SAGESSE UNIVERSITY

Faculty of Business Administration and Finance

MGT 670

Nestle Case Study

Name of Student: Ziad Emile Farah

ID Number: 201718766

Academic Year: 2019 – 2020 (Summer)

 1) Draw the similarities and differences between Brabeck and Bulcke
Vision, Mission and Corporate strategies?

Each company like Nestlé should have a vision for the future and mission to
achieve and a strategy for a long term, these three components are very
important for the company continuity and for the competition.

Vision:

Bulcke said. Nestlé's vision is to: “enhance lives with science-based nutrition and

health solutions for all stages of life, helping consumers care for themselves and
their families.” Nestlé does this via its classic food and beverage business, and
through its new ventures Nestlé Health Science and Nestlé Skin Health.

In rising to the apex of Nestlé, he has become the chief architect of the
company's vision for the future, a reality in which food operates more like
medicine. ... In steering the company in this direction, Brabeck has forged into
new territory, carving out a “nutrition, health, and wellness” industry.

Although Braceck vision was similar to Bulcke, but the means and the strategies
to achieve it were different.

Mission:

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’s goal was to achieve worldwide sustainable competitiveness through

four “strategic pillars”: (1) low cost, highly efficient operations; (2) renovation and
innovation of the Nestlé product line; (3) universal availability; and (4) improved
communication with consumers through better branding. Together, these pillars
would enable achievement of the “Nestlé Model,” a term used to describe the
company’s long-term objectives of organic growth between 5% and 6% each
year; continued year-after-year improvement in earnings before interest and tax
(EBIT) margin; and improved capital management.

Strategy:
 2) What was the change management program undertook in the
80th and 90th in relation with Nestlé’s vision? What was Nestlé’s
business model initiated by Brabeck and the global challenges?

3) How Nestlé linked its corporate strategies to the vision of

“Nutrition, Health and Wellness”?
Nestlé’s ultimate goal was to be recognized by consumers as “the” nutrition,
health, and Wellness Company and to deliver a competitive return to its
shareholders at the same time.

Nestle (Brabeck) Create a new Division of Nutrition in order to reinforce the focus
on their core nutrition business. This division is reported directly to CEO.

Three major acquisitions were made in the specialty nutrition area to establish a
platform of growth:

- Jenny Craig (2006), a U.S. chain of weight loss centers which allowed Nestlé to
enter into the area of weight management

- Novartis Medical Nutrition (2007), which reinforced Nestlé’s position in

healthcare nutrition

- Novartis’s Gerber baby foods business (2007), which extended the company’s
leadership across key areas of infant nutrition.

Nutrition, health and wellness vision was not limited to a single division but the
new strategy would be implemented in all Nestle categories, different businesses
and department were integrated to promote wellbeing through new product
development and through improving the nutritional foundation of existing
products.

Nestle believes that consumers are looking for healthier foods without
compromising on taste. Nestle constantly reviews its product range to improve
taste while enhancing nutritional value using a test called 60/40+ or the 60/40
benchmarking standard.

It is about taking out unhealthier things like salt-sugar-fat to give them a healthier
profile and then putting in other things like whole grains, more calcium, Omega
3s… to make products more nutritious. Nestle succeeded in adjusting recipes to
remove 34000MT of trans fatty acids, 5000MT of salt, 204000MT of sugar.

Nestle looked to add new functional benefits to its main product platform labeled
as “Branded active benefits”. For example, Nido powered milk for children that
were expanded by adding probiotics and proprietary BAB’s which strengthened
the child’s defense against harmful germs.

Nestle developed scientifically proven products for people with special needs.
For example, Nutren Balance Bars were formulated to provide better glucose
control for people with diabetes

As nutrition became more tailored to individual situations and conditions, Nestle

believed that services increasingly could complement a science based product
portfolio. For example, in the loss weight area Nestle’s Jenny Craig Centers
provided members with weekly personal nutrition counseling sessions…

Nestle invests on R&D which historically had focused on improvements in raw

materials or processing technology and now focusing on nutrition, health and
wellness.

4) Analyze the Strengths, Weaknesses, Opportunities and Threats of

Nestlé.
Strengths:

1. Unmatched research and development capability.

2. Strong geographic presence, with one of the best geographically
diversified revenue sources.
3. Unrivaled product and brand portfolio.
4. Environmental sustainability efforts.
5. Ownership of some of the most recognizable brands in the world.

Weaknesses:

1. Criticism over high water usage, selling contaminated food, anti-

unionism, forced child labor and using other unethical practices.
2. Contaminated food recalls.

Opportunities:
 1. Clear and accurate labeling indicating of any harmful products.
2. Transparency in material sourcing.
3. Growing number of small Silicon Valley based food startups.
4. Growing ready-to-drink (RTD) tea and RTD coffee markets.

Threats:

1. Poor quality water and its scarcity.

2. Increased competition in the beverage and food industries.
3. The price of coffee beans could significantly rise due to major weather
disasters.

5) What are the core competencies and competitive advantages of

Nestle in terms of organizational structure, R&D & operations?

They provide hygienic products to their customers. Products are also verified by
health and safety measures and international quality standards.

Nestle is the most renowned brand in the world. It has developed a respected
reputation in the food and beverages sector offering high-quality products for
everyday use across the globe.

It is a highly diversified company – Nestle sells its products in 189

countries Instead of relying on a few markets, it has captured the sizeable market
in a lot of developed and developing countries to earn most of its revenue. Its
leading markets include the US, China, France, and Brazil.

World’s most valuable brand – Nestle is among the top as the world’s most
valuable company in regards to highest revenue, profits, assets, and market
value.

Well-established relationships and popular brands– Nestle has some of the

world’s most recognized brands under its name such as Nescafe, Kit
Kat, Gerber, Milo, and Maggi. Besides, it has well-established relationships with
other trusted and powerful brands like Colgate Palmolive, Coca Cola, General
Mills, and L’Oréal.

Efficient R&D system – Nestle has the world’s largest food and nutrition research
organization with 21 R&D centers Its research and development capability is one
of its key competitive advantages. There are more than 5000 employees involved
in R&D operations.
Environmental sustainability practices: Nestle puts substantial efforts
in environmental sustainability practices and take innovative initiatives in improving its
quality of products. It optimizes advanced solutions to reduce waste, water
usage, non-renewable energy use, and packaging material usage. In
2017, 253 of Nestle factories reached zero waste production. To communicate
sustainability benefits with its customers and keeping the environment clean,
Nestle launched a free mobile app that helps people to recycle waste packaging
material correctly.

Large distribution system – Nestle owns an extensive and diversified distribution

system that is not only penetrated in urban areas but also rural regions. It has
adapted local distribution methods and decentralized approach to run the
business efficiently in respective countries. Nestle has strong relationships with
suppliers, retailers, vendors, and distributors.