Strategic Management Assessment: Nestle's Corporate Strategies Review

This report provides a comprehensive analysis of Nestle's corporate level strategies, focusing on cross-business synergies, corporate management mechanisms, and market acquisitions. It evaluates the suitability of these strategies using the Mintzberg model and Porter's competitive strategies, highlighting Nestle's emphasis on product quality and its adaptation to varying consumer purchasing capacities across different economies. The report examines Nestle's product diversification strategies, including the launch of new products, and assesses the company's market power and economies of scope. It also provides recommendations for improving Nestle's market strength and share, contributing to a deeper understanding of the company's strategic approach to business development and competitive advantage.

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Executive Summary
This report analyses the corporate level strategies as well as business mechanism that have
been implemented by Nestle. As evident in the analysis of the cross business synergies
implemented by the company, the major impact of the cross business synergy of the company
is evident in the strong organisational implementation. This can be perceived in that the
systemic arrangements of Nestlé’s various sections as well as brands helps to enable a kind of
growth that is reflected in the EBIT margin of the company in the year 2008. Analysis of the
corporate management mechanisms prove that there are different managerial levels and
Nestle, based on the levels, ensures step by step that different sections as well as brands of
the company are managed separately. Aggregation of internal control is brought about by
Nestle through an acute risk control and management system, product development
management system, innovation management, mechanism for corporation information
enhancement as well as an integrated management system for controlling cost. Through
assessment of the annual reports of the company, the most profitable market acquisitions of
Nestle have been provided here also. As a part of product diversification, the company has
decided to launch 35 new products in 2017. They are aiming that this diversification strategy
would help to keep their double digit market share growth intact. The analysis through the
Mintzberg model emphasises that Nestle always tries to achieve the highest product quality.
Nestle already emphasises the policy of make their entire product range available to the
customers irrespective of the variations in their purchasing capacity or their country of
residence. Since, income disparity exists among the various countries, Nestle produce as well
as repackage their products in alignment with their customers’ capacities of purchasing in the
various economies. This is emphasised in the analysis of the Porter’s strategic analysis.
Lastly, recommendations regarding the market strength and the market share of the company
have also been provided.

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Table of Contents
1. Introduction............................................................................................................................3
2. Identification and evaluation of the suitability of Nestlé’s current Corporate Level
Strategies....................................................................................................................................3
2.1 Identification and discussion of the corporate level strategies of the company...............3
2.1.1 Cross Business Synergies within Nestle....................................................................3
2.1.2 Corporate Management mechanisms.........................................................................4
2.2 Evaluation of the suitability of Nestlé’s current level strategies......................................5
2.2.1 Mintzberg Model.......................................................................................................5
2.2.2 Porter’s competitive strategies...................................................................................6
2.2.3 Recommendations......................................................................................................6
3. Conclusion..............................................................................................................................7

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1. Introduction
In the course of this report, the corporate level strategies as well as business
mechanism that have been implemented by the company across borders as well as economies
have been discussed as well as scrutinised. Based on the industrial polices implemented by
the company, detailed analysis of the benefits as well as demerits of the formulated strategies
in the current as well as future context have been highlighted in detail. At first the corporate
level strategy of cross business synergies in the company will be analysed. Nestlé’s policy of
rationalising the product lines that have been underperforming is a high end implementation
evidence of this strategy (Miller & Pisan, 2018). Simplification as well as standardisation of
the corporate regulations is another important corporate level strategy that will be discussed
in this report. The implementation policies of the Mintzberg framework as well as the
Porter’s competitive strategies have also been discussed under the scope of evaluation of the
corporate level strategies of Nestle.
2. Identification and evaluation of the suitability of Nestlé’s current Corporate Level
Strategies
2.1 Identification and discussion of the corporate level strategies of the company
2.1.1 Cross Business Synergies within Nestle
For various multi-business firms like Nestle, this kind of growth is the highest growth
level in the kinds of saturated market where they operate. Cross business synergies have been
defined by Wolf (2014), as the value that a firm creates and captures, over time through
summation of their businesses together compared to what it could have achieved separately.

