Nestle's Strategies: Business Level and Core Capabilities Analysis

This report provides an in-depth analysis of Nestle's business strategies, core capabilities, and competitive advantages in the global food and beverage industry. It begins by introducing Nestle's background, key products, and services, highlighting its global presence and diverse product portfolio....Read More

Running head: Business strategy
Business strategy

Business strategy
Table of Contents
Introduction.................................................................................................................................................3
Key core capabilities of Nestle.....................................................................................................................4
Business level strategies of Nestle...............................................................................................................6
Conclusion...................................................................................................................................................9
References...................................................................................................................................................9
2

Business strategy
Introduction
The report focuses on the key products, services, and customers of Nestle Company
which has been selected in the paper. Nestle is one of the leading companies which deals with
various food and beverage products and services. The firm is rendering its products and services
across the world to attain the competitive advantages in the market. In today’s era, the firm is
expanding and flourishing its business across the world by offering innovative and tasty products
to the customers. Further, the report depicts the business level strategy and core capabilities of
the company. The key core capabilities are an essential part of the organization because it helps
to make a strong position in the competitive market. It describes that how business level
strategies are leading to core capabilities in the world. The firm also uses corporate-level
strategies in order to overcome the competitors in the international market (Nestle, 2016).
Background of Nestle
Nestle is a Swiss international food and drink corporation with its headquartered is
located in Vevey, Vaud Switzerland. It was incorporated in 1867 by Henry Nestle who was a
trained pharmacist. It is one of the biggest food companies in the world measured by the revenue
and profit. The firm deal with various products such as medical food, baby food, breakfast
cereals, bottled water, coffee and tea, frozen food, pet foods, ice cream and dairy products etc.
Nestle brands include Nescafe, Smarties, Kit Kat, Maggi, and Nespresso. It is one of the biggest
shareholders of L’Oreal which is the biggest cosmetics company. The company manages and
operates 447 factories in more than 194 countries.There are approx 339,000 employees
employed in the firm. In today’s era, the corporation is increasing its revenue and profit with
maintaining sustainability in the organization. The firm introduced its chocolates in 1904 in the
market (Nestle, 2016).
In 1930, Nestle introduced enormous new products such as Nescafe and Milo. Therefore,
the company is increasing its revenue and profit day by day. Along with this, the firm uses
marketing mix strategies, product growth strategies, and diversification strategies in order to beat
the competitors in the market. Apart from this, the company uses personal selling, advertisement,
and promotional strategies in order to promote and enhance the food products in the global
3

Business strategy
market. In today’s competitive world, Nestle is number one food Group Company across the
world. The main target market of the firm is kids, young girls and boys who buy food products
on daily basis. The corporation uses several strategies to attract more people and to differentiate
its products from the competitors in the market. Apart from this, marketing mix strategies are
used by Nestle to stand out against the rivalries in the competitive market (Nestle, 2016).
Product and service description of Nestle
The company has approx 8,500 brands in over 80 countries in the world. Nestle provides
a wide range of food products and services to the customers across the world. The products and
services include coffee, chocolates, Nestle water, beverage products, frozen meals, ice-cream,
baby food, tea, and pet foods. In this way, the firm has been able to maintain a dynamic position
in the competitive market. Along with this, the organization uses innovative and new
technologies to produce delicious food products to the customers across the world. In addition,
home delivery is also provided by the firm to promote the products and services across the world
(Nestle, 2016).
Key core capabilities of Nestle
Nestle is one of the largest brands in the international market. The key core capabilities of Nestle
have been discussed below.
 The firm maintains a unique team to understand the needs, expectations, and desires of
the customers in the market. It helps to maximize and increase the revenue and profit of
the firm.
 The firm has the capability to produce and launch more nutritional food and beverage
products in the competitive market. Further, Nestle has been able to attract and retain
more human resources in the international market. It is one of the biggest core
capabilities of the firm.
 Along with this, the company is able to win and develop trust through quality among the
customers in the world. This core capability provides a chance to increase the number of
customers in the market.
 In addition, Nestle follows positioning strategy to make a strong financial position in
front of customers in the competitive market (Varma & Ravi, 2017). Furthermore, the
4

