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A Project On Nestle BD PDF
A Project On Nestle BD PDF
BANGLADESH LTD.
REPORT ON
LOCAL BUSINESS POLICIES OF NESTL BANGLADESH LTD
PREPARED FOR:
Dr. Shibli Noman Khan
Lecturer
Department of Business Administration
Independent University, Bangladesh
PREPARED BY:
Alif Al Mohammed Shalahuddin
ID: 1221557
MBA 509
Department of Business Administration
Independent University, Bangladesh
Letter of Transmittal
30th July, 2012
Dr. Shibli Noman Khan
Asst. Professor
Department of Business Administration
Independent University Bangladesh,
Dear Sir,
Its our great pleasure to submit the Report on Nestle Bangladesh Ltd. A study was making on a
company that you have asked to prepare to study. I have tried our best to follow the instruction
that was given by you. Throughout this study I tried to identify how Nestle operating their local
business being a multinational company in Bangladesh.
I sincerely hope that you will enjoy this report as I enjoyed while writing it. If you need any
further clarification or quarry in interpreting this analysis, we will be glad to oblige you.
Thank you,
Table of Contents
Particulars
ABSTRACT
PART ONE: INTRODUCTION TO REPORT
Origin of the Report
Objective of the Report
Scope and Limitation
PART TWO: NESTL BANGLADESH LTD.
2.1 Introduction
2.2 History of Nestl
2.3 Global Brand of Nestl
2.4 Nestl in Bangladesh
Customers of Nestl Bangladesh Limited
Functions of Nestl Bangladesh
Products of Nestl Bangladesh
PART THREE: ORGANIZATION STRUCTURE OF NESTL
3.1 Global Organization Structure of Nestl
3.2 Organization Structure of Nestls in Bangladesh
PART FOUR: STRATEGY OF NESTL
4.1 Key Success Factors
External factors
Internal factors
4.2 Marketing Strategy
Market Segmentation
Target market
Positioning strategy
Advertising and Promotional activities
Medium Responses
4.3 Competition Structure
4.4 Nestls Consumer Communication and Relationship
4.5 Retaining Old Customer or Attracting New Ones?
Customer Satisfaction Level
4.6 Market Audit
External Audit
Internal Audit
4.7 Nestls Commitment to Environmentally Sound Business Practices
4.8 The Supply Chain
Raw Materials
Manufacturing
Distribution Marketing
4.9 What Makes Nestl to Become Nestl?
Medical support
Food support
Sports Development Programme
4.10 Conclusion
PART FIVE: APPENDICES
References
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Table of Figures
Particulars
Figure 01: Sales Regions
Figure 02: Sales Process
Figure 03: Organizational Functions
Figure 04: Nestl Brands in Bangladesh
Figure 05: Global Organizational Structure
Figure 06: Organizational Structure in Bangladesh
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Abstract
The study seeks to identify the local business policies of Nestle Bangladesh Ltd. as a
multinational company. How they operate their business in Bangladesh being a multinational
company to compete with their local competitors. To operate their business how they develop
their strategy to gain the competitive advantage.
In details the study aimed to identify the business policy and their strategy in Bangladesh. What
is there key success factors, marketing strategy, competition structure, market audit as well as
how they develop their market segmentation, target market, positioning strategy, advertising and
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Secondary data: Companys reports and other published materials various marketing
books, personal interview with a Nestl professional.
Bangladesh
Local Business Policies of Nestl Bangladesh Ltd.
Independent University, Bangladesh
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For the confidentiality concern, access to some information was not available.
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2.1 Introduction
Todays Nestl, the world's largest food and nutrition company, founded by the Henri Nestl (10
August 1814 7 July 1890); a German confectioner in Vevey, Switzerland in 1866. In the food
industry Nestl is the most trusted name with high quality products. Good food Good Life is
the mission of Nestl, which drives the company to provide consumers with the best tasting and
most nutritious choices in a wide range of food and beverage categories and eating occasions.
The vision of creating shared value and the very own Corporate Business Principles
shaped the company culture and made them a reliable investor over 86 countries of the world.
Today Nestl employs around 280000 people and have factories or operations in almost every
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1905-1918: The Company formed by the 1905 merger was called the Nestl and Anglo-Swiss
Milk Company. Most production facilities remained in Europe, however, and the onset of World
War I brought severe disruptions, as a result acquiring raw materials and distributing products
became increasingly difficult. At the same time the war created tremendous new demand for
dairy products, largely in the form of government contracts. By war's end, the Company had 40
factories, and its world production had more than doubled since 1914. Moreover in this period
Nestl added chocolate to its range of food products and also the Condensed-milk exports
increased rapidly as the Company replaced sales agents with local subsidiary companies. In
1907, the Company began full-scale manufacturing in Australia.
