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MGT 602

Nestle case study

Prepared by :
Tony Semaan
Bahaa abou Hadir
Joelle Jawhar
Diane Nicolas
Nestle Overview:

 Nestle was founded in 1967 by Heni Nestle in Vevey Switzerland, where its headquarters
are located.
 Nestle’s beginnings began with the legendary Henri feeding his formula to a premature by
whose ailing mother was unable to fees the child.
 Peter Brabeck was CEO of the company since 1997 till 2008, Paul Bulcke replaced Bracker
in 2008 till present

1-

Every company should have a mission statement that defines the purpose of the company, a vision
that will define what the company wants to become in the future and a strategy is the direction and
scope of an organization over the long-term: which will help the company gain advantage over its
competitors and fulfill stakeholder expectation

Vision:

 Bulcke’s vision is:


To become the world’s recognized leader in nutrition, health, and wellness remains unchanged.

 As well as Brabeck’s vision is:


To be recognized by consumers as the nutrition, health, and Wellness Company and to deliver a
competitive return to our shareholders at the same time.

So, we can see obviously that Bulcke decided to keep the same vision as brabeck; in his opinion
this is a strong vision but he should just choose the means of achieving it.

As Brabeck said about Nestle’s report on 2007 “almost mystical barrier”, Balcke was afraid that
they become over-satisfied of themselves and this will be great weaknesses that will slow their
improvement.
Although Braceck vision was similar to Bulcke, but the means and the strategies to achieve it were
different.

Mission :

 Bulcke mission is:


The Nestlé model is one of steady growth and margin improvement. It is not management by
surprise. This model is so inherent in our structure and culture that we don’t have major
restructurings. We try to anticipate and be proactive so we don’t have to react, because then you
end up overreacting. We don’t need short-term gimmicks that might jeopardize the long-term
results.
 Brabeck mission was:
Achieve worldwide sustainable competitiveness through: low cost, highly efficient operations; renovation
and innovation of the Nestlé product line; universal availability, improve communication with customer
through better branding.

Corporate strategies:

 Brabeck:
1- Created new division of nutrition that report directly to the CEO

2- Three major acquisitions were made in the specialty nutrition area to establish platform for
growth

3- The 60/40 benchmarking

Building on nutrition, health and wellness strategy

 fonctional benefits (add new functional benefits like nido BAB)


 Speciality nutrition products(bar for diabetes)
 understanding and serving the consumer
4-Achieve worldwide sustainable competiveness through four "strategic pillars":

 Low cost, very efficient operations.


 Renovation and innovation of the Nestlé range.
 Universal availability.
 Improved communication with consumers through better brand image
5-Launched a number of important initiatives during its twelve-year mandate, including the
restructuring of:

 Research and Development department to be more receptive to consumers,


 Stimulate renovation and innovation and support organic growth
 Launch of a 60/40 rating system for products
 Develop GLOBE (Global Business Excellence), a comprehensive information system
designed to link all of Nestlé's activities within a common technology infrastructure.
6-The 60/40 strategy is a metric developed in 2003; through which Nestlé measured objectively
and then improved the nutrition of its products.
The metric was based on the Nestlé 60/40 standard, which required consumers to prefer the
Nestlé product to the top competitor's products at least 60% of the time in a blind taste test.
 Bulcke:
1-Identified four complementary platforms that could double the company's sales over the next
10 years:

 Health, nutrition and well-being.


 Emerging Markets.
 Excluding domestic consumption.
 "premiumisation" of existing products
2-

Change management program undertook in 80th and 90th in relationship with Nestle’s vision:

The vision was to be recognized as the nutrition, health, and Wellness Company & deliver a
competitive return to shareholders at the same time.

