Xavier University – Ateneo de Cagayan

School of Business and Management

Department of Business Administration

NESTLE’s LC1 Failure Control Strategy

Submitted by:

Medina, Jericha Ruelle V.

Opog, Claire P.

Sausa, Rhojane A.

Submitted to:

MR. PATRICK IAN F. PEDARSE

May 15, 2021

 I. Introduction
Nestle is recognized as the world’s largest food and beverage company and a most
profitable firm. The firm believes in providing its customers with healthy, high-quality, and
nutritious food. Nestle`s business strategy encourages product development through innovation.
Everybody recognizes that Nestle has been able to grow a wide range of brands such as baby
products, frozen drinks, breakfast cereals, packaged foods, ice creams, etc. The products of
Nestle drive the growth of the company’s sales. One of the reasons is its mission statement where
Nestle provides selections to every individual taste and lifestyle preferences. While their vision
statement is to aim to meet the various needs of the consumer every day by marketing and selling
foods for consistently high quality. The purpose of the firm is “unlocking the power of food to
enhance the quality of life for everyone, today and for generations to come”. Nestle possesses a
product of LC1 and one of the handlers/makers of the product is James Gallagher. This product
became popular in many places around the world and provides health benefits for the consumer.
However, here comes the problem that infiltrates the French market which causes the quotation
they placed.
Stated in the last part of the paper is the recommended alternative course of action with
the best approaches or control strategies for the Nestle company to perform better and
successfully implement their alternative courses of action considering a lot of challenges along
the way.
 II. Body

ALTERNATIVE COURSES CONTROL STRATEGIES DESCRIPTION/SPECIFICATION

OF ACTION

1. Apply Wendell Smith’s 1. Utilization of 1. Utilizing the resources will help

“differentiation and resources/Controlling in maximizing the materials
segmentation strategies” direct material costs and used in the production as it
channeled through the creation quantities guarantees that particular
of Nestle’s SBU (Strategic resources aren’t being over or
Business Units) a segment that under-used. Besides, it will
is solely bestowed with the task likewise help in limiting the
of fabricating strategies in expense with the progressions
strategy formulation. that are applied in the system.
The preparation of material
usage will guarantee a less
probability of risk when it
comes to the changes in costs.
Cost departments carry the
responsibility to review price
changes to prevent operation
issues.

2. Thorough evaluation of 2. The company should divide it

differentiation and into smaller segments to
segmentation strategies simply obtain their target
market and determine which
customer they should serve
(children, teenagers, and
adults). Evaluating your
customer and the minimum
cost of this strategy is
 important to avoid
overestimating or
underestimating certain
segments that will possibly
repeat the process of the
strategy and can prompt waste
both time and money.
Therefore, it is the controller's
responsibility to direct his/her
division to allocate the costs
and properly evaluate the
differentiation and
segmentation to avoid overly
diversification of the LC1
product.

3. Maintaining customer 3. Sustaining relationships with

relationship clients will help support the
changes in the company’s
production and promotion as
well. Concerning what was
mentioned, the nurtured
relationship is also a strategy
to determine the specified
segment that Nestle should
look up to and focus on. For
instance, 75% of their
customers who typically
purchase a specified flavor LC1
are adults, so the company can
choose effectively what

4. Testing Research with a
Focus Group
5. Setting or introducing a
relatively affordable initial
entry price for its
product.
predetermined flavor of LC1
should they sell on the market
and what specified customers
should they target for their
LC1 product. In that way, the
promotion will be
communicated effectively to
the customers, wherein,
advertisement, packaging, and
other marketing strategies will
be custom-fit to the segment.
4. This recommends
communication with a focus
group of 10 people from the
target customer base. Contact
or ask the target client
regarding their most and least
preferred goods and services
to help the company innovate
its product and to try one of
the products to provide
suggestions to it.
5. Selecting the right pricing
approach is challenging when
delivering a new product or
service but this enables the
company’s product and service
to be easily recognized and
accepted by consumers. In
 general, a penetration and
skimming strategy will assist
the ability to keep costs low
and the possibility of rapid
market entry by rivals.

2. Create SBU (Strategic 1. Planning time and the 1. Since Marketing Mix is
Business Unit) that will create planning period important to penetrate the
strategies applicable to the French market, the company
current situation. The SBU will should ensure a specific time
be tasked to follow the concept frame for each of its elements
of the Marketing Mix of NEIL H. to control the cost’s risk and
BORDEN of the Harvard escalation.
Business School
2. Employees’ discipline 2. In keeping up the ethical
towards the company conduct of the employees, an
policy obligatory seminar must be
conducted at least twice a year
to remind workers of the value
they must possess concerning
the rules and regulations of
the firm. Through it, they will
be able to maintain a high
class of professionalism in the
workplace as it will also help in
the development of the
organization and to handle the
company’s reputation.

3. Directing Employees 3. The Nestle company must

make sure that their
employees work together in a
 systematic way to accomplish
their alternative courses of
action precisely since we all
know that conducting a
marketing mix might be
expensive and require a lot of
time. That is why the controller
of the company should also
manage their employees to
make sure that they’re not
neglecting their other tasks for
the other products of Nestle
aside from LC1. Along these
lines, through controlling and
managing its employees, the
risk might be attenuated.

III. Conclusion

This study has explained control strategies that can be useful for implementing the given
alternative course of action in NESTLE’s LC1 Failure. As recommended in the analysis, applying
Wendell Smith’s “differentiation and segmentation strategies” conveys the best alternative way
NESTLE takes into consideration. In support of this is the creation of SBU (Strategic Business
Unit) that will create strategies applicable to the problem that the company is encountering. The
creation of SBU contains the concept of Marketing Mix by Neil H Borden supported by the listed
control strategies above. These control strategies will help ensure the implementation of
alternative actions in the company. Moreover, to execute strategies properly, NESTLE must be
thorough and careful with every step and action they have to take given that risk can’t be
eliminated. This is also to make sure that the risk in the process will attenuate. Moreover, the
activities in every strategy play a significant role in keeping the company on track, foreseeing the
company's future events, responding to possible opportunities or threats, and achieving the
company’s strategic objective. Thus, guaranteeing that the implementation will be successful.
References:
❖ https://smallbusiness.chron.com/five-major-marketing-control-techniques-40619.html
❖ https://elearn.xu.edu.ph/mod/page/view.php?id=293441
❖ https://elearn.xu.edu.ph/mod/page/view.php?id=286403&forceview=1
❖ https://elearn.xu.edu.ph/mod/lesson/view.php?id=309911