Strategic Management of Nestle Australia: Opportunities and Recommendations

The report analyses the strategic management of Nestle Australia by evaluating the internal and external environment of business that can offer potential opportunity and hinder the performance by showing the threats faced by the company. It identifies the international opportunities of Nestle and recommends future strategic direction.

Running Head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Students ID:
Name of the University
Authors Note

1STRATEGIC MANAGEMENT
Executive Summary
The report intends to analyse the strategic management of Nestle Australia Company by
identifying their strategic intention for a business organisation. This has been done in the
report by evaluating the internal and external environment of business that can offer potential
opportunity and hinder the performance by showing the threats faced by the company.
In this context, the study aims to explore the market opportunities and threats of the company
and decide to use the resources and capabilities in the internal market to pursue the objectives
of the company. By the end of the study, the study explains the future recommending strategy
that can be used by the company and that can fit the strategic direction for the company so
that they can perform better in business.

2STRATEGIC MANAGEMENT
Table of Contents
Introduction................................................................................................................................3
Australian Food Focussed Agribusiness industry......................................................................3
Background of the company...................................................................................................4
Identify the international opportunities of Nestle......................................................................5
Demographic factors..............................................................................................................5
Economic factors....................................................................................................................6
Political and legal factors.......................................................................................................6
Socio-cultural factors..............................................................................................................7
Technological factors.............................................................................................................7
Different international strategies for Nestle...............................................................................7
Appropriate and inappropriate mode of entry to the international market.................................8
Recommendations for the future strategic direction..................................................................9
Conclusion..................................................................................................................................9
Reference list............................................................................................................................11
Appendix..................................................................................................................................13
Appendix: the Market growth of Nestle...............................................................................13

3STRATEGIC MANAGEMENT
Introduction
The most crucial things for the business organisation is analysing their successful
performance among the largest competitors operating in the market. Therefore, it is essential
for the organisation to make the profit and obtain more than average returns. Based on this
the strategic management and the strategies for the company to enter the international market,
the study discusses the external and internal environment of Nestle Company. The analysis of
the strategic management is evident as it helps Australia to obtain competitive benefits and
earns a substantial return. In this context, the report enlightens the unitisation of resources,
competencies, capabilities used by the company to overcome the challenges and to
accomplish the opportunities. In addition to this strategic management tool has been used to
carry out the PEST analysis, and SWOT analysis, Porters five analysis.
The report further supports the company in deciding the future strategies in regards to
the recommendation offered. However, the organisation has typically adopted the strategies
of differentiation of product and cost leadership strategies that have been evaluated for
enhancing the performance
Australian Food Focussed Agribusiness industry
The food and Agribusiness industry is an essential part of the Australian economy that
makes a significant contribution to the growing economy of the local areas through the
provision of employment, business as well as service opportunities. In this context, the
Australian Government Industry innovation and competitive program recognises Food and
Agribusiness as a part of competitive empowerment for Australia and prioritises it as a
growing sector through the Food and Agribusiness industry. As stated by Fernandez-Mena et
al. (2016), agribusiness has a significant position within the Australian economy. In the year
203-14 Australian food exports have been seen to be reached at 11 years high. In the year

