DEDICATION
I dedicate this work to my affectionate
Parents and my worthy teachers
INTERNSHIP REPORT 1
ACKNOWLEDGEMENT
All appreciation and thanks to Almighty ALLAH the most gracious, merciful and
beneficent, which gave me the courage & talent to complete this task successful.
Many people have contributed in completion of this project, and I would like to thank
all of them. Course from very beginning to the completion of this report. I found it
difficult to find the words for appropriate dimensions, to express my gratitude to my
worthy instructor Saad Khan for his potential interest, useful suggestions, constant
encouragement, dynamic supervision and kind behavior throughout the course of this
research. I am also thankful to all my seniors’ supervisors, brand managers and
affectionate parents who prayed, encouraged and supported me and also to all people
who helped me in completing this project
INTERNSHIP REPORT 2
PREFACE
The purpose of this report is to explain what I did and learned during my internship
period with Nestle. This report is also a requirement for the fulfillment of BBA-
MARKETING program. The report focuses primarily on the basic structure, and
management style of the Nestle. After that Company’s core marketing strategies has
been explained. Then the most important marketing 4P’s are discussed. After that
there is most important part of the report that is named what I have learned in
internship period. Then I have calculated the basic financial ratios which are typically
called ratio analysis. At last but not the least there are some recommendations for the
betterment of Nestle
INTERNSHIP REPORT 3
ABSTRACT
The vibrant capabilities of communication department of Nestle planning have been
highly accentuate. The department has been acknowledged as the means through
which the swift industrialization and the other processing goals of the association can
be conquered.
This report delves into the role of my BBA program for setting the goals and
objectives and then devising means to achieve them. It covers all the aspects
regarding organizational structure and marketing aspects which encompass the
organization.
The verdict about Nestle marketing department process may facilitate policy
makers, employment agencies, organization to ascertain and over and above existing
cooperation, not only in Pakistan but also in all parts of the world.
INTERNSHIP REPORT 4
METHODOLOGY
Aspects have been piled up by means of primary sources by interviewing key
accounts managers during my internship, beyond this I also visited there warehouse.
All of the above, I put in writing all that stuff which I observed during my internship
Secondary information has been congregated through different internet sites of
NESTLE company.
INTERNSHIP REPORT 5
EXECUTIVE SUMMARY
Nestlé headquarters is in Vevey, Switzerland was founded in 1866 by Henri Nestlé
and is today the world’s biggest food and Beverage Company. Sales at the end of
2005 were CHF 91 bn, with a net profit of CHF 8 bn. They employ around 250,000
people and have factories or operations in almost every country in the world.
And the address is
Nestlé S.A.
Avenue Nestlé 55
1800 Vevey
Switzerland
Central switchboard
(Tel) +41 21 924 2111
(Fax) +41 21 924
INTERNSHIP REPORT 6
Table of Contents
INTRODUCTION TO NESTLE...................................................................................9Introduction..........................................................................................................10
Key Dates.................................................................................................................12JOINT VENTURES & ASSOCIATED WEBSITES..........................................13
COMPANY INFORMATION.....................................................................................14Background..................................................................................................................19Objective......................................................................................................................27Mission Statement........................................................................................................28Vision...........................................................................................................................29STRATEGIES..............................................................................................................30
Organizational StructureBoard of Directors of Nestlé S.A......................................32Board of Directors of Nestlé S.A.............................................................................33SALES STRUCTURE.............................................................................................35
TRAINING PROGRAM......................................................................................36CAREER DEVELOPMENT...................................................................................39
Management/................................................................................................................41Administrative Style.....................................................................................................41
STYLE OF WORKING...........................................................................................42Production....................................................................................................................44Marketing Mix.............................................................................................................48
MARKETING PROCESS.......................................................................................49ANALYZING MARKET SITUATION..............................................................49DEVELOPING MARKETING MIX...................................................................49MARKETING IMPLEMENTATION.................................................................49MARKETING CONTROL..................................................................................49
ANALYZING MARKETING SITUATION...........................................................51SWOT analysis.........................................................................................................51Internal analysis........................................................................................................51Strengths...................................................................................................................51Weaknesses..............................................................................................................52
External analysis..................................................................................................54Opportunities............................................................................................................54Current market situation...........................................................................................56MARKET ANALYSIS............................................................................................56Life Style..................................................................................................................57DEVELOPING THE MARKETING MIX..............................................................59Product Mix..............................................................................................................60Analysis of Company Marketing/ Sales Procedures................................................73Pricing Policy...........................................................................................................75Price List..................................................................................................................77Distribution Policy...................................................................................................79Objectives.................................................................................................................80ORDER PROCESSING...........................................................................................80
INTERNSHIP REPORT 7
WAREHOUSING....................................................................................................80REGISTERED CORPORATE OFFICE..............................................................83CORPORATE OFFICE ANNEX........................................................................83
Promotional Policy...................................................................................................87Societal Marketing...................................................................................................89STRATEGIC PLANNING:.....................................................................................92
Dealing with clients support by instances....................................................................95Market Segmentation, Targeting, Positioning..........................................................96Positioning................................................................................................................97
Financial Analysis........................................................................................................99Income Statement...................................................................................................100Balance Sheet.........................................................................................................104
RATIO ANALYSIS...................................................................................................113WHAT I HAVE LEARNED AT INTERNSHIP.......................................................122
Analysis..................................................................................................................123RECOMMENDATION.............................................................................................124REFERENCES...........................................................................................................125
INTERNSHIP REPORT 8
INTRODUCTION TO NESTLE
INTERNSHIP REPORT 9
Introduction
In 1866 Henri Nestlé, a pharmacist, developed a food for babies who were unable to
breastfeed. His first success was a premature infant who could not tolerate his
mother’s milk or any of the usual substitutes. People quickly recognized the value of
the new product, after Nestlé’s new formula saved the child’s life, and soon, Farine
Lactée Henri Nestlé was being sold in much of Europe.
In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early
1900s, the company was operating factories in the United States, Britain, Germany
and Spain. World War I created new demand for dairy products in the form of
government contracts. By the end of the war, Nestlé’s production had more than
doubled.
After the war Government contracts dried up and consumers switched back to fresh
milk. However, Nestlé’s management responded by streamlining operations and
reducing debt. The 1920s saw Nestlé’s first expansion into new products, with
chocolate the Company’s second most important activity.
Nestlé felt the effects of World War II immediately. Profits dropped from $20 million
in 1938 to $6 million in 1939. Factories were established in developing countries,
particularly Latin America. Ironically, the war helped with the introduction of the
Company’s newest product, Nescafé, which was a staple drink of the US military.
Nestlé’s production and sales rose in the wartime economy.
The end of World War II was the beginning of a dynamic phase for Nestlé. Growth
accelerated and companies were acquired. In 1947 came the merger with Maggi
seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963),
Libby’s (1971) and Stouffer’s (1973). Diversification came with a shareholding in
L’Oréal in 1974.
Nestlé’s growth in the developing world partially offset a slowdown in the
Company’s traditional markets. Nestlé made its second venture outside the food
industry by acquiring Alcon Laboratories Inc.
INTERNSHIP REPORT 10
Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé’s improved
bottom line allowed the Company to launch a new round of acquisitions, the most
important being American food giant Carnation.
The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled
and world markets developed into more or less integrated trading areas. Since 1996
there have been acquisitions including San Pellegrino (1997), Spillers Pet foods
(1998) and Ralston Purina (2002). There were two major acquisitions in North
America, both in 2002: in July, Nestlé merged its U.S. ice cream business into
Dreyer’s, and in August, a USD 2.6bn acquisition was announced of Chef America,
Inc.
Some important facts
• Nestlé, based in Switzerland, is the world’s largest food company. It
manufactures a wide variety of food products, from chocolate to frozen dinners to pet
food, and is one of the top four water bottling companies in the world. It controls one-
third of the American bottled water market, selling water under 70 different brand
names.
• Bottled water contributes to the plastic waste problem and seizes water that
should remain a shared public resource. Nestlé has been repeatedly sued for the
impacts of its bottled water operations on communities and for false advertising of its
products.
• Nestlé has been criticized internationally for its aggressive marketing of infant
formula in countries where potable water is scarce, leading to a reduction in
breastfeeding and increased risk for infants.
• Nestlé is also one of the world’s largest chocolate producers, and critics
charge that this makes it a contributor to child and forced labor problems in cocoa-
growing nations.
• The International Labor Rights Forum has sued Nestlé for its involvement
with child labor.
INTERNSHIP REPORT 11
• Fight Nestlé’s food and water abuses by taking action and visit Go Green to
learn about sustainable alternatives to Nestlé’s products.
Switzerland-based Nestlé S.A. manufactures a wide variety of food products from
chocolate to frozen dinners to pet food. In addition, Nestlé is one of the most
prominent bottled water companies in the world, and also produces personal and
health care products. Nestlé SA, employs 247,000 people and reported sales of over
$80.7 billion in 2006. Nestlé USA, the North American subsidiary of Nestlé S.A.,
accounted for $8.1 billion of Nestlé’s annual sales in 2005. The company also owns
26 percent of L’Oreal
MERGERS & ACQUISITIONS
Key Dates
1866 Company foundation
1905 Merger between Nestlé and Anglo-Swiss
Condensed Milk Company
1929 Merger with Peter, Cailler, Kohler Chocolats
Suisses S.A.
1947 Merger with Alimentana S.A. (Maggi)
1969 Vittel (equity interest)
1971 Merger with Ursina-Franck
1974 L’Oréal (equity interest)
1977 Acquisition of Alcon (2002: partial IPO)
1985 Acquisition of Carnation
1988 Acquisition of Buitoni-Perugina
1988 Acquisition of Rowntree
1992 Acquisition of Perrier
1998 Acquisitions of San Pellegrino and Spillers Petfoods
INTERNSHIP REPORT 12
2000 Acquisition of PowerBar
2001 Acquisition of Ralston Purina
2002 Acquisition of Schöller and Chef America
2003 Acquisition of Mövenpick, Powwow and Dreyer’s
2004 Acquisition of Valio (ice cream activities)
2005 Acquisition of Wagner, Protéika, Musashi
JOINT VENTURES & ASSOCIATED WEBSITES
Major Joint Ventures
1974 L’Oréal - (26.90%, 27.95% voting rights)
1981 Galderma - (joint venture with L’Oréal)
1990 Cereal Partners Worldwide - (joint venture with General Mills)
1991 Beverage Partners Worldwide (formerly CCNR) – (joint
venture with Coca Cola)
2002 Dairy Partners Americas - (joint venture with Fonterra)
Laboratories innéov - (joint venture with L’Oréal)
Associated Websites
Alcon http://www.alconlabs.com/
Cereal Partners http://www.cerealpartners.co.uk/
Galderma http://www.galderma.com/
Innéov http://www.inneov.de/
L’Oréal http://www.loreal.com/_en/_ww/index.aspx
INTERNSHIP REPORT 13
COMPANY INFORMATION
Ticker:
NESTLE
Country:
PAKISTAN
Exchanges:
KARACHI
Major Industry:
Food & Beverages
Sub Industry:Diversified Food
2007 Sales28,235,393,000
(Year Ending Jan 2008).
Employees:
2,345
Currency:
Pakistan Rupees
Market Cap:
61,221,938,400
Fiscal Yr Ends:
December
Shares Outstanding:
45,349,584
INTERNSHIP REPORT 14
Share Type:
Ordinary
Closely Held Shares:28,922,725
Management of Nestle Pakistan Ltd
Haseeb Aslam
Country Business Manager Water
Water Division
Aslam,Haseeb,LAHORE,Water
Peter Wuethrich
Head of Technical
Technical Division
Wuethrich,Peter,LAHORE,Technical
Raymond Franke
Head of Finance and Controls
Finance & Control Division
Franke,Raymond,LAHORE,Finance & Control
Trevor Clayton
Managing Director
M D Office
Clayton,Trevor,LAHORE,General Management
Salman Nazir
Head of Supply Chain
Supply Chain Division
Nazir,Salman,LAHORE,Supply Chain
Uzma Qaiser Butt
Head of Human Resources
Human Resources Division
Butt,Uzma,LAHORE,Human Resource
Zafar Hussain
Head of Sales
INTERNSHIP REPORT 15
Sales Division
Hussain,Zafar,LAHORE,Sales
Contacts - Nestle Pakistan Ltd.
