A Comprehensive Entrepreneurship Report: Nestle Case Study Analysis

This report is a comprehensive case study of Nestle, a multinational company, focusing on its entrepreneurial activities, innovation efforts, and marketing strategies. It examines Nestle's commitment to research and development, including investments and collaborations with universities and research institutions. The report analyzes Nestle's current marketing activities, including its use of search engine optimization and differentiated marketing strategies. It also explores the economic environment affecting Nestle, such as changing consumer preferences, fluctuating cocoa prices, and trade-weighted index impacts. The report identifies gaps in Nestle's strategies, particularly in relation to competition within the FMCG sector, and highlights the company's focus on sustainability and its efforts to meet evolving market demands. The analysis includes a comparison of Nestle's marketing activities with those of its competitors, such as Mars and Mondelez. The report concludes by emphasizing Nestle's commitment to innovation, sustainability, and its ongoing efforts to maintain a strong market presence.

Entrepreneurship Report: A Case Study of Nestle
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Current Activity and Innovation Efforts
Global companies are seeking to achieve the objectives and activities through the
strengthening of the links that serve their vision. Multinational companies seek for cutting edge
innovation with a high level of focus with an end goal of maximising capacity so as to get the
highest levels of productivity. This report highlights one of the largest of these companies -
Nestle. The company continues to exhibit great efforts towards achieving its objectives and
future plans within set dates. Through many innovative activities initiated by this company, it
was able to develop the scientific environment within the company to become one of the biggest
players in the world market. The company implemented a strategy that involved signing
contracts with scientists and consultants in the research and development on a high level of
professionalism to achieve goals that serve the company's research purpose as it also improves its
performance.
Nestle company has also made several innovations that put it on a spot as one of the
techno-efficient and sustainable organisations. Nestle Company has signed agreements with
several universities to conduct research and share the outcome, a strategy that creates
opportunities that help the youth in various parts of the world and transfer them to the life of
being more than professionals. This step is of great help in nurturing young people and raising
the level of global awareness. It has also made it possible for the weak voices and viable ideas to
get support and see the light of the day. Nestle also contributed significantly to the process of
minimising the effects of climate change. From here, the company has several activities to help
mitigate the impact of climate change. One of is using 100% renewable energy. The activity is
also mentioned on an annual basis within the annual report of the company. The company has
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contributed to sustainable water distribution to reduce significantly harmful emissions affecting
the environment and climate as the company's firm steps towards a secure future.
According to Palzer (2018), Nestle invests around 1.7 billion US dollars consistently in
research and development, more than any of its rivals around the world. The organisation has
around 5,000 individuals working in its worldwide research network. To change its outlook
regarding how the organisation innovates, nestle has executed 'internal start-ups'. This urges
researchers to think like business visionaries, by investigating original thoughts that lead to
ground-breaking discoveries. To fortify the capacities, the organisation teams up with academic
institutions, non-government associations, new companies, and innovation accomplices over the
world. Having incredible thoughts is critical, however, the genuine open door lies in how quickly
one can get them to buyers. To dispatch new items rapidly, nestle is utilizing quick prototyping
and utilizing the size and scale for brisk in-showcase testing. In the previous year alone, the
organisation has presented around 1500 new items around the globe. In coffee, for instance, it
launched the new Nescafé Azera Nitro in under 15 months. Utilizing 3D printing, the packaging
was quickly developed and industrialized. This smooth, nitrogen-injected cold espresso is
accessible on tap in bars and bistros, as well as in cans for consumption at home or on the go''
(Nestle.com., 2018).
Through the review of activities and innovations reflected, the company is keen to
continue making contributions that help achieve balanced sustainability and make its global
status assist in maintaining a permanent market presence. That qualify Nestle to be one of the
most important international companies which have made significant contributions to research
and development. The company continues to support these activities and innovations to ensure
the continuity of this effort and develop a future strategy for improving its performance and
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helps it secure a better future. According to Askew (2017), the level of Nestle’s products through
the six trends hopes to achieve leadership in industrial growth. After the presentation of the
wishes of the consumers and the consideration of the requirements, the conference held in
London confirmed the six trends upon which product manufacturing will be based to bring out
the benefit and desired quality. It is a natural and organic product. What is more, a client can also
contact and order what they desire in terms of sugar and protein levels as well as meeting the
needs of VEGETARIANS. As indicated above, the company has an array of products for global
customers with different taste. In addition, it has initiated many innovative and other activities
that continue to help it occupy a large share of the global market, not mentioning its wealth of
experience got over a period of more than 150 years.
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Brand’s Current Marketing Activities
One of the current brand marketing activities of Nestle Chocolate Company is being
among the top search results on the world web search engines. The company has a website which
appears among the top results in the search engines where consumers get most content about the
company’s products (Voung 2018). The search engine has enabled Nestle’s brand to achieve a
highly-extensive network link. Through the search engine, the company has equally developed
high visibility and awareness of its brand to consumers and especially the health-conscious ones.
