MGT657: STRATEGIC MANAGEMENT

NESTLE MALAYSIA SDN BHD

COMPANY REVIEW AND STRATEGY PLAN

NAME MATRIC NO

AHMAD IZZUDDIN BIN MOHAMAD 2020964371

FAIZ AZIM BIN ROSLI 2020957765

FARAH IZZETY BINTI ABDUL AZIZ 2020993069

NURIN ADLINA BINTI ABDUL HALIM 2020935443

NURUL WARDINA BINTI AZLAN 2020978755

CLASS: BA2415B
LECTURER: MADAM MUNA WADIHA BINTI MOHD FAUZI
DATE OF SUBMISSION: 4 February 2022

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 NAME MATRIC NO PHOTO

AHMAD IZZUDDIN BIN 2020964371

MOHAMAD

FAIZ AZIM BIN ROSLI 2020957765

FARAH IZZETY BINTI ABDUL 2020993069

AZIZ

NURIN ADLINA BINTI ABDUL 2020935443

HALIM

NURUL WARDINA BINTI AZLAN 2020978755

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 EXECUTIVE SUMMARY

Nestle is a health, nutrition, and wellness corporation that sells, manufactures, and

distributes ready-to-eat meals and cooking equipment, medicines and ophthalmology products,

milk-based products, cereals, and baby food. The company operates across six zones that include

Zone America, Zone Oceania, Zone Africa, and Zone Asia. In 1866, Nestle was established by

Henry Nestle and the company's headquarters are in Switzerland. Nestle now employs roughly

339,000 people across the globe, due to the implementation of various business strategies and the

launch of new product lines.

Furthermore, the company aspires to be a market leader in the food industry, particularly

in the areas of health, wellness, and nutrition. Despite its market success, Nestle still has internal

and external difficulties that it must overcome in order to achieve its objectives. With the market's

dynamic, Nestle embraces change and develops goods that are suitable for its customers while

maintaining the quality of its original product range. The company's profit margins increased as a

result of improvements in technology, organization structures, marketing mix, operations, and

human resource management.

In addition, Nestle faces numerous obstacles, particularly external ones, which seem to be

increasing by the day. However, with difficulties come opportunities that must be pursued. Nestle

has a high level of customer credibility due to its high-quality products, as well as customer loyalty

and trustworthiness. It also has the potential to collaborate and form relationships with other local

industries in order to improve their image in the region in which they are based. With dynamic

comes new trends that must be embraced if specific markets are to be conquered. Hence,

competition is beneficial because it forces businesses to think and devise tactics to stay ahead of

the pack.

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 Last but not least, every firm exists in a community with goodwill in mind, these businesses

may easily establish positive relationships that will help them promote their products. Thus,

customer relations can be improved, and the environment can be saved through corporate social

responsibility

ACKNOWLEDGEMENTS

First and foremost, we would like to praise and thank the Almighty God for giving us the

strength and because of His blessing, we finally managed to accomplish this assignment. Without

His blessing, we wouldn’t have gone this far. This assignment cannot complete without effort and

co-operation from our group member, which are consist of Ahmad Izzuddin Bin Mohamad, Faiz

Azim Bin Rosli, Farah Izzety Binti Abdul Aziz, Nurul Wardina Binti Azlan and Nurin Adlina

Binti Abdul Halim. We always work hard to produce a good assignment with our full commitment

and responsibility.

Therefore, we would like to acknowledge our lecturer, Madam Muna Wadhiha Mohd

Fauzi, because without her guidance, our assignment cannot be done properly like this. She always

gives us support and advice on how to do our assignment in order to produce a good outcome. She

inspired us greatly to work on this project. We also like to thank her for teaching us in this course.

Last but not least, we would like to express our thankfulness to University Technology

Mara (UiTM) campus Puncak Alam Selangor, for giving us the opportunity to conduct this writing

report assignment. Finally, an honorable mention goes to our family and friends for their support

and willingness to spend some time with us, in order to help us in completing this assignment.

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 TABLE OF CONTENT

PAGE

EXECUTIVE SUMMARY i

ACKNOWLEDGEMENTS ii

TABLE OF CONTENT iii

LIST OF FIGURES iv

LIST OF TABLES v

1.0 BACKGROUND OF THE COMPANY 8-12

1.1 HISTORY OF THE COMPANY
1.2 VISION
1.3 MISSION
1.4 ORGANIZATIONAL CULTURE/VALUES
1.5 GOALS & OBJECTIVE
1.6 LOGO
1.7 BOARD OF DIRECTORS

2.0 COMPANY REVIEW 13-36

2.1 SWOT ANALYSIS
● STRENGTHS
● WEAKNESSES
● OPPORTUNITIES
● THREATS
2.2 STRATEGY FORMULATION FRAMEWORK (STAGE 1)
• IFE MATRIX
• EFE MATRIX
• CPM MATRIX
2.3 ACHIEVEMENTS

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 2.4 PROBLEM
3.5 CONCLUSION

3.0 COMPANY’S STRATEGIC PLAN 37-43

3.1 STRATEGY FORMULATION (STAGE 2)
• IE MATRIX
• BCG MATRIX
3.2 STRATEGY FORMULATION (STAGE 3)
• QSPM
3.3 CONCLUSION

4.0 STRATEGIC IMPLEMENTATION 44-47

4.1 STRATEGY 1 PRODUCT DEVELOPMENT
4.2 STRATEGY 2 MARKET PENETRATION
4.3 STRATEGY 3 MARKET DEVELOPMENT

5.0 CONCLUSION AND RECOMMENDATION 48-49

6.0 REFERENCES 50-51

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 LIST OF FIGURES PAGE
FIGURES 1: NESTLE’S LOGO 11
FIGURES 2: BOSTON CONSULTING GROUP MATRIX (BCG 38
MATRIX)

LIST OF TABLES PAGE

TABLE 1 : TABLE OF BOARD OF DIRECTORS 12

TABLE 2: INTERNAL FACTOR EVALUATION MATRIX (IFE 24

MATRIX)
TABLE 3: EXTERNAL FACTOR EVALUATION MATRIX (EFE 26
MATRIX)
TABLE 4: COMPETITIVE PROFILE MATRIX (CPM MATRIX) 27
TABLE 5: INTERNAL- EXTERNAL MATRIX 37
TABLE 6: QUANTITATIVE STRATEGIC PLANNING MATRIX 42
(QSPM)

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1.0 CHAPTER 1: BACKGROUND OF THE COMPANY

1.1: HISTORY OF THE COMPANY

Nestle was established in Malaysia in 1912. The first Nestle office in Malaysia was set up

in Bishop Street, Penang, which was known as Anglo-Swiss Condensed Milk Company. Then, in

1939, due to growth and expansion, Nestle Company expanded to Kuala Lumpur.

