Strategic Intelligence: Nestle's Challenges and Management Response

This report analyses the strategic issues faced by Nestle in India, primarily focusing on the challenges arising from product quality concerns with Maggi noodles. The report identifies issues such as government bans, brand image damage, and negative publicity. It explores how senior management could handle these challenges through relationship building, product modification, and positive branding. Strategic tools like SWOT and PESTLE analysis are employed to dissect the internal and external factors affecting Nestle's operations. The role of an analyst in developing marketing strategies and improving communication is highlighted, with recommendations provided to address the identified issues and restore consumer trust. Desklib offers a platform for students to access this and other solved assignments for academic support.

Strategic Intelligence

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Executive Summary
The main aim of this report is to analyse the issues of Nestle. Nestle faced the issues of its
bad quality of product. SWOT and Pestle analysis helps to identify the issues which are faced
by the company such as government interference, brand positioning and others. Senior
managers of the company handle the situation by communicating with the government or
promoting the healthy products in the market. The analyst uses the marketing strategy,
communication plan to reduce these issues. Product differentiation, branding and promotion
are the methods which are recommended to reduce these issues and maintain the quality of
product and the faith of the consumers.

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Contents
Introduction...........................................................................................................................................3
Strategic Issues face by Nestle in India.................................................................................................3
Handling the Challenges by senior management...................................................................................5
Strategic Tools to analyse the issues......................................................................................................6
Role of Analyst......................................................................................................................................7
Recommendations...............................................................................................................................10
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12

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Introduction
The company makes strategies of achieving the organisational objectives but it faces
many issues which are called strategic issues. In this report, Nestle has been taken into
consideration to analyse the strategic issues faced by the company. Nestle is a food and
beverage company; it is the largest food and drinks Company in the world in terms of
revenue and other metrics. Nestle operates in many products such as coffee, tea, Maggie,
medical food, baby food and many others. The company has a high demand for its product
that is why its annual sales are approximately $ 1.1 billion in the U.S (Nestle, 2018).
In this report, the strategic challenges faced by Nestle in India will be discussed. After
that, the discussion will be made on the challenges handle by the senior management.
Strategic tools have been taken into consideration to analyse the strategic issues of the
company. To resolve the issues the recommendations will be provided at the end of the
report.
Strategic Issues face by Nestle in India
Nestle operates in India with the objective of earning profit by satisfying the customer
demand and needs. Nestle sells many products in India such as Coffee, Maggie, Tea,
Chocolates and many others. Maggi was the most popular noodles in India; the brand had a
dominant position in the Indian market. There are many states in India who agreed with the
statement that Maggi contained monosodium glutamate as well as lead above the limit. It is
observed that Nestle failed to maintain its quality of product that is why the government
banned the product in many parts of the country. The result of this issue was that the
government gave orders to a ban the sale of Maggi. Bad quality of food is an ethical issue
which is faced by the company after this case (Balasubramanian, Gopal, & Reefana, 2016). It

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is considered as an ethical issue because it is directly related to health of the consumers. It
was found that the product contains chemicals above the required limits which was causing
sever health issues. It is the ethical responsibility of the company to deliver good quality of
food while following all the regulations of food and safety.
Government Ban
The company faced many issues due to the bad quality of the product in which the
main problem the company faced was government ban. Government ordered to ban the
product because it was not safe for the people. It was found that the share prices of Nestle
gone down drastically after these issues of Maggie (Zhang, 2015). Maggi went zero in a
month in the market from top which was a critical phase for the company after ban on Maggi.
Brand image
It has been seen that the brand image of Maggi went down after banning the product.
Bad quality of product destroys the image of the company and the trust of people breaks
down towards the Nestle safe product. Trust plays a major factor at the time when consumer
buys a particular product. Harmful chemical lead and MSG was found in Maggi which has
shaken the consumers’ confidence for consumption of Nestle products. Sale of Maggi was
falling down with the rate of 60% (Anselmsson, Vestman Bondesson, & Johansson, 2014). It
not only affected the brand image of the Maggie as a product but also the brand image of the
company got affected and sales of other product also went down due to this.
Negative Publicity
After the lab testing, Lead and MSG was found in Maggi which is not safe for the
consumption; this statement affected the brand image of the company. There are many
rumours spread after banning the product that developed the negative image of the company.

