Nestle
College of Business Administration
Strategic Management (BUSI 4362)
(Proejct)
Group Members:
Fatima Alibraiem | 2009800025
Zainab AlNasser | 200900165
Manal Alsaif | 200800621
Instructor: Dr. Shaikh Arifusalam
Section: 201
Summer 2012
Table of contents
Introduction. ………….………………………………………………………….……………..3
Mission and Vision………...…………………………….………………………….…...... 5
Description of the Products and Services……...…………………………..…….…..7
Marketing and Sales Strategy………………………………. …………..…….……………9
Nestle Strength and Weaknesses……………….. …………..………………….....…12
Financial Management………………………………………………………………………15
Organizational Structure…….….………………………………………………….….…..17
External Assessment………………………………………………………………………..20
Nestle Opportunities and threats……………………………………………………22
External factors Evaluation……………………………………………………….…….24
Strategy formulation………………………………………………………………………..24
BCG matrix………………………………………………………………………..……………27
SPACE matrix………………………………………………………………………………….28
Strategy Implementation………………………………………………………………..29
Conclusion and Recommendations…………………………………………………34
Executive Summary………………………………………………………………………..35
References……………………………………………………………………………………..38
Business Description and Vision
Introduction:
This project will attempt to analyze Nestle Company, on many levels. The main points of concern are to discuss the Nestlé?s mission and vision, conduct both internal and external assessment of the company, formulate a strategy that is well-suited to the company's nature, implement it, and finally try to evaluate the outcome. To better understand the company and all information collected, one must first introduce it. Nestle was first founded in 1866 by Henri Nestle, and it is today the largest food and beverage company on an international level. Nestle is constantly invested in product innovation and business acquisition, which is precisely why it is where it is now. Their company grew over the years to include many products, some of which are chocolates, soups, coffee, cereals, frozen products, yoghurts, mineral water and other food products. However, by the start of the 1970's Nestle expanded its product portfolio to include pet foods, pharmaceutical products, in addition to cosmetics as well. Currently, and with all the products it holds, Nestle still maintains its image as a company concerned with high quality. At Nestle various fundamental principles guide the company's strategies. There is a maintained balance between keeping the product continually innovative while keeping geographic activities and product lines intact. Their main goal is to provide the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives. Nestle works on the principle of decentralization, meaning that the tastes of products differ from one place to another, as the efficacy responsibility and the process of recruiting falls on each region's management. However, it is important to realize that each management is not free to do as it wells completely. Headquarters in Vevey decides how the overall strategy should be implemented and practiced. This approach can be said in different words as 'centralize what you must, decentralize what you can'. Nestle seek to think about its company globally, however deal with issues on a local level when interacting with people.
Mission and Vision
Current Mission and Vision StatementsNestles? Vision: ?At Nestlé, we believe that research can help us make better food so that people live a better life. Good Food is the primary source of Good Health throughout life. We strive to bring consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological needs. In addition to Nutrition, Health and Wellness, Nestlé products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestlé helps provide selections for all individual taste and lifestyle preferences. Research is a key part of our heritage at Nestlé and an essential element of our future. We know there is still much to discover about health, wellness and the role of food in our lives, and we continue to search for answers to bring consumers Good Food for Good Life?The Mission of Nestle: ?Nestlé strives to be a leader in nutrition, health and wellness, with the belief that good food is central to health and wellness. At the Nestlé Research Center, nutrition research meets food innovation to bring consumers of all ages and stages of life, foods and beverages that contribute to health and wellness, while offering remarkable taste and convenience?
Improved Mission and Vision StatementsVision: ?Nestlé?s vision is to be the world?s first choice provider for foods, beverages, and commodity products. Providing customers with what they need, when they need it?The improved vision statement is better in the sense that it is drastically shorter than the original vision provided by the company. In addition to it being direct and to the point, promising consumers all over the world that they will be provided with what they require in the time they desire. It also shows that the company has ambition, and is willing to win over competitors from all over the world.Mission: ?Nestle is devoted in providing the best quality and value worth product to its customers. That is why we invest on research centers and collecting customers feedback, to best satisfy people of different tastes and expectations.? The improved mission statement shows commitment and devotion, and that it does not just stop at that, but it also shares how the company is functioning and is willing to reach its goals. Further, it appeals to different people of different backgrounds, because it is solely based on collecting research results and customers feedback.
Competitors Mission and Vision Analysis Nestle has many competitors in different industries, due to the fact that it has a multi product portfolio. However, a common competitor of most of the industries it operates in is Procter & Gamble. P&G vision statement: "Be, and be recognized as, the best consumer products and service company in the world".P&G mission statement: "We will provide braded products and services of superior quality and value that improve the lives of the world's customers, now and generations to come".Procter and Gamble?s mission and vision statement has the advantage of being shorter in length. However, their vision statement is vague and does not provide the reader or rather the consumer with the means by which they will accomplish their vision. The mission statement on the other hand is futuristic while maintaining a present sense of time. It relates to consumer and their children.
Description of the Products and Services
Products and Services
Product and Service Description
Nestlé has some 6,000 brands,[ with a wide range of products and large variety across a number of markets including ;
*Coffee (Nescafe, Nespresso, etc.) ,
*Baby Foods (Baby Foods) ,
*Sports Nutrition(CARNATION BREAKFAST ESSENTIALS, POWERBAR) ,
*Chocolates (AERO , AFTER EIGHT) ,
*Waters (NESTLÉ WATERS) ,
*Beverages (Nesquik, Milo, Carnation, etc)
*Frozen Meals (Findus, Lean Cuisine)
* Ice Cream & Frozen Treats (Häagen-Dazs, Skinny Cow) .