The first Nestle factory in Malaysia was developed in 1962 in Petaling Jaya. Now, it

manufactures its products in its seven factories from Petaling Jaya and Shah Alam at Selangor,

Chembong at Negeri Sembilan, and Kuching at Sarawak. Moreover, Nestle Malaysia’s head office

is located at Mutiara Damansara.

Since 13 December 1989, Nestle Company was publicly listed in the KLSE, which is

known as Bursa Malaysia Berhad now, at an issue price of RM5.20 for each share but it increased

sharply to RM21.00 each in 2000.

Today, Nestle Malaysia Sdn Bhd employs more than 5000 people and manufactures as

well as markets more than 300 Halal products in Malaysia. Nestle becomes the leader in the

nutrition, health, and wellness industry. Nestle employed local autonomous regional employees to

manage the company. This is because they understand the culture and taste of the local market

compared to foreigners. Besides, Nestle produces different products that are suitable for each

religion in a country.

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1.2: VISION

A firm's or organization's vision statement focuses on the firm's or organization's future

potential. In fact, it is about who they want to be. Furthermore, a vision statement may mention

how the organization is planning to bring that future potential into reality. This means that the

firm's vision statement is a description of "what" the company aims to be.

Nestle’s vision is to be the leader in Nutrition, Health, and Wellness Company by

delivering world-class products of the highest consistent quality, reliability, and convenience based

on business excellence principles throughout the operation.

1.3: MISSION

A mission statement identifies a company's line of business, as well as why it exists and

what purpose it serves. Every business should have a clear statement of purpose that impresses

employees about the work they perform and encourages them to join the team. A mission

statement, which is usually a few words long, should also outline the company's business strategy.

Nestle’s mission is "Good Food, Good Life", which is to provide consumers with the best

tasting, most nutritious choices in a wide range of food and beverage categories and eating

occasions, from morning to night.

1.4: ORGANIZATIONAL CULTURE/VALUES

Nestle has a well-established business culture, which is reflected in the company's logo.

The company's logo, "Good Food, Good Life," is always fastened to its products and serves as the

main direction for all of its activities. Nestle believes that excellent nutrition is the most important

factor in maintaining good health throughout one's life, hence it places nutrition, health, and

wellness at the center of its operations. The company is attempting to extend and emphasize these

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characteristics even further. All Nestle products, as well as the company's mission statement,

emphasize these three concepts: nutrition, health, and wellness.

When it comes to corporate culture and how it affects employee development, Nestle has

a culture of group determination and an open gate policy, which has proven to be one of its

corporate strengths. To encourage employees to work more, the organization promotes solidarity

and a presentation direction style.

1.5: GOALS & OBJECTIVE

Goals and objectives are a part of strategy formulation. An organization would have to

formulate goals and objectives in order for them to move forwards. Goals and objectives are

needed in order to accomplish the mission. Developing goals and objectives that are ambitious,

realistic, reliable, logical, and transparent is essential.

As for Nestle, their objective is unlocking the power of food to enhance the quality of life

for everyone, today and for generations to come. Nestle believes that foods can help to improve

someone’s life. It supports the growth and development of children, the elegant aging of elders,

and the enjoyment of life by all. Nestle is always pushing the limits of what is attainable with

meals, drinks, and nutritional health solutions in order to improve people's lives and contribute to

a healthier future.

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 1.6: LOGO

FIGURES 1: NESTLE’S LOGO

Consumers crave consistency. The logo will become more recognized to a broader variety

of buyers as the name expands, and this recognition will foster the impression that the firm is

reputable and approachable. The logo is frequently the initial thing that people recognize about a

company. Every commercial contains a logo or trademark. The logo will appear prominently on

any advertising materials and business cards that the company distributes. Buyers will have a bad

impression on a firm that manages a poor or ambiguous logo. Nobody strives to make that kind of

first impression.

Over the years, Nestle logo keeps on updating along with the new product lines being

introduced. As for the latest logo, while the other words are little or lowercase, the capital letter

"N" is artistically emphasised that one of its legs is elongated horizontally, creating the

importance of protecting children by giving food that is full with nutrients. The logo's colour

scheme is straightforward and uncomplicated, consisting of white paired with brown, grey, or

black.

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1.7 BOARD OF DIRECTORS

TABLE 1 : TABLE OF BOARD OF DIRECTORS

A board of directors (B of D) is a body of individuals who are selected to lead shareholders.

The board of directors is a regulatory body that works on a regular basis to establish business
management and supervision regulations. A board of directors is required for each public firm. A
board of directors is also present in certain private and non-profit organizations.
Boards of directors have a variety of responsibilities.
● choosing, nominating, supporting, and monitoring the work of the chief
executive;
● discharging the chief executive;
● controlling the firm by creating broad policy and strategic goals;
● securing enough monetary capacity;
● authorizing yearly expenditures;
● reporting on the organization effectiveness to stakeholders;
● establishing top management wages, remuneration, and bonuses;

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2.0: CHAPTER 2: COMPANY REVIEW

2.1: SWOT ANALYSIS

2.1.1: STRENGTHS

1. Wide Range of Products

Strengths include anything a company does well and its resources and capabilities for

developing a competitive advantage. From our research, we found out that Nestle has a wide range

of products. Six worldwide corporate brands which are Nestle, Nescafe, Nestea, Maggi, Buitoni

and Friskies contribute about 70% of the group’s total sales, with the Nestle brand itself

contributing 40%. Their high-quality products are sold all around the world. Nestle offers a wide

range of items as a large corporation. Nestle has a brand and packaging that is suitable for the

country in which it wants to sell its products. Nestle’s products are sold in more than 509 countries

across the world, and it is making this company the world’s largest food producer.

2. Strong Base of Suppliers

Nestle also has an extremely strong base of suppliers. It has a global network of 165,000

direct suppliers and 695,000 individual farmers. This allows the organization to ensure that its

long-term supply of resources is secure, and that any supply chain issues are addressed effectively.

Nestle also encourages local innovation, incorporates technology, and improves the traceability of

its raw material sources. As a result, the organization is able to generate significant operational

efficiencies.

