LGO5203 - Nestle Strategic Planning: Environmental Analysis Report

This report provides a comprehensive analysis of Nestle's business strategy, examining both the macro and micro environments that influence its operations. It begins with background information on Nestle, highlighting its global presence and diverse product portfolio. The report then delves into a PESTLE analysis, evaluating the political, economic, social, technological, environmental, and legal factors impacting Nestle. Following this, the internal environment is assessed using a value chain analysis, identifying key primary and secondary activities that contribute to Nestle's competitive advantage. The report also touches upon Porter's Five Forces, objective setting, strategy development, tactical plans, and control measures. The analysis aims to provide insights for strategic planning, enabling Nestle to navigate the complexities of the business environment and enhance its competitive edge. Desklib provides access to similar solved assignments and resources for students.

Business
strategy
Name-Yadanar Soe
| [Company Address]
ID- LGO5203

Table of Content
s
Background information of Nestle......................................................2
Analysis of macro environment and its impact and influence upon
the organization and business strategies...........................................3
Value Chain......................................................................................... 5
Porter five forces.................................................................................8
Internal situation..............................................................................11
Objective setting...............................................................................12
Strategy development........................................................................13
Tactical plan......................................................................................13
Control.............................................................................................. 14
Conclusion.........................................................................................14
References......................................................................................... 15
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I am appointed as a business analyst of Nestle who have responsibilities to
evaluate the environment and improve strategic planning. Thus, this
assignment will present the analysis of internal and external environment
for the development of strategic plan in order to survive and success within
an organization. After this, this assignment will evaluate most appropriate
strategies for an organization to improve competitive edge.
Background information of Nestle
Nestle is known as the largest food and beverages organization in the
world. At first, this company sold only infant’s cereal but has now branched
out to contain different products like chocolate, coffee, and soup. Its
headquarter is in Vevey, Switzerland and has over 308000 employees
around the world. Generally, this company has about 447 production
facilities and has operations in more than 189 countries They aim to have a
product line for each stage of a consumer's life cycle from their infancy to
their retirement stage. Nestle's mission of “Good food, Good life” is to make
hygienic food with the best tasting and provide eating occasions, from
morning to night. So that people can possess a better life. Top competitors
involve Unilever, Mars, and PepsiCo (Luenendonk, 2020).
Analysis of macro environment and its impact and influence upon
the organization and business strategies.
There is no doubt that business is greatly influenced by its environment.
There are many strategic tools that a firm can use. Among them, PESTLE
analysis is more common to use for detailed analysis of the macro
environment to know the opportunity and threats that are present among
the market in which the business operates. Following are the pest analysis
of Nestle (pratap, 2020):
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Politic and Legal factors
As Nestle works across 190+ countries, it is heavily influenced by politically
due to different regulations and rules of each country. Regulation in
accounting standard taxation requirements, tax rate changes are heavily
influenced on Nestle business. It is necessary to accept legal formalities of
each country in where Nestle is currently operating. Main concerned laws
to look after for nestle is health and safety law, consumer protection law,
laws association with control of environment and labor laws for smooth and
constant growth. If a company break any rule, a company had to pay a large
sum the form of court cases and public trials. These things can be
threatening for the profitability and market position of nestle. It is why a
large company like nestle spends a lot on legal compliance (pratap, 2020).
Brexit ( exit of British from EU) is an example of recent political factor
impacting the growth of company. Many FMCG and beverage businesses
lose their skilled professional EU workers in the UK because of Brexit deal.
It created a gap of a non-skilled workforce, and it has become very difficult
to hire skilled professionals (Shaw, 2020).
Economic
It is very crucial for a company to have enough information about the
country inflation rate, economic growth rate, and national per personal
capital income which all are vary in each country. Besides, multinational
company has to deal with many exchange rates of different countries. Even
a small change in the price of exchange rate would have a huge impact on
the revenue of the company. According to research conducted by Mintel
Global Food and Drink Trends in 2020, the trend of fast and comfort food is
growing, and it continues to grow in the next 10 years. This is an
opportunity for the company to increases it sales in this category (Shaw,
2020).