Nestle equally uses differentiated market orientation as a marketing activity to market its
products. In this strategy, a company explores a tactic where its products can be distinctively
differentiated from its competitors’ through aspects like packaging, design, and taste (Kanagal
2015). Applying this strategy, Nestle targets homogenous customers who prefer chocolate
products with low-sugar content. It explores a mixture of product and value-based differentiated
strategy to sell well-branded low-sugar content chocolate products to the local Australian market
consumers. This strategy has enabled Nestle to acquire a diversified market and broad brand
portfolio.
Nestle’s major competitors in the Australian market are Mars and Mondelez corporations
which equally produce chocolate and confectionary products. The major marketing activities
explored by Mondelez and Mars in the Australian market are social media and online
advertisements (Voung 2018). The companies use different advertising agencies and multiple
online platforms to avail their brands’ information to customers. Mondelez, specifically, explores
a media monetization strategy where it captures the attention of a large audience to build its
brand and increase its revenue. This model has replaced the company’s old advertisement model
where it used interruptive program advertisements (Voung 2018). The media monetization
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strategy has been effective in delivering satisfactory brand information and content to Mondelez
consumers. Mondelez is maintaining its brand’s marketing strategies by involving media
advertisements and especially local television channels, digital and Facebook platforms.
Mars Corporation equally explores the media advertisements marketing activity. The
company has six product segments and tries to position itself in the market to beat its competitors
(Voung 2018). The company has various set online campaigns in different television channels
where it positions its products in the target market. Mars chooses the market strategy to utilize
dependent with the product segment. Most of its chocolate products are advertised either through
articles in the local newspapers or through online television campaigns (Voung 2018). The ad
campaign is established as one of the most successful marketing strategies for the company as it
has been able to maintain its brand’s demand with this strategy. Mars has also extensively
ventured in the social media marketing strategy especially Facebook and YouTube which has
enabled consumers to get satisfactory information about the brand.
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Current Economic Environment
There are several aspects that describe the current economic environment facing Nestle’s
brand. Just like the other chocolate-manufacturing companies, Nestle has been facing changing
consumers’ preferences of its brand as a dominant current economic environment factor. Most of
the Australian customers have changed chocolate preferences to opt for a brand that has less fat
with low-sugar content (Voung 2018). This has diminished the consumers’ confidence levels
necessitating Nestle to innovate additional features to its chocolate brand to meet the customers’
preferences (Voung 2018). The change in the customers’ preferences is one of the factors that are
constraining Nestle’s brand. The fluctuating prices of cocoa are also affecting the brand (Voung
2018). The major product segment of the company is chocolate which is produced from cocoa as
the raw material. This means that the fluctuating world price of cocoa affects the prices of the
chocolate brand (Voung 2018). This results in fluctuated brand demand from customers.
The trade-weighted index is also affecting the company’s brand. Since Nestle is exposed
to the international market, its current performance is affected by the fluctuating trade weighted-
index. The company has been purchasing imported raw materials at higher prices in the recent
past following a drop in the strength of the Australian dollar. Such fluctuating patterns raise the
final prices of its brand reducing the company’s product’s demand (Voung 2018). The company
has been equally been experiencing fluctuated rates of exporting its products due to the trade-
weighted index. The demand for a company’s products and its supply chain are disrupted in
relation to external factors that affect the products’ prices (Garlin, Hayek, Mariyani-Squire and
Spanjaard 2018). Due to the trade-weighted index, major international companies are mandated
to control the activities of Nestle Company (Voung 2018). This external control is a current
source of disruption to Nestle’s activities which makes it lose part of its market share and brand
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demand. The company is also facing competition pressure from traditional manufacturing
chocolate companies such as those in Germany (Voung 2018). This is an economic factor facing
the brand that results in an undercut in domestic chocolate manufacturing. Most of the Australian
consumers are still price-sensitive and easily switch to low-priced and private-label brands of
chocolate imported to the country from Germany.
The current common economic factors facing Mondelez and Mars brands are decreased
demand of the companies’ products and competition from Nestle. The companies have had a
slow transition in altering their products’ formulation to meet consumers’ preferences (Voung
2018). The Australian market has changed its preference to consume chocolate and
confectionary products which are more sustainable with low-fat and sugar content. This has
acted to the disadvantage of the companies, thus, decreasing the demand of their brands. The
companies’ products experience stiff competition from Nestles’ brand related to price, quality,
and innovation (Voung 2018). By the fact that Nestle’s main product segment is chocolate, the
company has majored its economies of scale in chocolate, thus, beating its competitors. The
Australian chocolate market is more dominated by the Nestle chocolate brand than those from
Mars and Mondelez. The differentiated marketing strategy of Nestle Company has equally posed
as stiff and intensifying competition to Mondelez’s and Mars’ brand results (Voung 2018). This
has affected the companies’ economic environment by weakening the customers’ demand for
these brands.
