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Nestle's Global Strategy

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NESTLE: GLOBAL STRATEGY
1. Does it make sense for Nestle to focus its growth efforts on emerging markets? Why?
It does make sense for Nestle to focus its growth on emerging markets. It currently already has a significant presence in most segments of the market in developed markets, and further growth requires either taking market share from competitors or entering new product segments. Both of these are expensive undertakings that must be continually repeated to sustain growth above the level of economic growth. In contrast, if it gets a good foothold in emerging markets, it will be in a good position to grow with the market as the purchasing power of consumers’ increases. It can also progressively bring new products to these markets, accelerating its growth.

2. What is the company’s strategy with regard to business development in emerging markets? Does this strategy make sense?
Nestle tries to enter emerging markets ahead of competitors, and build a substantial position in basic foodstuffs. As income levels rise, the company progressively moves from these niches into more upscale items. It very much focuses on developing local goods for local markets, and places relatively less emphasis on its global brands in emerging markets. It also localizes its distribution and marketing strategy to the requirements of the local market. When good opportunities are available, Nestle acquires local firms. Given significant differences in various developing markets, and different food preferences of different cultures, this customized approach makes sense.

3. From an organizational perspective, what is required for this strategy to work effectively?
For this strategy to work it is important that local units be given a great deal of autonomy to make decisions that will best serve the interests of the local market. Excessive oversight or direction from...

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