Strategic Management Report: Nestle's Internal and External Analysis

This report provides a comprehensive strategic management analysis of Nestle, the global food and beverage giant. It begins with an executive summary outlining the importance of strategic planning for Nestle's growth and market image, emphasizing the need for quality control. The report then delves into the benefits of strategic planning, including goal setting, performance enhancement, and competitive advantage. It explores the roles of internal and external environmental analysis, utilizing SWOT and PESTLE analyses to evaluate Nestle's strengths, weaknesses, opportunities, and threats, as well as political, economic, social, technological, legal, and environmental factors. The report concludes with findings from the SWOT analysis and provides strategic recommendations for Nestle's activities in the next 3-5 years, aiming to help the company achieve its overall goals and objectives effectively. The report also considers various challenges faced by Nestle, such as competition and the need for innovation.

Running Head: Strategic Management
Strategic Management

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Executive Summary
Nestle is the largest food and beverage industry globally. The company was established
by Henri Nestle in 1866 in Switzerland. It is important for the company to consider proper
strategic planning so that growth can be achieved in an effective manner. It is also important for
the company to maintain the image in the market. If the image is not good then it can be difficult
to survive in the competitive environment. Quality is the major problem that is faced by the
company. So, the company should emphasize on maintaining quality so that goodwill can be
maintained. In the food industry, the company is considered as a leader as there are various
products in each sector that are offered by the organization. Also, the internal and external
analysis will be elaborated in the report. The last phase will discuss the findings by considering
SWOT analysis and on the basis of that recommendations will be made so that the company can
conduct the activities in next 3 to 5 years.
In this paper, an environmental analysis will be done by considering SWOT analysis.
Also, recommendations will be made by taking into consideration external and internal analysis
of the organization so that it can easy to accomplish overall goals and objectives effectively.

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Table of Contents
Executive Summary.....................................................................................................................................1
Introduction.................................................................................................................................................2
Benefits of Strategic Planning......................................................................................................................2
Role of environmental analysis in the strategic planning process...............................................................3
Internal analysis.......................................................................................................................................3
External analysis......................................................................................................................................4
Internal Environmental analysis..................................................................................................................5
Pestle Analysis.........................................................................................................................................5
External environmental analysis..................................................................................................................7
SWOT analysis.........................................................................................................................................7
Findings via a SWOT Analysis.......................................................................................................................8
Recommendations.......................................................................................................................................9
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10

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Introduction
In this report, Nestle is taken into consideration for conducting the overall analysis. It is
seen that there are more than 2000 brands offered to the customers globally. The report will take
into consideration the advantages of strategic planning in Nestle (Nestle, 2016). There are many
products that are launched by the company but also introduced by the competitors like Maggi
and yippee (Pandey and Puntambekar, 2016).
Benefits of Strategic Planning
It is analyzed that planning plays a great role in conducting the activities of the
organization smoothly. If there is no proper planning in the organization than it can be difficult
for the organization to conduct the activities of the organization in a proper manner. It also helps
to achieve overall goals and objectives of the company. The activities that are conducted in the
organization can be managed if proper planning is there in the organization (Grant, 2016). There
are various benefits that can be achieved through strategic planning. One of the benefits that can
be achieved by the organization through strategic planning is establishing goals. Planning
process helps the organization to increase the overall performance of the workers (Boxall et al.,
2016).
If there is proper strategic planning than it can be easy for the company to reduce
duplication of work and increase the productivity of the workers. The company can attain
success if goals and standards are given by the company (Suarez et al., 2016). The image can

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also be maintained if planning takes place in the organization in a proper manner. It is seen that
goal setting assist to compare the results with the outcome. Proper goals and objectives are set
by taking into consideration strategic planning. It can help the company to accomplish the given
targets (Chowhan, 2016).
Strategic planning can also help the company to overview the strength and weakness
which are concerned with the competitors. It is evaluated that management of the company
analyze the areas where the competitors are vulnerable and according to that strategies are made
so that organization can achieve success (Bettis et al., 2016). Strategic planning helps the
organization to create a competitive advantage by evaluating the overall weakness of the
competitors.
It is analyzed that strategic planning helps to minimize the overall risks that are
prevailing in the company. Planning helps the employees to accept changes that are made in the
organization. Risks that take place in the Nestle Company can be minimized by considering
proper strategic planning (Elshaer and Augustyn, 2016). If proper planning is there then it can
be easy for the organization to implement the strategies. Strategic planning also helps to promote
cooperation and it can be easy for Nestle to achieve large market share (Bryson, 2018). If a large
market share is achieved by the organization then overall profits can be enhanced. It is essential
for the company to communicate the strategies with the employees so that they can conduct the
activities accordingly (Hill et al., 2014).
Strategic planning helps the organization to manage the resources. There are limited
resources in the organization. The planning process gives information to the top management so
that the decisions that are made can be implemented in such a manner that productivity and
profitability can be enhanced (Mir and Pinnington, 2014).
Role of environmental analysis in the strategic planning process
Internal analysis
In the process of strategic planning, it is seen that internal analysis has a major role in
conducting the operations of the organization. Internal analysis of the organization is concerned
with the competencies of the organization. To conduct the internal analysis of Nestle Company

