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Nestle Porter's Five Forces Analysis

In: Business and Management

Submitted By Jeffrey959
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Content
Nestle’s Company Profile
-Nestle Headquarter Location
-Mission Statement
-Objective
-Management Style and Organizational Chart

Nestle’s SBUs Profile
Competitor Analysis
Market Targeting
Product Profile
Application of Ansoff’s four Strategic Options
Conclusion
Bibliography

Nestlé’s company Profile
Nestlé is the world's leading Nutrition, Health and Wellness Company. We are committed to increasing the nutritional value of our products while improving the taste.
Henri Nestlé who was the founder of Nestlé and developed the first milk food for infants in 1867, and saved the life of a neighbor’s child, the Nestlé Company has aimed to build a business as the world's leading nutrition, health and wellness company based on sound human values and principles.

Henri Nestlé

The key factor which drove the early history of the enterprise that would become The Nestlé Company was Henri Nestlé's search for a healthy, economical alternative to breastfeeding for mothers who could not feed their infants at the breast.
In the mid-1860s Nestlé, a trained pharmacist began experimenting with various combinations of cow's milk, wheat flour and sugar in an attempt to develop an alternative source of infant nutrition for mothers who were unable to breast feed. His ultimate goal was to help combat the problem of infant mortality due to malnutrition.

Nestlé’s Logo

Henri Nestlé also showed early understanding of the power of branding. He had adopted his own coat of arms as a trademark; in his German dialect, Nestlé means 'little nest'. One of his agents suggested that the nest could be exchanged for the white cross of the Swiss flag. His response was firm: "I regret that I cannot allow you to change my nest for a Swiss cross .... I cannot have a different trademark in every country; anyone can make use of a cross, but no-one else may use my coat of arms."
Food has entered a new phase. Once upon a time it was simply fuel to survive. Today's consumer is looking for something more - an improved nutritional value. We aim to be able to give consumers the products they need for a healthy lifestyle. We encourage a balanced, healthy diet and make products that fit into this; we are committed to increasing the nutritional value of our products while improving taste and pleasure. We inform fully about the ingredients of our products to allow you to take the decisions necessary to live a wellness lifestyle as you wish. Nestle’s headquarter Location
Company is chartered in Switzerland and therefore subject to Swiss company law. Our headquarters are in Switzerland (in Vevey, on Lake Geneva), we do report our consolidated accounts in Swiss francs (CHF) and about one third of our shareholders are Swiss. However, only about 2% of the Company's sales are recorded in Switzerland and a vast majority of Nestlé staff and assets are located outside the country.
Corporate headquarters are:
Nestlé S.A. avenue Nestlé 55
1800 Vevey
Switzerland

The Company's strategy is guided by several fundamental principles. Nestlé's existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company's priority is to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives.

Mission Statement
“Good Food, Good Life”
At Nestlé, we believe that research can help us make better food so that people live a better life.
Good Food is the primary source of Good Health throughout life. We 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 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. Research is a key part of our heritage at Nestlé and an essential element of our future. We know there is still much to discover about health, wellness and the role of food in our lives, and we continue to search for answers to bring consumers Good Food for Good Life.

Nestlé’s Objective
Nestlé's business objective is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners.

Nestlé’s Management style and Organizational chart Since Nestlé company has been trading over worldwide, their management style is formal style and for SBUs Nestlé gives decentralization and draw their own consolidated accounts. Nestlé’s currently board of directors (BOD) are:- Paul BULCKE
Chief Executive Officer, Nestlé S.A.

Werner J. BAUER
Executive Vice President
Chief Technology Officer, Head of Innovation, Technology, Research and Development
Frits VAN DIJK
Executive Vice President
Zone Director for Asia, Oceania, Africa and Middle East

Luis CANTARELL
Executive Vice President
Zone Director for United States of America, Canada, Latin America, Caribbean

José LOPEZ
Executive Vice President
Operations, GLOBE

John J. HARRIS
Executive Vice President
Chairman and CEO of Nestlé Waters

Richard T. LAUBE
Executive Vice President
CEO of Nestlé Nutrition
James SINGH
Executive Vice President
Finance and Control, Legal, IP, Tax, Global Nestlé Business Services

Laurent FREIXE
Executive Vice President
Zone Director for Europe

Petraea HEYNIKE
Executive Vice President responsible for the Strategic Business Units, Marketing, Sales and Nespresso