Business strategy
company wants to attract other well-known companies for joint ventures, strategic
alliances, and partnership.
 Along with this, the firm is exporting its breakfast cereals to more than 130 countries.
A future roadmap has been created by Nestle with the help of effective and dynamic key core
capabilities within the organization. The employees of the company are more capable to deliver
the best products and services to the customers in the world. On the other hand, the company
maintains unique core competencies which have been discussed below.
 Innovation and renovation are one of the significant core competencies of Nestle which
help to introduce new products and services in the market. The firm has been able to
make a separate portfolio by using and maintaining the core competency.
 Operation efficiency is another competency of the firm which helps to eliminate and
reduce the wastage in the organization (Sethi, 2012). It also helps to increase and improve
the performance and effectiveness of the workers.
These are two effective and attractive core competencies of the firm which helps to attract
more consumers in the competitive market. By using these core competencies, the company can
maintain a unique communication and collaboration with customers across the world. On the
other hand, the firm uses tangible and intangible resources to overcome the competitors in the
marketplace. The key core capabilities are also important to develop and build the business
strategy within the organization. Nestle cannot use a business level strategy without key core
capabilities and competencies. Mainly, the business level strategy outlines and explains the key
core competencies and capabilities of the firm. The capabilities demonstrate the strengths of
Nestle which helps to create a market share in the competitive business environment. Nestle
assimilate the core capabilities into a business-level strategy to gain the competitive benefits in
the international market (Lawrence & Beamish, 2012). The core capabilities are integrated into
business level strategy in order to reduce and eliminate the risks and challenges of the market. In
addition, business and growth level strategies help to measure and analyze the plans, strategies,
and procedures of competitors in the global market. Furthermore, porter five forces model is
used by the company to initiate the business level strategies with maintaining core competencies
within the organization. This strategy also helps to assess and measure the needs, wants desires,
expectations, and requirements of the customers across the world. The suppliers, customers,
5

Business strategy
substitute’s goods, new competitors, and rivalry are the main and significant five forces of
business level strategy. The firm has been able to make effective decisions by using business
level strategy in the organization. Now it is assumed that there is a unique connection between
key core capabilities and business level strategy (Furrer, 2016).
Business level strategies of Nestle
There are three business level strategies are used by Nestle to attain the long-term success
and growth of the firm. These strategies include cost leadership, differentiation, and focus
strategies. The business level strategies have been discussed below.
Low-cost leadership strategy: Nestle is a well-known brand in the world. It purchases high
quality of raw material from the various suppliers in the market. In this way, the company
reduces the cost of raw material in the global market. The company focuses on the quality in
order to achieve the goals and objectives through cost. The firm controls and manages the
unnecessary costs to beat the competitors in the international market. The main aim of the
current strategy is to achieve the operational efficiency within the organisation.
Differentiation strategy: It is the second important strategy of Nestle to stand out against the
competitors in the market. The main aim of this strategy is to differentiate the products from the
competitors (De Wit & Meyer, 2010). The other purpose of using this strategy is to develop and
build a unique brand image and positions in the minds of customers. Currently, Nestle
manufactures and produces more than 10,000 products under 8,500 different brand names. Along
with this, the company uses pricing strategy, packaging strategy, and labeling strategy.
Focus strategy: It is the third most significant strategy of Nestle which focuses on the low-cost
leadership and differentiation strategy to accomplish the vision and mission. The company uses
focused low-cost strategy in order to control and manage the marketing and manufacturing cost.
Now it is assumed that competitiveness and success of Nestle depend on the business level
strategy to make a good image in the market. Apart from this, the firm also uses corporate level
strategies to manage and tackle the different market situations. The corporate level strategies
include growth strategies, stability strategies, and retrenchment strategies to analyze and identify
the needs, requirements, and choices of the customers (Wheelen & Hunger, 2011). Nestle is one
of the leading beverage and food manufacturing company. The firm is expanding and flourishing
6

Business strategy
its business by using corporate-level strategies in the organization. Furthermore, Nestle uses
several motivational strategies to motivate and encourage the workers that have been discussed
below.
Reward strategy: This strategy is used by the organization to improve the productivity and
efficiency of the employees. The company provides enormous rewards to the customers in order
to provide job satisfaction and job security to the workers. In addition, the firm also provides
incentives, compensation, and other benefits to the workers. There are two types of rewards
which include financial and non-financial rewards.
Motivation strategy: The motivation strategies are used by Nestle to increase the efficiency and
effectiveness of the workers. There are two types of motivation which include extrinsic and
intrinsic motivation. These strategies help to provide pleasure and happiness to the employees
for performing task and duties effectively and successfully (Armstrong and Taylor, 2014).
All these business strategies help to increase the sale of the company. Further, it also
helps to maintain a strong goodwill in the global market. Further, Nestle can gain the competitive
advantages in the international market. These strategies also help to maintain a good working
environment in the workplace. Nestle still faces competition in the international and local market
which influence the trading activities and operations adversely. Groupe DANONE, Yinlu foods,
and Mars are the main competitors of the company. The company uses business-level strategies
to overcome the competitors across the world. The business level strategies help to maintain core
capabilities within the organization. It also helps to maintain customer’s relationship with
customers in the competitive market.
Low-cost leadership strategy provides helps to the customers to provide happiness and
satisfaction to them. The activities, strategies, and processes are leading to core capability from a
variety of perspectives which have been discussed below (Enama, 2017).
Commercial perspective: The low-cost leadership strategy helps to maintain a good culture in
the organization. In this way, it helps to attract and retain the employees within the organization.
It also helps to maintain dynamic core capabilities in the organization. The core capabilities
provide a framework to the Nestle where they can identify and measure their core strengths and
7