3. Efficient Research & Development System

Nestle boasts of the largest research and development network in the food and beverages

industry to address rapidly changing customer demands. In 2017, over 60% of R&D spend was

aimed at developing more nutritious products. Nestle operates 40 product technology centers,

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employing approximately 5000 employees. Nestle expanded their operations in the Greater China

Region to 3 R&D centers and 4 product innovation centers in 2020. They also collaborate with

cutting-edge partners around the world, such as startups, academic institutions, and government

agencies, to stay ahead of customer trends. Nestle spent 1.724 billion Swiss francs on research and

development in 2017. It keeps increasing its R&D spending every year, which is very high as

compared to its close competitors, thereby giving it a competitive advantage

4. Globally Recognized Brand

Nestle’s active presence in 187 countries is advantageous to its undivided growth. The

presence in some countries is over 150 years, establishing the brand in the local environment. This

means that their product is available to the people in these many countries, and it creates a long-

lasting impact on people as well. In addition, through its effective advertising and branding

strategies, it has created significant awareness and developed a successful brand image around the

world. According to the Fortune Global 500, Nestle is among the world’s largest corporations and

it’s ranked at 69th position in 2018 list.

5. Well-Diversified Brand Portfolio

Nestle has over 2000+ brands in its portfolio in different categories. Its product portfolio

covers every food and beverage category such as baby foods, bottled water, cereals, chocolate &

confectionery, coffee, dairy milks, drinks, food service, culinary, chilled & frozen food, healthcare

nutrition, ice cream, and pet care. The company offers products and services for all stages of life.

Some of its brands are globally renowned, and some are strong in local geographies. This well-

diversified portfolio allows the company to grow continuously and expand into new areas.

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6. Nestle Is A Nutrient Dense

Nestle produces products that reduce salt, sugar, and saturated fat content in their foods

because we recognize how vital it is for people to eat a healthy diet. They have also increased the

amount of entire grains, fibred, and vegetables in addition to critical nutrients. Nestle not only

manufactures a wide range of products, but also produces daily foods that are delicious and

nutritious. We can also obtain a lot of nourishment from Nestle’s products. Nestle, with its

catchphrase “Good Food, Good Life,” strives to improve the quality and flavor of its products in

order to meet the ever-changing needs of consumers. Nestle also strives to provide consumers with

the highest quality in terms of taste and nutrition.

7. Digital Transformation

Nestle's investment in digital transformation in areas such as marketing, social media, e-

commerce, manufacturing, and supply chain has enabled the company to become data driven. This

enables them to personalize their consumer’s needs and achieve higher satisfaction. Nestle used

artificial intelligence to transform 70 ecosystems in 2019 and customize 20% of their customers'

contacts. In addition, in 2019, Nestle achieved shortened timelines of science into technology on

average by 30% and saw an additional 50 fast-tracked projects which will launch within 6 to 12

months.

2.1.2: WEAKNESSES

1. Problem in Product Marketing

The first weaknesses is problem in product marketing. According to Lindsay (2021),

Product marketing is the one of process that Nestle Malaysia use to bring their product to the

market. This will be including on deciding their product’s positioning and messaging, launching

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the product and make sure sales representative and customers understand it (Cody,2020). The aims

of product marketing is to drive the demand and usage of the product.

Nestle has a weakness in positioning or marketing their product in the market when they

are again faced a strong and huge negative reaction from large number of people across the globe

due to not correctly positioning and marketing their product. For example, the ways Nestle Berhad

marketing their breastfeeding baby formula for people in poorer nations is unsuitable. This is

because, in poorer nations it will have a lot of uneducated mothers, so they will using the product

with contaminated water and it can result to high cases of sickness like cholera, typhoid fever and

dysentery.

2. High Attrition Rate in Work Force

Attrition rate is basically called as a churn rate where it refer to the rate of people or worker

leave the company and it can be calculated by divided by the average number of employees over

a period of time. According to Personio (2020), The high attrition rates shows the employees are

leave the company quickly while low attrition rate shows that the employees will staying at the

company for a longer period of time. In fact, when they have high attrition rate in work force, it

means the organization needs to be change immediately. Attrition can be divide into four type that

is voluntary attrition, involuntary attrition, internal attrition, and demographic-specific attrition.

According to Personio (2020), based on this type of attrition, the worst is voluntary attrition

and demographic-specific attrition. This is because, it will show the employers is weak in nurture

the employees. Voluntary attrition happen due to they not getting what they want and need or not

satisfied in their roles. In Nestle Malaysia Berhad, the attrition rate that they have is their weakness

since they recorded higher attrition rate in workforce compared to other competitors. This can be

prove when they spent more cost on training and development of its employees compare to their

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competitors. For example, Nestle was arrange a training with the total hours is 7306 hours and has

been attended by 9653 of employees (Nestle,2012). This will shows Nestle Malaysia Berhad have

a higher number of work force who leave that company and this will be a weakness to Nestle

Malaysia Berhad.

3. High Dependence on Advertising

The next weaknesses that faced by Nestle Malaysia Berhad is, they have high dependence

on advertising. Advertising is the one of the method that been use by any businesses to create

awareness among people on that countries. This advertising can be divided into 4 type that is

display advertising, mobile advertising, video advertising and native advertising

(HealthyAds,2019). But people usually see the advertisement on Television, Newspaper, and

board on the road. When the businesses depend on advertising as there method of marketing, it

can be a positive method but when they a having high dependence on advertisement it also lead to

negative decision.

This weaknesses was happened in the Nestle Malaysia Berhad when they are majorly

dependent on advertising to promote or create awareness to people on their products

(Tanisha,2021). So, it can affect the marketing costs where the marketing costs of Nestle Malaysia

Berhad are increases due to advertising costs. According to Statista Research Department (2021),

Nestle was invest about 2.4 billion in advertising costs. As a result, increasing in marketing cost

will lead to the high risk on the returns where there is possibility the profit earned will be less than

advertising costs. With upcoming challenges, Nestle's strategy will be not sustainable in the long

run.

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4. Social Criticism Due to Labelling on Packaging

According to City Vision University (2010), Social criticism can be referred as analysing

the flaws of the social structures where the aims to practical solutions by making the revolutionary

change, radical forms or even the specific measures. Nestle has faced several social criticisms

throughout the years. According to Advertising Malaysia Marketing (2018), Nestle Malaysia had

to defended their MILO products after received the public criticism from one Malaysian

entrepreneur, Vishen Lakhiani that posted two videos where he criticized Nestle for claiming their

MILO brand products as a healthy product while disputing its nutritional value and benefits

includes the MILO is made up from 40% of sugar. Hence, the spokesperson of Nestle have

explaining that MILO does contains 40% sugar in its raw form before dilution. However, people

start notice and get more attention on MILO’s labelling that stated MILO is made up of 40% sugar

and they had to add more sugar when they wanted to prepare a MILO where this is not tally as

what have been stated at the labelling on the packaging of the products.

