Report

To: Cesar Augusto Montoya Castillo

From: Lara Giraldez Jorge Luis

The company Nestlé SA together with its subsidiaries is dedicated to the field of
nutrition, health and well-being. It operates through Zone North America ; Europe Zone;
Asia, Oceania and Africa Zone; Latin America Zone; Greater China Zone; Nespresso;
and Nestlé's Health Sciences segments. This conglomerate has more than 140 years
in the market, its founder was Henri Nestlé. Its business projection was focused on
generating long-term company value, providing returns to its shareholders under a
model that guarantees the sustainability of its operations over time.

The company has operations in Zone North America ; Europe Zone; Asia, Oceania and
Africa Zone; Latin America Zone; Greater China Zone; Nespresso; and Nestlé's Health
Sciences segments. The main products that Nestlé offers to its public together with its
subsidiaries are baby food under the Cerelac , Gerber, Nido and NaturNes brands ;
bottled water under the Nestlé Pure Life , Perrier, Vittel , Buxton, Erikli and S.Pellegrino
brands ; cereals under the Fitness, Nesquik, Cheerios , and Lion Cereals brands ; and
chocolate and confectionery products under the brands KitKat, Smarties , Aero, Nestlé
L'atelier , Milkybar , Baci Perugina , Quality Street and Fitness. The company also
offers coffee products under the Nescafé , Nespresso, Nescafé Dolce Gusto, Starbucks
Coffee At Home, and Blue Bottle brands. Coffee ; culinary, refrigerated, and frozen
foods under the Maggi, DiGiorno , MEZEAST, Thomy , Garden Gourmet, Sweet Earth ,
Hot Pockets , Stouffer's , Buitoni , Lean, and Life brands Cuisine ; dairy products under
the brands Carnation, Nido, Bear, Coffee -Mate and La Laitière ; and beverages under
the Nesquik, Nestea, Nescafé and Milo brands. In addition, it offers food service
products under the Milo, Nescafé , Maggi, Chef, Nestea, Stouffer's , Chef-Mate, Sjora ,
Minor's , and Lean Cuisine brands ; health care nutrition products under the brands
Boost , Garden of Life , Nature's Bounty , Persona, Vital Proteins , Solgar , Peptamen ,
Resource , Vitaflo , Impact , and Compleat ; ice cream products under the Dreyer's ,
Movenpick , Häagen-Dazs , Nestlé Ice Cream , and Extrême brands ; and pet care
products under Purina, ONE, Alpo , Felix , Pro Plan, Cat Chow , Fancy Feast , Bakers ,
Friskies , Dog Brands Chow , Beneful and Gourmet. The company was founded in
1866 and is based in Vevey , Switzerland.

To carry out the analysis of the competition, a South American country was taken as a
reference where Nestlé SA operates, in this case Colombia. Nestlé's main competitors
in the dairy sector are:
All of these compete within the dairy industry with the percentage of participation
shown in graph 1:

Graph 01: Companies of the Dairy Sector in Colombia

MAIN COMPANIES IN THE DAIRY SECTOR

30%
25%
20%
15%
10%
5%
0%
Meals Coo. De
Nestlé
Mercade Gloria Parmalat Product Aliment
de Freskale
Colanta Alpina Alquería oy Colombi Colombi os de os del
Colombi che
Aliment a a Leche Valle
a
os de… del…
Series1 25% 25% 19% 11% 5% 4% 3% 2% 2% 2%

Source: Superintendence of Industry and Commerce

The study was carried out in the 2017 period and shows the Colanta company as the
leader of its industry, this presents a positive variation of 0.96% in its horizontal
analysis , which reflects sales for an amount of 2,081 billion pesos. Alpina follows in
this ranking with a positive variation in its profits of 40% and an increase in its sales of
8.8%. Finally, Nestlé is analyzed , which presents an increase in its sales of 14.47%
and its profits by 46% with respect to the previous period; however, the net worth of the
companies that lead the industry exceeds that of Nestle SA

The main objective of Nestlé SA is to position itself as a world leader in the field of
Nutrition, Health and Well-being. This approach allows it to be consolidated as a
sustainable and reliable company for its various interest groups; likewise, it lays the
foundations for a promising future as it aspires to be a benchmark with financial
performance that leads within its sector. The strategy formulated by Nestlé aims to
align its people so that they focus on the priorities that accelerate the achievement of
the company's objectives. For this, there is a plan that inspires its collaborators in the
long term, while value is created from short-term business actions.