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the focus will be given on SWOT analysis in which strength, weakness, opportunities, and
threats of the company will be discussed. Internal analysis is essential as it helps to collect the
information and also helps to make strategies so that organization can sustain the competitive
market.
It is evaluated that internal analysis helps to evaluate the strength and competency of the
company. Nestle takes into consideration latest technology so that activities can be conducted
smoothly. When latest technology is used it is seen that strategic planning is necessary as it helps
to take correct decisions related to work. Internal analysis helps the company to accomplish
overall goals and objectives of the organization (Tandon and Sethi, 2017).
The company can also maintain good image if there is proper strategic planning in the
company. The planning process adopted by the company helps to enhance the image of the
company in the market. It is also evaluated that planning helps the organization to consider
latest technologies so that productivity level can be increased. If the organization does not take
into consideration latest technology than productivity level is difficult to be enhanced. If
weakness of the organization is evaluated then it can be simple to conduct proper strategic
planning so that weakness can be minimized (Truong et al., 2017). The internal analysis also
helps to enhance the overall strength and it can only be done by proper planning.
Also, if organization need to enter the market than it is important to conduct proper
internal analysis so that success can be achieved. Strategic planning helps to analyze each and
every step of the organization. The organization should have proper knowledge of the change
that takes place in technology, economy, and operations of the competitors.
External analysis
External analysis has a major role in the planning process. This strategy is taken into
consideration to review the overall strategies that are concerned with the organization. It is
analyzed that by conducting proper analysis the organization can compete in the competitive
environment. The managers get help to manage the strategies so that activities of the
organization can be conducted easily. If strategic planning is there then it can be easy for the
workers to conduct the activities according to the strategies that are implemented in the

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organization. It is analyzed that if a strategic analysis is done properly then the organization can
evaluate the competitors in the market (Micheletti and Stolle, 2015).
Internal Environmental analysis
Pestle Analysis
Political Factors
It is evaluated that Nestle is conducting the activities by taking into consideration various
changes in the policies and procedures. The activities are conducted in a diversified community
so that operations can be conducted smoothly. There are various products that are offered by the
company but there are many reasons due to which the products are not supplied in many
countries. It is seen that the company takes into consideration various political changes in
developing countries so that activities can be conducted smoothly (Al-Haddad and Kotnour,
2015). The organization has shown stability in many economies like in India and China. Also,
due to government instability, the organization has to face the risks of distributing the products.
Economic factors
Nestle has given emphasis on research and development so that new and attractive
products can be offered to the customers. The company tries to focus on innovative products so
that large share can be grabbed. Due to economic changes in many countries the organization has
to face the problem in supplying its products to the consumers (Lütkenhaus and de Freitas,
2016). It is evaluated that customers also have the information of the changes that are related to
inflation and economic growth. Economic policies should be considered so that target market can
be achieved. It is essential for the organization to take correct decisions so that price, inflation
rate, and buying power can be set to attract the target market towards the products and services.
Nestle emphasizes on encouraging the economic worth of the farmers so that satisfaction level of
the consumers can be enhanced (Porter and Kramer, 2019).
Social Factors
Nestle takes into consideration social perspective. The emphasis is given on the taste and
preference of the customers. Taste and preference are considered so that appropriate product can

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be offered to the right target market. The activities of the organization are influenced by focusing
on the beliefs and thoughts of the consumers. In the present scenario, it is seen that individuals
try to maintain health and purchase those products that are good for their health. By analyzing
the overall behavior of the customers the company can easily enhance the image in the market.
Nestle tries to maintain the quality of the products and for this, the products are produced locally
(Rezaeegiglo et al., 2014). It is also seen that satisfaction level can be enhanced when the focus
is given on maintaining the quality.
Technological Factors
Latest technology should be taken into consideration by every organization, as it helps to
offer many opportunities that are prevailing in the market. Technology helps in developing the
new product at low cost and in a proper manner. Nestle focuses on latest technology so that
appropriate information can be collected and also products can be promoted through it. Social
Media is one of the techniques that have minimized the gap between the customers and
company. Nestle also focus on the technology so that demand for the products can be maintained
in a proper manner (Veth et al., 2017).
Legal factors
Labor is one of the major problems for Nestle Company. The organization has to face
problem-related to labor in which many rules and regulations are implied. Like fixed wages and
provision of law is considered. It is evaluated that organization has to consider the laws in each
and every activity of the company. At the time of promoting the product, the company focuses
on considering the laws so that activities can be conducted smoothly. Foreign trade regulations
are taken into consideration by Nestle so that distribution of products can take place properly.
Nestle also focuses on changes that are made on an international level so that products that are
introduced can be completed effectively. Global regulations are also followed by Nestle so that
growth can be achieved in the market (Wheelen et al., 2017).
Environmental factors
In the recent scenario, it is evaluated that the organization focuses on making the
environment clean. It is essential for the organization to take into consideration rules and

