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Nestl Case Study

1. Nestl Case Study Lauren and Florian


2. MissionTo provide consumers withthe best tasting, mostnutritious choices in a
widerange of food and beveragecategories and eatingoccasions, from morning
tonight.
3. Nestl Overview Nestl S.A. is a Swiss company, established in 1905 The
company started with condensed milk and infant formula Now Nestl sells baby
food, bottled water, cereal, chocolate and other confections, frozen food, dairy,
drinks, food service, health and sports nutrition, pet care, and weight
management products
4. Brief Summary of Case Nestl was in a good position, but needed to grow
internally The company was able to increase its competitive advantage by
continuing to innovate or renovate products, acquire firms that fit its brand, and
divest itself of lines that were not contributing to earnings
5. Core Competencies as Illustrated in the Case Global market share and brand
recognition Innovation and market predictions Ability to acquire new firms
and divest itself of unprofitable lines in order to strengthen branding and
earnings Successful programs to increase efficiency
6. SWOT Analysis Based on Case Facts Strengths: Diversified global food
company, scale and market reach, knowledge of global markets, greatly
improved operating efficiency, R&D and innovation Weaknesses: In the past the
firms revenue was 70% in markets with limited potential for growth, weak
profitability due to some of its acquisitions, some low-margin products
Opportunities: Goal of 4% new organic internal growth, improved efficiency,
health food industry, maintain momentum Threats: Fierce competition, foodproducing rivals had improved operating efficiency, possible brand overextension
7. Developments Since 2007 Current CEO is Paul Bulcke The company
continued to acquire and divest itself of product lines and brands Global
economic downturn Invests in countries where raw materials are produced
Increased emphasis on environmental awareness and free trade and sustainable
farming techniques in developing countries
8. Nestls Current Position Strong sales, operating cash flow, and returns to
shareholders Continued momentum, but with volatile currency values and raw
material prices Consumer confidence shaky, but balanced by emerging
markets 2011 goal of 5-6% organic growth and EBIT margin improvement
Focus on functional foods with higher margin, which means increased spending
in R&D
9. Competitive Advantages and Growth DriversNestls growth drivers
are:Nutrition, health, and wellnessEmerging marketsOut-of-home
consumptionPremiumizationCompetitive Advantages

10. Financial Information The Group achieved organic growth of 6.2% in 2010
Sales Group 2010: CHF109.7 bn (88.8 bn) EBIT 2010: CHF 16.2 bn (13.1
bn) Net profit 2010: CHF 34.2 bn (27,7 bn) Dividend in 2010 was CHF 1.85
(1.49 ) per share to shareholders (an increase of 15.6% compared to 2009)
11. Recommendations General Continued focus on sales in emerging markets
such Asia, Africa, and Latin America Perhaps raw materials can be sourced from
some of these emerging markets, provided there is stability Follow through with
constant streamlining of operating processes to increase efficiency Increased
advertising: due to Nestls strong position it can afford to advertise when their
competitors might not be able to, at the same level
12. Recommendations Specific Continue to strengthen presence in frozen and
convenience food industry, as well as the area between health food and
pharmaceuticals Strengthen the connection to Nestls commitment to green
movement and sustainable farming to brands Tighten up brand cohesion; may
be necessary to continue to divest product lines that are not a good fit for the
company
13. Conclusion Through smart strategic management decisions Nestle
succeeded and became a multinational Today, Nestle is still the largest food
and nutrition company in the world in terms of sales (#42 Fortunes in 2010)
14. Sources Course texts Nestle case www.nestle.com Nestle 2010 Annual
Report http://www.economist.com/node/14744982 www.hoovers.com