2.1.3 OPPORTUNITIES

1. Nestlé's Products Have Sufficient Purchasing Power

Nestle has numerous potential to expand and improve their business practises in the future.

The first opportunity they have is their products have sufficient purchasing power. Nestlé is well-

known for its low prices and high nutritional value. Malaysian society is diversified in terms of

social strata; however, this is primarily due to the countries low cost of living. In general, people

in this civilization can consume Nestlé products and Nestlé is visible in every market, making it

easy to purchase. Additionally, Nestlé have opportunity to offers a wide range of products,

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improved knowledge and helps to establish Nestlé as the leading Nutrition, Health and Wellness

Company.

2. Good Agricultural Technique And Technology.

Secondly, good agricultural technical and technology. Nestlé Chilli Club (NCC), in

collaboration with the Local Farmer's Association, provides rural farmers in Kelantan with a

sustainable source of income by teaching them the best agricultural techniques for cultivating raw

material. Thanks to local growers, Maggie Chilli Source was able to acquire high-quality chilli

that met international requirements. Farmers can improve agricultural yields and quality to match

international standards, as well as give new economic opportunities for the region's disadvantaged

farmers. Moreover, Nestle can help farmers by assisting them in improving their economic

stability, thereby making farming more appealing to the younger generation and ensuring the

future of agriculture and food production. Thus, Nestle will save time by not having to purchase

the chillies and agricultural from another country. As a result, they will save money while

maintaining the same level of product quality as in other countries.

3. Clear and Accurate Labelling Indicating of Any Harmful Products

According to a Delloite survey, consumers are more inclined to purchase things that are

clearly and precisely labelled. Almost 62 per cent of consumers prefer items that are free from

dangerous ingredients. Clear and accurate labelling affected 51 per cent of those polled, and 47

per cent indicated they would like to see information shown clearly. However, Nestlé, which has

a history of providing inaccurate nutritional information on its labels, has an opportunity to

improve its practises by clearly labelling its goods and including all relevant information in

addition to nutritional values.

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4. Strategic Partnerships.

Finally, the Nestle Corporation has strategic partnerships. Nestlé has already developed

partnerships with a number of major firms, like Coca-Cola and others, and this is only the

beginning. L'Oreal, the world's largest cosmetics corporation, is also a major shareholder of Nestlé.

As a result, we may assume that collaborating with other food behemoths will help the company

thrive in the future. . This is a terrific opportunity for the company because it opens up a lot of new

possibilities for product line expansion. Nestle will gain from engaging with a variety of

stakeholders by working together to optimise what may be accomplished. Additionally, when

Nestle Corporation, L'Oreal and Coca-Cola merge, the company will benefit from economies of

scale, produce more product lines and they can make larger companies more efficient.

5. Online Shopping

Nestle has a fantastic opportunity to grow its online shopping platform and e-commerce

sites. A small number of CPGs provide online services to make purchasing more convenient and

enjoyable. Although Nestle operates online storefronts in a few countries, the business will benefit

from expanding its online services to new places. As a result, Company Nestle will be able to

increase their sales by adopting online purchasing. It reveals that e-commerce sales accounted for

12.8 per cent of total sales in 2020, and that they increased by 48.4%.

2.1.4 THREATS

1. Competition in the Market

With an increasing number of local and national players it is becoming very hard for the

companies to differentiate themselves from others. There are also threats from counterfeit products

destroying its brand image in the market. The global FMCG companies like Unilever, Marico,

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P&G, JBS are competing ferociously in almost all of the markets Nestle has a presence in. This

extreme competition has led these companies to take too many promotional campaigns to penetrate

the markets. This extreme competition has led these companies to take too many promotional

campaigns to penetrate the markets.

2. Water Scarcity

Nestle’s production is highly dependent on water usage. Accessing the clean water through

less costly sources has become difficult for the company due to many reasons. These include

increasing population, climate change, growing demand for food and water, increasing pollution,

water wastage, and overexploitation of resources. If the climate changes, it will affect the raw

materials’ for Nestle products. For example, raw materials, like coffee, wheat and dairy are easily

affected by climate change. It is because these raw materials need specific weather to make these

raw materials keep safe and not damage.

3. Price

When it comes to purchasing things, price is also one of the significant factors. Every

business must properly assign pricing for each product because it may come across customers who

are price sensitive. Nestle must be cautious when setting prices for their products because other

competitors may set a lower price than Nestle and can cause them to lose customers and resulting

in a low profit margin. In addition, increasing the price of commodities will also result in further

increase in the price. Further increase in price will result in decrease in sales, margins, and brand

switching.

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4. Bargaining Power of Consumers

With such a diverse consumer goods market, it is difficult for customers to stick to a single

brand, which leads to brand switching, where consumers have the power to choose a brand based

on a variety of variables such as availability, reference group suggestion, preference, and price.

Furthermore, consumers can switch FMCG brands at a reasonable cost. Besides, there are many

alternative options for them to choose from. If the company fails to maintain quality or gets

exposed to any kind of issues like the one it faced in India about Maggie, in such cases it will lose

its credibility in the market and ultimately consumers-base. Inflation is also getting higher and

keeps higher so it will affect the purchasing power of the people becoming decreasing day by day.

5. Bargaining Power of Suppliers

Nestle has over 10,000 products, which means that raw materials are in short supply. The

company demands the best and highest quality materials and maintains long-term relationships

with its suppliers. To do so, farmers are required to keep high standards, in fact, suppliers enjoy

very little power when it comes to Nestle, because it is easily able to replace them, if not happy

about the quality. Despite the fact that Nestle sees this as a source of bargaining power, it could

pose a threat to the company. This is owing them to the large number of enterprises who supplied

the same service as Nestle while only a few suppliers. Due to the limited number of suppliers, the

buyers will have no option in who will be their suppliers, increasing the supplier’s bargaining

power. The suppliers can raise their rates and as a result of this, they have a monopoly on supplying

the food business, which means that enterprises will continue to seek them out.

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6. Economic Uncertainty

Despite the fact that Nestle's sales increased by 4.3 percent in quarter one of 2020, and e-

commerce sales increased to over 10% of total sales, the increase is attributed to panic buying

caused by recent events. The company’s revenue from commercial businesses are threatened by

economic uncertainty in the global markets and can decrease as these entities remain closed or

collapse due to the crisis. For example, Covid-19 pandemics. This pandemic slowly affected our

stock market, customer purchasing power supplier’s stock and more. Its quick challenges for the

businesses to keep growth and it will be threats for them.