Marc CAIRA
Deputy Executive Vice President
CEO of Nestlé Professional

Jean-Marc DUVOISIN
Deputy Executive Vice President, Nestlé S.A.
Head of Human Resources and Centre Administration

David P. FRICK
Senior Vice President
Corporate Governance, Compliance and Corporate Services

Nestle’s organizational chart

Nestlé is one of the largest and most successful food companies in the world. Nestlé has its own local companies in most countries. The Head Office in Switzerland works very closely with them, and sets overall strategy that is directed via Zone Management and the Strategic Business Units (SBUs). Zone Management

Geographically, Nestlé divided into three main zones i.e., Europe and the Americas, Asia and Oceania, Africa and the Middle East. For example, South East Asia is a sub unit of the Asia and Oceania Zone and in this region Nestlé presents in 10 countries and 23 factories in those country including Myanmar. They work closely with the local markets and the SBUs. Their primary role is that of enablers, acting as the voice of the centre to the markets, and the voice of the markets to the centre. They share Nestlé’s vision so that everyone around the world understands the direction to take and how to get there with common tools, common strategies and common values. This ensures that their people around the world know how to act and have a very strong framework of values and a clear reference point for fast decision-making. Strategic Business Units (SBUs)

Nestlé’s structure is a combination of a decentralized organization and seven worldwide strategic business units (SBUs). The SBUs are dividing as specialize in a particular category and they have 7 Strategic Business Units (SBUs). They are 1.Dairy SBU, 2.Coffee & Beverages SBU, 3.Chocolate, Confectionery & Biscuits SBU, 4.Ice Cream SBU, 5.Food (Culinary and Frozen food) SBU, 6.PetCare SBU, and 7.Pharmaceuticals SBU. They work with Research and Development (R&D) to ensure that everything the company produces is led by consumer insights and relevant innovation and they help the markets to achieve their business and brand objectives. Nestlé offers a wide range of products across many different areas of the food and beverage industry. Nestlé have choice to incorporate new product into one strong performing product in each one of its SBUs. For example: As their new product named as LC1 which is come out from their R&D unit, they have chance to introduce LC1 into yogurts through their Dairy SBU, cereals in their Cereal SBU, into chocolate bars in their Confectionary SBU, power bars through their Nutrition SBU, baby formulas through their Baby Food SBU, pet foods through their Pet care SBU, into ice-cream through their Ice Cram SBU and into their drinks through their Beverages SBU. Nestlé should choose one product in each of these SBUs to introduce to the market. This way there is wide area of products with in different areas of the food and beverage industry in which the new product to bring a profit. So if their new product does well in certain areas of the industry, but not another, Nestlé can shift its focus from the weak product to the strong product. Introducing it to many different products in many different areas of the food and beverage industry gives the new product a better chance of achieving success. Nestlé, already begin a diversified food and beverage company, has the benefit being able to explore an option such as this. This is how their SBUs are powerful and effective over competitors. Nestlé bring these various SBUs and zones together into Nestlé’s indispensable “expatriate army”. Although Nestlé is one of today’s global giants, their priority is to be a local company in each of the 130 countries where they market their products. There they try to learn about their people cultures, need and habits and to benefit their economies and communities. Local Nestlé units work within a global framework based on the Nestlé principle: “centralize what you must, but decentralize what you can”. In this way they combine the advantages of a worldwide company with the advantages of smaller local businesses.

