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8/10/2019 NESTLE SM PPT (1)
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By-
Pinal Basarani 12
Jayesh Budhrani 20
Pawan Lilani 52
Vinita Makhija 55
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The worlds leading nutrition, health
and wellness company
Nestl: Good Food, Good Life
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MISSION STATEMENT
Good Food, Good Life"is to prov idecon sum ers w i th the best tast ing, mos t
nutr i t ious cho ices in a wide range of food
and beverage catego ries and eating
occasions, from morning to night.
Customers Yes
Products and Services Yes
Markets No
Technology No
Concern for survival, growth and
profitability
No
Philosophy No
Self-concept Yes
Concern for public image NoConcern for employees No
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Found in 1866 by Henri Nestl at. Switzerland
Over 280,000 employees
Nestl sales for 2009 were CHF 108 bn.
456 factories in 84 countries
24 R&D Centres worldwide.
10,000 different products
Nestl at a glance
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Americas42.2%
Asia, Oceania, Africa
21.8%
Europe
36.0%
Excluding globally managed businesses (Pharmaceutical, Nestl Waters, Nestl Nutrition)
Sales by rgionPercentage of total sales in 2008
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Nestl India has presence across India with 8
manufacturing facilities and 4 branch offices.
Nestl India manufactures products Nescaf, Maggi,
Milkybar, Milo, Kit Kat, Bar-one, Milkmaid And Nestea
BRANDS-
Milk products and Nutrition
Beverages
Prepared dishes and Cooking AidsChocolates and confectionery
Nestl: Presence In India
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STRATEGIES OVER THE YEARS
Nestle Nutrition-a global business organization.
Corporate Wellness Unit was designed to integrate
nutritional value-added in their food and beverage
businesses.
Competitive Strategies associated with FDI.
It aims to balance sales between low risk but low
growth countries of the developed world and high risk
and potentially high growth markets of Africa and
Latin America.
Another Strategy-Striking Partnership with other large
companies.
It employed wide-area strategy for Asia
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FOUR STRATEGIC PILLARS
1. low-cost, highly efficient operations
2. renovation and innovation of the Nestle
product line
3. universal availability
4. improved communication with consumers
through better branding
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NESTLE MODEL
The Nestl Model seeks to achieve the
following every year:
5-6% organic growth
Improved trading operating profit marginImproved underlying earnings per share
Improved capital efficiency
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CHILD LABOUR ISSUE
PROBLEM
The use of child labor in cocoa production
Because of the poverty and a lack of schools
Violation of child labour law
Enslaved children and child trafficking
SOLUTION
Introduces the nestle supplier code
Monitoring all participants in its supply chain and set clearer labor standards.
Give special training on how to address child
labor problem
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RECOMMENDATION
Monitoring all of process for recruitment of child labor
Working with government
IMAGE OF CHANGE (CARETAKER)
The manager control is severely impeded by a variety of internal and external
forces beyond their.
The manager had create Nestle Supplier Code to guide and maintain the
relationship between supplier and company.
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RAW MATERIALS
PROBLEM
1. Unexpected demand by customers
2. Bad weather and natural disaster
3. Inaccuracy of orders receives in inventory or stocks in hands
SOLUTION
1. Manager build multiple relationship with other raw materials suppliers
2. The surplus products will be sell with promotion to clear the stock
3. Build the Dealer Management Systems (DMS)
- Dms is a software for solutions that provide tools for managing sales, services,
parts and inventory management, business management, integration, and core
architecture
- Dms was build to maintain the relationship between dealer and consumers
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RECOMMENDATION
Import inventories from other region
Not all region has similar demographic factor such as race.
IMAGE OF CHANGE (CARETAKER)
The manager control is severely impeded by a variety of internal and external
forces beyond their.
The manager had build Dms software to guide and maintain the relationship
between dealer and consumers.
This can prevent the poor the relationship from happens among the Nestle dealers
and consumers
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Business-level strategy
Nestle business-level strategy is integrated
cost leadership/differentiation
-Wide range of products (over 20 categories:
coffee, milk, mineral water, petfoods, cereals)-Low cost operators.
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Competitors
Many competitors
The same qualities
The same prices
Unilever, Kraft, Master foods
High pressure
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Problem
High market share
Low growth
Competitive pressure
Want to expand
Dont have enough resources
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Solution
Cut investment budgets, overheads, frill
Maximizing existing assets, capacity,
distribution
Target internal growth rate
Improve supply chain, productivity,optimize
planning
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ANALYSIS
1. SWOT Analysis
2. Porters Five Force Model
3. PEST Analysis
4. IFE
5. EFE
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SWOT ANALYSISSTRENGHTS
Unmatched product and brand portfolio.
