You are on page 1of 5

Case Analysis

Nestle SA: Nutrition, Health and Wellness Strategy


Strategic Management
MBA

I. SUMMARY

One of the biggest and largest food and beverage industry in the world from US and well known from
other countries. Nestle was became the role model of other competitors to be like or to be with the
company ambitious vision and strategy by offering Nutritious, Healthier, and Wellness products and
services to the people around the world. With the initiative of CEO and Chairman Peter Brabeck the
Nestle Company became stronger foundation in market competition through the acquisitions of some
leading industries that offered products inline to their NHW strategy and with continue investing in
Research and Development for betterment of the products and services to customers. In 2007 Nestle
announced the positioned or role for CEO and Chairman should be split, having achieved its strategic
goal and becoming the foremost nutrition company in the world. That Mr. Paul Bulcke, a long-time
Nestle employee and former head of Nestle American Business appointed to be the CEO while Mr.
Peter Brabeck retained as chairman. There are many changes and innovative decision made with the
management of the two personnel in continue growing of the company vision.

II. PROBLEM STATEMENT


How can the Nestle Company engage the long term strategy after achieving the NHW strategy with the
increased competition in food and beverage industry?

III. OBJECTIVES
1. To support the long term strategy of the Nestle Company.
2. To sustain current market positioning of the Nestle Company.
3. To come up new innovative decision or strategy of the Nestle Company.
4. To increase the profit margin of the Nestle Company.

IV. AREAS OF CONSIDERATION

STRENGTHS
 The world’s largest food company in terms of sales with $116.62 billion in 2010
 They have employed 280,000 people and marketed products in 130 countries
 They have manufactured over 10,000 different products
 Its largest 29 brands, each generating at least $ 1 billion in revenue, drove 70% of the firm’s sales
in 2010
 Research and Development Departments are well-funded and supported by the management in
developing new nutrition technology.
 Strong conviction and focus in providing nutrition, wellness and health to its customer.
WEAKNESSES
 Expensive cost for launching their product brands
 Costly for Research and Development for the company
 Timely for getting information from their customers
 Uncontrollable supplies in the market with the high in demand products
 Some consumer thinks that the company is contradicting its vison by having significant holdings in
some “indulgence” categories.

OPPORTUNITIES
 Acquiring other competitive company that offered NHW products and services
 Coordination with the government health agencies
 Expansion of the market location to some country with potential markets
 Engage to online company or e-business company for selling their products
 Be the first company to provide its customers a product that could help prevent or even threat
some chronic ailments.

THREATS
 Increasing number of competition in the beverage and food industries
 Increasing the price of raw materials/ingredients in the market (Inflation Rate)
 Government intervention in increasing the tax rate for the goods
 Government intervention in terms of rules and regulations in other country

V. ALTERNATIVE COURSES OF ACTION

ACA 1: The Nestle Company should continue adopting their current strategy for NHW and by acquiring
more leading food and beverage company that are inline to their vision and mission and deeper their
investment for Research and development
PROS:
 Increase the profit margin of the company
 Growing the company profile
 Maintain the standing of the company portfolio
 Expanding the needs of the market for NHW
 Continuous improvement of the company without shifting its visions.

CONS:
 Competitors are slowly adopting their product in the health and nutrition needs of the consumers
 Not all leading company have the same firm stand about NHW
 Other company demanding higher payments or amount for the acquisition
 Some company might be same strategy offered but contradict with other aspects in terms of the co
mpany vision and mission
 Costly for the company to launching new brands
 No assurance the market positive accept the new products in the market place

ACA 2: The Nestle Company should improve more their company Vision as to be the leading NHW food
and beverages in the world rather by offering best products, safe, quality and optimal nutrition in addition to
NHW.
PROS:
 The company become more effective for having wider vision to achieve
 The company can fit more their vision to some leading company offer other products but the
same strategy on NHW
 The company would engage more on innovation to have better vision and mission toward their
strategy

CONS:
 It takes time for the company to think for the best vision considering other factors affected on it
 Sometimes the company contradicting with their current products and services offered
 Timely for the company to adjust and make changes with other products just to fit for their vision

ACA 3: The Nestle Company should improve more their marketing strategy by giving clear information to
their customers about the NHW of their products and keep on innovating their products offered in the
market

PROS:
 Increase consumer awareness on the benefits does Nestle products has to offers.
 Increase the Value of their products and the company profile
 Give more competence to the company to penetrate the wide market value chain

CONS:
 Additional expense for the company in investing in expensive marketing strategy
 Some of the customer might be switching to other products because of the high pricing
 Increasing the price of the goods in the market due to additional expense in marketing
 No assurance if the market wants the new products offered in different market with their culture

VI. RECOMMENDATION
Nowadays, consumers are far more concerned about everything from food ingredients, genetically
modified food to organic foods than previous generations. Indeed, an obsession with healthy and clean
eating seems to be the order of the day, this is why we recommend ACA 1 as the best course of action,
that the Nestle Company should continue adopting their current strategy for NHW and by acquiring more
leading food and beverage company that are inline to their vision and mission. With the current standing of
the Nestle Company they really performing well in terms of profit margin and positioning in the marketplace
for being the leading NHW food and beverage company in the world. However, they would not limit/stop
their acquisition to some leading companies but they still need to acquire more reputable companies that
are offering other products but with almost the same strategy for NHW. In order the Nestle Company grow
more and offer more products to customers with the safe, quality, and optimal nutrition in addition to NHW.
VII. ACTION PLAN
PARTICULAR PERSON INVOLVES TIME FRAME
Review the current company market positioning in Management Dept., 1 to 2 weeks
the marketplace and financial standing Marketing Dept., and
Treasury Accounting
Dept.
Conduct meeting for the updates of company All department head 1 to 2 weeks
portfolio, market share, and other importance matter representative, CEO,
in connection with the current company strategy Chairman, Board
NHW Directors and
members, and the
President
Discuss the present and future plan for the company CEO and Chairman 3 to 5 days
in continue adopting the NHW strategy and deepen
investing for the Research and Development
Seeking for budget approval for some expenses to Marketing Dept. and 3 to 5 days
be use on achieving the company plans Treasury Accounting.

Survey potential food and beverages company can Head of the marketing 2 to 3 weeks
be acquire or partnership Department and
colleagues
Proposed the potential competitive company in food Marketing 2 to 3 days
and beverages with their different products offered in Department Head,
the market that can acquire by the Nestle Company CEO, and Chairman
align with their strategy NHW
Make an agreement between the acquisition CEO, Chairman, and 3 to 5 days
company with the agreed policies of the Nestle Head of the Compant
Company
Undergo process for identifying and research Research and 2 to 3 weeks
development for the acquired company that can Development
passed the standard of Nestle Company with their Department
strategy NHW
Launching the new brand acquired by the Nestle in CEO, Chairman, 3 to 5 days
the public and dispose the different products in the President, and Head
marketplace of the Marketing Dept.
Monitoring and enhancement the performance of the Management dept., Upon implementation
new acquired products by Nestle Company in the Marketing Dept., and
marketplace Treasury Acctg. Dept.

VIII. POTENTIAL PROBLEM ARISING


The Nestle Company might be find difficulty in looking for some leading businesses that offered
same strategy NHW and they cannot easily make closing deal immediately considering to the demand of
pricing for their brands of the company.
And due to the rapid increase of companies that offers a nutritious and healthy products
considerable percentage of consumers are less than convinced that the food health information they
receive is accurate.