Competitor analysis of Nestle`

Nestlé is a global organization and therefore there’s no doubt about that they have many competitors in every market they entered and international strategy is their main strategy to overcome their competitors. Their competitive strategies are associated mainly with foreign direct investment in their diary and other food business. Nestlé balance their sales figures between low risk and low growth countries that have many competitors and high risks and potentially high growth markets that do not have many competitors. But they don’t try to take unnecessary risks of those countries only to increase their profit. When entering into a new market, Nestlé strive to gain their profitability through foreign direct investment in big companies.
Nestlé’s another strategy to beat their competitors worldwide is acquisition of the local company and form a group of local managers who know more about the culture of local markets than the foreign manager. Nestlé’s strong cash flow and comfortable debt-equity ratio makes easy for them to takeover another company. When they get their information from the local managers, they manipulate ingredients and technology according to the local conditions and taste. After that, they try to introduce their differentiated products to other countries with new taste.
Another strategy that has been successful for Nestlé is making strategic partnerships with other large companies. In the early 1990s, Nestlé made strategic alliance with Coca Cola in ready-to-drink teas and coffees in order to benefit from Coca Cola’s worldwide bottling system and expertise in prepared beverages.
The strengths Nestlé have over competitors are that they have great leaders and their structure is solid. And the Nestlé’s top management understands where to centralize and where to decentralize. This is an important fact of the success of Nestlé because they are running internationally. Another strength over their competitors is they are low cost operators. And as they are multinational company and produce various kinds of products with differentiated taste, their risks are diversified. In this age, consumers are becoming more health conscious and realize that living longer isn’t only by luck and genetics. Because of this factor, the health-based products of Nestlé become more popular.
The main weakness of Nestlé is that they are producing various products, so it’s difficult to focus in one area to become a market leader and sometime they will be beaten up by the specialists of the market they entered. Moreover, some of the markets they entered are already matured. This can also be a weakness that Nestlé have.
Target Markets
The market of Nestlé is worldwide one as it is an international company. Nestlé target variety of market in different countries. Nestlé wants to control every consumer by producing every product that consumers might want. Nestlé targets almost the whole world population including from the children to the adults and age by offering every product range they needed. Another priority of Nestlé is to become a local company in every country they market their products. So they try to produce the products that are needed in the country they market and differentiate them according to the needs of the markets.
In meeting their target markets in different Nestlé might use the Sun Tzu’s strategies. The first principal is to “Win All Without Fighting” or to prioritize markets and determine competitor focus. Nestlé would need to figure out what areas of food and beverage industry they are already operating strongly in and pinpoint out some of the suited product to introduce in the market. They could introduce it into yogurts through their Dairy SBU, cereals in their Cereal SBU, into chocolate bars in their Confectionary SBU, etc. Nestlé should choose one product in each of these SBU’s to introduce to the market. This way there is wide area of products with in different areas of the food and beverage. Nestlé can shift its focus from the weak product to the strong product. Introducing it to many different products in many different areas of the food and beverage industry gives Nestlé a better chance of achieving success.
The second principal is to “Avoid Strength and Attack Weakness” or to develop attacks against competitor’s weakness. Nestlé would attacks the weakness of their competitor by highlighting their strengths over competitors. This is a way of showing indirectly the weakness of the competitors.
The third principal is “Deception and Foreknowledge” or war gaming and planning for surprise. In the market almost only Nestlé can offer probiotic products. Nestlé would plan for a surprised attack by educating the consumers the benefits of using probiotic products. This educational campaign should be backed up by scientific support.
The fourth principal is “Shape Your Competition” or integrates best attacks to unbalance the competition, to throw competitors off. When Nestlé is going to introduce a new product in several different areas of the food and beverage industry, they could only advertise products in one or two markets. Then the competitor would defend usually on the large market that Nestlé entered. But by focusing their resource in the markets where they had not previously hinted, Nestlé could catch their competitor off guard and take completely control over that market.
The fifth principal is “Speed and Preparation” or readies your attacks and ready and release it. This mean when Nestlé is going to launch, they should be ready in all over the worldwide market. When they are fully prepared and ready, Nestlé should launch immediately at the same time. This would not give the competitors the chance to take control over the market.
The final principal is to reinforce success and starving failure. Smart leaders know when to put further assets into products and markets that are performing well and when it would be better to retreat from them. Nestlé has a well-established management structure that is support by a strong reputation in the industry. This, along with the fact that Nestlé is introducing many products into many markets gives them the edge and flexibility to fine-tune their management, production and sale of products.