Registered and Corporate Office
308 – Upper Mall,
Lahore
+92 042 111.637.853
+92 042 578 9303
+92 042 578 9304
Corporate Office Annex
304 – Upper Mall,
Lahore
+92 042 111.637.853
Park Lane Tower
72-Tufail Road,
Lahore Cantt
Lahore
Sheikhupura Factory
29thK.M.Lahore
Sheikhupura Road,
Shiekhupura
Kabirwala-Kabirwala Road
Kabirwala Factory
Kabirwala, District Khanewal
+92 065 111.637.853
INTERNSHIP REPORT 16
Islamabad Factory (Water)
Plot no. 32, Street 3,
Sector 1 – 10/3,
Islamabad
Karachi Factory (Water)
23-A, North Western Industrial State
Port Qasim Authority
Karachi
INTERNSHIP REPORT 17
Code of Business Conduct
INTERNSHIP REPORT 18
Background
Since its founding, Nestlé’s business practices have been governed by integrity,
honesty, fair dealing and full compliance with all applicable laws.
Nestlé employees worldwide have upheld and lived this commitment in their
every day responsibilities ever since, and Nestlé’s reputation remains one of the
Company’s most important assets today. The Nestlé Corporate Business
Principles prescribe certain values and principles which Nestlé has committed to
worldwide. This Code of Business Conduct specifies and helps the continued
implementation of the Corporate Business Principles by establishing certain
nonnegotiable minimum standards of behavior in key areas. The nature of this
Code is not meant to cover all possible situations that may occur. It is designed to
provide a frame of reference against which to measure any activities. Employees
should seek guidance when they are in doubt about the proper course of action in
a given situation, as it is the ultimate responsibility of each employee to “do the
right thing”, a responsibility that cannot be delegated.
Employees should always be guided by the following basic principles:
avoid any conduct that could damage or risk Nestlé or its reputation;
act legally and honestly;
– Put the Company’s interests ahead of personal or other interests.
Compliance with laws, rules and regulations
We respect the law at all times
Nestlé and its employees are bound by the law. Compliance with all applicable
laws and regulations must never be compromised.
Additionally, employees shall adhere to internal rules and regulations as they
apply in a given situation. Those internal rules are specific to the Company and
may go beyond what is required by the law.
INTERNSHIP REPORT 19
Conflicts of Interest
We will always act in the best interests of Nestlé
A Conflict of Interest occurs when personal interests of an employee or the interests
of a third party compete with the interests of Nestlé. In such a situation, it can be
difficult for the employee to act fully in the best interests of Nestlé. Employees shall
avoid Conflicts of Interest whenever possible.
If a Conflict of Interest situation has occurred or if an employee faces a situation that
may involve or lead to a Conflict of Interest, the employee shall disclose it to his or
her Line Manager and/or the HR or the Legal or Compliance Function to resolve the
situation in a fair and transparent manner.
Outside directorships and other outside activities
We take pride in Nestlé’s reputation and consider Nestlé’s best interests also in our
outside engagements and activities
Outside of Nestlé, no activities shall be pursued if such activities will interfere with
the employee’s responsibilities for Nestlé, or if they create risks for Nestlé’s
reputation or if they in any other way conflict with the interests of Nestlé. When in
doubt about the permissibility of an activity, employees shall consult with the HR or
the Legal or Compliance Function. The following positions and activities are deemed
acceptable only in case of prior authorization from a member of the Executive Board:
Board member
Officer
Employee
Partner
Consultant
Authorization will be withheld if the position or activity is likely to conflict with
Nestlé’s interests or the employee’s responsibilities.
Board memberships on publicly listed companies need prior approval by the CEO and
In the case of members of the Executive Board –Chairman.
INTERNSHIP REPORT 20
Unless requested by the Company to take up a particular position or activity,
employees shall pursue outside activities and positions at their own risk and cost
and within their spare time only.
Families and Relatives
Nestle hiring and people development decisions will be fair and objective
Immediate family members and partners of employees may be hired as employees
or consultants only if the appointment is based on qualifications, performance,
skills and experience and provided that there is no direct or indirect reporting
relationship between the employee and his or her relative or partner.
These principles of fair employment will apply to all aspects of the employment,
including compensation, promotions and transfers, as well as in case that the
relationship develops after the respective employee has joined the Company.
Provided that they are equally suited as other candidates, priority may be given to
children of Nestlé employees with respect to internships, training periods,
employment during holidays and similar short-term assignments.
Corporate opportunities
We are committed to advance Nestlé’s business
Employees shall not compete with the Company. Nor shall they take personal
advantage of business opportunities that they discover during the course of their
employment, unless the Company expressly waives its interest in pursuing such
opportunity.
If employees want to pursue business opportunities that might be of interest to the
Company, they shall inform their Line Manager who will seek a management
decision as to whether or not the Company wants to pursue the opportunity. Even if
the Company decides against pursuing the opportunity, the employee may seize the
opportunity on his or her own behalf only if it is clear that doing so will not result in
direct or indirect competition with the Company’s operations.
INTERNSHIP REPORT 21
Insider trading
We respect and follow the Insider Trading
Rules when buying or selling Nestlé securities
Nestlé prohibits the purchase and sale of Nestlé shares or securities on the basis of
potentially share price relevant information which is not yet public. Non-compliance
may not only entail disciplinary sanctions, but also result in criminal charges.
When in doubt regarding the interpretation or applicability of Nestlé’s insider trading
rules, employees shall consult with the Legal or Compliance Function.
Antitrust and fair dealing
We believe in the importance of free competition
Nestlé is prepared to compete successfully in today’s business environment and will
always do so in full compliance with all applicable antitrust, competition and fair
dealing laws. Therefore, employees must at all times adhere to the following rules:
– Commercial policy and prices will be set independently and will never be
agreed, formally or informally, with competitors or other non-related parties,
whether directly or indirectly;
Customers, territories or product markets will never be allocated between
Nestlé and its competitors but will always be the result of fair competition;
Customers and suppliers will be dealt with fairly. All employees, but
especially those who are involved in marketing, sales and purchasing, or who
are in regular contact with competitors, have a responsibility to ensure that
they are familiar with applicable competition laws. When in doubt, the Legal
Function should be contacted in order to
Provide competition law advice and training.
INTERNSHIP REPORT 22
Confidential information
We value and protect our confidential information and we respect the confidential
information of others
Confidential information consists of any information that is not or not yet public
information. It includes trade secrets, business, marketing and service plans, consumer
insights, engineering and manufacturing ideas, product recipes, designs, databases,
records, salary information and any non-published financial or other data.
Nestlé’s continued success depends on the use of its confidential information and its
nondisclosure to third parties. Unless required by law or authorized by their
management, employees shall not disclose confidential information or allow such
disclosure. This obligation continues beyond the termination of employment.
Furthermore, employees must use best efforts to avoid unintentional disclosure by
applying special care when storing or transmitting confidential information. Nestlé
respects that third parties have a similar interest in protecting their confidential
information. In case that third parties, such as joint venture partners, suppliers or
customers, share with Nestlé confidential information, such information shall be
treated with the same care as f it was Nestlé’s confidential information.
In that same spirit, employees shall protect confidential information that they have
obtained in the course of their prior employment.
Fraud, protection of company assets, Accounting
We insist on honesty and we respect the
Company’s assets and property
Employees must never engage in fraudulent or any other dishonest conduct involving
the property or assets or the financial reporting and accounting of Nestlé or any third
party. This may not only entail disciplinary sanctions but also result in criminal
charges. Nestlé’s financial records are the basis for managing the Company’s business
and fulfilling its obligations to various stakeholders. Therefore, any financial record
must be accurate and in line with Nestlé’s accounting standards.
INTERNSHIP REPORT 23
Employees shall safeguard and make only proper and efficient use of Nestlé’s
property. All employees shall seek to protect Nestlé’s property from loss, damage,
misuse, theft, fraud, embezzlement and destruction. These obligations cover both
tangible and intangible assets, including trademarks, know-how, confidential or
proprietary information and information systems. To the extent permitted under
applicable law, the Company reserves the right to monitor and inspect how its assets
are used by employees, including inspection of all e-mail, data and files kept on
Company network terminals.
Bribery and corruption
We condemn any form of bribery and corruption
Employees must never, directly or through intermediaries, offer or promise any
personal or improper financial or other advantage in order to obtain or retain a
business or other advantage from a third party, whether public or private. Nor must
they accept any such advantage in return for any preferential treatment of a third
party.
Moreover, employees must refrain from any activity or behavior that could give rise
to the appearance or suspicion of such conduct or the attempt thereof. Employees
should be aware that the offering or giving of improper benefits in order to influence
the decision of the recipient, even if he or she is not a government official, may not
only entail disciplinary sanctions but also result in criminal charges. Improper benefits
may consist of anything of value for the recipient, including employment or
consultancy contracts for closely related parties. Employees must be aware that
election laws in many jurisdictions generally prohibit political contributions by
corporations to political parties or candidates. Nestlé has adopted a policy not to make
such contributions except for the parent company in its country of origin. Any such
contributions and any deviations from such policy must be approved by the CEO and
the Chairman.
INTERNSHIP REPORT 24
Gifts, meals, entertainment
We compete and do business based only on quality and competence
Employees shall not be influenced by receiving favors nor shall they try to improperly
influence others by providing favors. Employees may only offer or accept reasonable
meals and symbolic gifts which are appropriate under the circumstances, and they
shall not accept or offer gifts, meals, or entertainment if such behavior could create
the impression of improperly influencing the respective business relationship. When
assessing the situation in light of the above, employees shall consult the policy
applicable in their Market. If no such policy is available, they shall apply the most
restrictive local practice in order to avoid even the appearance of improper dealings.
When in doubt, the employee shall seek guidance from his or her Line Manager or the
Legal or Compliance Function.
No employee shall offer to or accept from any third party gifts taking the form of any
of the following, whatever the value involved:
Money
Loans
Kickbacks
Similar monetary advantages.
Discrimination and harassment
We embrace diversity and respect the personal dignity of our fellow employees
Nestlé respects the personal dignity, privacy and personal rights of every
employee and is committed to maintaining a workplace free from discrimination
and harassment. Therefore, employees must not discriminate on the basis of
origin, nationality, religion, race, gender, age or sexual orientation, or engage in
any kind of verbal or physical harassment based on any of the above or any other
reason. Employees who feel that their workplace does not comply with the above
principles are encouraged to raise their concerns with the HR Department.
INTERNSHIP REPORT 25
Failure to comply
We will consult the Code, comply with its provisions and seek guidance where
needed
It is each employee’s responsibility to ensure full compliance with all provisions of
this Code and to seek guidance where necessary from their Line Manager, or from the
HR or the Legal or Compliance Function. To “do the right thing” and to ensure the
highest standards of integrity is each employee’s personal responsibility that cannot
be delegated. When in doubt, employees should always be guided by the basic
principles stated in the introduction to this Code. Any failure to comply with this
Code may result in disciplinary action, including the possibility of dismissal and, if
warranted, legal proceedings or criminal sanctions.
Reporting illegal or non-compliant conduct
We take responsibility for ensuring that we all act with integrity in all situations
Employees shall report any practices or actions believed to be inappropriate under this
Code or even illegal to their Line Managers or the appropriate members of the HR or
the Legal or Compliance function. If it is appropriate, in view of the nature of the
reported matter, reports of violations may be made directly to higher levels including
the Group’s Chief Executive Officer and/ or Chief Compliance OfficerWhere
appropriate, complaints may be made on a confidential basis or through employee
Hotlines. All complaints shall be properly investigated.
Nestlé prohibits retaliation against any employee for such reports made in good faith,
while it also protects the rights of the incriminated person.
INTERNSHIP REPORT 26
Objective
“Making our customers winners by constantly exceeding their expectations.”
INTERNSHIP REPORT 27
Mission Statement
Nestlé believe that research can help them make better food so that people live a
better life. “Good Food is the primary source of Good Health throughout life.
Nestle strive to bring consumers foods that are safe, of high quality and provide
optimal nutrition to meet physiological needs. In addition to nutrition, health and
wellness, Nestlé products bring consumers the vital ingredients of taste and
pleasure. As consumers continue to make choices regarding foods and beverages
they consume, Nestlé helps provide selections for all individual taste and
lifestyle preferences. Research is a key part of Nestle heritage and an essential
element. They know there is still much to discover about health, wellness and
the role of food in our lives, and they continue to search for answers to bring
consumers Good Food for Good Life.”
