MGT 657 : STRATEGIC MANAGEMENT

NESTLE MALAYSIA
SDN BHD

COMPANY REVIEW AND STRATEGY PLAN

MEMBERS NAME & MATRIC NO :

1. NURUL SYAKILAH BINTI ISMAIL (2020985469)

2. NUR AISHAH BINTI RASID (2020504885)
3. NURSYAFIQAH MAISARAH BINTI BAHRIN (2020994765)
4. NUR ZALIFAH BINTI ZULKIPLI (2020996667)
5. NUR SYUHADA BINTI RAHMAT (2020976993)

CLASS : M1BA2465C
LECTURER NAME : NORRAEFFA BINTI MD TAIB
DATE OF SUBMISSION : 7th JANUARY 2021
 EXECUTIVE SUMMARY

ACKNOWLEDGEMENT
 First and foremost, praises and gratitude to the God, the Almighty, for His showers of
blessings throughout our effort to complete the report of company review and strategic plan
successfully.

We would like to express our greatest and sincerely gratitude to our beloved lecturer
Norraeffa Binti Md Taib, Universiti Teknologi Mara (UiTM), for giving us a chance to do
research, providing invaluable guidance and making time for us to do a consultation throughout
this report. Her sincerity and motivation have truly impressed us. It was a great opportunity and
honouring to work and learn under her guidance. We are extremely grateful to complete this
grouping report so that we can submit it on the due date which is on 7th January 2022.

However, we would also want to thank to our parents who have constantly contributed
emotional, prayers and sacrifices a financial support to us during this semester. Without the
participation and support of everyone, this report would not be able to be finished. Not to forget
our beloved teammates for this assignment that always patience during the discussion with them
on the report preparation. Finally, thanks go to all the people who have helped us to finish the
group project directly or indirectly.

TABLE OF CONTENTS

EXECUTIVE SUMMARY .......................................................................................................I

ACKNOWLEDGEMENT ....................................................................................................... II
TABLE OF CONTENT .......................................................................................................... III

LIST OF FIGURES ................................................................................................................IV

LIST OF TABLES

.......................................................................................................................V

1.0 CHAPTER 1 : BACKGROUND OF THE COMPANY

1.1 History of the company ........................................................................................... 1

1.2 Vision ...................................................................................................................... 1

1.3 Mission .................................................................................................................... 1

1.4 Organizational Structure ......................................................................................... 2

1.5 Organizational Culture/Values ................................................................................ 2

1.6 Goals & Objectives ................................................................................................. 2

1.7 Logo ........................................................................................................................ 2

1.8 Board of Directors ................................................................................................... 2

2.0 CHAPTER 2 : COMPANY REVIEW

2.1 SWOT Analysis ...................................................................................................... 3

2.1.1 Strengths .................................................................................................. 3

2.1.2 Weaknesses .............................................................................................. 3

2.1.3 Opportunities ............................................................................................ 4

2.1.4 Threats ...................................................................................................... 4

2.2 Strategy formulation framework (Stage 1)

2.2.1 IFE Matrix ................................................................................................ 5

2.2.2 EFE Matrix ............................................................................................... 6

2.2.3 CPM ......................................................................................................... 7

 2.3 Achievements .......................................................................................................... 9

2.4 Problems ............................................................................................................... 11

2.5 Conclusion ............................................................................................................ 14

3.0 CHAPTER 3 : COMPANY’S STRATEGIC PLAN

3.1 Strategy Formulation (Stage 2) .................................................................................

3.1.1 SWOT Matrix ............................................................................................

3.1.2 BCG Matrix ...............................................................................................

3.2 Strategy Formulation (Stage 3) – QSPM ..................................................................

3.3 Conclusion ................................................................................................................

4.0 CHAPTER 4 : STRATEGY IMPLEMENTATION

4.1 Potential alternative strategies that can help to achieve long term
objectives..................................................................................................................
4.1.1 Strategy 1 ....................................................................................................

4.1.2 Strategy 2 .........................................................................................................

4.1.3 Strategy 3 .......................................................................................................

5.0 CHAPTER 5 : CONCLUSION AND RECOMMENDATION

5.1 Expectation of the new strategies ..........................................................................

6.0 REFERENCES

7.0 APPENDICES
 LIST OF FIGURES

Figure 1.1 Logo of Nestle Malaysia Sdn Bhd

Figure 1.2 Board of Directors

Figure 3.1 BCG Matrix Diagram

LIST OF TABLES

Table 2.1 Internal and External factors of SWOT Analysis

Table 2.2 Internal Factor Evaluation Matrix (IFE Matrix)

Table 2.3 External Factor Evaluation Matrix (EFE Matrix)

Table 2.4 Competitive Porfile Matrix (CPM)

Table 3.1 Quantitative Strategic Planning Matrix (QSPM) for Nestle Malaysia
Sdn Bhd
 CHAPTER 1 : BACKGROUND OF THE COMPANY

1.1 HISTORY OF THE COMPANY

Since 1912, Nestle has served Malaysians with high-quality brands and products while
upholding Halal excellence and integrity. This is consistent with their aim of maximizing the
potential of food to improve people's lives today and in the future. Nestle has a long history of
providing high-quality goods to Malaysians. Nestle first established itself in Malaysia in 1912 as
the Anglo-Swiss Condensed Milk Company in Penang, and then relocated to Kuala Lumpur in
1939 owing to growth and expansion.

Nestle Malaysia employs over 5,000 employees across six factories and manufactures over
500 Halal-certified goods. For many years, several of its big brands, such as Milo, Maggi, Nescafé,
and Kit Kat, have become household names in Malaysia. Nestle has been present in the country
and in the hearts of Malaysians for over a century and is deeply devoted to providing the very best
in quality, nutrition, and pleasure.

Generations of Malaysians have grown up with their legendary brands, which continue to
play an important part in their everyday lives despite their existence in the nation for over a
century. Nestle works hard to ensure that these well-known brands remain relevant to both younger
and older generations. This involves establishing their brands as a force for good, both in terms of
the nutritional and value advantages they offer, as well as their deliberate attempts to expand
ideals that make a significant contribution to society.

Nestle has been present in Malaysia for more than a century, and their success highlights
their ability to balance short-term performance with long-term investment in capabilities that will
enable them to improve as a team. Nestle Malaysia believes that continual development is the
greatest approach to respond to changing market and customer dynamics, as well as the
opportunities made possible by developing technology.

Nestle is consistently looking for ways to improve operational efficiency and leverage
digital transformation to enable continuous improvement. During the pandemic, they were among
the first Nestlé markets to implement a new technology to improve the efficiency of product
delivery from our distribution center by land. Utilizing data analytics and digital technologies to
optimize logistical routes, they lessen the carbon footprint and logistics expenses, demonstrating
that environmental and financial efficiency can thrive.
1.2 VISION

Nestle's goal is to be a leading, competitive Nutrition, Health, and Wellness company that
contributes value to shareholders by being a preferred corporate citizen, chosen employer,
preferred supplier, and preferred seller of preferred products. Nestle's competitive advantage
originates from its investment in Research and Development. Nestle would not have been able to
become the food industry leader in nutrition, health, and wellbeing if it had not invested in
research and development. Nestle is able to create high quality, safe food solutions for people all
over the world by bringing together all of its global Research and Development resources whether
in terms of nutrition, health, wellbeing, taste, texture, or convenience. Above all, Nestlé provides
the finest quality products to consumers. Safety is unquestionably important. Research and
Development is also essential in ensuring that all Nestle goods meet regulatory requirements.
Nestle is able to introduce new products fast and efficiently in countries all over the world by
incorporating regulatory issues into all of its Research and Development efforts from beginning to
end.

