Nestle's Business Strategy: Analysis and Recommendations Report

This report provides a comprehensive analysis of Nestle's strategic business management, focusing on its market position, competitive strategies, and future recommendations. The report begins with an executive summary highlighting the importance of business strategy for success, followed by an introduction that sets the stage for the analysis. It delves into the simulation of the business firm, exploring how training simulations are used to improve customer satisfaction and management skills. The report then utilizes tools such as Porter's model and PESTLE analysis to evaluate the external environment, assessing threats, opportunities, and the impact of political, economic, social, technological, legal, and environmental factors. Gaps within the firm, such as an aging workforce, child labor issues, and ethical concerns, are identified. The report also examines Nestle's objectives, functional and business-level strategies, including inspiring healthy lives, generating employment opportunities, uplifting local farmers, boosting the economy, and expanding the business. Recommendations for future strategies are also provided, concluding with a summary of the key findings and insights. The report uses figures and diagrams to illustrate key points and provides a reference list for further reading.

Running head: STRATEGIC BUSINESS MANAGEMENT
Strategic Business Management
Name of the Student:
Name of the University:
Author’s Note:

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Executive summary
Business strategy is an integral part of any successful business management. Each and every
company must be able to know their present position in the market and the necessary changes
that they must adopt in order to be successful in the long run. As far as the reports are concerned,
Nestle has been successful in maintaining a respectable market share in the past few years but
their main objective is to keep up their level of production and emerge as the top food and
beverage market in the world. The aim of this paper will be to deal with the different strategies
taken by Nestle for improving their business and giving a tough competition to all the
competitors existing in the market

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Table of Contents
Introduction......................................................................................................................................5
1. Simulation of business firm.........................................................................................................5
2. Tools for analyzing the environment...........................................................................................5
Porter’s model..................................................................................................................................5
Threat of new entrants..................................................................................................................5
Threat of Substitutes....................................................................................................................6
Bargaining power of the suppliers...............................................................................................6
Bargaining power of consumers..................................................................................................6
Pestle................................................................................................................................................7
Political factors............................................................................................................................7
Economic factors..........................................................................................................................7
Social factors................................................................................................................................7
Technological factors...................................................................................................................7
Legal factors.................................................................................................................................8
Environmental factors..................................................................................................................8
Gaps in the firm...............................................................................................................................8
Some of the gaps existing within the firm are.................................................................................8
Aging workforce and retirements................................................................................................8

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Less experienced younger generation of employees....................................................................9
Child labor problem.....................................................................................................................9
Raw material problem..................................................................................................................9
Ethical and boycott problems.......................................................................................................9
4. Objectives of the firm..................................................................................................................9
5. Functional and Business Level Strategies.................................................................................11
Business level strategies mainly include the following.................................................................12
Inspiring healthy lives................................................................................................................12
Large scale employment opportunities......................................................................................12
Uplifting the local farmers.........................................................................................................12
Boosting up the economy...........................................................................................................13
Expanding the business..............................................................................................................14
Providing fresh and healthy food to the customers....................................................................14
Recommendations for Future........................................................................................................15
Conclusion.....................................................................................................................................15
Reference list.................................................................................................................................16

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Introduction
A good business strategy must have these three things called focus, divergence, and a
compelling tagline. It will also make a survey of the existing competitive firms in the market and
how to face that competition. A well-planned business management strategy is one which will
enable the company to know its strength, opportunities and also its weaknesses and threats so
that the company can work upon its weaknesses and overcome the threats in future and be
equipped with a sound risk management method.
1. Simulation of business firm
The training simulations will be used by the company in various genres, and they will
mainly be focused on customer satisfaction, increasing business awareness and management
skills. The first and foremost thing that will be undertaken by the company is to improve the
quality of products and bring a wide variety of diversification in the products related to the
texture, color, ingredients, taste and also the price of the products. The simulation will be
basically about the strategy series that is the strategic management issues, which will mainly deal
with the development of a proper market strategy for increasing the overall sales of the company.
2. Tools for analyzing the environment
Porter’s model
Threat of new entrants
This always is one of the major threats that remain in a company. Moreover, if the market
is dealing with a very narrow and restricted resource then it will naturally become very difficult

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for the company to work on its loopholes and overcome them. Though Nestle is a large and well
know firm but the area of operation of this firm is itself too huge and viable too. So, there has
been the entry of many new firms in this market but they have not been able to give tough
competition to Nestle in terms of market share. Hence, this goodwill that Nestle has been
enjoying for years increases the threat of entry of new competitive firms even further.
Threat of Substitutes
Since this firm mainly deals in food and beverage, there is a huge range of substitutes
available in the market and there is always a high chance that the buyers can switch over to
another alternative, here it really becomes immensely essential for the company to keep a huge
innovation in its products to retain the attention of the customers.
Bargaining power of the suppliers
As far as the supplier relationship is concerned, Nestle always maintains a good
relationship with all the suppliers, since they know that in dairy and agricultural products,
maintaining the quality is of utmost importance.
Bargaining power of consumers
Nestle always tries its level best to satisfy the needs and demands of their customers.
However, the customers always have the option of switching over to other alternatives, as they
are available in plenty but Nestle has been successful in satisfying all the demands of the
customers so far. Since Nestle always has been able to maintain the highest amount of market
shares, the rival firms are always in search of opportunities to give a tough competition,
companies like Kraft Foods and Groupe Danone are some of the notable rival firms.

