Case study-Nestle

CASE STUDYNestlé

ByKARTHIKEYA

MNC

MNC……• According to Stuart Wall, Sonal Minocha and Bronwen Rees (2010), MNC (Multinational corporate) is a company that has headquarters in one country but has operations in other countries.According to an analysis by McKinsey Global Institute, as many as 158 global large companies have their headquarters in India with a combined revenue of $ 898 billion. The US topped the chart with 2,123 large firms followed by Japan (1,028 firms, $ 7,347 billion), China (577, $ 5,449 billion), Germany (462,$ 3,788 billion) and United Kingdom.

Nestle

Introduction to the MNC Nestlé….• In 1860s, a pharmacist named Henri Nestlé had succeeded in

developing a food for babies who were unable to be breastfed. And his first success was to be able to feed a premature infant who could not take his mother's milk or any of the usual substitutes (Nestlé 2010).• In German Nestlé means little nest. The Nestlé symbol is universally

understood to carry the meaning of nurturing and caring, security, nourishment and family bonding. These attributes are still the guiding legacy of the company, Henri Nestlé founded, which fulfils the commitment to 'Good Food, Good Life.

• In 1905 Nestlé work together with the Anglo-Swiss Condensed Milk Company, the year after Nestlé added chocolate to its line of foods. The newly formed Nestlé and Anglo-Swiss Milk Company had factories in the Spain, Germany, United States and Britain. Soon, the company had full-scale manufacturing in Australia with warehouses in Hong Kong, Singapore. Most production still took place in Europe.• After many M&A Nestlé is --- Currently, having their principles,

which is to provide the best products throughout the world. As the leading Food and Nutrition, Health and Wellness Company, Nestlé provides the best food for anytime of day and for anytime of your life.

Introduction to the MNC Nestlé….

Nestle

India and Nestle

India and Nestlé……..• After India's independence in 1947, the economic policies of the

Indian Government emphasised the need for local production. NESTLÉ responded to India's aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab.• NESTLÉ has been a partner in India's growth for over a century now

and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods.

Nothing what appears outward is same as

inward….!!!!So lets understand what the company Nestlé

is….

Question

This analysis is a framework or tool used by marketers to analyse and monitor the macro-environmental factors that have an impact on an organisation. The result of which is

used to identify threats and weaknesses which is used in a SWOT

analysis.What is this analysis????

Pestle Analysis

PESTLE analysis……

•Political factors.• Economical factors.• Social factors.• Technological factors.• Legal factors.• Environment factors.

• Political factors.Since the company has to deal with many diversified communities it

has to consider the different factors like- it has to build the plant according to a country’s political stability, good tax incentive, skilled workforce and the like.

For ex. it has chosen Malaysia to be the regional manufacturing centre for NESCAFE, it should be very careful dealing with Emerging economies for political stability is weak.

Pestle Analysis

• Political factors.• Economical factors.

It has started preparations of the beverages, baby food, pet food and the like. And its also working in more than 85 countries and hence the economical factor comes in. It also requires profits. Due to different economic policies in different countries it has got problem to meet all the customers and also that cost of raw material also increased.

Pestle Analysis

• Political factors.• Economical factors.• Social factors.

Education level had increased in the developing and developed nations the people are aware of the quality of the products. Since the Nestlé is an MNC is has to maintain the international standards in production. And in has. And also that the culture difference will be there in different countries to which it has to give respect to.

For example, Kit-Kat's formula is almost different everywhere. A Russian Kit-Kat is smaller than a Bulgarian, but less sweet than Germany's Kit-Kat. While in Japan, the strawberry Kit-Kat is all the rage.

Pestle Analysis

• Political factors.• Economical factors.• Social factors.• Technological factors.

The impact of the IT development in the market had created a new approach to people respond to the ADVT., so to transform people to leads and then to prospect is entirely depends on the technology. E-commerce has grown into a giant in the economy so it has to cope with the rivals..

Recent study had shown that Nestlé had been using the efficient processes which have reduced the wastage..