1.3 MISSION

Nestle is a global leader in nutrition, health, and wellness. From morning to night, our
mission of "Good Food, Good Life" is to provide consumers with the greatest tasting, most
nutritious alternatives in a wide range of food and beverage categories and dining occasions. This
remark suggests that Nestle places client experiences at the top of its list of priorities which
include boosting health, improving lives and improving communities. Nestle has been
acknowledged for many years for its devotion in ensuring that all of its food products meet the
basic health standards and regulations. This is done by the firm to guarantee that everyone is safe
from infection while still providing excellent items to fulfil their demands. Furthermore, in the
second point, Nestle acknowledges that people's health, social, and economic stability come first,
ahead of other commercial goals. Nestle has continuously improved community health by doing
so.
1.4 ORGANIZATIONAL STRUCTURE

An organisational chart is a diagram that shows the relationships between people in a

company. Managers to subordinates, directors to managing directors, the CEO to various
departments, and so on are all examples of such relationships. If an organisation chart becomes too
large, it can be divided into smaller charts for different departments within the organisation.

Nestle is a matrix-structured decentralised company. Nestle's decentralised structure allows

subordinate branches to have a comparably high degree of autonomy. Although significant
strategic choices are still made at the headquarters level, daily operations are delegated to
subordinate units to determine and perform them. The responsibility for operational decisions is
delegated to local units (Broeckx & Hooijberg 2008). In organisational structure, a complex
system is one that contains a large number of entities with a high level of nonlinear interaction. A
number of basic observations have been made through the investigation of complex systems,
primarily utilising computer simulation and non-linear mathematics. Unden (2001)

Typically, complex systems are open systems. Nestle has demonstrated an exceptional
capacity to adapt to an ever-changing external environment without compromising its fundamental
principles and core values, which are critical for long-term success, during its lengthy historical
journey from a tiny village enterprise to the world's top food Company. This competence will be
tested even more in the coming years as Nestle grows in size and complexity to a level that
necessitates constant evolution of its organisation and the way it operates (Christopher &
Yannicrumar 2008).

1.5 ORGANIZATIONAL CULTURE / VALUE

The Nestle Group has always adhered to a set of values and principles that govern how
they should treat one another, their organisation, and respected customers. Nestle feels that the
values they have decided to focus on are trust, respect,iInvolvement, and pride that will help them
to operate a successful business and offer an appealing workplace for everyone. Respect is at the
heart of Nestle values. Respect for oneself, for one another, for variety, and for the future.

Nestle strives to include diversity and inclusion into all they do, with an emphasis on three
key areas: culture, innovation, and society. Building an inclusive culture that appreciates our
employees' unique skills and experiences, innovating to meet the demands of our diverse clients
and customers, and engaging with society in the diverse markets where we operate are all part of
this. Nestle hires skilled and motivated individuals, provides equitable chances for development
and progress, and protects their privacy. Nestle does not accept any sort of discrimination or
harassment. Their commitment to providing equal chances begins with the hiring process and
continues until the employment relationship ends.

1.6 GOALS & OBJECTIVES

Unleashing the power of food to improve people's lives now and in the future. This is what
we want to accomplish. Nestle is a firm that promotes good food and a good life. They think that
food has the capability to enhance people's lives. Good cuisine satisfies and enchants the senses. It
promotes healthy growth in youngsters, the well-being of pets, the elegant ageing of parents, and
the enjoyment of life by everybody. They come together over good meals. Good eating is also
good for the environment and preserves resources for future generations. Nestle is always
exploring and pushing the frontiers of what is possible with meals, drinks, and nutritional health
solutions in order to improve people's lives and contribute to a healthier future. Nestle directs the
energy and resources to areas where harnessing the power of food can have the biggest impact on
people's lives, protect and improve the environment, and produce considerable value for our
shareholders and stakeholders.

1.7 LOGO

Figure 1.1 : Logo of Nestle Malaysia

Henri Nestlé was one of the first Swiss manufacturers to utilize a logo to create a brand.
Nestlé's initial logo was inspired by his family's coat of arms, which portrayed a single bird on a
nest. This was a reference to the family name, which means "nest" in German. As a result, it
was quickly changed to an early form of the Nestlé logo, which portrays three birds in a nest
being fed by their mother, in 1868. Nestlé's nest became iconic and linked with nourishment,
and that feeling of purpose became stronger as the company developed. The iconic bird's nest
emblem, on the other hand, is still used on Nestlé goods all over the world. Nestlé's current
motto is "Good Food, Good Life." The inherent beauty of this emblem stems from a time when
"branding" was not only the domain of professional marketers.
1.8 BOARD OF DIRECTORS

Figure 1.2 : Board of Directors

 CHAPTER 2 : COMPANY REVIEW

2.1 SWOT ANALYSIS

SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to

analyse a company's competitive position and establish strategic planning. SWOT analysis
evaluates internal and external elements, as well as existing and future possibilities. A SWOT
analysis is intended to assist a realistic, fact-based, data-driven assessment of an organization's,
initiative's, or industry's strengths and weaknesses. The organisation must maintain the analysis
precisely by eliminating preconceived opinions or grey regions and instead focus on real-life
scenarios. Companies should use it as a suggestion, not as a prescription.

INTERNAL FACTORS

STRENGTHS WEAKNESSES

i. Superior brand name i. Limited Management Skills

ii. Efficient Research and Development ii. Increase commodities price
system
iii. Span of control and organizational
iii. Large distribution centre
structure
SWOT
ANALYSIS
OPPORTUNITIES THREATS

i. Clarity in material sourcing i. Scarce of water resources and bad quality

ii. Clear & accurate labelling of harmful ii. Risen competition in the food and
products beverages industry.
iii. Increasing ready-to-drink (RTD) tea and iii. Instability of economic situation
RTD markets

EXTERNAL FACTORS

Table 2.1 : Internal and External factors of SWOT Analysis

The diagram above shows a SWOT Analysis for a Nestle company which consists of
internal (strengths and weaknesses) and external factors (opportunities and threats). Nestle's
strengths, weaknesses, opportunities, and threats are best explored using this approach of SWOT
Analysis. Nestle's SWOT analysis will reveal if it has formed its strategy on its strengths, protected
itself from market threats, and worked to overcome its weaknesses. However, each of these factors
will be discussed in more detail below:

11
 2.1.1 STRENGTHS

i. Superior brand name

Nestlé (Malaysia) Berhad has developed tremendously since its founding in 1912. Today,
as the Good Food, Good Life company and the nation's leading food and beverage (F&B)
manufacturer, they remain steadfast in their commitment to nourish Malaysians, in line with their
mission of unleashing the power of food to improve the quality of life for everybody, today and for
future generations. (Nestle, 2020).Nestle has been operating commercially in Malaysia and has
over 5,018 number of employees as at 31 December 2020. Nestle Malaysia also has been listed as
the biggest Halal-producing Nestle market in the world. Nestlé is a worldwide corporation, not to
mention the largest industry in foods and drinks. As a result, Nestlé has the power to attract more
customers than smaller businesses. Nestlé has a greater financial capability to change existing
products in terms of packaging, formula, and others, as well as to create new products, as well as to
adapt or upgrade latest information system technology in manufacturing, order processing, and
other related fields in order to sustain their competitive advantage by delivering lower cost of
goods and services than their competitors.

Nestle has done very well, expanding its top line faster than the country's annual GDP
growth and boosting profit margins year after year. They have boosted our financial performance
by capitalising on excellent brands, nutritious and healthful goods, production skills, and people.
They have reaped the benefits of scale offered by Nestlé's Global Business Excellence programme
(Globe) by becoming the first Nestlé market to execute this programme in the Asia-Pacific area and
recently utilising a regional Nestle shared services company in the Philippines. Nestle Malaysia has
implemented Nestlé Continuous Excellence (NCE) principles in their factories and headquarters,
allowing them to capture considerable savings and eliminate waste throughout the company while
continuing to improve their operations. (Peter Vogt, 2010).

ii. Efficient Research and Development system

Nestlé has a significant Research and Development organisation, which aids the
corporation in achieving cross-border synergy, such as packaging its worldwide goods to local
tastes. Nestlé also promotes the use of modern information technology, which Nestlé believes will
provide a long-term potential for them to smoothen the company's operations or boost efficiency
in packaging, among other company's activities. Furthermore, Nestlé has enhanced its
technological capability, for example, to renovate existing products to be more innovative, higher

12
quality, and healthier, as Nestlé noticed that consumer-centered innovation and renovation is the
most important pillar of Nestlé's global strategy, which would accelerate Nestlé's progress from
"good" to "better." "The Nestlé Corporate Essence - Our Roots and Wings," (Nestlé, 2007). Nestlé
consumers across the globe benefit from world-class production facilities, the greatest private
R&D capabilities in food and nutrition, worldwide quality and safety standards, and products
tailored to local tastes.