INTERNSHIP REPORT 28
Vision
The Nestlé is to be the leading health, wellness, and Nutrition Company. In
particular, we envision to: Lead a dynamic motivated and professional workforce
proud of its heritage and bullish about the future. Meet the nutritional needs of
consumers of all age groups – from infancy to old age, from nutrition to pleasure,
through an innovative portfolio of branded food and beverage products of the
highest quality. Deliver shareholder value through profitable long-term growth,
while continuing to play a significant and responsible role in the social, economic
and environmental sectors of the country.
INTERNSHIP REPORT 29
STRATEGIES
To fulfil this vision, Nestle follow these strategies:
Nestle have profitable and diversified high quality food and beverage
product portfolio, delivering 60:40+ advantage to consumers, available
across all sales channels.
Brands are the preferred choice in their categories. Consumer insight
drives all aspects of our marketing and communication efforts.
Nestle communications to the consumer are relevant, cutting-edge, and
adhere to the highest standards of responsible communication.
Nestle is seen as the No. 1 career destination for talented, motivated
and ambitious professionals.
Nestle result-oriented organisational structure ensures effective
communication and empowered self-management.
Nestle milk collection and agri services will continue to play the
primary role in development of the dairy sector in rural Pakistan.
Nestle proactive innovation and renovation culture is the key to our
success in the marketplace.
Fully integrated systems (Nestlé Pakistan, suppliers, customers) ensure
efficient business processes.
Non-strategic activities and products are outsourced or discontinued
INTERNSHIP REPORT 30
Part II
INTERNSHIP REPORT 31
Organizational
Structure
INTERNSHIP REPORT 32
Board of Directors of Nestlé S.A.
Helmut O. Maucher
Honorary Chairman
Board of Directors of Nestlé S.A.
Peter Brabeck-Letmathe
Chairman
Paul Bulcke
Chief Executive Officer
Andreas Koopmann
1st Vice Chairman
CEO, Bobst Group
Rolf Hänggi
2nd Vice Chairman
Chairman, Rüd, Blass & Cie AG, Bankers
Edward George (Lord George)
Former Governor of the Bank of England
Kaspar Villiger
Former Swiss government minister
Daniel Borel
Co-founder and Board member, Logitech International S.A.
Jean-Pierre Meyer
Vice Chairman, L’Oréal S.A.
INTERNSHIP REPORT 33
André Kudelski
Chairman and CEO, Kudelski Group
Carolina Müller-Möhl
President, Müller-Möhl Group
Günter Blobel
Professor, the Rockefeller University
Jean-René Fourtou
Chairman of the Supervisory Board, Vivendi
Steven G. Hoch
Founder and Senior Partner, Highmount Capital
Naïna Lal Kidwai
CEO, HSBC India and Country Head of
HSBC Group Companies in India
Beat Hess
Group Legal Director, Royal Dutch Shell plc
David P. Frick
Secretary to the Board
KPMG Klynveld Peat Marwick Goerdeler SA
Zurich
Independent auditors
INTERNSHIP REPORT 34
Territory In-charge
Group Brand Manager
Key Account Executives
Area Brand Manager
Business Development Manager
SALES STRUCTURE
Head of Sales
Zonal Sales Manager National Key Account Business/Chiller Manager
Regional sales manager Key Account Manager
Area Sales Manager Brand Manager
INTERNSHIP REPORT 35
TRAINING PROGRAM
The training programs are conducted time to time according to the need of the
organization. Thus, there are different training programs held for the employees. The
training programs are conducted every month whereas the training programs for the
employees are conducted from time to time according to the standard of the company.
They are also providing technical training to their employees. They made cross
functional teams for training and the development of their employees.
TRAINING PROGRAM FOR DSR
An organization conducts a training program to provide better service to its customer.
Thus, for this reason Nestlé conducts training program every month to train its DSR
in various areas because DSR are the delivery person and it is they who through their
behavior and appearance develop the image of their company.
The training program for the DSR emphasize on the following features:
How to behave when they are dealing with the customers
What is expected from them
What are there duties
How to handle the situation if any problem arises.
How to dress themselves
How to handle the retailer
Their personal attire
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TRAINING PROGRAMS FOR THE EMPLOYEES
The training program for the employees involves different programs, which gives
them chances to improve themselves where they lack and to handle the situation more
confidently, and efficiently.
According to the need, the employees are given a chance to visit the Institute of Sales
& Marketing in Lahore for one day training. These training programs are offered to
the employees once in a year to keep up the new building standards of the
organization and to make them competitive.
Departments
Supply Chain & Procumbent (Distribution)
Technical (Factories)
Human Resource
Finance (Finance & Control Manager)
Working
Looking the main shops known as key accounts
Key Account:
Self service
Having wide range of assortment
Minimum Sales Volume
Responsibilities
Run Promotion
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Displays
Sampling
Below the line
o Merchandising
o Long term mutual benefits relationship
o Availability / maintains
o Market intelligence
o Planning of BTL
o Provide excellent customer service
Requirement
Mba in marketing with 1-2 years experience
Good Communication skills
Key competent ion
Excellent negotiation skills
Good writing and verbal skills
Analytical skills
Assessment
KPI (key performs indicators)
Sales target
Activities
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Attendance
Value growth
Incentives
Customer service level
CAREER DEVELOPMENT
Nestlé does give their employees a chance to discuss their career development for
future accomplishments. They send their efficient workers and employees abroad for
the improvement in their career. They also conduct workshops and seminars for this
purpose.
When employees are given specific training program, they tend to learn new things
and therefore show improvement in their performance. This betterment in their
performance enable them attain promotion for themselves which gives them more
experience and motivates them to do well in future and develops their career as they
go along.
COMPENSATION SYSTEM
Nestle has established a separate compensation department for its employees. They
offer incentive pay and special bonuses to employees. They have developed the
performance appraisal system. They also provide disability benefits to their
INTERNSHIP REPORT 39
employees. Company has hired human resource professionals to develop a
competitive compensation system.
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Part III
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Management/Administrative Style
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STYLE OF WORKING
Nestlé is profit and customer oriented organization rather than system and strategy
oriented. The products are manufactured at low-cost and sales are made at high price.
All the departments of Nestlé are related to each other along with their independent
working. In order, to improve their working and their level of service they provide to
their customer, weekly and monthly meetings are held. These meetings discuss the
following things:
Performance level of employees
Progress at territory level and as a whole
Sales of the organization
Where an improvement is required the working/activities of division include the
following features:
Selling through proper transportation
Area storming for creating awareness
Stall activities
Rewards offering scheme
Taking feedback from the customers
Providing service for chiller maintenance and technical problems
This activities/working of the organization involve the basic principles of marketing,
client service, public relation, planning, organizing, leadership and communication
The basic principle of Nestlé in marketing is to provide its customers with quality
product at reasonable price. For communication at national and international level
there are various ways to communicate that are as follows: Universal and direct
telephone lines
Fax
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Letters
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Part IV
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Production
INTERNSHIP REPORT 46
As a consequence of joint venture arrangement between Nestle S.A. of Switzerland
and Milkpak Ltd. in 1988, the existing production facility of Milkpak in Sheikhupura
became a part of Nestle Milkpak.
The Milkpak Sheikhupura factory commenced operations in 1981 as a producer of
UHT milk. By 1988, it had expanded its operation and was also producing butter,
cream, desi ghee - all under the brand name of MILKPAK and juice drinks under the
brand name FROST.
To meet the demands of the large food market that Pakistan offered, Nestle Milkpak
reorganized and reinforced the production of existing brands and gave shape to new
production lines. The first to come was a milk powder plant, which not only began
producing NIDO in 1990 but was also critical to the production of several milk-based
products in the future. With the installation of the roller dryer in 1990, the first such
product to come was CERELAC - an internationally recognized brand of infant
cereal. This was followed by LACTOGEN 1 & 2 in 1991.
The year 1992 saw the introduction of tea whitener EVERYDAY and milk powder in
bulk packing named GLORIA. MILO and NESLAC came under production in 1994
and MILO RTD in 1995. Local packing of imported coffee under the name of
NESCAFE 3 in 1 commenced the same year. In 1996, Nestle Milkpak’s first
confectionery plant of POLO Mint was installed and the production of NESTLE
PURE ORANGE JUICE commenced. Packaging of coffee under the brand name of
NESCAFE CLASSIC was undertaken the same year.
In 1997 NESTLE WHEAT and two variants of POLO viz. Strawberry and Orange
were introduced. In 1998 a substantial capital investment was made to launch several
products and install two new state-of-the-art technologies. SWEET TREETS were
launched in early 1998. The addition of two flavors of POLO: Blackcurrant and
Strong Mint, increased the number of POLO variants to five. A new variant Lemony
was added to the range of popular FROST fruit drink flavors and a new 1-liter
INTERNSHIP REPORT 47
packing of FROST was introduced. Flavored milks under the brand FRESH &
FRUITY came under production on the new Tetra Filling Machine equipped with the
modern “slim” format. MILO RTD and UHT Cream were also shifted over to this
new format.
A new flexible confectionery line enabled the manufacture of a wide range of high
and low boiled sweets and toffees, including TOFFO and two variants of SOOTH-
ERS’ Menthol Eucalyptus and Honey Lemon. Nestle Milkpak also contracted to
supply dairy mixes to McDonald’s, for its popular soft serves and milk shakes. And to
top it all, the most prestigious project, NESTLE PURE LIFE was also commissioned
in December. Based on the latest water treatment and bottling technology, this marked
the entry of Nestle Milkpak in the Pakistan water market and that of Nestle in the
world water market.
The expansion of high boiled sweet line continued in 1999 with the introduction of
Fruit Drops and BUTTERSCOTCH.
The year 2000 saw the production of some exciting products. First came NESCAFE
Frothed Original, followed by its two other flavors: Mocha and French Vanilla.
NESCAFE Frappe RTD was to come next. The fruit juice range was expanded by the
production of Mango and Orange- Mango Mix. On the confectionery side, Tutti Fruiti
was added under the umbrella of POLO and Wild Cherry was added to the
SOOTHERS range. The success of NESTLE PURE LIFE in PET bottles encouraged
the commissioning of 5-gallon bottles production line for home and office in June.
And the last product line of the year to be commissioned in November was that of
NESTLE Plain Yogurt, a high quality product with special Stay-Fresh Seal.
To meet the needs of safe and quality storage for the ever expanding product range
and their volumes, a National Distribution Center (NDC) was completed and became
functional in June, 2000. Spread over 6614 square meters, it has the capacity to store
up to 8300 pallets (approximately 8000 tons).
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Part V
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Marketing Mix
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MARKETING PROCESS
It is a process which consists of four steps enabling the marketers to perform their
strategies according to their plans. These steps are:
ANALYZING MARKET SITUATION
It is based on information and research including SWOT and PEST analysis of market
DEVELOPING MARKETING MIX
It includes development of 4P’s namely
Product Price Place Promotion
MARKETING IMPLEMENTATION
It involves turning plans into actions.
MARKETING CONTROL
Being the last step it identifies the gap between planned and actual goals
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Marketing process
Milk Pack was the first tetra pack introduced in Pakistan in 1981 with green and white
packaging that is associated with Pakistan’s flag. It was a brand that promised natural
and healthy milk. It further gained strength when it was backed by Nestle Switzerland
a well established and reputable international brand that bought in to it and expanded
its scope and activities. It has recently highlighted the use of iron that has been added
to the milk and communicated this in its advertising and packaging. The tag line also
reads as “making a stronger household”. Milk Collection The core raw material of
Nestle MilkPak is milk. Over the last Twenty Eight years, the company’s prime
concern has been to improve the quality and volume of milk for UHT processing and
for other milk based products. The company successfully established its own
collection system and expanded its operations over a very large milk shed area in
Punjab. Owing to this tremendous growth in the volume of an extremely high quality
raw milk, Nestle MilkPak now produces a superior quality and better tasting UHT
milk, with longer shelf life.
Today, Nestle MilkPak can boast of the largest milk collection network in the
country, unmatched in size, productivity and efficiency. Milk is collected through a
vast network of village milk centers (VMCs), sub-centers and centers. At these
centers, chillers have been installed to lower milk temperature to 4C for preventing
bacteria development during long hauls to the factories, which are undertaken by a
large fleet of specially insulated tankers. Nestle gathers High Quality milk through a
comprehensive strategy, intensive education program for the farmers and the milk
collection staff, up gradation of milk loading and transportation system, increase in
the chilling capacity and above all, adherence to the highest acceptance standards at
all milk collection points, including the factories.