It is important to mention that Nestlé works to achieve leadership and trust by meeting
its established objectives, which allows it to meet the expectations of consumers,
shareholders, the communities where it operates and society in general. For this
reason, the business group is investing to guarantee the financial and environmental
sustainability of its actions and operations in the long term that are part of its policies,
specifically in:

- Ability
- Technologies
- Skills
- People
- brands
- research and
- Development

The purpose of these actions is intended to satisfy the current needs of its customers,
without compromising the supply of future generations. This makes it possible to
ensure profitable growth continuously year after year and oriented to the long term.

Table 1 - SWOT technique.

STRENGTHS WEAKNESSES

 Concentration of products by well-positioned

 Nestlé SA has more than 2,000 brands and
is present in 197 countries. It is highly
diversified, since its market is wide.
 The positioning of the brand is high
because it is in the mind of the consumer
and also, it is related to brands such as
Coca Cola, Colgate, Starbucks, among
others.
brands. Food revenue at Nestlé is also
concentrated among Western retail giants such
as Walmart and Tesco.
 Excessive use of water
 Child labor in developing countries
 Sale of lead-tainted noodles in India
 Misleading and contradictory advertising
scandals

OPPORTUNITIES THREATS

 Scarce water resources in some countries

 The sales of its retail line are constantly
 Sale of bottled water limited by the above
growing due to electronic commerce,
problem.
which allows it to reach the final consumer
 Competition is high, your main competitors are
directly.
companies like Hershey , Mars, PepsiCo and
 Emerging markets such as India and China
Unilever.
represent an important niche of sales
 Global challenges, since Nestlé SA is present in
growth for Nestlé SA products.
almost every country on the globe, it is subject
 STRENGTHS WEAKNESSES

 Consumption trends due to the high to variations in the prices of raw materials,

demand for prepackaged foods allow which represents instability for its profitability.

Nestlé SA to establish a range product.

The SWOT matrix in Table 1 constitutes the initial starting point for the formulation of
strategies through the MEFI (internal factors matrix) and MEFE (external factors matrix)
matrices.

Internal Factor Assessment Matrix (MEFI)

Table 2 - Evaluation Matrix.

INTERNAL FACTOR WEIGHT QUALIFICATION P. WEIGHTED

STRENGTH

Trained Personnel 0.20 3 0.60

machinery modern 0.10 3 0.30

Variety and quality of service 0.05 2 0.10

Compliance with obligations and Payments 0.10 4 0.40

Security and Trust 0.15 4 0.60

Supremacy Analysis _ 0.60

WEAKNESSES

Low level of Leadership 0.08 3 0.24

Advertising System 0.12 2 0.24

quality control 0.10 1 0.10

function manual 0.05 2 0.10

Plans of blackberries to the environment 0.05 1 0.05

Supremacy Analysis _ 0.40

 INTERNAL FACTOR WEIGHT QUALIFICATION P. WEIGHTED

STRENGTH

1 2.73

Analyzing the total result of the value obtained in the MEFI matrix of Table 2, it can be seen that
it is equivalent to 2.73, which according to David (2013) indicates that the average acceptance
is 2.5 and the result obtained is above this value; However, the supremacy analysis of the
Strengths is 0.60 versus that of the Weaknesses, which is 0.40, which shows a difference of
0.20 and means that the internal environment is favorable to the interests of the company. .

Internal Factor Evaluation Matrix (MEFE)

Table 3 - MEFE Evaluation Matrix.

EXTERNAL FACTOR WEIGHT QUALIFICATION P. WEIGHTED

OPPORTUNITIES

Possibilities of accessing credits financial 0.18 4 0.72

Expand to other markets 0.10 3 0.30

associate with others companies 0.08 2 0.16

constants trainings 0.12 3 0.36

Capturing new markets _ 0.12 3 0.36

Supremacy Analysis _ 0.60

WEAKNESSES

competencies of others companies 0.06 2 0.12

High costs of some materials 0.08 2 0.16

Situation country 's economy 0.10 2 0.20

natural disasters 0.06 1 0.06

machinery depreciation _ 0.10 3 0.30

 EXTERNAL FACTOR WEIGHT QUALIFICATION P. WEIGHTED

OPPORTUNITIES

Supremacy Analysis _ 0.40

1 2.74

Analyzing the total result of the value obtained from the MEFE matrix, 2.74 is obtained, which
according to David (2013) indicates that it is above the average acceptance, which is 2.5. In the
analysis of supremacy between Opportunities and Threats, Opportunities remain at 0.60 above
Threats, which is 0.40, this indicates that the external factor is favorable to the interests of the
company.

