Nestle Formation Strategy

INTRODUCTION
The strategic management process is based on the belief that organization should continuously
monitor internal and external events and trends so that timely change can be made as needed. An
organization must be capable of wisely identifying and adapting to change. In this report, I will
choose Nestlé S.A, one of the most successful food processing company in the world to discuss its
strategy management process.

2.0 COMPANY PROFILE
Nestlé S.A. is the world’s largest food processing company and is headquartered in Vevey,
Switzerland. The company was founded by Henri Nestlé in 1866. Nestlé Company had made
several name changes from 1866 to 1947, and finally adopted Nestlé S.A. in 1977 as the company’s
name. Nestle S.A. has factories or office in almost every region of the world and markets a wide
range of brands. The company is often described as "the most multinational of the multinationals." in
the current food industry market.
Henri Nestlé, also know as of the main originator of condensed milk. In 1867, he developed the first
milk food for infants and a baby who could not be breast-fed was rescued. Nestlé’s invention
responded to the need for a nutritionally safe alternative to breast milk. Thus, Nestlé S.A has
targeted to build a business based on sound human values and thoughts.

The key to success of the company is due to its huge Research and Development network within the
food processing industry. With R&D as the competitive advantage, Nestlé has become the world’s
leading nutrition, health, and wellness company. The company is devoted in continuing to improve
the nutritional value of their products while enhancing the flavour. Nestlé achieves this through its
brands and with initiatives like the Nutritional Compass and 60/40+. Millions of people choose to
consume Nestlé products everyday because the company sustain the quality as the fundamental
ingredient in all of its brands. Consumers choose to place their trust in Nestlé due to the company’s
dedication to achieve distinction and turn to Nestlé brands to preserve nutritional balance in today’s
fast paced world.

Switzerland-based Nestlé S.A. has the highest ranking as the largest player throughout the entire
world in the competitive position within the food industry. The rating reflects the company’s
competitiveness and market attractiveness. With combined sales of 110 billion (Swiss Franc) in
2008, Nestlé states a diversified business portfolio, being the market leader in numerous product
categories worldwide including bottled water, instant coffee, milk and cheese products, nutrition and
baby food, ice cream, frozen foods, culinary preparations, and coco products. Nestlé's broad
geographic coverage includes North America and Europe as well as Asian markets.

The vision of Nestlé R&D is long term, it helps shape the future of foods making consumer needs
into research priorities and convert new technologies into consumer benefits, and services.

3.0 STRATEGY ANALYSIS
3.1 Environmental Scanning
Environmental scanning has the management scan internal environment and external environment.
The factor which are the predominant factor for an organization factor is SWOT standing for
strengths, weaknesses, opportunities and threats.

3.1.1 SWOT Analysis
SWOT analysis is a strategic planning method developed by Albert Humphrey using data from
Fortune 500 companies in the 1960s and 1970s.
3.1.1.1 Internal Environment
Strengths
Strengths include anything a company does well and its resources and capabilities for developing a
competitive advantage.
The greatest strength of Nestlé is culture that is team focused and an open door policy. Nestlé
focuses on collectivism and performance orientation attitude which encourages employees to work
harder.
Nestlé achieves broader range of products by improving existing and innovating new products.
Consumer demands are switched to changes of taste, colours and design that have been
undertaken to products such as Nestlé’s Smarties and Kit Kats. The launch of Kit Kat Chunky has
proven that creativity and innovation can extend the life cycle of a product.

Weaknesses
The lack of certain strengths and things a company does not do well are viewed as weaknesses.
Nestlé is poor in targeting some of its products.
Nestlé MilkPak is a premium product targeted to upper middle and high class consumers. Most
consumers in Pakistan are from lower middle and poor class. They are not afford to purchase it due
to the premium price.
Nestlé has a complex supply chain configuration too and traceability is a critical issue for Nestlé
India. High standards of hygiene, quality of edible inputs and workforce are required in the food
industry. Fragmented nature of the Indian market will cause more problems.

3.1.1.2 External Environment
Opportunities
The external environmental analysis a firm’s new opportunities for profit and growth.
Nestlé in Pakistan has a great opportunity for expanding its milk products because Pakistan is the
seventh major milk producer in the world with annual output more than 22 billion litres.

Threats
Adjustments in the external environment present threats to a firm. For an example, shifts in
consumer’s preferences.

The major threats to Nestlé’s products is Unilever’s Walls, a famous ice-cream brand. It is distributed
nationwide and has total control within the local market.
Besides, economic slowdown can reduce demand, and inflation is getting higher and higher causing
the purchasing power of consumers is decreasing day by day.

3.1.1.3 General Environment
PEST Analysis
Pest Analysis is used to illustrate a structure for the analysis of macro-environmental factors.

Political
Political factors include a country or government’s regulations and legal issues and rules which a
firm must follow. For example, Nestlé’s famous brand Milo.

Place an Order
The product stay within the law in all countries including being aware of legislation health and safety,
commercial standards, consumer protection and trade description.

Economical
Economic factors such like economic growth, exchange rate and inflation rate will influence potential
customers’ purchasing power and the firm’s cash flow.
During recession, customers have less disposable income, demand for Milo might drop in the
market.

Social
Social factors comprise the cultural aspects and demographic of the external macro-environment.
These factors influence customer needs and potential markets’ size.
The society are more aware of health conscious nowadays, Nestlé can build up Milo as a new
fashionable drink like 100 plus in the fitness industry.