In the 80th : In the 90th:

o A nutrition formula was developed by o Nestle merged with the Anglo Swiss
a pharmacist Henri Nestle in condensed milk Company, grew
Switzerland. geographically and enter new products
including chocolate.
o Applies a unique drying process o The firm begin manufacturing in
without affecting nutrition benefits several countries and markets
o Created for mothers and babies unable o Created a local supply change
to breastfeed o Nestle merged with Maggi a large
European producer of food after World
o He used a bird feeding babies in a nest War 2
as Nestlé's symbol
o Nestle kept the managers of the
o The use of “NESTLE” as the
acquired companies separated from
trademark. (meaning little nest)
their normal operation like L'Oreal ,
Alcon laboratories

o Nestle invented new key products such


as Nescafe, Nestea

o Development of new products related


to the frozen food category

o Nestle used the differentiation strategy


to grow rapidly
Business model of Brabeck:

 Maucher the CEO undertook a radical change of program within the once highly
bureaucratic company.

 Reaching sustainable competitiveness through the use of the four “Strategic pillars”

 Improvement of the performance and swift delivery of the “ renovation and innovation”
for organic growth

 Centralization of the data capture system through “GLOBE”, retailers could add new
products to their store inventories with one “Click” of the mouse.

4
Strength:
1) World’s leading brand food company in nutrition, health and wellness.
2) Rated as a billion dollar brand with a solid financial performance.
3) The high level R&D and globe system program followed by the company
for organic growth which ties all Nestles infrastructure business together.
4) Working on developing new products by giving it an added value.(Ex:
adding probiotics in NIDO to strengthen the Childs defense against harmful
germs.)
5) Nestle has products that were scientifically proven for people with special
needs; for instance, children with lactose intolerance Nestle company are
working to find solutions and satisfy all the people.
6) Huge investments in the training and giving cross experiences which help it
to be more trustworthy.
7) Loyalty plays the role in relation with the farmers and excellent
communication with the customers.
8) Positioning brands with a large amount of market share in the largest
national economies.

Weaknesses:
1) Brand structure, it has many products under the same umbrella which
leads to conflict in customer interest.
2) Difficulty to develop one global product that pleases everyone ( it costs
the company to create more products to satisfy every body.

o With respect to brand structure and difficulty to develop one


global product this weakness turn to be a strength due to the
variety of the products assured to all people with different
ages.

3) Decentralization, managers following ideas created without being


enrolled in decision making. (a decisions taken by the headquarter oblige
others to walk with it which insure that some managers cannot take the
lead by creating new strategies.

Opportunities:
1) Healthy breakfast products with high growth potential in nutrition &
wellness program. (Oats and cornflakes cereals helping it do more
marketing penetration strategies.
2) Ability to manipulate its product to create new effective ones.(Ex:
Powder milk developed into syrup form (low fat or skimmed fat milk
and also ready to eat products varieties).
3) Futuristic vision will put them 10 years ahead of competitors
4) Entering pharmaceutical market through R&D of nutritional products
5) Expanding market by entering into a chain and transitions to further
expansion for the company ex: increasing advertising and sales
;moreover, helping new customers to try the product and become
loyal in the future.
6) Develop high income level to dominate rich people segment by
engaged a partnership with other companies ex: L’Oréal ( the largest
cosmetic company worldwide.)
7) Customer retention through social media , (helps to a positive world
of mouth about the company’s product leading to increasing market
share.

Threats:
1) Competition, other companies use comparative advertising
strategies for their counterfeit products in the market hence it cause
destroying the Nestle brand image.
2) Customer awareness and healthy lifestyle trend made the customer
use the healthy nestle product; on the other hand, this Consumer is
aware on other product by not buying because of its ingredients ex:
Maggie fried noodles.
3) No standard worldwide taste (due to the variety of the factories
worldwide)
4) Pricing, increasing prices leads to decreasing sales (main threat
making the consumer switch to the competitor’s brands.)

5-The competencies and advantages of nestle in terms of organizational


structure are:

- The number of employments in the countries make the company


international . (275,000 employee and products are sold in 130 countries).
- The mangers play a role to classify the regions into zones which leads to
achieve profit revenue and goals .
- Local management in every company understand the wants and the needs of
the customers; hence, building a long term relationship with consumers
through acquisition .
- Building and maintaining strong structure .(removing unnecessary obstacles
in the organization on the other hand assure operation speed and focus on
customer satisfaction.
- Establishing flat and flexible nestle organization .(shifting the
responsibilities in the management ladder ,flat structure empower employees
to take charge by helping decision making and feel responsible for the
company success.