Table of Contents

1) NESTLE............................................................................................................................................. 3 ................................................................................................................................................................ 3 2) Mission & Vision.......................................................................................................................... 4 Our Mission Statement:- ................................................................................................................. 4 Our vision and values:-.................................................................................................................... 4 Our Goals And Objectives:- ............................................................................................................. 4 3) General and specific Environment .............................................................................................. 4 Operating within environmental boundaries ................................................................................... 5 4) 5) Porter Five Forces ....................................................................................................................... 5 Threat of New Entrants:-............................................................................................................. 5 Bargaining Power of Suppliers:- ................................................................................................. 6 Bargaining Power of Buyers:-..................................................................................................... 6 Availability of Substitute ............................................................................................................ 6 Competitive Rivalry .................................................................................................................... 6 Industry setting:- ......................................................................................................................... 7 Maturing stage ................................................................................................................................ 7 6) Industry structure ........................................................................................................................... 7 Monopolistic competition:- ............................................................................................................ 7 7)Industry attractiveness .................................................................................................................... 7 Profit potential:- .............................................................................................................................. 7 Nature of demand:- ......................................................................................................................... 8 Industry Potential:-.......................................................................................................................... 8 8) Industry performance ..................................................................................................................... 9 9) Strategic Group Analysis of Nestle................................................................................................ 11 10) Competitors approach analysis:- ................................................................................................ 12 11) ETOP Analysis .............................................................................................................................. 14 Economic Environment:-............................................................................................................... 14 Technological Environment:- ........................................................................................................ 14 Marketing Environment:-.............................................................................................................. 14 Social Environment:- ..................................................................................................................... 15 a) Strengths and weakness:- ......................................................................................................... 15

b) Core Competency of Nestle .......................................................................................................... 16

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C) Competitive advantage................................................................................................................. 17 15) Value chain analysis .................................................................................................................... 17

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1) NESTLE

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2) Mission & Vision

Our Mission Statement:..the world's leading nutrition, health and Wellness Company. Our mission of "Good Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.

Our vision and values:To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved shareholder value by being a preferred corporate citizen, preferred employer, preferred supplier selling preferred products.

Our Goals And Objectives:To be the reference for: 1. Nutrition, Health and Wellness 2. Sustainable Financial Performance 3. Trust by all stakeholders

3) General and specific Environment

The Policy incorporates the United Nations Global Compacts three guiding principles on environment namely, that business should:

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Support a precautionary approach to environmental challenges Undertake initiatives to promote greater environmental responsibility, and Encourage the development and diffusion of environmentally friendly technologies.

Operating within environmental boundaries

Food production and consumption takes a large share of the worlds limited resources. Clean air and water, high quality land and soil, and the biodiversity and climate that support the food system need to be properly valued and used in a way that keeps the planet in balance. We recognised that to measure progress meaningfully on environmental sustainability, it is essential to provide context and benchmarks for comparison. We are increasingly focused on understanding our planet's total availability of natural capital. Our thinking in this regard has been guided by a seminal paper published by Rockstrom et al in 2009 (Nature 461, 472-475, 24 September 2009) which outlined planetary boundaries in areas such as biodiversity, nitrogen and climate change. Only with this context will it be possible to determine whether our impacts on vital resources and ecosystem services are above, below or at the levels required to ensure their sufficiency or continued existence. Even dramatically improved levels of eco-effciency may still be insufficient. Balancing this serious challenge with our aim to ensure we continue to delight consumers in the future is arguably the most significant environmental challenge we face.

4) Porter Five Forces

Threat of New Entrants:There is big number of food companies in the world; meanwhile the competitive

between food companies are happened. Some companies have carved out role in which they support to dairy supply. These food companies are fearful of being squeezed out by the big players. Another threat for many food companies is other food services companies entering

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the market. Competing in a new industry requires resources to invest. Production of packed products requires huge investment of financial, human, technical, and marketing resources.

Bargaining Power of Suppliers:-

The suppliers of food might not pose a big threat, because of the number of suppliers. Raw milk is standard commodity and is available in the open market from a large number of milkmen. If anyone refuses to sell its product then company can buy it from others who are already willing to sell to company. On the other hand, the importance of volume to supplier also considered as a threat. Suppliers also have less leverage to bargain over price because the company is purchasing the large volume of their milk and suppliers dont have much option to sell milk to others.

