...Joey Van Hoose Excelsior ID# 30796152 M5A1- Nestlé Nestlé Case Study Nestlé has been considered the world’s largest food and beverage company for many years and they achieved this by operating under a localization strategy. Under a localization strategy, a company focuses on local responsiveness, and requires little coordination between the subunits. Working under a localization strategy, firms do not have a high need to integrate mechanisms to knit together different national operations. With that each operation has the ability to control operations by relying primarily on output and bureaucratic controls and a policy of management by exception. Considering the need for integration and coordination is low, under a localization strategy, the need for common processes and organization culture is also low (Hill, 2011). With that, each operating unit basically acts as its own entity, creating their own independent set of core values and policies. Nestlé traces its origins back to the first European condensed milk factory, based in Cham, Switzerland, that opened in 1865 by the Anglo-Swiss Condensed Milk Company. One year after this, Henri Nestlé, a trained pharmacist, launched one of the world’s first prepared infant formula companies in Vevey, Switzerland. The two companies, that at the time were fierce competitors, decided to merge in 1905 to become the Nestlé we know today, and their headquarters are still in Vevey, Switzerland (Nestlé, 2012). Nestlé begin with the...
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...Nestlé Boycott Final Exam Case Study Business Ethics The arguments for continuing the Nestle boycott from the viewpoint of consumers is that in the last 30 years, there has been significant amounts of change that have resulted from the boycott. Nestle not only agreed to abide by the WHO code but Nestle also stepped up their efforts to develop new ways of managing this baby milk issue. As stated in the article, the company introduced an ‘ombudsman system’ to encourage employees to confidentially report violations without fear of retribution — this shows their efforts to change. Another example is that they are being open and transparent with their marketing by allowing Bureau Veritas, the global auditing firm to complete an internal and independent assessment. We can see that the efforts of the boycott are not being ignored in that Nestle went to great lengths to release dedicated reports on its economic and social impacts in Africa and Latin America for the first time. On the other hand, there are also arguments against continuing the boycott. Infant formula products account for less than 1% of Nestlé’s profits, yet this 30-year boycott and issue is still present today and if anything the media coverage of this issue for the last 30 years has caused anything but harm to Nestle. If anything, they are receiving more publicity than ever. Seeing as Nestle has wilfully accepted each demand by the boycott and has abided by every code of conduct presented by the WHO and other...
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...http://www.brighthub.com/office/entrepreneurs/articles/115557.aspx The World Health Organization found children in developing countries who fed on Nestle’s infant-formula had mortality rates five to ten times greater than that of breast-fed children. The problem was Nestle’s sinister campaign of appointing uniformed nurses to distribute the baby formula to poor mothers for free, long enough for lactating mother’s milk to dry up. The mother and child now became entirely dependent on Nestle’s infant formula, and since most of them could not afford the formula, they gave their children an insufficient quantity of the formula. The formula also required clean water, which most mothers could not access. Nestle again made the news when they sued the country of Ethiopia, one of the world’s poorest countries, for six million dollars during the time when it was in the midst of the worst drought in 20 years. Nestle wanted compensation for its stake in the Ethiopian Livestock Development Company (Eldico), which it obtained through an investment in Schweisfurth, a German company. Ethiopia had nationalized Eldico and sold it for a profit. Nestle finally reached a settlement of $1.5 million with Ethiopia, the maximum the government could afford. Recently, Nestle has made headlines again for getting caught spying on Attac, a non-government organization. Nestle has been ordered to pay compensation to the organization. (http://www.frontlinedefenders.org/node/21523). Numerous other shady dealings...
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...Nestle is a Swiss, world leading multinational company producing a wide range of tasty beverages and nutritious food at international standards. Nestle holds on to a good brand name, innovative products, low cost, rising share market and a financial position which can be classified as Cash Cow using the Boston Consulting Group Matrix. Nestle has an employee strength of over 328,000 people around the world. Nestle produces a wide range of baby food, dairy products, beverages, pet food, confectioneries and also pharmaceutical products. My selected country Australia, had become the second largest export market for Nestle by 1906. This potential translated to setting up the business in Australia in 1908. Nestle Australia Ltd is ranked at number 83 against 2000 Australian companies This public company is foreign owned and it’s profits are focused from Beverage, food and Tobacco manufacturing. Strengths The strengths of this company is it produces quality products. It’s more than 140 years in the industry has earned Nestle the world’s biggest brand. Committed research and development through product innovation resulted in the invention of Milo in 1934 which is seen as a breakthrough in Nestle technology in Australia. Nestle is seen as the world’s biggest brand and was featured as a top brand in the Fortune 500 list Nestle also hold a strong marketing and advertising power due to the global brand. Nestle’s constant upgrade in technology has resulted in the quality and...
