22-06-2013, 04:05 PM
STRATEGIC MANAGEMENT PROJECT REPORT ON INTERNAL ANALYSIS OF NESTLE
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INTRODUCTION TO NESTLE:
Today, Nestle is the world leading Food Company. Nestle headquarters is in Switzerland. Its international R&D network supports the products made in more than 500 factories in 86 countries. The Nestle factories are operating in the region of:
Africa
America
Asia
Europe
Oceania
Being a company dedicated to food from the beginning, Nestle remains sensitive to culinary and eating habits, and responds to specific nutritional problems, whilst also setting and matching new trends such as growing out-of-home consumption and caring about the well being of its consumers.
EANING OF NESTLE:
Henri Nestlé endowed his company with the symbol derived from his name. His family coat of arms, the nest with a mother bird protecting her young, became the Company's logo and a symbol of the Company's care and attitude to life-long nutrition. The Nestlé nest represents the nourishment, security and sense of family that are so essential to life.
Nestle Pest Analysis
PEST is a type of analysis used in strategic management which takes into account Political, Economic, Social and Technological (PEST) factors. The term "PEST" was first coined by Francis Aguilar in his 1967 book, "Scanning the Business Environment." The analysis also often includes Legal and Environmental factors, thus creating a PESTEL analysis. The "EL" was added by Liam Fahey and V.K. Narayanan in their book, "Macro-environmental Analysis in Strategic Management," published in 1986.Frequently combined with Michael E. Porter's Five Forces Model and Albert Humphrey's SWOT analysis, PESTLE analysis is a useful tool for understanding market demand/decline, current business positions and potential opportunities/obstacles. The factors it analyzes should not be considered solely at the company level. Rather, these external factors must be examined at a company, national and global level.
Five Forces Analysis:
Threat of New Entrants (Low-Medium). Even though food and beverage is in many ways analogous to a commodity business, barriers to entry as a result of supply-side economies of scale, demand side benefits of scale, capital requirements, incumbency advantages and unequal access to distribution channels keep the threat of new entrants relatively low (Porter, 2008).
Power of Suppliers (Medium) Porter (2008) notes that "powerful suppliers capture more of the value for themselves by charging higher prices, limiting quality or services, or shifting costs to industry participants" (p. 6). For most major firms in the food and beverage industry, the power of suppliers is medium to medium high. For Nestle, the power of suppliers is quite low as a result of extensive vertical integration by Nestle.
Power of buyers (low). For Nestle and most other buyers in the industry, the power of suppliers has been kept quite low because of the fact that buyers are numerous and cannot credibly threaten to integrate forward and assume their business.
Threat of Substitute Products (High). It would be difficult to name or think of a food or beverage product which did not have a near or identical substitute.
Rivalry of existing competitors (Medium High to High). Porter (2008) notes that the intensity of rivalry is greatest when competitors are numerous or roughly equal in size and power, industry growth is slow; exit barriers are high and firms cannot read each other's signals very well (p. 9). Many of these conditions have been met, thus the intensity of rivalry would be assessed as fairly intense.
Corporative Strategies:
Nestle describes itself as a food, nutrition, health, and wellness company. Recently they created Nestlé Nutrition, a global business organization designed to strengthen the focus on their core nutrition business. They believe strengthening their leadership in this market is the key element of their corporate strategy. This market is characterized as one in which the consumer’s primary motivation for a purchase is the claims made by the product based on nutritional content.
In order to reinforce their competitive advantage in this area, Nestle created Nestle Nutrition as an autonomous global business unit within the organization, and charged it with the operational and profit and loss responsibility for the claim-based business of Infant Nutrition, HealthCare Nutrition, and Performance Nutrition. This unit aims to deliver superior business performance by offering consumers trusted, science based nutrition products and services.