
Threat of New Entrants- Low
Nestle's switching costs are manageable because it would just have to adapt to the different agreements and ensure that the supplier's quality is acceptable.
Buyers can switch brands rapidly and Nestle and other companies are attempting to influence the market or drive-up costs. To set themselves apart from the competition, food companies like Nestle should focus on improving the quality of their products and strengthening their brand communications.
Nestle faces a high threat of substitutes, therefore it needs pay close attention to customer trends and product differentiation in order to win new customers and maintain existing ones.
Threat of Substitutes- High
Bargaining Power of Suppliers- Low
Bargaining Power of Buyers- High
PORTER’S FIVE FORCES
.
3
STRENGTHS
WEAKNESS
OPPORTUNITIES
THREATS
Nestlé has
been around for over a century (Nestlé, 2019), they have earned people's confidence and loyalty
The company also aims at providing healthy snacks for all ages, like the organic 'kit kat' chocolate; it is a healthy snack suitable for people who try to maintain a healthy lifestyle. (Djarum et al., 2019)
Nestle has innumerable competitors like Kraft Foods, Unilever, general mills, Groupe Danone. (Bell and Shelman 2009)
Nestle has a variety of opportunities, one being its shot at growing its online and e-commerce sites. Although Nestle has established online stores in several countries, the business will benefit from expanding its online markets to new places.
One of Nestle’s most significant threats is the industry's growing competitiveness (Varma and Ravi, 2017)
SWOT ANALYSIS
4
VRIO ANALYSIS
| Valuable | Rare | Imitable | Organized to capture value | Results | |
| Providing opportunities for young farmers | YES | NO | YES | YES | Sustained Competitive Advantage |
| Financial Resources | YES | NO | NO | YES | Sustained Competitive Advantage |
| Nutritional Attributes | YES | NO | YES | YES | Sustained Competitive Advantage |
| 150 years of reputation | YES | YES | YES | NO | Sustained Competitive Advantage |
| Financial Resources | YES | NO | NO | YES | Sustained Competitive Advantage |
| Distributors and subsidiaries in more than 180 countries | YES | YES | YES | NO | Sustained Competitive Advantage |
| Varieties of products | YES | YES | YES | YES | Sustained Competitive Advantage |
VMOST ANALYSIS
Value
Nestle goal is to become a cut-throat, essential, Nutrition, Health and Wellness Company distributing refined shareholder value by being a preferred corporate citizen, preferred employer, preferred supplier selling preferred products". (Akter, 2020)
Mission
Nestle is dedicated to creating a healthy diet amongst its customers. Its mission statement is supported by the quote 'Good Life, Good Food’ (Nestlé, 2019a). Showcasing that other than its nutritional qualities, it also prides itself on providing quality, safety, and convenience for consumers to boost enjoyment.
Objective
Nestlé's long-term corporate goal is to be one of the best and most well-known food brands in the world. They also want to be known as the industry reference for financial performance and recognized leader in health, wellness and nutrition (Rakesh, Research, and Ravi, 2017).
Strategy (Tactics)
Enhancing operational effectiveness.
Using discipline and clear priorities to allocate our resources and capital, through acquisitions and financings
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POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGY
LEGAL
ENVIRONMENT
PESTLE ANALYSIS
Technically, the more countries a company operates in, the higher the probability of policy changes disrupting its operations. (Frue, 2019) Since Nestle operates in about 187 countries (Nestlé, 2019), any change in the regulatory structure can significantly affect operations.
As a multinational firm, its influence on foreign exchange rates and prices significantly affects. If the currency deteriorates, it may lead to a decline in revenue, Depending on the location. It could have the reverse outcome. — an increase in profit. (Frue, 2019)
Nestle operates on such a large scale, and it is impacted by even the slightest shift in consumer trends. To promote better health, the organization has decided to focus on low sugar, sodium, and saturated fats. (Zigu, 2011)
Nestle will be able to provide better products across the board as technology advances, so improving the region's health and quality of life. (Singh et al., 2021)
Many environmental issues confront the world today, such as climate change and water scarcity. Companies must make new efforts to address environmental challenges since they rely on natural resources directly and through their supply chain (United Nations Global Compact, 2018).
It is necessary to analyse and comply with the legal requirements of various countries. Employee health and safety laws, product quality and hygiene rules, and labour regulations enacted in different countries must all be adhered to.
7
PERFORMANCE REVIEW. FiMO (Marketing and Operations)
| EMPLOYEES | Nestle employs 273,000 worldwide (Nestlé, 2019b) |
| DISTRIBUTION | Nestle operates in 189 countries worldwide. Nestle has 447 factories in 86 different countries. Nestle distributes products in 197 nations. |
| BRAND PORTFOLIO | Nestle offers varieties of brands including, bottled water, cereal, chocolate and confectionary, diary, drinks, etc. |
| CUSTOMER-RETENTION | Nestle values client feedback so much that it established a customer engagement center to manage its offline and online brand data. The unit works on customer data in order to better understand the true requirements and desires of customers. |
| MARKETING | To meet the changing needs of the most competitive industry, Nestle employs demographic, regional, and behavioural segmentation tactics. The company's diversified initiatives aids them in targeting a consistent set of clients (i.e. consumers with similar wants) with their product bundle. |
| SUSTAINABILITY | Nestlé strives for zero waste and the complete recovery of unwanted by-products. its factories have cut waste by 23% and improved reuse or recovery of by products by 36% since 2000, thanks to Nestlé Continuous Excellence (NCE) and other initiatives. |
OPERATIONS
MARKETING
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STAKEHOLDERS ANALYSIS
| Media | Competitors Suppliers Employees Civil Society Organization |
| Government | Customers Board of Directors Investors |
| Customers Employees Board of directors Investors | Government Communities Media Competitors |
| Suppliers | Civil Society Organization |
Influence
Expectations, Met?