Business strategy
strategize in the organization. Furthermore, the company measures and identifies the core
competencies by using effective and unique business level strategy.
Customer perspective: The firm reduces the prices of products by using low-cost leadership
strategy. In this way, it creates a positive working environment in the environment as well as the
organization. It also helps to enhance and develop unique core capabilities of the company. The
consumers can buy the products at reasonable prices from the market. It also helps to make a
unique image in the mind of customers across the world (Peters, Hofstetter & Hoffmann, 2011).
Apart from this, Nestle has been able to provide innovative and attractive food and beverage
products to the consumers in the competitive market. The customers easily buy the products of
the company due to its strong image in the international market.
Market perspective: The core capability is the key success factor for the company which helps
to determine the long-term success and growth of the company. Nestle has been able to beat the
competitors by maintaining and using dynamic core competencies and business level strategies
within the organization. Apart from this, the firm is able to deliver the innovative food and
beverage products to the market. In this way, optimum utilization of resources can be done by
the firm. In addition, low-cost leadership strategy helps to maintain sustainability in the market.
The firm uses this strategy to provide satisfaction to the marketers (D'heur, 2015).
Society perspective: The business level strategy also provides benefits to the society. Nestle can
easily run the business successfully and effectively by using these strategies within the
organization. It also helps to increase and enhance the operational efficiency and effectiveness of
the workers as well organization. The core capabilities also generate sustainable competitive
benefits for the company. It helps to evaluate and analyze needs, preferences, tastes, and choices
of the people. Further, the business level strategy also helps to maintain teamwork and
communication with customers across the world. In addition, people have become aware in the
market to make the effective and unique decisions. Further, the company uses leadership styles
to provide satisfaction to people. Now it is assumed that business level strategies help to build
and develop core capabilities of Nestle in the competitive market. These strategies play a vital
role to maintain sustainability and CSR practices effectively and efficiently (Williams, 2014).
Further, the core capabilities provide benefits to the customers, society, and market. It also helps
to make a good and strong image in the international market.
8

Business strategy
Conclusion
On the above aforesaid information, it has been evaluated that Nestle is one of the largest
corporations in the world. The company offers tasty food and beverage products to the customers
in the competitive market. Apart from this business level strategies are used by the company to
gain the competitive advantages in the global market. Further, Nestle maintains unique key core
capabilities within the organization to increase the number of customers in the international
market. There is a close connection between business level strategy and core capabilities. The
core capabilities help to achieve the long-term vision and mission of the company. Along with
this, core capabilities provide various benefits to the market, customers, and society. Nestle
cannot run the business successfully and effectively without using and maintaining core
capabilities within the organization. Furthermore, key core capabilities help to encourage and
promote innovation and renovation in the organization (Islam, 2016). These core capabilities also
access and evaluate the opportunities and threats of the market.
9

Business strategy
References
Armstrong, M. and Taylor, S., (2014). Armstrong's handbook of human resource management
practice. Kogan Page Publishers.
De Wit, B., & Meyer, R. (2010). Strategy: Process, content, context. Cengage Learning EMEA.
D'heur, M. (Ed.). (2015). Sustainable value chain management: Delivering sustainability
through the core business. Springer.
Enama, A. (2017). Research on Market Development Strategy in Africa. A Case Study of Nestle
Nigeria PLC.
Furrer, O. (2016). Corporate level strategy: Theory and applications. Routledge.
Islam, K. R. (2016). Corporate marketing–a study of corporate communications at Nestlé
Bangladesh Limited.
Lawrence, J. T., & Beamish, P. W. (Eds.). (2012). Globally responsible leadership: Managing
according to the UN global compact. Sage.
Nestle, M. (2013). Food politics: How the food industry influences nutrition and health (Vol. 3).
Univ of California Press.
Nestle., (2016). About us., reviewed on 7 Dec 2017< http://www.nestle.com/csv>
Nestle., (2016). The Nestle company history., reviewed on 7 Dec 2017., <
http://www.nestle.com/aboutus/history/nestle-company-history>
Nestle., (2016). What products does Nestle sell?., reviewed on 7 Dec 2017., <
http://www.nestle.com/ask-nestle/products-brands/answers/what-products-does-nestle-
sell>
Peters, N. J., Hofstetter, J. S., & Hoffmann, V. H. (2011). Institutional entrepreneurship
capabilities for interorganizational sustainable supply chain strategies. The International
Journal of Logistics Management, 22(1), 52-86.
10

Business strategy
Sethi, S. P. (2012). Multinational corporations and the impact of public advocacy on corporate
strategy: Nestle and the infant formula controversy (Vol. 6). Springer Science &
Business Media.
Varma, G. R., & Ravi, J. (2017). Strategic Analysis on FMCG Goods: A Case Study on Nestle.
Verbeke, A. (2013). International business strategy. Cambridge University Press.
Wheelen, T. L., & Hunger, J. D. (2011). Concepts in strategic management and business policy.
Pearson Education India.
Williams, O. F. (2014). Sustainable development: The un millennium development goals, the un
global compact, and the common good. University of Notre Dame Press.
11