4STRATEGIC MANAGEMENT
2015, the sector of employment in the industry is almost 522,000 employees, this shows that
there is a decline of 1.1% since the year 2014 with an average fall down of 1.2% since the
year 2010. The gross value added of the industry has grown on an average by 1% yearly over
the period of previous 5 years. The productivity of employees in the sector has been running
around $54 on an hourly basis (Tamplin 2018).
The value of Food and agribusiness exports has increased by 6.1% per annum during
the period of 10 years until the year 2015. This shows that there is a doubling of exports over
the period from $22.6 billion in the year 2012 to $40.8 billion in the year 2017(). Therefore,
the past five years have seen both an increase and decrease in the percentage of food and
agribusiness exports as well as an increase in industry’s share of total exports. This shows
that Agribusiness has a potential part in the Australian economy. In this context, in the year
2016-17 the total value of Australian farm and food production was AU $42.6 billion that
were valued at AU $30.5 billion that is more than 50% of the exports going to Asia (Simboli
et al. 2018). Australian production is a necessary part of the international yearly food supply,
with free trade agreements and counter-seasonal production to the northern hemisphere.
Background of the company
Nestle is a Swiss multinational organisation that produces health concerned consumer
ford headquartered in Switzerland. It is one of the largest food organisations in the world if
measured by revenues. In this context, Nestle in Australia has a huge part since the year 1906
that turned in to the second largest export market for Nestle. The company has over 2000
brands ranging from international icons to local flavours that are present in almost 189
countries. In the year 2017, Nestle Australia generated almost $2, 220, 849, 00 of market
revenue including sales and other revenue (nestle.com.au 2018). The company in Australia is
ranked at 198 out of the topmost 2000 organisations in Australia. In Australia, the company
helps to generate most of the income from the food production in Australia. In the year 2017,

5STRATEGIC MANAGEMENT
the Nestle Australia had almost 4432 employees including employees from all the other
subsidiaries under the management of the Australian company (nestle.com.au 2018). The
products of the company consist of baby food, bottled water, cereals for breakfast coffee
products, confectionary products, dairy materials, and snacks.
Identify the international opportunities of Nestle
The general environment is composed of various dimensions in the wider society that
may impact the food industry and may also influence the organisation. These dimensional are
classified into six different environmental segments like demographic, economic, political,
socio-cultural and technological. However, Klimek and Bjørkhaug (2017) stated that these
structural segments are external for the organisation. The challenge of the organisation is to
monitor and evaluate these factors of great importance and make efforts to develop
international opportunities for Nestle. They are as follows:
Demographic factors
Nestle products are for everyone around the world; therefore, customers from any
areas, any region and any region will prefer their products. As stated by Kotsanopoulos and
Arvanitoyannis (2017), the products offered by them are not luxury items that will be used by
particular customers. Almost all age group young to old can be accustomed to the product
offered by Nestle. For example, Nestle has an opportunity to segments into different age
groups within the international location. For babies, they have baby foods, while young
generation people have Nescafe and other beverages and increase cream to eat (Higgins et al.
2015). In Vietnam Nestle produces Maggi brand in combination with different sauces, but
Maggi products are not operational in England due to the presence of geographic tastes.

6STRATEGIC MANAGEMENT
Economic factors
Nestle is one of the leading industry of food that shares knowledge and expertise with
the domestic and small-medium organisation. The company helps the entrepreneurs to
compete in the new environment of free trade that has the opportunity to benefit the industry
and economy by developing market growth. Alongside this, Nestle also partners with the
local government to offer technical support to the farmers in harvesting the plantations. As
stated by Delaquis et al. (2018), by doing so, farmers will get the incomes and Nestle will
have the opportunity to purchase the goods from the farmers and fresh raw ingredients for
their foods. By having own local manufacturing facilities they will no more be required to
import any aw goods from other countries from which they will be able to save a huge
amount of money (Caiazza and Volpe 2014). These activities will also provide advantages to
consumers at low prices. Increased number of consumers will use the Products of Nestle and
they will have an opportunity to obtain profit.
Political and legal factors
Political factors are essential in the food industry. In this context, with wide
operations spread all around the world, Nestle has a possibility to get influenced by the
Political factors including regulatory laws and policies governing business functions along
with strict health and safety policies. As stated by Serrano and Acero (2015), the primary
objective of these regulations is safeguarding the health and wellbeing of the customers from
harmful food products. The company has recently suffered many challenges associated with
contamination of the producers and poor quality of food supplies that resulted in the decline
of sales. However, the company has responded effectively to address these issues by ensuring
the quality and standards of the products. Now they have the opportunities to ensure that
consumers do not buy fake producers with the high amount of trust in their product. Strict
quality control has an opportunity for the company to play a helpful factor in addressing the