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...EVALUATION OF A MARKETING STRATEGY THAT WOULD GIVE WHITE HORSE WHISKY COMPETITIVE ADVANTAGE Name Institution Instructor’s name Course Date Literature Review According to Merchlewicz different beverage businesses adopt varying marketing strategies depending on the different target results (2011). The alcoholic market experiences different patterns with every coming year, and this has a major effect on the resolutions of various marketing departments. Leading alcoholic beverage producers’ is convenience and increase in the product demand. The current market patterns push various beverage companies to invest huge finances to increase their sales opportunities (Spandern 2014). The market is particularly faced by intense competition that has seen numerous brands decline and even others facing withdrawal from the market. Generally, the strategy to increase market share gains favour from most companies. Branding efforts are crucial as they promote strategic planning of various businesses. Sankrusme also argues in support of the existing competition in the beer market and in particular discusses the Thailand market (2011). In the recent past there has been a high rate of expansion in the beer market, a situation that caused a number of entrepreneurs to venture into the business. The new businesses used different marketing strategies to gain a competitive advantage in the market. The author identifies that the Carlsberg beer used...
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...How Diageo Manages its Brands A case study of Brand Asset Management (BAM) in action Diageo Industry: Global Drinks Site Scope: Brand Asset Management BAM Solution: VYRE Unify Diageo is a UK success story. With a net sales close to £10Bn*, Diageo has 25,000 employees working globally across 180 countries. It is the acknowledged market leader in the global drinks industry and its 370 brands include category leaders and household-name brands such as Smirnoff (vodka), Guinness (beer) and Johnnie Walker (whisky). Great marketing and branding are central to Diageo’s success. Creativity in advertising and promotions in particular is a critical factor. Diageo excels in this area, and Guinness for example has won numerous accolades for its impactful advertising campaigns. With a £1.5Bn* annual investment in marketing, Diageo has been keenly aware of the need to protect its intellectual property and brand assets. This paper reveals how Diageo’s industry-leading global Brand Asset Management (BAM) system helps Diageo manage its exalted international reputation and global brand ambitions. * year ended 30 June 2011 1 Overview of SmartBrand SmartBrand is the name of Diageo’s BAM system and is actively used by c. 5,000 Diageo brand, marketing, and compliance managers world-wide, and Diageo’s agencies. “ With a company of our size and complexity Smartbrand is essential in making it more effective, both at search and spin and from a compliance perspective. The site protects our...
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...their position and their strategy. Entering new markets offers advantages and developing opportunities. In order to achieve profitability Michael Porter established a 4 strategy matrix, three of which might be found very useful to a company that wishes to follow international headway (Michael Porter, 1980). Through this assignment Porter’s matrix and his proposals are about to be presented as a helpful tool for any enterprise that whishes development off its country’s borders. Two major companies, worldwide known for their products in beverage market segment are about to be analyzed as representative examples of their differentiative and cost leadership character. VIN and Spirit, a Swedish firm which was the creator of Absolut Vodka compared with Diageo, Smirnoff’s enterprise. VIN and Spirit Company without the basic knowledge of a global strategy, it managed to obtain one of the leading market beverage segments being also a very representative example of advertising and packaging differentiation (Vin & Spirit Annual report, 2007). The second company, DIAGEO is producing popular products ne of which is Smirnoff Vodka. Because of its well known products worldwide, Diageo does not concentrate on a specific product (DIAGEO Annual Report, 2007).Instead it uses very good organized mechanisms of production, promotion packaging and distribution with lowest cost which offers the advantage of selling cheaper than the competitors, without spoiling product’s quality (Michael Porter, 1980)...
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...Formula Controversy CASE 4 April VanRivers Adv. International Marketing March 24, 2013 1. What are the responsibilities of companies in this or similar situations? Domestic companies and multinational companies have responsibilities that portray their corporate and social stance as an organization. Many of these responsibilities are indicated in the vision or mission statement. Ethical and socially responsible conduct should be the cornerstone of any organization’s core values and strategic management process (Godiwalla & Damanpour, 2006). For an MNC, ethical and social responsibility charge becomes an imperative because it is globally conspicuous, and, its activities have global impact and ramifications (Godiwalla & Damanpour, 2006). An MNC’s activities whether they are the pursuit of rapid growth, increased market share and profits, and competitive performance, should emanate its core ethical values and socially responsible vision. A MNC’s responsibility should stem beyond financial targets and in addition focus on the well being of people, communities and the environment. A company that has a strong social responsibility statement is Diageo. Diageo is one of the top ten MNCs and is the world's largest producer of spirits and a major producer of beer and wine (SiliconIndia, 2012). Diageo's brands include Smirnoff, Johnnie Walker, Baileys and Guinness (SiliconIndia, 2012). It is also the exclusive international distributor of Jose Cuervo and owns 34 percent of...
