Business Plan Case Analysis

The report evaluates the potential success of Nestle using a structured approach. A brief description of the company is followed by an industry analysis which opens up the discussion of product uniqueness, marketing, operating and financial plans of the company. This is useful for assessing the success potential of Nestle. Finally, the report concludes with an assessment of risk factors and suggestions for combating them.

Running Head: BUSINESS PLAN CASE ANALYSIS
Business Plan Case Analysis
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1BUSINESS PLAN CASE ANALYSIS
Executive summary:
The report evaluates the potential success of Nestle using a structured approach. A brief
description of the company is followed by an industry analysis which opens up the discussion of
product uniqueness, marketing, operating and financial plans of the company. This is useful for
assessing the success potential of Nestle. Finally, the report concludes with an assessment of risk
factors and suggestions for combating them.

2BUSINESS PLAN CASE ANALYSIS
Table of Contents
Introduction......................................................................................................................................3
Industry analysis..............................................................................................................................3
Determination of Nestlé’s unique value proposition.......................................................................4
Marketing plan.................................................................................................................................5
Operational plan...............................................................................................................................5
Financial plan...................................................................................................................................6
Risk analysis....................................................................................................................................7
Conclusion.......................................................................................................................................7
References:......................................................................................................................................9

3BUSINESS PLAN CASE ANALYSIS
Introduction
Founded back in the 1860s("History", 2018) in Switzerland, Nestle has evolved as one of
the largest food companies in the world. The products range from medical, baby food and bottle
water to pet foods and snacks. Specific fundamental rights guide the marketing and planning
strategies of the company. Innovation and renovation of product ranges maintain the balance
between product lines and geographic activities. The success probability is high since
businesspotential (long-term) is never sacrificed for performance (short-term). The chief aim of
the company is to meet the daily needs of customers all around the world by providing them with
healthy and nutritious food. This report analyses the business plan of Nestle with close reference
to the industry, marketing plan, operational plan, and financial plan. Following this, the paper
assesses the probable risks the company is likely to face and concludes with suggestions that
could help the company combat the risk factors.
Industry analysis
In terms of production, Nestle is ranked fifth in the world and is currently world’s most
diversified manufacturers of food. Nestle focuses on the efficiency of distribution and fast
processing. Although Nestle is the undisputed leader in the industry of food processing, it faces
minor challenges due to the global economic meltdown. At present, Nestle has about 30 brands
that earn revenue independently, adding up to a billion francs each year. The company aims to
create long-term value for catering to the needs of the customers and uses a decentralized
approach for extending the scope of its business. The unique manufacturing operations of the
company accounts for its competitor advantage, since everything from supply chain, plant

4BUSINESS PLAN CASE ANALYSIS
processing and technology, to marketing is carried out in privatized plants. If innovation is all
about creating value among society and customersas opined by Osterwalder, Nestle is on the
right track of creativity and innovation. Moreover, the company does enough justice to its tagline
“Good Food, Good Life”, by focusing it chief goal on advancing nutrition and health (Nestle,
2013). Nestle promotes the nutritional values of its products by expanding the product ranges to
including more food items of nutritional value. The Health Science branch created by the
company additionally validates the company’s commitment to creating pharmaceutical foods,
health and nutrition. This subsidiary is dedicated to bridging the gap between food and
pharmaceuticals, untying the accessibility of drugs and food. Technological innovation is the
chief force driving the food processing industry. Nestle has invested about two billion dollars for
new technologies that support freeze-drying, chilling and dehydrating. Nestle has therefore
emerged as an impressive leader in the competitive market of food industry.
Pestle analysis:
Political factors:
 Unstable government regulations in
different countries might be
unfavorable for market sales.
 Lobbyism in countries like the United
States affect affects business growth
and brand reputation.
Economic factors:
 The supply chain network of Nestle is
efficient and is known as one of the
most accessible brands for consumers.
 The recent ban of Maggi led a sales
decline of 17%.
Social factors:
 Nestle organizes social programs in
public interest.
 The training programs for farmers and
Technological factors:
 Nestle has made valuable
contributions in the world of food
technology.