Pestle Analysis

• Political factors.• Economical factors.• Social factors.• Technological factors.• Legal factors.

Nestlé has to face the labour laws of the different countries and has to abide by the minimum wages to be given to workers. It should also abide by the rules and regulations in time of setting up also. It should also need to protect the trademark and should not imitate the other ones.

Pestle Analysis

• Political factors.• Economical factors.• Social factors.• Technological factors.• Legal factors.• Environment factors.

There always been problems with environment with all the MNCs for their interest lies in the profits and not the environment. So all the governments will impose some of the restrictions on the company or the product. The certificate for environment is ISO-14000 where as ISO-9000-9003 will deal on quality of the product…

Pestle Analysis

Strategy

After having seen the factors affecting the MNC now we will see what are Nestlé’s strategies to go to public.

MPS

Market Penetration Strategy(MPS)…....• The strategy meaning is that what it does to reach out the Public.• They do something called Market Penetration Strategy..• It simply means that to increase the market share of the existing

products. Something like- buy one and get one.• It will also involve the 4Ps which are

ProductPricePromotionPlace

4Ps

4Ps•Product

Product in the international marketing is the extent to which the product is standard and differentiated.

Ex. Nestlé is using the differentiated products of Kit-Kat in different flavours for different countries. A Russian Kit-Kat is smaller than a Bulgarian, but less sweet than Germany's Kit-Kat. While in Japan, the strawberry Kit-Kat is all the rage.

•PromotionPromotion basically means putting forth its own products.So Nestlé promotes its products through advertisement, direct

marketing, personal selling, sales promotion. This will ensure that children will get attracted and would want to have it.

4Ps

4Ps

•PriceInternational Price for any product depends on the various

factors like- trade between the countries, exchange rates, tariffs, taxes, government regulation, competition.

Thus Nestlé prices the product with regard to all these things and the price will change from country to country.

4Ps

4Ps

•PlacePlace means how does any company place its product or

distributes. This step is difficult because the company is based in home country but has to control the overseas subsidiaries.

For ex. Nestlé may hire a local person to take the charge of the subsidiary if any problem arises with regard to warehousing or selling markets.

4Ps

4Ps

For every company be ita MNC

or a non-MNCthere will be strengths and weaknesses, let’s see those

..….

SWOT Analysis

Strengths…. • Product diversity : Nestlé is highly diversified country and is operating

in many different markets. It has economics of scale and is performing better.• It has well established relationship with many reputed brands.• Brand value : Nestlé has become the one of the top ten reputable

companies in the world in the annual, in 2013. A report published by Forbes, Nestlé became 43rd position in the World’s most valuable brands.

Weakness….• Incident in India : in recent years in India we know that MAGGI had

been banned because of the unfair trade practices, thus affecting the brand value of the Nestlé.• Nestlé had to reduce the sugar content in its products around 2004

because it was affecting the people in longer lives causing diabetics among the American children.• There was a strong competition by other brands. When it entered the

France it was dominated by the existing brand DANNON

SWOT Analysis

Opportunity….• It can open up a online retail store and thereby it has a new

opportunity to grow bigger.• Demand for healthier products : now that people are becoming more

of health conscious it has a great opportunity to increase its product line and width. It also has the strong R&D team.• It can increase its focus on the developing nations.

SWOT Analysis

Threats….• There is a pressure from large retailer like Wal-mart to cut down the

prices. • The growing use of new retail channels like Amazon prime may not

favor the traditional ones.• With the growth of the world economy the prices of the raw materials

are also going up.

SWOT Analysis

Quote

“At Nestlé, we believe that

Quality = Trust”

“Quality is not an accident.It is a passion that meets stringent norms at everystep and ensures safety”

Quote

Conclusion

Conclusion • On the day Nestlé was introduced, it was only food for infants. As

time went by, Nestlé has grown to be a famous brand. Today, Nestlé is one of the most famous and successful foods and drinks producers. Besides that, Nestlé will always try to counter threats and competitor, such as the current products or new product entrants. Therefore, Nestlé still has the potential to grow more and continue to be the one of the leaders in the market share.