1918-1938: The end of World War I brought with it a crisis for Nestl. Rising prices for raw
materials, the worldwide postwar economic slowdown, and declining exchange rates made the
situation worst. In 1921, the Company recorded its first loss. Nestl's management brings Louis
Dapples as an expert to deal with the situation; his rationalized operations and reduction of the
company's outstanding debt improve the financial condition. On the other hand Nestl's first
expansion beyond its traditional product line came in 1920s by producing chocolates. In the
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coffee surplus, after eight years of research Nestl came with Nescaf became an instant success.
meantime Brazilian Coffee Institute first approached to Nestl in 1930 to reduce Brazil's large
1938-1944: in this period World War II were felt immediately upset the business once again and
Profits dropped from $20 million in 1938 to $6 million in 1939. To overcome distribution
problems in Europe and Asia, factories were established in developing countries; particularly in
Latin America. As the end of the war approached, Nestl executives found themselves
unexpectedly heading up a worldwide coffee concern, as well a company built upon Nestl's
more traditional businesses.
1944-1975: The graph of growth sets its trends little higher between 1944 and 1975. As a result
many new products were added as and outside companies were acquired. In Nestl merged with
Alimentana S.A in 1947, purchase of Findus frozen foods occurred in 1960, Libby's fruit juices
joined the group in 1971 and Stouffer's frozen foods in 1973and finally in 1974 the Company
became a major shareholder in L'Oral, one of the world's leading makers of cosmetics. The
Company's total sales doubled in the 15 years after World War II.
1975-1981: In 1920s the economic situation was in challenge due to price of oil rose, growth in
the industrialized countries slowed down and worldwide unstable political situation. In 1975 and
1977 price of coffee bean and the price of cocoa tripled. In this situation to maintain a balance,
Nestl went to second venture outside the food industry by acquiring the pharmaceutical and
ophthalmic product producer Alcon Laboratories Inc. of U.S; as a result it increased competition
and shrink the profit margins.
hand in July 2000 Nestl launched a Group-wide initiative called GLOBE (Global Business
Local Business Policies of Nestl Bangladesh Ltd.
Independent University, Bangladesh
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towards liberalization of direct foreign investment was good news for the company. On the other
1996-2002: The opening of Central and Eastern Europe, along with China and a general trend
8 Excellence) aimed to simplifying business process. Two more acquisitions took place in this
period-U.S. ice cream business was to be merged into Dreyer's and the acquisition of Chef
America, Inc. a leading U.S.-based hand-held frozen food product business.
2003-2009: Within this area the acquisition of Mvenpick Ice Cream, Jenny Craigand Uncle
Toby's enhanced Nestl's position as one of the world market leaders in the super premium
category. On the other hand Novartis Medical Nutrition, Gerber and Henniez join the Company
in 2007. Meanwhile Nestl entered into a strategic alliance with the Belgian
chocolatierPierreMarcolini at the end of 2009.
2010 to onward: In mid-2010 Nestl finalized the sale of Alcon to Novartis; at the same time
Nestl bought Krafts frozen pizza business. Another important move in this period is launch of
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Special. Tea machine system and the completion of the CHF 25 billion share buyback program
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Nestl Bangladesh Limited started its commercial operation in Bangladesh in 1994. Its total
authorized capital is TK1.5 billion and total paid up capital is TK 1.1 billion. The only factory of
the company in Bangladesh is situated at Sreepur, 55 km north of Dhaka. The factory produces
the instant noodles and cereals and repacks milks, soups, beverages and infant nutrition products.
Today Nestl Bangladesh Ltd. is a strongly positioned organization. The Company is
continuously growing through the policy of constant innovation, concentrating on its core
competencies and its commitment to high quality food to the people of Bangladesh.
Since the beginning of Nestls operation in Bangladesh, the chairman of the company has been
Mr. LatifurRahman, one of the top industrialists of the country, his firm Transcom used to import
the products of Nestl. His business house Transcom is still involved in wide range of business
like beverage, pharmaceutical, electronics, newspaper, tea export, fast food franchises etc. Still
he remains as an honorary chairman of the company although his group Transcom does not
capture any share today as Nestl S.A. holds 100% share of this company.
