Strategic Management Analysis of Nestle Company

NESTLE COMPANY
Strategic Management analysis

Executive Summary
Organization is accompanied with the complex set of activities in which various
functions are performed to achieve the set objectives and goals. It is analyzed that strategic
planning is the process which is used by management of company to prepare the long term
business planning for their business. It is an organization management activity that is used to set
priorities, focus energy and resources, strengthen operations and ensures that employees and
stakeholders are working towards achievements of set goals and objectives. In this report, the
internal and external analysis has been implemented to identify possible threats, opportunity and
diversified business strategic plans of company. In this report, NESTLE Company has been
taken into consideration which shows the possible risk and business opportunity at large. The
NESTLE Company has established strong brand image which has shown that company has
increased its overall total revenue by 22% since last year. The market share of company has also
increased to 28% on international level which shows that company could grab more market share
by diversifying its business in other market sectors. It is observed in Asian countries, NESTLE
Company has increased its market share by following the market development strategy. It has
consistently followed market development strategy to grab more clients and increase its overall
turnover.

Table of Contents
Executive Summary.....................................................................................................................................1
Introduction.................................................................................................................................................2
Corporate Identification...........................................................................................................................2
Description of NESTLE company...........................................................................................................2
Business units of NESTLE Company......................................................................................................3
Source of Sustainable competitive advantage..............................................................................................4
Diversification of Nestle..............................................................................................................................7
Pestle analysis of Nestle for its business units...........................................................................................10
SWOT analysis of business units of Nestle Company...............................................................................13
Proposed strategy for future business planning of Nestle..........................................................................15
Recommendation.......................................................................................................................................16
Conclusion.................................................................................................................................................17
References.................................................................................................................................................17

Introduction
With the ramified economic changes, each and every organization is using strategic
management analysis to run the business effectively. It is observed that there are several internal
and external factors which may affect the business and company need to analysis all these factors
to formulate the effective strategic plans and procedure. In this report NESTLES Company has
been analyzed to prepare the strategic planning decisions. In the starting of this report, internal
factors analyses have been used to identify the strength, weakness, opportunity and threats. After
that, external factors analysis have been used to identify buyers behavior, suppliers strengthen,
threat of new substitutes and rivals offering in the market. In addition to this, diversification
strategy of NESTLE company and its business units and sub-units have been analyzed. It has
shown that company has been using the effective strategic plans and procedure to increase the
overall brand image and turnover at large. The strategic planning of the NESTLE company
focuses on the managing its business for long run and creating the core competency in the
business. The competitive advantage of NESTLE company is based on its product differentiation
strategy. It has been offering high quality products and services in the international market to
attract more clients. Nonetheless, In Asian countries, Company has established strong brand
image by offering different goods and services in FMCG sectors.
Corporate Identification
With the changes in economy, NESTLE company has gained momentum throughout the
time on international level. It has increased its overall turnover and profitability throughout the
time. It is considered that company has increased its overall market share by focusing on cost
leadership and product differentiation market leadership program (Porter, and Kramer, 2019).
Description of NESTLE company
The NESTLE company is Swiss transnational food and drink company, headquarter in
Vevey, Vaud, Switzerland. It is the largest Food Company in the world in terms of its revenue
and other metrics such as profit, market share and return on capital employed. There are several
subsidiaries of the NESTLE Company such as , which are accustomed to act as per the
directions and instructions of the management of the NESTLE Company. The stock price of

company is (VTX) CHF 75.24 -0.14 (-0.19%) which shows that company has decreased its
share price value since last one year. Nonetheless, as compared to other rivals, NESTLE
Company has maintained stable business and shown 22% average growth since last five years
(Shelley, 2015).
Business units of NESTLE Company
Throughout the time, Nestle Company has incorporated and managed several business units
throughout the time. It has observed that ideally, company has four main business units on which
it has focused its strategic planning to increase its overall market share such as Bottle water,
coffee, infant nutrition and pet care (Weissbrodt, 2017).
Nonetheless, since the beginning there are several business units which are undertaken by Nestle
Company by using merger, acquisition and amalgamation. These joint ventures which are
working as a company unit for its business are listed as
 General mills as Cereal partner worldwide
 The Coca Cola company as Beverage partner worldwide
 Lactalis Nestle Produits Frais with Lactalis
 Nestle Colgate-Palmolive with Colgate-Palmolive
 Nestle Indofood Citarasa Indonesia with Indofood
 Nestle Snow with Snow Brand Milk Products
 Nestle Modelo with Grupo Modelo
 Dairy partners America Brasil with Fonterra (Olawepo, and Ibojo, 2015).
All these units worldwide are directly related with the company in some venture for company’s
business growth and to make its business diversified in terms of products too (Terpening, LI, and
AKHTAR, 2015).
This company has taken several mergers, acquisitions to expand its business through its
strategic plans. The main competitive advantage which NESTLE Company has used to run its
business on sustainable basis in long run is based on its product differentiation and cost
leadership strategy. The management of company has kept the price of its products and services
by setting effective corporate leadership program by entering into the strategic alliance with

other organization. These corporative strategic plans have helped company to increase its overall
output and return on capital employed (Antonelli, and Ruini. 2015).
Source of Sustainable competitive advantage
The competitive advantage could be defined as strategy which is hard to copy by other
rivals in organization. It has been used by companies to implement effective business functioning
to win over the market. The research and development department of company is also very
strong which shows creative and innovative business functioning of the company which have
been used internationally to win over the market. However, the NESTLE Company has expert’s
employees working in its value chain activities which reflect that company has efficient work
culture which assist company to reduce its cost of product selling in market. The strategic
alliance of company with retail sellers is also strong which replicate the success of its products
selling in sustainable business environment (Nisa, 2015). The global competitive strategies are
associated mainly with the foreign direct investment in dairy and other food business. NESTLE
Company has established the strong balance sales between low risk but low growth countries
named Asian and Latin America (Anastasia, 2016). It is evaluated that when operating its
business in developed market, NESTLE Company has been striving to grow and gain
competitive advantage by increasing its production level to its economic scale. The main
strategic business operational plan of NESTLE Company is to acquire the local companies who
know more about the culture of the particular country and by collecting data from these
companies, it customizes its most of the products and services as per the client’s needs and
demand. It has been following decentralized business strategy to reduce the complexity of its
business units and delegates its most of the operational decisions to local units which have high
degree of autonomy concerning pricing, distribution and marketing (Buxel, Esenduran, and
Griffin, 2015). NESTLE Company has set up strong seven different worldwide strategic business
units which are indulged in strategic business development including acquisitions and market
entry strategy. By using the effective competitive advantage, NESTLE Company has strongly
dominated the Asian market with its attractive offers and quality products. There are several
recent merger and acquisition of the company which shows that company has consistently
followed product development and market expansion strategy to win over the rivals in
international market (Nisa, 2015). It has consistently increased its market share in Latin America