CASE STUDY OF NESTLÉ

History of Nestlé
Nestlé was founded in 1866 by Henri Nestlé in Vevey, Switzerland. Nestlé started as a food company
specializing in the production of milk-based baby food. In 1905, Nestlé merged with the Anglo-Swiss
Condensed Milk Company, which had been founded in 1866 by brothers George and Charles Page.
The merger was a huge success and the company grew rapidly. By the 1920s, Nestlé had become one
of the world's largest food companies. (Nestlé, 2022)
Emerging markets refer to countries or regions that are undergoing rapid economic growth and
development, and are seen as having significant potential for future growth. In the food and beverage
industry, emerging markets are often characterized by a growing middle class with increasing
disposable income, and a corresponding increase in demand for high- quality, diverse, and convenient
food and beverage options. These markets present opportunities for companies to expand their
operations and gain a foothold in new regions, and for investors to capitalize on the potential for
growth in these markets. (Orendorff, 2022)
Nestlé is a global company, so its long-term strategic resources are likely to be diverse and varied.
However, some key resources for the company are likely to include its strong brand recognition and
reputation, its extensive distribution network, and its broad portfolio of products in the food and
beverage industry. Additionally, the company has a robust supply chain and efficient manufacturing
processes, which help it to produce high-quality products at scale. These resources, along with a
dedicated and experienced workforce, are likely to be key to Nestlé's long-term success. (Nestle, 2012)

A value chain analysis is a tool used to identify the various activities that a company performs in order
to create value for its customers. This analysis can be used to understand the sources of a company's
competitive advantage, as well as to identify potential areas for improvement. (Porter, 1980)
In the case of Nestlé, a value chain analysis might focus on the activities involved in the development,
production, distribution, and marketing of its products. For example, Nestlé's R&D activities, which
focus on creating new products and improving existing ones, could be seen as a key source of its
competitive advantage. Additionally, the company's extensive distribution network, which allows it to
reach customers in markets around the world, could also be seen as a key strength. Other activities that
might be included in a value chain analysis of Nestlé could include sourcing raw materials,
manufacturing, packaging, and marketing.

The BCG matrix is a tool used in business and marketing to help companies understand the relative
performance of their different business units or product lines. It is often used in conjunction with
portfolio analysis, which is a technique for evaluating the mix of products or businesses that a company
has in its portfolio.
In the case of Nestlé, a BCG matrix and portfolio analysis could be used to evaluate the company's
various product lines and business units in relation to their potential for growth and market share. For
example, Nestlé's core business in the food and beverage industry could be considered a "cash cow" if
it has a high market share and generates a steady stream of revenue and profits. On the other hand, a
new product line or business unit that is still in the early stages of development and has a low market
share might be considered a "question mark." (Sadeghi & Askarzadeh, 2012)
It is not possible to say with certainty whether Nestlé uses the decoy effect to attract customers, as this
information is not publicly available. The decoy effect is a psychological phenomenon in which
people's preferences can be influenced by the presence of a third, "decoy" option. (Hovland & Mandel,
1964)
While it is not known whether Nestlé specifically uses the decoy effect in its marketing and pricing
strategies, it is possible that the company employs similar tactics to influence customer behavior.
Nestlé offers a wide range of products across many different categories, and it is likely that the
company uses a variety of pricing and marketing strategies to encourage customers to choose its
products over those of its competitors. However, without more information, it is not possible to say
whether the decoy effect specifically is one of these strategies.