Since Nestle respects the faith that their customers have in them, every Nestlé product
goes through a thorough Research and Development process and strict quality criteria before it is
released. Nestle’s interest in Halal stemmed from a sense of social duty and respect for their
Muslim workers and customers, and they are now reaping the long-term investment that have
been made in production and marketing Halal products. (Nestle, 2018).

iii. Large distribution centre

Nestle has opened a national distribution centre in Teluk Panglima Garang, Selangor, at
Axis Mega DC. It takes up the whole Phase 1 and is 515,000 square feet in size. The plant is
located on 24.78 acres of leasehold industrial land with a lease term of approximately 73 years.
Nestlé has agreed to a 10-year lease, with the option to renew for another three years. Nestle
Malaysia remains a fundamentally healthy firm with significant brand equity and a broad
distribution network throughout Malaysia and the region. Given its dominance in the consumer
staples business, the corporation will almost probably be able to weather the uncertain
environment.

2.1.2 WEAKNESSES

i. Limited Management Skills

Having management skills implies being able to operate a business. It is the ability to
make the appropriate decisions while managing the overall performance of the firm. It entails
being able to communicate and produce outcomes by providing personnel with a solid business
strategy to accomplish the company's goals. To run a firm, management abilities are essential,
which include supervising workplace concerns, personnel, teamwork and team growth, and
communication. It also entails assigning tasks to staff and assessing their performance while
achieving the corporate goal.

13
 Nestlé believes that every individual should have the potential to reach his or her full
potential in a safe and fair workplace where they are heard, respected, and cherished.
Their corporate values of Trust, Respect, Involvement, and Pride are continuously followed and
practised at all levels within the organisation. Nestle is going forward by introducing a revamped
leadership curriculum called Personal Effectiveness and Renewal Leadership (PEARL), which
focuses on personal effectiveness and follows up on action plans through Corporate Coaching.
(Nestle, 2019).

ii. Increase commodities price

Most of their grocery sales are achieved through huge retail giants such as Tesco. Any
increases in prices by these retailers can affect Nestle’s sales. High commodity prices and
transportation costs are increasing pressure on consumer firms to hike retail pricing on some
items as global economic activity resumes. Nestlé expects rising commodity prices to raise
operational costs beginning in the fourth quarter of 2021, according to CGS-CIMB Research
analyst Walter Aw. While the business hopes to minimise some of the damage through increased
sales, it has already hiked the selling prices of several items in order to pass on higher input
costs.

Nestle (Malaysia) Bhd (Nestle Malaysia) chief executive officer Juan Aranols admitted
that increasing commodity prices may cause some cost constraints, but he highlighted that the
business is confident in mitigating the effects and delivering another year of good performance.
They have taken efforts to offset the effect of commodity headwinds, including our hedging
policies in place and Nestle Malaysia is pursuing several initiatives to boost efficiency in
methods of working, which would help to manage margins even further. (Juan Aranols, 2021)

Nestle remains hopeful and will keep monitoring their commercial strategy, as well as the
cost and organisational structure, with a view to driving steady and long-term sustainable
performance, noting that despite operating in a highly unpredictable environment at the moment,
it continues to monitor solid demand for its brands. (Aranols, 2021).

iii. Span of control and organizational structure

The number of employees reporting to a certain boss is referred to as the span of control.
Nestle, on the other hand, has a narrow span of control since it is structured in a matrix structure,
which implies that a big number of brands are grouped together. Maggi, Milo, Nescafe, and
Cerelac are a few examples. A matrix structure is one in which an employee must report to a
14
number of different supervisors from various reporting structures. As a result, managing the huge
administration is difficult for Nestle since it may result in a conflict of interest.

High employee turnover rate is one of the internal weaknesses for Nestle. Turnover rate
refers to the frequency with which a corporation replaces its staff. Nestle has a higher employee
turnover rate when it comes to employees quitting their jobs. As a result, Nestle is investing more
in training and development as people leave and join. Nestle then wastes a lot of time training staff
since they continually departing and rejoining. As a result, it is difficult for Nestle to have
dedicated personnel who can assist the firm reach its goals.

2.1.3 OPPORTUNITIES

i. Clarity in material sourcing

Supply chain transparency demands firms knowing what is occurring upstream in the
supply chain and communicating this knowledge both internally and publicly. One reason the
procedure has grown in importance is that more consumers are requesting it.

Nestlé goods account for nearly 12% of the typical Malaysian food basket, making many of
their brands an essential component of Malaysian homes. Consumers' faith in the quality and safety
of the products is never jeopardised. When faced with a food safety concern, such as the melamine
contamination incident, trust might become fragile. During a situation like this, customers might
appreciate organisations who are socially responsible and follow ethical policies that go beyond
compliance (Nestle, 2018).

ii. C lear and accurate labelling of any harmful products

Consumers are more likely to purchase products that are clear and accurately labelled.
Almost 62% of consumers would choose products that are free from any harmful products. Nestle
wants to be a leader in producing the most sustainable packaging solutions for its food and
beverage goods. They are expanding their research capacity in order to discover innovative
packaging materials and solutions. Nestle hopes that by doing so, they would be able to solve the
rising problem of packaging waste, particularly plastics. (Mark Schneider, 2019). Nestle should
increase the quantity of product information available to their customers by providing on-pack
guidance to more of their goods each year. Understanding the nutritional worth of products and the
15
ingredients used is essential for assisting individuals in making the best dietary choices for
themselves and their family.

iii. Increasing ready-to-drink (RTD) tea and RTD markets

RTD coffee has been the fastest growing liquid beverage sector in the U.S for the past
three years. Therefore, Nestle should add a significant brand in RTD coffee or RTD tea markets.
Recognizing the rise in tea consumption and stress levels in today's culture, Nestlé Malaysia
investigated adaptogens, which are ancient herbs that have been used for ages to assist the body's
natural capacity to cope with stress. Nestlé Malaysia took advantage of this chance to meet the
demands of customers by incorporating these components that have historically been highly
accepted into a Ready to Drink tea.

Nestlé Malaysia intends to debut the new RTD brand LIVELYTM Tea in Malaysia
exclusively through Family Mart shops in May 2021, before expanding statewide in August
2021. In fact, Nestlé used an innovative test launch method, selling LIVELYTM Tea through its
own web shop beginning in December 2020, to gather customer data, including defining
consumer personas and optimising consumer experience. LIVELYTM Tea will migrate to
platforms such as Lazada and Shopee after gathering all of the learnings and customer insights
from the initial launch via the web shop. Recognizing the rise in tea consumption and stress
levels in today's culture, Nestlé Malaysia investigated adaptogens, which are ancient herbs used
for ages to assist the body's natural capacity to cope with stress. (Chang Tze Lai, 2021).

2.1.4 THREATS

i. Scarce of water resources and bad quality

25% of the total Nestle comes from beverage products. Scarce of water is due to factors
such as climate change, the increasing demand for food products and the poor management of
wastewater. Water demand is expected to be 50% more than it is today by 2030, with outflows
exceeding natural renewal by more than 60%, leading in water shortages for one-third of the
world's population. Food security is also jeopardised if we do not tackle the world's water dilemma,
as agriculture consumes more than two-thirds of all water withdrawals. Water Resources Group
2030, 2009; IWMI 2003)

16
 Nestlé, as a food and beverage company, relies on access to clean water to continue
supplying safe and high-quality goods to their customers across the world. As a result, water
availability such as both quantity and quality affects the company in a variety of ways, and it is in
their best interests to restrict usage and waste of the resource. Nestle’s efforts in Malaysia and other
Nestlé facilities around the world have resulted in a drop in water use in Nestlé's manufacturing
operations in relation to the rising production.

ii. Risen competition in the food and beverages industry.

