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Group MembersProjectM. Waleed Hafiz Faizan Mahmood

PresentersFareed Ud dinAsad Adil Syed Zar Mehdi

Mission StatementNestl is dedicated to providing the best foods to people throughouttheirday,throughouttheirlives,throughouttheworld.With ourunique experience of anticipating consumers needs and creating solutions, Nestl contributes to your well-being and enhances your quality of life.

VisionThe Nestl global vision is to be the leading health, wellness, and NutritionCompanyintheworld.NestlPakistansubscribes fullytothis vision. In particular, we envision to: Lead a dynamic motivated and professional workforce proud ofits heritage and bullish about the future. Delivershareholdervaluethroughprofitablelong-termgrowth ,while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country.

Business AnalysisPESTEL AnalysisSWOTAnalysisPorters five forces Analysis

PoliticalIfgovernmentimposesheavytaxesontheindustrythenitbadly effects the industry growth. The taxes impose is from government side and it varies from industry to industry. FMCGs have to pay heavy taxation, change sinanytaxationsystemcanbadlyeffectNestlesproductivity&sales(profits). Nestles some product has like butter and cream which has more taxes.

Political Cont..Labor Laws Labor is being privileged here having all the laws. Nestle company also follow these law like government announce minimum salaries of an employ Rs 6000. But if any labor laws changes it will affect the Nestls management all to gather because its difficult to get potential labor now a days. Nestles main aim to or key potential factor is to keep their employees happy &contended because as one said happy employees happy management & it leadsto prosperity.

Political Cont..Laws on hiring &promotions Hiring & promotion is followed by law. People with better capabilities areprivilegedbecausetheydeserveit,forthebettermentofthe organization as well as a well educated & skilled experienced person is a preciousassetforthecompanysuitshouldbehiredonbetterterm& conditions and be promoted on the basis of it capabilities.

Political Cont..Environmental Protection Laws They do concern for environment and contribute more and more for the betterment of environment. Nestles considers a lot about CSR, Nestle is worldwide a environmental company so as Nestle Pakistan, Nestle care for poor & urban areas, in the start Nestle gave the concept about friendly environment & to care for your environment.

Political Cont..Foreign trade RegulationsForeigntraderegulationdoesnotaffecttheoverallpolicyandthe working of the Nestle because they operate nationally not internationally. However it affect when the condition get so worst. But as the last two years whole the world is suffering from great depression so any economy of the world

Political Cont..Political instabilityForeigntraderegulationdoesnotaffecttheoverallpolicyandthe working of the Nestle because they operate nationally not internationally. However it affect when the condition get so worst. But as the last two years whole the world is suffering from great depression so any economy of the worldThe government stability also plays a great role for any industry. In Pakistan government face lot of difficulty from the side of terrorism and also its activity that badly effect environment of the country which is totally very upset. Recently in Punjab instability of government creates lot of problem for theindustrylikeshortageofelectricitythatbadlyaffectstheindustry operational process. Nestle have not much affect this condition but in futureit may be face some difficulty for operating

Economic ForcesInflation RateNow in Pakistan inflation rate is almost 22.3%, so if any increase in inflation rate then increase in prices of Nestle products which eventually affects the Nestle Pakistan. So inflation rate affect mostly everyone in the industry so as nestle but nestle by the great decision making able to retain55% of market share in Milk & Nestle Pure life.

Economic Forces Cont..Economic growth rateEconomy growth rate accelerate is 7% and plus which eventually affect the Nestle productivity & sales.

Social Forces Social Forces & Cultural Health ConsciousnessTodaypeoplearemorehealthconscioussoNestleproductsby identifying this need of the people they are also producing health conscious products with more elements of pure & quality, which create the market for Nestle & trend of its products in the market. However when launches it Milk in 1988 back then it was not so much popular but now a days people are more health conscious.

Environmental concernsAbout the environmental concerns of Nestle products are the symbol ofgoodhealth&nutritionnomatterwhichproductis underconsideration. Nestle also consider a lot about the environmental factors because they are very much socially responsible towards nature & humans.

Environmental concerns Cont...Work life qualityQuality of work life is very safer & environment friendly company of the world as every MNC is maintaining the same standards abroad with a slight cultural changesmaintain the efficient scale of production which normally called economies ofscale

TechnologyTotal spending on R&DSpending on R&D is long term investment for any organization. Nestle has R&D department and Nestle total spending on R&D 70 million because with true technological changes this research & development cannot takes place. So with the help of technological changes Nestle can enhance its products & diversify its portfolio of products.

Technology Cont..New communication technologyAll the modern as well as traditional ways of communication are being adopted by Nestle including own emails, letters, faxes and monthly visit indifferent offices of Nestle for better communication among customers. Nestle has also established own web site which can be visited any one for most recent news innovation and activities being taken in the organization with the technological change adoption the whole organization can be increased.

SWOTAnalysis

STRENGTHSParent supportCompany ImageHigh Quality ProductsWell-developed strategyMarket ShareGood marketing skills and servicesBrand strengthResearch & Development TeamProduct innovationHR departmentWEAKNESSESLess ProactiveNestlebeingacompanyislessproactivetheycreate changesbut usually unless competitor doesnt change they doesnt adopt a change.

