Strategic Analysis of Nestle

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Nestlé vision is to meet the various needs of the consumer everyday by marketing and selling foods of a consistently high quality. Their objectives are to deliver the very best quality in everything they do, from primary produce, choices of suppliers and transport, to recipes and packaging materials.

Their mission is they strive to bring consumers foods that are safe, of high quality and provide optimal nutrient to meet physiological needs. Nestlé helps provide selections for all individual taste and lifestyle preferences.

Nestlé purpose is to offer safe, tasty, convenient and nutritious foods to improve health and well-being of consumers of all ages all over the world. To meet the needs and desires of today’s and tomorrow’s consumers, Nestlé is strongly committed to Research and Development (R&D) to improve products and develop new foods with specific health benefits (Nestlé.com, 2012).

EXTERNAL ANALYSIS

- General Environment Analysis

The general environment is composed of dimensions in broader society that influence an industry and, indirectly, the firms within it. They group these dimensions into six environmental segments such as demographic, economic, political, socio-cultural, technological and global. These structured segments are external to the firm. The challenge to the firm is to scan, monitor, forecast, and assess those elements in each segment that are of the greatest importance. These efforts should result in recognition of environmental changes, trends, opportunities and threats.

- Demographic Segment

Nestlé’s product is for everyone. People from any area, any culture, any age, and income will drink water. It is not any luxury item which is used by a specific people. Nearly all age from young to old people can produce Nestlé. And all six continents are their customer. For instance, Nestlé segment into different of age. For baby, they have Nestlé baby foods while young people can drink Milo, Nescafe or eat ice cream, chocolate and cookies. In Vietnam, Nestle has the Maggi brand with many kinds of Asia sauce, but Maggi do not exist in England because of the different in the geographical taste.

- Economic Segment

Although Nestlé is leading food industry, it shares its knowledge and expertise with local small and medium companies. It helps entrepreneurs to compete in the new free trade environment which will ultimately benefit the industry and the economy by making the market growth. Besides that, Nestlé also collaborates with local government to provide technical assistance to farmers in planting and harvesting crops. The farmer will get income and Nestlé will get to purchase good and fresh raw materials to produce their food. By having own local productions, Nestlé should no longer needs to import any raw materials from other country where they will save much more money. It will also benefit the consumers whereby consumers could enjoy the local productions with low price. More consumers will use this product and therefore Nestlé will gain more profit from that.

- Political/Legal Segment

Political factors are important especially in food industry. The company policies are affected and its budget is also affected. Nestlé provide food assurance to provide assurance to the consumers that Nestlé’s products are manufactured, imported and distributed under the strictest hygienic and sanitary condition. Besides that, to ensure that consumers do not buy any fake products, Nestlé’s products are always come with the seal of guarantee. By having the seal of guarantees, consumers are now more confident and trust of Nestlé’s products. Strict quality control played a role in political factor too. It means that Nestlé’s products quality will not be different with other countries. Consumers are guarantees with full satisfaction of the products all over the world.

- Socio-cultural Segment

A good diet and adequate food supply, the central for promoting health and well-being is the focus of every person even these days; whether people tend to value products that incorporate with them healthy benefits. Obviously, these types of goods are preferred more than that of junk foods and its relative products. Moreover, generation Y cohorts, those born from 1980s-2000s, possess characteristics such as acceptance to change and being technologically savvy. These kinds of characteristics should coincide to the firms’ aggressiveness of using technology especially that this is also the tie of the influx of technology in the Europe.

- Technological Segment

Internet and Mobile Technology is currently growing so rapidly in the market where almost all of the people nowadays will get contact with it. Nestlé could use this advantage to benefit them by using technology to promote their products over those advanced technology. Customer could get any information from their site. Nestlé’s employees could use this internet service to connect to its industry in other country such as Australia, Singapore, U.K and more. They did research and development by using the technology to find more information to satisfy the local tastes and cultural flavours in each country market. By understanding what each country asks for, Nestlé could market difference product according to the customer demand in difference country. It is already proven that the technology factors are important for Nestlé Company.

- Global Segment

Nestlé Company improves their operational efficiency by integrating the company’s businesses on a global scale. They are now transitioning to become a genuinely global food company, to behave as one. Nestlé has a dynamic global network of Nestlé R&D centres working on scientific research and product development. They have the world’s largest food and nutrition research organisation, with about 5000 involve in R&D. Nestlé’s global R&D is applied locally to meet different consumer needs and preferences through over 300 Application Groups worldwide.

(The detailed data are given in Appendix 1)

- The Industry Environment Analysis

Compared with the general environment, the industry environment has a more direct effect on the firm’s strategic competitiveness and to earn above-average returns. The intensity of industry competition and an industry’s profit potential are functions of five forces of competition such as the