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MEANING OF NESTLE
Henri Nestl endonestled his company with the symbol derived from his name. His family coat of arms, the nest with a mother bird protecting her young, became the Companys logo and a symbol of the Company's care
ABOUT NESTLE
NESTL IS THE WORLD'S LEADING NUTRITION, HEALTH AND NESTLELLNESS COMPANY. IT IS COMMITTED TO INCREASING THE NUTRITIONAL VALUE OF NESTLE PRODUCTS WHILE IMPROVING THE TASTE. WHILE NESTL CORPORATE BUSINESS PRINCIPLES CONTINUE TO EVOLVE AND ADAPT TO A CHANGING WORLD
BRANDS
VISION
THE NESTL GLO IS TO BAL V ISION BE TH E LEA HEALT D I NG H, WE NUTRI LLNES S, AN TION D CO M P A NY I N WORL THE D
MISSION GOOD FOOD IS THE PRIMARY SNESTLECE OF GOOD HEALTH THROUGHOUT LIFE. NESTLE STRIVE TO BRING CONSUMERS FOODS THAT ARE SAFE, OF HIGH QUALITY AND PROVIDE OPTIMAL NUTRITION TO MEET PHYSIOLOGICAL NEEDS. IN ADDITION TO NUTRITION, HEALTH AND NESTLELLNESS, NESTL PRODUCTS BRING CONSUMERS THE VITAL
MISSION STATEMENT (PROPOSED) GOOD FOOD IS THE PRIMARY SNESTLECE OF GOOD HEALTH THROUGHOUT LIFE. NESTLE STRIVE TO BRING CONSUMERS FOODS THAT ARE SAFE, OF HIGH QUALITY AND PROVIDE OPTIMAL NUTRITION TO MEET PHYSIOLOGICAL NEEDS WITH THE BEST TECHNOLOGY AROUND THE GLOBE. IN ADDITION TO NUTRITION, HEALTH AND NESTLELLNESS, NESTL PRODUCTS BRING CONSUMERS THE VITAL INGREDIENTS OF TASTE AND PLEASURE THAT IS MATCHED BY NONE. NESTLE WANT TO EXCEL AS MARKET LEADER IN THE INDUSTRY
STRUCTURE
NO OF FACTORIES/OFFICES
HEADQUARTERED IN LAHORE, THE COMPANY OPERATES FIVE PRODUCTION FACILITIES. TWO OF ITS FACTORIES IN SHEIHUPURA AND KABIRWALA ARE MULTI PRODUCT FACTORIES, WHILE ANOTHER ONE AT KARACHI IS ALREADY FOR PRODUCTION. ONE FACTORY IN ISLAMABAD AND TWO IN KARACHI PRODUCE BOTTLED WATER
GOALS/ OBJECTIVES
A PERSONALIZED AND DIRECT WAY OF DEALING WITH EACH OTHER. THIS IMPLIES A HIGH LEVEL OFTOLERANCE FOR OTHER IDEAS AND OPINIONS
NESTLS BUSINESS OBJECTIVE IS TO MANUFACTURE AND MARKET THE COMPANYS PRODUCTS IN SUCHAWAYASTOC REATEVALUETHATC ANBESUSTAINEDOV ERTHELONGTERMF ORSHAREHOLDERS, EMPLOYEES, CONSUMERS, AND BUSINESS PARTNERS.
AL RN TE /I N AL RN TE NT EX ME RN VI EN
STEPLE ANALYSIS
SOCIAL FACTORS
HEALTH CONSCIOUS TREND IN LIFE STYLES INCREASED PRODUCT DEMAND ON SOCIAL N RELIGIOUS EFFECT.
TECHNOLOGICAL FACTORS
PRODUCT TRANSITION FIRST MOVER ADVANTAGE DIFFERENTIATED PRODUCTS THROUGH PROPER R&D.