Bargaining Power of Buyers:The buyers will not post much of a threat to the food industry. Large clients have their own bargaining power with food companies. Large corporate clients like airlines and retailers pay millions of dollars a year. There are large numbers of distributors, who are buying and distributing the product, so their bargaining power is low and company have leverage to dictate implement its terms and conditions to distributors.

Availability of Substitute
There are few of substitutes in the food industry. Most of the food companies have similar suites of services. Companies focusing on their role usually have a competitive advantage, but this advantage depends on whether there are any barriers that preventing other firms from entering.15

Competitive Rivalry
The food industry is highly competitive in nowadays. As a result, food industry has become more like a commodity, an area in which the food company with the low cost structure, greater efficiency and better customer service will beat out competitors. In long run, larger companies prefer to take over or merge with other companies rather than spend the money to market and advertise to people.

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5) Industry setting:Maturing stage:Growth can take weeks or months (e.g. the latest fashion clothes) or years (e.g. the typical packet or canned food and drinks found in supermarkets). Eventually the maturity stage is reached, where sales of the product and consumers' level of product awareness are both high. At this stage, products risk going into decline, largely because they have become too familiar and are seen as less exciting than recently launched alternatives.

6) Industry structure
Monopolistic competition:Monopolistic competition is a market situation in which there is a large number of sellers and large number of buyers whereas monopoly means a market situation in which there is only a single seller or supplier of goods and services in the entire market and large number of buyers. South Africas chocolate market is a monopolistic market situation since it has got more than one supplier, the major ones being Cadbury and Nestle, and a rapidly growing large market buyers, being more than R3-billion, and growing at an estimated 3% per annum according to Angela Zachariasen and Lorna Schofield, 31 July 2008.

7)Industry attractiveness
Profit potential:Profit at Nestle, the worlds largest food company, rose 12 per cent to SFr10.6 billion ($12 billion) on demand for its main brands including Nescaf soluble coffee, KitKat chocolate bars and Maggi soups in emerging markets.

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Sales reached SFr92.2 billion in 2012, up from SFr83.6 billion in 2011, driven by beverages, dairy products, pet food, and bottled waters such as San Pellegrino and Perrier, the Vevey-based company said Thursday.

Nature of demand:The heavy promotional nature of ice cream and pizza also causes demand to wax and wane by store or region. Nestle demand planners struggled to factor in the impact of promotions. Our existing solutions did a poor job of forecasting demand around promotions, explains Geoff Fisher, director of Demand and Supply Planning for Nestle. Data was also scattered in numerous locations. Some of it was sitting in spreadsheets in regional offices and might get sent in once a week, if that. In the division that handles delivery to drugstore chains (a growing business) forecast accuracy was decreasing by the year. It was driving a lot of service issues and increasing our carrying costs, explains Bill Grah, senior manager for Strategic Sourcing.

Nestle wanted a robust, scalable and high-speed solution to address these issues that didnt require planners to spend the majority of their time administering the data, and a user-friendly reporting system. So, the company turned to SAS. In a DSD business, the details really matter, says Arnaud Joliff, director of Supply Chain Integration for NDSD. With SAS weve seen that we can create forecasts at a much lower level of detail without losing accuracy.

Industry Potential:-

Nestle has identified Africa as one of the biggest areas of opportunity for the food industry in the next ten to twenty years both within the continent and for European food makers, according to Dr Serigne Diop, director of Nestles R&D centre in Abidjan, Ivory Coast. Food manufacturers should be looking to better understand and harness the potential of African raw materials, from staples like millet and cassava, to fruits, vegetables, and

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nutritional ingredients, Diop told delegates at the European Federation of Food Science and Technology (EFFoST) annual meeting in Montpellier, France last week. Agriculture is the largest economic sector in Africa but there is a lack of food industry development, he said. We believe that in the next ten years there will be 500m Africans who can afford packaged food. This is an opportunity not just for Africa but also for Europe.

8) Industry performance
1) Profitability:Profit at Nestle, the worlds largest food company, rose 12 per cent to SFr10.6 billion ($12 billion) on demand for its main brands including Nescaf soluble coffee, KitKat chocolate bars and Maggi soups in emerging markets.

2) Operational efficiency
Our commitment to environmental sustainability is integrated into Nestle Continuous Excellence (NCE), the key element of our strategy to drive operational efficiency and strip out waste throughout the value chain. The overriding goal of NCE is to engage employees hearts and minds using three main principles:

Excelling in compliance: this includes complying with legal and strict Nestle internal requirements at all times.