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The major impact of the cross business synergy of the company is evident in the
strong organisational implementation. This can be perceived in that the systemic
arrangements of Nestlé’s various sections as well as brands helps to enable a kind of growth
that is reflected in the EBIT margin of the company in the year 2008. Nestlé’s policy of
rationalising the product lines that have been underperforming can also be counted as a major
driver of enhancement of performance. Strong organisational implementation for Nestle has
therefore helped in optimising the business rules as well as schedule-wide operation in the
Nestle Company.
Another synergy that have been implemented by the company is at they have
processed for a multi business team decision making process. Such business team are
definitely the loci of business value creation for the company as well as identification of
potential synergy initiatives (Jones, Comfort & Hillier, 2016). This kind of leveraging is
implemented by the company in the context of strategic alignment as well as relational
resources. In terms of this, there are direct and dedicated initiative teams of Nestle overseeing
the four growth platforms of each of the platforms of Nestle. On top of that the company has
also implemented a Popularly Positioned Product strategy model which emphasises on the
lower income consumers through providing them highly nutritious products at absolutely
affordable prices.
2.1.2 Corporate Management mechanisms
Nestle strengthens management of their rules through management of their rules
through simplification as well as standardisation (Wolf, 2014). There are different managerial
levels and Nestle, based on the levels, ensures step by step that different sections as well as
brands of the company are managed separately. Aggregation of internal control is brought
about by Nestle through an acute risk control and management system, product development

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management system, innovation management, mechanism for corporation information
enhancement as well as an integrated management system for controlling cost.
The market acquisition strategy of Nestle, as Jose (2017), opines, is one of the most
profitable prospect for the company. In order to make their first market entry in the US, the
company merged with an Anglo-Swiss Milk Company
2.2 Evaluation of the suitability of Nestlé’s current level strategies
The differentiation of the strategic from the tactical decision making, as Miller &
Pisan (2018) argues, is proven to be the most enabled corporate organisational development
strategy. This is because of the fact that it allows the corporate centre to emphasise mostly on
the destiny of the company as well as allow the business units to concentrate on the business
unit operations. Assessment of the annual reports of the company, the most profitable market
acquisitions of Nestle have been provided here. The first acquisition worth mentioning is
Purina. In 2017, this acquisition has accounted for 13.9% of the sales for Nestle. The business
marketing campaigns of the company has enhanced after this acquisition and they have
introduced brands like Friskies, Fancy Feast and so on. As an outcome, they are having to
incur a much higher campaign cost.
The acquisitions of Dreyer’s have not been yielding smooth results for the company
since the beginning. By the end of 2017, Dreyer’s sales have been accounting for 14.9% of
the sales of the company. However, in 2011, the company have been losing heavily after
entering in to sales of premium desert categories. After the implementation of the concentric
market diversification strategy, the company is now again on the winning track (Jones,
Comfort & Hillier, 2016). The company have been profited by the acquisition of Gerber,
DiGiorno and atrium in a similar way. These global strategies have helped the company to
expand in to a famous brand in UK and US.

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In place of striding to become a big brand around the world, the company is always
endeavouring to become a household name. They are attempting to specialise in specific
product in specific economies and as an outcome their products generally win high acclaim
all over the globe.
Authors like Jones, Comfort and Hillier (2016), have also praised the concentric
corporate level diversification strategy whereby they have implemented a strategy of
launching new products in order to increase the market share of the company. As a part of
product diversification, the company has decided to launch 35 new products in 2017. They
are aiming that this diversification strategy would help to keep their double digit market share
growth intact. In fact as Suresh Narayan, the CMD of Nestle, Asia speaks;
“There are so many categories in which we are not in. We don't have a premium coffee
business. Expresso and dolce gusto is not here. Pet care is also not there. Cereals is not
here, in health care we are here but it’s very small. These are potentially the businesses.”
Nestle also considers seriously, their economies of scope. This is an essential growth
policy of the company. The company relies on their marketing expertise as well as their well-
established position for the expansion of their range of products. As Miller and Pisani (2018),
opines, this strategy would lead Nestle to develop economies of scope along with economies
of scale. This would help the company to enter new markets, however the market competition
of the organisation would also enhance at a parallel scale. In case if they are not able to
generate brand awareness in the new domains, this can lead to waste of capital resource at a
large scale.
As assessed by Jones, Comfort and Hillier (2016), the market power of the Nestle
company is relatively low. They are operating in to moderate economies mostly with the
major bulk of the business in to Asia. However, as an outcome, the company would not be