In Bangladesh Nestls vision is-to be recognized as the most successful food and drink
Company in Bangladesh, generating sustainable, profitable growth and continuously improving
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Dhaka North
Dhaka South
Chittagong
Khulna
Sylhet
Bogra
The retail distributors supply Nestl products to four types of outlet, while Nestl Professional
Distributors supply products to different institutions.
Vending Site
Tea Bunk
Retail Distributor
Mordern Trade
Nestl
Bangladesh Ltd.
Institutional Sale
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Nestl
Professional
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Retail/Wholesale
General
Management
Finance and
Control
Human
Resource
Supply Chain
Marketing
Nutrition
Nestl
Professionals
Sales
No matter how many functions are running, their main aim is to gain ultimate excellence. Every
function contributes from their end to meet the corporate goal. The General Management take
cares of the overall operation of the company and makes the key decisions. Human Resource
focuses the management of employees and organizational culture; moreover HR professionals
are also responsible for retaining the people who are making the difference with their
competitors at the end of the day. Supply Chain ensures the stable supply of the products
according to the demand of the customers. Marketing looks after the existing brands, market
share and product development of the products. Nestl is the worlds largest Nutrition Company
that is why the importance of the Nutrition products is much more in compared to the other food
companies; as a result they created a totally separate team to look after the Nutrition products,
such as, CERELAC, LACTOGEN. Finance and control deals with the financial transactions and
most importantly they also apply the control mechanism to remain the company complaint
revenue for the company, but sales goes for the retail distributors and Nestl Professionals looks
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financially and procedurally. Finally Sales and Nestl Professionals are responsible for earning
Beverage
Nescafe
Culinary
Maggi, Shade-Magic
Nestea
Dairy
Breakfast
Cereal
Nutrition
Nido
Comflex
HunyGold
Coffeemate
Kokocranch
Lectozen
Nesfuta
NAN
Cerelac
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Nestl
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Product availability-
Building relations with medical and scientific community in light of Nestl Bangladesh Ltd., this
report tried to analyze the following components of marketing strategy through different theories
and applications:
External factors
Social: Nestl makes an effort to integrate itself as much as possible into the cultural and
social values of the different countries. During operation in Bangladesh Nestl has
launched products with integration of social & cultural factors. This has been done to
match the taste buds of Bangladeshi consumers.
Internal factors
Marketing structure: Nestl is more people, product and brand oriented than system
oriented. Nestl favors long-term successful business development and even to greater
extent, customer life-time value. At the same time Nestl does not lose sight of the
necessity to improve in terms of quality, price and distribution. However, Nestl remain
conscious of satisfying the wants needs and demands of its consumers. It is also aware of
the need to generate a sound profit annually.
Nestl seeks to earn consumers confidence, loyalty and preference and anticipate
their demands through innovation and renovations. Therefore Nestl is driven by an acute
sense of performance adhering to quality and customer satisfaction Nestl is as
decentralized as possible within its marketing strategic definitions requiring increasing
flexibility. Nestl is always committed to the concept of continuous improvement of its
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activities and customer satisfaction through market segmentation, positioning and target
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Market Segmentation
Nestl is targeted towards the consumer market. So Nestl food products can be treated as
consumer products. The major factors which play key role in the process of
consumer segmentation are:
Demographic (age, income, etc.)
Consumption pattern
Social economic factors
Brand loyalty patters
Perceptual factors
Cultural factors
Proper consideration of the given factors results in effective consumer segmentation for Nestl.
Since the product range is expensive in Bangladesh; FoysalAlam, the Marketing Officer, says,
we have to concentrate strongly on income of consumers.
Target market
Nestls main focus is the socio-economic class, which is the company wide target. Nestls
potential consumers are those who acknowledge that Nestl is all about quality and most
importantly those who can afford the products. The strategy for selecting their target market is
the following:
Income level (>10000 Tk)
Education
Quality realization
Positioning strategy
Nestls positioning strategy comprises of the three steps:
Identifying the right competitive advantage
Choosing the right competitive advantage
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The company then effectively communicates and delivers the chosen position to the market.
Nestl strongly believes that their products are specific and so are the product benefits. This,
Foysal Alam, the marketing officer, termed as Benefit Positioning
Regarding new upcoming products, Nestl is looking forward to renovation and innovation for
Maggi noodles and soups. This might be in terms of new flavors or improvising the quality and
the quantity of the products.
