You are on page 1of 28

Nestle: Global

Strategy
Good food, Good life
1
History

Nestle’s Head Office & Factory In London


2
ESATBLISHMENT
In 1866 Henri Nestlé, a pharmacist developed a food
that made from powdered milk, baked food, and sugar
for babies who were unable to breastfeed. Henri Nestlé
founded Nestlé’s headquarters in Vevey,
Switzerland in 1866. People quickly recognized the
value of the new product, after Nestlé's new formula
saved the child's life, and soon, Farine Lactée, Henri
Nestlé was being sold in much of Europe. And Nestlé’s
first foreign office established in London in 1868. With
so many ups and downs now Nestlé emerges its
existence throughout the world.

Peter BRABECK-LETMATHE is the present Chairman &


CEO; Chairman of Chairman's and Corporate
Governance Committee
3
BUSINESS TYPES:
Nestlé is one of the world's oldest and largest
multinational businesses. Nestlé covers nearly
every field of nutrition foods: infant formula,
milk products, chocolate and confectionery,
instant coffee, ice-cream, culinary products,
frozen ready-made meals, mineral water etc.
they are also a major producer of pet food.

RESOURCES :
They have “Expatriate Army” around 247,000
employees. 500 factories are extending the
whole world to deliver the customers needs.

4
SALES :
Sales at the end of 2004 were CHF 87 billion,
with a net profit of CHF 6.7 billion. Roughly
38% of its food sales were made in Europe, 32%
in the American and 20in Africa and Asia.
Africa &
Asia
20%

Europe
America
38%
32%

5
EXPANSION PLAN :
Nestlé committed to offering consumers high-
quality food products that are safe, tasty and
affordable. The Nestlé Seal of Guarantee is a
symbol of this commitment. Nestlé's existing
products grow through innovation and
renovation while maintaining a balance in
geographic activities and product lines. Now a
day the company focuses on new technology
platform such as non-animal protein
resources or agricultural biotechnology
products.

6
SWO T Analysi s

7
Strengths :
1. Pioneer of soluble coffee drink
In 1938, Nestlé had been effected by the effects
of 2nd World War. Their profits had dropped
down from $20 million to $6 million in the time
duration by 1938-1939. After that Nestlé started
its most revolutionary journey with Nescafé, the
world ‘s first soluble coffee drink. In that time
Nestlé's production and sales rise in the
wartime economy. Still now Nescafé is the most
offered and prominent coffee in throughout the
world.

8
2. Nestlé owns Massive brands

Nestlé - the world's largest food group, not only in


terms of its sales but also in terms of its product range
and its geographical presence. Nestlé covers nearly
every field of nutrition; infant formula, milk products,
chocolate and confectionery, instant coffee, ice-cream,
culinary products, frozen ready-made meals, mineral
water etc. they are also a major producer of pet food.

9
Nestlé is present in different markets with the following
main brands:
Coffee Nescafé, Taster’s Choice, Ricoffy, Bonka,
Nespresso, Zoégas, Loumidis
Water Nestlé Pure Life, Nestlé Aquarel, Ice
Mountain, Nestlé Vera, Deer Park,
Other Nestea, Milo, Carnation, Libby’s, Caro
beverages
Shelf stable Nestlé, Nido, Milkmaid, Klim, Nestlé
Omega Plus, Bear Brand, Coffee-Mate
Shelf stable Nestlé, Nido, Milkmaid, Klim, Nestlé
Omega Plus, Bear Brand, Coffee-Mate
Chilled Nestlé, Ski, Yoco, Svelty, Molico
Infant Nestlé, Nan, Lactogen, Nestogen,
nutrition
10
HealthCare Nutren, Peptamen, Modulen
nutrition
Ice cream Antica, Maxibon, Mega,
Mövenpick,
Frozen foods Stouffer’s, Hot Pockets, Maggi

Chocolate, Cailler, Milkybar, Kit Kat,


confectionery Smarties, Baci, Butterfinger, Polo
and biscuits
Foodservices and Chef, Minor’s, Santa Rica
professional
products
Pet care Fancy Feast, Alpo, Mon Petit, Dog
Chow, Cat Chow, Pro Plan,

11
3. Extensive R&D

Though Research & Development operation is a


common functional department in every company but
at Nestlé it took a special place. 3,100 employees
dedicated to these functions. They covered 18
different groups in 11 countries through out the world.
They spend approximately 1% of its annum sales
amount. Around 70% of R&D budget spend on
development initiatives that is new products and
fulfill rising needs.