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making majr losses as the brand awareness of Nestle and their purchasing parity compared to
other regular brands in the market is quite high.
2.2.1 Mintzberg Model
The five step strategy model by Mintzberg can be highlighted here, which stress on
the five important factors like plan, pattern, position, ploy as well as perspective. Planning
emphasises on the creation of an organisational mission and vision regarding then chief
targets of the company (Perrini & Russo, 2019). The pattern of the company is the pathway
that it wants to follow in order to implement a concrete strategy.
An organisational strategy which is integrated should be emphasising on overall
orientation towards achieving growth as well as stability. So far as the case of the Nestle
Company is concerned, the orientation of the organisation needs to be largest in the world
and with the highest product quality standard as a branded food manufacturer. Hence, the
company might focus on a portfolio corporate strategy that is a strategy emphasised on the
market where the company have ample business units as well as a well-defined product line.
In this context, it deserves mention that the chief principle of the Nestle Company is to help
the customers in experiencing a balanced as well as healthier diet. As Miller and Pisani
(2018), suggests, amidst an unpredictable, volatile as well as highly competitive marketplace,
the capability of divergent as well as innovative strategic thinking at a multiple business level
is essential for creation as well as sustenance of competitive advantages. Nestle makes use of
a planning scenario as well as strategic business models.
The example of Nestle nutrition, an autonomous body of Nestle, can be considered.
This brand is responsible for claim based business in the sector of infant as well as health
care nutrition. This is one such strategic units of the company that is created for the

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maintenance of the competitiveness of the company (Jones, Hillier & Comfort, 2015). This
business unit helps in alleviating the business performance of the company by development
as well as offering of various nutritious as well as consumable products. In particular, this
business unit helps in strengthening the leadership position of the Nestle Company in the
market.
2.2.2 Porter’s competitive strategies
The first strategy in this context that the company can follow s emphasising to be a
cost leader with absolutely lower cost across the industry segment where the company
operates. Nestle already emphasises the policy of make their entire product range available to
the customers irrespective of the variations in their purchasing capacity or their country of
residence (Jones, Comfort & Hillier, 2016). Since, income disparity exists among the various
countries, Nestle produce as well as repackage their products in alignment with their
customers’ capacities of purchasing in the various economies.
2.2.3 Recommendations
The strategy of Differentiation can also be suggested for the company. Similar to
being a cost leader then company can also implement the strategy of developing a
differentiated product line (Ng, Walls & Wingard, 2016). In order to bring about product
differentiation, the company can introduce policies similar to their agreement with L’Oreal in
2008. The organisation can consider the acquisition of local companies and thus form a body
of autonomous regional managers that would help them to develop an intricate and
customised sales policy.
The risk analysis of Nestle shows a score of 9.00 in terms of their stock attractiveness.
A value nearby 10 responds that the market position is stable. However, it is also necessary

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that they choose their product diversification and branding wisely in order to stay afloat their
immense number of market competitors (refer to appendix 1).
3. Conclusion
In the future also, Nestle would still remain a most competitive global brand. The
company would remain as an example of organisation as well as strategy making highly
emphasised to meet the stated goals. As a health, wellness and well as Nutrition Company,
the purchasing motivation of the customers makes for a big portion of their core competence.
The organisation knowledge of customers in different contexts has improved its profit margin
relative to its competitors.

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Reference List and Bibliography
Jones, P., Comfort, D., & Hillier, D. (2016). Water stewardship and North America's food
and beverage companies: a case study in corporate sustainability. International
Journal of Corporate Strategy and Social Responsibility, 1(1), 26-43.
Jones, P., Hillier, D., & Comfort, D. (2015). Water stewardship and corporate sustainability:
a case study of reputation management in the food and drinks industry. Journal of
Public Affairs, 15(1), 116-126.
Jose, P. D. (2017). Corporate sustainability initiatives reporting: a study of India’s most
valuable companies. In Corporations and Sustainability (pp. 55-94). Routledge.
Miller, V. V., &Pisani, M. J. (2018). 10. Sustainability science and water usage: science as a
method for the corporate governance of natural resources. Managing Natural
Resources: Organizational Strategy, Behaviour and Dynamics, 245.
Miller, V. V., &Pisani, M. J. (2018). Sustainability science and water usage: science as a
method for the corporate governance of natural resources: Organizational Strategy,
Behaviour and Dynamics. In Managing Natural Resources. Edward Elgar Publishing.
Ng, E., Walls, J., &Wingard, G. (2016). Getting to the Heart of Corporate Sustainability: The
Role of Managerial Values and Motivation in the Mongolian Mining Industry.
Perrini, F., & Russo, A. (2019). The Roots of Corporate Sustainability: the Art of Managing
Innovation and Relationships by illycaffè. In Managing Sustainable Business (pp.
367-398). Springer, Dordrecht.
Wolf, J. (2014). The relationship between sustainable supply chain management, stakeholder
pressure and corporate sustainability performance. Journal of business ethics, 119(3),
317-328.

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Appendix
Appendix 1: GRPV analysis of Nestle