STRATEGIC MANAGEMENT

NESTLE Presented by:Lupescu EcaterinaLeu Ingrid Teodora

The customer groups are divided by taking into consideration their demand of features in the products. Such groups are called Market Segments. The firms divide the market on the base of different factors including region, taste, age group, gender bases, religion beliefs etc. Firms have started targeting the smaller groups in order to satisfy the needs of their customers.

o. Regiono. Tasteo. Age Groups & Genders

Nestle is a food and beverage Global Company, with circa 500 factories around the globe. brands and beverage products: milk products, nutrition and ice cream; prepared dishes and cooking aids; chocolate, confectionery and biscuits; pet care; food services etc.

NESTLE

The nutrition business - Health and Wellness

“Our core aim is to enhance the quality of consumers lives every day, everywhere by offering tastier and healthier food and beverage choices and encouraging a healthy lifestyle. We express this via our corporate proposition 'Good Food, Good Life‘.”

Nestle Nutrition program: products for infants young and elderly health conscious consumers Nestlé Home Care (high-nutrition foods and nutrition-related services)

NESTLÉ´s CENTRAL GROWTH STRATEGY

According to the Ansoff Matrix, diversification is the point where the company moves away from existing market and existing products. The strategy of NESTLÉ when launching thenutrition business is to get a foothold in different markets through different products. It is a competitive advantage that NESTLÉ has created recently. However this strategy does not drive NESTLÉ to a Blue Ocean as it does not create an unknown market. The competition still exists in a red ocean, where many companies try to get greater share of existing demand.

DIVERSIFICATION

ACTION FRAMEWORK (Blue Ocean)

SEQUENCE OF BOS

NESTLÉ´s new strategy doesn’t satisfy the Sequency of BOS. The reasons are for the Price, which is not accessible to the mass of buyers and also because of the Cost, as the company had to spend a lot on R&D for the new range of health and wellness products.

Cost DriversNestle's market leadership and leading brands provide economy of scale whichis important as NESTLÉ has high product development costs. It takes advantageson country specific differences,addaptingit´s products to the host country.Market Drivers The presence of global customers is a market driver that could be related to NESTLÉ´s need for internationalization.

YIP’S DRIVERS FRAMEWORK(Drivers of Internationalization)

Competitive drivers

Interdependence between countriesincreases the need of internationalizationespecially companies like NESTLÉ, where the parent country´s market is too smalland the competition is fierce. Globalized competitors would pressure NESTLÉ to adopt an international strategy, as they would be competing inside NESTLÉ in the domestic market.

YIP’S DRIVERS FRAMEWORKDrivers of Internationalization

Government driversNESTLÉ´s strategy in foreing marketsis to avoid the disadvantages of policy issues, operating mainly through joint ventures and partnerships with local companies avoiding this risks.

“Part of Nestle's recent success has been down to its ability to minimizecurrency and raw material price fluctuations. This is all the more impressive considering the strategy of acquisition that the company has pursued, and the company will be optimistic that economies of scale, and efficiencies gained through the successful integration of these acquisitions will only improve profits further.”

Nestle: Healthy operations yielding healthy profits

YIP’S DRIVERS FRAMEWORKDrivers of Internationalization

Unique capabilities: NESTLÉ exploitsadvantages in technologies and scientific capabilities around the world. It has strong R&D investments in manycountries. Product tehcnology centers are present in 34 countries and 4 in-house fundamental research centrescounts with partnerships with universsities around the world in orderto exchange experiences with their centres and explore overseas knownledge in the filed ofnew technologies and development.

THE INTERNATIONAL VALUE FRAMEWORK

NESTLÉ international strategy is global. The coordination of the activities is high and Cofiguration ofActivities is disperse. Uses international value Networks.

INTERNATIONAL STRATEGIES

Joint ventures and alliancesNESTLÉ owns some world´s well known brands across diverse products categories. It´s diverse portifolio is it´s global leadership. Enters foreing countries through joint ventures and alliances that avoid the risks of lack of knownlege on target country

ENTRY MODES

1/3 of the Britain population hasn’t got a perception of the NESTLÉ name. The company failed in the UK in what concerns linking it´s name to it´s well known brands. Less then 5% of NESTLÉ´s total profit is from UK market. 

The marketing strategies in the UK market are weak. There is a need for consolidation of the advertisement in a global pattern. In the UK NESTLÉ works with a number of local agencies.

The CEO doesn’t like the idea of standardization of products, as he thinks food needs to be too customized to the local market conditions in each country.

The NESTLÉ brand needs to be more evident in the packaging (in the UK)for gaining the credibility the brand already has all over the world.

NESTLÉ IN THE BRITAIN

The companyowns 32 billionaire brands, that generate more than CHF1 billion ($1.13 billion) in revenues annually. In FY2012,these

billionaire brands achieved 7% growth in revenues through organic means.

NESTLÉS´S NUMBERS

MARKETLINE.COM, 2013. Nestle SA. Available: http://store.marketline.com/Product/nestle_sa?productid=73C32CD1-213A-4E6B-95D2-40255DDFB362. Viewed 6 July 2013.

TUNGATE, M., 1999. Nestle makes moves to befriend the British. Marketing, , pp. 15.http://search.proquest.com/docview/215009577?accountid=132872

COMPANY SPOTLIGHT: NESTLE' 2007, Marketwatch: Food, 6, 6, pp. 30-37, Business Source Premier, EBSCOhost, viewed 5 August 2013

COMPANY SPOTLIGHT: Nestle' 2004, Marketwatch: Drinks, 3, 11, pp. 21-25, Business Source Premier, EBSCOhost, viewed 5 August 2013.

MINTZBERG, LAMPEL, QUINN and GHOSHAL, 2003. The Strategy Process: Concepts, Contextes, Cases. Pearson, Ed.4. New Jersey, pp. 115-208.

REFERENCES

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