ECONOMIC FACTORS
INCREASED PRICE OF RAW MATERIAL
POLITICAL FACTOR POLITICAL INSTABILITY POLITICAL PRESSURES TO KEEP PRICE LOW. ENVIRONMENTAL PRESSURE GREEN ISSUE ENVIRMENTAL FRIENDLY ENERGY DEFICIENCY LEGAL FACTORS EXCISE DUTY ON IMPORT OF MACHINERY
NEW ENTRANTS INTO THE INDUSTRY MUST ATTEMPT TO SEIZE A PORTION OF NESTLS MARKET SHARE IN ORDER TO SURVIVE. ESSENTIALLY, NESTL IS CONSTANTLY A TARGET, AND SO THE THREAT OF
CUSTOMERS HAVE A LARGE AMOUNT OF BARGAINING PONESTLERREGARDING THEIR CONSUMPTION OF NESTL PRODUCTS. AS STATED PREVIOUSLY, THERE ARE CLOSE SUBSTITUTES FOR NESTL PRODUCTS WHICH ALLOWS FOR THE PREFERENCES OF THE CUSTOMER TO BE VERY INFLUENTIAL. NESTL UNDERSTANDS THE PONESTLER OF THE CUSTOMER AND HAS TAKEN SPECIFIC STEPS TO MEET THE NEEDS OF ITS PRODUCTS CONSUMERS.
Increase in consumer food industry by 14% Threats Engro and Shakarganj as major competitors Market segment growth could attract new entrants Taste of the consumer has already developed Legal & ethical issues Economic slowdown can reduce demand Effect of seasonality upon sales Strong advertisement by major competitors Total
0.05
0.20
3 2 2 2 2 3 3
nestleaknesses Lack of awareness among target market Nestle milk always stands at last because of low advertisement. 0.04 0.09 2 2 0.08 0.18
Revenue from confectionary decreased by 14% Low credit sales and profit margin to retailers nestleak promotional activities through nestlebsites Cant launch expensive brand due to low income groups Total
2 2 3 1
CPM MATRIX
Nestle Pakistan Critical Success factors nestleights Rating nestleighted Score Engro Foods Rating nestleighted Score haleeb Foods Rating nestleighted Score 0.0 to 1.0 1 to 4 1 to 4 1 to 4
Market Share Inventory System Financial Position Product Quality Consumer Loyalty Relationship with Suppliers
3 3 4 4 3 3
2 2 2 3 2 3
1 2 3 3 1 2
0.06 0.02
3 3
0.18 0.06
1 2
0.06 0.04
1 1
0.06 0.02
3 2 3
2 4 3
2 3 2
.05 1
0.15 3.20
.04 2.56
.04 2.27
SPACE MATRIX
Average financial increased in 18.8 Return on capital employed increases by66:34 Price earnings ratio by Debt equity ratio changes from 2010 as compared to 2009 Net profit increased in 94% was63:37as2010 as compared 38.9 Nestles netStrength 2010 by 20% intocompared to 2009to 2009 40% Financial sales strength
4 5 3
Average Industry Strength Due to in of contribute only Engro 14% Market easeconsumer All companies entry food industry byfoods, Shezand foods Increasesegment growth has attracted new entrants to increase profit potential Industry Strengthin market,6% to processed milk market and Shakarganj are properly utilizing their resnestleces
4.5 4 5
Averageproductare market leaders in many product due to quality brand extension strategy Qualityextended distribution networks Nestle enjoys strong customer loyalty in country categories product product life competitive advantage Competitive Advantage cycle is being ensured
-1.75 -1 -2
Environmental Stability
Economic slowdown can reduce the demand Fluctuating rate of inflation in the country Price range of competing products Average Environmental Stability
-2 -2 -1 -1.75
SWOT MATRIX
BCG
Brands Sales % Sales Profit % Profit % Market Share % Growth Rate