Technological
Technological factors can reduce barriers to entry, improve products quality and influence
outsourcing decisions.

Advance in science allows Nestlé to improve its product such as Milo, the company can add energy
and healthier formula to Milo.

3.2 Porter's Five Forces Analysis

Michael E. Porter developed Porter’s five forces in 1979. It is a framework that helps marketer to
differentiate a competitive environment.

Threat of substitute products

An analysis of the threat of substitute products will identify the consumers of a company might switch
their purchasing alternative. There is a tendency for food and beverages manufacturers to produce
broad range of products. These products may compete with one another to gain market share and
become substitute for each other.

Nestlé Koko Krunch Cereal can be the substitute for Nestlé Nesvita cereal drink since both of them
are intended for breakfast consumption.
Nestlé is not offering all kinds of food and beverages, those unoffered kinds may act as the
substitutes for the Nestlé’s products. For example, Nestlé has coffee in its product lines which is
Nescafé, the substitute for it can be the soft drinks which are not in the portfolio of Nestlé. In this
case the substitutes are very broad.

Bargaining power of suppliers

An analysis of the bargaining power of suppliers will identify the changing price, quality and service
of suppliers without consequence. Supplier power can be different due to seasonal or economic
cycles. Supplier power is increasing as many of the food processing companies are not producing
their own raw materials.
Nestlé itself gets material in the form of raw or semi-processed directly from farmers and trade
channels.
By considering the number of suppliers in the industry and the switching cost, the dependency to a
particular supplier can be reduced. Nestlé has operations in many countries throughout the world, if
one supplier unable to offer good price for Nestlé, it can switch to other suppliers.
The bargaining power of supplier depends heavily on the strength of the company’s brand. Big
companies such as Nestlé can take advantage in bargaining.

Bargaining power of buyers

Food processing industry is very broad and rivals can come out with numerous product selections.
When the companies step into the maturity stage, they will have even more products provided to
strengthen the company’s brand.
Nestlé Milo has strong market share and remains a constant favourite amongst Malaysia
consumers. In order to further strengthening the brands image, the company added Milo Gold to its
product range to keep the consumers loyalty towards the product.
Threats of new entrants
An analysis of the threat of new entrants will identify entry barriers within an industry. Industries with
high barriers to entry will face low risk from new competitors than an industries with low barriers to
entry.

The competition of ice cream business in Pakistan is very small. This could create chances for other
international ice cream brand to penetrate their products to compete with Nestlé in Pakistan. The
major substitutes of Nestlé’s ice cream would be Walls ice cream and Hico ice cream.

Competitive rivalry within an industry

Rivalry among competing firms is the utmost of the five competitive forces. Firms within the same
industry are competing with one another to gain customer share to increase profitability. The
competitors are of roughly equal size which can make the competition even stiffer. They will attempt
to gain dominance over another.
Nestlé and General Mills have joint ventured for breakfast cereal market. By having such joint
venture these two companies can achieve better success instead of competing with each other.

3.3 Value Chain Analysis

Value chain analysis is a development for understanding the general factors and conditions under
which a value chain and its firms can achieve higher levels of performance.

Manufacturing and the environmental footprint

Nestlé has a great commitment to the environment.
They put in great efforts to protect the access of water and ensure everyone’s responsibilities as
water users.
Nestlé moves to different fuel types to produce their products to improve the environmental
performance.
One of the significant steps in the value chain is transport. Nestlé initiated an experiment with
Schenker, to evaluate the effect of different types of transport, distances driven and fuel type used to
create a better environment.

Nestlé’s employees
The company determined by skilled and motivated workforce for continued success.
Nestlé includes many nationalities, religions, and ethnic groups working together in one single
unifying corporate culture.

Farmers and Agriculture

Nestlé always assist farmers to be successful suppliers.

This great effort is helping the entire region to develop a positive long-term impact to boost economic
performance.
Nestlé share good environmental and water management practices with farmers by carrying out
agricultural programs.
Nestlé insist code of ethics to maintain good and long-term relationship with their suppliers.

Products and consumers

Nestlé strengthens its brands and customers’ loyalty to respond to consumers changing
preferences.
Nestlé preserves the nutritious in its products while enhancing the flavour and improve the quality of
their products.
According to Julio Frenk, former Secretary of Health Mexico, from his experience in Mexico, he
believes that Nestlé is delivering genuine shared value through its products in the society.

3.4 Benchmarking
A company should has its benchmark to improve quality of its products.
In June 4, 2009, Nestlé started make use of ASSET4 to benchmark its environmental, social and
governance (ESG) performance.
ASSET4 is the top supplier of idea, comparable, and auditable extra-financial information.
According to Nestlé’s head of Investor Relations, Roddy Child-Villiers said that Nestlé is committed
to improve its ESG performance via Creating Shared Value, which build continuous business
triumph and the establishment of shareholder value to the creation of value for society at large.

4.0 STRATEGY FORMULATION

Strategy formulation is the second stage in the strategic management process. In the aspect of
corporate strategy, the current objectives and strategies of Nestlé will be discussed as well as
suggestions given on how Nestlé to be more successful in the food processing industry. For
example, what amendments should be made to achieve the development objectives and strategies
of Nestlé, the lines of business that Nestlé is in now, and how these lines of business fit mutually.