The beverage and food industries are highly competitive and consist of numerous small,
large and multinational companies. Nestle’s beverages, foods and snacks compete on the basis of
brand recognition, taste, price, quality and the ability to respond to consumer trends. Main
competitors for Nestle Malaysia are Horlicks, Ovaltine and Vico. (Nestle, 2018).

Horlicks released chocolate-based beverages to counteract Milo's prominence. Such

situations, according to Nestle's marketing research and development team, are not actually
conceivable. Ovaltine has also developed the malt-based beverage in order to maintain their
declining market share in the sector. A for Vico, the parent firm, sold its interest in production
and marketing facilities to the Maestro Group of Companies in 2000. A comparable malt-based
incursion into the market is quite doubtful in the foreseeable future. Because of the appealing
sustained profitability and dominance of the leading companies in this food and beverage
business, the only thing that may disrupt the sector as a whole is the entry of new foreign
brands.

iii. Instability of economic situation.

Malaysia is currently undergoing difficulties due to the persistence of Covid-19 cases

locally and concerns brought on by Delta variant of the virus. The COVID-19 disaster
highlighted people', communities', and economies' vulnerabilities, necessitating a rethinking of
how economic and social activities are structured. The situation necessitates bold answers based
on solidarity, cooperation, and accountability. Social economy companies with business models
based on such principles can contribute to the restructuring of post-crisis economies and society.
(OECD, 2020).

Earnings at NESTLÉ (M) Bhd declined 20.8 percent year on year in the first quarter
ended March 31, 2020 (1Q20), as the country's largest food and beverage (F&B) maker was
hampered by the Covid-19 epidemic and the early festive season. Nestlé Malaysia's net profit for
17
the first half of the year fell to RM186.31 million from RM235.22 million the previous year,
while profits per share fell to 79.45 sen from 100.31 sen the previous year. Revenue fell 1.3
percent to RM1.43 billion from RM1.45 billion the previous year, owing mostly to a 3.4 percent
drop in domestic sales, despite an 8.8 percent increase in overseas sales. "The impact on
domestic sales is due in part to the anticipated earlier timing of Chinese New Year (CNY) and
the impact of Covid-19 on the out-of-home business, following the closure of fast food places,
coffee shops, and most other dine-in channels," (Nestle, 2020).

18
 2.2 STRATEGY FORMULATION FRAMEWORK (STAGE 1)

2.2.1 Internal Factor Evaluation Matrix (IFE Matrix) - Interpret

Key Internal Factors Weight Rating Weighted Score

Strengths
1 Largest food company 0.20 3 0.60

2 Efficient research and development system 0.25 4 1.0

3 Large distribution system 0.20 4 0.80

Weaknesses
1 Limited management skills 0.12 2 0.24

2 Price fluctuations by retail giants 0.15 1 0.15

3 Span of control and organizational structure 0.08 2 0.16

Total 1.00 2.95

Table 2.2 : Internal Factor Evaluation Matrix (IFE Matrix)

To determine the weights in the internal factor evaluation matrix, we indicate based on
weight ranges from 0.0 (not important) to 1.0 (all-important) to each factor. For the ratings, 1 - 4
rating to each factor represents a major weakness (Rating = 1), a minor weakness (Rating = 2), a
minor strengths (Rating = 3), and a major strengths (Rating = 4). Therefore, it shows that strengths
indicate a 3 or 4 rating, while weaknesses indicate a 1 or 2 ratings. The ratings are company-
based, while the weights are industry-based. For weighted scores, the total weighted score below
2.5 indicates a weak internally, whereas a total weighted score above 2.5 indicates strong internal
position.

The table reveals that the main important factors to be successful in Nestle company is
“Efficient research and development system”. Besides, it shows that the company is doing best on
“Largest food company” and “Large distribution system”. However, the company is having a
major problem with its “Price fluctuations by retail giants”. As we can see from the table shown
above, the most important factor for Nestle Malaysia in the industry (Weight = 0.25) is well
19
established relationships and popular brands, and Nestle Malaysia does excellent (Rating = 4) in
developing a successful brand image and establishing good relationships with other brands.
Overall, this company receives a 2.95 total weighted score which is above the average 2.50. Thus,
it shows that the company has a strong internal position.

20
 2.2.2 External Factor Evaluation Matrix (EFE Matrix) - Interpret

Key External Factors Weight Rating Weighted Score

Opportunities

1 Clarity in material sourcing 0.20 3 0.60

2 Provide clear and accurate labelling of any 0.15 2 0.3

harmful products

3 Increasing ready-to-drink (RTD) tea and RTD 0.25 3 0.75

coffee markets

Threats
1 Scarce of water resources and bad water quality 0.11 2 0.22

2 Risen competition in the food and beverage 0.20 4 0.80

industries

3 Difficult economic environment 0.09 1 0.09

Total 1.0 2.76

Table 2.3 : External Factor Evaluation Matrix (EFE Matrix)

To determine the weights in the external factors evaluation matrix, we indicate based on
weight ranges from 0.0 (not important) to 1.0 (very important) to each factor. The weight indicates
the importance of the external factor to being successful in the firm’s industry. The weights that
indicate are based on industry-based.

For the ratings, it is between 1 and 4 to each key external factor to indicate the
effectiveness of the firm’s current strategies to respond to the factor. We allocate the assumptions
of each factor by 4 = the response is superior, 3 = the response is above average, 2 = the response
is average, and 1 = the response is poor. These ratings are based on the effectiveness of the firm’s
strategies. Therefore, both types of factors which are opportunities and threats can be rated from 1
to 4.

The table above reveals that the most important factor to being successful in this business
is “Increasing ready-to-drink (RTD) tea and RTD coffee markets”, as it indicated by the 0.25
weight. Nestle Malaysia is also doing excellent to handle two other factors, “Clarity in material
sourcing” and “Risen competition in the food and beverage industries”. The company also has a
superior response towards the “Risen competition in the food and beverage industries” factor.
Overall, based on the external factor evaluation matrix table, the total weighted score is 2.76
15
which is above the average midpoint of 2.5, thus indicating that Nestle Malaysia is doing good,
taking advantage of the external opportunities, and avoiding threats of the company.

16
2.2.3 Competitive Profile Matrix (CPM Matrix)

Nestle Yeo Hiap Fraser and Neave

Malaysia Seng (Yeo’s) (F&N) Malaysia
Malaysia

Critical Success Weight Rating Score Rating Score Rating Score

Factors
1 Brand 0.13 4 0.52 3 0.39 4 0.52
reputation

2 Product 0.13 4 0.52 4 0.52 4 0.52

diversification

3 Superior 0.08 3 0.24 2 0.16 2 0.16

marketing
capabilities

4 Price 0.09 2 0.18 3 0.27 3 0.27

Competitiveness

5 Domestic 0.10 3 0.30 3 0.30 3 0.30

market
Penetration

6 Financial 0.12 3 0.36 3 0.36 3 0.36

Position

7 Customer 0.09 4 0.36 3 0.27 4 0.36

retention

8 Low cost 0.07 2 0.14 2 0.14 2 0.14

structure

9 Market Share 0.12 3 0.36 3 0.36 3 0.36

10 Variety of 0.07 4 0.28 3 0.21 3 0.21

distribution
channels

Total 1.0 3.26 2.98 3.20

Table 2.4 : Competitive Profile Matrix (CPM)

Each critical success factor in the competitive profile matrix has been assigned a weight
ranging from 0.0 (not important) to 1.0 (important). The weight indicates how important the
factor is in succeeding in the industry. Therefore, the critical factors in a competitive profile
matrix include internal and external areas. For the ratings in the competitive profile matrix, it
indicates how well the companies are doing in each area. The ratings represent strength and
17
weaknesses, which are 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 =
major weakness.
Based on the competitive profile matrix (CPM) above, the most important to being
successful in the industry are “brand reputation” and “product diversification” as indicated by
0.13 weight. The main competitors of the foods and beverages (F&B) industry in Malaysia are
Nestle Malaysia, Yeo Hiap Seng Malaysia (Yeo’s) and Fraser and Neave Malaysia (F&N).
Overall, the weighted score in the competitive profile market shows that Nestle Malaysia
(3.26) is the strongest performer in the market compared to the Yeo Hiap Seng (Yeo’s)
Malaysia (2.98) and Fraser and Neave (F&N) Malaysia (3.20).
This analysis reveals that Nestle Malaysia is the strongest player in the industry with
relative strengths in brand reputation, product diversification, customer retention, and variety
of distribution channels.