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...Abstract This paper aims to evaluate the marketing planning process for the case of Smirnoff Ice as a top selling Diageo’s brand at the Serbian marketplace. After a brief Company profile description and its business environment, the article proceeds to discuss and evaluate steps for a full analysis of the strategic marketing planning process assessing its importance with all related assumptions. Using the material collected after comprehensive research of the Smirnoff Ice market place and assessing the Smirnoff Ice Marketing Plan, the writer of this article tried to provide answers to the questions like: why is the marketing planning process an important tissue, who makes the strategic marketing decisions, what information are used in the strategic planning process, who sets objectives and marketing mix strategies etc. Finally, the paper offers the conclusions and recommendations by summarizing the article findings, highlighting most important topics discussed. Key words: marketing plan, marketing planning process, Smirnoff Ice, marketing mix : 1. Introduction Planning is an important process which exceeds its basic role as the tool for the business decision making. According to Drucker (1955), planning is concerned with development of strategies based on an organization’s assessment of the marketplace and perceptions of managerial expectations and organizational capability. Marketing planning is an essential management process as it affects every aspect of organizational...
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...1°) How would you explain the Guinness pricing strategy and the underlying assumptions about consumer behavior when Diageo reports for 2005 that in the UK and Ireland the Guinness sales volume fell by 3 per cent, but a value growth of 4 per cent was achieved in both markets, mainly due to price increases? 2°) Motivated by the success of this pricing strategy, should Diageo continue to increase the price of Guinness? HOW TO EXPLAIN GUINNESS PRICING STRATEGY ? - Pricing: Not just a financial and commercialization part => belongs to marketing and sales strategy - Pricing affects : - sales - market share - revenue - profit => Right pricing : a direct implication to the product success in the market => The product needs to remain PROFITABLE Pricing strategy needs to reach the main objectives of a company : PROFIT – TURNOVER – VOLUME - MARKETSHARE -Price sensitivity of shoppers differs between the distribution channels Discount hypermarket : people check carefully to buy a beer-pack Bars / Pubs : ready to pay much more for a beer than in the grocery -3 Ways to determine a price : - cost pricing : based on the company expenses - competitor pricing : based on the competitors prices - value pricing : how the product is perceived by the customer ? An aggressive price increase policy - A National icon : recognized worldwide •55% of the world stout market •Market leader in 4/7 regions : •Western Europe / North...
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...link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/6c92feaa-fc0f-11e0-b1d8-00144feab49a.html#ixzz2Cu5c99bj Case study: Diageo By Abby Ghobadian The story: After a series of mergers, demergers and acquisitions, the management of Diageo, the conglomerate formed by the 1997 merger of Guinness and Grand Met, made a strategic decision to focus on premium alcohol drinks. Diageo was in charge of an expanding and wide-ranging collection of brands, some of which had broad appeal across many countries while others had more regional appeal, sometimes limited to just a few markets. The challenge: After both organic growth and acquisitions, three key dilemmas emerged by 2002. First, how to manage brands with significantly different appeal, such as Guinness, a brand with strong Irish roots but huge global appeal, or Buchanan’s, the leading Scotch whisky in Latin America. Second, how to rejuvenate tired brands and third, how to improve the market share of the most successful brands, such as Captain Morgan, J & B, Smirnoff and Johnnie Walker. The initial strategy: To help managers maintain focus and allocate resources, Diageo developed three brand classifications: global priority, local priority and category. The global priority brands were the big sellers that were popular across a number of important markets and received the lion’s share of promotional resources...