R&D capabilities.
Distribution channels and geographic
presence.Competency in mergers and acquisitions.
Brand reputation valued at $7 billion.
Ability to customize and localize products
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WEAKNESSES
Inability to provide consistent quality infood products.
Weak implementation of CSR.
Allegations of unethical conductProduct concentration in many areaswhich might be viewed as unhealthy.
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OPPORTUNITIES
Increasing demand for healthier foodproducts.
Acquiring startups specializing in
producing well-being products.Establishing new joint ventures.
Opportunity to further expand into new
markets (geographic and product)
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THREATS
Food contamination.
Trend towards healthy eating.
Growth of private labels.
Rising raw food prices.
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INTERNAL FACTOR EVALUATION
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EXTERNAL FACTOR EVALUATION MATRIX
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Porters Five force Model
Keeping in mind the global market in which Nestleoperates, the porters five force analysis will becarried out keeping a general view of the entireworld as the potential market for Nestle.
1. Threats of New Entrants: Nestle threats to entryexists because its barriers to entry are very low.For instance, Nestle in India there are low barriersto entry and many small domestic players can
enter the market and challenge the market ofnestle through their product or pricing offeringwhich is tailored to the local culture and tastes.
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Bargain ing Power of Suppl iers
The bargaining power of suppliers of Nestle is
very low especially in regions where the
countries are economically backwards such asPakistan or Bangladesh. That is because Nestle
being such a giant in the market has the ability
to bring lots of new business to the suppliers and
therefore the suppliers have to produce the rawmaterials according to the outlines set by the
company or they can be replaced.
7
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Bargain ing Power of con sum ers:
The bargaining power of the customers of Nestle ishigh. That is because it is a brand which greatly
relies on consumer appreciation for the product. If aproduct is launched in any part of the world wherethe consumers do not like the taste, they will refuseto buy it. Similarly in third world countries theconsumer base is very price sensitive. This raises
their bargaining power if Nestle wants to penetrate,then it will have to reduce its prices to theiraffordability level.
7
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Threat o f Subst i tutes:
Threat of substitutes for Nestle is also very high.In all areas of its operations there are multiple
other firms that are offering either similarproducts or substitute products. For this purposeNestle has to ensure that it offers a productexperience that cannot be imitated and isdemanded by its consumers.
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Indus try Rivalry:
Industry rivalry for Nestle is very high in no
matter what part of the world it operates in. In
United Kingdom it faces threat of competition
from brands like Kellogs, in India it faces
competition from local brands and brands such
as Knorr which are starting to venture into thefood industry
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BCG MATRIX
STARS
Nescafe
Maggi Noodles
QUESTION MARKS
1. Milo2. Nestle Kitkat/Barone/ Munch
3. Maggi Sauces
4. Maggi Soups
5. Nestle Butter
6. Nesvita
7. Milk
1. Nestle Maggi Pickles
2. Nestle Butter
CASH COWS
Ceralac
DOGS
1. Nestea2. Milky Bar
3. Nestle Crunch
HIGH
LOW
B
USINESSGROW
THRATE
HIGH LOW
MARKET SHARE
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Product: NescafePosition: Star
Reasons for present positioning:
(1) Nescafe is one of the leading coffeebrands in the Indian market.
(2) It has find a dominance which isunparalleled by any other brand in thecountry.
(3) Not only does it have a high market share
but it growth rate is also significantlyhigh.
(4) The name Nescafe has become genericwith coffee.
Product: Maggi Noodles
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Product: Maggi NoodlesPosition: Star
Reasons for present positioning:
(1) It is surprising to note that Maggi Noodles, whichhas found more households of consumption in Indiathan any other country in the world and has become
the first preference of Indian children in terms of instantfood, but with other competition prospects arechanging
(2) The reason essentially lies in the fact that thoughMaggi Noodles has a significantly high market share in
the Noodles market in India, the market growth rate ofNoodle consumption is growing very high.
(3) Though the number of repeat purchasers is high incase of Maggi, the rate of increase among the newpurchasers is also growing.
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Position: Question Mark
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Position: Question MarkIntended Placement: Star
(The reason why these are is not placed as a dog is that it has the potential to
expand
and also because the product lies in a market with high business growth rate.