Milk and Dairy Beverages Bottled Water Confectionary and Chocolate Baby Food Foods and Cereals Total 13993 7820 9054 1646 5350 3293 41156 34 19 22 4 13 8 100 1082 661 511 150 331 270 3005 38 20 17 5 11 9 100 100 85 100 31 60 40 100 +15 +10 +3 -15 -5 8
BCG
STARS THE STARS ARE THE HIGH RELATIVE MARKET SHARE AND HIGH MARKET GROWTH.NESTLE BEVERAGESI.E. CASH COWS THE CASH COW IS MILO. . HAS TO TAKE MEASURES TO MAKE THIS PRODUCT AS S DOGS THE PHARMACEUTICAL PRODUCTS ARE NESTLE CEREALS QUESTION MARKS THE QUESTION MARKS ARE THE ICE
GSM
QSPM
Acquisitions HALEEB FOODS No Aquisitions
Key factors
OPPERTUNITIES
Few and nestleak competitors in the market Disposable income increased by 3.6% Consumer expenditure on food has increased by 3.6% Population density increased by 2.18% (per sq.km) Credit policy can be adopted to increase sales Potential in cold dairy market All companies contribute only 2% to processed milk market Pakistan as 7th largest milk producing country with milk output of 200 billion liters
nestleights
AS
TAS
AS
TAS
4 3 3 4
2 1 2 -
0.20
0.10
THREATS Engro and Shakarganj as major competitors Market segment growth could attract new entrants Taste of the consumer has already developed Legal & ethical issues Economic slowdown can reduce demand Effect of seasonality upon sales Strong advertisement by major competitors
0.14 0.04 0.02 0.01 0.01 0.05 0.08 1.00 3 1 2 0.02 0.12 0.02 4 4 3 .03 0.48 .08
QSPM(Continued)
Acquisitions No Aquisitions HALEEB FOODS
Key factors
STRENGHTS Socially Responsible Company Nestle products enjoy strong brand image Sales force as a major physical resnestlece strength Quality product distribution networks in country Net Profit increased by 94% in 2009. Price earnings ratio decreased from 38.9 to 18.8 Export Sales increased by 48% to PKR 3.3 billion nestleAKNESSES Lack of awareness among target market Nestle milk always stands at last because of low Advertisement. Revenue from confectionary decreased by 14% Low credit sales and profit margin to retailers nestleak promotional activities through nestlebsites Cant launch expensive brand due to low income groups Total
nestleights
AS
TAS
AS
TAS
Matrix Analysis
Alternative Strategies Back ward integration Forward integration Horizontal integration Product Development Market Penetration Market Development Related Diversification Unrelated diversification Retrenchment Divestiture Liquidation Space BCG Grand Strategy Matrix Count
X X X X X X X X
X X X X X X
2 2 3 3 2 2
DECISION NESTLE RECOMMENDATION: CONSIDERING THIS FACT NOW NESTLE RECOMMENDED NESTLE PAKISTAN TO HALEEB FOOD TO EXCEL AS A MARKET LEADER FOR THE YEAR 2012
HORIZONTAL STRATEGY
REASON BEHIND
NESTLE SA EXPANDS GLOBALLY EITHER THROUGH ITS OWN BRAND OR THE ACQUISITIONS OF NATIONAL BRANDS, CONSIDERING THIS FACT IT SEEMS A CRITICAL TIME FOR NESTLE SA TO EXPAND THROUGH A NATIONAL BRAND.
CORE COMPETENCIES
UNMATCHED PRODUCT AND BRAND PORTFOLIO UNMATCHED RESEARCH AND DEVELOPMENT (R&D) CAPABILITY UNMATCHED GEOGRAPHIC PRESENCE PEOPLE, CULTURE, VALUES AND ATTITUDE
CORPORATE CULTURE
THANKS TO THE DEDICATION AND EFFORTS OF NESTLE EMPLOYEES, EVERY DAY NESTLE MAKE A DIFFERENCE TO THE LIVES OF MANY CONSUMERS AROUND THE WORLD. NESTL HAS A STRONG CORPORATE CULTURE WHICH UNITES MORE THAN 281000 PEOPLE [KPI] WORKING IN MORE THAN 100 COUNTRIES. OVER A THIRD (33.9%) OF NESTLE WORKFORCE IS LOCATED IN EUROPE, 38% IN THE AMERICAS AND 28.1% IN ASIA, OCEANIA AND AFRICA. DURING THE GLOBAL