5BUSINESS PLAN CASE ANALYSIS
skill development for women are two
good examples.
 Probiotics, fermentations, foam
boosters, material science were all
initiated by Nestle.
Legal factors
 News of using child Labor and the
Maggi scandal have jeopardized the
company’s legal proceedings.
 The controversies concerning water
supply and infant milk formula have
caused legal troubles to the company.
Environmental factors:
 Nestle has strived towards sustainable
development as reflected in their
environmental friendly manufacturing
and packaging process.
 Water conservation and eco-friendly
packaging are notable actions aimed at
environmental conservation.
Determination of Nestlé’s unique value proposition
Like most large-scale companies, Nestle has formulated a statement that distinguishes the
activities and services provided by the company from rival firms and describes the benefits of the
company’s offering. This is highly integral to the success of any business since the buyer
decisions of consumers is heavily dependent on the product type; more unique the product,
greater chances does it have at sales. The reliable and convenient delivery of top beverages both
for home and business purposes is a point to note(Nestle.com, 2018). The new “anytime
ordering” of facility enables the customers to avail services at any time of the day. The provision
is ideal for planning events and special occasions since there is no limit for quantity of
deliverables. The exclusive range of purified bottled water is enhanced with rich minerals for
better taste. This is to help families adapt a healthier lifestyle and to make it enjoyable.

6BUSINESS PLAN CASE ANALYSIS
Marketing plan
. The consumer range for the product varies from high upper class to low middle class
strata of the society. Consumers belong from all age categories, depending on their requirements.
Most consumers at least have an average incomes, although people with high incomes opt for
Nestle products. The diverse product ranges include beverages, milk products, cooking aids,
prepared dishes, and chocolates. The price varies for each product, depending on the ingredients,
quality, and cost of manufacturing. The packaging and sizing options also determine the pricing.
Competitive pricing is offered for products like Munch and Kitkat, where the substitution threats
are considerably high. Nestlé’s distribution strategy is based on the FMCG process of
distribution. It follows the chain of: manufacturing, agent, distributorship, retailor, consumer
manufacturing, bulk buyers and finally consumers(Bhasin, 2018). Nestle has two different
distribution forms and introduces tactics such as trade discounts so that the channels remain
motivated. The high recall value of the brand can be accredited to its strong marketing strategies.
The Marketing Mix of Nestle are as follows:
Price- Products are priced according to quality and demand. Nestle offers a variety of packaging
options and product sizes for consumers. Competitive pricing is offered for products like Munch
and Kitkat, because of the tough competition.
Place-Nestle’s target audience is geographically dispersed in both urban and suburban crowds.
For distribution, Nestle uses the FMCG strategy. The products of the company have a distinctive
brand positioning while the trade discounts keep the channels motivated. The only challenge in
terms of market place is convincing the retailers to sell Nestle products instead of Cadbury.
Promotion- The advertising campaigns for Nescafe and Maggi have proved quite inviting in the
past. The innovative and witty promotion tactics have seen the company to success. For instance,

7BUSINESS PLAN CASE ANALYSIS
Kitkat’s “take a break” commercial has done excellent marketing for the product, since it
appeals to the elderly and a("Kit Kat Digital Advert, 2018)aged alike.
Product- The diverse product range caters to the taste of a huge consumer base. Nestle offers
large variety of FMCG products of premium quality. The wide array of products accommodates
almost every kind of need.
Operational plan
The Premium Quality Policy of Nestle ensures food safety and builds trust by offering
services and production that live up to the expectations of the consumers. The operational
strategies are designed specifically to support people who are willing to adopt a healthy lifestyle.
Industry-oriented research accompany the operations design of the management. Besides that,
the development and research activities of the company focus on the exploration of the new
nutritional therapies that enhance the improvement of health and lifestyle of the consumers.
These activities are helping the company create awareness among different communities to take
better care of aspects concerning health and wellbeing. The operations plan is hence largely
based on informing the world about the impacts of their activities. For achieving the aim, the
company shares insights concerning the health and welfare challenges, global nutrition, engages
will key leaders, stakeholders, policymakers, and builds prospective partnerships with other
large-scale companies. The several science-based programs organized by the company that
promotes the importance of health and nutrition in regular life, have convinced many customers
who are drawn towards the healthy products of Nestle and buy them for their nutrition value.
Changes in government policies have caused significant modifications in the operational plans,
but the company continues to evolve by making the company operations more transparent and
affordable for global customers(www.coursehero, 2018).