At Nestlé, the responsibility for making strategy is likely to be shared among several different levels of
the organization. At the highest level, the company's Board of Directors, which is composed of elected
representatives from different parts of the business, is responsible for setting the overall direction and
strategy for the company.
Below the Board of Directors, Nestlé's executive team, which is composed of the company's top
executives and leaders, is responsible for implementing the company's strategy and achieving its goals.
The strategic choice decision of an organization is the process of selecting a specific course of action to
achieve its goals and objectives. This decision is typically based on an analysis of the organization's
internal strengths and weaknesses, as well as its external opportunities and threats. (Mahajan, 2021)

A Competitive Profile Matrix is a tool used to compare a company's strengths and weaknesses to those
of its competitors. The resulting chart can then be used to identify the company's relative strengths and
weaknesses, and to develop strategies for improving its competitive position. To construct a
competitive profile matrix for Nestlé, one would first need to identify the company's key competitors in
the global food and beverage industry. Some of Nestlé's major competitors include companies such as
Coca-Cola, PepsiCo, and Unilever. Next, it’s needed to identify a set of key attributes that are relevant
to the industry and important for evaluating a company's competitive position. Examples of such
attributes might include market share, product quality, innovation, brand recognition, and distribution
network.
For example, if Nestlé has a higher market share than its competitors, this would be considered a
strength, while a lower product quality score would be considered a weakness. By analyzing the
resulting matrix, you can gain a better understanding of Nestlé's competitive position and develop
strategies for improving its performance and maintaining its competitive advantage.

A TOWS matrix is a tool used in strategic planning to help a company understand the relationship
between its internal strengths and weaknesses and external opportunities and threats. This matrix can
be used to identify potential strategies that the company can pursue in order to take advantage of its
strengths and opportunities, while also mitigating its weaknesses and threats.

Strengths: Weaknesses: Opportunities: Threats:

1.Established 1.Regulatory 1. Growing demand: 1. Rising costs: The
distribution channels: restrictions: The food The demand for food cost of ingredients and
Food and beverage and beverage industry and beverage products equipment used in the
companies usually is subject to strict is increasing as the production of food and
have access to regulations, which can population grows and beverage products are
established distribution limit the ability of health concerns constantly increasing,
channels that have companies to innovate become more which can reduce profit
been developed over a or compete. prevalent. margins and make it
long period of time. difficult to remain
competitive.
 2. Brand recognition: 2. Health risks: As 2. Expansion into new 2. Intense competition:
The food and beverage food and beverage markets: The food and The food and beverage
industry is highly products are often beverage industry has industry is highly
competitive, and many consumed by large the potential to expand competitive and there
companies have built numbers of people, into new markets, such are many companies
up strong brand there is an increased as emerging economies vying for the same
recognition over time. risk of health problems and developing customers.
associated with their countries.
consumption.
3. Cost efficiency: The 3.High cost of 3. Innovation: The 3. Consumer trends:
food and beverage production: The cost of food and beverage The tastes and
industry is typically producing food and industry is constantly preferences of
able to produce goods beverage products can evolving and there is consumers are
at a lower cost than be high, as there is always the potential for constantly changing,
many other industries. often a need to new products and which can make it
This allows them to purchase ingredients services to be created. difficult for companies
maintain competitive and equipment in bulk. Companies that are to stay ahead of the
prices and offer value This can drive up costs able to innovate and curve and remain
to their customers. and make it difficult to stay ahead of the profitable.
remain competitive. competition can gain a
competitive advantage.