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Pestle
Political factors
It can affect this company a great deal because it has its branches located in many regions
of the country and hence is subjected to many rules and regulations which make it very essential
for the company to look after government factors like taxation, excise duties etc.
Economic factors
The emergence of Nestle in Australia has given a strong boost to the local economy as it
has increased the employment opportunities a great deal. Nestle is one of the biggest employers
in Australia and has opened around thirty full time job opportunities and has turned the site into
the company’s production hub.(Desai, 2016). Nestle is also working immensely to support the
farmers by producing products with the locally available materials. Apart from this, the GDP of
Australia is getting a great boost due to the expansion of business, as the Nestle products are sold
far across in the local Aussie supermarkets as well as on a global basis.
Social factors
So far, Nestle has understood the social factor well and has also been able to cater to the
changing needs of the customers since they know that the customer demand changes according
to the changing social scenario. They have been successful in maintaining the trust factor with
their customers. (Sioen et al., 2017)
Technological factors
Technology opens an y new doors and this company knows how to make good use of the
opportunities. Nestle uses the modern scientific methods in order to maintain databases with the

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help of software and also by taking help from social media and the internet it has been able to
bridge the gap between itself and its customers, this, in turn, helps them to global standards.
Legal factors
Nestle is subjected to certain legal rules like maintaining health and safety rules for the
employees and also to maintain the proper level of hygiene in their products. As Nestle is
accused of being involved in child labor, it must put a thorough check on the recruitment of labor
and avoid child labor on highest priority as it is strictly forbidden by law.
Environmental factors
Nestle has to focus towards the production of safe, healthy and fresh products with eco-friendly
manufacturing methods.
Gaps in the firm
Some of the gaps existing within the firm are
Aging workforce and retirements
Nestle is facing a problem as most of the senior employees are getting retired and this
makes the company carry on their recruitment process over a long duration of time. This, in
turn, is a very long and complicated process and finding the right person at the right time is also
a tough job.

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Less experienced younger generation of employees
The new employees that are recruited are usually young and suffer from lack of proper
experience, as a result of which, the production gets hampered both in terms of quality and
quantity (Lee & Vachon,2016).
Child labor problem
Nestle is accused of violating the child labor act, a large number of children are forced to
work as laborers in the cocoa production because of poverty and a lack of schools.
Raw material problem
There is often the issue of unexpected demands by the customers which become tough to
meet with and often the natural reasons like unfavorable climatic conditions can also prove to be
a major obstacle Blumenthal, (Hoffnagle et al., 2014). There is often the problem of inaccuracy
in receiving the correct orders (Rinoj, 2014).
Ethical and boycott problems
There is often the charge on Nestle of having sold unethical products, unethical
marketing of infant formula etc, which often leads to the boycott of the products (Maier, 2015).
A good example can be the recent case of Nestle two minutes Maggie noodles which was
accused of containing some harmful chemical components and it led to a long duration of ban on
several Nestle products including Maggie.
4. Objectives of the firm
 Inspiring healthier lives
 opening up more employment opportunities
 Uplifting the local farmers

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 Boosting up the economy both on local as well as global basis
 Providing healthy, fresh and safe food to the customers
 Expanding business
 Boosting up the GDP of nation
Figure1: strap line of Kit Kat
(Source: paperdue.com.2016)

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5. Functional and Business Level Strategies
figure2: Strategic road map of Nestle
(Source: nestle.com.2016)

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Business level strategies mainly include the following
Inspiring healthy lives
The first and foremost strategy that will be used by Nestle for expanding their business in
Australia is by inspiring healthy lives, thus staying true to their belief of good food and good life.
They will help and inspire people to live healthy lives. Nestle will be conducting many health
awareness programs and seminars to educate and aware the parents so that they can give their
children the best in life. Nestle healthy Kids Program will be conducted that helps to know the
right value of nutrients and also encourages physical activities.
Apart from this, Nestle will be constantly working in building a strong connection
with the best Research and development networks in the industry, so that they can make their
products healthiest and tastiest and safest at the same time. (Perera et al., 2014).
Large scale employment opportunities
Staying true to its objective of generating large scale employment, Nestle will be opening
up many new branches in different parts of Australia, and will encourage many new families to
come and settle in close proximity of their new store locations, so that they can be appointed as
full time workers. Nestle has opened about thirty full time vacancies in Australia and thus
provided a steady source of work and income for many families. They are also planning to
employ more number of people in the recent years.
Uplifting the local farmers
In the coming years, Nestle will be aiming at generating more employment opportunities for the
local farmers. This will in turn help in satisfying two fold purposes, one will be that of getting