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ANALYZING MARKETING SITUATION
SWOT analysis
A SWOT Analysis is conducted by the company so that it is able to position itself to
take advantage of particular opportunities in the environment and to avoid or
minimize environmental threats. In doing so, the organization attempts to emphasize
its strengths and moderate the impact of weaknesses. The analysis is also useful for
uncovering strengths that have not been fully utilized and in identifying weaknesses
that can be corrected. Matching information about the environment with the
organization’s capabilities enables management to formulate realistic strategies for
attaining its goals.
A SWOT Analysis of Nestlé MilkPak is as follows:
Internal analysis
Strengths
Socially Responsible Company.
NML’s products enjoy strong brand image and market pull.
Innovative and constantly growing product line. NML launched 17 new
products, including variants of existing products in recent past.
Sales force is the major resource strength in terms of physical resources of the
company.
Marketing strategies established by the company are innovative and lure
customers.
Financial, marketing and sales strategies are formulated by gauging the
customer demands.
Periodic research carried out to judge market trends.
It is a large scale organization, with abundant funds and has the capability of
acquiring weaker firms by throwing them out of competition.
The recent acquisition of the water brands Aqua and Fontalia provide an
example for this strength of the company.
Multinational.
Growing Sales and profits.
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Major shareholder in the food industry of Pakistan.
Aggressive Marketing.
Efficient Distribution networks through out the country.
Quality Products.
Environment Friendly.
Skilled labor.
Educated staff.
Large number of offerings.
Pre purchase virtual display.
Arrangement of events.
Good background of the company.
Easy to approach outlets.
Physical evidence Strong Brand image
Quality product
Solid Financial position
Strong supply chain network
Qualified work force
Commitment to High Quality Products
Focus on research and development Estimations of UHT Milk Production and
Consumption up to 2008– 09
Year Annual Production
(Million liters) Annual Consumption
(Million liters)
2008-09 => 648.43 353.71
2009-10 => 753.89 372.05
Weaknesses
Selective investment due to uncertain economic and political conditions.
Feasibility of new products needs to be analyzed, e.g. Nestea was launched
some years back but it failed because no customer demand for it existed.
Relatively a new company in comparison to its rivals e.g. Lever Brothers.
Low levels of inventory maintained can be dangerous.
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No credit sales.
Low sales margins due to highly value added products.
They cannot launch many of its expensive international brands due to the
lower income groups.
Physically impossibility to have target market.
There is weak marketing of MilkPak as there is no advertisement of MilkPak
on official website.
Lack of awareness among the target market.
It Dependency on others (govt. & sponsors) for the arrangement of events. The
target market of Nestle MilkPak is upper middle and high class because lower
middle and poor class cannot afford to buy UHT milk due to its premium
price.
It is a main weakness of MilkPak that there are different companies of milk
but the name of nestle MilkPak is always stand in the last because of low
advertising and marketing.
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External analysis
Opportunities
Pakistan is the seventh largest producer of milk in the world with annual
output of over 22 billion liters.
There are substantial growth opportunities considering the average yield of
Pakistani animals at only 1,100 liters/annum as compared to 6,000
Liters/annum for animals in Europe and USA. There are nearly 20 million
milk producing animals in the country, mostly in Punjab (80%).
The overall milk market in Pakistan is 20 billion liters, out of which processed
milk contributes only 3 million liters. Nestlé MilkPak along with other
processed milk businesses contributes only 2% to this large market.
Nestlé MilkPak has expanded its product range by entering the cold dairy
market recently by launching Nestlé plain yogurt and now fruit yogurt is also
added to it.
To expand the cold dairy products range, Nestlé fruit yogurt is the latest
addition to this group.
The cold dairy market offers many opportunities for the company which can
capitalize these products by banking on its superior quality milk.
The coffee brand also offers many opportunities for the company to expand by
tuning the taste of the masses towards coffee.
Credit policy can be adopted to increase sales.
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Threats
Price fluctuations due to rupee devaluation as raw material are imported.
The uncertainty of economic conditions poses a great threat as the major funds
invested in the country come from outside Pakistan.
The present economic crisis in the world, led to the withdrawal of foreign
management from the company and the investment has come to a halt.
Competition with Nestlé’s owns smuggled brands.
Effect of Seasonality’s upon sales.
Imported raw material, in some of the company’s products.
Major player may enter target market
Legal and ethical issues.
Market segment growth could attract new entrants.
Economic slow down can reduce demand. Two main competitors Haleeb and
Olpers are main threat for MilkPak especially the Olpers is growing very fast.
Inflation is getting higher and higher so the purchasing power of the people is
decreasing day by day.
There is no entry barrier for new entrants as the Olpers has come in the
market.
Taste of consumer has already developed which is hard to change.
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Current market situation
Today, Nestlé MilkPak produces in over 81 countries and achieves 98% of its
turnover outside Europe. Nestlé MilkPak is the world’s largest milk company, which
does 98% of its business. It has an annual turnover of 70 billion Swiss francs, 522
new factories in 81 countries, 200 operating companies, 1 basic research outer and 20
technological development groups, has more than 231,000 employees and more than
8000 products around the globe. There are three companies co-ordinate the activities
of some 200 operating companies around the globe. Their functions and details are as
follows: The first, Nestlé MilkPak, holds the financial shares in the allied companies.
It also checks the profitability of these companies and to ensure the profitability of the
group as whole. The second, Nestlé MilkPak, has two areas of activities that are as
follows:
Research and technological development
Technical assistance beside this, it provides know-how in engineering,
marketing, production, organization, management and personnel training on a
continuous basis. The third company is Nestlé World Trade Corporation that
oversees the import and export of merchandise worldwide.
MARKET ANALYSIS
In 1986, Haleeb entered the market with its distinctive blue packaging and positioned
itself as the thickest natural milk. The two brands were the main players in a market
that is the world’s fourth largest milk producing country.
Then in 2006, Engro Foods launched Olper’s milk in a market dominated by two
highly entrenched strong brands.
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Customer Profiling (Customer Data)
Transaction Details
Frequency,
Amount and timing of purchases,
Items bought,
Prices paid
Use of cash or credit.
Marketing channel
Promotion type, and
Address/city.
Appended Database Data
Life Style
Profession/occupation,
vehicle ownership,
Internet use,
Travel,
Pets, and
Hobbies.
Financial
Investments,
Credit card usage and type,
Living expenses, and
Credit worthiness.
Demographic
Age,
income,
education,
gender,
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marital status, and
Number of kids.
Almost all type of peoples is the consumers of the milk.
Own/rent,
urban/rural,
size of city,
region, and
Size of dwelling.
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DEVELOPING THE MARKETING MIX
The most interesting part of commerce is the marketing; this is the latter addition of
the business tools. It starts with conceiving idea of presenting a product, traditionally
producers were interested in producing those goods only which has existing pull,
whereas now because of marketing tools they are producing with the intention of
pushing the product into consumer’s hand. Marketers use numerous tools to elicit
desired response from their target markets. These tools constitute a marketing mix.
Marketing Mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market. McCarthy classified these tools into four broad
groups that he called the four P’s of marketing:
Product
Price
Place
Promotion
1981 Milkpak
1983 Butter
1986Milkpak UHT
creamMilkpak Desi
GheeFrost
1990 NIDO Cerelac
1991 Rice Lactogen1 Lactogen 2
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1992 Everyday Gloria Maggi
1994 Milo Powder Neslac
1995 Milo RTD
1996 Juices Polo mint Nescafe’ classic
1997 Kit Kat
1998 Toffo Soothers Pure life
2000 Plain Yogurt
2001 Fruit yogurt NAN 1 NAN 2
2002 Everday liquid
2003 Buddy Nesvita yogurt Nesvita milk
2004 Raita Caution Easywhip Nescafe 3 in 1
Product Mix
YEARS OF PRODUCT LAUNCH
Diary
From shelf-stable solutions to chilled dairy. Nestle’ has long been a major player in
the dairy industry , originally with shelf stable brands as NIDO, innovation and
renovation play a major role in the development of milk based products
Nestle’ Milkpak UHT milk
Launched in 1981, MILKPAK milk became synonymous with purity, in September
1999; it was launched under the Nestlé’s brand, which further strengthened its
position. Backed by a very strong brand name , aggressive marketing and
distribution , consistent quality and all year round availability , nestle’ milkpak milk
has become number one selling milk brand in Pakistan. It is available in four pack
sizes of
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1500 ml 1000 ml 500 ml 250 ml
The key competencies are
clean bacteria free homogenized standardized
Nestle’ NESVITA hi- calcium low fat milk To tap the fast growing “adult well being’ segment in Pakistan, nestle’ hi calcium low
fat (HCLF) milk was launched in September 2003. Not only did this product offer
high calcium, but it also offered the advantage of low fat retaining, at the same time,
the natural goodness and taste of milk. The product, which was re-launched under the
brand of nestle’ Nesvita in 2005, has become the preferred choice of those seeking
healthy lifestyles. It is available in;
1000 ml 500 ml
MILKPAK UHT cream
MILKPAK UHT cream was introduced under the MILKPAK brand in 1986. It is
available in an attractive 200 ml slim pack. The consumer trust in the brand name and
the product has ensured its dominant share in the cream category.
Key competencies are
Hygienically processed Nourishing Convenient packing Excellent for cakes and coffees
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MILKPAK Desi Ghee
MILKPAK Desi Ghee was introduced in 1986 in tetra packaging. However, in line
with the current market trend, MILKPAK Desi Ghee was re-launched in 870 gm tin
packaging in 2000 followed by 75 gm sachet in 2003. The product was also
introduced in 16 kg tin packaging to tap the potential of loose desi ghee.
Nestle’ NIDO
One of nestle’ largest brands internationally, NIDO was launched in Pakistan in 1990.
Since then NIDO has grown from strength to strength to become the mother’s trusted
partner in catering to her children’s growth and development. Along with the natural
goodness of pure milk NIDO is now also enriched with minerals and vitamins that
help children excel in the classroom and on the playing field. It is available from 100
gm to 62 gm pack sizes.
Nestle’ NIDO 1 +
The NIDO family was expanded with the launch of NIDO 1+ in august 2005. The
product is meant for children from 1-3 years of age. NIDO 1+ contains Prebio 1 , a
natural fibre by nestle’ that helps maintain a healthy tummy while providing the
nutrition and goodness of milk. Regular use of NIDO 1 + will ensure a healthy child.
Nestle’ everyday
To target the large potential offered by the tea –creaming segment , NESTLE’
everyday tea-creamer was launched in1992. Supported by integrated marketing ,
focused distribution with sampling drives and excellent consumer acceptance, the
brand has shown strong growth and holds great promise for the future. The brand is
available in a variety y of pack sizes ranging from 40 gm to 1000gm
Key competencies are
Good for tea Long life Nourishing Convenient packing
Nestle’ everyday liquid
Nestle’ everyday liquid leveraged by a very strong mother brand EVERYDAY
powder was introduced to capture the huge liquid milk consumption in tea. Launched
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in june 2002 in 200 ml , it Is now available in 125 ml and 375 ml sizes. Year 2005 has
seen this brand become a significant player in highly competitive milk market.
Nestle’ plain yogurt
Launched in November 2000, nestle’ plain yogurt became the market leader and has
Maintained its position ever since. The stay- fresh seal, printed expiry date and an
exclusive distribution system contributed to the immense popularity and success of
the product. N account of its nationwide distribution, NESTLE’ plain yogurt is only
national player in the market.
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Nestle’ fruit yogurt
The year 2001 saw the launch of the Nestlé’s fruit yogurt in 3 variants of strawberry,
mango and peach with real fruit pieces. This made a pleasant difference for the
consumer, as the local competition was only able to offer fruit flavored yogurt.
Nestle’ Nesvita high calcium low fat yogurt
After the success of plain yogurt, nestle’ introduced “hi-calcium low fat” yogurt in
2003. The product contains less than 1 % fat and 50 % more calcium than plain
yogurt. In 2005 the product was relaunched under the brand of nestle’ nesvita which
has helped to further strengthen its brand image.
One 450 gm. Cup of nestle’ nesvita hi- calcium low fat yogurt contains 900 mg of
calcium ,which is sufficient to fulfill the daily adult requirement of approximately
1000 mg of calcium as recommended by the US food and nutrition board
(1997).calcium is essential for stronger bones and teeth and helps combat osteoporosis
especially in women.
Nestle’ Raita
Nestle’ raita was launched in year 2004. it has become an instant favorite with
Pakistani cuisine lovers and housewives.