There are three main components fall under corporate strategy. These components include
directional strategy, portfolio analysis and parenting strategy.

4.1 Directional strategy
Directional strategy refers to a firm’s overall orientation towards growth, stability and retrenchment.

4.1.1 Growth strategy
Growth strategy has two fundamental categories, concentration within existing industries and
diversification into other lines of business or industries. In this report, I will choose to discuss the
concentration strategy of Nestlé. Concentration strategy can be achieved via merger and acquisition
(M&A).

M&A have emerged and are widely used in many industries today. Nestlé has been using these form
of strategic alliances to link technology gaps and resources, to recruit expertise and obtain market
positions. M&A are essential and potentially useful for a company that wishes to enter a new
industry and new markets.

Merger
Merger is defined as the combination of companies.
In 1905, Nestlé S.A was formed by the merger called the Nestlé and Anglo-Swiss Milk Company.
Nestlé stepped outside the food industry for the first time and diversify its business in the cosmetic
industry. In 1974, Nestlé became a major shareholder in L'Oréal, one of the world's leading makers
of cosmetics.

Acquisition
Acquisition is the act of purchase or takeover of a company that is completely absorbed by the
subsidiary or division of the acquiring corporation.

Since 1985, Nestlé has made over 50 acquisitions. Nestlé's growth strategy began with acquisitions
to diversify its product offering.
In the early 1990s, it used acquisitions to expand geographically. More recently, Nestlé has focused
its acquisitions on growing a select number of very attractive businesses in markets where it can
achieve leadership positions.
For example, Nestlé has acquired Frozen Food in 2010. The factors of the acquisition are due to
Frozen Food’s number one position in United Stated and Canada as well as strong growth profile in
North America by proving fast recovery in times of economic downturn.

Meanwhile, concentration strategy includes two strategies which are vertical growth and horizontal
growth. I will choose horizontal growth of Nestlé’s for further discussion. Horizontal growth refers to
the expansion of operations into other geographic locations and enlarging the variety of products
and services offered to current markets. Horizontal growth can be achieved via joint venture. As an
example, in 2001, Coca-Cola Company and Nestlé S.A. continue their existing joint venture
business, Coca-Cola and Nestlé Refreshments. This co-operation will be renamed Beverage
Partners Worldwide (BPW) to emerge their beverage segments, especially ready-to-drink tea.

4.1.2 Portfolio Analysis
Portfolio analysis is basically a product portfolio in which a company rank their products and where
their products are stands in the market. There are two popular portfolio analysis techniques that will
be used to analyse Nestlé’s portfolio. There techniques include BCG Matrix (Boston Contingency
Group) and GE Business Screen. For this report, BCG Matrix is selected to explain the current
standing of Nestlé’s brand in India.

BCG Matrix
In 1960, Bruce Henderson, president of the Boston Consulting Group design BCG Matrix to develop
business strategy. There are four categories of product position which are stars, cash cows, dogs,
and question marks.

Stars
When an industry is growing and the share of a firm is high as well, then the firm is the leader in
business.

Nestlé’s Nescafé is one of the leading coffee brands in the Indian market.

It has the strong position in the market which is incomparable by other brand within the country.
Nescafé has high market share in the industry as well as the growth rate is significantly high.

In addition, the name of Nescafé has become generic with coffee.

Cash Cows
When the industry growth is low but the firm has high market share, then the firm’s products are
considered Cash Cows.

Nestlé’s Maggie Noodles has more households of consumption in India and has become the first
preference of Indian children in terms of instant food, yet it is still considered as Cash Cows, not a
star.

It has a significantly high market growth rate in the Noodles market in India, but the market growth
rate of Noodle consumption is not very high.

Question marks
Question marks refer to products with the potential to penetrate into the market and succeed but will
require a lot of cash for development.

Maggie Pickles has limited variety especially in this taste crazy country, India.
Maggie Pickles is doubted for two main reasons. The first reason price and packing of the product is
high, which seems to target customer from upper class.

The second reason is it lack of significant number of alternative, therefore it is a challenge to

maintain itself in the market. Thus, it is suggested that Maggie Pickles to review its packaging and
price so every citizen in India can afford to purchase the product.

Dogs
If the industry growth is low and a firm’s share is instability or low, then the products of the firm is
considered dog.

Nestlé’s Dahi is considered Dog because people in India was unaware that Nestlé offers a Dahi.

The product is facing competition from Amul’s Masti Dahi.

The concept of Dahi’s packaging is not favourable by the consumer who prefer to play it safe with
the local manufacturer. Nestlé Dahi is placed in as a Dog due to lack of growing market. It is
recommended that Nestlé has to think on what it can do to make everyone in India recognize Nestlé
Dahi.

4.1.3 Corporate Parenting Strategy

Corporate parenting strategy is developed to examine each business unit in terms of its strategic
factors, areas in which performance can be improved, and analyze how well the parent company fits
with the business unit.

Horizontal strategy
To expand a business to another geographic location, extra cost such as import duties, logistics and
other packaging requirements will weigh down a products launch in the targeted region. Hence
building an overseas plant or subcontract the manufacture of the product to a licensed local
manufacturer.

Nestlé’s has many manufacturer in almost every country in the world to manufacture its products.
This strategy has helped Nestlé to cut down the extra costs as I have mentioned above.

Multipoint competition
Multipoint competition refers to a multinational organization compete against other multinational
organizations in a number of markets.

