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Nestle Mature Markets Growth

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NESTLE’: SUSTAINING GROWTH IN MATURE MARKETS 1. Describe the characteristics of each of the following elements in the Current Competitive Landscape: a. Globalization - Nestle’operates in 77 countries and sells its products in all 6 continents. Its global position is further enhanced by acquisition of companies which have an established global presence. b. Technology – As part of the GLOBE initiative, Operation Excellence program was implemented which deals with creating concepts & systems to optimize productivity, improving supply chain, eliminating overhead & reduce product complexity. Installation of common information systems in order to integrate all information from all business units. c. Knowledge - As part of the thrust to achieve internal growth , the company invested on extensive research and development . Existing products undergo improvement/changes such as changes in shape, packaging or even taste. Other products are being moved to a new promising product segments in order to maximize earning potential. d. Strategic Flexibility – The launching of Global Business Excellence initiative or GLOBE has transformed Nestle to what success it is enjoying at the moment. GLOBE covers a broad range of strategic objectives and also to improve operational efficiency by integrating the company’s businesses on a global scale. e. Quality – Putting into consideration consumers whose primary motivation to purchase a product is the product’s nutritional value, Nestle’created the Corporate Wellness Unit. Its main thrust is to increase the value of its traditional products by adding health and nutritional benefits. These add-ins are referred to as Branded Active Benefits (BAB’s). In addition, Nestle ‘devotes 1/5 of its research & development budget to nutrition research. f. Profit Pool – The company’s 127,000 products were allocated to 6 strategic brands namely: Nestle’, Buitoni, Maggi, Nescafe, Nestea and Purina. This resulted to higher margins, the products occupy more shelf space, help retailers generate top-line growth and by exploiting brand synergies resulted to reduced marketing expenditures. Further expansion into new product segment through the creation of the Life Venture Fund. Acquisition of business with established market share in order to reinforce its poor business segment is the key action to fulfilling Nestle’s objective of reaching critical mass in terms of market share. 2. Discuss the Vision and Mission of Nestle Nestle’is a company that is not only after of generating sales and profit but also looks after the welfare of its stakeholders (e.g. consumers, employees). Over the years, it has exerted relentless effort in product innovation and renovation in order to meet consumers’ needs or to improve existing products by adding nutritional value. Nestlé strives to be a leader in nutrition, health and wellness, with the belief that good food is central to health and wellness. Nestlé products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestlé helps provide selections for all individual taste and lifestyle preferences. 3. Identify and describe the fundamental principles that guide the company’s strategy Nestle’s strategy evolved from the company’s vision of providing Good Food for Good Life. It is a human company providing a response to individual human needs throughout the world with specific concern for the wellbeing of both its consumers and employees. The company aims to increase sales and profits, but, at the same time, to raise the standard of living everywhere it is active and the quality of life. 4. Explain how Nestle establishes & manages relationships with its primary stakeholder. For over 130 years, the company has acquired the knowledge of the markets all over the world and is enjoying success in adapting its products to the local taste. The company employs continuous product innovations and renovations of its existing products in order to suit its consumers ‘needs. As part of the strategic initiative, Nestle’ has ventured and invested heavily on nutrition and wellness products and to develop nutrition and wellness as a value added feature in its existing products. The creation of Nestle’ Nutrition Unit to provide products for consumers whose primary purchasing motivation is it’s nutritional value. 5. Discuss the leadership tasks that are fundamental to Nestle’s success. When Brabeck took over the reins of Nestle as CEO, the company is already enjoying success in terms of generating sales & hitting profit targets. But despite its success, the challenge that faced Brabeck is sustaining the company’s growth in a maturing market. In order to address the challenge, initially, Brabeck had to identify new growth opportunities and this requires significant investments in R&D and marketing capabilities. Brabeck launched programs and initiatives that address the company’s weak points. An example is the manufacturing efficiency program or MH97 with an objective of cutting raw material costs and optimizes production process. 6. Update the case information using at least three (3) data sources in addition to the text. In 2006, Nestle’ concluded 2 critical acquisitions under its Nutrition business namely: Novartis Medical Nutrition and Gerber. Through the acquisition, the company has significantly increased presence globally and in the US, in Europe and in Japan, which are key markets for medical nutrition. With sales of nearly 1.2 billion Swiss francs, Novartis Medical Nutrition amounted to more than twice the sales of Nestlé Healthcare Nutrition. The combination generated sales of over 1.7 billion Swiss francs and a very solid base to tackle a worldwide market estimated at 10 billion dollars. With 82 percent market share in the US, Gerber occupies a significant part of the baby aisle in the retail trade and its dedicated sales force will help Nestlé infant products to benefit from that critical mass. Overall, the acquisition reinforces and extends the leadership Nestlé had in infant nutrition. While Nestle is already a clear leader in infant formula and in infant cereals at the global level, Gerber now propels the company into the number one slot also in baby meals and drinks. With these two key acquisitions, as well as the excellent internal growth generated by Nestlé Nutrition, the Group's position as the world's foremost nutrition company is now solidly anchored. Based on sales forecast of more than 10 billion Swiss francs, or about 10% of the Group's food and beverage turnover, Nestlé Nutrition is now twice as large as its nearest competitor and a significant driver of growth for the Group. It covers all key areas, from infant nutrition to healthcare and to performance nutrition, as well as weight management with Jenny Craig.
REFERENCE

1. http://www.nestle.pk/pdf/4c%20Management%20&%20Leadership%20Principles.pdf 2. http://www3.interscience.wiley.com/journal/114124270/abstract?CRETRY=1&SRETRY=0 3. http://www.scribd.com/doc/10552265/Nestle 4. http://wiki.answers.com/Q/What_is_the_Mission_Statement_for_Nestle 5. http://www.nestle.com/MediaCenter/SpeechesAndStatements/AllSpeechesAndStatements/Nine+months+results+2007+press+conference+-+address+by+Peter+Brabeck.htm

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