Social
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The social and cultural environment that impact on Nestle which are
constantly changing. Every country had different culture associated with
beliefs, lifestyle, food, and their language. Moreover, different countries
have different consumer taste and behavior. As company is completely
dependent on the consumer attitude and lifestyle, company need enough
information about the consumer lifestyle before launching the product. Now
most of the people becoming health conscious so a company has an
opportunity to fulfill their needs by operating low fat and sugar containing
product categories (pratap, 2020).
Technology
Technology is an essential factor for both the internal and external
integrity of an organization. Because it creates opportunities for new
product, process improvements and advances marketing techniques such as
social media and e-commerce are also effective platforms for Nestle market
expansion. (pratap, 2020). Nestle spends a plethora of resources on
research and development of finding more efficient ways of preparing
quality and healthier products to the customers. That conducting research
is much easier because of digital, technology and social media marketing.
More, blockchain technology helps business to have full control over and
access from production facilities to the delivery of the products. It would
help nestle to follow newer ways although it’s a bit costly project (Shaw,
2020).
Environment
As a multinational company, environment factor is a big concern for Nestle.
Nestle adopt eco-friendly options in its business process and products to
reduce negative impact on environment. They are reducing the use of
plastic in their products and trying to create 100 percent recyclable
packaging. Moreover, a company also claims zero-waste production in their
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manufacturing goods. In short, they are trying their best to fulfill the
environmental laws. These things contribute towards the sustainability of
and welcoming for eco-conscious people (pratap, 2020).
There is no doubt that business is greatly influenced by its environment.
Business has two types of environments known as internal and external
environment. Here will discuss about internal environmental analysis. An
internal analysis examines an organization’s internal components, both
tangible and intangible, including resources, assets, and processes. This
analysis helps an organization decision-maker accurately identify areas for
growth or revision to form practical business plan. There are many
strategic tools that a firm can use. Among them, value chain analysis is
more common to use a detailed analysis of the internal environment to
determine the company’s assets, threats, or opportunity.
Value Chain
A value chain is a business attempt that can evaluate the entire field of
internal activities which required to manufacture product or provide
service. A value chain consists of the steps which include production of
products to distribution and value creation activities such as marketing
activities and customer service.
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Figure: Porter's generic value chain model (Dudovskiy, 2020)
In a view of value chain, Porter separate business’s activities into two
categories, “primary” and “secondary”. Primary activities include five
components, and these are
Inbound logistics: Functions such as buying raw materials, warehousing,
and managing inventory. As a global company, nestle has many suppliers
who are trustworthy to meet expected standard. This allows a company to
achieve effectively supply chain management to achieve quality product
(Byrne, 2020). Nestle source agricultural raw materials like herbs, milk,
cereals and vegetables from either through trade channels or directly from
farmers. Need to explain where Nestle suppliers from and how they
manage their inventories for effectiveness. For controlling inventory,
Nestle use Continuous Review which is the whole computerized
system. In this way they keep a continuous control over their
inventory. The stores officer not only maintains records but also
makes visits at the warehouses to see the actual situation of
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materials. The officer can review the inventory at any time.
Operations manager and the auditing people also check the
inventory and its records so that the risks of loss or manipulation
may be minimized.
e use a wide variety of different suppliers worldwide all of whom have to
comply with Nestlé quality standards.
We source our agricultural raw materials – principally milk, coffee, cocoa, cereals,
vegetables, fruit, herbs, sugar and spices – either through trade channels or directly
from farmers.
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Operations: Process of converting raw materials to finished product.
Nestle is relying on creating innovative products to meet or exceed
customers expectation. The increased productivity can help nestle to gain
consistent economic growth and raise profit. But if they are unable to
innovate effectively, its sales could be decreased. Therefore, operations of
nestle are mainly dependent on technological improvement, R&D and
management of information. In this stage, a company main challenge may
be the time it took to turn logical knowledge into successful products
(Byrne, 2020). Need to explain how Nestle operate
Nestle Operations
Initially, Nestle started functioning in Vevey, a town in Switzerland that offered baby
milk as substitutes for breast milk. Now, the Nestle group operates in different
Zones garnering billions of dollars in revenue and sales worldwide for the company.
