Nestle: Sustaining Growth in Mature Markets

Presented by-

Group-5

Introduction of Nestle

Leading position in global food industry.Objective : to implement strategic and organizational

structure.Diversified in operations( global).Faced many challenges both internally and externally

Swot analysisStrength:• Oldest and leading food industry.• Role model company of thinking globally as well

as locally.• Give nutritional value.

Weakness:• Couldn’t develop much on organic growth.• Has many takeovers of other small companies.• Several low margin product segment.

Opportunity:• Can much develop in organic growth in near

future through R&D.

Threat:• Competition from global competitors like

Unilever, Master food.• From local competitors it also facing threat as

they are also developing in terms of quality.

Earning the Right to Grow

• Brabeck has realized that Nestl’e has to adopt innovative policy to strengthen it’s position in the market & for this it requires significant investments in the group’s R & D & marketing capabilities.

• This objective can be achieved by reducing the costs, which can be used to strengthen brands, leads to new innovation etc.

• By keeping in mind Brabeck launched a manufacturing efficiency program called MH97,which will be helping in reducing raw material costs & optimizing production process.

• Again Nestl’e initiated a fitness initiative for the particular group who were not targeted before.

• In the year 2000 Nestl’e launched GLOBE which was established to increase operational efficiency & to install common information system..

The Nutrition & Wellness Initiative• Brabeck realized that with low growth products they are not

going to create value in long run. So they concentrated on wellness & nutrition factor.

• Nestl’e devotes about one-fifth of its overall R&D budget to nutrition research.

• Three quarters of its budget is used at the Nestl’e Research Center which focus on health & well-being.

Strengthening Innovation• Nestle Ranks 1st in the field of innovation of Global food and nutrition sector,

where a powerful team or sector drive these innovation through intensive R&D to improve the existing product and creating tomorrow’s nourishment.

• The main objective of Brabeck was internal growth by strengthening the company by using three strategic measures namely:

- Setting the company’s R&D a challenging target of renovating products 1/5 th part i.e. packaging, shaping, taste or quality check.

- A strong budgetary increase in its R&D to achieve certain targets, which lead to increase in efficiency and improvement in the operational level.

- R&D connection operates where the PTC (Product Technological Center) transformed Nestlé’s fundamental research centers which led to transformation of products into the market more swiftly.

• Finally the cluster and cross-divisional project was designed to improve the communication and knowledge between R&D and rest of the company, which led to cluster results in synergies, shared investment and faster product roll-out.

External Growth As a Platform For Organic Growth

Peter Brabeck faced the challenge of having to improve the company's profitability in order to generate the financial means required to invest in growth initiatives.

  Launching a suite of process innovation initiatives, Brabeck generated the funds necessary to spur

organic growth.

  Peter Brabeck invested strongly in product innovation while relying on a balanced combination of

incremental and radical forms of innovation.

  Changes were made in the company's organizational structure to provide the flexibility required for

innovation and to speed up product development processes.

Both acquisitions and corporate venturing were used to support Nestle's research and development (R&D) departments and to provide platforms for further organic growth.

 

Nestle later ventured into nutrition and food science which significantly accelerated the groups innovation process and besides the acquisition , divestitures played an important role to the groups portfolio and lead to the objective of sustainable organic growth

Nestle Today

Total Sales of Nestle in the year 2005 is 92000in (CHF millions) which has increased from 1995 by 31.43%, indicates that the company sales is increasing year by year.

Net income of Nestle in year 1995 was 4000 and it was increased to 8000 in 2005 by 100%, which indicates that the company net income has been increased from previous years.

Net Sales per region,2005:-

38%

31%

13%

12%

3% 3%

EuropeUSA and CanadaAsiaLatin AmericaAfricaOceania

Net Sales per product segment,2005:-

26%

25%

18%

12%

12%

6%1%Beverages Milk

products,nutrition and ice cream

Prepared dishes and cooking aids

chocolates,confectionaryand biscuits

Pet care Pharamaceuticalsand cosmetics

Others

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