High
Low
Yes
No
Low
High
Low
High
Power
Level of Interest
POSITIONING MAP
SOURCE OF ADVANTAGE
MARKET SCOPE
Low Cost
Differentiation
Broad
Narrow
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STRATEGY AND RECOMMENDATION
Nestle aims at creating value for its stakeholders. Its strategy focuses on creating shared value among specifically among its key shareholders. By meeting the needs of its consumer through the provision of healthy foods and cleaner water and to make sure its products are accessible and affordable to all class of people.
| SMART | YES | NO |
| SPECIFIC | YES | - |
| MEASUREABLE | - | NO |
| ATTAINABLE | YES | - |
| REALISTIC | YES | - |
| TIME-LINE | - | NO |
REFERENCES
adamkasi (2017). Porter’s Five Forces Analysis (Porter Model) of Nestle|Porter Analysis. [online] Porter Analysis. Available at: https://www.porteranalysis.com/porters-five-forces-analysis-porter-model-of-nestle/.
advantage.marketline.com. (n.d.). MarketLine Intelligence Center. [online] Available at: https://advantage.marketline.com/Company/Profile/nestle-sa?swot.
Akter, S. (2020). Companies’ vision, mission, and core values focus on human resource management. International Journal of Financial, Accounting, and Management, 2(4), pp.343–355.
Bell, D.E., Shelman, M. and Harvard University. Harvard Business School (2009). Nestlé in 2008. Boston, Ma: Harvard Business School.
Birahim, S.A. (2020). Internal and External Factors of Nestle and Comparison with Unilever. BRAC Business School Brac University.
Conzelmann, C. (2013). Insight: improving our products’ performance along the value chain. [online] Nestlé. Available at: https://www.nestle.co.uk/en-gb/media/newsfeatures/insight-improving-our-products%E2%80%99-performance-along-the-value-chain [Accessed 2 Apr. 2021].
Djarum, S.V., Kee, D.M.H., Binti Azmin, N.N., Isdianto, R.D., Elghoul, A.O. and Pandit, S.S. (2019). The Challenges and the Opportunities of introducing Organic KitKat Chocolate by Nestle (A Study Case: NESTLE). Journal of The Community Development in Asia, 2(3), pp.59–67.
Faiz, M. (2019). Nestle Australia Limited. Monash University, pp.15–17.
Frue, K. (2019). PEST Analysis of Nestle: How politics and social culture affect its growth. [online] PESTLE Analysis. Available at: https://pestleanalysis.com/pest-analysis-of-nestle/.
Markovic, M. (2018). (PDF) Nestlé’s Strategic Analysis Report. [online] ResearchGate. Available at: https://www.researchgate.net/publication/328968077_Nestle.
McGrath, M. (2017). World’s Largest Food And Beverage Companies 2017: Nestle, Pepsi And Coca-Cola Dominate The Field. [online] Forbes. Available at: https://www.forbes.com/sites/maggiemcgrath/2017/05/24/worlds-largest-food-and-beverage-companies-2017-nestle-pepsi-and-coca-cola-dominate-the-landscape/#4217f0923a69.
mehmetavsar (2013). Nestle Analysis. [online] Available at: https://www.slideshare.net/mehmetavsar/nestle-29302747.
REFERENCE CONTD.
Nestle (2018). Understanding Nestlé. [online] Nestlé Global. Available at: https://www.nestle.com/investors/overview.
Nestlé (2019a). Mission & Vision. [online] Nestlé. Available at: https://www.nestle-esar.com/aboutus/missionvision.
Nestlé (2019b). The Nestlé company history. [online] Nestle.com. Available at: https://www.nestle.com/aboutus/history/nestle-company-history.
Nestlé Annual Review 2020. (2020). [online] . Available at: https://www.nestle.com/sites/default/files/2021-03/2020-annual-review-en.pdf Our purpose Contents Accompanying reports.
Nestlé Global. (2020). Strategy. [online] Available at: https://www.nestle.com/investors/overview/strategy.
Singh, P., Sin, L.G., Binti Kama’Aziri, N.S., Jian, O.Z., Binti Mohd Azlan, N.A.S., Binti Ibrahim, P.N.I.B., Sheng, D.H., Kee, D.M.H., Heng, J.T.S., Wee, L.S. and Ying, L.Y. (2021). A Study on Nestle Promotion Strategy. International Journal of Accounting & Finance in Asia Pasific, 4(1), pp.60–70.
Varma, G.R. and Ravi, J. (2017). Strategic Analysis on FMCG Goods: A Case Study on Nestle. [online] . Available at: http://www.ijrms.com/olvolume2issue4/GedelaRakeshVarma-JaladiRavi-3.pdf.
Zigu (2011). Nestle PESTLE Analysis | MBA Skool-Study.Learn.Share. [online] MBA Skool-Study.Learn.Share. Available at: https://www.mbaskool.com/pestle-analysis/companies/17962-nestle.html.