Competitive Comparison
1/ Unmatched product and brand portfolio
2 /Unmatched research and development (R&D) capability
3/ Unmatched geographic presence
4/ People, culture, values and attitude
Technology
Nestlé is strengthening its research and development by enlarging its global Product Technology Centre
Future Products and Services
At the same time NestléR&Dis committed to continuous improvement in consumer insights, and translating these into innovative products and packaging to meet consumer needs and preferences
Marketing and Sales Strategy
Nestlé’s Marketing Strategy
The management following what is expected has designed a marketing strategy mix. Which is basically the combination of four aspects: product, distribution, promotion and price. Nestle main strategy and way of business is to focus on innovation and renovation while maintaining a balance between the earlier two and geographic activities and product lines.
Nestle is devoted internationally to taking into consideration local legislation, cultural and religious practices:
· Manufacturing and marketing the company's products in a sense to create sustainable value over a long period of time for stakeholders, employees, consumers and business partners, is Nestlé’s business objective.
· Nestle prefers long-term business development to short-term profit.
· Nestle is invested in its customers feedback, and admits to identifying the genuine interest coming from them. They believe that without the customers, the company would not exists.
· Nestle always maintains a respectable relationship with the countries in which it operates, by respecting laws, culture and traditions.
Nestlé’s Website
Figure 2
Positive points:
1. Very accessible, provided tabs help visitors and customers access what they need correctly and clearly.
2. Relatively newly updated, as it shows on the latest press releases.
3. Provided diverse multimedia (videos, images).
4. The choice of selecting your position on the map, to access the website in different language and read about information related to your location.
5. Nestle gives the visitor the choice of subscribing to its website, sharing with friends, and downloading the page. Which works in its benefit as advertisement.
6. Full information on many topics, supported by charts, tables and graphs.
7. The contact us page is very simple and efficient. It also contains the address and phone number of the company's central switchboard.
8. It promotes all Nestlé’s products, which is beneficial in the sense that a customer may not be aware of a product, thus by seeing it his/her interest will be gained, and perhaps bring more sales to the company.
Negative Points:
1. Somehow clustered, visitor may feel overwhelmed by the amount of stuff on the home page.
2. Some tabs are repeated at the top and bottom of the page, which is unnecessary and adds to the cluster of the page.
3. The design of the website is dull, colors are very neutral and uninteresting.
4. The website is not available in multiple languages. However when switched to countries who speak French, it changes directly without the consent of the visitor.
Nestle Strengths and Weaknesses
Strengths:
1- Located in over 100 countries. The largest Company in the world for producing food products.
2- In 2008, Nestlé was named one of "America's Most Admired Food Companies" in Fortune magazine for the twelfth consecutive year.
3- Professional brands sold to restaurants, colleges, and hotels.
4- Nestle has some very strong brands like Nescafe, Maggi and Cerelec. These brands are almost generic to their product categories, which are known globally.
5- Nestle has a worldwide network of centers in 17 locations on four continents. An international staff of 3500 engaged in the search for innovative new products and the renovation of existing ones.
6- Nestle has a high level of market share.
7- People all over the world trust and recognize Nestle, because they have brand recognition. Nestle is a big brand name.
8- They are low cost operators, which allow them to beat competition, in addition to edging ahead operating excellence, innovation, renovation, product availability and communication.
9- They carry leadership in nutrition, especially infant nutrition. Their key priority is to innovate nutrition products, which are sold in hospitals, and clinics.
Weaknesses:
1- Growth in their organic food sales division was slightly low in 2008.
2- Since 2004 the breakfast cereal industry has been under fire from the FDA and the American Medical Association, both of which say that false claims of "heart healthy" and "lower cholesterol" need to be removed from packaging and advertising. They have also been forced to reduce the amount of sugar in their products, as parent's advocates groups claimed they were contributing to the diabetes epidemic among American children
3- Nestle is entering into markets that are already mature and can give a tough competition to new entrants.
4- Nestle plain Yogurt has proved to be a Nestle weakness because it has been unable to make its market place in USA.
5- The company has a complex supply chain management.
6- Nestle did not develop enough competitive unit. Nestle is trying to innovate their products, but sometimes not fast enough than competitors.
7- In case of high competitive situation their prices are sometimes too high.
Financial Management
Financial Ratio Analysis
Here are some of Nestle most important financial ratios
Profitability Ratios:
Liquidity Ratios:
Activity Ratios:
Solvency Ratios:
Organizational Structure of Nestle
Nestle is a function based organization. Tasks in the organization are distributed into separate jobs, which are later grouped together under different departments. The organizational structure at nestle is hierarchical, as it shows on the chart. (Figure 1)
Figure 1
The chain of command spreads from the organization’s upper levels to the lowest levels, clearly showing who is supposed to report to whom. Suggestions move from downward to upward, while orders move from upward to downward. Thus encouraging employee to share their opinions and thoughts with their superiors, yet keeping ordered easy to follow and from a single direction. The nature of job descriptions are explicit and formalized, procedures and practices are clearly described to employees. Moreover, in an effort to stay in pace with change and current trends, Nestle has moved towards decentralizing decision-making, and to be more flexible and responsive.
Improved Organizational Structure
Perhaps an improved version of the organizational structure could be one where departments are divided according to the genre of the product being manufactured and sold, thus making it relevant and more convenient to manage and project expectation and goals. In the improved version of the organizational structure each department or rather facility will work as an individual unit, however they all must report to the headquarter office with reports that indicated how well they are doing and what they may be facing. This can implemented on a local level, since Nestle operates in multiple regions all over the world, it would be better to satisfy customers to have functions operation under each location’s requirement, while still maintaining the main values of the original company.