7STRATEGIC MANAGEMENT
political factors. This shows that Nestle producers will not different for the other international
countries and consumers will be ensured with full satisfaction of the products.
Socio-cultural factors
A healthy diet and sufficient supply of food is a crucial element for promoting health
and wellbeing is the main focus of all the customers. Therefore, these types of products are
preferred more than any other types of foods. In addition to this Generation Y, specifically,
people from 1990's to 2000s have characteristics such as adaptability to change and are
technologically savvy. As stated by Morales et al. (2016), these kinds of characterises will
help in coinciding with the organisation capability of aggressiveness with the use of effective
technology in international boundaries.
Technological factors
Internet, social media and mobile technology are growing drastically in the market
where nearly all the people currently are able to contact with the brand. In this context, Nestle
will be able to use these benefits by using technology for promoting their products using
social media platform. As stated by Adenle et al. (2017), through this, customers from
worldwide locations will be able to access information from their website. Therefore, the
employees will be able to use this internet service to communicate with the industry in
different countries such as Singapore, UK and other international location. They also can
utilise research and development on the technology for seeking more information for
satisfying the regional tastes and flavours in each of the countries. Therefore, by evaluating
the demands and cultural difference within the countries they will able to set up technological
operations.

8STRATEGIC MANAGEMENT
Different international strategies for Nestle
Nestle is a characterised as a multinational company due to is the domestic and
international response, including its functional companies. It is evident from the above
analysis that Nestle has high opportunities in terms of Market leadership based on cost
leadership and innovation. As stated by Vázquez and González (2015), the company has a
well-developed economy that will help them to obtain low-cost reduction. However, in order
to meet the customer requirement in the international market, they are required to blend their
product mixes with that of their local ingredients. Therefore, as the markets competitive as
well as more flat, it is highly necessary that Nestle looks forwards into international markets
to seek growth.
Appropriate and inappropriate mode of entry into the international
market
In terms of Mode of entry and internalisation of the market, Kirezieva et al. (2015)
state that internationalisation is the product with series of incremental strategies and phases
based on the different strategy of entering the international market. In this context, Nestle has
introduced the Uppsala international model. In this model, the organisation’s involvement
within the particular country helps them to develop the market chain through four stages. As
stated by Caiazza et al. (2014), there are no regular export and import activities that are
performed within the market. The export activities of the company take place through
independent channels, sales subsidiary and production in the international market. The
sequential stages show that there is an increasing commitment towards resources in the
marker. However, Nestle uses direct export for the mode of entry for the subsidiary and they
utilise their organisation within the overseas market.

9STRATEGIC MANAGEMENT
In case of growth, the company highly emphasis on the internal growth and they tried
to obtain the high volumes by innovating their products and renovating their present products,
this strategy helped Nestle with the capability to enhance their products in the different fields
such as prepared foods, breakfast foods, dairy products and baby foods. However, Nestle is a
limited cost operator that allows them to move ahead with reduced cost on operating and
helps them in beating the competitors by manufacturing low-cost products (Tzamalis et al.
2016).
Recommendations for the future strategic direction
The company needs to work for further development and to enhance their quality of
products. In this cont6exr, the company is required to be aware of the incident that took place
in China and India related to Maggi products and infant food products. These types of
activities need not be repeated by the company. This is because the situation may turn
different for Nestle if this kind of situation takes place again. Therefore, the organisation
needs to try to manufacture differentiated products by improving the quality of the foods and
the beverages they manufacture in different global location.
Conclusion
Overall Nestle has been successfully made the presence that is felt like the world’s
largest food company. From the beginning of the company, the organisation has been
successfully able to enhance their market share by adopting success strategies of growth. This
shows that the entire methodical practice of the Nestle has been highly effective in the
regional markets that they barked upon. Therefore, in conclusion, it can be stated that the
main reason behind the success of the organisation is their collaboration with the
globalisation. In this context, it will be wrong to say that the organisation has entered into the
Australian as a part of the effort towards globalisation, but it has been an overall success in

10STRATEGIC MANAGEMENT
the country due to the alignment of products with the cultural trend and the demands of the
customer. Despite the inferior set up of the company, the company has successfully increased
their rate of production of food products in large quantity. These are the major reason behind
their success of the company is their ability to expand into prospective international markets
that can be as well be contributed to the organisational structure and the strategy used by
them. Moreover, to the most significant reason behind their success is their flexible repose
towards the environmental fluctuation and their growing willingness to learn a new culture.