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regulations so that activities can be conducted in a proper way. In each county the rules and
policies are different so it is important to maintain proper acceptance in the overall market. The
company emphasis on social contribution so that issues related to packaging and recycling can be
solved easily.
External environmental analysis
SWOT analysis
This section represents the SWOT analysis of the Nestle Company. SWOT analysis takes
into consideration the resources of the organization so that competitive advantage can be
developed. In the present scenario, there are threats and opportunities that are faced by the
company and also it has impacted the activities of the company.
Strength
It is evaluated that Nestle is one of the largest company in the market. It emphasizes on
individual branding that assists the organization to create awareness in the food brands. Nestle
has a large workforce that helps to conduct the operations of the activities in a proper manner. It
is analyzed that the organization has a good distribution channel system that helps to give
products to the customers on time. The organization penetrated in urban as well as in rural
markets. The company has taken into consideration door to door services so that product can be
acceptable by the customers globally.
Weakness
It is evaluated that company has to face problem in managing the brands under the same
group. There are many legal and consumer problems that are analyzed in the market. Also, there
are many issues related to quality that has taken place. It is essential for the organization to
maintain a proper quality of the products and also to reduce the price so that large market share
can be grabbed. By having large market it can be easy for the company to conduct the activities
smoothly.
Threats

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It is analyzed that in this sector the buyers are high and loyalty is low of competitors. One
of the major threats to the organization is concerned with the use of latest technologies. It is
essential for every organization to take into consideration latest technologies so that operations
can be conducted smoothly. There are various substitutes that are available in the market for the
products that are given in the market by the organization. The competition level is very high as
every company is focusing on achieving large market share globally. So, it is important to
consider latest technologies so that products can be produced in less time and in a cost-effective
way. For example: Amul and Cadbury are the competitors of Nestle.
Opportunities
To achieve large market share the company has the opportunity to conduct the activities
in the international market. The emphasis should be given on maintaining proper distribution
channel so that products can be reached to the customers in a proper manner and this also impact
the overall sales of the company. It is analyzed that there are many new businesses that are
looking to merge with the large companies so that activities can be conducted on the large scale.
So, it is seen that Nestle has the opportunity to acquire new startups so that market share can be
enhanced effectively. It is important to enhance the market share as it helps to achieve overall
profits of the organization.
Findings via a SWOT Analysis
By evaluating the SWOT analysis it is analyzed that the organization is one of the famous
brands in the market. For Nestle, it can be easy to increase the market share in the international
market as the goodwill is maintained by the organization. By having a good image in the
market, it is seen that organization can easily achieve large market share by increasing the
satisfaction level of the customers. Distribution channel also plays a great role in conducting the
routine activities of the company. It is analyzed that company has a good distribution channel
and the products are available in the market easily which helps to achieve overall success in an
effective manner. There are many controversies that are analyzed in the company and it is related
to boycott of baby formula and also the discussion is made on the quality of the product. It is also
seen that company possess weakness also which is related to the fixed cost.

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So, it is important to focus on reducing the high cost so that large market share and
goodwill can be achieved effectively. It is important to minimize the risks that arise in the
company so that growth can be easily achieved. It is seen that company faces risk due the latest
technologies. It is important for the organization to give emphasis on considering latest
technologies so that productivity and profitability can be enhanced effectively. It will also give
impact on the enhancing the satisfaction level of the customers.
Recommendations
By analyzing the four segments it is evaluated that the company should emphasis on
producing innovative products in the market so that customers can be attracted towards the
products and services offered. It will also help to achieve competitive advantage and large
market. Resources should also be managed properly so that in next 3 to 5 years company can
achieve profits in a proper manner. Nestle should emphasize on enhancing the quality of the
products so that image can be maintained in the market.
Conclusion
It is evaluated in this report, that promotional methods are important to be considered by
the organization as it helps to promote the products in the market. Nestle should try to reduce the
weakness so that sales can be maximized. If company gives emphasis on providing quality
products then it can be easy to survive in the competitive environment. Therefore, by introducing
innovative products will help the company to grow globally.

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References
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Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to
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Elshaer, I.A. and Augustyn, M.M., 2016. Direct effects of quality management on competitive
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Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.