Strategic Analysis of Nestle Australia: HI5019, Holmes Institute

This strategic analysis report provides a comprehensive overview of Nestle Australia, a leading food and beverage company. It includes an external analysis using PESTLE and Porter's Five Forces to evaluate the general and industry environments, identifying opportunities and threats. The internal analysis explores Nestle Australia's tangible and intangible resources, capabilities, and core competencies. The report also examines the competitive environment, highlighting key rivals and their strategies. Finally, the report proposes suitable information system recommendations for Nestle Australia. Desklib offers a platform for students to access similar solved assignments and past papers.

Running head: Strategic Analysis report on Nestle Australia
Strategic Analysis report on Nestle Australia
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1Strategic Analysis report on Nestle Australia
Executive Summary
The aim of this report is to provide a strategic analysis of the company, Nestle Australia
Limited .The report provides both external and internal analysis of the company. The external
analysis discusses about the various economic, physical, social, technological and other factors.
It also discusses in details about the industry environment and the competitive environment of
the company. The threats and opportunities of the company are also identified and discussed.
The internal analysis of the company includes discussion about the resources of the company. It
also gives in depth analysis of the capabilities and core competency of the company. Finally, a
suitable information system is proposed and discussed.

2Strategic Analysis report on Nestle Australia
Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
External Analysis.........................................................................................................................4
Overview of Nestle Australia..................................................................................................4
General Environment Analysis................................................................................................5
Brief about the industry Environment.....................................................................................8
Competitive Environment of Nestle Australia......................................................................11
Opportunities and Threats......................................................................................................12
Internal Analysis........................................................................................................................13
Nestle Australia‘s resources, tangible and intangible products.............................................13
Capabilities of Nestle Australia.............................................................................................14
Core Competency Analysis of Nestle Australia....................................................................15
Proposed Strategy and recommendations..............................................................................16
Conclusion.....................................................................................................................................17
References......................................................................................................................................18
Bibliography..................................................................................................................................20

3Strategic Analysis report on Nestle Australia

4Strategic Analysis report on Nestle Australia
Introduction
Nestle Australia Limited is one of the leading public company present in Australia.
Nestle Australia has been ranked 197 out of all the leading companies in Australia. Nestle
Australia is headquartered in Rhodes, located in the state of New South Wales, Australia
(Nestle.com.au. 2018). The company was founded in the year 1908. Nestle Australia earns
majority of the income from its products of food and manufacturing industry. Nestle Australia
Limited is a leading manufacturer and marketer of wide range of beverage and food products in
Australia. The variety of products manufactured and marketed by Nestle Australia includes
culinary products, coffees, drinks, snacks, breakfast cereals, baby products, chocolates,
confectionary products and others. The range of products offered by Nestle Australia also
includes pet foods and accessories. Nestle Australia Limited not only manufactures the products,
it exports its products as well. The report would perform both internal and external analysis of
Nestle Australia. The report will give an overview of Nestle Australia. The report will discuss
and analyze the external factors related to Nestle Australia, highlighting all the possible factors.
The report will give an outlook of the industry environment, highlighting all the aspects. The
opportunities and threats of Nestle Australia would be analyzed in this analysis report. The paper
would also provide core competency analysis of Nestle Australia and discus about the tangible
and intangible resources of Nestle Australia. At the last, the report would provide suitable
recommendation regarding needs of the company, Nestle Australia.

5Strategic Analysis report on Nestle Australia
Discussion
The strategic analysis of the company, Nestle Australia can be done by studying both the
external situational factors and internal aspects of the company (Grant 2016). This report would
discuss about the various internal and external influences on the company, Nestle Australia.
External Analysis: PESTLE Analysis
Overview of Nestle Australia
Nestle Australia is one of the leading food and beverage industry in world. Nestle
Australia is headquartered in Rhodes which is located in the state of New South Wales,
Australia. Nestle Australia Limited offers wide range of products. The list of products offered by
them includes processed milks, coffees baby foods, chocolate and confectionary, products of
culinary and foods and accessories for pets. Nestle Australia markets its products using brand
names that includes Nescafe, Carnation, Nespresso, Optifast, and Bakers’ Choice, Plaistowe,
Cerelac and many others. The company Nestle Australia Limited markets their products in
Australia, it also has its operations in the country Fiji. Apart from manufacturing, Nestle
Australia also exports their certain products. Nestle Australia Limited falls under the Food and
beverage industry.