Nestlé competes in a wide range of geographic areas in addition of broad range of product
categories. Therefore it faces competition from multinational companies such as Unilever and Philip
Morris with similar product lines that cross regional bounds. Since Nestlé is facing this type of
competition, it is suggested that Nestlé must compete briskly across its worldwide customer base.

5.0 STRATEGY IMPLEMENTATION
Strategy implementation is the third stage in strategy management. In order to carry out the
formulated strategies, Nestlé needs to establish annual objectives, planning policies, motivation
employees and allocate resources. This stage is also known as the action stage of strategic
management and it is often considered to be the most complicated stage. It needs the collaboration
from all the employees at all levels in Nestlé in terms of personal discipline, commitment, and
sacrifice. In this stage, I will discuss several issues that will affect to Nestlé during the process of
strategy is being implemented.
5.1 Management Issues
Management changes are essentially more extensive when strategies to be implemented move a
firm in a major new direction. I will select several factors from the management issue to discuss how
are they going to affect Nestlé’s organizational performance.

Annual Objectives
Annual objectives are especially important in strategy implementation, whereas long-term objectives
are particularly important in strategy formulation. Annual objectives represent the basis for allocating
resources.

Resources
Nestlé need at least four types of resources in order to achieve desired objectives.

Financial resources. One of the major strengths of Nestlé is its R&D which contribute a lot in
supporting the company’s strategy implementation. In 2006, Nestlé invested CHF 1.73 billion in R&D
and over CHF 1.5 billion in Venture Capital. Thus, the company needs sufficient financial resources
in order to continue its R&D.

Physical resources. Nestlé has a committed sales force which is the major resource strength in
terms of physical resources. It is very important as part of the company’s success particularly after
the strategy is implemented, and the employees able to develop markets and sell its products.

Human resources. Human resources is one the significant concern while implementing strategy
because it is the backbone of any organization. The fact that Nestlé is more people and product than
system oriented reflected in the way HR is functioning and is organized.

Technological resources. R&D at Nestlé is an international group of science and technology

centres of excellence. Its R&D has a long tradition of building its own machines based on extensive
in-house engineering experience. Proprietary technological claims in all products categories assist
Nestlé to maintain and improve its position as market leader.

Rewards and Incentives

The Real Rewards in Nestlé USA’s investment in you is a comprehensive package for waged
employees. Compensation is a key part reward of Nestlé USA’s Real Rewards package to help to
attract, motivate, and retain a workforce of top performance. There are three types of compensation
of the Real Rewards package.

Base Pay. Based Salaries are designed to be competitive which based on data specific to different
position as measure in marketplace. High performance over time is recognized by base pay that is
higher than the market.

Short-Term Incentives. Short-Term Incentives Pay is designed to reward employees (typically

yearly) for their accomplishments and contribution to Nestlé USA’s success.

Long-Term Incentives. Nestlé USA’s Long-Term Incentives Plan are designed to motivate and
reward those in eligible leadership position for the company’s sustained success for a longer period,
often three years or more.

Human Resources
Nestlé Human Resources Policy encompasses those guidelines which represent a sound basis for
effective and efficient HR management in the Nestlé Group around the world. Learning is part of the
company culture in Nestlé. Employees at all levels is conscious of the need to upgrade constantly
his or her skills and knowledge to achieve personal and organizational goal.

5.2 Marketing Issues
Marketing variables can determine the success and failure of strategy implementation.

Market Segmentation
Marketing segmentation is the process in marketing of grouping a market to identify different groups
of customers with different needs or responses to marketing activity. Consumer can be segmented
on the following characteristics.

Geographic Segmentation, Region. People would prefer to drink juices during the hot weather or
summer season. The marketing team can segment the market on the basis of high temperature
zones. To boost the demand of its juices products, they can focus more in the region where the
consumption remains almost the same all the year around.

Demographic Segmentation, Gender. Women will be the best targeted customers as they usually
shop for their family. When they are convinced that the juices will be good for the health for their
family, they will eventually purchase.

Psychographic Segmentation, Life style. People belonging to luxury life style tend to spend more
on luxuries as compared to people in the lower class.

In strategy implementation, market segmentation is an important variable. It allows Nestlé to operate

with limited resources due to unnecessary of mass production, mass advertising and mass
distribution. The market segmentation decision directly affect the marketing mix variables.

Marketing Mix
Product strategy. Nestlé juices main competitive advantage is its quality leadership. The company
aim provide the original and best quality to their customers and fulfill their need.

Place an Order
Place strategy. In Pakistan, Nestlé established the distribution channels for its juices products in
famous cities such as Karachi, Lahore and Gujranwala. Then they acquired maximum two to three
suitable distributors in these cities to hinder from their own competition.

Promotion strategy. The marketing team of Nestlé use various sources to promote their target
marketing. Sources used such like TV, Newspaper and Billboard to advertise their products. When
Nestlé launches new juice, the marketing team will use the promotion strategy that are mentioned to
spread the awareness of their brand.

Price Strategy. Nestlé juices are available six flavored and two size. The packing of 200ml size is
targeted for individual customer while 100ml packing is targeted for whole family. They charge price
premium since they provided high quality and 100% clear juices other than competing low cost with
their competitors. Nestlé juices contain maximum profit margin compared to theiProduct
Positioningr rivals.