11STRATEGIC MANAGEMENT
Reference list
Adenle, A.A., Manning, L. and Azadi, H., 2017. Agribusiness innovation: A pathway to
sustainable economic growth in Africa. Trends in food science & technology, 59, pp.88-104.
Caiazza, R. and Volpe, T., 2014. Agro-food firms' competitiveness: made in Italy in the
world. International Review of Management and Business Research, 3(3), p.1790.
Caiazza, R., Volpe, T. and Audretsch, D., 2014. Innovation in the agro-food chain: Policies,
actors and activities. Journal of Enterprising Communities: People and Places in the Global
Economy, 8(3), pp.180-187.
Delaquis, E., de Haan, S. and Wyckhuys, K.A., 2018. On-farm diversity offsets
environmental pressures in tropical agro-ecosystems: A synthetic review for cassava-based
systems. Agriculture, Ecosystems & Environment, 251, pp.226-235.
Fernandez-Mena, H., Nesme, T. and Pellerin, S., 2016. Towards an Agro-Industrial Ecology:
A review of nutrient flow modelling and assessment tools in agro-food systems at the local
scale. The science of the Total Environment, 543, pp.467-479.
Higgins, V., Dibden, J. and Cocklin, C., 2015. Private agri-food governance and greenhouse
gas abatement: Constructing a corporate carbon economy. Geoforum, 66, pp.75-84.
Kirezieva, K., Jacxsens, L., Hagelaar, G.J., van Boekel, M.A., Uyttendaele, M. and Luning,
P.A., 2015. Exploring the influence of context on food safety management: Case studies of
leafy greens production in Europe. Food Policy, 51, pp.158-170.
Klimek, B. and Bjørkhaug, H., 2017. N region Agro‐Food Attracting Private Equity Capital;
Varieties of Capitalism–Varieties of Financialisation?. Sociologia Ruralis, 57(2), pp.171-190.

12STRATEGIC MANAGEMENT
Kostopoulos, K.V. and Arvanitoyannis, I.S., 2017. The Role of Auditing, Food Safety, and
Food Quality Standards in the Food Industry: A Review. Comprehensive Reviews in Food
Science and Food Safety, 16(5), pp.760-775.
Morales, A.B., Bustamante, M.A., Marhuenda-Egea, F.C., Moral, R., Ros, M. and Pascual,
J.A., 2016. Agri-food sludge management using different co-composting strategies: a study
of the added value of the composts obtained. Journal of Cleaner Production, 121, pp.186-197.
nestle.com.au. (2018). Home. [online] Available at: https://www.nestle.com.au/ [Accessed 10
Oct. 2018].
Serrano, R. and Acero, I., 2015. Rethinking Entry Mode Choice of Agro-Exporters: The
Effect of the Internet. International Food and Agribusiness Management Review, 18(3), p.67.
Simboli, A., Taddeo, R. and Morgante, A., 2015. The potential of Industrial Ecology in agri-
food clusters (AFCs): A case study based on the valorisation of auxiliary materials.
Ecological Economics, 111, pp.65-75.
Tamplin, M.L., 2018. Integrating predictive models and sensors to manage food stability in
supply chains. Food Microbiology, 75, pp.90-94.
Tzamalis, P.G., Panagiotakos, D.B. and Drosinos, E.H., 2016. A ‘best practice score’for the
assessment of food quality and safety management systems in fresh-cut produce sector. Food
Control, 63, pp.179-186.
Vázquez, A.M. and González, P.A., 2015. Managing collective symbolic capital through
agro-food labelling: Strategies of local communities facing neoliberalism in Spain. Journal of
Rural Studies, 41, pp.142-152.

13STRATEGIC MANAGEMENT
Appendix
Appendix: the Market growth of Nestle