Strategic Analysis of Nestle

Executive Summary

The purpose of this report is to evaluate Nestle Company industry based on the case study and comprehend how the company develop strategic intent for their business organisations following the analysis of external and internal business environments. I will analyse the strategic management process as firm used to achieve strategic competitiveness and earn above-average returns. I will discuss the strategy formulation that includes business-level strategy and corporate-level strategy.

It also aims to identify market place opportunities and threats in the external environment and to decide how to use their resources, capabilities and core competencies in the firm’s internal environment to pursue opportunities and overcome threats. In order to strengthen this assignment about Nestle, there are several methods of gathering data has been conducted, such as PEST analysis, Porter’s 5 forces model, value chain analysis and SWOT analysis.

By the end of this assignment, future strategy will be mentioned as well as my recommendations about Nestle that will fit into strategic orientation in order to perform better in their business world. And continue to develop and implement its learning approach as the chosen large company by using different strategies.

Table of Contents

Executive Summary        1

1.0        Introduction        4

1.1        Industry and Nestle Summary        4

EXTERNAL ANALYSIS        5

2.0        General Environment Analysis        5

2.1        Demographic Segment        5

2.2        Economic Segment        6

2.3        Political or Legal Segment        6

2.4        Socio-cultural Segment        6

2.5        Technological Segment        7

2.6        Global Segment        7

3.0        Industry Environment Analysis        7

3.1        Threat of New Entrants        8

3.2        Bargaining Power of Supplier        8

3.3        Bargaining Power of Buyers        8

3.4        Threat of Substitute Products        9

3.5        Intensity of rivalry among Competitors        9

4.0        Competitive Environment        10

5.0        Opportunities and Threats of Nestlé        11

5.1        Opportunities        11

5.2        Threats        11

INTERNAL ANALYSIS        11

6.0        Nestlé’s Resources, Tangible and Intangible        12

6.1        Tangible Resources of Nestlé        12

6.2 Intangible Resources of Nestlé        13

7.0        Capabilities of Nestlé        13

8.0        Core Competencies Analysis        15

9.0        Value Chain Analysis of Nestlé        16

9.1. Primary Activities        16

9.1.1        Inbound Logistics        16

9.1.2        Operations        16

9.1.3        Outbound Logistics        16

9.1.4        Marketing and Sales        16

9.1.5        Services        17

9.2        Support Activities        17

9.2.1        Procurement        17

9.2.2        Technological Development        17

9.2.3        Human Resources Management        17

9.2.4        Firm Infrastructure        18

10.0        Weaknesses        18

11.0        SWOT Analysis        18

11.1        Strengths        18

11.2        Weaknesses        19

11.3        Opportunities        19

11.4        Threats        19

12.0        Current Strategy        19

13.0        Strategy        20

14.0        Conclusion        21

References        22

Appendices        23

Appendix 1        23

Appendix 2        23

Appendix 3        24

Appendix 4        26

Appendix 5        26

Appendix 6        4

1. Introduction

The most important thing for most of business company is an understanding their successful performance among the other competitors in market place. For some parties, like shareholders, it is essential for company to make a profit and gain above-average returns. In this assignment, I will discuss furthermore about Nestlé’s external environment in all aspects such as their general environment, industry environment, competitive environment, and scan the opportunities and threats of the company. And also I am going to explain briefly about their internal environment includes their resources, type of their resources, company’s capabilities, evaluate their core competencies and so on.

1. Industry and Nestle summary

Nestlé S.A. is a Swiss multinational nutritional and health-related consumer goods company headquartered in Vevey, Switzerland. It is the largest food company in the world measured by revenues. Nestlé’s products include baby food, bottled water, breakfast cereals, coffee, confectionary, dairy products, ice cream, pet foods and snacks. Nestlé employ around 330,000 people in over 150 countries and have 461 factories or operations in 86 countries. Nestlé sales for 2011 were almost CHF 83.7 billion. It is one of the main shareholders of L’Oreal, the world’s largest cosmetics company. Nestlé history begins back in 1866, when the first European condensed milk factory was opened in Cham, Switzerland, by the Anglo-Swiss Condensed Milk Company. In Vevey, Switzerland, Nestlé founder by Henri Nestlé, a German pharmacist, launched his Farine lactee, a combination of cow’s milk, wheat flour and sugar, saving the life of a neighbour’s child. Nutrition has been the cornerstone of the company ever since. In 1905, The Anglo-Swiss Condensed Milk Company, founded by Americans Charles and George Page, merged with Nestlé after a couple of decades as fierce competitors to form the Nestlé and Anglo-Swiss Milk Company. The company grew significantly during the First World War and again following the Second World War, expanding its offerings beyond its early condensed milk and infant formula products. In 2011, Nestlé was listed No.1 in the Fortune Global 500 as the world’s most profitable corporation. The Nestlé Corporate Business Principles are at the basis of the company’s culture, developed over 140 years, which reflects the ideas of fairness, honesty and long-term thinking. Nestlé believes that not only possible to create long-term value for their shareholders if their behaviour strategies and operations also create value for the communities where they operate, for their business partners and of course, for their consumers.

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