18
2.3 ACHIEVEMENTS

i. Nestle Malaysia performance turnover in Quarter 2 of 2021 increase

According to Nestle Malaysia, the turnover for the quarter climbed by 13.2 percent to
RM1.38 billion from RM1.22 billion in the previous year’s equivalent quarter (Nestle Malaysia,
2021). This was driven by significant domestic sales growth of 15.8 percent , on the basis of the
Group’s strong core F&B division, which expanded by 8.4 percent in Q2 2021. The Out-Of-
Home business under Nestlé Professional witnessed a significant improvement against very low
sales in the same quarter last year when the early lockdowns had the most dramatic impact on
this area of operation. The focus on serving the local market amidst operational limitations had
some impact on the export business, which only rose by 2.5 percent in Q2 2021.

ii. Nestle Malaysia performance turnover in Quarter 3 increase

Turnover for the quarter climbed by 3.6% to RM1.44 billion from RM1.39 billion in the
previous year’s corresponding period (Nestle Malaysia, 2021). This was accomplished on the
strength of robust sales growth in both domestic and foreign markets, which climbed by 3.4%
and 4.5% respectively, driven by the Group’s F&B business registering a rise of 5.5% in Q3
2021. This was despite the limitations of the EMCO introduced in Q3 2021, which further
hampered the OOH business under Nestlé Professional.

During Q3, interesting product innovations were released, including NESCAFÉ

ReadyTo- Drink Limited Editions (Gula Melaka, Pandan and Ros Bandung), NESCAFÉ Ice
Caffé Latte, KIT KAT Chunky Raisin & Cookie and NESTLÉ Onde Onde Ice Cream. The
Group expedited the growth of our plant-based offering under HARVEST GOURMET and the
Dairy-Free MILO and NESCAFÉ beverages, while the worldwide rollout of LIVELY Tea
gained progress.

iii. Awards and Recognition

The Thomson Reuters Top 100 Diversity & Inclusion Index, which aims to highlight
global companies that have demonstrated clear leadership in embedding Diversity & Inclusion
within their company strategy, is designed to transparently and objectively measure the relative
performance of over 7,000 companies worldwide. Nestlé Malaysia was featured in the list for the

19
first time in 2018, ranked 88 (Nestle Malaysia). Nestlé Malaysia was awarded the 'Successful
International Halal Company' at the Halal Industry Development Corporation (HDC) Awards

20
Friday night, in connection with the World Halal Conference 2018. The outstanding award
validates the company's world-class Halal knowledge and enhances their position as Nestlé's
worldwide Halal Centre of Excellence.

The Minority Shareholder Watchdog Group (MSWG)-ASEAN Corporate Governance

Awards seek to promote effective corporate governance systems in listed businesses. The
ASEAN Corporate Governance Scorecard is used to evaluate organisations, and it is compared to
the global Organization for Economic Cooperation and Development (OECD) Principles of
Corporate Governance. Nestlé Malaysia achieved the Excellence Award for Long Term Value
Creation at the MSWG-ASEAN Corporate Governance Award 2018 as a result of the Company's
high standards of corporate governance disclosures and practises.

The Putra Brand Awards evaluate Malaysia's most desired brands in numerous industry
areas based on extensive customer research. At the 10th Putra Brand Awards 2019, five well-
known Nestlé Malaysia brands received top honours. Milo achieved Platinum in the Beverage
(non-alcoholic) category, while Maggi and Kit Kat received Gold, Nescafé gained Silver, and
Nestlé Everyday obtained Bronze in their respective categories.

21
 2.4 PROBLEMS

i. MILO products are being criticized for their misleading ingredients.

As we know, Nestle is known as a global leader in the nutrition, health, and wellness of
the food industry. However, in February 2018, Nestle Malaysia faced criticism by the public
about the MILO brand products which is one of their product segmentations under Nestle
Malaysia. It happened when two viral videos uploaded on Youtube by Malaysian entrepreneur
Vishen Lakhiani, CEO of education technology business Mindvalley, criticized Nestle for
portraying its MILO brand product as healthy while questioning its nutritional value and
benefits. This includes claims that MILO has 40% sugar (Marketing Interactive, 2018). At the
time of that post, it has over 789,000 views, 18,000 shares, 9,300 responses, and over 1,700
comments. The video also elicited a mixed reaction from internet users, with some praising
Lakhiani for calling out Nestle and others debating whether the video's critiques were justified.

Nestle responded to the video by releasing a statement that it is clearly misleading

regarding their products. According to the company, Milo is produced from milk, malt (barley),
and cocoa powder that provides vitamins and minerals, including Vitamins B2, B3, B6, and C.
Milo's total sugar content is naturally about 50% milk and malt sugars. They maintain the sugar
content to a minimum, using just six grams of sugar per 200 ml serving, or around one teaspoon
(Wan, 2018). Following the initial video's responses, Lakhiani addressed an earlier Nestle
statement labelling his video's statements as misleading. He then proceeded to refute Nestle's
counterclaims in response to his first video by developing a second video that summarises the
ingredients found in various Nestle products in order to support his arguments stated in the first.
Lakhiani then closes the video by pleading with Nestle to uphold its objective and be transparent
in its advertising (Kaw, 2018).

Besides, due to the criticism, health experts have dropped Milo's 4.5 Health Star Rating
and claimed the beverage tricked customers into believing it was a healthy beverage. For years,
Milo's 4.5-star rating was based on consumers drinking not more than three tablespoons of the
drink with a glass of skim or low-fat milk, according to (Han, 2018). A 1.5 star rating was
recommended by public health experts and consumer organisation Choice since the general
population does not consume Milo in the healthy way. Later, spokesman of Nestlé, Margaret
Stuart said that the 1.5-star rating will be reflected on the Milo powder, but that the 4.5-star
rating would remain on all other Milo’s products.
22
ii. False message on Baby Food recall by Nestle

In 2016, there is a false message that has been circulating on social media and has had a
negative impact on Nestle Malaysia. Nestlé Malaysia has been informed of rumours spreading
on social media, particularly WhatsApp, claiming Nestlé is demanding customers return a
banana baby food product as it contains glass (Nestle press releases, 2016). According to Nestle
Malaysia press release statement, this false message has been spreading on social media since
2011.

However, it became a major problem for Nestle Malaysia and made them respond to the
false message. Though, there has been no recall issued by Nestle Malaysia regarding their baby
food or any of their other products. They reassure customers that all Nestlé products are safe to
eat and that our consumers' safety and well-being are of the utmost importance to them. Nestlé
adheres to the strongest quality control and safety standards across their supply chain since
product quality and safety are non-negotiable for them. They also encourage everyone to share
information properly and express their gratitude to customers who have contacted them for
clarity on that problem.

iii. Nestle Malaysia was fined RM90,000 for polluting the environment

In December 2020, the Sessions Court in Shah Alam fined Nestle Manufacturing
Malaysia Sdn Bhd RM90,000 on two charges of releasing industrial effluent in excess of the
allowable limit (Bernama, 2020). On the first count, the company was charged with violating
Regulation 11 (1) (b) of the Environmental Quality (Industrial Effluent) Regulations 2009 by
discharging five kinds of industrial effluent into inland waterways that exceeded the statutory
limit for biochemical oxygen demand requirements. The second was for exceeding the
regulatory limitations for discharging concentrated chemical oxygen demand requirements into
inland waterways. On May 21, 2019, the violations were committed at its premises in Jalan
Playar 15/1, Section 15 Shah Alam. The firm was fined RM50,000 in the first count and
RM40,000 in the second count.

iv. Nestle Malaysia has been asked to withdraw its noodles products.