Nestle’ easy whip
Nestle’ easywhip was launched in oct 2004, in order to meet the needs of urban cream
usage. As compared to other available creams, it is the only cream that whips.
Nestle’ butter
New pack design allows milkpak butter to gain the strength like that of UHT milk
Key competencies are
nourishing
Convenient packing
Source of vitamin
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Baby Food
Lactogen
Lactogen 1 and Lactogen 2 are casein-predominant infant and follow up formulae.
Locally launched in 1991 in soft packs. Lactogen is available in 200gm and 400 gm.
Is also available in imported tins of 450 gm and 1000 gm. The brand provides both
affordability and quality
NAN
NAN 1 is a whey-based started infant formula while NAN 2 is its follow up . the local
manufacturing of these formulae began in 2001 , which was a landmark achievement,
as it brought the expertise of producing an internationally renowned high quality
infant product exclusively to nestle’ Pakistan in this region. This also offers a great
advantage to the consumer as a high quality product is now available at the best
affordable price. NAN 1 and NAN 2 are available in locally produced 400 gm soft
packs and in imported tins of 450 gm
CERELAC
With local production commencing in 1990, cerelac has emerged as the dominant
player in the branded infant cereal market. Available in six variants, the brand
provides balanced nutrition to infants from six months onwards. The variants include
cerelac wheat, cerelac wheat 3 fruit, cerelac wheat honey, cerelac wheat banana,
cerelac rice and cerelac chicken vegetable rice – the latest addition to the cerelac
range. Cerelac sachet of wheat and wheat 3 fruit were added to the range in October
2002, which provided affordability and accessibility to the consumer.
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NESTLE’ rice
An affordable starter weaning cereal, nestle’ rice offers the flexibility of preparation
with a variety of meals. With the advantage of being gulten free , the brand is
available in 125 gm pack and is especially suited to the needs if infants from 6 months
onwards. It was launched in 1994.
Neslac
Neslac is growing up milk formulated specially for young children from 1 to 3 years
of age. It contains just the right balance of proteins, calcium, iron, vitamins and
essential minerals to cater to the nutritional needs of a growing child during this
special age.
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Beverages
Nescafe classic
Nescafe’ classic is locally repacked and marketed in 1.4gm and 25 gm sachets, 50gm
and 100 gm jar packs and 500g bag and box. The brand enjoys a special position in
the country’s coffee consuming segment.
Global campaign “open up “was launched in Pakistan as well, introducing a new
frame work and increased sales of coffee in Pakistan
Nescafe’ 3 in 1
To cater for consumer convenience, nescafe’ 3 in 1 was launched in 2004. Available
in 18gm single serve sachet, it offers an inexpensive way of having coffee wherever,
whenever and however.
Nescafe’ gold
In order to offer more sophisticated coffee experience nescafe’ gold is available In 50
gm and 100 gm ja pack. This is particularly appreciated by coffee connoisseurs who
look for the rich full-bodied taste, coupled with stimulating aroma
Milo powder
Ever since milo powder was launched in 1994, it has achieved fairly consistent
results. Milo is positioned as a milk modifier, both for hot and cold consumption. The
inexpensive alternate to imported products and have an immense potential,
particularly among growing children and those involved in active lifestyles. It is
marketed in 200 gm packs and 14gm single serve sachet.
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MILO RTDTo cater for consumer convenience, MILO RTD (ready to drink) was launched in
1995 and is available in 200ml and 125 ml pack sizes. It is an ideal alternate to
summer drinks and is popular with all age groups, particularly among children and
consumers who are nutrition conscious or have an active life style.
Frost
A well-known fruit drink brand FROST was introduced in 1986. Positioned as a cold
drink and alternate to other soft drinks, its strength lies in the convenience attached to
its usage.
Nestle’ juices
Encouraged by the consumer response to nestle’ orange juice launched in 1996, the
category of nestle’ juices was further expanded with the introduction of mango and
mango orange in 2000, followed by apple nectar in 2002.
In 2003, based on consumer insight and to broaden the range further, nestle’
pineapple nectar was introduced. To offer more variety to consumers, red gapes nectar
was launched in 2005.
Nestle’ juices category as gained substantial market share and is a preferred choice of
consumers. Available in 1000ml and 250ml pack.
Nestle’ buddy
Introduced by keeping small kids in mind, nestle’ buddy gave a new concept. It is a
small jucie packet available in mango flavor. It says “nestle’ buddy, only for cool
kids” which attracts young kids to have a check on this product
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Confectionary & Culinary
In view of the potential for confectionary sales in country, company established as
independent sales and distribution network that expended swiftly/
POLO
Nestle’ milkapk successfully entered the confectionary business in 1996 with the
launch of POLO. POLO was positioned as the refreshing sweet with a hole and
catered for the younger segment.
Over the years its range has been extended to appeal to various age and income
groups.
Nestle’ kitkat
Chocolate is a small but fast growing segment. Nestle’ kitkat was launched in 1996 to
make inroads in this market. Popular price points and focused marketing activities
have shown excellent sales growth. Complementing the company’s confectionary
business.
Nestle’ kitkat chunky
Launched In Pakistan in 2005 kit kat chunky is nestle’‘s giant single wafer version of
the world famous brand KIT KAT. The launch was part of global strategy to make
KIT KAT the largest selling chocolate brand in the world.
MAGGI 2- minute noodles
Fast to cook, good to eat – MAGGI 2- minute noodles were launched in 1992 and in
doing so nestle’ Pakistan pioneered the category of instant noodles in Pakistan. Maggi
2 minute noodles have special appeal for children, as they are fun to eat and offer a
INTERNSHIP REPORT 71
range of appetizing flavors: chicken, chatkhara, chilli, ketchup and masala. The
product was re launched in 2003 with renovated packaging to further strengthen its
market leadership.
Nestle toffo
Nestle’ toffo is a toffee which has caramel taste. The product was made for kids by
taking care of their requirements.
Nestle’ hazelnut wafer chocolate
Filled with hazelnut and wafer this chocolate was liked by specific segment. Due to
its unique and enriched combination, nestle’ hazelnut wafer chocolate soon got its
place in the market.
Nestle’ rice crispy chocolate
Nestle’ rice crispy chocolate is a mini chocolate to fill in the demand of users who
need small amount of chocolate. It’s a blend of exclusive flavors and is an innovation
in itself.
Soothers
Soothers are the Throat drops. These are the medicated candies to give a relief to
throat and to help people in getting rid of throat rashes and reactions. The soothers are
present in two flavors.
Honey lemonMenthol eucalyptus
INTERNSHIP REPORT 72
INTERNSHIP REPORT 73
Water
Nestle’ Pure Life
Launched in December 1998, nestle’ pure life was nestle’ first global bottled water
brand. Marketed in 0.5 and 1.5 liter PET bottles, it was established as the clear market
leader within 3 months of launch, becoming the benchmark for quality of bottled
water in Pakistan. With focused attention on distribution, marketing communication
and merchandising, nestle’ pure life soon came to command dominant market
leadership, establishing a new price point of bottled water.
Nestle’ pure life is a part of the product portfolio of nestle’ waters, which ranks as the
biggest bottled water company in the world with its renowned brands like
PERRIER ,VITTEL , CONTREX, POLAND SPRING etc. Nestle’ pure life is
registered with NSF international USA, an independent quality certification agency,
with the authorization to use its mark of quality on the label. It is also approved by
PSQCA and carries its mark of certification
Nestle’ pure life – home and office service
In 2000, nestle pure life established a successful home & office(H& O) deliver
service, which has substantially grown ever since and has come to dominate the 5-
gallon market in major towns , offering greater convenience and better value to the
consumers. Successful marketing and sales strategies has provided greater
convenience and better value to the consumers. The brand is poised for continued
strong growth.
AVA & FONTALIA
To expand its H&O water delivery business country wide, nestle’ acquired major
share holdings in both these businesses in 2001. While AVA is an important national
player in the branded bottled water category, FONTALIA is a strong player in H&O
service in Karachi
INTERNSHIP REPORT 74
These acquisitions have helped the company in the extension of its H&O service in
Karachi and Islamabad. The two factories in Islamabad and Karachi that produce the
AVA brand were later merged with nestle’ Pakistan in 2003, as was the factory that
produced FONTALIA which was merged in 2005.
VALUE added services BY NESTLE
Brand Consciousness
People prefer Nestle because of its strong brand background all over the world.
People from all the classes opt for brand name. The main factor, which convinces
them, is its verified brand and line extensions. This point makes the brand name
strong position in the minds of the people. This is the biggest positive factor,
which is the result of one of the highest turnovers of Nestles products.
Nestle Pure Life
is the biggest icon in water industry. Although there are many big competitors
working in the same industry but the value Nestle offering is different and unique
which is its purity.
Packaging:
The packaging, which Nestle is giving to its customers, is different as compared
to it rivals. In their competition Classic and Cool are supplying water in the same
design, which can be bought from the market. But here Nestle has its own design,
which attracts the customers.
Delivery:
Nestle is considered pioneer in delivering water at your doorstep. Big hoardings
are placed on the roads with their number given of free delivery.
Availability:
Nestle is available at all areas of Lahore. Because they have only few distributors
but they are covering each and every area of Lahore. If competitors are taken, they
don’t have full coverage of main cities.
INTERNSHIP REPORT 75
Analysis of Company Marketing/ Sales Procedures
The company succeeded in achieving sustainable profitable growth during the
previous year driven by successful marketing and sale strategies and focus on key
initiatives. Consumer confidence in the company’s brands has further strengthened
and the trade remains confident as ever in doing business with it.
Innovation and renovation remained the key to the development of products. In
previous 1-2 years, several new products were introduced that include NESTLE
BUDDY, NESCAFE 3 IN 1 , NESTLE RAITA ,CAUTION , NESTLEEASYWHIP
in addition to two new products in the chocolate category with NESTLE RICE
CRISPY AND NESTLE HAZELNUT WAFER. New variety was also added to the
existing range with the launch of NIDO 750 g . EVERYDAY 750 g and MAGGI 2-
MINUTE NOODLES ketchup flavor.
The strategy to increase penetration by offering right price point pack sizes ,
supplemented by distribution expansion in small towns continued with focus on
CERELAC , NIDO and EVERYDAY sachets through localized activities , with very
good results.
Consumer insight remained our guiding principle to develop effective
communication. Consumer services shows, door-to-door sampling, “Path to
Purchase” philosophy and consumer promotions strengthened our communication.
During the period nestle’ continued with strategy to increase the distribution
penetration and develop additional trade channels. Second strata towns remained the
focus of our attention and activities such as town storming, special distribution drives
and distributor training were extensively undertaken.
Further sales structure was strengthened with emphasis on area- based territory
management and additional area demarcation, overall availability and visibility of
products provided a competitive edge.
One of the key initiatives has been the “Category Sales Development” function,
which has effectively been aligned with marketing and sales to strengthen strategy
planning with respect to channels, customers and shoppers.
INTERNSHIP REPORT 76
FoodServices business unit is fast developing the required skills and competencies to
meet specialized needs of Out-Of-home customers. Organizational structure was
further strengthened and its role and activities expanded during 2004.
Out –Of-Home channels that the unit serves include hotels, restaurants, clubs,
businesses, industries, third party canteens and NESCAFE vending operations.
Specialized products and pack sizes have been developed to meet specific channel
needs. Our strategic outlook is clearly skewed towards propelling growth behind
liquid milks, tea creamers, hot and cold beverages and water. The future outlook
seems very upbeat owing to dramatic changes in consumer trends for out of home
consumption.
Balanced growth was achieved in all strategic categories and the market share
position of key brands was further strengthened. Trade spent & market returns were
kept well under control while achieving sales value growth and an impressive Real
Internal Growth (RIG). Distributors’ outstanding was efficiently managed due to the
compliance of sales on cash policy.
INTERNSHIP REPORT 77
Pricing Policy
According to nestle’ there is no specific policy about pricing that has been followed.
Because pricing a product depends on many factors like,
Target market
Consumers
Product cost
Manufacturing process
Raw material cost
Demand of product
Availability of raw materials
Distributional cost
Storage cost
GMP (Good Manufacturing Practices) etc
The problem with nestle’ high prices is that its quality standards are very high. High
hygienic conditions are maintained during manufacturing, storage and distribution.
If any raw material does not fulfill the quality standard criteria the product is disposed
off or sold back at a cheap price.