Product Range PRODUCT GROUPS The secondary segment format - by product group - is divided into six product groups (segments), which are: Beverages Milk products, Nutrition and Ice Cream Prepared dishes and cooking aids Chocolate, confectionery and biscuits PetCare Pharmaceutical products Main Brands Today Nestlé is present in different markets with the following main brands: Coffee (Nescafé, Nespresso,Taster’s Choice, Ricoré, Ricoffy, Bonka, Zoégas, Loumidis ) Water (Poland Spring, Nestlé Pure Life, Arrowhead, Vittel, Deer Park, Levissima, Perrier, S.Pellegrino, Ozarka, Contrex, Ice Mountain, Zephyrhills, Nestlé Aquarel, Hépar, Acqua Panna, ) Other beverages (Nestea, Nesquik, Nescau, Milo, Carnation, Libby’s, Caro, Nestomalt, Nestlé ) Dairy - Shelf stable (Nestlé, Nido, Nespray, Ninho, Carnation, Milkmaid, La Lechera, Moça, Klim, Gloria, Svelty, Molico, Nestlé Omega Plus, Bear Brand, Coffee-Mate) Dairy - Chilled (Nestlé, Sveltesse, La Laitière, La Lechera, Ski, Yoco, Svelty, Molico, LC1, Chiquitin) Ice cream (Nestlé, Antica Gelateria del Corso, Dreyer's / Edy's, Drumstick, Extrême, Maxibon / Tandem, Mega, Mövenpick, Sin Parar / Sem Parar / Non Stop, Delta) Infant nutrition (Nestlé, Nan, Lactogen, Beba, Nestogen, Cerelac, Nestum, Neslac, Guigoz, Good Start ) Performance nutrition (PowerBar, Pria, Musashi) HealthCare nutrition (Nutren, Clinutren, Peptamen,) Modulen Bouillons, soups, seasonings, pasta, sauces (Maggi, Buitoni, Thomy, Winiary,Torchin, Osem, Totole, Haoji) Frozen foods (prepared dishes, pizzas, small meals) [Stouffer's, Lean Cuisine, Hot Pockets, Buitoni, Maggi, Wagner, La Cocinera] Refrigerated products (cold meat products, dough, pasta, pizzas, sauces, snacks) [Nestlé, Buitoni, Herta, Toll House, Sabra] Chocolate, confectionery and biscuits Nestlé, [Crunch, Cailler, Galak/Milkybar, Kit Kat, Smarties, Butterfinger, Aero, Polo] Nestlé Professional [Chef, Davigel, Minor's] Petcare Purina, [Friskies, Fancy Feast, Alpo, Gourmet, Mon Petit, Felix, Dog Chow, Cat Chow, Pro Plan, Purina One, Beneful, Tidy Cats]

Ansoff’s four strategic options At the glance, there are simply many strategies that the company can apply. Among them Ansoff can be regarded as one of famous weapons. Ansoff’s four strategic options support the senior level management to make decision making.
Ansoff’s four strategic options are:- 1) Penetration Option – for Existing Product in Existing Market. 2) Product Development Option – for New Product in Existing Market. 3) Market Development Option – for Existing Product in New Market. 4) Diversification Option – for New Product in New Market.
Although they are comparison with 2 variables, they are not inter-related and each one is used for specific product to specific market. The strategies enclosed each option may vary.
Nestle have many products and we will mention some product by applying in Myanmar Market with application of Ansoff’s four strategic options. 1) Penetration Option – for Existing Product in Existing Market
Assuming Nestle Company launched Coffee Mix which consumption is low. The problem how can we make this product to be Attractive, Increasing the usage of existing customers.
A simple marketer should use the following strategies:-
-Advertising (media, billboard, online marketing,...,etc)
-Promotion (Sale promotion , lucky draw, Free sample tasting,…,etc)
-Strengthening distribution channel (Trade Discount,..,etc) in the coffee mix market, Nestlé is still pending to become a market leader. Nestlé is competing with many brands. Among them, another international brand like Nestlé, Super Coffee Mix can be assumed as the market leader and main competitor. Super emphasizes only on the coffee mix market and take market leader place for a long time. In the other hand, Super coffee mix can be viewed as the entrepreneur in the coffee mix market of Myanmar. In the couple of last decades, Super is a monopoly in the coffee mix market. But in this age, there are much more competitors in the coffee mix market and Super has to share its market share. But still they are the market leaders because of their strengths. First of all, the most important thing is being a pioneer. As a pioneer, Super has many loyal customers and brand popularity. The second one is their advertising force. Unlike Nestlé, they advertise almost on every channel. The third one is their distribution channels which spread though not only in urban area but also in rural area. The main weakness of Super, which also is their strength, is its taste. Super has strong taste. And some rumors said that the heart will have a rapid heart rate because of the strong taste coffee. Therefore some people would prefer mild ones. Nestlé should respond in the light of Super’s strengths and weaknesses. At first, Nestlé should try to catch up with Super in both advertising and distribution. Then Nestlé should try to launch new product which has strong taste in order to share the market pie of strong taste demands. The packaging of Nestlé should be renovated too. The word “Mild Taste” will be effective in packaging and should be included in new design of package. By doing this, the weakness of Super and the strength of Nestlé can be clearly defined. 2) Product Development Option – for New Product in Existing Market
Assuming Nestle company’s Milo product has stable Consumption rate. In order to increase the consumption rate of Milo , the company should do for it’s product refinement.