After segmenting markets, Nestlé can target particular customer groups, the next step is to find out
what customers wants and needs. In 2009, Nestlé launched two fortified juice drinks for children,
Juicy Juice Brain Development and Juicy Juice Immunity.
Customer wants. Children are targeted easily targeted for these two juice drinks because they can
choose three flavours that are available including apple, berry and grape flavours in these two juice
drinks.

Customer needs. Parents are very concerned with their kids’ development. Therefore, these two
juice drinks are specifically targeting brain and immune development in under five age group.

5.3 Research & Development Issues

R&D is an investigative activities that a business choose to conduct with the purpose of discovering
new products and to improve the existing products. Nestlé is the global leader in the food processing
industry with regard to R&D. The R&D expert team in Nestlé have provided best practices and help
in the company’s implementation. For example, the R&D structure offers the flexibility to use the
huge sources of local ideas, bring them back and develop them for the global implementation.

The major advantages of Nestlé R&D include:

The company attract the best scientist and engineers from top-level universities who want to work
and partner with them.

To build plants, expand, grow, and market products and services more efficiently.

6.0 CONCLUSION
In a nutshell, it is not easy to maintain the position as the world leader in food processing industry
like Nestlé. A company must be able cope with any unexpected changes in order to survive and
compete in the world of business.

Posted 8th December 2014 by Mr Moore

http://emerexalba.blogspot.com/2014/12/nestle-formation-strategy.html

Steps in Strategy Formulation Process

Strategy formulation refers to the process of choosing the most appropriate course of action for the
realization of organizational goals and objectives and thereby achieving the organizational vision. The
process of strategy formulation basically involves six main steps. Though these steps do not follow
a rigid chronological order, however they are very rational and can be easily followed in this order.

1. Setting Organizations’ objectives - The key component of any strategy statement is to set the
long-term objectives of the organization. It is known that strategy is generally a medium for
realization of organizational objectives. Objectives stress the state of being there whereas
Strategy stresses upon the process of reaching there. Strategy includes both the fixation of
objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider
term which believes in the manner of deployment of resources so as to achieve the objectives.
 While fixing the organizational objectives, it is essential that the factors which influence the
selection of objectives must be analyzed before the selection of objectives. Once the objectives
and the factors influencing strategic decisions have been determined, it is easy to take strategic
decisions.

2. Evaluating the Organizational Environment - The next step is to evaluate the general
economic and industrial environment in which the organization operates. This includes a review
of the organizations competitive position. It is essential to conduct a qualitative and quantitative
review of an organizations existing product line. The purpose of such a review is to make sure
that the factors important for competitive success in the market can be discovered so that the
management can identify their own strengths and weaknesses as well as their competitors’
strengths and weaknesses.

After identifying its strengths and weaknesses, an organization must keep a track of competitors’
moves and actions so as to discover probable opportunities of threats to its market or supply
sources.

3. Setting Quantitative Targets - In this step, an organization must practically fix the quantitative
target values for some of the organizational objectives. The idea behind this is to compare with
long term customers, so as to evaluate the contribution that might be made by various product
zones or operating departments.
4. Aiming in context with the divisional plans - In this step, the contributions made by each
department or division or product category within the organization is identified and accordingly
strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic
trends.
5. Performance Analysis - Performance analysis includes discovering and analyzing the gap
between the planned or desired performance. A critical evaluation of the organizations past
performance, present condition and the desired future conditions must be done by the
organization. This critical evaluation identifies the degree of gap that persists between the actual
reality and the long-term aspirations of the organization. An attempt is made by the organization
to estimate its probable future condition if the current trends persist.
6. Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course of action
is actually chosen after considering organizational goals, organizational strengths, potential and
limitations as well as the external opportunities.

https://www.managementstudyguide.com/strategy-formulation-process.htm

Formulation and implementation of Business Strategy-

Nestle

Task: 1
 AC 1.1: Explain Business strategy, Vision and Mission. Choose an UK Business organization and briefly
explain how its business strategies are related to their Vision, Mission, scope and business
environment.

Business Strategy

A business strategy is the methods by which it embarks to accomplish its wanted targets. It can
just be portrayed as a long haul business planning. A business strategy is concerned with real
asset issues e.g. raising the fund to fabricate another processing plant or plant. (Teece, 2010)

Vision and Mission

A Mission Statement characterizes the organization's business, its targets and its approach to
achieve those goals. A Vision Statement portrays the sought future position of the organization.
Components of Mission and Vision Statements are regularly consolidated to give an
announcement of the organization's reasons, objectives and qualities. (Heritage, 2011)

How Nestle business strategies are related to their Vision, Mission, scope and business environment?

Strategies of any organization are figured on the premise of its vision, mission, degree and
business environment. Same is the situation with Nestle UK, Which is subsidiary of Nestle. On
the off chance that you experience the vision and statement of purpose, degree and business
environment of the Nestle and afterward study its systems which have been planned you come
about that these have been figured to attain its vision, mission and these are inside the extent of
the organization and are additionally as per its business surroundings.

AC1.1 and 1.2

a)      Identify the steps of Strategic planning. Briefly explain if strategic planning is a

one off issue or a continuous process and review the matters involved in this
process.

The following are steps involved in strategic planning.

