Strategic Thinking at Nestle

Overview
•Leadership via acquisition and
mergers
•Developed - FDI/ economies of scale

and developing country strategy –

substitute products
•Boycott and failures

•Creation of Nestle Nutrition Unit/

Corporate Wellness Unit.

•Currently Nestle owns 29 billionaire

brands across the globe.

 Porter’s Five Forces:
Threat of
new
•Supplier power is relatively entrants •Frozen entry market had
low high product differentiation
•Suppliers contractual • High barriers to entry in

relationship with Nestle food industry

•To ensure compliance

•Degree of competition is Quite intense

•Nestlé's competition with Unilever and P&G

rgaining power Bargaining power

Competitive rivalry
of suppliers of buyers
within the industry

•Degree of competition •Bargaining power of

from substitutes was buyers
relatively high was quite high.
•Diversity products
•Consumers of food
•Confectionery, instant
Threat of products
foods substitutes tend to be fairly price
•Not enough focus on pet
sensitive,
foods so that customers
•Ex: from substitute
influence pricing
products such as carob Different tastes of people
products, non chocolate
 Portfolio Analysis
STARS QUESTION MARK

Beverages Pharmaceuticals
Milk Products, Nutrition and
Ice cream
Pet care
CASH COWS DOGS

Confectionary Prepared dishes and

Nestle Food Services cooking aids
(showing tendencies to be
dog)
 M&A
Economies of Scope
Knowledge:
Tacit – Develop new products constantly and Facilities: Local clusters
improve and adapt existing ones to suit
changing consumer tastes.
60/40 Benchmarking
Formal – Radical approach and staying
focused
Competency – Open innovation
Co-ordinated strategies:
Knockout competition
GLOBE
Exploring new product categories
New business development:
Anglo-swiss merger
Nutrition health and wellness company
Area of weight management
Healthcare nutrition
Baby foods business
From infant to candy to pet food
Economies of Scale
Resources:
Human: Develop local management with
training and cross culture experience
R&D: Achieving worldwide sustainable
competitiveness through four strategic
pillars.
20-25 R&D conferences each year
Vertical integration:
Make – buy decision
manufacture v/s supplier, eg. cocoa and
diary processing plants.
Adopted the GLOBE information system
Establishing local supply chain but
refraining from land ownership
Negotiation power:
Companies portfolio was placed better than
competitors
Stakeholder Analysis

 Beforeboycott  Passive
Boycott Defensive
Resolving the issue  Proactive
◦ Containment
◦ Co-Operation
◦ Compliance
◦ Consolidation
 Resolving the issue
Attitude
For

Neutral

CRITICS

Against Influence
Low Medium High
Shareholder vs Stakeholder
Profit Margin
12
 Creating Shared Value
10
◦ Reconceiving products and Markets
◦ Productivity in value chain 8

◦ Local cluster development 6

0
ROA
12

10

0
Conclusion

 Strategic Thinking
◦ Rational Thinking : Create shared/economic
value
◦R&D
◦M&A
◦ Product Diversification
◦ Stakeholder satisfaction
◦ Generative Thinking
◦ Handling of boycott
Boycott Nestle ?
Thank you...