In April 2017, there was a statement made by the Health Ministry that it had issued
Nestle Malaysia to withdraw its noodles products from the market and soon went popular on

23
social media. However, the director of the Health Ministry, Datuk Dr. Noor Hisham Abdullah
responded

24
by stating that the news was untrue and that the Ministry did not issue any such order to the
company. According to him, the incident was in India and not in Malaysia. Later, the Health
Ministry has confirmed once again that Maggi noodles are safe to consume in Malaysia (Nestle
press release, 2017).

Dr. Noor Hisham was asked to comment on a statement circulating on the internet
claiming the Ministry of Health had issued an order withdrawing Maggi Noodles from the
Malaysian market due to safety concerns. The statement said that the product contained harmful
lead and had been broadcast on a local television station. According to the New Straits Times,
India recalled Maggi noodles off its stores in June 2015, citing harmful lead levels in the snack.
This follows testing undertaken by the Delhi municipal authorities, which determined that ten
out of thirteen samples were dangerous due to lead levels surpassing the permissible limit. In
response to these and other concerns made about comparable products in the nation, the Health
Ministry assured consumers that Nestle-owned Maggi noodles were safe to consume (Zamzuri,
2017).

According to a news article, Dr. Noor Hisham said that Malaysian instant noodles were
not imported from India (Koris, 2017). He said that the Ministry had also confirmed with the
manufacturer of the noodles that they had followed all necessary measures to assure their safety
for eating. He had said that the public need not be concerned about the safety of Maggi noodles
since the Ministry was constantly monitoring and enforcing food safety to assure their safety.

25
2.5 CONCLUSION

Based on the strategy formulation framework, we can conclude that all the matrices
have a lot of benefits. For example, they are simple to comprehend and do not necessitate a
high level of skill or a significant expenditure of time, money, or manpower. We can evaluate
from the internal factors on what Nestle companies are good at and what yields added value
for their customers compared to what their competitors offer. As we know, Nestle has a total
weighted score of 2.95, and it demonstrates the company's internal strength as well as the
external factor evaluation matrix table, Nestle Malaysia's total weighted score is 2.76
showing that the company is doing well, taking advantage of external opportunities, and
avoiding threats.

The EFE and IFE matrices' results of Nestle can be combined to analyze the
organization's strategy and goals of Nestle company. So, in order for us to create new
strategic decisions, the best results of the weighted averages for Nestle company might be
chosen from these analyses. Besides, from the result of the ratings in the competitive profile
matrix, Nestle Malaysia is the strongest player in the business compared to other companies
which are Yeo Hiap Seng (Yeo’s) Malaysia and Fraser and Neave (F&N) Malaysia. Hence,
the factors used are inputs that have a clear meaning for everyone inside and outside the
Nestle company. As these result of focusing on the most significant internal and external
factors can be utilised for a variety of functions, including creating a SWOT analysis.

26
 CHAPTER 3 : COMPANY STRATEGYC PLAN

3.1 STRATEGY FORMULATION – STAGE 2

3.1.1 SWOT Matrix

27
3.1.2 BCG Matrix

28
 Figure 3.1 : BCG Matrix Diagram

BCG Matrix also known as Boston Consulting Group Matrix including four quadrants
which are question marks, stars, cash cows and dogs. Each quadrant brings different
explanations and strategies in implementing for the company itself to have better planning for
the future. A product or business unit with a low market share but a high growth market is
known as a question mark. The product has the potential to grow its market share and become
the market leader. As for Nestle, it has a diverse production line for its products which some
of them might need a higher amount of money that will not benefit the company well enough
to meet the amount spending for those products. Nestle should decide to proceed with the
original plan of selling it or discard it from the plans for future growth. Any intensive
strategies would be implemented in the question marks quadrant to strengthen the high cash
needs products yet, Nestle must have deeper understanding for better plans.

Besides, the star quadrant contains products that are in a rapidly rising market with a
large market share. Market-leading items in the stars quadrant require significant investment
to preserve their market position, promote growth, and sustain a competitive advantage. Stars
quadrant is the best quadrant of all. When Nestle reaches this stage, the products listed have
the best long run opportunity for growth and profitability which Nestle must figure out more
on planning to attract a higher number of investors to invest for these products to maintain its
dominant position in the market. Integration and intensive strategy would be the best strategies
to be implemented in the stars quadrant in maintaining the best position and ranks of all.

The cash cows quadrant contains products that are in a market that is slowly growing
and has a large market share. Products in the cash cows quadrant are considered to be market
leaders. The products have previously received substantial investment and do not require
significant more investment to preserve their position. Nestle’s have tonnes of products in the
cash cows market such as Milo. Milo has been in the market since forever and it is hard for
the competitors to be their substitute as the recipes used are not the same as they have loyal
customers. In cash cows, companies can implement product development or diversification
strategies for these products to grow and increase the sales and profits.

Lastly, the dogs quadrant contains products that are in a slow-growing sector with a small
market share. Products in the dogs quadrant can usually sustain themselves and generate
cash flows, but they will never make it to the stars quadrant. Unless the items are
complementary to existing products or utilised for a competitive reason, companies often
29
phase out products in the dogs quadrant. In the dogs quadrant, Nestle is advised to phase out
the unnecessary products in the dogs quadrant as these products grow sluggishly as
compared to other significant or major products in the market. Defensive strategy has been
suggested to be the best in managing products for the dogs quadrant.

30
3.2 STRATEGY FORMULATION (QSPM) – STAGE 3

STRATEGIC ALTERNATIVES

1 2 3
Improve Increase the Hire more
technology production experts to
system to of ready-to- explore the
detect drink (RTD) external
harmful environment
product

Key Factors Weight AS TAS AS TAS AS TAS

Opportunities

1. Clarity in material sourcing 0.20 2 0.40 1 0.20 4 0.80

2. Provide clear and accurate labelling of 0.15 4 0.60 1 0.15 3 0.45

any harmful products

3.Increasing ready-to-drink (RTD) tea 0.25 3 0.75 4 1.00 2 0.50

and RTD coffee markets

Threats

1.Scarce of water resources and bad 0.11 4 0.44 1 0.11 3 0.33

water quality

2.Risen competition in the food and 0.20 3 0.60 4 0.80 2 0.40

beverage industries

3.Difficult economic environment 0.09 - - -

Total 1.00

Strengths

1.Largest food company 0.20 3 0.60 2 0.40 1 0.20

2.Efficient research and development 0.25 2 0.50 4 1.00 1 0.25

system

3.Large distribution system 0.20 - - -

Weaknesses

1.Limited management skills 0.12 4 0.48 1 0.12 3 0.36

2.Price fluctuations by retail giants 0.15 2 0.30 3 0.45 4 0.60

3.Span of control and organizational 0.08 - - -

structure

Total 1.00 4.67 4.23 3.89

Table 3.1 : Quantitive Strategic Planning Matrix (QSPM) for Nestle Malaysia Sdn Bhd
 ( Attractiveness Score : 1 = Not acceptable, 2 = Possibly Acceptable, 3 = Probably
acceptable, 4 = Most Acceptable, 0 = Not Relevant )

To determine the firm’s key external opportunities and threats and internal strengths
and weaknesses in the table, it is taken directly from the EFE Matrix and IFE Matrix as well
as the weight rate for external and internal factors. We also determine the Attractiveness
Scores (AS) and not mere guesses because it should be rational, defensible and reasonable.
For the rating of Attractiveness Scores (AS), the range is 1 = not attractive, 2 = somewhat
attractive, 3 = reasonably attractive, and 4 = highly attractive. By "attractive," we mean the
level to which one strategy, as compared to others, allows the company to focus on its
strengths, improve its weaknesses, take advantage of the opportunities, or avoid threats.