8BUSINESS PLAN CASE ANALYSIS
Financial plan
The accounting policies of Nestle conform to the IFRS and the financial statements are
applied to the policies. The income statement declares the revenue collected from sales when the
rewards and risks of goods ownership are transferred to buyers via shipment. The cost of
production determines the cost of the goods, which is adjusted for discrepancies of inventory.
Any other expense concerning promotions and advertisement is included in the total cost of
production. The company also earns revenues from the contracts it has made with the customers.
Nestle has more acquisitions than dispositions, although the financial statements of years 2016
and 2017 suggest that the cash inflow on certain disposals of the business were significant and
could cost the company a minor debt.
Startup Expenses
Buildings / Real Estate
Purchase
$
40,000
Construction 10,000
Remodeling -
Other 500
Total Buildings and R / E
$
50,500
Leasehold Improvements
Item 1
$
5,500
Item 2
$
5,500
Item 3
$
5,500
Item 4
$
5,500
Total L / H Improvements
$
22,000
Capital Equipment List
Furniture
$
55,000

9BUSINESS PLAN CASE ANALYSIS
Equipment
$
1,500
Fixtures
$
1,500
Machinery
$
6,500
Other
$
2,500
Total Capital Equipment
$
67,000
Location and Admin Expenses
Rental
$
-
Utility Deposits 5,500
Legal and Accounting Fees 4,500
Prepaid Insurance 55,000
Pre-opening Salaries 5,500
Other 5,500
Total Location and Admin Expenses
$
76,000
Opening Inventory
Category 1
$
2,560
Category 2
$
2,560
Category 3
$
2,560
Category 4
$
2,560
Category 5
$
2,560
Total Inventory
$
12,800
Advertising and Promotional Expenses
Advertising
$
1,500
Signage
$
1,500
Printing
$
1,500
Travel & Entertainment
$
1,500
Other / Additional categories

10BUSINESS PLAN CASE ANALYSIS
-
Total Adv and Promo expenses
$
6,000
Payroll and payroll taxes
Expense 1
$
25,000
Expense 2 25,000
Total Payroll and payroll taxes
$
50,000
Sources of Capital
Owners' Investment (name & % ownership)
Your name & % ownership
$
6,000,000
Other Investor 25,000
Other Investor 2,500
Other Investor -
Total Investment
$
6,027,500
Bank Loans
Bank 1
$
2,500
Bank 2 2,500
Bank 3 -
Bank 4 -
Total Bank Loans
$
5,000
Other Loans
Source 1
$
65,000
Source 2 25,000
Total Other Loans
$
90,000

