RICKY RAMIREZ PUQUIZ, LPT, GLOBAL MARKETING (7:00AM-10:30AM

MBA SATURDAY)
DBA student Dr.Susan D. Ramirez

CASE TITLE:NESTLE PHILIPPINES

VIEWPOINT/S:
•To identify the problem and provide appropriate solution/s.

1.To assess the company’s capability to address the different appropriate program to enhance the
brand’s image and profitability.
•To understand the appropriate marketing program to identify the right product appropriate to each
segment.

TIME CONTEXT: PRESENT SETTING: PHILIPPINES HISTORICAL BACKGROUND:

Nestle Philippines is currently among the greatest food cycle worldwide. It was established by Harvard
in 1866, a German Pharmacist who initially introduced "FarineLactee"; a combination of flour and milk
to feed infants and reduce death rate. At the same time, the Page brothers from Switzerland also found
The Anglo-Swiss Condensed Milk Business. The 2 became competitors initially but later merged in
1905, leading to the birth of Nestle Philippines.

Business is now a transnational business. Unlike other international companies, it has senior executives
from different countries and tries to make choices considering the entire world. Nestle Philippines
presently has more than 500 factories worldwide and a network spread throughout 86 countries.

Purpose

The purpose of Business Corporation is to enhance the quality of life of individuals by playing its part
and supplying healthy food. While making sure that the business is being successful in the long run,
that's how it plays its part for a much better and healthy future

Vision

Nestle Philippines's vision is to supply its customers with food that is healthy, high in quality and safe to
consume. Business pictures to establish a trained workforce which would help the business to grow

Mission

Nestle Philippines's mission is that as currently, it is the leading company in the food market, it believes
in 'Excellent Food, Good Life". Its objective is to offer its customers with a range of options that are
healthy and best in taste too. It is concentrated on providing the very best food to its consumers
throughout the day and night.

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Products

Business has a wide range of items that it offers to its clients. Its items consist of food for infants,
cereals, dairy items, snacks, chocolates, food for pet and mineral water. It has around four hundred
and fifty (450) factories around the world and around 328,000 workers. In 2011, Business was noted as
the most gainful company.

Goals and Objectives

•Bearing in mind the vision and mission of the corporation, the business has laid down its goals and
objectives. These objectives and goals are listed below.
•One goal of the company is to reach absolutely no land fill status. It is pursuing no waste, where no
waste of the factory is landfilled. It encourages its workers to take the most out of the spin-offs.
(Business, aboutus, 2017).
•Another objective of Nestle Philippines is to squander minimum food throughout production.
Frequently, the food produced is wasted even before it reaches the consumers.
•Another thing that Business is working on is to enhance its packaging in such a way that it would help
it to decrease the above-mentioned problems and would also ensure the shipment of high quality of its
items to its consumers.
•Meet global standards of the environment.

•Develop a relationship based upon trust with its consumers, service partners, staff members, and
government.

STATEMENT OF PROBLEM/S/OBJECTIVES

Critical Issues

Just Recently, Business is focusing more towards the technique of Nutrition, Health and Wellness
(NHW) and investing more of its revenues on the R&D innovation. The country is investing more on
acquisitions and mergers to support its NHW method. The target of the business is not achieved as the
sales were expected to grow greater at the rate of 10% per year and the operating margins to increase
by 20%, provided in earlier discussion. There is a need to focus more on the sales then the innovation
technology. Otherwise, it may result in the declined revenue rate.

Situational Analysis

Analysis of Current Strategy, Vision and Goals

The present Business strategy is based upon the idea of Nutritious, Health and Health (NHW). This
method handles the idea to bringing change in the consumer choices about food and making the food
stuff much healthier concerning about the health problems.

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The vision of this method is based on the key method i.e. 60/40+ which just means that the products
will have a rating of 60% on the basis of taste and 40% is based on its nutritional value. The products
will be produced with extra nutritional worth in contrast to all other products in market gaining it a
plus on its nutritional material.

Quantitative Analysis

R&D Spending as a portion of sales are declining with increasing actual amount of spending shows that
the sales are increasing at a higher rate than its R&D costs, and permit the business to more invest in
R&D.

Net Earnings Margin is increasing while R&D as a percentage of sales is declining. This indicator also
reveals a green light to the R&D costs, mergers and acquisitions.

Financial obligation ratio of the business is increasing due to its costs on mergers, acquisitions and R&D
development rather than payment of debts. This increasing financial obligation ratio pose a hazard of
default of Business to its financiers and could lead a decreasing share prices. For that reason, in terms
of increasing financial obligation ratio, the firm needs to not spend much on R&D and needs to pay its
current financial obligations to decrease the risk for financiers.

The increasing threat of investors with increasing financial obligation ratio and declining share costs can
be observed by substantial decrease of EPS of Nestle Philippines stocks.

The sales development of company is also low as compare to its mergers and acquisitions due to slow
understanding structure of consumers. This sluggish development likewise hinder company to
additional invest in its mergers and acquisitions. (Business, Business Financial Reports, 2006-2010).

SWOT Analysis

SWOT analysis can be utilized to obtain different techniques based on the SWOT Analysis offered
above. A brief summary of TWOS Analysis is given up.