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It can be measured in terms of profit; Nestle earned INR1185 crore in India in 2014 but after
banning the product the company faced loss with the rate of 60.1% (Thomason, 2018). The
negative marketing of the company can also be measured in the context of the share price of
the company. The share prices fell down with the rate of 13.5% within the 15 days of ban of
the product (Kleppinger, & Cain, 2015).
Handling the Challenges by senior management
There are different ways that could have been used by the top management in order to handle
the situation. Some of the techniques are discussed below:
Build relations
The senior management of the company could handle the situation by building a
relationship with the government. Government raises the voice against the company after
observing the bad quality of food delivered by the company. Thus, the senior management of
the company could maintain the relationship with the government by assuring that the quality
will be improved and it will be manufactured as per the government regulations only. This
could help the government to help the company to allow the product again in the market
(Adami, & Hållander, 2015).
Product Modification
It has been seen that the senior management has the responsibility to handle the
situation faced by the company by taking a decision of change in the product’s nutritional
values. The company could modify the product with the new qualities. It could modify the
product with healthy nutrients. To improve the quality of the product the managers could
measure the quality of the product and regular inspections the performance of the product

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(Mukhopadhyay, & Ye, 2016). A testing of the quality of the product should be cone before
launching it into the market.
Positive Branding
It is necessary to maintain the positioning of the company after receiving the negative
reviews of the product. The senior management could maintain the positioning by launching
a healthy product in the market with the high quality. Health conscious consumers get
attracted towards the product and high quality of product satisfies the consumers which
results positive feedback from the consumers (Gensler, Völckner, Egger, Fischbach, &
Schoder, 2015).
Strategic Tools to analyse the issues
It is necessary for the company to analyse the issues as soon as possible because it
will help the company in addressing the issues faster. There are many tools to analyse the
strategic issues of the company such as SWOT Analysis, PESTLE Analysis, Porter’s five
forces framework and others. In order to analyse the strategic issues faced by Nestle below
strategic tools would be better:
SWOT Analysis
SWOT Analysis is a tool which helps the company to identify the internal issues of
the company. This tool is also used to evaluate the product, brand and outsource of a business
function. The company can use this tool to evaluate the particular supply source, a business
process, a product market or to evaluate the product quality. The company can use this tool to
identify the strength and weakness which helps to modify the product and improve the brand
image. The company identifies the opportunity to grab the market share in the market. This
tool identifies the threat which helps the company to reduce this threat at the initial stage

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(Bull, et al., 2016). With the help of SWOT analysis NESTLE can analyse the Strength of
Maggie on which it can focus to build a strong relationship with the consumers. SWOT
analysis will also be helpful in knowing the threats such as strict rules related to food quality
so that the company can further handle it effectively.
PESTLE Analysis
This model is used to analyse the external environment which helps the company to identify
the external issues. NESTLE can analyse its political factor which affects the company’s
growth. The company also uses this tool to evaluate the technology which is used to
manufacture the product or to maintain the quality of the product. It helps the company to
identify the position in the market to analyse the social factor of the company. The economic
and environmental factor of PESTLE analysis helps the company to identify the issues which
affect the product sales. If economic and environmental conditions in India are better, then
this will be beneficial for NESTLE (Afonina, 2015).
Role of Analyst
The company has to reduce the issues to improve positioning in the market in order to
maintain the marketing issues which are faced by Nestle. Strategies help to reduce the issues
and help the product to come back to its position. Therefore, there are certain steps which the
strategist takes to reduce the issues and that are described below:
Making Marketing strategies
Strategist takes the step to bring the positive image in the market and in the mind of
the customer. The analyst can suggest starting marketing campaigns in which the customers
come to know about the changes which are done by the company to overcome the issues.
Marketing Campaign helps the company to represent its motive and product in the front of

