Nestle. Case study

Июль 28, 2022

Содержание

2. Largest nutrition and foods company in the world Founded and headquarterd in Vevey, Switzerland Nestle originated
3. Key Figures Revenue 107.6 billion Operating Income 15.7 billion Profit 10.43 billion Total Assets 110.9 billion
4. Nestle has 8500 brands with a wide range of products across a number of markets including:
5. Growth Strategies Forced by Switzerlands small size Established its first foreign offices in U.S.A and Great
6. Emerging Markets Does it make sense for Nestle to focus on emerging markets? Infrastructure / Political
7. Profits of Adversity Nestlé's sales in emerging markets up 8.5% last year Double the rate of
8. Growth of Emerging Markets Propensity 1 billion consumers in emerging markets will increase their incomes enough
9. Population Growth Distribution
12. Investing In Emerging Markets “Nestle will receive $28.1 billion from Novartis for its majority stake in
13. Investing in Emerging Markets “Nestle may purchase bottled water businesses in markets such as China” Frits
14. Strategy to work effectively Flexibility is another distinctive competencies which Nestle company was able to achieve
15. The Nestle company uses that approach in order to the convenient fact that the consumer is
16. Nestlé's strategy in emerging markets The Key strategy: Customization rather than globalization.
17. Executing the strategy Flexibility Local adaptation A long-term focus
18. In Nigeria: the company hired local singers to go to towns and villages offering a mix
19. Nestle Organizational Structure Moving from Localization strategy to Transnational strategy Includes first mover advantage, local economies,
20. Nestle Organizational Structure Seven global strategic business units classified by food type (worldwide production divisional structure)
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Largest nutrition and foods company in the world
Founded and

headquarterd in Vevey, Switzerland
Nestle originated in a 1905 merger of the Anglo-Swiss Milk Company which was founded by Henri Nestle in 1866
Company grew significantly during the WWI and WWII
Operates in 86 countries
Employees 283,000 individuals.

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Key Figures
Revenue 107.6 billion
Operating Income 15.7 billion

Profit 10.43 billion
Total Assets 110.9 billion
Total Equity 53.63 billion (2009)

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Nestle has 8500 brands with a wide range of products

across a number of markets including:
coffee
bottled water
other beverages
chocolate
ice cream
infant foods
confectionary
pet food
…

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Growth Strategies
Forced by Switzerlands small size
Established its

first foreign offices in U.S.A and Great Britain in the late 19th century
Australia, South America, Africa and Asia in the first three decades of the 20th century.
By the late 1990s, Nestle had 500 factories in 76 countries, sold products in 193 nations
3% of its employees are located in Switzerland

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Emerging Markets
Does it make sense for Nestle to focus on emerging

markets?
Infrastructure / Political difficulties ?!
Nestlé Emerging Markets Division imports products from more than 20 countries, and exporting products to more than 40 countries.

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Profits of Adversity
Nestlé's sales in emerging markets up 8.5% last year
Double

the rate of the company’s total revenue
Sales from those regions totaled $33.15 Billion, more than any rival.

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Growth of Emerging Markets Propensity
1 billion consumers in emerging markets will

increase their incomes enough to be able to afford Nestle products within the next decade.
1/3 of its revenue from emerging economies and aims to lift that to 45% within a decade.
- CEO Paul Bulcke

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Population Growth Distribution

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Investing In Emerging Markets
“Nestle will receive $28.1 billion from Novartis for

its majority stake in Alcon, the maker of Opti-Free contact lens cleaners, giving it a cash pile exceeding the $26.5 billion that Google had on its books at the end of March. The Swiss company is starting a new 10 billion-franc buyback programme, though Nestle would rather invest in its business or make acquisitions”
CFO Jim Singh said on June 22

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Investing in Emerging Markets
“Nestle may purchase bottled water businesses in markets

such as China”
Frits van Dijk, head of Nestle’s Asian business, on June 22.
“Acquisitions would also be considered to expand its business selling nutrition products for athletes, such as PowerBar”
Nestle Nutrition CEO Richard Laube
Start cheap and introduce luxury later

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Strategy to work effectively
Flexibility is another distinctive competencies which Nestle company

was able to achieve to react as quickly as possible to changing environments.
As a consequence, company was able to respond to changes in local demand, cultural barriers and political fluctuation.
Ethnocentric behavior must be avoided in any circumstances in order to approach the market in the appropriated .

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The Nestle company uses that approach in order to the convenient

fact that the consumer is easier to reached because he is accustomed to this brand name and they think they know what they are buying.
The Nestle strategy was to be cultural awareness, which means a company should employ locals in order lower cultural barriers and resentments established by the foreigner.
Nestle believes that, the key to their success is customization rather than exaggerated globalization.

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Nestlé's strategy in emerging markets
The Key strategy:
Customization rather than globalization.

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Executing the strategy
Flexibility
Local adaptation
A long-term focus

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In Nigeria: the company hired local singers to go to towns

and villages offering a mix of entertainment and product demonstrations.

In China: Nestlé established its own distribution network, known as milk roads.

Executing the strategy

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Nestle Organizational Structure
Moving from Localization strategy to Transnational strategy
Includes first mover

advantage, local economies, global web, economies of scale
Strong local responsiveness, but production, training, and R&D becoming centralized
Management practices – spread knowledge, create learning effects, and transfer core competencies
“Glocal” philosophy and creating value

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Nestle Organizational Structure
Seven global strategic business units classified by food type

(worldwide production divisional structure)
Five regional units by geography (worldwide area structure)
Has created a global matrix structure
Example of a global matrix structure:

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Nestle. Case study

Содержание

Largest nutrition and foods company in the world Founded and

Key Figures Revenue 107.6 billion Operating Income 15.7 billion

Nestle has 8500 brands with a wide range of products

Growth Strategies Forced by Switzerlands small size Established its

Emerging MarketsDoes it make sense for Nestle to focus on emerging

Profits of AdversityNestlé's sales in emerging markets up 8.5% last yearDouble

Growth of Emerging Markets Propensity1 billion consumers in emerging markets will

Population Growth Distribution

Investing In Emerging Markets“Nestle will receive $28.1 billion from Novartis for

Investing in Emerging Markets“Nestle may purchase bottled water businesses in markets

Strategy to work effectivelyFlexibility is another distinctive competencies which Nestle company