2.2: STRATEGY FORMULATION FRAMEWORK (STAGE 1)

2.2.1: INTERNAL FACTOR EVALUATION MATRIX (IFE MATRIX)

Key Internal Factors Weights Rating Weighted Score

Internal Strengths

Wide range of products 0.04 3 0.12

Strong base of suppliers 0.06 3 0.18

Efficient research & 0.15 4 0.60

development system

Globally recognized brand 0.15 4 0.60

Well-diversified brand portfolio 0.10 3 0.30

Nutrition-dense 0.20 4 0.80

Digital transformation 0.10 4 0.40

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 Internal Weaknesses

Problem in product marketing 0.06 1 0.06

High attrition rate in workforce 0.02 2 0.04

High dependence on advertising 0.09 1 0.09

Social criticism due to labeling 0.03 2 0.06

on packaging

TOTALS 1.0 3.25

TABLE 2: INTERNAL FACTOR EVALUATION MATRIX (IFE MATRIX)

Internal Factor Evaluation (IFE) Matrix is a strategy development tool that highlights and

analyzes the primary strengths and weaknesses in a business’s functional areas, as well as

providing a framework for identifying and analyzing relationships between these areas. From this

framework, major strength for Nestle are nutrition dense. According to Nestle Nutrition articles in

2021, nutrition dense foods are those that provide generous amounts of nutrients such as vitamins

and minerals and fiber with few calories. Nestle produces products that reduce salt, sugar, and

saturated fat content in their foods because they recognize how vital it is for people to eat a healthy

diet. The weights for nutrition-dense is 0.20 with a rating of 4 which results in 0.80 for the weighted

score. The minor strength for Nestle is a wide range of products. The variety of brands gives Nestle

a strong ability to weather economics because it serves many different segments of the market. As

a result, revenue is less volatile if there is a shift in demand for a certain product segment. The

weights for a wide range of products is 0.04 with a rating of 3 which results in 0.12 for the weighted

score.

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 Meanwhile, high dependence on advertising is a major weakness for Nestle. It is because

Nestle is majorly dependent on advertising to promote their products, and it will increase the

marketing costs and consequently a high risk associated with the returns. The total weighted score

of this major weakness is 0.09 which is 0.09 for the weights and 1 for the rating respectively.

Nestle has a high attrition rate in their workforce. Attrition rate is basically called a churn rate

where it refers to the rate of workers leaving the company. In fact, when they have a high attrition

rate in the workforce, the organization needs to be changed immediately. It is a minor weakness

for Nestle with a weighted score of 0.04 which is 0.02 for the weights and 2 for the rating

respectively. In conclusion, the total Internal Factor Evaluation (IFE) is 3.25 which is above the

average of 2.50. It shows that Nestle is doing very well.

2.2.2: EXTERNAL FACTOR EVALUATION MATRIX (EFE MATRIX)

External Opportunities WEIGHT RATE TOTAL WEIGHT

SCORED
Nestle’s products have sufficient purchasing 0.11 4 0.44
power
Good agriculture technique and technology 0.21 4 0.84

Clear and accurate labelling indicating of any 0.05 3 0.15

harmful products

Strategic partnerships. 0.07 3 0.21

Online Shopping 0.18 4 0.72

25
 THREATS WEIGHT RATE TOTAL WEIGHT
SCORED
Competition in the market 0.09 2 0.18

Water scarcity 0.05 2 0.10

Price 0.08 2 0.16

Bargaining power of consumers 0.07 2 0.14

Bargaining power of suppliers 0.03 1 0.03

Economic uncertainty 0.06 1 0.06

TOTAL 1 3.03

TABLE 3: EXTERNAL FACTOR EVALUATION MATRIX (EFE MATRIX)

Based on the EFE matrix table, it shows that the major opportunity for Nestle Malaysia is

good agriculture technique and technology with 0.84 of weighted scored. These being major

opportunities for Nestle Malaysia because it can helps Nestle Malaysia to reduce their cost of

production in term of raw material when they can only get all the raw material in their country.

Furthermore, competition in the market is a major threats for Nestle Malaysia with the total

weighted score is 0.18. Nestle faced a lot of competition in Food and Beverage industry because

there are so many company that promote for the same thing which it could affect the decline of

Nestle sales. The total score EFE Matrix of Nestle Malaysia is 3.03 which indicate that the

company's strategies efficiently capitalise on existing opportunities while minimizing the negative

impacts of external threats.

26
2.2.3: COMPETITIVE PROFILE MATRIX (CPM MATRIX)

Nestle Dutch Lady Yeos

CRITICAL
SUCCESS FACTOR WEIGHT RATING SCORE RATING SCORE RATING SCORE

Advertising 0.1 4 0.4 3 0.3 3 0.3

Product Quality 0.1 4 0.4 4 0.4 4 0.4

Price 0.1 4 0.4 4 0.4 4 0.4

competitiveness

Management 0.1 4 0.3 3 0.3 3 0.3

Financial Position 0.2 4 0.8 3 0.6 2 0.4

Customer Loyalty 0.2 4 0.8 3 0.6 3 0.6

Global Expansion 0.1 4 0.4 3 0.3 3 0.3

Market Share 0.1 4 0.4 3 0.3 3 0.3

Total 1 3.9 3.2 3.0

TABLE 4: COMPETITIVE PROFILE MATRIX (CPM MATRIX)

27
 The competitive profile matrix is an important strategic management tool for comparing

the company to the industry's top players. The competitive profile matrix gives the firm a clear

image of their strengths and weaknesses in comparison to their competitors. Because Dutch Lady

and Yeos are Nestlé’s main competitors, we included them in this matrix. We identified the

following important success variables after a thorough examination of the external and internal

environments: advertising, product quality, price competitiveness, management, financial

position, customer loyalty, global expansion, and market share. After we've determined that factor,

we'll need to rate each field. The firm's response to the important success factors is represented by

the CPM's rating. The response scale ranges from 1 to 4, with 4 being the highest. The ratings are

based on strengths and weaknesses, with 4 denoting significant strength, 3 denoting minor

strength, 2 denoting minor weakness, and 1 denoting major weakness.

Nestle, we discovered, makes the most effort in their advertising field in this market. Nestle

has done a variety of advertisements, including newspaper ads, commercials, and web ads. Also,

in comparison to Dutch Lady and Yeos, their advertising is more eye-catching and appealing to

the general audience. Nestle is one of Malaysia's top three advertisers, according to Nestle

managing director Alois Hofbauer. They also intend to boost their digital media advertising and

promotion.