MAFE Matrix

Table 4 MAFE Matrix

Strengths weaknesses

D1. low level of

F1. Trained staff leadership
F2. modern machinery
D2. advertising system
MAFE NESTLÉ MATRIX F3. Variety and quality
of service D3. QA
F4. Compliance with
obligations and payments D4. Function's manual
F5. security and D5. Environmental impact
confidence
Chance FO Strategy DO Strategy
1. Establish
O1. Possibilities of mutual cooperation
accessing financial credits agreements with leading
transnational companies 1. Design a marketing plan
for the exchange of focused on the retail sector
O2. Expand nationally experiences. (F1, F2, O2, O3, through digital channels
and regionally O5) (D1, O3, O2)
O3. Partner with 2. Apply investment projects 2. Develop a function model
other companies with financing that allows better control of the
O4. Constant from public and private services offered.
training companies. (F4, F5, O1, O2, (D4, O3)
O5. Capture of O3)
new markets.
threats FA Strategy AD Strategy
A1. Competitions from
other companies 1. Redefine the company's 1. Submit reports to find out
A2. High costs of some processes in order about the
materials to systematize efficiency and quality controls offered by the
A3. Economic situation save funds for the organization. company once it has provided
of the country (A3, F2, F1) services. (D3, A4)
A4. Natural disasters
TO 5. machinery depreciation

PEYEA Matrix

Table 5 . PEYEA Matrix

ENVIRONMENTAL
FINANCIAL STRENGTH STABILITY

Solvency 4 Technological changes -2

Liquidity 4 Rate of inflation -4

Capital 6 demand variability -2

Market feasibility
5 competitive pressure -5

cash flow 4 Political stability -5

risks 3 Price range -4

-
Total 4.333333 Total 3.66667

INDUSTRIAL STRENGTH COMPETITIVE ADVANTAGE

technological knowledge 5 market share -1

Productivity 6 Product quality -2

Demand 5 customer loyalty -3

growth potential 3 supplier control -3
Market entry feasibility
5 Product life cycle -3

Industry regulation 4 competitive ability -1

-
Total 4.666667 Total 2.16667

PEYEA GRAPH
Fuerzas Financieras
CONSERVADORA AGRESIVA
+6

+5

+4

+3
(2.50, 0.67)

+2

+1
Ventaja

Competitiva
 aggressive competitive type

Fuerzas

Industriales

It can be inferred from the Nestlé company that it is financially solid and that it also has
important competitive advantages, for which reason a competitive and cautious
expansion strategy is recommended, which will allow stable growth in the future since it
has an important participation inside the market.

The recommended competitive type expansion strategy focuses on product

development in traditional markets in which the company operates. To do this, it has
technical, commercial and financial resources that are used for the current activity of
the business.
Regarding the capacity of Nestlé SA, it makes changes in units that are not generating
profitability; However, the speed of change is a tool that allows this organization to be
able to implement any improvement without removing the perspective of its main
objective, for which it coordinates with the areas involved in order to prepare the
different work teams for this transition.

Regarding the architecture of Nestlé SA, the organization has a corporate governance
capable of adapting to different scenarios since it allows managing the flow of
information, the information structure and authority in the organization, which drives
decision-making within the organization in order to advance the proposed goals. For
this reason, the company has extensive and equipped infrastructures and, in addition, it
operates with a system of rewards for goals, which, accompanied by good human
resources practices, allows the workflow in the process to be effective and that the
Design of your processes to suit your needs.

Regarding the agility of Nestlé SA, it has an organizational structure capable of

carrying out an analysis and evaluations on the operational areas of the company in
order to determine if the actions carried out can be improved and allow greater agility in
its processes.

The following chart explains the product expansion strategy.