1.      identify particular issues or decisions that the planning methodology ought to address

2.      articulating Mission and Vision

3.      assessing the Situation

4.      developing Goals, Strategies, and Objectives

5.      Completing the Written Plan (Lorange, 2008).

Strategic planning is continuous process. Significantly under the best of circumstances, planning
may bring about objectives that are inadequately chosen, and methods that fizzle. After the
execution of strategy, there are two more steps which are rehashed consistently. (Powell, 2012)

Study

When an arrangement has been actualized, the following step is to study the effect of that usage.
For example, assume an organization plans and actualizes another wellbeing project intended to
lessen the quantity of on location mishaps in an assembling plant. As the arrangement is
actualized, the organization thinks about the effect of the arrangement on wellbeing levels. In
the event that wellbeing levels enhance, the organization will expect that the arrangement had a
positive effect. In the event that wellbeing levels continue as before or decrease, the organization
will expect that the arrangement did not have a positive effect. (Cherry, 2014)

Act

In view of the results after arrangement execution, organizations then make a move. In the event
that the results have been positive, the organization will keep on executing the arrangement and
maybe spread the plan to different parts of the association. On the off chance that the
arrangement has not been a win, the organization will consider what it has realized and start the
planning cycle- -arrangement, do, study, act- -once more, as a major aspect of its persistent
change endeavors. (Mason & Mitroff, 2011)

(b)       Classify the four levels of management in a diversified company and briefly show the
responsibilities of each level of managers to decide and implement Vision, mission, objectives and
strategies to achieve goals.

There are three Levels of Management in a diversified company.

Top Level of Management The top level management decides the goals,
strategies and arrangements of the association.
They assemble accessible assets. They plan long
haul arrangements of the association. The
achievement or disappointment of the
 association generally relies on upon their
proficiency and choice making.

Middle Level of Management Middle level management offers suggestions to

the top level management. It executes the
strategies and arrangements which are made by
the top level management. It co-ordinate the
exercises of every last one of divisions. They plan
transient arrangements of their areas of
expertise. They are delegate in the middle of top
and lower management.

Lower Level of Management Lower level management coordinates the

workers. It keeps up a connection in the middle
of laborers and the middle level management.
The lower level management educates the
specialists about the choices which are taken by
the management. They likewise educate the
management about the execution, challenges,
sentiments, requests, and so on. Of the laborers.
The lower level managers make every day, week
by week and month to month plans. They have
restricted power yet vital obligation of
accomplishing the work from the specialists.

AC1.3: Explain Ansoff matrix, BCG growth-share matrix; directional policy matrices as planning
techniques to meet the objectives of shareholders.

Ansoff Matrix

To depict elective corporate development methods, Igor Ansoff displayed a grid that concentrated on
the company's available and potential items and markets (clients).

Existing Products New Products

Existing
Market
 s Market Penetration     Product Development    

New
Market     Market
Diversification
s Development    

Ansoff's grid gives four diverse development methods:

         Market Penetration - the firm looks to accomplish development with existing items in their current
business fragments, expecting to build its piece of the overall industry.

         Market Development - the firm looks for development by focusing on its current items to new market
sections.

         Product Development - the organizations creates new items focused to its current business portions.

         Diversification - the firm becomes by differentiating into new businesses by creating new items for new

(Watts, Cope & Hulme, 2008).

The BCG Growth-Share Matrix

This matrix: classes the business units into four classifications on the premise of their
development and relative pieces of the overall industry.
BCG Growth-Share Matrix
The four classes are:

         Dogs - Dogs have low piece of the overall industry and a low development rate and therefore not create
or devour a lot of cash. Then again, dogs are cash traps due to the cash tied up in a business that has
minimal potential.

         Question marks - Question marks are developing quickly and consequently expend a lot of cash, but
since they have low pieces of the pie they don't create much cash.
         Stars - Stars create a lot of cash as a result of their solid relative piece of the overall industry,
additionally devour a lot of cash due to their high development rate; consequently the cash in every
bearing more or less nets out.

         Cash cows - As pioneers in an adult business, cash cows display a profit for resources that is more
prominent than the business sector development rate, and in this way create more cash than they
devour.

(Smith, 2012)

Directional policy matrix

This tool employs two variables:

         the Business Position (i.e. measures the aggressive position and business sector execution of the
organization)

         the Business Sector Prospects (i.e. is the part in a developing or declining area)

(Robinson, Hichens, & Wade, 2008).

To achieve M1 you need to show that an effective research has been applied to justify the significance
of strategic planning and its nature.

Strategic planning is essential to an association in light of the fact that it gives an ability to read a
compass and diagrams measurable objectives. Strategic planning is a device that is valuable for
managing regular choices furthermore for assessing advancement and changing methodologies when
getting up and go. Keeping in mind the end goal to take advantage of strategic planning, your
organization ought to give cautious thought to the strategic destinations it diagrams, and afterward go
down these objectives with reasonable, altogether looked into, quantifiable benchmarks for assessing
results.

Task: 2

AC 2.1 Carry out a current SWOT analysis (organizational audit) of your chosen company using facts.
Strengths

One of the greatest strengths of Nestle is the brand picture that it has. Its brands, for example, Kitkat,
Nescafe, and Nesquick are very nearly synonymous with the brand name. The organization likewise has
the overwhelming money related muscle to put resources into its innovative work which can further
improve its product offering and additionally put resources into advertising.

Weaknesses

One shortcoming of the organization is that it has needed to review a number of its items because of
terrible quality and that has enormously hampered its image picture. The organization likewise is the
focus of being boycotted as a result of media weights and environmentalists for participating in non-
green practices and use of youngster work.

