Nestle analysis
Transcript of Nestle analysis
Summary of Case• Nestlé with headquarters in Vevey, Switzerland was founded
in 1866 by Henri Nestlé and is today the world's biggest food and beverage company.
• Nestlé has around 468 factories, operates in 86 countries around the world, and employs around 330,000 people
• An overview is presented on the division of products of the
company which include the history of brand. It also talks about the Gene technology in food production, their business principles, the company’s commitment to Africa’s economy.
SWOT of Food IndustryStrengths• Abundant availability of raw material• Vast network of manufacturing facilities all over the country• Vast domestic market
Weaknesses• Low availability of adequate infrastructural facilities• Lack of adequate quality control & testing methods as per
international standards• Inefficient supply chain due to a large number of intermediaries• High requirement of working capital.• Seasonality of raw material
• Opportunities• Rising income levels and changing consumption patterns• Favorable demographic profile and changing lifestyles• Integration of development in contemporary technologies such as
electronics, bio-technology etc. offer vast scope for rapid improvement and progress
• Opening of global markets
• Threats• Affordability and cultural preferences of fresh food• High inventory carrying cost• High taxation• High packaging cost
SWOT of Food Industry
SWOT Analysis of NestleStrengths
1. Unmatched product and brand portfolio2. R&D capabilities3. Distribution channels and geographic presence4. Competency in mergers and acquisitions5. Brand reputation valued at $7 billion
Weaknesses1. Inability to provide consistent quality in food products2. Weak implementation of CSR
Opportunities1. Increasing demand for healthierfood products2. Acquiring startups specializing in producing well-being products3. Establishing new joint ventures
Threats1. Food contamination2. Trend towards healthy eating3.Growth of private labels4. Rising raw food prices
Porters Five Force Model
• Threat of New Entrants
• Threat of Substitute Goods
• Bargaining Power of Suppliers
• Bargaining Power of Customers
• Competitive Rivalry within the Industry
Why did nestle follow a variety of strategies of merger and expansion?
List of Mergers and expansions • 1905 – anglo swiss condensed milk • 1947 – maggi seasoning • 1960 - Crosse and blackwell • 1963 – findus • 1971 – libby’s • 1973 – stouffer’s • 1997 – san pallegrinos • 1998 – spillers petfoods• 2002 – ralston purina • 2002 – dreyers • 2002 – chef america
Reasons for merger and expansions
• To enter into global markets via brownfield strategy
• To grab the maximum market share within the industry
• Focuses on the culture and locality aspects
• To serve the world in number of products which had
nutritive value
Diversification:
Entering new markets with new products
Related diversification:
A process that takes place when a business expands
its activities into product lines that are similar to those it
currently offers
Unrelated diversification
It is a form of diversification when the business adds new or
unrelated product lines and penetrates new market
Benefits of Related Diversification
• Share assets, skills, or capabilities
• Combine operations to achieve lower cost
• Exploiting the well-known brand name
• Spread investor risks over a broader base
Related DiversificationBaby Milk Products
Condensed milk
Chocolates
Coffee
Ice - Cream
Unrelated Diversification
Prepared Food
Breakfast Cereal
Pharmacy
Frozen Food
Mineral water
Main driver of globalization• Cost Drivers, • Government Drivers, • Market Drivers, • Competitive Drivers• Technological Drivers
Government factors
• World War 1
• Demand for diary products
• Government contracts
• World War 2
• Introduction of Nescafé
• LPG MODEL in the 1st half of 1990
Market Drivers• Started with food for babies
• Operating in US Britain Germany and Spain
• Merger with Anglo-Swiss condensed milk company I.e.
first merger
• Merger with Maggi seasonings and soup, crosse and
Blackwell, findus, Libby's, stouffers.
• Acquisition of CARNATION, American food giant
Diversification• Introduction with baby milk products
• Condensed Milk
• chocolates
• Nescafé a coffee drink
• 29% stake in Loreal
• Acquiring Alcon laboratories
• Mineral Water
• Ice cream business
• Technological factors• Gene technology
Why did Nestle concentrate on responsibility to the community ?
• Nestle believes in fairness, honesty & general concern for people.
• Nestle aims to serve its customers with best quality food products with nutritive element.
Corporate Social Responsibility followed by Nestle
• Nutrition
• Water
• Rural development
• Responsible sourcing
• Environmental sustainability
• Human rights & compliance
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