At times tons of milk is disposed off if it doesn’t meet anyone of the criteria. And also
the release criterion of products is very strict. due to the fact that major product of
nestle’ is for infants and therefore very stringent policies are followed , and in case of
any deviance the products are not released .
Such procedures are the reason for high cost of nestle’ products. But even then nestle
is one of the major food selling companies due to its high quality that ensures health
and fitness.
INTERNSHIP REPORT 78
Nestle want to earn profit not just by satisfying consumers but by pleasing them
To set the price followings things are checked
Pricing objective
Demand
Cost
Competitors cost , prices, offers
Selecting a pricing method
Setting final price
Demand of nestle products is a major factor in the price determination. it sets a ceiling
on the price a company can charge on its products.
Companies select a pricing method that includes one or more of three considerations:
Customer demand
Cost
Competitors pricing
Nestle uses perceived value method. Means price are set by the proposition that price
should be according to the value perceived by customer
If a new product is launched a lot care is taken so as to gain consumers loyalty.
Psychology of consumers is taken into account.
INTERNSHIP REPORT 79
Price List
These prices are subject to errors. As the final list was gone for update these days.
PRODUCT PACK SIZE(g) PRICE (Rs)Nido Pouch packs 62
4001000
15108240
Everyday Pouch packs 404001000
10104228
Nestle’ butter Tin packs 100200
2540
Nescafe’ classic 75225500
105N/AN/A
Lactogen 1 &2 Soft packSoft packImported tin
2004001000
72133500
Cerelac wheat three fruit
Soft packs 200400
73139
Cerelac wheat Soft packs 200400
61117
Cerelac banana Soft packs 200400
69132
Cerelac honey Soft packs 200 63
Cerelac rice Soft packs 200 69
Neslac Soft packs 200 115
Nestle item Soft packs 125 40
NAN 1 Imp tinSoft pack
450400
265185
NAN 2 Imp tinSoft pack
450400
265185
PRENAN Imp tin 400 375
AL110 Imp tin 400 325
INTERNSHIP REPORT 80
PRODUCT FLAVOR SIZE PRICEMaggi noodles Chicken
ChatkharaChiliMasala
70707070
12121212
Nestle water 0.5 L250ml330ml
241236
Nestle yogurt 450 29Nestle’ wheat Banana 200 67
Three fruit 200 71Nestle juicesAppleRed grapesMangoMango orangePineappleorange
Soft packs 250ml 15
Kit kat SmallLarge
515
Milkpak cream 200ml 26Polo 5
INTERNSHIP REPORT 81
Distribution Policy
As far as the distribution strategy is concerned Nestle follows one policy. i.e.
“Sales on cash”
No sale is done to the distributors on credit basis. Zero day’s credit is given to the
distributors. And therefore the whole process remains very clear and lucid.
According to nestle’
“We don’t push things into the market”
By following such a rule of thumb consumers get products only when they want.
There remains no idle stock in the market.
For distribution purpose nestle’ has its own sales team force that support the whole
procedure and coordinate with the distributors.
Such sales team is well trained and skilled. Training and development is provided to
all the distributors and sales team force.
Their exists a strong coordination among all the distributors of Nestle’ and the sales
team support.
For the distribution of products from SKP (Sheikhupura factory) a separate
department is present known as NDC (National Distribution Center) such department
ensures the supply of products from SKP factory to nation wide.
The aim of nestle’ is to provide its products according to the needs of consumers and
consumer convenience in getting the product is nestle’s top most priority.
INTERNSHIP REPORT 82
Objectives
Nestle has following distribution objectives:
To reach the customer and better availability of the product to the customer To capture more market shares as compared to competitors satisfying the
changing needs of market.
Nestle’ has well defined physical distribution channel. Main elements of nestle’
distribution mix are
Order processing Warehousing Inventory management Transportations
ORDER PROCESSING
Physical distribution comes with customer order. Nestle’ order processing steps are
carried out quickly and accurately. Retailer’s send in their orders daily. Nestle’s order
dept quickly processes these orders and then warehouse send those items.
WAREHOUSING
Nestle has two factories. Each factory has its own cold houses which stores its
products. Nestle has large and highly organized warehouses designed to keep products
manufactured at its plants.
Inventory management
Nestlé major goal is to maintain a balance of inventory which can meet the overall
production requirements and fulfill demands off customers.
Other distribution channels
For the distribution outside Lahore, the company has hired a
INTERNSHIP REPORT 83
“Goods forwarding agency”
The milk is transported through trucks to various out station destinations. In
individual cities, the company has appointed distributors who are given some
commission. All expenses of delivery are borne by the company. The products are
supplied from the factory according to area requirements under level two distributions
as explained above. The vehicles of company provide efficient and in time delivery
leaving no problem for consumers regarding availability of the products in the market.
Terms of contract
The company currently has about 250 distributors countrywide. So a tremendous
improvement has taken place in the recent years due to the efforts of the company
managers regarding the distribution divisions. Distributors are hired on contractual
basis. If any distributor uses his own transport the company provides him with the
equal price for job doe.
INTERNSHIP REPORT 84
Nestle’ headquarter Switzerland
INTERNSHIP REPORT 85
Company directory
REGISTERED CORPORATE OFFICE
308 Upper Mall, Lahore
CORPORATE OFFICE ANNEX
304 Upper Mall, Lahore
Factories
SHIEKHUPURA
29th km , LHR-SKP road , Sheikhupura , Pakistan
KABIRWALA
Khanewal-kabirwala road, kabirwala , district khanewal , Pakistan
REGIONAL SALES OFFICES
NORTH ZONE
Islamabad
92- east , 3rd Floor, Razia sharif plaza , fazal-e-haq road, Blue Area, Islamabad,
Pakistan.
Peshawar
201, Block B, 2nd Floor City Tower, Jamrud Road, Peshawar, N.W.F.P. Pakistan.
CENTRAL ZONE
Lahore29-b, Main Gulberg, Lahore, Punjab, Pakistan
INTERNSHIP REPORT 86
Faisalabad
Al Haq Plaza,271-A, Small D Ground, People’s Colony Faisalabad, Punjab, Pakistan.
Gujranwala
3 irrigation road , opp. Commissioner house, civil lines, gujranwala.
MultanSurij Miani Road, Chungi No 1, Multan, Punjab, Pakistan.
Sahiwal :
174-B/7 tehsil road old civil lies ,stadium chowk ,sahiwal
SOUTH ZONE
Karachi
F-77/1, Block 7, Clifton, KDA Scheme 5, Karachi, Sind, Pakistan.
Hyderabad
178, Block C, Unit 2 Latifabad, Hyderabad, Sind, Pakistan.
Quetta
63 B-D, Chamman Housing Scheme, Opposite Askari Park Quetta, Baluchistan,
Pakistan.
Sukkur:
C- 408/6- Minara road, sukkur
INTERNSHIP REPORT 87
Milk collection centers
1. Arif wala
2. Alluday wali
3. Basirpur
4. bhawana
5. Chishtlan
6. Duniyapur
7. Farooka
8. Ghaziabad
9. Jalla more
10. Haveli lakha
11. Kamalia
12. Kalowal
13. Layyah
14. Ludden
15. Mailsi
16. More mandi
17. Mian channu
18. Minchanabad
19. Pakpattan
20. Pindi bhattlan
21. Renala
22. Sahiwal
23. Shorkot
24. Yazman
INTERNSHIP REPORT 88
REGISTERED
CORPORATE
OFFICE
SHEIKUPURA FACTORY
KABIRWALA FACTORY
INTERNSHIP REPORT 89
Promotional Policy
For promotion of its products, nestle ‘follows an aggressive strategy. The strong
promotion is done through mediums like TV and magazines/ news papers.
Some other mediums which are used for promotion purposes are nestle’ international
websites, billboards, posters, radio etc
The chart shows the increase in nestle’ sales promotion and advertisement expense in
the year 2004 and 2005. from almost 0.6 bn it has increased to Rs. 0.8 bn
“Nestle’ is a human company providing a response to human needs through out the
world” this is the opening statement of nestle’ management and leadership principles”
– a document that defines Nestle’ values and that is applied throughout the
organization worldwide, thereby becoming a tangible expression of Nestlé’s corporate
culture.
For promotion nestle’ fulfills its social responsibility very efficiently. “Nestle’
corporate business principles”- a document that serves as the company’s management
tool, reflects its commitment to corporate social responsibility as the way of doing
business . not only does the company abide by its policy of serving its consumers
through high quality and safe products coupled with responsible consumer
communication , it adheres to good manufacturing practices , environmentally sound
INTERNSHIP REPORT 90
business practices and support the principles of UN’ s global concept on human rights
.
Nestle uses media like
TV commercials
Magazines
Outdoor advertisement ( banners, billboards , neon signs)
Point of sale advertisement in shops , departmental stores and other consumer
buying places
Buses printed especially for nestle pure life and everyday
Promotional budget
Nestle’ promotional budget is et by the main head office in Switzerland on annual
basis for various consumers’ products depending on the sales and demand
Advertisements are very important in building image of company. Because customers
are attracted and persuaded to try the product out. The budgets for different products
vary depending on the sales and demand of products. Like on milk nestle’ has 60 % of
total sales. As compared to competitors like halleb and others, the advertising strategy
is very different. The company doesn’t rely on comparative ad but it tries to attract
customers by its distinctive and unique approach. For ad , nestle’ hires top leading
models that present hidden qualities in the products.
When juices were introduced, company made such advertisement that people were
surprised
INTERNSHIP REPORT 91
As far as direct marketing is concerned following techniques are
adopted at nestle’
Door to door selling
Prizes
Free sampling
Nestle is doing a lot to improve the picture in the minds of consumers. Its market size
is increasing day by day
Societal Marketing
Nestle’ actively takes part in various social action programs undertaken for the rural
and underprivileged communities, sports and culture is promoted and environmentally
safe practices are strictly adhered to.
Such policy aims at meeting the company’s obligations to the society at large.
Social action programs
Child and mother issues
The company arranges nutrition program for undernourished children and mother
through several NGO partners and charitable organizations. It also assists APWA in
participating in international seminars and conferences on child issues
Donations
The company donates to hospitals and organizations that provide services to the poor
and also responds to distress calls by the government and NGOs for assistance to
victims of flood, earthquake, drought and other natural calamities.
Rural support programs
It helps to alleviate the sufferings of rural populations which do not have easy access
to potable water by undertaking tube well and hand pump installation schemes in
INTERNSHIP REPORT 92
selected areas. The first tube well was completed in 2002 in a village of about 3000
inhabitants in Tehsil Dunyapur, district Khanewal to meet water needs of the
inhabitants of desert regions of cholistan and thar , 150 hand pumps each have been
installed in both.
The milk collection and Agri-services dept of the company provides free and
extensive advisory and support service to milk farmers by training them in good
animal husbandry practices vaccinating and treating their milch animals, facilitating
purchase of feed supplements and fodder seeds and assisting in breed improvement .
This translates into increased milk production and consequently a better income for
the farmers.
Educational support to underprivileged students
To help improve the quality of education in rural areas, which have remained
neglected for too long, the company undertakes rehabilitation and refurbishing of
primary and middle schools, particularly those for girls.
Three schools have been rehabilitated in 2004. In partnership with an NGO that
specializes in education, the company has embarked on a program of school adoption
in 2004, under which educational facilities are being improved through provision of
teaching aids and steps are taken to enhance the quality of education through teacher
training. These measures have shown immediate results and the school attendance has
already doubled.
During 2004 the company donated 55 computers to schools in poor urban
communities to enable those children to step into the world of technology.
Sports & culture
The company regularly sponsors a variety of sports and cultural events such as the
international polo Tournament and SAF Games.
Environment
For nestle’ respect and responsibility for the environment is a part of its broader
commitment to sustainable development. Sustainable development requires an
INTERNSHIP REPORT 93
integrated approach to policy and decision making in which long term economic
growth, environmental protection and social achievements are not incompatible, but
are complementary and mutually dependent.
Nestle’s record of environmental activities can be traced back over several decades ,
with many effective measures put in place. The first global nestl’e policy on the
environment was published in 1999, confirming and strengthening the company’s
commitment to environmentally –sound business practices.
In line with nestle’s global commitment, nestle’ milkpak in Pakistan is equally
dedicated to play its role in helping to protect environment.