As evidenced by Nestle Malaysia Berhad, there are three strategies selected which are
improving technology systems to detect harmful products, increase the production of ready-
to-drink (RTD) and hire more experts to explore the external environment are being
considered by this company. As we can see, the decision should be the first strategic
alternatives which is the business analyzed here in should “Improving technology systems to
detect harmful products” rather than “Increase the production of ready-to-drink (RTD)” and
“Hire more experts to explore the external environment”.

The Nestle company should improve its technological system for production (4.67)
based on the Sum Total Attractiveness Scores (STAS) which they have contributed to the
highest score which are compared to the increase the production of ready-to-drink (RTD)
(4.23) and hire more experts to explore the external environment (3.89) according to the table
above. It also considering when this QSPM strategy emphasize all the relevant external factors
and internal factors that can influencing the attractiveness score for each strategy that can
affect the strategic decisions. The higher scores indicate more attractive strategies when all
relevant external and internal elements influencing strategic choices are considered by Nestle
Malaysia Berhad.

As we can see, Nestle factories have seen significant increases in water efficiency
for many years as a consequence of a systematic commitment to water conservation.

29
Despite the fact that Nestle uses water to effectively transform raw materials into finished
items, yet the issue of water resources is always affected and impacting this company.
For example, California is suffering a serious drought and is challenging Nestle over its
water use. Nestle is dealing with water quality issues that might threaten their products.
Thus, the company's approach for improving technology or processes must be effective in
order to prevent processing harmful products. So, the QSPM may be helpful by Nestle in
making critical strategic decisions and it also may help either large, small, profit or nonprofit
companies when it comes to strategic planning.

30
3.3 CONCLUSION

To end the strategy analysis part, we have determined that Nestle's marketing
strategy decision has a significant impact on the company's positive market results. This
may also be observed in some of the concerns voiced regarding Nestle's product spoilage,
particularly when it comes to the water sources used to process drinks. Nestle has a strong
product positioning strategy and always provides something for everyone, regardless of
age.

Moreover, Nestle has understood the concept of designing items that are suited for
their target market group and properly positioning themselves so that customers are aware
that they meet customers’ wants. We can see how Nestle can earn consumer trust by
enhancing their technologies so that they are less reluctant to utilize their products. As we
all know, Nestle goods are well-known for their reliability and durability. Thus, the
company's reputation must be protected.

31
 CHAPTER 4 : STRATEGIC IMPLEMENTATION

4.1 POTENTIAL ALTERNATIVE STRATEGIES THAT CAN HELP TO ACHIEVE

LONG TERM OBJECTIVES.

4.1.1 Improve technology systems to detect harmful product.

Nestle should strengthen its companies by implementing some strategies after its
establishment for almost 109 years. According to the QSPM matrix's findings, there are three
major strategies on which Nestle could help to achieve long term objectives in order to
overcome their weaknesses which are to improve technology systems to detect harmful
product, increase the production of ready-to-drink (RTD) and hire more experts to explore
external environment. Improving technology systems to detect harmful product especially for
water resources is one of the highest recommended strategies that must be implemented to
detect harmful products of Nestle according to the Sum Total Attractiveness Scores (STAS) of
QSPM strategy.

Today, unsafe food has always been a concern for human health. Despite Nestle's
greatest efforts to improve the safety of the food supply, foodborne disease remains a
significant health concern for consumers who use Nestle products. To keep the product safe,
the product packaging, labeling and quality must be accurate and clear to ensure that the
company's reputation is always sustained and executed without any issue. The technology must
always be consistent in ensuring that the best date before and the date of use are valid so that
customers know when the food will pass the best level and when it is no longer safe to eat. The
corporation can strengthen technological systems to detect any harmful product available in
any material, product, or water resource before Nestle products are sold in the market,
according to the ideas for this strategy.

Besides, in the food industry, machines and robotics are leveraged to enhance
operations, further protecting quality and efficiency, at low cost. They typically operate
alongside human employees to improve or enhance operations. They come with some
unexpected benefits as well, such as much-improved safety for workers, faster and greater
product output and consistent, reliable quality. Technologies are also playing a significant part
in strategic business growth for Nestle company. One of the tools related with technologies
such as the scanner, which are particularly significant in the primary production of food, are a
common method of point of service device. For example, in New Zealand-based company
26
Veritide, that specializes in optical scanning techniques to detect bacterial and fecal
contamination or any harmful product or material by using scanning devices in their food
industry.

Despite the fact that practically all Nestle factories are built to strict specifications,
including clean and safe water supply, there is still a possibility of food spoiling. It is possible
to ensure that the materials, equipment, and production environment can generate safe goods
by adding or improving the usage of technology. Because modern equipment or technology is
more successful at eliminating harmful microorganisms and avoiding the production of
dangerous amounts of chemical pollutants, in this case. This is due to concerns with Nestle
goods that represent a danger to the challenge of low-quality water resources utilized in the
manufacturing of their products. As a result, we suggest that the regulations and controls
should be tightened so that the technology used is more up-to-date, and that each factory have
separate zones, equipment, and utensils for various materials to avoid cross-contamination.

4.1.3 Hire more expert to explore external environment

In order to have a good strategy to achieve Nestle long term objectives is hiring more
experts to explore the external environment. By recruiting more experts, they would be able to
provide the specific and in-depth information required for every particular industry or
organization. In addition, many firms will provide in-depth training and advisors will work
with several clients in their particular area, keeping them informed of the newest trends and
developments in the Nestle company. However, there are a few suggestions of steps to
efficiently hire external talent or consultants. The first step is evaluate your requirement for
external background, choose the right external resource, form the team that you will need and
lastly use flexible expert sourcing to your company's benefits.

For the first steps, it is important to know the requirement of an external expert
background. When most businesses assess their capabilities and project requirements, they will
realize they need external expertise, whether in the planning phase, implementation phase, or
educating your employees in the new way of working. Even while bringing in external
expertise from a well-known worldwide consulting business might be costly, it may be the best
option in some situations, such as when the project requires a team with specific technical
know-how or when the project is unusually difficult. Having expertise and experience in your
business may not only be the most cost-effective decision, but it may also result in a more
personalized, high-quality product that perfectly fulfills your company's requirements.
27
 Next, any external resource should start with a clear understanding and awareness of
your company's specific requirements. For example, as a general rule, boutique consulting
companies and individual consultants you bring in will not tackle challenges in a pre-
fabricated, cookie-cutter manner, but rather collaborate closely with you to tailor deliverables
and solutions to your specific requirements. If a consultant starts pitching you on their
solutions before they've completely grasped your problem or requirements, simply back away
and you need to look for another supplier.

Besides, you may obtain external expertise in a variety of methods, including online
talent platforms, word-of-mouth from your network, and a variety of other options. It is
essential for leadership to clearly plan out the change management process, construct the
internal project team, fill gaps with external expertise if needed, and then explain who needs to
do what and when it comes to recruiting and working with consultants or outside specialists. It
will help you control expenses and promote efficiency, especially when you can clearly
identify what you need and when things should happen, the more effective and efficient you'll
be at leveraging external talent knowledge when it's needed.

Last but not least, using flexible expert sourcing to Nestle company benefits. In other
words, many mid-market companies are implementing digital transformation, building a
culture of innovation, and increasing organizational adaptability in order to keep up with
technological development. We can see how external experts might be beneficial to any
business. Hence, it is necessary that Nestle intends to bring in and utilize the outside talent to
solve its business challenges, especially in the future.

4.1.2 Increase the production of ready-to-drink (RTD)

In Malaysia, Milo and Nescafé brands are major competitors of product ready-to-drink
(RTD), Nestlé has recorded significant growth in its ready-to-drink beverages category over
the last four years. To keep up with rapid and immediate changes in customer lifestyles and
threats from competitors, Nestlé can expand the production of ready-to-drink (RTD) beverages
to improve sales performance. To begin, Nestle can manufacture more nutritious and sweet
drink products. Nestle, for example, in Indonesia is committed to providing high-quality,
nutritional products to meet growing customer demand, particularly in the RTD category,
where the RTD beverages sector is also growing in convenience and demand when it comes to
making purchases both online and off-the-shelf.

