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ASSIGNMENT

Defining Corporate, Business, functional
Operational level Strategies of a Company

Submitted To: Sir Mubashar

Submitted By:
Fatima Zahra RMBA-Fall 12-048

Class: MBA 3.5
Session: 2012
Semester: 5




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Company Introduction:
Nestle is one of the worlds largest and most known companies. It is a Swiss company with its
headquarters located in Vevey, Switzerland. The company was inaugurated in 1866 (Nestle
2012) and since its inception has grown through leaps and bounds to become the worlds largest
food and nutrition company (Cnn money 2011). The company is also a major stakeholder in the
cosmetic company, LOreal.
For a company to start from a small domestic town and then expand internationally, the strategic
vision of the company plays a central and key role. The subsequent chapters shall discuss the
companys internal goals and strategy and how that strategy paves way for Nestle to build its
competitive advantage in all the markets it operates in.
Vision and Values:
The vision of Nestle reflects ideas of fairness, honesty and long-term thinking. These ideas are
reflected in the companys corporate business principles that have shaped the company culture
and strategy for the past nearly 140 years. The core values that the company has are its people,
the quality of its people and brand, the companys brand portfolio, their consumers, their
customers and the companys sustainable performance.
Company Objectives:
The main objective of Nestle can be appropriately summed up by the phrase Creating Shared
Value This principle at Nestle can be described as having a conviction to build long term and
beneficial relationships with their stakeholders, comply with all legal requirements and ensure all
activities that the business undertakes are sustainable and result in value creation for both the
company and the society at large. A strategy that the company has developed to mark their
achievements is that they would like to become the benchmark of:
1. Nutrition, Health and Wellness
2. Sustainable Financial Performance
3. Trust by all stakeholders.
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In order to achieve these benchmarks Nestle underwent heavy expenditure in Research and
Development and relies greatly on new research and innovation, both in terms of food
production and processes.
Competition can emerge both from international brands as well as local brands of the market in
which Nestle enters and tries to operate. The rising prices of raw materials, fuel as well as the
political instability in many third world countries where nestle has set up their production plants
also threatens to cause unreliability in the supply line (Lin, 2007).
Mission/Goals

...positively influence the social environment in which we operate as responsible corporate
citizens, with due regard for those environmental standards and societal aspirations which
improve quality of life. -- Henri Nestl, 1857.




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Corporate Strategy
Nestl is able to maintain its mission and goals through three different strategies. The graph
above shows how those three strategies (Operational Pillars, Growth drivers, and Competitive
advantage) allow Nestl to maintain a competitive advantage over its rivals.

Operational Pillars
1. Innovation and renovation
2. Operational Efficiency
3. Whenever, Wherever, However
4. Consumer communication
Growth Drivers
1. Nutrition, Health, and Wellness
2. Emerging markets and popularity positioned products
3. Out-of-home consumption
4. Premiumisation
Competitive Advantage
1. Unmatched Product and Brand Portfolio
2. Unmatched Research and Development capability
3. Unmatched geographic presence
4. People, culture, values and attitude
These are the strategies used by Nestl to ensure that it succeeds in the market. What
makes Nestl stronger than their competitors, like General Mills, is that Nestl uses strong
brands that are able to create competitive barriers. As part of their operational pillars, their key
success comes from their incredible marketing. Their marketing is based on the fact that they are
able to provide quality and cheaper priced products while providing customer satisfaction. This
comes from their main mission of nutrition, health, and wellness. Unlike their competitors
marketing, Nestle is able to support their strong brands with their influencing powers of
nutritional products

Nestl also goes above its competitors using its strategy of unmatched research and
development capability. They have also partnered with other large corporations, for example:
Coca Cola. They also do something very different than their other competitors, Nestl acquires
local companies to create regional mangers that know the local markets and culture. This allows
them to gain a strategic advancement in the global areas that they are part of to gain better
consumer satisfaction.

Business Strategy
Nestl is a company with many brands; the individual business level strategies are different
from the corporate level, because each business has different markets and consumers.
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These are all the different brands that represent the Nestl Corporation.

Baby Foods Cerelac, Gerber, Gerber Graduates, NatureNes, Nestrum
Bottled Water Nestle Pure Life, Perrier, Poland Spring, S. Pellgrino
Cereals Chocpic, Cini Minis, Cookie Crisp, Esterlitas, Fitness, Nesquik Cereal
Chocolate &
confectionery
Aero, Butterfinger, Cailler, Crunch, Kit kat, Orion, Smarties, Wonka
Coffee
Nescafe, Nescafe 3 in 1, Nescafe Cappuccino, Nescafe Classic, Nescafe
Decaff, Nescafe Dolce Gusto, Nescafe Gold, Nespresso
Dairy Carnation, Coffee-Mate, La Laitiere, Nido
Drinks Juciy Juice, Milo, Nesquik, Nestea
Food Service
Maggi, Milo, Minor's, nescafe, Nesrea, Sjora, Lean Cuisine, Stouffer's
Healthcare nutrition Boost, Nutren Junior, Peptamen, Resource
Ice Cream Dryer's, Extreme, Haagen-Dazs, Movenpick, Nestle Ice Cream