The company fully complies with local laws of environmental act / regulation (1997)
INTERNSHIP REPORT 94
STRATEGIC PLANNING:
BOSTON CONSULTING GROUP (BCG) MATRIX FOR THE SBU’S
Company’s Market Share
High Low
High STARS QUESTION MARKS
CASHCOWS DOGS
Low
STARS:
The two Sbu’s, Mineral water and Confectioneries fall into this category of the BCG.
These SBU’s have high market share and high industry growth rate. These Sub’s are
requiring lots of investment to compete in the growing market. For example, lots of
money is being spent and aggressive marketing strategies have been implemented for
the Mineral water to build and maintain market share. Nestle Pure Life has captured
50 % of the bottled-water market in Pakistan since it was introduced in 1998. Its
approximate sales for 1999 are RS. 70, 401000. This sales figure is quite impressive
as the sales rose quite high in only one year. It is predicted that there will be
additional growth in the mineral water category in coming years. The sales of the
INTERNSHIP REPORT 95
Indu
stry
Gro
wth
Rat
e
Milk Products
Coffee Dietetic &
Infant foods
Chocolate Drinks
Fruit Drinks
Pure Life Water
Confectioneries
Culinary products
confectioneries rose to RS. 106,559 000 from RS. 87,758 000. The huge increase of
RS. 18, 801 000 puts this SBU in the stars category and shows its increasing market
share. There is a growing market for the products in confectioneries for example
Kitkat (eventhough it’s imported), Polo Smarties etc. This can be proven from the
fact that Nestle keeps introducing new products in this category for example Allen’s
Soothers were launched during the last quarter of 1998.
CASHCOWS:
Milk products, Coffee and Dietetic and Infant food have a high market share and are
doing business in mature industries. Since the customers of this product category are
loyal, the marketing costs of these SBU’s are quite low and as a result a large amount
of cash can be generated. Customer Loyalty is a must for these Cash cows to
maintain their market share. The sales of the Milk products have increased to RS.
108,430000 from RS. 87, 758000. This huge increase in sales reflects the high market
share of this SBU. However, its growth rate is low because in general this category is
in its maturity stage – that is – a number of milk products have been launched by
Nestle, most of which are quite old. An innovation has not really been made in this
category. The same conclusion can be made about Coffee. There is an already
existing market for Coffee which is not increasing further by a large amount. The
sales of Coffee were Rs. 46, 89 000 in 1999 and Rs. 392, 00 000 in 1998. This huge
difference shows that a great amount of cash is being generated from this SBU. Sales
of Dietetic and Infant food rose to Rs. 60,935 000 from Rs. 52,655 000. The infant
foods unit of Nestle is operating in a mature industry. Like the milk products, the
infant foods have been around for a long time without barely any new product line
being started in this category.
QUESTION MARKS:
Included in this section is the culinary products of the organization. The products
such as Maggi 2-minute Noodles and Maggi cold sauces have a low market share and
a high growth rate. These products especially the cold sauces are operating in a
highly competitive market. The approximate sales were Rs. 79,919 000 in 1999 and
Rs. 60,818 000 in 1998. This figure represents a great potential for growth in future.
However, in contrast, the market share of the products in this category is not very
INTERNSHIP REPORT 96
high currently. A reason for this is that Nestle just recently introduced cold sauces
such as “Emily sauce” etc. However the enthusiasm with which the customers
received the different flavors of sauces, portrays a very high potential for future
growth. The firm needs to focus on differentiating its products in the competitive
market to gain customers.
DOGS:
Chocolate and Fruit drinks fall into this category and they possess a low market share
and a low growth rate. Chocolate drinks had sales of Rs. 19639000 in 1999, which
rose from Rs. 19541000 in 1998. This is quite a small increase considering the rise in
the sales of other SBU’s. However, the chocolate drinks are still profitable so the
firm does not have to worry about liquidating or getting rid of this SBU. The sales of
Fruit drinks rose to Rs. 40,620 000 in 1999 from Rs. 38,103 000 in 1998. There has
been a small amount of increase; however it is not a lot compared to other SBU’s.
Firstly, there is not a huge market for chocolate drinks in Pakistan. People usually
tend to buy light juices like apple or orange juice or Pepsi instead of chocolate drinks.
Secondly, regarding the fruit juices, there are not a lot of flavors available currently in
this category. Nestle needs to introduce new flavours such as apple, grape etc. to
capture the market that prefer these flavours. This will not only increase the sales of
the SBU, but it will also increase its market share. At the moment, additional amount
of money is not being invested in these SBU’s, as they are not very profitable. Nestle
is currently trying to maximize profits from this category by minimizing expenditures
and by differentiating the product to build market share.
INTERNSHIP REPORT 97
Dealing with clients support by instances
For the customers and consumers there exists a separate department to handle all the
complaints and support all the queries.
Customers which are the retailers, distributors are given full support by the sales team
force. Such team is specially defined to meet all the inquiries and criticisms.
The customer service department has direct contact with the consumers i.e. the end
users of the product.
Thousands of consumers are directly contacted to find out their preferences, demands
and views regarding products. Continuous feedback is attained so as to achieve
continuous improvements. This means about million people are contacted every year.
Nestle’ teams visit schools, colleges, universities and organize shows.
Nestle’ also have a session with mothers. This session is for about 1-2 hrs to resolve
all the complaints and to spread knowledge. Such sessions bring awareness to the
mothers that how they could bring up their children in the best possible way
The CS dept handles all kinds of complaints e.g. replacement, investigation etc for
more efficient functioning a software has been provided to the customer service
department. This software is names COSMOPLUS. This software has given a new
direction to the CS department as by the help of this nestle’ is getting more close to its
clients.
If a product is found defective & is to be replaced, full investigation is done. So as to
find the reason for such cause. The product is replaced to the client.
In most of the complaints clients themselves are found faulty. But even then nestle’
try it’s level best to provide its service in the most competent way.
Nestlé is committed to offer consumers high-quality food products that are safe, tasty
and affordable. The Nestlé Seal of Guarantee is a symbol of this commitment.
It believes in maintaining regular contact with consumers. This applies both to how it
presents its products and to how it addresses consumers’ questions and concerns.
When Henri Nestlé prepared his first boxes of infant formula for sale, he put his
address on the packages so people would know where to go if they had questions.
INTERNSHIP REPORT 98
Today, Consumer Relationship Panel with the words “Talk to Nestlé” expresses
the same commitment.
This is why we have a worldwide Nestlé Consumer Services network devoted to
caring for our consumers. Our people have expertise in a wide range of areas such as
nutrition, food science, food safety and culinary expertise. They provide the prompt,
efficient and high quality service that consumers expect from Nestlé.
In addition, we teach them talk with consumers and above all, to listen. Listening
helps us to understand what people want. Nestlé uses the insights gained from
relationships with consumers to drive product development.
Nestlé care for their consumers because they believe that their success depends on
meeting their needs and expectations.
According to nestle’,
Through listening and understanding, we can make products that consumers will want
to use all through their lives.
Market Segmentation, Targeting, Positioning
Nestle products are used more in cities so it concentrates more on urban areas then on
rural areas.
Nestle is well aware of the various characteristics of the population. It segments of the
population on the basis of these characteristics marketing mix for each. Mostly they
use income, age, gender, and social class, family e.g.
lactogen 1 , 2 NAN 1 ,2 is for infants
Cerelac is for basics.
.Yogurt is meant for almost all ages.
.As in Pakistan there is joint family system so the products are available in variant
size.
.Pure juices are meant for people of all ages
INTERNSHIP REPORT 99
With the passage of time the life style, personalities and values of people have
changed and Nestle is well aware of these changes.
Nestle tailor their messages to appeal the personality traits.
As it says” Milk pak Khalis hi sub kuch hai”
Nestle is also aware of the fact that values also relate to purchase behaviour.
It appeals your “sense of belonging” when it says “Tu hi mera pyaar Everyday”
And “her achi cheese mehngi nahin hoti
milo is for people who value fitness.
Hi calcium low fat milk and yogurt is for health conscious people
Consumer is as important for an organization as is blood for the human body.
Consumer is always interested in its benefits. a successful company is that which
markets the benefits and simply the physical characteristics of a product and nestle is
not ignorant of this fact. it communicates and gives the feeling that it’s existence in
the market is for the human benefits. Its products are fully hygiene, good for health,
nourishing and fresh. E.g.
1. Nestle yogurt meant for people who want fresh and hygienic yogurt.
2. Pure juices are for the people who want to be fit and want less sugar intake. Etc.
Positioning
Nestle is trying its best to continuously improve its image in the minds of people
Water is produced by various companies but nestle makes it superior by saying
“Pure life”
It’s considered that every quality product is expensive but by introducing “everyday”
at reasonable price it says
“Zindagi main her achi cheez mehngi nahi Hotee”
For nestle’ nutrition like nido , lactogen nestle is making awesome ads in which it is
shown that by taking nestle’ products children become smart and intelligent. As in
one of NIDO ad
A little girl says “mama dekhein mein kitneee smart houn na ”
And most of all the words
“GOOD FOOD, GOOD LIFE”
INTERNSHIP REPORT 100
Depicts a positive image that nestle’ is concerned about providing good food so that
everyone could have better, healthy lives!