Delighting our consumers: Creating Shared Value and sustainability are increasingly becoming a driver for product development, and we aim to share our aims and achievements with consumers through brand and product communications; and

Driving competitive advantage: this includes making progress towards our ambitions for zero waste and improving water efficiency and energy efficiency.

3) Innovation

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Nestle continues to drive the growth of its business in Europe through innovation with the launch of its BabyNes nutrition system for infants and toddlers in France. BabyNes offers single-serve formulas that are carefully composed to suit a childs changing nutritional needs and growth patterns in early life. Nestle is launching the premium machine in France following a successful launch in Switzerland.

4. Technological advancement
A combination of machine technology and pioneering capsule innovation is what fills your cup of Nestle at home. For over a quarter of a century, the Company has adapted new technologies and designed new machines to lead and change the habits of beverage drinkers. Offering a quadruple of innovative beverage-making systems for consumers including premium coffee system Nespresso, the coffee-at-home concept Nescafe Dolce Gusto, Japanese exclusive Nescafe Barista, and premium portioned tea machine Special.T Nestle has led machine development for every taste since 1986. Alfred Yoakim, who leads the research and development programme in Systems Technology at Nestle, explained why each unique machine brand has a different formula for success. He said: Each machine has the Nestle brand, but it has its own identity. Under the Nestle umbrella, we have kept the characteristics of each. But also we had to come up with new technologies to improve the machines and from that, we also changed the designs to make them user-friendly. With this, we created a new trend of new models and machines. Now it is something that is in the mindsets of our customers when is the next new model or innovation?

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Mr Yoakim emphasised the importance of creativity and believed it is about thinking beyond the box to create something totally different. If you want to make a real innovation, its about starting with the imagination, having the freedom to do so and then taking that opportunity, he added.

9) Strategic Group Analysis of Nestle

A strategic group is a concept used in strategic management that groups companies within an industry that have similar business models or similar combinations of strategies. For example, the restaurant industry can be divided into several strategic groups including fast-food and fine-dining based on variables such as preparation time, pricing, and presentation. The number of groups within an industry and their composition depends on the dimensions used to define the groups. Strategic management professors and consultants often make use of a two dimensional grid to position firms along an industry's two most important
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dimensions in order to distinguish direct rivals (those with similar strategies or business models) from indirect rivals. Strategic Group Analysis Strategic Group Analysis (SGA) aims to identify organizations with similar strategic characteristics, following similar strategies or competing on similar bases. Such groups can usually be identified using two or perhaps three sets of characteristics as the bases of competition. Examples of Characteristics

Extent of product (or service) diversity Extent of Geographic coverage Number of Market segments served Distribution Channels used Extent of Branding Marketing Effort Product (or service) quality Pricing policy

10) Competitors approach analysis:-

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 Abdul Ghafoor Kassim Acp Oil Mills (pvt) Ltd. Adeel Hamza Oil Ind. Ahbab Oil Industries (pvt) Ltd. Ahmad Oil & Ghee Mills (pvt) Ltd. Ahmad Oil Industrieds (pvt) Ltd. Al-hamd Edible Oil Industries (pvt) Ltd. Al-hashmi Brothers Oil Industries Ltd. Atta Oils (pvt) Ltd. Baluchistan Oil Mills (pvt) Ltd. Bashir & Co. Bengal Oil Mills Ltd. Ayesha Cooking Oil Mills (pvt) Ltd. Al-hilal Vegetable Ghee Mills (pvt) Ltd. Allied Oil Traders

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11) ETOP Analysis

Economic Environment:The company is working widely in different part of world including the most developed economies such as Europe and America, emerging economies such as China and India and underdeveloped economies such as Africa. All the markets are different and the need of the consumer in different markets is different. Consumer of a developed market prefers buying from the supermarkets whereas such markets are not very popular in other countries. In developed economies, super markets such as Carrefour and other Hyper Markets cater more than 90% of the consumers whereas in developing economies, such markets has not such high share. Most of the people prefer buying from the small shops.

Technological Environment:The parent company of Nestle India has been the worlds best state of art technology holder in the packaged food industry. Nestle India has access to such technology through a General License Agreement. This has contributed in product innovation and product renovation. Even though the investments are made by the parent, the benefit is enjoyed by all its subsidiaries. A high degree of automation is involved in packing the food. The factories in India have excellent quality management systems which are certified by ISO. The modern Information system GLOBE is being implemented for further business growth. GLOBE is a unique project and the largest of its kind and will enable the Nestle Group to maintain its competitive advantage in the increasingly complex environments of the future.