Product quality is quickly becoming a key competitive factor. There are five basic

techniques to defining quality that can be distinguished. The transcendent approach to philosophy

comes first, followed by the product-based approach to economics and last, the user-based

approach to economics. The manufacturing-based and value-based approaches to operations

management are the next two. Overall, the product quality of all three companies is good, and each

of them takes great care in manufacturing their products, starting with the raw materials, food

28
packaging materials, method development, and obtaining certification for packaging materials for

food products and certification for materials used in serving products.

The ability to compete on pricing is the next essential success component. The term

"competitive pricing" refers to determining a product or service's price depending on what the

competitor is charging. Because services vary from business to business while product qualities

remain consistent, businesses offering similar products are more likely to employ competitive

pricing. When it comes to pricing a product, businesses have three alternatives. They have the

option of setting it below, at, or above the competition. Nestle, as a market leader in the food

industry, tends to establish the price of food products in the market, and other firms either follow

suit or choose to offer their products at a lower or higher price than the market price. Yeos gets a

0.3 for price competitiveness since they keep their prices the same, whilst Nestle and Dutch Lady

decided to raise their prices from 4% to 8% starting in 2013, claiming increased global dairy prices

as the reason for the hike. Despite their decision to expand their product line, customers continue

to purchase it.

Meanwhile, in the management sector, all three organisations receive the same score of 3.

Because management is a business's lifeblood, it cannot thrive without it. The goal of management

is to achieve maximum prosperity with the least amount of work. Wherever group actions must be

directed toward the attainment of common goals, management is vital. All organisations get a score

of three since they maximise their available resources to make profit while also caring for their

employees.

Furthermore, the company's financial position plays a vital part in determining its success.

Financial position reflects the current state of an organization's assets, liabilities, and owner's

equity, as well as their interrelationships, as evidenced in financial statements. They function as a

29
financial scorecard as well as a planning tool for the future. Based on their net sales, we assigned

a financial rating. Nestle is the market leader in the diverse food sector, therefore it's no surprise

that their response is a 4.

The second component is customer loyalty, which indicates the likelihood that prior

customers will continue to buy from a particular company. Marketing and customer service receive

a lot of attention in order to keep current clients and increase their loyalty. Nestle defeated Dutch

Lady and Yeos with a score of 0.8. Nestle products outperformed their competitors in the Food

and Beverage category, according to the Readers Digest Trusted Brand 2014 (Malaysia) poll.

Furthermore, they have a very varied product line and have been on the market for over 100 years,

demonstrating that they have loyal customers all over the world, not just in Malaysia.

We discovered that worldwide expansion is an equally significant critical success

component. Nestle is again at the forefront of this aspect, with their headquarters in Switzerland

and a focus on international and worldwide expansion. Many of their products are produced in

developing countries. The last aspect on which we concentrate is market share. This is significant

because organisations must be able to transform sales targets into market share in order to

determine whether projections can be met by growing with the market or by stealing market share

from competitors. Nestlé’s stock is a blue chip stock, demonstrating how strong they are in the

market.

In CPM, the weight attribute highlights the relative importance of each component to the

firm's industry success. The total weighted score is the sum of all weighted scores; the final value

of the total weighted score should be between 1.0 (low) and 4.0 (high) (high). The average

weighted score for the CPM matrix is 2.5, and any company with a total weighted score lower than

2.5 is considered weak. A total weighted score of 2.5 or higher indicates that the company is in a

30
good position. Nestle received a total weight of 3.9 pounds, Dutch Lady 3.6 pounds, and Yeos 3.2

pounds in this case. This shows that Nestle is the most successful corporation in this matrix, with

the other two remaining strong competitors.

2.3: ACHIEVEMENTS

Throughout the journey of Nestle as one of the largest companies in food and beverages

industries that have maintained the strong standing in the global. A lot of renovation, innovation

and the continuous improvement that have been done by this company to be better in the eyes of

the world where it has led this company to achieve a lot of award and achievements. The recent

achievement is Nestle was ranked 1st company out of 25 in a global food and beverages in the

Access to Nutrition Index (ATNI) in year 2021 where Nestle has been placed in 2018 with the

same ranked.

1. Putra Brand Award 2019

Nestle Company have been awarded by a lot of honours where Nestle have won PUTRA

BRAND AWARD in 2019. This award has been made on the robust consumer research where it

will determine the most favourite and preferred brands in Malaysia that involved the various

industry. Nestle Malaysia have clinched an award of the top honours when at the 10th Putra Brand

Award, five of the Nestle Malaysia’s brands have grab this award. Five products under the Nestle

Malaysia are Milo that has won the Platinum in beverage, Kit Kat and Maggi achieve the Gold

award, Nescafe won Silver while Nestle Everyday have won the Bronze in their own respective

categories.

31
2. Malaysia’s 100 Leading Graduate Employers Awards 2019

After that, Nestle has unlocked another achievement by won an award in Malaysia’100

Leading Graduate Employer Award in 2019. Nestle Malaysia was chosen as one of the companies

that meet the requirement to won the award. To be fair, this award has been determined by pools

all votes from the graduate students and university by the survey of annual national, Barometer

Malaysia’s Graduate where this the largest and most established surveys in Malaysia that have

been participate by more than 44,900 students in year 2019. Nestle have get an award in Fast-

Moving Consumer Goods category and got the ninth spot in the M100.

3. Graduates Choice Award 2019

Nestle has been one of the leading companies in the Malaysia when have successful won

the Graduate Choice Award in 2019. The loyalty of the customers has shown that Nestle are

entitled to held this award when Nestle Malaysia has the exceptional employer and graduate

recruitment from the university across Malaysia. Nestle Malaysia have been chosen from for the

second time under the Graduate Employer for the Fast-Moving Consumer Goods category with

the amount of voted is 28,500 students that have involved over 100 universities.

4. National Annual Corporate Report Awards (NACRA) 2019

Nestle continues their achievement in NACRA 2019 that have been held annually and

organized by Bursa Malaysia, the Malaysian Institute of Accountants, and the Malaysian Institute

of Certified Public Accountants, recognise excellence and transparency in corporate reporting.

Nestle Malaysia received two awards where the NACRA Gold Award for the Best Designed

Annual Report in year 2019 as well as the Silver Award for Best Sustainability Reporting for the

Nestle in Society report.

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5. Randstad Employer Brand Awards 2019

The Randstad Employer Brand Award is based on vast repository of data collected via

Randstad Employer Brand Research survey and employs a series of demanding criteria to

determine Malaysia’s best employers. With over 2,500 Malaysians aged between 18 to 65 have

participate in this survey in 2019, Nestle Malaysia was named as one of the three Most Attractive

Employers in the country for the fourth years in a row.