The ways of making product refinements:-
-Change of packaging , taste,…,etc

For packaging , we can change the size to smaller or bigger depends on the situation. We can also change the color into more attractive instead of green. We can also change the design by adding animation characters for kids.

For Taste, we can have a new flavor of White chocolate instead of ordinary chocolate or other taste that prefer by customers.

By doing these refinement, we can gain more consumption that means more customer loyalty.

3) Market Development Option – for Existing Product in New Market

Assuming Nestle company launch instant noodles to worldwide, but not in Myanmar (New Market).
Three strategies can be applied:-
-Appealing to market sectors
-Repositioning of product
-Distribution methods or channels

Maggi Noodle is a brand of instant noodles manufactured by Nestle. his brand is popular in worldwide. Maggic noodles recently introduced a new variety of its noodles, to cater for the health conscious like ‘Less Salt’ and ‘No Trans fat’.
In mid 2008 New Zealand supermarkets introduced replacement formulations of it’s beef, Oriental and Curry flavors. Maggi noodles take around 2 minutes to cook , hence the name “2 minute noodles”. It is also known as “magi mee” in several countries.
By launching this noodle in new market Myanmar, Nestle noodle Maggi can have various advantages. It can have competitive advantage by distributing the well known brand and it has product differentiation of “2 minute Noodles” which beat all the local brands like Ma Ma, Mamee, Yum Yum,…,etc.

4) Diversification Option – for New Product in New Market
Assuming Nestle introduced new product Frozen Pizza to North America (New Market).Distributing New product in New market is highly risky. Therefore, making survey before actual action is better than did nothing.

Two strategies can be applied,
- Integration (Vertical or Horizontal)
-Conglomeration

Nestle Company apply Horizontal Integration strategy by acquisition of Kraft foods’ frozen pizza business. This acquisition is an excellent strategic match for Nestle as it brings leadership in the North American frozen pizza category, where the Company had only a minor presence. The business complements Nestle’s existing frozen meals and snacks businesses while allowing the company to optimize its existing direct distribution network to stores across America. In addition, this acquisition enables Nestle to leverage its pizza-making know-how in Europe.

Conclusion
As Nestle is the world leading Nutrition, Health and Wellness Company, they have deep penetration in the world’s market. However, their penetrations have limitations in the market of Myanmar due to sessions. They can’t have fully functioned company branch in Myanmar because their parent company is in EU area. So they distributed their products from their company branch that exists in Thailand via the distribution of Myanmar. Not having a company branch in certain country make some difficulties in marketing such as advertising, the key determinant of the sale in Myanmar. So, even the quality of the products of Nestle is the best, it is not easy to compete with other brands.

Ansoff’s four strategic options can be regard as one of the best options for strategic choice but it didn’t take account on environmental factors, judgment on profitability and it can inhibit the creativity of planners.

Our opinion is to use strategies depend on the situation , culture , type of country, and other factors need to be considered.

Bibliography
ABE Manual Book of Strategic Marketing http://www.nestle.com/AllAbout/ http://articles.castelarhost.com/nestle_competitive_strategy.htm http://articles.castelarhost.com/nestle_competitor_profile.htm http://articles.castelarhost.com/nestle_proposed_strategy.htm http://www.nestle.com.my/…...

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...1.0 INTRODUCTION Micheal E. Porter has developed ‘five forces’ model, which this model has been frequently used systematic tool in order to investigate the industry environment. The famous framework of Porter, which is called as five forces model may assists managers to identify threats as well as opportunities by examine the forces of competitive in the competitive environment, with this examination. It illustrates all the five forces of competitive environment. The well-known Porter’s five forces include the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and lastly the intensity of rivalry among competitors in an industry. Capability of a firm to compete in the market will be influenced by each one of these Porter’s forces. This forces help manager to make a decision whether their company should stay in an industry or exit from stay in the industry. In the year of 1866, Nestle which is a company that leading health, wellness, and nutrition in this world today. Henri Nestle is the founder of the Nestle and the headquarters are located in Vevey, Switzerland. There are a number of principles of fundamental, which is guide the strategy of the company. The main concern of Nestle is to come up and give relevant and best products to the new and existing customers that could meet their needs and whenever the customers are. The success of the company can be credited to the......

