Nestle Space Matrix

Financial Strength
1. Nestle’s net sales increased by 20% in 2009 as compared to 2008 3

2. Net profit increased by 94% in 2009 as compared to 2008 5

3. Debt equity ratio changes from 63:37 to 66:34 3

4. Price earnings ratio in 2009 was 18.8 as compared to 2008 38.9 5

5. Return on capital employed increases by 40% 4

20

Industry Strength
1. Increase in consumer food industry by 14% 5

2. All companies contribute only 6% to processed milk market 4

3. Market segment growth has attracted new entrants to increase profit potential 5
4. Due to ease of entry in market, Engro foods, Shezand foods and Shakarganj are 4
properly utilizing their resources
18

Competitive Advantage
1. Nestle enjoys strong customer loyalty -2

2. Quality product distribution networks in country -1

3. Nestle extended product life cycle is being ensured due to quality brand extension -2
strategy
4. Nestle product are market leaders in many product categories -2

-7

Environmental Stability
1. Economic slowdown can lower the demand -2

2. Fluctuating rate of inflation in the country -2

3. Price range of competing products -1

-5

1) Average FS= +20/5 = +4 3) Average IS= +18/4= +4.5

2) Average CA= -7/4 = -1.75 4) Average ES = -5/3 = -1.67
X= CA+IS= (-1.75)+(+4.5)= +2.75
Y= FS+ES = (+4)+(-1.67) = +2.33