Products
traditional New
traditional Market Penetration Product development
markets New Market development Diversification

market penetration

It is intended to increase sales volume by focusing on the needs and preferences of

your current customers with the aim of increasing the frequency with which they use
the product or service. In the case of Nestlé SA, it is possible to apply this type of
strategy, since unsatisfied demands have been identified, which generates a large
number of potential customers. Directly attacking these niches in a competitive
environment is very complicated, so the strategy to reach potential customers is to
carry out multiple advertisements with the participation of representative and famous
people. It is important to point out that Nestlé uses its social networks such as Twitter,
Facebook, Linkedin , Youtube Channel among several web pages, where its official
page https://empresa.nestle.es/es and https://www.agustoconlavida stand out. es/, in
order to reach the final consumer and make themselves known to other segments
through the use of various applications for both mobile phones and tablets . These
include Nestlé Cocina, Nestlé Desserts, Learn by Playing, Nestlé Baby, Health Science
, Nestlé Farma , Purina Pro Plan , among others, which increases the volume of sales
without modifying its core business .

Product penetration

As the industry in which Nestlé SA operates is very dynamic or competitive, it is of vital

importance to carry out constant innovation processes so that the life cycles of the
products are shorter than usual. Nestlé's success is based on an integrated philosophy
that is characterized by innovation based on scientific knowledge that offers answers to
changing nutritional needs. The business group has the largest private network in the
world for nutrition and food research; It also has 40 research centers that offer
employment to some 5,000 people and has an investment capital of 1,650 million euros
per year, which has allowed it to obtain great awards and recognition worldwide. It has
research centers such as: Nesté Prensa, 2016, which in turn is divided into: Nestlé
Research Center, focused on basic nutrient research; Nestle Nutrition Institute , which
is in charge of sharing information with health professionals, scientists and those
communities related to nutrition and finally, Nestlé Institute of Health Sciences , which
offers nutritional solutions to prevent and treat diseases. This allows the organization to
enter the market with increasingly sophisticated products.

Market development

It focuses on introducing traditional products in new markets, this allows you to take
advantage of existing or new technology and production capacities that allow you to
sell your products in other markets. Within Nestlé's strategy, it has developed a line of
Desserts for a market segment, these are chocolate tablets for confectionery and due
to its ease when melting, it is in high demand for the market. This is a way to develop
new markets by identifying the needs of current customers.

Nestlé SA's value proposition is aligned with the company's objectives. In this sense, it
presents a combination of external and internal alignment, since, in addition to focusing
on the value proposition, it focuses on the processes and practices that are essential to
guarantee company operations. Likewise, one of the main reasons for the growth of
this company is the alignment towards an inclusive leadership that consolidates the
company's mission in each of its activities.
Conclusions:

This paper has addressed various corporate strategies; however, it has focused on
developing the competitive expansion strategy, since it has solid competitive
advantages. On the one hand, in the SWOT analysis it was possible to determine the
strengths, opportunities, threats and weaknesses that the company presents. After that,
through the MAFE matrix, it was possible to establish different scenarios and possible
recommendations through the crossing of the variables, which were a fundamental
piece in the puzzle that allowed us to establish our strategy after the analysis of the
environment. The MEFI and MEFE matrix was also used in order to determine and
consolidate the strategy. Finally, work was done with the PEYEA matrix and the PEYEA
graph, where different weights were assigned to the 4 components of this matrix, such
as: financial strength, environmental stability, industrial strength, and competitive
advantage. With this information, added to the 4A model, it was possible to determine
how the company is doing, since it identified shortcomings that the company has and
its strengths to overcome them. Thus, a reasonable and achievable strategy was
proposed that focuses on market penetration, product penetration and the development
of new markets.

References:

http://scielo.sld.cu/pdf/rus/v12n4/2218-3620-rus-12-04-45.pdf

https://buleria.unileon.es/bitstream/handle/10612/11428/Salguero%20Aller%20Laura.p
df?isAllowed=y&sequence=1

https://www.revistainforetail.com/noticiadet/nestle-potencia-su-
internacionalizacion/d3e2c58231b5c25c69f3b30445386124

https://www.nestle.cl/aboutus/nuestra-estrategia

https://empresa.nestle.es/es/sala-de-prensa/actualidad-nestle/nestle-colabora-con-
mediamaraton-y-maraton-de-barcelona

https://empresa.nestle.es/es/sala-de-prensa/actualidad-nestle/nestle-
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