Opportunities

The way that Nestle has gone from being just a nourishment brand to being sustenance and prosperity
brand is a decent open door for the organization as it opens a lot of people new territories for product
offering augmentation. Going into developing markets and creating assembling plants likewise helps the
organization in decreasing its expenses.

Threats

The food business is likely a standout amongst the most soaked commercial ventures on planet.
Remembering this Nestle confronts the extremely solid risk of rivalry. The climbing costs of crude
materials, fuel nations where settle has set up their creation plants likewise debilitates to cause
instability in the supply line. (Dyson, 2009)

AC 2.2 Conduct a PEST analysis (environmental analysis) of your chosen company.

Political:

Since the UK is a piece of two major political unions, United Nations and EU; it permits the option to
exchange proficiently both locally and universally. Regardless of having both a government and a
parliamentary manifestation of government, the administrative framework is decently adjusted and the
basic law is honed.

Economic:
UK is the third biggest economy in Europe after Germany and France. Because of the economy without
further ado being in a low development stage it is exceptionally vital for Nestle to comprehend the
business and concoct items and techniques where it could keep on offering the same elevated
requirement of items that it offers but attempt and moderate expenses.

Social:

Around 66.2% of the Population of UK lies between the age sections of 15-64 years. This implies that
there is an expansive work power accessible however a dominant part of populace is likewise maturing.

Technological:

The UK is a technologically progressive nation with overwhelming concentrate on innovative work and
figured supported recreations and outlines. This is a positive point for Nestle as Research and
Development is a key preference for the organization.

Environmental:

The administration of the United Kingdom pays weight on organizations doing their operations on
environmental amicable standards. Since Nestle is an organization that is inside the nourishment and
sustenance industry accordingly the environmental consistence is amazingly fundamental for it. (Paul,
2009)

AC 2.3 Develop a stakeholders mapping of your company and explain the significance of stakeholders’
analysis

Keeping in mind the market in which Nestle operates in, there is requirement of Porter’s five
forces model analysis.

Threat of New Entrants:

Settle regardless of being in a foods and nourishment industry confronts the genuine risk of new
contestants in the business. There are low obstructions to section and a lot of people little household
players can enter the business and test the business sector of settle through their evaluating or item
offering which is custom-made to the neighborhood society and tastes.

Bargaining Power of Suppliers

Nestlé’s suppliers bargaining power is low. That is on account of Nestle being such a titan in the business
sector can bring bunches of new business to the suppliers and along these lines the suppliers need to
create the crude materials as indicated by the blueprints set by the organization or they can be
supplanted.

Bargaining Power of consumers:

Nestle’s consumers’ bargaining power is high. That is on account of it is a brand which extraordinarily
depends on buyer thankfulness for the item. On the off chance that an item is propelled in any piece of
the world where the consumers dislike the taste, they will decline to purchase it.

Threat of Substitutes:

Risk of substitutes for Nestle is likewise high. In every aspect of its operations there are numerous
different firms that are offering either comparable items or substitute items. For this reason Nestle
needs to guarantee that it offers an item encounter that can't be imitated and is requested by its
consumers.

Industry Rivalry:

Industry competition for Nestle is high. In United Kingdom it confronts risk of rivalry from brands like
Kellogs et cetera.

Significance of stakeholder’s analysis

Stake holders analysis; poplar one is porter’s five forces model. The model is huge on the grounds that it
focuses an organization's aggressive surroundings, which influences profitability. The bartering force of
purchasers and suppliers influence a little organization's capacity to expand costs and oversee costs,
individually. Be that as it may, if there is one supplier for a specific segment, then that supplier has
bartering control over its clients. Low-entrance hindrances pull in new rivalry, while high-passage
obstructions debilitate it.

To achieve M1 you need to show that an effective judgment has been made to develop and explain
the stakeholder analysis of your company.
Following are few of the observations were made to develop and explain the stakeholder analysis of
Nestle.

Stakeholders asked Nestlé to articulate and leverage the connections between issues. 
They observed, for instance, that nutrition and rural development is closely linked. Nutrition and the
living wage are also linked (workers and farmers who cannot afford to feed their families); as are water
and human rights (all people have a right to water and a right to sanitation).

Stakeholders would like to see Nestlé use its influence and convening power to enable collaboration and
partnerships in order to build ‘the enabling environment’.(Bhattacharya, Sen,& Korschun, 2011)

Above mentioned stakeholders’ perception, and desire influence the company make strategies for their
concerns and the company act on most of opinion of its stakeholders.

To achieve M2 you need to demonstrate that a range of sources of information has been used to
explain the impact of PEST and SWOT analysis on your chosen company.

As indicated by a scope of assets, in the wake of doing PEST analysis Nestle UK comprehended their
business better, tended to weaknesses, deflected threats, profited by opportunities, exploited their
qualities, created business objectives and procedures for accomplishing them.

As indicated by a scope of assets, SWOT analysis of Nestle UK helped the organization to diminish the
effect and impacts of potential threats to the association. It additionally supported and energized the
advancement of strategic thinking inside the association. Given a system that empowered the
association to distinguish and adventure new opportunities. It likewise empowered the organization to
survey ramifications of entering new markets.

To achieve D1 your conclusions must be arrived at through synthesis of ideas and they have been well
justified.