BUSINESS LEVELSTRATEGY:
LOW COST - LESS PRICE TRANSPARENCY IS FOLLONESTLED. DIFFERENTIATION - TO REDUCE THE RISK OF COMPLEXITY OF SUPPLY CHAIN AND LONESTLERATTRACTIVENESS FOR DISCOUNTERS
MANAGEMAENT STRATEGIES
TO STRENGTHEN NESTLE VALUEDRIVEN CULTURE, NESTLE INVOLVED NESTLE TOP& MIDDLE MANAGEMENT IN AN EXERCISE TO DEFINE THE FRAME OF NESTLE ASPIRED WORKING ENVIRONMENT NESTLE HISTORICALLY SUCCESSFUL MANAGEMENT TRAINEE PROGRAM IMPROVED APPROACH WAS APPRECIATED AND CONTINUED THIS YEAR AS NESTLE
MOTIVATIONAL TECHNIQUES
Rewards:
PERFORMANCE DRIVEN COMPETITIVE INCLUSIVE FLEXIBLE BENEFITS
TQM
1)DEVELOP,WITHINPUTFROMALLPERSONAL,TH ECOREVALUES,VISIONSTATEMENT,MISSION STATEMENT, AND QUALITY POLICY STATEMENT. 2) DEVELOP THE STRATEGIC LONG TERM PLAN WITH GOALS ANDTHE ANNUAL QUALITY IMPROVEMENTPROGRAM WITH OBJECTIVES. 3) DETERMINE ANDCONTINUALLY MONITOR THE COST OF THEPOOR QUALITY. 4) CONTINUALLY DETERMINE THOSE PROJECTS THAT IMPROVE THE PROCESS, PARTICULARLY THOSE THAT AFFECT EXTERNAL AND INTERNAL CUSTOMER SATISFACTION
MARKET ANALYSIS
PRODUCT
NESTL IS A FAMOUS GROUP OF COMPANIES. IT IS WELL KNOWN FOR ITS RENDERED SERVICES INFOOD SECTOR.NESTL HASMORETHAN70 CONSUMERPRODUCTSIN PAKISTAN.THIER FAMOUS PRODUTS ARE MILK COFFE NOODLES. THEY ALSO FAVOR READY-TO-DRINK BEVERAGES,
PRICING
NESTL HAS ITS OWN SET OF TECHNIQUES FOR SETTING THE PRICES OF THE PRODUCT. IT DOES NOT PRIMARILY FOCUS ON THE COMPETITORS PRICING STRATEGIES. IT EMPHASIZES ON THE
PLACE
NESTLMAKESITSURE THATITS PRODUCTIS AVAILABLE AT EVERY CORNER OF THE COUNTRY REGARDLESS OF RURAL OR URBAN AREAS. NESTLS MAIN FOCUS IS TO MAKE THE PRODUCT WITHIN THE ACCESS OF EVERY CONSUMER SO THAT THE CONSUMER SHOULD HAVE NO DIFFICULTY IN GETTING
PROMOTION
NESTL SETS ITS PROMOTIONAL BUDGET ON ANNUALLY BASIS. NESTL IS WELL AWARE OF THE IMPORTANCEOFTHEEFFECTI VENESSOFTHEPROMOTIONA LPROGRAM.ITDESIGNSITS PROMOTIONAL PROGRAM
MARKET SHARE
FOR 9 YEARS IN A ROW, THE COMPANY HAS WON A PLACE AMONG THE TOP 25 COMPANIES OF THE KSE.
MARKET SEGMENTATION:
GEOGRAPHICALSEGMENTATION
THE COMPANY SEGMENTS ITS MARKET GEOGRAPHICALLY ON DIVISIONAL BASIS. THEY DIVIDE EACH DIVISION IN DIFFERENT ZONE. AND EVERY DISTRIBUTOR IS RESTRICTED TO SALE ITS PRODUCTS ONLY IN HIS OWN ZONE .E.G. LAHORE IS DIVIDED INTO FIVE ZONES LIKE EAST, WEST, SOUTH, NORTH, AND SOUTH WEST.
DEMOGRAPHICAL FACTOR:
IF WE LOOK NESTLE DEMOGRAPHIC SEGMENTATION THAN WE WILL FIND THAT OUR PRODUCT IS FOR EVERY ONE. PEOPLE FROM ANY AREA, ANY CULTURE, ANY AGE, ANY BELIEF AND ANY INCOME WILL DRINK WATER. IT IS NOT ANY LUXURY ITEM
IN ALIGNMENT WITH NESTLS GLOBAL PRIORITY OF ENHANCING THE DISTRIBUTION NETWORK, AND THE CONCEPT OF AVAILABILITY OF OUR PRODUCTS WHENEVER, WHEREVER AND HOWEVER ARE FULLY INTEGRATED INTO OUR DISTRIBUTION SYSTEM NESTL HAS ALSO EMBARKED ON A JOURNEY OF RURAL PENETRATION THROUGH OUR PPP (POPULARLY POSITIONED PRODUCTS). TO PENETRATE DEEPER INTO NARROW STREETS WHERE IT IS DIFFICULT TO REACH WITH VANS, MOTOR BIKE OPERATIONS HAVE BEEN INTRODUCED IN A BID TO OFFER NESTL PRODUCTS TO THE MASSES SO THAT THEY CAN ALSO BENEFIT FROM THE HIGH QUALITY PRODUCTS AT AFFORDABLE PRICES.
THE KEY ACCOUNT TEAM HAS WORKED WITH AN OBJECTIVE TO GENERATE SUSTAINABLE, MUTUAL, PROFITABLE GROWTH FOR NESTL PRODUCTS AND CATEGORIES.