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Nestle Porter's 5 Forces

...* What does the model tell you about the nature of competition in the industry? External Analysis (Porter's Five Forces Analysis) Threat of Substitute products (low) Food and beverage market has a long industry chain and big industry span so threat in substitute products is low. Giants such as Wrigley (Mars, Milkway, Snickers and etc), Unilever (Knorr, Cornetto ,Lipton Ice tea and etc) ,Coca Cola, Nestle have similar products to offer to customers. But in Nestle case threat of substitute products is high because of wide range of similar products that can compete directly with Nestlé. For example, Danone led Nestle to decreasing sales in 2009 in European Markets. In order to make a differentiation in the worldwide market Nestle should innovate its products to stay in the market and to go beyond its substitutes. Recent innovation made by Nestle health consciousness and wellness factor that has been introduced in all products of company. Threat of new Entrants (low) The company has been lunched since 1866 which gave Nestle a wide experience in the food and beverage industry. With substantial brand equity and a base of loyal customers Nestlé is at an insignificant risk from entrants. Nestlé has an advantage of holding majority of the share in the market where competition is becoming increasingly fierce in the world today. Although the food and beverage industry is very competitive and is constantly evolving with entrants, small business don’t have much......

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Ryanair Porter’s Five Forces Analysis

...power towards its main supplier, Boeing. However, the supplier switching costs for Ryanair is extremely high due significant amount of expenses involved associated with pilot retraining needs. Moreover, “airline pilots have a strong bargaining power in the airline industry” (Pelapu et al, 2007, p.48), because there is no abundant supply of highly qualified and experienced pilots. Nevertheless, Ryanair enjoys rapidly increasing power towards a different category of its suppliers. Specifically, as Walsh (2011) confirms, highly intensified level of competition among airports has significantly increased the bargaining power of airline companies in their business relationships with the local airports. New Picture 52 Ryanair Porters Five Forces Analysis Bargaining power of customers Bargaining power of customers can be explained as “an advantage that comes from gathering together to put collective pressure on producers to lower prices or improve quality” (Business Dictionary, 2012, online). Ryanair customers enjoy high bargaining power because switching to another airline is simple and not associated with additional expenses. However, it has to be mentioned that only for Ryanair, but for airline industry in general “the bargaining power of buyers is relatively high and increasing, since most airline companies are forced to cut costs by aggressive competitors” (Szymanski, 2011, p.7) Increased level of price sensitivity of Ryanair customers is another factor that......

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Premium Essay

Nestle Porter's Five Forces

...1.0 INTRODUCTION Micheal E. Porter has developed ‘five forces’ model, which this model has been frequently used systematic tool in order to investigate the industry environment. The famous framework of Porter, which is called as five forces model may assists managers to identify threats as well as opportunities by examine the forces of competitive in the competitive environment, with this examination. It illustrates all the five forces of competitive environment. The well-known Porter’s five forces include the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and lastly the intensity of rivalry among competitors in an industry. Capability of a firm to compete in the market will be influenced by each one of these Porter’s forces. This forces help manager to make a decision whether their company should stay in an industry or exit from stay in the industry. In the year of 1866, Nestle which is a company that leading health, wellness, and nutrition in this world today. Henri Nestle is the founder of the Nestle and the headquarters are located in Vevey, Switzerland. There are a number of principles of fundamental, which is guide the strategy of the company. The main concern of Nestle is to come up and give relevant and best products to the new and existing customers that could meet their needs and whenever the customers are. The success of the company can be credited to the......