Informative advertising
Persuasive advertising
Since Nestl is already an acknowledged and quality food product company in Bangladesh, it
does not emphasize much on publicity and promotion. Here are a few points to ponder about
advertising done by Nestl Bangladesh Ltd.:
More indulged into product sampling and test marketing Nestl had performed test
sampling in the year 2003 on Nescaf.
Nestl Bangladesh Ltd. has specialized agencies for their promotional purposes. They
Nescaf -Unitrend
Maggi - Protishobdo
Polo Protishobdo
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Medium Responses
Newspapers (e.g. ProthomAlo) Small Pass along audience, approx. 1 lakh. High cost
per exposure.
Outdoor
The given table suggests that Cost per Contact is better in television advertisement than in
newspapers and other media for Nestl. Nestl also believes that television receives better
clutter, fleeting, exposure and a mass audience for promotion, which is only to be considered for
Nestl Bangladesh Ltd.
The main advertising is done on television and to a very little extent, newspapers. The emphasis
is on building a corporate image about maintaining their high quality. There are also
considerations underway to promote upcoming brands and products to extend their promotional
activities by putting up more billboards, posters, flyers, and banners. They will start internet as
their medium from year 2005. These decisions are carried out by the marketing department.
Hence, Nestl Bangladesh is trying to integrate their promotional activities and have an
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quality.
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have any organized internal database of its consumers. Hence, it can be said that Nestl hardly
However, for specific brands, such as Milo, Nestl Bangladesh has an organized database of
1000 consumers who are the core that is final consumers of Nestl. Whenever, there are any
upcoming new products, Nestl sends these loyal consumers newsletters, leaflets, free samples
and even feedback questionnaires. This is the only consumer communication that Nestl does in
Bangladesh; also consider to be Direct Marketing. For any other products Nestl never performs
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consumer communication.
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Nestl products.
2. Internal Audit
o Opportunities
o
Threats
o Strength
o Weakness
External Audit: Scanning the external environment of Nestl, we tried to find out the
opportunities and threats that are pointed out here:
Opportunities: The ability to expand their product line that requires an approach that is
compatible with Nestls strengths and that compensates for its weaknesses, e.g. to make
certain products available in the market at a relatively lower price so that a larger number
of consumers can buy itproducts such as Cerelac. Enhance distribution of their
Infant Nutrition Products in a country like Bangladesh where malnutrition already exists,
increasing the distribution channels and channel outlets.
Threats: Few local manufacturers who tend to sale their products at a relatively lower
price through various unethical means. For instant, many do not value expiry dates since
not much restrictions are practiced in Bangladesh.High degree of bargaining power of
suppliers.
Internal Audit:
Then we tried to analyze the internal situation of Nestl and we figured out the following
strengths and weaknesses:
Strengths:
o A portfolio of products which responds to the consumer trend for lighter yet indulgent
snacking
o A unique strategic position which combines powerful local brands with strong global
targets
o Centralized organization that helps in easier coordination of business activities
Local Business Policies of Nestl Bangladesh Ltd.
Independent University, Bangladesh
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o Dedicated core staff who are willing to provide significant labor hours to accomplish
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product brands
Nestl Weaknesses:
o Far fewer staff than actually required in terms of tasks to be completed.
o Significantly less customer support services than is required in terms of the number
of customers and the complexity of the services offered.
o Except form Milo, they have no post purchase service for other products in
Bangladesh.
Another Approach toward Strengths; Weaknesses Apart from conducting the SWOT analysis,
under marketing assessment, a different approach is taken to make an in depth analysis about
Nestl. In this approach, first, some core factors are identified against which the performance or
relative strength or weakness of Nestl can be measured. These factors include:
a. Marketing Factors
b. Manufacturing Factors
c. Organizational Factors
But these factors are too broad. So, further some criteria were developed for each factor to be
evaluated. Then the relative weaknesses or strengths are measured against each criterion that is
Marginal
Strength
Strength
Neutral
Marginal
Fundamental
Weakness
Weakness
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Fundamental
Weaknesses
Strengths
Manufacturing actors:
Organizational Factors:
Relative Market
Production facilities
Culture
Reputation
Flexibility
Leadership
Previous Performance
Workforce
Managerial capabilities
Competitive Stance
Technical skill
Workforce
Customer Loyalty
Delivery capabilities
Flexibility
Adaptability
Product quality
New product program
Distribution cost
Dealer network
Geographical coverage
Sales force
After sales service
Manufacturing cost
Pricing
Advertising
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Structure of competition
Complies with applicable environmental legislation. Where none exist, Nestls own
internal rules are applied; and
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Raw Materials:
In general, Nestl is not directly involved in the production of raw materials. Wherever possible,
locally available raw materials are used. They are either obtained directly from producers or
purchased through trade channels. Nestl applies the following principles when sourcing raw
materials: all raw materials must meet both legal and internal quality criteria, including limits on
possible environmental contaminants; whenever possible, preference is given to raw materials
that are produced by environmentally sound farming methods (e.g. integrated crop management);
and farmers are encouraged to apply sustainable farming methods and, where appropriate, are
provided with assistance in crop production and dairy farming. Such assistance includes the
provision of recommendations for the conservation of natural resources (soil, water, air, energy,
and biodiversity) and techniques for reducing environmental impact.