Running Head: BUSINESS PLAN CASE ANALYSIS
Year 1 Year 2 Year 3 Year 4 Year 5 Total
Operating activities
Net income $0 $0 $0 $0 $0 $0
Depreciation $27,900 $28,458 $29,016 $29,574 $30,132 $145,080
Accounts receivable $0 $0 $0 $0 $0 $0
Inventories $0 $0 $0 $0 $0 $0
Accounts payable $0 $0 $0 $0 $0 $0
Amortization 5,000 5,000 $5,000 $5,000 $5,000 $25,000
Other liabilities 25,000 25,000 $25,000 $25,000 $25,000 $125,000
Other operating cash flow items 0 0 $0 $0 $0 $0
Total operating activities $57,900 $58,458 $59,016 $59,574 $60,132 $295,080
$0
Investing activities $0
Capital expenditures $0 $0 $0 $0 $0 $0
Acquisition of business 15,000 15,000 15,000 15,000 15,000 $75,000
Sale of fixed assets $10,000 $10,000 $10,000 $10,000 $10,000 $50,000
Other investing cash flow items 0 0 0 0 0 $0
Total investing activities $25,000 $25,000 $25,000 $25,000 $25,000 $125,000
Financing activities
Long-term debt/financing ($95,000) $0 $0 $0 $0 ($95,000)
Preferred stock 0 0 0 0 0 0
Total cash dividends paid 5,000 5,000 5,000 5,000 5,000 25,000
Common stock 0 0 0 0 0 0
Other financing cash flow items 5,000 5,000 5,000 5,000 5,000 25,000
Total financing activities ($85,000) $10,000 $10,000 $10,000 $10,000 ($45,000)
Cumulative cash flow ($2,100) $93,458 $94,016 $94,574 $95,132 $375,080
Beginning cash balance $0 ($2,100) $91,358 $185,374 $279,948
Ending cash balance ($2,100) $91,358 $185,374 $279,948 $375,080

Running Head: BUSINESS PLAN CASE ANALYSIS
Risk analysis
Despite being the leading brand in food industry, Nestle has been facing challenges that
threatens the stability of the business. The company had been previously criticized for employing
child labor, especially for the supply chain of cocoa. The developed media system and the surge
of social awareness will ensure an unfavorable reputation of the company among the consumers.
The boycott and ethical issue might drive the company to ruins. Nestle was accused of
aggressive marketing, in the third world orders particularly, which has led to many conservative
countries boycott some of the culture-sensitive product. There are considerable challenges with
respect to the availability and sustainable usage of raw materials. Apart from natural disasters
bad weather conditions, unexpected consumer demands and inaccuracy of received orders in
inventory or in-hand stock. Restructuring the organization might also impose threats to the
traditional employee contributions. The company also identified issues with the pyramidal model
of organization and had to subsequently develop the “on the Move” program.
Conclusion
According to the discussion under the specific sections, Nestle has a strategically
formulated management plan which enhances its potential for achieving success. However, the
operations manager must be cautions of the risks that threaten the stability and growth of the
company. Some recommendations for avoiding the risks would be to support WHO campaigns
while marketing complementary goods, advertising with free samples and make suitable
provisions for building multiple relationships with other suppliers of raw materials. It must be
noted that a majority of the success factors of the company lies with its efficient and tactful
marketing strategies and financial plan. If there is one area that Nestle needs to work on, it is the

BUSINESS PLAN CASE ANALYSIS 1
aspect of risks and challenges associated with the operational functions of the business.
Additionally, Nestle should also come up with more unique value propositions for extending the
scope of the business. A company is characterized by its products and diversity in product range
is the best strategy to extend consumer base.

BUSINESS PLAN CASE ANALYSIS 2
References:
("Kit Kat Digital Advert By Doubleyou: Take a break | Ads of the World™", 2018)
Bhasin, H. (2018). Marketing Strategy of Nestle - Nestle Marketing Strategy. Retrieved from
https://www.marketing91.com/marketing-strategy-nestle/
Cordón, C., Hald, K. S., & Seifert, R. W. (2013). Strategic Supply Chain Management.
Routledge.
History. (2018). Retrieved fromhttps://www.nestle-ea.com/en/aboutus/history/history_detailed
Nestlé executive: ‘We are all facing risks of having supply challenges’. (2018). Retrieved from
https://www.euractiv.com/section/agriculture-food/interview/nestle-executive-we-are-all-
facing-risks-of-having-supply-challenges/
Nestle, M. (2013). Food politics: How the food industry influences nutrition and health (Vol. 3).
Univ of California Press.
Nestle.com. (2018). Retrieved from https://www.nestle.com/investors/overview
Sarno, V., & Barmo, M. (2014). Sustainability Management in the Agri-Food Companies: A
Practical Guide. Quality-Access to Success, 15(141).
www.coursehero. (2018). Retrieved from https://www.coursehero.com/file/11563244/Nestles-
Strategic-and-Operational-Plan/