The group’s operating Zones are:
 EMENA : Zone Europe, Middle East and North Africa
 AMS : Zone Americas
 AOA : Zone Asia, Oceania and Sub-Saharan Africa
The product it offers includes baby foods, nutritional supplements, breakfast
cereals, Confectionaries, ice-cream, frozen food, pet food and snacks.
Outbound logistics: Functions which focus to distribute final products to
customers. It includes some activities like material handling, warehousing,
scheduling, order processing and delivering to the end customers.
Customers can purchase nestle product from supermarkets, convenience
store, through online, wholesaler and retailer. The company need to
manage outbound logistics activities properly with minimal costs and
product delivery processes that can maintain the quality of product during
shipping and delivery (Byrne, 2020). Explain how Nestle manage outbound
logistics
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Sales and marketing: Strategies to target customers like advertising,
promotion, and pricing. This stage is very important since only producing
high quality product cannot create value until a company invests on
marketing and sales. A company need to avoid making false commitments
regarding with product features that cannot be performed by the operation
department. However,Nestle has strong capabilities in sales and marketing
as it understood its markets. Additionally, it has the ability to grow its
online retail which could open channels of for distribution of product such
as Amazon by passing traditional retailers (Byrne, 2020). Explain how
Nestle advertise and sales
Services: Programs to maintain a product, enhance customer experience,
repair, refund, and exchange. Regarding with nestle, it provides a training
center for internal chefs mainly to try out innovation products and maintain
existing product quality. This can maximize the customer satisfaction and
increases growth opportunities for the firm. Moreover, a company believe in
the importance of combining great products with great services. For
example, they provide a well-trained professional ready to trouble shoot and
resolve issues of their product over the phone or send out technicians if the
problem cannot be solved by phone (Byrne, 2020).
The secondary activities help primary activities to be more efficient. They
include,
Firm infrastructure: Company’s system and composition of its
management teams like planning, accounting, finance, and quality control.
With regards to Nestle, it has a strong financial backup to invest in high-
quality products with continuous value addition. The management of its
planning and financing also add values for their customers and
stakeholders. The risk can be the lost production time caused by delays due
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to unrealistic plans and lack of finances. What about the company
infrastructure of Nestle (Byrne, 2020).
Human resources management: This involves activities concerned with
recruitment, training, development, and compensation of employees. When
it comes to Nestle, it focuses strong on employees as they are key driver of
business success. And, they have taken broad approach to building
capabilities of their people. It contains to host of skills development
program for blue- and white-collar employees which aims to drive greater
interdependence and improve collaboration within an organization.
Therefore, their ability to attract, develop and retain the qualified people is
critical for effective implementation of the tasks required for organization
(Byrne, 2020).
Technological foundation: Activities that can improve the efficiency of
operation, accuracy in production and quality development. This associated
with the use of advanced electronic devices, computer system,
telecommunication and all other process and technical knowledge used to
support the primary activities. Nestle has also managed to build a
technological platform Name the platform where customer can ask
questions, provide suggestions, and share experience. Moreover, they have
been able to reduce waste in its operations in the outsourced production.
This has been because of the implementation of latest technology in its
mass production models (Byrne, 2020). Need to explain what technologies
that Nestle is using and their effectiveness.
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Procurements: Due to its link up with many value chain activities, nestle
carefully consider its procurement activities to optimize the inbound,
operational, and outbound processes. Nestle have many suppliers so that a
company can brake power of its suppliers and make them weaker to
negotiate at its own term. This gives a company a chance to change
suppliers easily. There can be possible that a supplier may join forces to
avoid price fluctuation which make supplier power may grow in the future.
Nestle, however, treat its supplier’s fairly to create more loyalty among
them (Byrne, 2020).
Porter five forces
Porter’s five forces are a simple but powerful tool for understanding
the competitiveness of the business environment. It can be used to identify
a business strategy to increase competitive advantage. Here will be
examined Porter five forces of Nestle: Need to explain more about why
porter five force is used.
Figure: porter five forces model (Kumar, 2020)
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