6Strategic Analysis report on Nestle Australia
Figure 1: Sales chart of Nestle Australia in Australian market
(Source: Nestle.com.au. 2018)
General Environment Analysis
Political factors - The food and beverages authority of Australia regards non-alcoholic
beverages and food products offered by Nestle India within the food category. The government
generally regulates the manufacturing procedures of these products and the companies, the
products that fail to meet the government standards are subjected to give fine. Nestle Australia
Limited also falls under the Food Safety Act of Australia (Magnuson et al. 2013). Some of the
major political factors that affect the operations of Nestle Australia Limited are:
 Changing laws and regulation related to food standards and actions of marketing.
 The stability of the government in new economies that are emerging and the risk question
that falls in the part of international process.
 Changes in the regulations regarding standard practices adopted globally and adaptation
to different political forces are also the factor that has to be taken into consideration.
Economic factors – The economic factor that affects the operation of Nestle Australia are:

7Strategic Analysis report on Nestle Australia
 Changing budgets of the consumer and the rise of the consumers who are cost conscious
are an economic factor.
 The hike in price of the raw material goods in regards to the need to source from the
sustainable suppliers is an economic factor that influences operation of Nestle Australia.
 The other economic factor influencing nestle Australia is knowledge and awareness about
the changes about inflation, economic growth rates and income levels.
Figure 2: List of top sugar product sellers
(Source: Gupta 2013)
Social factors – The list of social factor that influences the sales of products of Nestle Australia
are:
 The changing attitudes of the consumers are one of the social factors that influence the
sales of Nestle Australia .The consumers are opting for healthier products with the
initiatives from the government that supports balanced diets and make people aware of
the danger of sugar.

8Strategic Analysis report on Nestle Australia
 There is a need to adapt to different settings of culture that includes family setting,
language and religious beliefs.
 There is a dire need to understand the behavior of the consumer for ensuring a proper and
personal approach to marketing.
Technological factor – Some of the technological factors that cause company’s actual results to
vary from expected results include:
 The innovation that has been triggered by technological developments is considered as a
technological factor.
 E-commerce that has been the platform for development for Nestle Australia is one of the
major technological factors for Nestle Australia (Goel 2016).
 The emergence and rise of social media through which consumers are able to interact
with the company through a wide range of platforms contribute to the technological
factor (Levina and Vilnai-Yavetz 2013).
Legal factor – The legal factors concerning Nestle Australia are as follows:
 The changes in the nature of regulation regarding the food and beverage industry are to
be taken into consideration.
 There is a need to follow the practices of global regulations and changes that are taking
place across different markets globally.

9Strategic Analysis report on Nestle Australia
Demographic factors – Nestle Australia offers wide range of products targeted to population of
all age groups .Nestle Australia targets children ,youth and adults that comprises of 50-60% of
Australia’s population .Thus they cater their services to more than half of country’s
population .They offer their products in Australia and have its operation in Fiji. Nestle Australia
also export their products.
Figure 3: Industry
composition of Australian market
(Source: Peristeris 2014)
Brief about the industry Environment :Porter’s Five Forces
The industry environment of Nestle Australia can be analyzed from the following force models:

10Strategic Analysis report on Nestle Australia
 Competitive Rivalry – Nestle Australia Limited has a dominating position in the food
processing industry but still there are few rivals or competitors in the market of Australia.
The major competitor of Nestle Australia in the market is from Cadbury. The rival
companies are continuous in a tug of war to avoid competition (Peristeris 2014). All these
companies generally spend a lot on marketing and advertising of their products. There is
a violent cutthroat competition in food processing industry and all the rival companies’
tries to outperform each other. As long as this competition persists, the consumers will be
able to get improved product qualities.
 Threat of Substitute Products – In products market, there is always room for substitute
goods, all kinds of products present in the market has substitute, which results in high
competition (Gupta 2013). Nestle Australia Limited manufactures products, which are
used commonly, and daily as a result the threat from the substitutes is very high.
Therefore, it is understandable that Nestle Australia should adopt innovative approach in
its manufacturing of products to persist in the, market successfully and has to work
efficiently in order to remove the potential substitutes in the market.
 Threat of new Entrants – When the market is lucrative it will attract many new entrants,
which would be a threat to the company but if the resources are limited, and there are
hardly any place for improvement it may result in monopoly. Nestle Australia is present
in the Australian market for a long time. However, still some companies have emerged as
new entrants considering the huge market of food processing industry. Many new
companies have emerged in Australian market. However, their market share is far less
than Nestle Australia. Every year new companies emerge in the market of food
processing in Australia but few are only able to survive. Nestle has been a leader in the

11Strategic Analysis report on Nestle Australia
markets of Australia for a long time and it is very difficult for new companies to come
and mark their presence in term of quality or market share. Therefore, it can be said that
the threat from the new entrants is moderate threat for Nestle Australia.
 Bargaining Power of Suppliers – Nestle Australia shares a very cordial relationship
with the suppliers because they understand that in food industry quality of products is
very important and Nestle Australia has good amount of buying power (Lacoste and
Blois 2015). Nestle Australia also provides guidance to the suppliers to work more
efficiently and reduce expenses which are redundant. This cordial relationship with
buyers enables them to get quality products from the suppliers.
Figure 4: Supply curve
of Nestle Australia
(Source : Nestle.com.au. 2018)
 Bargaining Power of Buyers - The customers possesses a huge amount of bargaining
power (Painoli and Singh 2015).There are lot of substitute products in the Australian