FINANCIAL ANALYSIS
PROBLMES
THE PROBLEMS FOR NESTLE IN TODAYS WORLDARE THE CLAIMS FACED BY IT AS BEING CHARGED WITH THE RESPONSIBILITY OF VIOLATING THE INTERNATIONAL MARKETING CODES THE COMPANY HAS A COMPLEX SUPPLY CHAIN MANAGEMENT AND THE MAIN ISSUEFORNESTLEPAKISTANIST RACEABILITY.THEFOODINDUSTR YREQUIRESHIGHSTANDARDSOF HYGIENE, QUALITY OF EDIBLE INPUTS AND PERSONNEL. THE FRAGMENTED NATURE OF THE
STRATEGIES
ETRAINED S SHOULD B EMPLOYEE CHANGING NG TOTHE ACCORDI DS OF THE STANDAR IZATION. ORGAN D CONDUCT ANY SHOUL COMP E TO TIME FROM TIM SURVEY TO WHICH CCORDING TO A TRODUCED S CAN BE IN CHANGE ATION TO HE ORGANIZ IN T IN THE
EMPLOYEES SHOULD BE GIVEN COMPENSATION IN ORDER TO KEEP THEM LOYAL. EMPLOYEES SHOULD BEMORE INVOLVED INDECISION MAKING TO BECOME MORE DIFFERENTIATED. NESTLE MUST STATE IN WRITING THAT IT ACCEPTS THAT THE INTERNATIONAL CODE AND THE SUBSEQUENT RELEVANT WORLD HEALTH ASSEMBLY RESOLUTIONS ARE MINIMUM REQUIREMENTS FOR EVERY COUNTRY. NESTLE MUST STATE IN WRITING THAT IT WILL MAKE REQUIRED CHANGES TO BRING ITS BABY
IMPLEMENTATION PLAN
NESTLE SHOULD STRENGTHEN ITS INTERNAL STRUCTURE AS PER OUR PROJECT STUDIES, WE ACKNOWLEDGE THAT CURRENT FOOD AND BEVERAGE INDUSTRY IS A STEP IN RIGHT DIRECTION. BUT WE WOULD LIKE TO WIDEN THEIR SCOPE MORE. NESTLE SHOULD STRENGTHEN THEIR SUPPLY CHAIN MANAGEMENT SYSTEM MORE TO ENSURE THE IN TIME DELIVERY
NESTLE SHOULD PROVIDE PRODUCTS TO THE CONSUMERS AT COMPETITIVE PRICES.BEACUSE THERE ARE DIFFERENT COMPETITORS LIKE SOFI WATER N SHEZAN JUICES WHOSE PRICES ARE LESS THAN NESTLE. SO NESTLE SHOULD REVIEW THEIR PRICE POLICY. NESTLE SHOULD INTRODUCE OR ALTER THE PRODUCTS WHICH IS NOT VERY POPULAR IN CONSUMERS .FOR EXAMPLE KNOR NOODLES DEMAND ARE MORE HIGH THAN MAGI. SO NESTLE SHOULD REVIEW ITS PRODUCT TO COMPETE IN MARKET. NESTLE SHOULD MENTION ITS PRODUCTS SERVING SIZE. BECAUSE
NESTLE SHOULD PONDER THE PRODUCTS WHICH HAVE LOW TURNOVER RATE AND THEY NEED TO REPOSITION THEM IN MARKET. SO THAT THEY COULD COMPETE IN THAT RESPECTIVE AREA..
RECOMMENDATIO
COMPANY SHOULD FOCUS ON MORE MARKER CAMPAIGNS N ADVERTISEMENTS COMPANY SHOULD GIVE MORE EMPOWERMENT TO EMPLOYEES COMPANY SHOULD KEEP AN EYE ON FAKE BRANDS TO PROTECT ITS IMAGE.
KEEP CONCENTRATING ON TQM FOR INCREASED QUALITY OF PRODUCTS. COMPANY SHOULD IMPROVE ITS SUPPLY CHAIN MANAGEMENT. COMPANY SHOULD INTRODUCE NEW
CONCLUSION
NESTLE HAS ALMOST TRIED ALL OF THE STRATEGIES THERE CAN BE. NESTLE COMPANY HAS EXPANDED INTERNATIONALLY, HELPED COUNTRIES ECONOMIES GROW, BE ENVIRONMENTALLY CONSCIOUS AND CREATE JOINT VENTURES WITH OTHER COMPANIES IN WHICH ENHANCED NESTLS AND THESE
REFERENCES