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Gap Identification
As per the previous discussion and analysis, it may be construed that the company is
surely one of the fast-growing companies in the FMCG (Fast Moving Consumer Goods) segment
worldwide. In terms of sales revenue, the brand has been able to achieve one of the highest ranks
across the world. The annual reports of the firm show that the company has been able to manage
a decent profit margin on its revenue for the last few decades. However, there seems to be
extreme competition in the FMCG segment and hence, the management of Nestle seems to be
alert every time in order to assess the market needs and consumer preferences and innovate the
products accordingly in order to meet the changing landscape of customers’ demand and testes.
It has been observed that the brand faces extreme pressure from peers and competitors in
terms of product differentiation and hence, needs to work consistently on research &
development (R&D). However, the philosophy of Nestle management is not only limited to
R&D; rather the management wants a step-by-step approach towards sustainability. For this
reason, the company conducts R&D in a regular manner consistently. In this context, t may be
stated that the company achieved only 3.2% organic sales growth in the year 2016, which was
second lowest figure in last two decades for the firm (Hawthorne, 2017).
Though the situation is not only applicable to Nestle but also other players in the given
market like Unilever, Proctor & Gamble, Heinz etc; however, the gap lies in the changing pattern
of consumer’s needs and preferences. Such preference does not only depend on the product
offering and service provision. Nowadays, the consumers want to get associated with the brand
they consume and hence, it becomes crucial for the companies to brand a steady and sustainable
brand image in the public mind so that people do not feel hesitated or puzzled to get associated
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with the said brand image. In other words, the brand positioning in the market is crucial in terms
of achieving the market share through sustainable and phased-out manner (Stephen, 2016).
There has been a number of issues that have led to the gap of lower organic sales growth.
One issue is the deforestation issue in Malaysia and Indonesia, as alleged by Greenpeace against
Nestle. The allegation revolved around the fact that Nestle was into deforestation and producing
products from trees, shrubs and as a result, the green forest has been affecting in huge numbers
(Hawthorne, 2017).
In addition, there was a certain allegation of using child labour in the factories of Nestle,
at the supplier's place. The management of the company discovered that there had been child
labour in their supplier’s factory in Thailand. In this context, it may be noted that the company
has 320,000 staffs employed across the world in the year 2017, which is one of the highest in
FMCG sectors. With such amount of labour forces and one of the most complex and largest
supply chain network across the world, it becomes a bit difficult for the management to assure
that the suppliers and vendors are conforming to the brand’s policy. The management, at times,
fails to communicate the vendors about the corporate culture and hence, creates a communication
gap that may often result in non-compliance.
Also, there were issues with respect to workers’ safety in the factory place and it was
observed that the Lost Time Injury Frequency Rate (LTIFR) was considerable in the year 2011
or 2012. It was almost 55 in the year 2012 which gradually declined to 30 in the year 2013 and
so on (http://www.nestle.com.au, 2018).
It is needless to mention that the brand image, as explained earlier, depends on the labour
issues also and customers perceive the brand to be trustworthy based on these parameters also.
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Also, there have been issues around Milo's health point rating and various health groups
including NGOs raised an objection to the same, post which Nestle management removed the
rating of 4.5 stars from Milo's packaging (Metherell, 2018).
Finally, it may be stated that the company has been facing issues with respect to noodles,
cocoa, chocolates, health drinks and many more goods that are well circulated in the market. The
company has been surviving in the last 150 years and that too with decent growth rate. Presently,
the company has more than 2,000 brands with a presence in almost 189 countries across the
globe. With such gigantic operations, the management would need to focus on the quality and
identify the gaps and mitigate the same in order to build the brand image through sustainable
approach (Datta, Ailawadi and Van Heerde, 2017).
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References:
Datta, H., Ailawadi, K.L. and Van Heerde, H.J., (2017). How well does consumer-based brand
equity align with sales-based brand equity and marketing-mix response?. Journal of
Marketing, 81(3), pp.1-20.
Hawthorne, M. (2017). One step at a time, Nestle slowly changes its ways. [online] The Sydney
Morning Herald. Available at: https://www.smh.com.au/business/companies/one-step-at-a-time-
nestle-slowly-changes-its-ways-20170224-gukolx.html [Accessed 13 Jan. 2019].
http://www.nestle.com.au. (2018). Safety. [online] Available at:
https://www.nestle.com.au/creating-shared-value/environmental-impact/safety [Accessed 13 Jan.
2019].
Metherell, L. (2018). Milo's 4.5 health star rating stripped away by Nestle. [online] ABC News.
Available at: https://www.abc.net.au/news/2018-03-01/milos-4.5-health-star-rating-stripped-
away-by-nestle/9496890 [Accessed 13 Jan. 2019].
Stephen, A.T., (2016). The role of digital and social media marketing in consumer
behavior. Current Opinion in Psychology, 10, pp.17-21.
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