28
 However, employees can contribute their innovative ideas and improve their product
development skills through this activity. Because they have earned the trust and loyalty of their
customers, they can develop new products and bring them to market without hesitation. For
example, they can make yogurt products with ready-to-drink (RTD) based on traditional
Malaysian recipes. The process of bringing new product ideas to market is known as new
product development. It can be divided into five stages: conception, research, planning and
prototyping, procurement, and costing, although it varies by industry. After they can bring
many of the best ideas regarding the ready-to-drink-product, it is the result of building
something entirely new.

Nestle does not only need to produce a large quantity of ready-to-drink products but
they need to come out with new ideas in order for Nestlé to become well-known in Malaysia
for all their ready-to-drink (RTD) as a market leader in dairy and nutritional products. When a
ready-to-drink beverage is produced in large quantities, the product's quality must be
maintained so that its products do not become harmed. It will give an advantage to this ready-
to-drink (RTD) product where it may be consumed at any time and is more durable than
regular products.

29
4.2 CONCLUSION

To conclude, although there are several significant competitors in this industry that can
compete with Nestle, such as Hershey or Kraft Heinz, Nestle still has to improve its
technology and compete more effectively through diversification. Nestle will be able to
enhance with new technologies, allowing them to preserve market share or possibly gain a
competitive advantage. Even though these three strategies have different aims, they all work
together to help Nestle accomplish its ultimate goal of increasing sales and profit. Nestle's
objectives, as well as the company's policies, will need to be adjusted in order to fit and adapt
to the new plans that have been formulated. Nestle needs more relevant policies to support the
goals of the selected strategies, despite the fact that they are the simplest methods to
implement.

As a result, no company should become a prisoner of its own strategy, because even
the most powerful plans will become obsolete sooner or later. To be successful, every
organization, whether military, product-oriented, service-oriented, or governmental, must
devise and implement effective plans. Since it has specific external possibilities and dangers,
as well as internal strengths and weaknesses that might lessen company problems, all of the
alternative strategies implemented can be matched to build feasible alternative strategies.

Proper processes or procedures must also be followed to examine and analyze each
phase of the approach so that problems can be identified and appropriate responses can be
given as quickly as possible to avoid undesirable outcomes or, at the very least, to minimize
the effect whenever a problem arises in the future. Because the procedures will enable Nestle
to react appropriately in unexpected circumstances, minimizing any losses and consequences
that may arise if anything unexpected occurs during the implementation of the plans or
strategies that the company will benefit. Hence, it is necessary for Nestle to implement the
strategies mentioned above in order to solve the company's inefficiencies with regard to past
issues or problems.

30
CHAPTER 5 : CONCLUSION AND RECOMMENDATION

31
 REFERENCES

Nestle Swot Analysis 2021: SWOT ANALYSIS OF NESTLE. Business Strategy Hub.
(2021, October 19). Retrieved November 13, 2021, from
https://bstrategyhub.com/nestle-swot- analysis-2019-swot-analysis-of-nestle/.

Jurevicius, O. (2021, October 22). Nestle Swot Analysis - SM Insight. Strategic

Management Insight. Retrieved November 13, 2021, from
https://strategicmanagementinsight.com/swot-analyses/nestle-swot-analysis/.

Umesh. (2021, April 7). Verdict media limited. Food Processing Technology. Retrieved
November 13, 2021, from https://www.foodprocessing-
technology.com/news/nestle- manufacturing-unit-malaysia/.

Astro Awani. (2016, August 15). Baby food recall a false message, Nestle says. Astro Awani.
Retrieved December 4, 2021, from https://www.astroawani.com/berita-malaysia/baby-
food-recall-false-message-nestle-says-114086

Bernama. (2020, December 24). Nestle fined RM90,000 for environmental pollution.
MalaysiaNow. Retrieved December 5, 2021, from
https://www.malaysianow.com/news/2020/12/24/nestle-fined-rm90000-for-
environmental-pollution/

Han, E. (2018, March 1). Nestle wipes '4.5' health star rating off flagship Milo product.
Sydney Morning Herald. Retrieved December 3, 2021, from
https://www.smh.com.au/healthcare/nestle-wipes-4-5-health-star-rating-off-flagship-
milo-product-20180301-p4z295.html

Kaw, S. (2018, February 15). Nestle Malaysia maintains Milo is healthy following public
criticism. Deccan Chronicle. Retrieved December 3, 2021, from
https://www.deccanchronicle.com/lifestyle/health-and-wellbeing/150218/nestle-
malaysia-maintains-milo-is-healthy-following-public-criticism.html
32
Koris, S. N. N. (2017, April 5). Health Ministry denies issuing order to recall Maggi noodles.
New Straits Times. Retrieved December 5, 2021, from
https://www.nst.com.my/news/2017/04/227412/health-ministry-denies-issuing-order-
recall-maggi-noodles

Marketing Interactive. (2018, February 7). Nestle Malaysia defends MILO product health
claims in wake of viral videos. Marketing Interactive. Retrieved December 3, 2021,
from https://www.marketing-interactive.com/nestle-malaysia-defends-milo-product-
health-claims-in-wake-of-viral-videos

Nestle Malaysia. (n.d.). Awards and Achievements. Nestlé Malaysia. Retrieved December 3,
2021, from https://www.nestle.com.my/aboutus/nestle-my/awards-achievements

Nestle Malaysia. (2021, 8 24). Nestlé Malaysia delivers sales and profit acceleration in Q2.
Nestlé Malaysia Home Page | Nestlé Malaysia. Retrieved December 3, 2021, from
https://www.nestle.com.my/

Nestle Malaysia. (2021, November 2). Quarter 3 2021 Results. Nestlé Malaysia. Retrieved
December 3, 2021, from https://www.nestle.com.my/media/pressreleases/q3-2021

Nestle press release. (2017, April 6). Kementerian Kesihatan nafi keluarkan perintah untuk
tarik balik mi MAGGI. Nestlé Malaysia. Retrieved December 5, 2021, from
https://www.nestle.com.my/media/pressreleases/allpressreleases/no-directive-to-
withdraw-maggi-noodles---ministry-of-health-malaysia

Nestle press releases. (2016, August 14). Clarification: False Message on “Baby Food”
Recall. Nestlé Malaysia. Retrieved December 4, 2021, from
https://www.nestle.com.my/media/pressreleases/allpressreleases/clarification-false-
message-on-baby-food-recall

33
Wan, L. (2018, February 14). Nestlé Malaysia defends Milo over viral video accusations about
sugar content. Food Navigator Asia. Retrieved December 3, 2021, from
https://www.foodnavigator-asia.com/Article/2018/02/14/Nestle-Malaysia-defends-
Milo-over-viral-video-accusations-about-sugar-content
Zamzuri, S. (2017, April 4). Health Ministry denies issuing order to recall Maggi noodles.
New Straits Times. Retrieved December 5, 2021, from
https://www.nst.com.my/news/2017/04/227412/health-ministry-denies-issuing-order-
recall-maggi-noodles

How we ensure food safety. Nestlé Global. (n.d.). Retrieved December 31, 2021, from
https://www.nestle.com/aboutus/quality-and-safety/how-we-ensure-food-safety

Neo, P. (2021, July 13). Indonesia's RTD Revolution: Nestle confident about growth
opportunities on back of new factory. foodnavigator. Retrieved December 31, 2021, from
https://www.foodnavigator-asia.com/Article/2021/07/13/Indonesia-s-RTD-revolution-
Nestle-confident-about-growth-opportunities-on-back-of-new-factory

4 tips to efficiently hire and work with external talent and consultants. National Center for the
Middle MArket. (n.d.). Retrieved December 31, 2021, from
https://www.middlemarketcenter.org/expert-perspectives/4-tips-to-efficiently-hire-and-
work-with-external-talent-and-consultants

34
APPENDICES

35
36
37
38
39
41