Nestl in 2008

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Content

How did Vision Nestl Achieve Differentiation? Value Chain and History of Nestl Differentiation Sustaining Differentiation Product Line Anshoffs Matrix SWOT Analysis Profit Margin PESTLE Analysis Operating Margins Porters Five Forces Revenue Problems in 2007 Nestls Differentiation Strategy

Problem Resolution Porters Generic Strategy 3/25/12

Vision and Mission

To become the worlds recognized leader in nutrition, health and wellness

Nestls brands and products are the 3/25/12 focus of continual innovation and

History of Nestl

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History of Nestl

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History of Nestl

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History of Nestl

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Product Line

Powdered and liquid beverage Milk products and ice-cream Prepared food and cooking aids Pet care Pharmaceuticals Nestl Waters Nestl Nutrition

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SWOT Analysis

STRENGTHS:

WEAKNESSES:

Largest food & beverage co. Nestls organization structure was decentralized and flat - strong, local market team

Being complacent Low inorganic growth

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SWOT Analysis

THREATS:OPPORTUNITIES:

Getting involved nutrition and wellness industry Growth of health,in lawsuits Emerging markets Out-of-home consumption Premiumization Opening coffee chains and chocolate shops across nations

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PESTLE Analysis

Political/Legal trends:-Rise in Globalization Sociocultural trends: The world people care more about theirhealth, especially with foods and beverages. Technological trends:

Use of latest technology( in researching, producing) Try to find new way of create new product

Improve the quality of products (like 60/40 3/25/12 benchmarking)

Porters Five Forces for Nestle vis-a-vis the food industry

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Problems

Increase in the prices of basic agricultural commodities Local-Global balance Disinvestments Acquisitions

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Porters Generic Strategy

Competitive Advantage Lower Cost Differentiation Comp Broad Cost Differentiation etitive Target Leadership (Nestl, Kraft) Scope (Unilever) Narrow Cost Focus Differentiation Focus(Group Target (General Danone) Mills)
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Nestls Differentiation Strategy

Broad Differentiation Strategy created by targeting consumers who want health, nutrition and wellness

Under Brabeck, Nestle changed from a cost leader strategy to a differentiation strategy (transition from food and beverage company to a nutrition, health and wellness company) 'Division of nutrition' was created that reported directly to the CEO Acquisitions of Jenny Craig(US chain of weight loss centers), Novartis Medical 3/25/12 Nutrition(healthcare nutrition), Novartis Gerber

How did Nestl Achieve Differentiation?

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Value Chain and Differentiation

Firm infrastructure top mgmt support in sales, GLOBE MIS

HR- Strong culture shared by Employees Technology development- 1.75% of revenues on R&D, NRC Procurement -Long term relations with supplier
Half of factories in developing countries, 60/40 &60/40+ benchmark

M A R G I N S

Inbound

Outbound logistics

Marketing Positioned as Healthy, and Nutritious

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Interrelations : JV with General Mills for cereals

Sustaining Differentiation

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Anshoffs Matrix

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Profit Margin

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Operating Margins

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Revenue in 2007

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Problem Resolution

Acquire strategic players like Groupe Danone(before Kraft or Unilever) which can increase differentiation. Moreover, Nestle is good in developing people from acquisitions. Moreover, EBIT and inorganic growth are directly related. Increase the use of GLOBE IS so that best practices could be shared Divest in loss-making business units

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