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the customer that helps to bring the positive image of the company. This strategy helps the
company to take direct feedback from a customer which is beneficial for the company to
know about the point of view of the customer for the company. Through the marketing
campaigns, the company represents the changes to reduce the negative feedback from the
customer (Wensley, 2016).
To bring the positive image in the market; the company has to promote the product
through advertisement. The company can upload a short clip on its websites about the
processing of its product manufacturing. The short clip should contain the whole detail about
the company and the quality of its product; the short clip should be attractive which can
attract the customer towards the product of the company. This strategy helps the company to
boost the sale of its product. There are many other sources to advertise the product such as
showing advertisement on television, radio and social media (Balaji, Londhe, & Shukla,
2016). Advertisement reveals the company’s social responsibilities towards the economy
which builds the trust of the customer towards the product of the company. This step of
strategist helps the company to promote the product which helps in boosting the sale or to
build the customer trust towards the company services.
Improving the communication
It has been seen that effective communication is beneficial for the company to attain
the business objectives. Effective communication in the company helps to improve the
performance of the employees which directly affect the quality of the product. The strategist
should effectively communicate with the employees about the reasons for its bad quality of
product and the problems which are faced by the consumers. The main purpose of effective
communication plan is to communicate for the quality of food. The employees can also

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present their problem in front of top management which is faced by them at the time of
manufacturing such as lack of facilities or resources (Dhanesh, & Sriramesh, 2018).
It has been seen that the company will improve the product when it identifies the
issues which are faced by the consumers. The target audience of this strategy is customer,
employees, government as well as food authority. Strategist uses the different channel to
communicate with the customer or to identify the issues which are faced by the customer. It
is observed that social media is the best way to communicate with the customer. It is
observed that the company has to communicate with the government in an appropriate
manner to handle the situation. Strategist could communicate the problem with the
government in an appropriate manner also with the food corporation in the same manner
(Sasmita, & Mohd Suki, 2015).
Quality management
It has been seen that the objective achieved is the result of activities done in an
efficient manner. The strategist has to prepare and adopt the quality policy and implement the
quality planning. Best quality is a key to achieve long-term success in the market. This policy
helps to ensure the best quality of food; this policy includes the stakeholders to improve the
product quality. All the activities that are involved in the quality policy will ensure the quality
of the product is maintained which makes the customer happy. This strategy has to be
adapted by the strategists to achieve the success as well as to bring the positive brand image
in the market. Bad quality is the major issue which is faced by the company that is why it is
the responsibility of the strategist to adopt the quality policy to ensure the quality of the
product (Jeuring& Haartsen, 2017).

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Recommendations
Product diversification
From the above analysis, it has been recommended that the company has to add some
quality parameters to the product. Diversification may be achieved by entering into the
additional market or by pricing strategy. NESTLE can add some additional healthy noodles in
the same product range for diversification. The company has to improve or change by adding
new qualities to the product. With the customer feedback, the company can easily change the
product as per the demand of the customer towards the product. In this process, the company
has to develop marketing activities to promote the product with a positive image (Greenstone,
2017).
Total Quality Management
It is a system which is based on the principle that every employee of the company has
to maintain the high standard of work in every stage of the company’s process. It is the
responsibility of the senior management of the company to evaluate the performance of an
employee so that the senior management can improve the performance of an employee at the
initial stages. Evaluation helps to identify the obstacles which come in the way of improving
the quality of the product. To maintain the standard of work of an employee, the senior
manager builds the atmosphere which improves the ability of an employee and motivates
them towards the work.
Branding

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After founding the lead and MGS; the company’s brand image went down in the
market. To bring the positive brand image; the company has to improve the quality of the
product which makes the customer happy. The company can launch new healthy products or
take direct feedback with the customer. Negative feedback helps the company to make the
changes in the product as per the demand of the customer. Consumer satisfaction is also a
reasonable way to improve the brand image in the market. Positive feedback encourages the
company to improve the quality of the product or it also improves the brand image in the
market (Cheng, Green, Conradie, Konishi, & Romi, 2014).
Conclusion
From the above analysis, it has been concluded that the company has to improve the quality
of food. Nestle faced the issues due to the bad quality of food such as government ban,
negative marketing, and negative brand image. To handle these issues the company has to
maintain the relations with the government which is possible by implementing the proper
communication channel. Government banned the Maggi in the market; to resolve this issues
it has to build a strong relationship with the government. The company has to launch the new
healthy products to bring the positive brand image in the market. Negative marketing affects
the profit of the company. To improve the image the company has to advertise the product
with the different communication channels. Good quality improves the brand image of the
company in the market which helps to earn the high profit and grab the high market share in
the market. To improve the quality it is essential to maintain the quantity and quality of
product with the effective management. Quality of food is the key to long-term success in the
market, it is necessary for the company to change the product with the new quality nutrients
and represent these qualities in front of the customer so that the trust of the customer builds
towards the product of the company and the brand image improves.

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