12
4. Good number of acquisitions.
Two-third of Nestlé’s growth has come from acquisitions. Some are as follows;

1977 Acquisition of Alcon


1985 Acquisition of Carnation
1988 Acquisition of Rowntree
1992 Acquisition of Perrier
1998 Acquisitions of San Pellegrino and Spillers
Petfoods
2000 Acquisition of Power Bar
2001 Acquisition of Ralston Purina
2002 Acquisition of Schöller and Chef America
2003 Acquisition of Mövenpick, Powwow and
Dreyer's
2004 Acquisition of Valio (ice cream activities)
13
Weakness :
1. Inadequate infrastructure of China.
In 1990 Nestlé opened up a new plant to produce
powder milk and infant formula in china. But soon they
realized that there were no adequate infrastructures to
collect the milk and deliver the finished goods.

2. Improper forecasting
Nestlé had a good sales and position in Japan.
Japanese were accepted the instant coffee that helped
them to be the dominant coffee product in Japan. But to
compete with soft drinks they launch a new canned
coffee that was not accepted by the Japanese like instant
coffee. Because it was just a coffee flavored drinks rather
than real things.
14
Opportunity
• Growth possibilities in different zones.
Development in economic and population growth
simply provide the opportunity to increase the sales and
market shares in some markets such as; eastern
Europe, Asia and Latin America. Though many of
these countries are relatively poor but when economy
will be in the booming condition then the income level
of the people will be rise.

2. Government paid less to the farmers


Every developed country’s government helps its farmer
by giving incentive in different terms to increase the
productive capacity of that particular sector. In china the
government had reluctant to pay the incentives. This
opens the door for Nestlé to work out their objectives.
15
Threats :

1. Cannibalizing.

2. Strong competition.

3. Price war.

16
Co rporate le ve l st rategy
that h as t aken

17
Nestlé goal is “to evolve and adapt to a changing world
continuously and reflects the basic ideas of fairness,
honesty, and a general concern for people.”

On the basis of this goal Nestlé formulate its strategies.


Such as,

1. Nestlé owns enormous brands

Nestlé wants “to evolve continuously” that is visible in


their enormous brands extension. 8500 brands help
them to be one of the largest MNC through out the
world.

18
2. Global adaptation
Nestlé wants “to adapt in changing world
continuously”. Nestlé uses the global brand (Nescafe)
in some developed countries but when they went to a
developing country they must try to fit processing
technology and ingredients with that particular local
condition.

3. Good number of acquisitions

Nestlé’s two- third growth comes from their constant


acquisition activities, which is a critical function for any
company.

19
4. Decentralize management structure

It depends on the company’s policy whether it follows


centralization or decentralization management
system. Nestle follows decentralization management
system that increase the efficiency of each level of the
company. Though separate regional office reports to
the head office but it operates and takes action
according to the local policies and values to achieve
the company goal. It reduces the decision making
process and develops the accountability among the
executives.

20
5. Growth possibilities in different zones:

To grab the opportunities of Eastern Europe, Asia and


Latin America, nestle initially focus on niches rather than
expose with handful strategic brands. The goal is to
building a commanding market position of these niches.

21
Busi ness le ve l str ate gy
that h as t aken

22
Corporate strategies are formulating from corporate
levels managers and translate by individual business
level managers to implement in individual division to
direct functional level managers so that goals can be
achieved.

1.Extensive R&D

Nestlé’s 3100 employees dedicated to this function. They


covered 18 different groups in 11countries through out
the world. They spend approximately 1% of its annum
sales amount and allocate around 70% of R&D budget
spend on development new products. Now a –days they
concern with the development of non-animal protein
sources or agricultural biotechnology products.

23
2. Inadequate infrastructure of China
Nestlé established own distribution network among 27
villages to collect milk. Managers also offer the farmers
vans to carry out the milk promptly. The network known
as “Milk Roads” and the factory collection points known
as “Chilling Centers “
3. Government paid less to the farmers
When Government paid less to the farmers it gave a
opportunity to the Nestle to work out the farmers for
themselves. They paid the farmers payment appropriate
and promptly. Farmers become motivated and got
encourage to buy another cow. As a result within 18th
month the numbers of cow increase from 3,000 to
9,000. So more cow helps nestle to get more milk to
produce powder milk.
24
Recommendations

25
1.Improper forecasting & Cannibalizing

Nestlé forecasted that Japanese will easily accept


canned coffee instead of taking Coca-cola whenever they
want soft drinks. To protect instant coffee form industry
competition in Japan nestle launch a flunk product that
is canned coffee. Because Coca-cola is a strong brand
and posses highest brand loyalty in the soft drinks
industry. But they became fail and loose market share
because Japanese didn’t like the canned coffee since
that not give the real taste of coffee. Now nestle can take
the following steps;

26
2. Price war

To keep them away from the price war, Nestlé can


manage their sales and profit by sticking with its price
level. Because consumers must know that quality
products require its real price. People perceive that
high price indicates high quality. So nestle should not
involve in price gambling game.

27
Thank you

28