Limited Distribution ChannelNestles major & bad factor is the limited distribution channel because they distributes their products to whole seller in their own factory vehicles as compare to their major competitor they have limited distribution channel but they are maintaining to penetrate the market as far.

WEAKNESSES CONT..No outlets in PakistanThey dont have direct outlets to whole sellers to create less burden on thefactorydistributionchannelshowever theircompetitorsgivethem a major threat by this.

More concerned aboutprofitAs being less proactive they are more concerned about profits, & their market share the main objective of every company is to gain profits but as compared to competitors its a drawback.

OPPORTUNITESSupport from Foreign InvestorsGovernmentsupportforeigninvestorstoinvestinPakistanwhich eventually is the opportunity for Nestle.

Enhance Distribution ChannelNestle should be working on the distribution network to enhance the companys network against its competitor.Changing Social TrendConsumers in urban areas now adopt Western lifestyles, especially the youngergenerationwhichishugelyinfluencedbytheWesternmedia.Younger consumers tend to follow Western life style. There was an increase in demand for Nestle products over the review period.OPPORTUNITES CONT..Health consciousIncreasing health and hygiene awareness among Pakistanis has greatly increased sales of nestle products. Both the government and the media have startedhealthawarenesscampaignstomakePakistanisrealizesthat consumption of Nestles hygienic products is as essential as eating food. Fruit/ juices & eatable products are doing very well in both urban and rural areas.

Market growthNestle market expands very fast. A new research proves that in future(2012) every person use 85.5 liters juices per years & uses more hygienic products because of the low hygienic conditions of the environment.

THREATSGovernment RegulationThey face problem if government employ taxes on them which force them to raise the price of their product.

Increase in Competition amongCompetitorCompetition among competitors ismajor threat to Nestle whichcan be controlled by the help to retaining more customers & making more loyal ones.

No Entry BarrierTherearenomanyentrybarrierssoalargenumbersoflocal companies enter in various Nestles product market.

THREATS CONT..Inflation rateIncrease inflation rate very fast .In 2008 expected inflation rate 23.3%so with the increasing inflation rate the prices will go down which creates the market slump, so inflation is very true bad factor which can affect Nestle.

Unfavorable Changes in Consumer DemandWith the increase in the competitors there will be a increase in the number of related products which eventually harm the Nestles market. Due to which the consumers demand pattern fluctuate.

Loss of Market ShareWhen the market saturates the loss of the market share of Nestles products is there major threat to Nestle.

Porters five forces Analysis

Threat of New EntrantsThe threat of new entrance means when any other company that is not operate in that product category but operate in the other product market or the company that start it new venture see a opportunity in this field like

some of the industry profits. Suppliers have great bargaining power if the company cannot produce its raw materials or other ingredients. Suppliers have weak bargaining powers, if in the market many suppliers and demand of raw material is low.The bargaining power is low because Nestle doesnt rely on any supplier they produce there on raw material or import it from parent company, even they have no reliance on the distributors they have their own factory trucks to supply the material.

Bargaining Power of BuyersBuyer power is the most important factor of porters fiver forces model, because buyer are the consumers of the product, for nestle its a major impact factor because the competition is intense & competitors have the same products may differs in quality but providing the same needs. For that particular reason we can say that Nestle have high bargaining power from buyers.Theycanlosethecustomeriftheprices&quality formthe competitor meet their products. SoifNestlecan controlthe factoroftheir competitorsmaybethey eliminate this buyer power all to gather. After all switching cost not as much high to engage in using another brand however nestle with the time &quality became a Generic brand in Pakistan

Threats from SubstitutesSubstitute products refer to products in other industries. To the economist ,a threat of substitutes exists whena product demand is affected bythe price change of a substitute product. A products price elasticity is effected by substitute product as more substitute become available, demand becomes moreelasticsincecustomerhavemore alternative .Aclosesubstitute products constrains the ability of firms in an industry to raise prices. Nestlehaveamajorthreatfromitsubstituteproductsfromother competitor due to which there product can lost the market share, there are many competitors so the threat from substitutes product are high.

Competitive RivalryThe big factors determining the strength of rivalry is how actively and aggressivelyare rivalsemployingthevariousweaponsofcompetitioninjockeying for a stronger market position and seeking bigger sales. In the market rival create a great threat. Many companies introduce same products such as milk, water, cereals & many more items to hamper the nestles impact in market and increase threat. Many local company enter in market there is also great threat for establish company. Nestle also face lot of HIGH competitorrivalry.

Conclusion In conclusion we can say that whether the company is international or local both of the organizations have strengths & weaknesses which lead them to avail opportunities & remove threats. So for nestle it important or recommended that they should pay more attention to their weaknesses &threatsinordertocompetefor alongtime&maintainthe sustainable competitive advantage. Nestle is doing so far in a good way they compete with their competitor with full &strong response. They are proactive but less reactive which is not good for the firms or organizations that are reactive.