Each brand of Nestl business has the same strategy since Nestl is a food corporation. The core
strategy for each brand is the same as the corporation's strategy as laid out in the 3 pillars. The
manufacturing factories for these brands follow the same protocol for energy reduction. They
reuse many of their products in order to create energy to produce their products. Their main
strategy is to create low-cost, highly efficient operations make a universally ability products, and
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to improve communications with their consumers. Similar to their corporate strategy, they are
able to focuses these similar strategies through their brands.

BCG MATRIX OF NESTLE

Functional Strategy
Driving functional excellence requires the implication and commitment of talented and skilled
managers at all levels with specific expertise required to succeed in key functions at Nestl
Waters. It also implies a perfect coordination with Nestl functional communities.
Our success depends on our employees. They bring their expertise and know-how and their
ambition and commitment drives them to developing new skills continuously contributing to our
organizations growth. Get a feel for their commitment and youll want to be part of the teams
that drive Nestl Waters function excellence!
Nestle (Operation Management Aspects)
Capacity and Capacity Planning
Facility Location
Product design
Globalization
JIT( Just in time) Manufacturing System
Forecasting
Supply Chain Management
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Nestle (Capacity)
Capacity is the ability to hold, receive, store and accommodate.
Volume and certainty of anticipated demand
Strategic objectives
Cost of expansion and operation
Best operating level
Nestle (Facility Location)
The factor by which the management calculate by formulas to locate their facility.
Heavy manufacturing facility
Light industry Facility
Retail and Services facility
Benefits
Location Incentives
Nestle (Product design)
Focusing new generation.
R&D
Consumers daily life.
Differentiation
Nestle (Globalization)
The companies develop their operations into many of the countries.
Export import regulations, duties and tariffs
Raw material availability
Number and proximity of suppliers
Transportation and distribution system
Labor cost and education
Available technology
Commercial travel
Nestle (JIT-Manufacturing System)
The concept of JIT is to getting the right quantity of goods at the right place and at the right
time.
Raw Material
Reduce space requirements
Continuous improvement
Lower production cost
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Increased flexibility
Increased machine utilization
Lower inventory cost
Nestle (Forecasting)
Short-range forecast
Medium-range forecast
Long-range forecast
Nestle (Supply Chain Management)
Good supplier relations
Price advantage for materials
Responsibility of SC Manager
To buy raw material as an input.
To use raw material in economical way.
To supply all of the materials to the customers.
Functions of OM
Understanding strategic objectives
Developing an operations strategy
Improving the performance of operation
Planning and controlling
Designing the operation's products, services and processes
Implementation
Nestl is very strict with its employees when implementing their corporate and business
strategies. They have created a code called the WHO code across all of Nestl's operations to
ensure equality within their brand.
The WHO code includes:
1. Nestl Policy and Instructions
2. Training, testing and compensation on WHO Code Knowledge
3. Nestle WHO Code Management System
4. Internal Ombudmen (outside of the line management) System
5. Internal and External Audits
6. Internal and External Reporting
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Nestl trains their employees on the WHO Code, and based on their performances on the tests,
they can get salaries increases as well as promotions, and under certain cases, can also lead to the
dismissal from the company.
Nestl also has created an "Ombudman", an outside of the line management system that any
employee can go to confidentially if they are suspicious of any WHO code violations. There is
also a corporate ombudsman, who is a member of the executive board, that employees may
report allegations to if they feel uncomfortable reporting it to their markets ombudman.
There are also internal audits on the WHO code, where employees are told that their actions are
subjected to audits and if there are any violations of the WHO code that will result in
punishment. In additions, there are also external audits on making sure the WHO code is
followed. Nestl has made Bureau Verities, a global auditing company, to review and analyze
Nestl infant food market in the less developed countries.
Evaluation & Conclusion:

In conclusion it is safe to say that Nestle has a lot of positive attributes backing its larger than life
product portfolio and therefore the company has managed to sustain its position in the list of the
fortune five hundred companies. The company through the use of efficient management
procedures, innovation, capital infusion and research and development continues to expand its
portfolio and also serves as an example of not just a an exceptional food and nutrition providing
company but also a real multinational corporation. There are many lawsuits against the company
and it is also generally considered to be one of the worlds most boycotted companies and
despite all off that the revenues of the company have hardly slumped since its inception. That is a
testament to their value chain creation and streamlined processes that ensure that nestle becomes
a part of the livelihood of the people of the 130 countries it serves.