The retailers dont give much importance to these items as an item on the
shelf but they also do not completely disregard it off their stores.
WHY?
These might have not seriously taken promotional drive.
The main chunk of advertisements is seasonal
Extensive promotional exercise meant to place it in the mindset of the Indian
psyche.
It has huge avenues for growth especially analyzing the extending Indian
market.
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Position: Question Mark
Intended Placement:DISINVESTReasons for present positioning:(1) Maggi Pickles and, on account of its limited variety (especially in thistaste crazy country) and comparatively higher prices, has been unableto acquire a market necessary for its bare minimum existence.
(2) The sales of Maggi Pickles has never really trigged since its launch.
(3) The placement of Maggi Pickles is doubted for the twin reasons of itshigh price and packing, which seems to target it to the upper substratawhile the lack of a significant number of variants poses it a challenge tomaintain itself in such households.
(4) It is not a dog because it is not the market which has low growthrate. In fact the market of packaged pickle is growing but it is MaggiPickles which is unable to gather a substantial share in this growingmarket.
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(1) Placing Maggi Pickles on the hearts and mind of the
typical taste centric and money conscious Indian
consumer will require an overhauling and huge
investment.
(2) Extensive price cuts are required but the matching
returns are doubtful.
(3) Pickles being a non-durable product and their
success essentially related to the taste of the consumer,
are not one of the core competencies of Nestle, which is
better known to introduce standard taste in the countryand get them approved by the consumers.
(4) Thus it is better advised to disinvest in the business
and focus on other brands.
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Reasons for present positioning:(1) Nestle Butter, though available in the market for some
time now, has not found much support from the consumers
primarily on account of the dislike of the taste of Nestle
Butter.(2) Considered as salt less, Nestle butter again is yet to
grow from its pre-launch position on account of the huge
competition it faces from Amul, the market leader in this
field.
(3) Now, as the market growth rate is quite significant, yet
as Nestle Butter has not acquired a better share in the
market, it has been placed in the category of Question Mark.
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1) Facts do not favor Nestle to continue with its butter.
(2) Instead of no response, a significant number of
retailers are of the opinion that Nestle Butter seems to be
rejected by the consumers for the reason that its tastedoes not suit the Indian psyche.
(3) Thus it is advisable for Nestle to discontinue with
butter, as it did with its water brand, Pure Life. Also, itwould be better to concentrate on other brand than to go
in for a head on collision with Amul, the market leader,
which is inevitable on account of the same market which
both the products cater to.
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Product: Milky BarPosition: Dogs
Reasons for present positioning:(1) It become quite popular in and around the year 2000 but itnever reached the stage of a power brand.
(2) Primary tried by the Indian consumer as a craze which laidin trying the first no brown chocolate, Nestle Milky bar was a
sweet chocolate with cream color. Thus the primaryacceptance of Milky bar was not based on its core qualitiesbut on the basis of certain peculiarities which it contained,differentiating it from other products in the same line.
(3) Milky Bar, as a chocolate, though has a growing market,yet it has been placed as a dog on account of the inherentlack of core quality which makes it generic with chocolates.This was the main reason why it was never considered acompetitor by other chocolate manufactures and theconsumers also treated it so.
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Intended Placement: Disinvest
Comments:(1) Milky Bar has lost the primary battle which it had withmindset of the unaware Indian consumers who couldnever contemplate a non-brown chocolate.
(2) The market positioning of Nestle Milky Bar has beenonly to children (as one can contemplate from theadvertisements which relate only to children in the agegroup of 10 -15) and thus it has lost the adolescentconsumer, which is also a
major part of the entire consuming segment of chocolates.
(3) The promotion style of Milky Bar has disappeared. Theadvertisements have been too soft and not too impressive.Thus success of Milky Bar requires rebuilding the image ofMilky Bar.
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REFERENCES
Nestle Annual Report 2013
http://www.articlesbase.com/management-
articles/strategic-management-at-nestle-
5907881.htmlwww.nestle.com
http://articles.castelarhost.com/nestle_competit
ive_strategy.htm
http://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.nestle.com/http://articles.castelarhost.com/nestle_competitive_strategy.htmhttp://articles.castelarhost.com/nestle_competitive_strategy.htmhttp://articles.castelarhost.com/nestle_competitive_strategy.htmhttp://articles.castelarhost.com/nestle_competitive_strategy.htmhttp://www.nestle.com/http://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.htmlhttp://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.html8/10/2019 NESTLE SM PPT (1)
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Thank you!