INTERNSHIP REPORT 101
Financial Analysis
INTERNSHIP REPORT 102
Income Statement
2008 2007
Sales 109908 107552
Cost of goods sold -47339 -45037
Distribution expenses -9084 -9104
Marketing and administration expenses -35832 -36512
Research and development costs -1977 -1875
EBIT 15676 15024
Net other income/(expenses)
Other income 9426 695
Other expenses -2124 -1285
7302 -590
Profi t before interest and taxes 22978 14434
Net financing cost
financial income 102 576
Financial expense -1247 -1492
-1145 -916
Profi t before taxes and associates 21833 13518
Taxes -3787 -3416
Share of results of associates 1005 1280
Profi t for the period 19051 11382
INTERNSHIP REPORT 103
Sales
Increase (Decrease)Amount Percent
5262712 20.4%
The sales figure has been increased by 2.9% due to increase in demand
Cost of goods soldIncrease(decrease)
AmountPercentage
-2302 5.11%
the cost of good sold increased by 5.11% due to inflation
Distribution expensesIncrease(decrease)
AmountPercentage
20 -0.22%
distribution decrease by .22% because we are finding cheap buyers
Marketing and administration expensesIncrease(decrease)
Amount Percentage680 -1.86%
marketing expenses decease by 1.86% due to cheap source for marketing
Research and development costsIncrease(decrease)
Amount Percentage-102 5.44%
research and development cost increase by 5.44% due to our immersive research on consumer buying pattern
EBITIncrease(decrease)
Amount Percentage652 4.34%
EBIT increase by 4.34% because increase in sales, cost of good sold and R&D cost, and decrease in distribution cost
INTERNSHIP REPORT 104
Net other income/ (expenses):
Other incomeIncrease(decrease)
Amount Percentage8731 1256.26%
net increase by 1256% because sales are more than expenses
Other expensesIncrease(decrease)
Amount Percentage-839 65.29%
other expense increase by 65% due to high rates
Total
Increase(decrease)Amount Percentage8731 1256.26%-839 65.29%7892 -1337.63%
Profi t before interest and taxesIncrease(decrease)
Amount Percentage8544 59.19%
Net financing cost:
Financial incomeIncrease(decrease)
Amount Percentage-474 -82.29%
Financial decrease by 82% due to decrease in return against our investment portfolio
Financial expenseIncrease(decrease)
Amount Percentage245 -16.42%
Financial expenses decrease by 16% due to decrease in cost of borrowing
INTERNSHIP REPORT 105
Total
Increase(decrease)Amount Percentage
-474 -82.29%245 -16.42%
-229 25.00%
Profit t before taxes and associatesIncrease(decrease)
Amount Percentage8315 61.51%
profit before tax increased by 61% due to decrease in financial and operating expenses
TaxesIncrease(decrease)
Amount Percentage-371 10.86%
Share of results of associatesIncrease(decrease)
Amount Percentage-275 -21.48%
Profit t for the periodIncrease(decrease)
Amount Percentage7669 67.38%
INTERNSHIP REPORT 106
Balance Sheet
2008 2007
Assets
Current assets
Cash and cash equivalents 5835 6594
Short-term investments 1296 2902
Trade and other receivables 13442 14890
Current income tax receivables 889 531
Assets held for sale 8 22
Inventories 9342 9272
Derivative assets 1609 754
Prepayments and accrued income 627 805
Total current assets 33048 35770
Non-current assets
Property, plant and equipment 21097 22065
Investments in associates 7796 8936
Deferred tax assets 2842 2224
Financial assets 3868 4213
Employee benefi ts assets (a) 60 1513
Goodwill 30637 33423
Intangible assets 6867 7217
Total non-current assets 73167 79591
Total assets 106215 115361
Liabilities and equity
Current liabilities
Trade and other payables 12608 14179Liabilities directly associated with assets held for sale 7
Financial liabilities 15383 24541
Current income tax payables 824 856
Derivative liabilities 1477 477
Accruals and deferred income 2931 3266
Total current liabilities 33223 43326
Non-current liabilities
Financial liabilities 6344 6129
Employee benefi ts liabilities 5464 5165
Deferred tax liabilities 1341 1558
INTERNSHIP REPORT 107
Other payables 1264 1091
Provisions 3663 3316
Total non-current liabilities 18076 17259
Total liabilities 51299 60585
Equity 21
Share capital 383 393
Treasury shares -9652 -8013
Translation reserve -11103 -6302
Retained earnings and other reserves 71146 66549Total equity attributable to shareholders of the parent 50774 52627
Minority interests 4142 2149
Total equity 54916 54776
Total liabilities and equity 106215 115361
Assets:
Current assets
Cash and cash equivalentsIncrease(decrease)
amount percentage-759 -11.5%
cash and cash equivalent decrease by 11% because we made a cash payments
Short-term investmentsIncrease(decrease)
amount percentage
-1606 -55.3%short term investment decrease more than 50% because of sale of short term investments
Trade and other receivables
Increase(decrease)
amount percentage
-1448 -9.7%
INTERNSHIP REPORT 108
Trade and other receivables decrease by 9% due to change in credit policy
Current income tax receivables
Increase(decrease)
amount percentage
358 67.4%
Assets held for sale
Increase(decrease)
amount percentage
-14 -63.6%
Inventories
Increase(decrease)
amount percentage
70 0.8%Inventories increase by .8% due to cheap rates
Derivative assets
Increase(decrease)
amount percentage
855 113.4%
Prepayments and accrued income
Increase(decrease)
amount percentage
-178 -22.1%
Total current assets
Increase(decrease)
amount percentage
-2722 -7.6%Total current assets decrease by 7.6% because economic recession
INTERNSHIP REPORT 109
Non-current assets
Property, plant and equipment
Increase(decrease)
amount percentage
-968 -4.4%Property, plant and equipment decrease by 4.4% because of sales
Investments in associates
Increase(decrease)
amount percentage
-1140 -12.8%
Deferred tax assetsIncrease(decrease)
amount percentage
618 27.8%
Financial assets
Increase(decrease)
amount percentage
-345 -8.2%Financial assets decrease by 8.2% because financial market is not performing well and we have sold some of our financial assests
Employee benefits assetsIncrease(decrease)
amount percentage
-1453 -96.0%
Goodwill
Increase(decrease)
amount percentage
-2786 -8.3%
INTERNSHIP REPORT 110
Intangible assets
Increase(decrease)
amount percentage
-350 -4.8%
Total non-current assets
Increase(decrease)
amount percentage
-6424 -8.1%Total non-current assets decrease by 8.1% because of tangible assest
Total assets
Increase(decrease)
amount percentage
-9146 -7.9%
Liabilities and equity
Current liabilities
Trade and other payables
Increase(decrease)
amount percentage
-1571 -11.1%Trade and other payables decrease by 11% because we had payments
Liabilities directly associated with assets held for sale
Increase(decrease)
amount percentage
-7 -100.0%
Financial liabilities
Increase(decrease)
amount percentage
-9158 -37.3%Financial liabilities decrease by 37% as compared to last year
INTERNSHIP REPORT 111
Current income tax payables
Increase(decrease)
amount percentage
-32 -3.7%
Derivative liabilities
Increase(decrease)
amount percentage
1000 209.6%
Accruals and deferred income
Increase(decrease)
amount percentage
-335 -10.3%
Total current liabilities
Increase(decrease)
amount percentage
-10103 -23.3%Total current liabilities decrease by 23% because of decrease in payable
Non-current liabilities
Financial liabilities
Increase(decrease)
amount percentage
215 3.5%
Employee benefits liabilities
Increase(decrease)
amount percentage
299 5.8%
Deferred tax liabilities
INTERNSHIP REPORT 112
Increase(decrease)
amount percentage
-217 -13.9%
Other payables
Increase(decrease)
amount percentage
173 15.9%Other payables increase by 15% due to increase in credit purchase
Provisions
Increase(decrease)
amount percentage
347 10.5%
Total non-current liabilities
Increase(decrease)
amount percentage
817 4.7%Total non-current liabilities increase by 4.7% as compared to last year
Total liabilities
Increase(decrease)
amount percentage
-9286 -15.3%
Equity
Share capital
Increase(decrease)
amount percentage
-10 -2.5%Share capital decrease by 2.5% because we buy back some purchase
Treasury shares
Increase(decrease)
INTERNSHIP REPORT 113
amount percentage
-1639 20.5%
Translation reserve
Increase(decrease)
amount percentage
-4801 76.2%
Retained earnings and other reserves
Increase(decrease)
amount percentage
4597 6.9%There is an increase in retained earnings and other reserves by 6.9%
Total equity attributable to shareholders of the parent
Increase(decrease)
amount percentage
-1853 -3.5%
Minority interests
Increase(decrease)
amount percentage
1993 92.7%
Total equity
Increase(decrease)
amount percentage
140 0.3%
INTERNSHIP REPORT 114
Total liabilities and equity
Increase(decrease)
amount percentage
-9146 -7.9%
INTERNSHIP REPORT 115
RATIO ANALYSIS
INTERNSHIP REPORT 116
LIQUIDITY RATIOS
2008 2007
Current Ratio Current Assets/Current Liabilities 0.99 0.83
Quick Ratio Quick Assets/Current Liabilities 0.04 0.07
Cash Ratio Cash + Marketable Securities/Current Liabilities 0.22 0.17
Working Capital Turnover Ratio Sales/Average Working Capital -628.05 -14.23
Operating Cash Flow Ratio Cash Flow from Operations/Current Liabilities 0.37 0.27
Current Ratio
The current ratio has slightly increased and it is compatible with the industry.
Quick Ratio
The quick ratio has slightly decreased due to decrease in fixed assets.
CASH RATIO
The cash and marketable securities have increased during the current year
causing the cash ratio to increase by a little amount but it is compatible with
industrial trend.
WORKING CAPITAL TURNOVER RATIO
The sales have decreased as compare to increase in working capital Causing
the working capital turnover ratio to decrease and it also indicates in-efficient
use of working capital.
.OPERATING CASH FLOW RATIO
The increase in cash flow from operations has been compensated by equal
increase in current liabilities causing the ratio to remain the same.
Working
INTERNSHIP REPORT 117
2008 2007
Current Assets 33048 35770
Current Liabilities 33223 43326
Quick Assets 1296 2902
Cash 5835 6594
Marketable Securities 1609 754
Total Expenditure 10000 14000
Sales 109908 107552
Average Working Capital -175 -7556
Operating Profit 15676 15024
Depreciation 344 122
Taxes Paid 3787 3416
Total Assets 106215 115361
Fixed Assets 73167 79591
Total Liabilities 51299 60585
Fixed Liabilities 18076 17259
INTERNSHIP REPORT 118
Cash Flow from Operations
2008 2009
Operating Profit 15676 15024
Depreciation 344 122
16020 15146
Taxes Paid 3787 3416
12233 11730
INTERNSHIP REPORT 119
SOLVENCY RATIOS2008 2007
Interest Coverage ratio EBIT / Interest Expenses 12.57 10.07
Debt Ratio Total Liabilities / Total Assets 0.48 0.53
Debt - Equity Ratio Total Debts / Total Equity 0.12 0.11
INTEREST COVERAGE RATIO
Due to decrease in interest expenses the interest coverage ratio has
increased means bank has much captial to meet its liabilities.
DEBT RATIO
There is a decrease in debt ratio as compared to last year.
Debt - Equity Ratio
The total debts have increased while there is a decrease in total equity.
INTERNSHIP REPORT 120
ACTIVITY RATIOS
2008 2007
Fixed Assets Turnover Total Income / Fixed Assets 1.50 1.35
Assets Turnover Ratio Total income/ Total Assets 1.03 0.93
Fixed Assets Turnover
The increase in total income is slightly higher than increase in fixed assets because the bank has opened new branches so expenses on fixed assets have cause this ratio to increase by a small amount
ASSETS TURNOVER RATIO
The increase in total income is compensated by an equal increase in total assets.
INTERNSHIP REPORT 121
2008 2007
EBIT 15676 15024
Interest Expenses 1247 1492
Total Liabilities 51299 60585
Total Assets 106215 115361
Total Debts 6344 6129
Total Equity 54916 54776
Sales 109908 107552
Fixed Assets 73167 79591
Total Assets 106215 115361
INTERNSHIP REPORT 122
PROFITABBILITY RATIOS
2008 2007
Net Profit Margin Ratio Net Profit / Sales 19.86% 12.57%
Gross Profit Margin Ratio Gross Profit / Sales 20.91% 13.42%
Return on Total Assets Net income after tax / Total Assets 17.94% 9.87%
Return on Equity Net Profit after tax / Common Equity 4974.15% 2896.18%
Net Profit Margin Ratio
Net profit has increased because there might be and decreasing cost, increase in
productivity and efficiency, decrease in fixed overheads and competitors have decreased.
GROSS PROFIT MARGIN RATIO
Gross profit may have increased due to decrease in sales and decrease in competition
RETURN ON TOTAL ASSETS
Return on total assets might have decreased because net income after tax is lower than
the assets invested.
RETURN ON EQUITY
Return on equity has increased because net profit has decreased while common equity
has decreased.
INTERNSHIP REPORT 123
SHAREHOLDERS' RATIOS
2008 2007
Earnings Per Share (Net Profit - Preffered dividend)/No. of equity shares outstanding 5.70 3.44
Dividend Payout Ratio Dividends per common share / EPS 0.02 0.04
Dividend Yield Dividends per common share / MPS 1.10% 1.30%
Return on Equity Net Profit after tax / Common Equity 4974.15% 2896.18%
Earning Per Share
Due to increase in net profit and lower sales in current year the profit available for common share holders is higher as
compared to previous year.
DIVIDEND PAYOUT RATIO Dividend payout ratios has decreased
DIVIDEND YIELDDividends per common share are lower than previous year because dividends were
high during previous year.
RETURN ON EQUITYReturn on equity has increased because net profit has decreased while common equity
has decreased.
INTERNSHIP REPORT 124
WHAT I HAVE LEARNED AT INTERNSHIP
Objective
• Impact of international chains on local key accounts.
• Impact on sales to local accounts.
• Analysis of basket size of the Shoppers.
• Previous shopping point of customers moving to International Chains.
• Reasons for moving of customers to International Chains.
• Suggestions & recommendations for local Key Accounts.
Working
Designed a questionnaire on local key accounts
Our target market was local stores which are known as local accounts, because
a lot of shoppers are shifting from local accounts to international chains
We did a market survey on following local accounts to find why shoppers are
moving from local accounts to international chains:
Alfatah
Bismillah
Best Buy
CSD Mall road
HKB
Jalal Son’s
Rahat bakery
Victoria
INTERNSHIP REPORT 125
To enhance the sales and bring quality in the products
We also ask their previous shopping point
INTERNSHIP REPORT 126
Analysis
I have calculate the findings and did analysis of it
I suggest way forward for these local accounts
I have prepared a presentation in which i pointed out the most lacking points
of local accounts and recommend that Nestle should keep an eye on them for
the increase in sales
I have presented the whole project to the National Key Account Manager
Extra skills
Interpersonal skills
Computer skills
Presentation skills
Get knowledge about the shopper
Research that how much a research is important for a company
To have knowledge about their customers as well as their competitors
INTERNSHIP REPORT 127
RECOMMENDATION
There are few recommendations that are recommended if the project is to be
conducted again in future.
Employees should be trained according to the changing standards of the
organization.
Company should conduct survey from time to time to according to which
changes can be introduced in the organization to stay updated in the
market.
They should introduce creativity into the work, so that the employees
can do their work active mindedly.
Employees should be given compensation in order to keep them loyal.
Employees should be more involved in decision making to become more
differentiated.
Company should provide incentives to shop keepers
INTERNSHIP REPORT 128
REFERENCES
www.nestle.com
www.nestle.pk
By communicating with the employees
Annual report 2008
INTERNSHIP REPORT 129
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