Economics Assignment: Nestle's Market Strategy and Analysis

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student
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1ECONOMICS ASSIGNMENT
Table of Contents
Introduction:...............................................................................................................................2
Description of Company and Industry:......................................................................................2
Overview of the company:.....................................................................................................2
Industry overview:.................................................................................................................3
Industry Market Structure:.........................................................................................................5
Microeconomic analysis of Nestle:............................................................................................7
Elasticity of products:..............................................................................................................10
Recent events in food and beverage industry of Australia:......................................................12
Conclusion:..............................................................................................................................13
References:...............................................................................................................................14

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Introduction:
In this dynamic world of business, each small, medium or large-size business needs to
select proper business strategy as their respective market structure. This business strategy can
further help a company to sustain in a competitive business market through making sufficient
amount of profit. After globalisation, a firm needs to compete in international market with
foreign companies. Therefore, making standard product and delivering better services are
become an essential issue. In this context, it needs to mention that different types of
companies operate in different market structure based on characteristics of different
industries. Moreover, demand and supply of a company’s product or service depend on
various factors. The firm needs to understand the demand elasticity and supply elasticity of
their product. This can help the producer to charge prices accordingly (Thomason 2018). This
project intends to determine strategy of Nestle for the next 5 years covering various key
issues that have mentioned earlier.
Description of Company and Industry:
Overview of the company:
Nestle is an international company, headquartered in Switzerland. This is the largest
food and beverages company across the world, as it delivers large a vast range of food items,
such as medical food, baby food, dairy products, pet foods and coffee and tea and so on.
Nestle was established over 150 years ago and gradually has made a unique footprint in
international market (Nestle.com 2018). However, Nestle grew significantly after the First
World War. At present, Nestle sells its products in 189 countries. The chief aim of this
company is to provide sustainable as well as industry leading performance to the world. This
further helps Nestle to earn customers’ trust by increasing quality of life and offering best
quality of product for healthier future. At of 2017, around 323000 employees work in this

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company across the world (Pai 2018). Moreover, it has 413 factories over 85 countries. In the
same year, the rank of this company on the Fortune Global 500 was 64. Nestle possesses
some most recognisable brands all over the world including Nescafe, Maggie and Milo and
others (Garimella 2018). Thus, Nestle has become the leader of some fastest growing food as
well as beverages categories as mentioned before.
Figure 1: Constant return on Investment
Source: (Bee et al. 2015)
The above figure represents that the trend of constant return on investment of Nestle
has increased over the year since 1995. In this context, it needs to mention that Nestle is one
of the biggest shareholders of L’Oreal, which is the largest cosmetics company in this world.
Industry overview:
Nestle operates in a food and beverages industry. This sector is considered as
multifarious for its lucrative nature. This industry always experiences shifting of trends in
both developed and expanding markets all over the world. According to some market
researchers, if this dynamic industry takes a wrong step regarding their business decision then
it could experience competitive disadvantage (Chen 2018). Moreover, increasing
segmentation of foods as well as trends of healthy food and decreasing operational costs can