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Premium Essay

Nestle Porter's 5 Forces

...Nestle Porter's 5 Forces * What does the model tell you about the nature of competition in the industry? External Analysis (Porter's Five Forces Analysis) Threat of Substitute products (low) Food and beverage market has a long industry chain and big industry span so threat in substitute products is low. Giants such as Wrigley (Mars, Milkway, Snickers and etc), Unilever (Knorr, Cornetto ,Lipton Ice tea and etc) ,Coca Cola, Nestle have similar products to offer to customers. But in Nestle case threat of substitute products is high because of wide range of similar products that can compete directly with Nestlé. For example, Danone led Nestle to decreasing sales in 2009 in European Markets. In order to make a differentiation in the worldwide market Nestle should innovate its products to stay in the market and to go beyond its substitutes. Recent innovation made by Nestle health consciousness and wellness factor that has been introduced in all products of company. Threat of new Entrants (low) The company has been lunched since 1866 which gave Nestle a wide experience in the food and beverage industry. With substantial brand equity and a base of loyal customers Nestlé is at an insignificant risk from entrants. Nestlé has an advantage of holding majority of the share in the market where competition is becoming increasingly fierce in the world today. Although the food and beverage industry is very competitive and is constantly evolving with entrants, small......

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Porter's Five Forces Analysis

...Five Forces Analysis Introduction (1) • Devised by Michael Porter • It a framework for the analysis of the structural factors that  shape competition within an industry • The five forces: • Determine the profitability of an industry • Assess how attractive and potentially profitable is an industry Introduction (2) • This is a framework for understanding an industry or an  organisation’s position with respect to the forces operating in  the microenvironment • It can be used to explain the performance of competitors in a  market • From the analysis a number of generic competitive strategies  can be derived • Cost leadership • Differentiation • Focus The five forces • The ability of firms to earn an good return depends on five  forces: namely the… • Threat of new entrants‐ the ability of new competitors to  enter the industry • Bargaining power of suppliers • Bargaining power of customers • Threat of substitute products • Degree of competitive rivalry The five forces framework Threat of Substitute Products Bargaining Power of Suppliers Intensity of rivalry within the industry Bargaining Power of Buyers (Customers) Threat of New Entrants The threat of new entrants Threat of new entrants • If new entrants move into an industry they will gain market  share, rivalry will accelerate and profits will decline • If it is difficult to enter an industry the position of existing  firms will be strengthened •......

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Porter’s Five Forces Analysis of the Fast Food Industry

...Porter’s Five Forces Analysis of the Fast Food Industry Complete a Porter's Five Forces Analysis of the fast food industry and for each of the 4 generic strategies, identify one restaurant that you believe is employing that generic strategy. According to Hoover's Fast Food and Quickservice Restaurant Report, Fast food restaurants make up one of the largest food industry segments with more than 200,000 restaurants in the US. Fast food franchises are known for their low cost and high-speed products served to go as well as for a quick on-site consumption. Consumers are attracted to the idea of standardized menus and familiar meals in each location. Michael Porter’s model discussed below will help us identify five key competitive forces to analyze the fast food industry environment. The threat of entrants - High Entry barriers into the fast food industry seem to be low because of the relatively low capital requirements to start a new restaurant. New entrants are not in need to possess proprietary technology to be able to compete with already established restaurants or franchises. However, the fast food industry is dominated by globally recognized chains with high brand awareness and brand loyalty like McDonald’s, Burger King, KFC, Pizza Hut and etc. Established fast food restaurants have numerous advantages in product technologies, easy access to ingredients and supplies, favorable locations, successful marketing, and experience. While these disadvantages can seem as a......

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Nestle Five Forces

...Case Analysis Nestle Group 3 11 February 2010 David Chol, Whitney Drost, Raynard Geason, Sarah Laborde, Casey Landers, Darren McNeely, Vanessa Robicheaux, Nicholas Knight, Taylor Mendel, Jonathan Bush, John Priola, William Ratcliff Table of Contents Introduction 3 Goals 3 Constraints 3 Through the years, Nestle has emerged as a multi-national company that serves as a brand in itself as well as an umbrella company for many well recognized processed food commodity brands. Nestle was established in 1867, with the distribution of its first product, a dehydrated baby food; this product quickly made the company profitable. Through a series of well-coordinated mergers and the growth of a vast selection of innovative food products, Nestle became the global giant it is today. Nestle’s success can be attributed to its deep agricultural supply chain, strong local market teams, hiring from within, and long tenured CEOs. Nestle has become the epitome of innovation and success in the retail food product industry. In 1996 Nestle established the Nestle Environmental Management System (NEMS) in an attempt to produce more environmentally friendly products. NEMS required innovative eco-design in the company’s products and activities, and gave......

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