BMA6104 Organisational Strategy: Nespresso's Strategic Analysis

This report provides a comprehensive strategic analysis of Nespresso, an operating unit of the Nestle group. The analysis begins with defining organisational strategy and then delves into Nespresso's current strategic position, evaluating its internal strengths and weaknesses, such as premium coffee experience and limited store locations, and external opportunities and threats, including product portfolio expansion and increasing competition. The report explores the bargaining power of suppliers and buyers, the threat of new entrants and substitutes, and competitive rivalry. Furthermore, it proposes future strategies for Nespresso, including enhanced promotional practices, improved e-commerce supply chain, use of big data for personalization, skimming pricing strategy, and potential alliances with retailers like LIDL and hotel chains like Premium Inn. The report also includes notes on Nespresso, Premium Inn, and LIDL, and suggests potential strategic links between them, such as Nespresso offering its products within Premium Inn restaurants and forming alliances with LIDL to expand into the European market. References are provided to support the analysis.

Nespresso

Introduction
Organisational strategy defined as the set of actions that company
intend to take for achieve long term goals or achieving competitive edge
at marketplace. The current project is based on Nespresso which is an
operating unit of Nestle group based in Switzerland. The aim behind this
project is to study about current position of company to determine future
strategies can be adopted for better operation.

Current strategic position
Internal analysis
Strength
Premium Coffee Experience
Several ranges of product related with coffee.
Use recycling capsules in store
Installation art is creative
Weakness
Limited store location which leads to low accessibility.
More depend on salesperson performance.
Lack of comparability for products.
Opportunity
On going product portfolio expansion
Can approach fine dine restaurants
Alliance with supermarkets for opening stores.
Threat
Increasing competition
Substitute products available
Price war among the market players.

Continue..
External analysis
Bargaining power of suppliers (low)
•Well established relationship with coffee farmers
•Switching cost for suppliers are high
Bargaining power of buyers (low)
•Nespresso operates exclusive point-of-sale
•Provide better customer’s experience

Continue..
Threat of new entrant (moderate)
• Companies like Senseo, Lavazza etc. started offer similar products
• Setup costs are high and technical norms are main barriers to
entrance
Threat of substitute (High)
• Availability of hot beverages like tea, hot chocolate.
• More expensive product leads to choice switch
Competitive rivalry (High)
• Competition from newly established portioned coffee companies
• Competition from other units of Nestle group

Future strategies
• Put more emphases toward promotional practices for differentiating
among other players.
• Improve supply chain for E-commerce platform to assure quick
delivery.
• Make use of big data to derive insight and personalised products for
consumers.
• Must opt for a skimming pricing strategy for dealing with
competitors
• Produce alliance with greater retailers to offer its product or manage a
store in supermarket like Lidl.
• For offering Luxury product it can also deal with the hotel chain such
as Premium Inn.

Notes
Nespresso
•It is a operating unit of Nestle which is based in Switzerland.
•It offers range of equipment’s and products such as brew espresso
machines, pods, coffee capsules etc.
•Nespresso offer premium products that are of high quality and higher
price.
•From year 2000 Nespresso is considered to be the fastest growing
product line of Nestle at the growth of around 40 % annually.

Continue..
Premium inn
•Premium Inn is a British hotel chain and operates business at global
level
•It is ranked as world’s strongest hotel chain with a Brand strength index
of 88.7 out of 100.
•Perform promotions with the help of high-profile celebrities in TV ads
and maintain a strong brand campaign
•Had a good brand image around the world and larger customers base
physically as well as virtual channel.

Continue.
LIDL
•LIDL is a German global discount supermarket chain.
•Operates around 10000 stores across Europe and United state
•It operates at penetration marketing strategy by offering its product at
lower possible price which provide it with a larger market share.
•LIDL offer grocery and other food items that are of high quality which
maintains maximum customer satisfaction.
•Maintains great customer value by offering only products from brands
that are of top quality and offer at best price.
•LIDL maintains its online channel to offers its services anytime or
anywhere and for this it maintain strong network of suppliers.

Potential links
Premium Inn and Nespresso
•Strategic alliance between both the brands support Nespresso in
expanding its business wisely with the help of a well established and highly
rated brand.
•Nespresso can offer its several speciality coffee and related items within
the restaurant of Premium Inn.
•This help Nespresso in assessing the customers base of Premium Inn
where customers satisfaction will also allow a reference leads to its main
stores of Nespresso.

Continue.
LIDL and Nespresso
•The Nespresso can perform strategic alliance with the LIDL which is a
well-established retail super market and maintains higher goodwill.
•With the help of strategic alliance the Nespresso become able to approach
the customers of European market much effectively which is a better place
to expand the business.
•The LIDL maintains around 10000 stores and this strategic alliance will
give a quick brand awareness about Nespresso to its customers which help
in increasing sale and revenue.

References
Johnson, G., 2016. Exploring strategy: text and cases. Pearson
Education.
Furniss, D., Curzon, P. and Blandford, A., 2018. Exploring
organisational competences in Human Factors and UX project
work: managing careers, project tactics and organisational
strategy. Ergonomics, 61(6), pp.739-761.
Willis, C., Riley, B., Lewis, M., Stockton, L. and Yessis, J., 2017.
Guidance for organisational strategy on knowledge to action
from conceptual frameworks and practice. Evidence & Policy:
A Journal of Research, Debate and Practice, 13(2), pp.317-341.
Hernaus, T., Vuksic, V.B. and Štemberger, M.I., 2016. How to go
from strategy to results? Institutionalising BPM governance
within organisations. Business Process Management Journal.