6. Halal Industry Development Corporation (HDC) Awards 2018

Nestle Malaysia created the greatest achievement and awards when Nestle Malaysia was

won as the most ‘Successful International Halal Company’ at the Halal Industry Development

Corporation (HDC) Awards in connection with the World Halal Conference in 2018. This

prestigious award has validated their company as one of the world-class Halal expertise at the same

has enhances and strengthens their level as Nestle’s worldwide Halal Centre of Excellence.

2.4: PROBLEMS

1. Sources of Supply of Raw Material

The most prevalent issue that Nestle faces is a lack of raw material supply (Nestle,2017).

This is due to an unanticipated rise in demand, which could result in severe supply shortages for

commodities, resulting in significant price increases. Bad weather and natural disasters, for

example, have always been a challenge when it comes to arriving raw materials (Njambi et al.,

2016). The inaccuracy of orders received in inventory is the second issue. No company,

particularly in the food and beverage industry, can ever meet the need for zero faults.

For instance, when Nestle informs its supplier that they need extra orders of a specific

product sent fast owing to an unexpected surge in demand, the supplier may already have orders

33
from other customers. This frequently occurs around special occasions such as Chinese New Year,

when the demand for Nestle Cornflakes cereal rises as a result of multiple people purchasing the

product to make cookies (Nestle, 2107). Nestle will suffer a significant loss as a result of the

incorrect order of magnitude, as they may not be able to produce the specific output required.

2. Packaging Issues of Nestle.

Next is packaging issues of Nestle. Nestlé is the world's largest food and beverage

company, since they create a huge number of fast-moving consumer goods (FMCGs), almost all

of which are packaged in ways that can affect the environment if not properly disposed of.

Packaging can have consequences such as product presentation, cost-effectiveness, and fast and

efficient movement through the supply chain, which can drive up business profit margins,

according to the firm's perspective. This emphasises the relevance of packaging in the context of

supply chain management.

Companies like Nestlé utilise packaging not only to protect products from potential harm,

but also to increase distribution efficiency and interact with customers, giving them a competitive

advantage in the market. Nestlé employs a variety of packaging materials for their products,

ranging from less environmentally friendly materials like paper and wood to less environmentally

friendly materials like metal, glass, and plastic (Nestlé, 2020). According to reports from the

United Kingdom, landfills gathered around 9 million tonnes of packaging debris in 2001.

(Flaherty, 2017).

More and more households are opting for multi-packs rather than smaller packs, resulting

in increased package waste (Nestlé, 2020). According to reports, Nestlé alone consumes around

1.7 million tonnes of plastic each year for logistical and packaging needs. Nestlé's use of plastic

34
has climbed by 5% in recent years. This is because 98 per cent of the company's products are

packaged in single-use, non-eco-friendly materials (Kopp, 2019).

3. Nestlé Boycott

On July 7, 1977, a boycott against the Swiss-based Nestlé firm was begun in the United

States. In the early 1980s, it swept across the United States and into Europe. Concerns about

Nestlé's "aggressive marketing" of breast milk replacements, particularly among the poor in less-

developed countries (LEDCs), spurred the move. The boycott has been terminated and renewed

based on the International Baby Food Action Network's monitoring of Nestlé and other alternative

manufacturers' business practises (IBFAN). The boycott's organisers argue that using the

alternatives puts newborns' health at danger, and they promote newborn nourishment through

natural breast milk.

4. Palm Oil Controversy

Lastly, Nestlé is embroiled in a public relations struggle with Greenpeace over charges that

it continues to buy palm oil from Sinar Mas, an Indonesian company accused of deforestation and

peatland removal. Nestlé, the creator of Kit Kat, sources palm oil from corporations that devastate

Indonesian rainforests, endangering local people's livelihoods, and threaten orang-utans'

extinction.

35
2.5: CONCLUSION

To sum up, it is very important for a firm to identify their strengths, weaknesses,

opportunities, and threats in order to secure the long-term developments of the business. Hence,

by knowing the internal positive and negative factors in the firms, as well as external positive and

negative factors can allows the firms to make a better penetrate in the market in order to fulfil the

business’s aims where it is also can detecting the potential and possible areas for the development.

Next, the information might assist the organisation in planning and taking relevant actions to retain

momentum in a dynamic market.

Based on the SWOT analysis, Nestle Malaysia has various strengths and also several

weaknesses, which is common for a firm where Nestle Malaysia Berhad can also face a lot of

problems and challenges but it able to capitalise on the opportunities and chances to growth at the

same time can expand the business. The strategies and strengths that Nestle Malaysia’s have can

be the advantages to overcome their weaknesses in order to compete with their competitors which

are Yoes and Dutch Lady. Apart from that, Nestle Malaysia Berhad shows an excellent strategy

by taking the opportunities to upgrading and improving its products and gaining new potential

customers, as well as dealing with external threats. It can be proved by examining at the total score

of CPM matrix, which is higher than the average score of the CPM matrix which is 3.90. Nestle

Malaysia Berhad is one of the companies that very well-prepared when facing the problems where

comes out with a suitable solution in order to guarantee that its product has high demand in the

market at any circumstances.

36
3.0: CHAPTER 3: COMPANY’S STRATEGIC PLAN

3.1: STRATEGY FORMULATION (STAGE 2)

3.1.1: INTERNAL - EXTERNAL MATRIX

Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High
3.0 to 4.0 I II III

EFE = 3,03

Medium
2.0 to 2.99 IV V VI

Low
1.0 to 1.99 VII VIII IX

IFE = 3.25

TABLE 5: INTERNAL- EXTERNAL MATRIX

From the table IE matrix above, the total weighted IFE Matrix score is 3.25 in which the

point that shows Nestle company is more than the average ability of internal strength. On the other

hand, the total weighted score for EFE Matrix is 3.03 in which it also more than the average ability

to respond to external factors.

Based on the table above, we also can see that Nestle is located in the area of ‘Grow and

Build Strategies’. This means intensive and aggressive tactical strategies. As a result, Nestle should

pursue their strategies focused on market penetration, market development, and product

development. Furthermore, from the operational perspective, a backward integration, forward

integration, and horizontal integration should also be considered.

37
 3.1.2: BOSTON CONSULTING GROUP MATRIX (BCG MATRIX)

MARKET GROWTH

STAR QUESTION MARK

MARKET SHARE

CASH COW DOG

FIGURES 2: BOSTON CONSULTING GROUP MATRIX (BCG MATRIX)

The growth-share matrix of the Boston Consulting Group (BCG) is a planning method that

provides visualization tools of a company and its products to enables the firm identify what to

preserve, trade, or devote in far more. It depicts where the organization stands in terms of market

share and growth. There are four quadrants in BCG namely, Star, Question Mark, Cash Cow and

Dog.