The ANSOFF Matrix is a tool used in strategic planning to help companies understand the relationship
between their existing products and markets, and potential new products and markets. This matrix can
be used to identify growth opportunities and develop strategies for achieving them. The company's
existing markets could include regions where it already has a strong presence, such as Europe, North
America, and Asia. In terms of potential new products and markets, Nestlé could consider launching
new products in existing markets, such as healthier or more sustainable versions of its existing
products. The company could also explore opportunities to enter new markets, such as emerging
economies where there is growing demand for its products. For example, Nestlé could pursue a market
penetration strategy by launching new versions of its existing products in its existing markets.
As a global company operating in the food and beverage industry, Nestlé has many different rivals
across its various businesses and markets. Some of the company's major rivals include companies such
as Coca-Cola, PepsiCo, and Unilever. These companies are among Nestlé's key competitors in the
global market for food and beverage products, and they compete with Nestlé for market share, brand
recognition, and customer loyalty. In addition to these global rivals, Nestlé may also face competition
from local or regional players in the markets where it operates. For example, in the market for coffee,
Nestlé competes with companies such as Starbucks and Dunkin' Donuts, while in the market for
chocolate, it competes with companies such as Mars and Hershey's. Overall, Nestlé's rivals are a
diverse and varied group of companies that compete with the company for customers and market share
across many different markets and product categories. In order to maintain its competitive advantage,
Nestlé must continuously monitor and adapt to the changing competitive landscape and the strategies of
its rivals. There are several ways in which Nestlé can use generic approaches such as cost leadership
and differentiation to gain a competitive advantage in the global food and beverage industry. One way
for Nestlé to gain a cost leadership advantage is by focusing on reducing its costs of production and
distribution, and passing these savings on to consumers in the form of lower prices.
Overall, by combining cost leadership and differentiation strategies, Nestlé can gain a competitive
advantage by offering a broad range of products at competitive prices, while also differentiating itself
through its focus on innovation and product quality. By leveraging its strengths and capabilities in these
areas, Nestlé can maintain its position as a leader in the global food and beverage industry.

A Stakeholders Analysis is a tool used to identify and evaluate the interests and influences of the
different groups that have a stake in an organization or decision. In the case of Nestlé, some of the key
stakeholders that the company would need to consider in a stakeholders analysis could include its
shareholders, employees, customers, suppliers, and local communities. For example, Nestlé's
shareholders are likely to be interested in the company's financial performance and profitability, as well
as its overall direction and strategy.
By conducting a stakeholders analysis, Nestlé can identify the key groups that have a stake in its
operations and decisions, and evaluate their interests and influences. This analysis can help the
company understand the potential impact of its actions on different stakeholders, and develop strategies
for managing its relationships with these groups in order to maintain its reputation and long-term
sustainability.

A Power/Interest Matrix is a tool used in stakeholder analysis to help organizations understand the
relative power and interest of different stakeholders. This matrix is typically constructed by plotting the
stakeholders on a grid, with power on one axis and interest on the other.
To construct a power/interest matrix for Nestlé, is first needed to identify the company's key
stakeholders, such as its shareholders, employees, customers, suppliers, and local communities. Next, is
needed to evaluate the power and interest of each stakeholder group. Once the power and interest of
each stakeholder group has been evaluated, these values can be added in a matrix, with power on one
axis and interest on the other. For example, Nestlé's shareholders might be considered high-power,
high-interest stakeholders, while local communities might be considered low-power, high-interest
stakeholders. By analyzing the resulting matrix, Nestlé can gain a better understanding of the relative
influence and importance of different stakeholders, and develop strategies for managing its
relationships with these groups. For example, the company may need to devote more time and
resources to engaging with and addressing the concerns of low-power, high-interest stakeholders in
order to maintain its reputation and long-term sustainability. (Rentschler & & Boer, 2015)
Bibliography
Hovland, C. I. & Mandel, N., 1964. The decoy effect in advertising.. The Journal of Applied Psychology, pp. 242-
245..

Mahajan, T., 2021. SWOT Analysis of Nestle [Detailed]. Super Heuristics.

Nestle, 2012. Nestlé in Society: Creating Shared Value and meeting our commitments, s.l.: Nestle Corporate.

Nestlé, 2022. Nestlé. [Online]

Available at: https://www.nestle.com/about/history

Orendorff, A., 2022. Food & Beverage Industry Report: The Digital Future of Consumables in the Ecommerce
World. Common Thread, 28 April.

Porter, M. E., 1980. Competitive Strategy: Techniques for Analyzing Industries and Competitors'.. New York: NY:
Free Press.

Rentschler, M. & & Boer, H., 2015. Stakeholder power interest mapping – a visual tool for stakeholder analysis..
The Journal of Corporate Citizenship,, pp. 83-100..

Sadeghi, M. & Askarzadeh, A., 2012. An application of the BCG matrix in Nestle.. International Journal of
Business and Economics Research, pp. 46-52.