Manufacturing:
Manufacturing comprises all processes that are necessary to transform perishable raw materials
into safe and convenient food products for consumers. Nestl strives to achieve optimal
performance in its manufacturing activities, including the environmental aspects. As such, the
manufacturing practices of the Group:
Respect natural resources by emphasizing the efficient use of raw materials, water and
Reduce waste generation and emissions as much as possible; consider recycling of waste as a
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energy;
Review factory compliance with applicable legislation and Nestls own standards;
Packaging fully investigate incidents that could affect the environment and take relevant
measures; and
Compare results with previous targets and set new improvement objectives.
take into account new packaging materials and processes that reduce the impact on the
environment;
avoid the use of substances that can adversely impact the environment during packaging
production and disposal;
decrease packaging waste at all stages, including package manufacturing, utilization and
Increase the recyclables and compatibility of its packages with existing waste management
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disposal;
Regular assessments of Nestls packaging are carried out and action plans are implemented.
Nestl supports industrial and governmental efforts to promote integrated waste management
that takes into consideration matters such as source reduction, reuse, recycling, composting,
energy recovery and landfill. Nestl encourages suppliers of its packaging materials to adopt
sound environmental practices
Distribution Marketing
Distribution of products from the factory to the customer involves transport and storage.
Efficient management of the distribution system is essential to preserve the safety and quality of
Nestls products, to ensure a high level of customer service, and to meet its commitment to
environmentally sound business practices. To this end, Nestl:
selects appropriate transportation modes, with particular attention given to optimum unit
loads (pallets), vehicle capacity utilization, route planning and consolidation with
outside partners, scheduling and fuel conservation;
Nestl encourages its distribution service providers to use environmentally sound practices.
Marketing is based on the principle of satisfying consumers needs. The overall trust
of consumers in Nestls brands and products comes from a quality image that has been
Continuously strengthened for over 130 years. Nestl strives to increase this trust through its
commitment to environmentally sound business practices. For this reason, Nestl:
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Inherited attitude
Flood relief Nestl Bangladesh donates products to support the Prime Ministers Relief Fund of
Bangladesh which helps victims of floods and other natural disasters. The Company also assists
with fund-raising efforts for the Flood Relief fund.
Medical support
The Company contributes to the Floating Hospital Project which provides medical assistance for
the poorest of the poor people.
Food support
The Company also runs a feeding programme for a school, established for the under- privileged
children of Dhaka city slums. Under this programme, food is supplied twice a week for the
students.
Sports Development Programme
Cricket is the most popular sport in Bangladesh. Nestl Bangladesh has stepped forward together
with the Bangladesh Cricket Board (BCB) to develop cricket talent for the future under a special
sponsorship programme. Milo will sponsor a series of local cricket development camps and
tournaments, to be organized by BCB for the under 13 and under 15 age groups. Through this
specific programme, a pool of young talented cricketers will be identified to ultimately represent
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Bangladesh internationally.
4.10 Conclusion
Finally it can be said that that Nestl Bangladesh Limited is using and developing their strategy
perfectly. By using valuable marketing tools they are creating competitive advantage for
themselves which ultimately helping them to reach their market as well as organizational
objectives. Again their continuous renovation are making them leader into the market which
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References
Corporate Governance report 2011
The Nestl Corporate Business Principles 2010
Annual Report 2011
Quick Facts 2011
Nestl Management report 2011
Nestl Sustainability Review
Nestl People Development Review
Corporate Business Principles
Million Years of the Food Industry
The Nestle Management and Leadership Principles
Nestle Policy on the Environment
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