It is sheltered to say that Nestle has a great deal of positive properties sponsorship its overwhelming
item portfolio and accordingly the organization has figured out how to maintain its position in the
 rundown of the fortune five hundred organizations. The organization through the utilization of effective
management systems, development, capital mixture and innovative work keeps on extending its
portfolio furthermore serves as a sample of an excellent sustenance and nourishment giving
organization. There are numerous claims against the organization and it is likewise for the most part
thought to be one of the world's most boycotted organizations and notwithstanding all off that the
incomes of the organization have scarcely drooped subsequent to its commencement. That is a
demonstration of their worth chain creation and streamlined methodologies that guarantee that settle
turns into a piece of the employment of the people.

References

1.      Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 172-
194.

2.      Heritage, C. (2011). Vision and Mission.

3.      Mason, R. O., & Mitroff, I. I. (20111). Challenging strategic planning assumptions: Theory, cases, and
techniques (pp. p-43). New York: Wiley.

4.      Lorange, P. (2008). Corporate planning: An executive viewpoint.

5.      Powell, T. (2012). Strategic planning as competitive advantage. Strategic Management Journal, 13(7),

551-558.

6.      Watts, G., Cope, J., & Hulme, M. (2008). Ansoff’s matrix, pain and gain: Growth strategies and adaptive
learning among small food producers. International Journal of Entrepreneurial Behaviour &
Research, 4(2), 101-111

7.      Smith, M. (2012). Derrick's Ice–Cream Company: applying the BCG matrix in customer profitability
analysis. Accounting Education, 11(4), 365-375.

8.      Robinson, S. J. Q., Hichens, R. E., & Wade, D. P. (2008). The directional policy matrix—tool for strategic
planning. Long Range Planning, 11(3), 8-15.

9.      Dyson, R. G. (2009). Strategic development and SWOT analysis at the University of Warwick.  European
journal of operational research, 152(3), 631-640.
10.  Paul, I. (2009). Critical evaluation of the significance of PEST factors in organizational strategic
planning. Publications Oboulo. com.

11.  Cherry, K. (2014). Nestlé. Strategic marketing management. GRIN Verlag.

12.  Bhattacharya, C. B., Sen, S., & Korschun, D. (2011). Leveraging corporate responsibility: the stakeholder
route to maximizing business and social value. Cambridge University Press.

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http://www.netmba.com/strategy/matrix/bcg/

http://strategycapstone.ning.com/page/directional-matrix

http://yourbusiness.azcentral.com/strategic-planning-important-organization-4103.html

http://www.inforefuge.com/nestle-australia-and-uk

http://www.academia.edu/5598619/Nestle_international_business_strategy

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The Five Stages of the Strategic Management Process

 by Jim Clayton; Reviewed by Jayne Thompson, LLB, LLM; Updated January 29, 2019

The strategic management process is more than just a set of rules to follow. It is a philosophical
approach to business. Upper management must think strategically first, then apply that thought to a
process. The strategic management process is best implemented when everyone within the
business understands the strategy.
Tip

 The five stages of the process are goal-setting, analysis, strategy formation, strategy implementation
and strategy monitoring.

Clarify Your Vision

The purpose of goal-setting is to clarify the vision for your business. This stage consists of identifying
three key facets: First, define both short- and long-term objectives. Second, identify the process of
how to accomplish your objective. Finally, customize the process for your staff, give each person a
task with which he can succeed. Keep in mind during this process your goals to be detailed,
realistic and match the values of your vision. Typically, the final step in this stage is to write a
mission statement that succinctly communicates your goals to both your shareholders and your staff.

Gather and Analyze Information

Analysis is a key stage because the information gained in this stage will shape the next two stages.
In this stage, gather as much information and data relevant to accomplishing your vision. The focus
of the analysis should be on understanding the needs of the business as a sustainable entity, its
strategic direction and identifying initiatives that will help your business grow. Examine any external
or internal issues that can affect your goals and objectives. Make sure to identify both the strengths
and weaknesses of your organization as well as any threats and opportunities that may arise along
the path.

Formulate a Strategy

The first step in forming a strategy is to review the information gleaned from completing the analysis.
Determine what resources the business currently has that can help reach the defined goals and
objectives. Identify any areas of which the business must seek external resources. The issues facing
the company should be prioritized by their importance to your success. Once prioritized, begin
formulating the strategy. Because business and economic situations are fluid, it is critical in this
stage to develop alternative approaches that target each step of the plan.
Implement Your Strategy

Successful strategy implementation is critical to the success of the business venture. This is the
action stage of the strategic management process. If the overall strategy does not work with the
business' current structure, a new structure should be installed at the beginning of this stage.
Everyone within the organization must be made clear of their responsibilities and duties, and
how that fits in with the overall goal. Additionally, any resources or funding for the venture must be
secured at this point. Once the funding is in place and the employees are ready, execute the plan.

Evaluate and Control

Strategy evaluation and control actions include performance measurements, consistent review of

internal and external issues and making corrective actions when necessary. Any successful
evaluation of the strategy begins with defining the parameters to be measured. These parameters
should mirror the goals set in Stage 1. Determine your progress by measuring the actual results
versus the plan.

Monitoring internal and external issues will also enable you to react to any substantial change in
your business environment. If you determine that the strategy is not moving the company toward its
goal, take corrective actions. If those actions are not successful, then repeat the strategic
management process. Because internal and external issues are constantly evolving, any data
gained in this stage should be retained to help with any future strategies.