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...General Mills’ Acquisition of Pillsbury from Diageo PLC Lauren Sherlock Jason Park JP Zendman 12/9/2009 General Mills’ Acquisition of Pillsbury from Diageo PLC Situation Analysis: In December 2000, management at General Mills (GM) proposed a plan to acquire Pillsbury, a bakedgoods producer, in a stock-for-stock exchange. Pillsbury is currently controlled by Diageo PLC, one of the world’s leading consumer–goods companies. The deal specifies that General Mills is to create and thus issue additional shares of common stock to Diageo in exchange for complete ownership of the Pillsbury subsidiary. If the deal is executed, Diageo will become General Mills’ largest shareholder. The consideration to Diageo would include 141 million shares of the company's common stock and the assumption of $5.142 billion of Pillsbury debt, making the deal worth over $10 billion. In addition, the agreement will contain a contingency, as up to $642 million of the total transaction value may be repaid to General Mills at the first anniversary of the closing, depending on its (20-day) average stock price at that time. Therefore, we must calculate and thus analyze the various costs and savings associated with the transaction to determine whether or not General Mills’ shareholders should vote for the proposed merger. If approved, this will be the biggest takeover in GM’s 136 years of business and General Mills will become the fifth largest food company in the world (Forster, 2002). General Mills Company...
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...09295266 Diageo Diageo is the leading premium drinks company in the world; of which categorizes most of the leading brands around the world and the market leader in many of the major growth market around the world! Their unique STP strategy had allowed them to develop globally into a renowned brand with operating profit reaching up to £ 2.5bn in 2010! It has also expanded from its headquarters in London into 80 worldwide offices employing around 20,000 workers. Its efficient market segmentation and diversification had allowed them to meet specific demands of its global consumer base which had contributed to the firm’s success. The Alcoholic industry is an oligopoly market dominated by about five large players estimated to be made of 26 PLC and about 200 LTD. In 2010 Diageo was right up there with annual revenue of £ 9.5 billion and return on invested capital of 14.8%. Global sales volume of alcohol reached 182.9 billion liters in 2010, growing between 1 – 2% from the previous five years! There are 3 separate categories in this market: beer, wine and spirits; which Beer is highest accountant of it, 76% of total sales. These statistics illustrate the huge competition firms face within the industry highlighting the importance of a well defined and aggressive marketing strategy. (Hatherly, 2010) Diageo was formed in 1997 via mergers: Guinness and Grand Metropolitan; since then it had efficiency in its operations, it sold off food brands Burger king and Pillsbury after finding...
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...General Mills’ Acquisition of Pillsbury from Diageo PLC Lauren Sherlock Jason Park JP Zendman 12/9/2009 General Mills’ Acquisition of Pillsbury from Diageo PLC Situation Analysis: In December 2000, management at General Mills (GM) proposed a plan to acquire Pillsbury, a bakedgoods producer, in a stock-for-stock exchange. Pillsbury is currently controlled by Diageo PLC, one of the world’s leading consumer–goods companies. The deal specifies that General Mills is to create and thus issue additional shares of common stock to Diageo in exchange for complete ownership of the Pillsbury subsidiary. If the deal is executed, Diageo will become General Mills’ largest shareholder. The consideration to Diageo would include 141 million shares of the company's common stock and the assumption of $5.142 billion of Pillsbury debt, making the deal worth over $10 billion. In addition, the agreement will contain a contingency, as up to $642 million of the total transaction value may be repaid to General Mills at the first anniversary of the closing, depending on its (20-day) average stock price at that time. Therefore, we must calculate and thus analyze the various costs and savings associated with the transaction to determine whether or not General Mills’ shareholders should vote for the proposed merger. If approved, this will be the biggest takeover in GM’s 136 years of business and General Mills will become the fifth largest food company in the world (Forster, 2002). General Mills Company...
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...Mills management might believe that the business of these two companies is supporting each other or basically so-called synergy. The synergistic effect will benefit both General Mills and Diageo. By acquiring Pillsbury, the company will become more powerful in the competitive market. This could be achieved through combining or sharing the resources, capital, and technologies of both firms. This would eventually result in higher and better efficiencies and increase in production capacity for any future expansion. When the combined firm is bigger, they would absolutely have higher bargaining power over the suppliers. The raw materials could be bought at lower rate than before. - Reduction in competitive forces and competition Upon acquiring the Pillsbury, the company will obtain greater market share among the other rivals in the industry. The company will have more flexibility to control over the pricing strategies, thus might be able to increase profitability. In other words, the selling and marketing will be more efficient. - Future growth and expansion The acquisition will allow General Mills to double its size. The brand will be added more than before acquisition. The company can basically gain more shelf space in the supermarket or hypermarket in the US and international markets. Simply speaking, the expansion of the firm could be reflected by number of brands being added. - Diversification With the greater intensive competition in the food and...
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