Strategies to exploit Opportunities using Strengths

Business needs to present more ingenious products by big quantity of R&D Spending and mergers and
acquisitions. It could increase the marketplace share of Business and increase the revenue margins for
the company. It could also supply Business a long term competitive benefit over its rivals.

The worldwide growth of Business need to be concentrated on market recording of establishing

countries by expansion, attracting more consumers through customer's loyalty. As developing countries
are more populous than developed countries, it might increase the consumer circle of Business.

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Strategies to Overcome Weaknesses to Exploit Opportunities

Nestle Philippines must do mindful acquisition and merger of organizations, as it could impact the
consumer's and society's perceptions about Business. It ought to get and combine with those business
which have a market credibility of healthy and nutritious companies. It would improve the
understandings of customers about Business.

Business needs to not only invest its R&D on development, instead of it should also concentrate on the
R&D costs over evaluation of cost of numerous healthy items. This would increase cost efficiency of its
items, which will result in increasing its sales, due to declining rates, and margins.

Strategies to use strengths to overcome threats

Business needs to move to not only establishing but also to developed countries. It should broaden its
geographical expansion. This broad geographical expansion towards developing and established
countries would decrease the danger of prospective losses in times of instability in numerous
countries. It should widen its circle to different countries like Unilever which runs in about 170 plus
countries.

Strategies to overcome weaknesses to avoid threats

It should obtain and combine with those nations having a goodwill of being a healthy company in the
market. It would also enable the business to use its possible resources effectively on its other
operations rather than acquisitions of those companies slowing the NHW strategy growth.

Segmentation Analysis

Demographic Segmentation

The market segmentation of Business is based on four elements; age, gender, income and occupation.
For instance, Business produces a number of items connected to children i.e. Cerelac, Nido, etc. and
related to adults i.e. confectionary products. Nestle Philippines products are rather economical by
almost all levels, however its significant targeted customers, in terms of earnings level are middle and
upper middle level consumers.

Geographical Segmentation

Geographical division of Business is made up of its existence in almost 86 countries. Its geographical
segmentation is based upon 2 primary factors i.e. average earnings level of the consumer along with
the climate of the region. For instance, Singapore Business Company's division is done on the basis of
the weather of the area i.e. hot, warm or cold.

Psychographic Segmentation

Psychographic segmentation of Business is based upon the personality and lifestyle of the consumer.
Business 3 in 1 Coffee target those customers whose life style is quite hectic and don't have much time.

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Behavioral Segmentation

Nestle Philippines behavioral segmentation is based upon the mindset understanding and awareness of
the client. For example, its extremely nutritious products target those clients who have a health
mindful mindset towards their usages.

Nestle Philippines Alternative Courses of Action

In order to sustain the brand in the market and keep the client intact with the brand name, there are
three choices:

Option: 1

The Company ought to spend more on acquisitions than on the R&D. Pros:
•Acquisitions would increase total properties of the business, increasing the wealth of the business.
Costs on R&D would be sunk cost.
•The company can resell the gotten systems in the market, if it fails to implement its method.
However, quantity invest in the R&D might not be restored, and it will be considered completely sunk
expense, if it does not give potential outcomes.
•Spending on R&D provide slow development in sales, as it takes long time to present an item.
Acquisitions provide fast results, as it provides the company currently established product, which can
be marketed quickly after the acquisition.

Cons:

1. Acquisition of business's which do not fit with the business's values like Kraft foods can lead the
company to deal with misunderstanding of consumers about Business core values of healthy and
nutritious items.

2 Large costs on acquisitions than R&D would send out a signal of company's inadequacy of developing
innovative items, and would outcomes in customer's frustration.

3. Big acquisitions than R&D would extend the line of product of the company by the items which are
currently present in the market, making company not able to present new ingenious items.

Option: 2.

The Business must invest more on its R&D instead of acquisitions. Pros:
•It would allow the company to produce more innovative products.

•It would offer the business a strong competitive position in the market.

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3.It would make it possible for the company to increase its targeted clients by presenting those
products which can be used to a completely new market segment.

4.Ingenious products will offer long term advantages and high market share in long term. Cons:
5.It would reduce the earnings margins of the business.

6.In case of failure, the whole spending on R&D would be thought about as sunk expense, and would
affect the business at big. The risk is not in the case of acquisitions.

7.It would not increase the wealth of company, which could offer an unfavorable signal to the
financiers, and could result I declining stock costs.

RECOMMENDATION

Continue its acquisitions and mergers with substantial spending on in R&D Program.

3.It would enable the company to introduce brand-new innovative products with less risk of converting
the costs on R&D into sunk expense.

4.It would offer a favorable signal to the investors, as the overall assets of the company would increase
with its significant R&D spending.

5.It would not impact the profit margins of the company at a big rate as compare to alternative 2.

6.It would offer the company a strong long term market position in regards to the business's overall
wealth along with in regards to innovative products.

PLAN OF ACTION

It has institutionalized its strategies and culture to align itself with the market changes and client
behavior, which has eventually allowed it to sustain its market share. Business has established
considerable market share and brand identity in the urban markets, it is advised that the company
ought to focus on the rural areas in terms of establishing brand loyalty, awareness, and equity, such
can be done by creating a particular brand allotment method through trade marketing tactics, that
draw clear distinction in between Nestle Philippines items and other competitor products.

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