Nestlé's Growth Warning: Analysis of Sales Decline and Strategies

This report analyzes Nestlé's recent sales decline, examining the factors contributing to the issue, such as reduced consumer demand, pricing challenges, and issues in key markets like China and Brazil. The report highlights the impact on Nestlé's financial performance, including a decrease in profit margins and overall revenue. It delves into the strategic responses taken by the company, including price adjustments and restructuring initiatives. The report also explores the role of management and the need for proactive measures to address these challenges, including the appointment of a new CEO, Ulf Mark Schneider, and the potential for further strategic actions to mitigate risks and improve the company's market position. The analysis emphasizes the importance of understanding consumer behavior, market dynamics, and the need for effective strategies to ensure sustainable growth and profitability in the competitive consumer goods industry. This report is available on Desklib, a platform offering past papers and solved assignments.

Nestlé’s Growth Warning Shifts Focus to Costs
Nestle is considered as the largest consumer goods manufacturing organization of America.
Recently, it is facing a decline in its growth for different reasons. Nestle expected that it would
grow its sale approximate 4.2%, but after calculating its third-quarter result, it was found that it
declined its sales. Now its sale rate is 3.5% which was 3.8 % in 2015. At regular currencies,
prices were rise with just 0.8% year to year for the first four quarters but nestle prices becomes
lower than expected given currency valuations (Wilmot, 2016). Nestle was earning more than
88.8 billion profit every year which reduces ultimately with a decrease in the sale of its products.
Now it is earning 13.4 billion profit. This influences the overall business strategy and market
position of the organization. It takes a various initiative to reduce the effect of sale changes. The
organization did raise prices in Brazil to offset the loss, but it influences the demand of nestle
products in a negative manner. On the other hand, it also faces sales problem in china. The
interest of the consumer in nestles products such as peanut-based protein drinks reduced which
ultimately influences the margin of revenue in the greatest
manner(http://www.nestle.com/assetlibrary/documents/library/documents/financial_statements/
2015-financial-statements-en.pdf). The management of the organization should take efficient
initiatives to tackle with such problem, but it fails. However, management of the organization
also blamed a more general slowdown in consumer demand across developing and developed
markets. This will influence the perspective of investors towards nestle in largest manner. It has
occurred because Nestle does not have the pricing power in its competitive market. This will be
sluggish down consumer demand and profitability of the organization reduced. This could be a
big problem for the organization in future which influences the overall competitive image in the
market. The management of the organization should identify the areas which require scrutiny.

Restructuring Initiatives can be beneficial for the organization to save itself from the selling risk.
Ulf Mark Schneider, who immediately joins Nestle as chief executive putting more efforts to
take aggressive actions. Stalling growth may boost the bond-like attractions of Nestlé’s
expensive shares. This will facilitate organization to overcome its risk factors in an efficient
manner.

References
Wilmot, S. (2016). Nestlé’s Growth Warning Shifts Focus to Costs. WSJ. Retrieved from
http://www.wsj.com/articles/nestles-growth-warning-shifts-focus-to-costs-1476973563
(2015). Retrieved from
http://www.nestle.com/asset-library/documents/library/documents/financial_statements/2015-
financial-statements-en.pdf