Marketing Environment:-

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Nestle is the market leader in terms of packaged food. But in chocolates section, Cadbury is the leader. One major issue is that Nestle India does not advertise its Infant Nutrition products due to legal obligations. Efficient surveys are conducted to judge what the customer wants. Nestle's USP is its easy availability. The secret behind the price mix of Nestle is the scale of production. In the beginning, it may have been thought that the products are being priced higher, but as the market segments increased and economies of scale were reached, no one could complain about Nestles price. Nestles most of the products is available in a variety of sizes to suit all the classes of society. Its beverage section has the option of easy to store sachets and pouches to the airtight and reusable jars.

Social Environment:Nestle has an extremely good CSR. It includes the following programs like development of dairy farmers situated in and around the plant locations, providing clean drinking water, providing sanitation facilities for students in schools and empowering village women to take part in economic activities of the village. Its main areas of activities include water, nutrition and rural development. The company has Village Women Dairy Development program to enhance the dairy activities conducted in the villages and spread awareness about health, hygiene, water conservation etc The company has collaborated with Punjab Agricultural University ,Ludhiana to start Nutrition Awareness programme to educate adolescent girls about good nutrition practices. The energy sources are being used to minimum possible. For the past 10 years, for every ton of production, usage of energy is reduced by 50%, greenhouse gases by 60% and waste water generation by 70%.

12)
a) Strengths and weakness:Strengths:Parent support - Nestle India has a strong support from its parent company, which is the

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worlds largest processed food and beverage company, with a presence in almost every country. The company has access to the parents hugely successful global folio of products and brands. It is a recognized nutrition, health and wellness company. Brand strength - In India, Nestle has some very strong brands like Nescafe and Maggi. These brands are almost generic to their product categories. It is the market leader in the packaged food section as it offers a well-diversified product set in each of the brands it has. Customer Base- It caters to every income strata which is the main reason for its huge customer base. Product innovation - The Company has been continuously introducing new products for its Indian patrons on a frequent basis, thus expanding its product offerings. Strong financial position The change in the share price from 936 in 2005 to 3415 in 2010 gives a general picture of how the company is faring. The dividends has been as high as Rs.20 to 21 each year.

Weakness:Supply chain - The Company has a complex supply chain management and the main issue for Nestle India is traceability. The food industry requires high standards of hygiene, quality of edible inputs and personnel. The fragmented nature of the Indian market place complicates things more. Drop in Indirect taxes- The Company may lose out on the decline in the indirect taxes laid by the Government.

b) Core Competency of Nestle

To pose Nestle product against the competitors, the company will be using differentiation strategy which will not only differentiate their own from others but also give an edge over others. Nestle core products will be very beneficial especially in terms of quality, health, and hygiene and most important consumer satisfaction. Nestle augmented

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products will include consumer satisfaction, warranty to retailers in terms of expire, delivery and after sales services. The companies all over the world get some competitive edge based on some features which other companies dont have. For example, as the Dell has the competitive edge over other computer manufacturer companies, because they use built-to-order Strategy while no other company in computer industry use this strategy. Similarly in Pakistan nestle has their competitive edge based on the strategies like product differentiation and customer oriented. Nestle is using the product differentiation strategy by providing the superior quality products. Their main focus is to keep the customers loyal. They bought shelve space in different departmental stores to attract the customers. They tried to reach each group of people in which they have succeeded. Besides, customer satisfaction is the focal point for the company. They provide hygienic products to their customers. Products are also verified by health and safety measures and international quality standards.

C) Competitive advantage
True competitive advantage comes from a combination of hard-to-copy advantages throughout the value chain, built up over decades. There are inherent links between great products and strong R&D, between the broadest geographic presence and an entrepreneurial spirit, between great people and strong values.

15) Value chain analysis

The Value Chain is the food production process, starting from the very early stages of understanding consumer culture, behaviour and needs, and then continuing the innovation process from ideation to product conception, development and launch. Then, after the product or service becomes available on the market, Nestle must always test and validate that it satisfies their needs and expectations.

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Our scientists and research are present at every step of Nestles value chain of innovation, creation and development.

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