The first category is the star. This category indicates a high market growth and high market

share. This upper-left quadrant indicates that the products have a high return and be a source of

38
revenue but it also need a high level of investment. It is a product where the investors will be

interested to invest as it gives a high return of investment and have a big potential to grow further.

As for Nestle, the products that can be categorized under this class is Nestle Health Science and

Nescafe. We are currently living and heading to a health conscious society whereby people

nowadays value a good health. They are willing to spend monies in order to have a better life. As

for Nestle Health Science, they are providing several types of nutrition foods and supplements for

diabetic patient or even elderly to allow them to have a healthier lives span. Nestle have invested

significantly to position itself from rivals in advanced markets and boost brand recognition in

developing markets as a result of the rising consciousness for living a healthy lifestyle.

Products that have a high market growth but a low market share is recognize as question

mark. This class of BCG explained that the products may have a potential to become a revenue

generator or it can be a source for company’s loss. Products in question mark category would be

fail to bring out the profit is due to the increasing number of competitors. Customers would prefer

to buy another brand for a similar product. A question mark product also could be a revenue maker

if the products are given attention in order to be modified or improved. Firms would be hesitate to

invest heavily in this category as it is a high risk investment due to the unknown outcome of the

products acceptance. Nestle’s products that can be classified under this category would be Nestle

Milk and Nestle Confectionary. There are too many brands of milk and chocolates being supplied

in the demand of consumers. It is undeniable that the buyers may opt to another brands since Nestle

only offered a few variety of milks and chocolates compared to the other brand such as Dutch Lady

or Cadbury. If these products are being marketized enough and being improvised so that it attracts

customers to purchase it, undoubtedly, the products can later be categorized under star or cash

cow.

39
 Dog category consists of a low market share and low market growth. It is a situation

whereby the market is stagnant and not generating a sufficient revenue due to its minimal growth.

Investors would refuse to invest in this category and may have a thorough thought whether to really

invest on this products or not since there is a possibility to not bestow any profit. Nestle Infant is

one of the products that Nestle had produced that can be classified under the dog quadrant. This is

because, parents these days are concern with what their child consumes. Whether it is giving

enough nutrient for their child to grow healthily. Few brands are giving and producing a far better

formula milk with more promising nutritious ingredients than Nestle Infant. Also, Nestle Infant is

not well-known enough as compared to the other products, so consumers would tend to choose

another brand. For a betterment of the company, the products from the dog category should be

considered to be discontinued to prevent future losses.

Lastly, the best products produced will be categorized under the cash cow quadrant. Cash

cow denotes a small growth but a high market share. These products are likely to have a little or

lesser investment in order to sustain in the market as it always be in a constant demand from the

consumers. It is closely related with customers loyalty and the number of repeating purchase is

high. Since it provides a large return for a little investment, it can be said that this is a safer place

for the business. The revenue generated from this category can be reinvested to develop a new

product. It is unquestioned if Nestle Maggi and Nestle Milo are grouped under this type. These

two products are too familiar among the consumers in Malaysia. People would call all brands of

instant noodles as Maggi and all chocolates drinks as Milo. It symbolizes that these products give

an outstanding perspective for the public. Maggi and Milo are in the maturity stage of the products

where they do not have to put an effort to marketize or advertise the products as the buyers are

already favour to purchase as they are already conversant with the products.

40
3.2: STRATEGY FORMULATION (STAGE 3)

3.2.1: QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)

Key Internal Factors Product Market Market

Development Penetration Development
Strengths Weight AS TAS AS TAS AS TAS
Wide range of products 0.04 4 0.16 3 0.12 3 0.12

Strong base of suppliers 0.06 3 0.18 3 0.18 3 0.18

Efficient research & 0.15 4 0.6 4 0.6 4 0.6

development system

Globally recognized brand 0.15 4 0.6 4 0.6 4 0.6

Well-diversified brand 0.10 3 0.3 3 0.3 3 0.3

portfolio

Nutrition-dense 0.20 3 0.6 2 0.4 3 0.6

Digital transformation 0.10 4 0.4 3 0.3 3 0.3

Weaknesses
Problem in product 0.06 4 0.24 3 0.18 3 0.18
marketing

High attrition rate in 0.02 3 0.06 2 0.04 3 0.06

workforce

High dependence on 0.09 4 0.36 2 0.18 2 0.18

advertising

Social criticism due to 0.03 2 0.06 3 0.09 2 0.06

labeling on packaging

TOTAL 1.00

41
Key External Factors
Opportunities
Nestle’s products have 0.10 3 0.3 3 0.3 4 0.4
sufficient purchasing
power

Good agriculture 0.20 3 0.6 4 0.8 3 0.6

technique and technology

Clear and accurate 0.05 4 0.2 3 0.15 3 0.15

labelling indicating of any
harmful products

Strategic partnerships 0.07 3 0.21 4 0.28 3 0.21

Online Shopping 0.19 4 0.76 4 0.76 4 0.76

Threats
Competition in the market 0.07 3 0.21 3 0.21 3 0.21

Water scarcity 0.05 2 0.1 2 0.1 3 0.15

Price 0.08 4 0.32 4 0.32 3 0.24

Bargaining power of 0.08 3 0.24 3 0.24 3 0.24

consumers

Bargaining power of 0.05 3 0.15 4 0.2 3 0.15

suppliers

Economic uncertainty 0.06 3 0.18 3 0.18 3 0.18

TOTAL 1.00

Total Sum of Attraction 6.83 6.53 6.47

Score

TABLE 6: QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)

42
 Quantitative Strategic Planning Matrix (QSPM) is a strategic method for analyzing

alternative strategies and selecting the best one. Generally, our strategies are product development,

market penetration and market development. Based on the calculation in the table of our QSPM,

it can be concluded that product development strategy is a better decision to adopt in the business

rather than market penetration and market development. This is because the total sum of attraction

score of product development strategy is the highest one compared to others, which is 6.83. While,

the sum of attraction score for the market penetration is 6.53 and for the market development is

6.47.

3.3: CONCLUSION

Chapter 3 is discussing about the company’s strategic plan, in which consists of the IE

matrix, BCG Matrix and QSPM. In a nutshell, the strategic management analysis at Nestle

conclude that food industries are never easy to compete with. Furthermore, as Nestle grows, so do

those other businesses, which are trying to do something interesting for their own good, Nestle

must make a significant change.

43
4.0: CHAPTER 4: STRATEGIC IMPLEMENTATION

4.1: STRATEGY 1 : PRODUCT DEVELOPMENT

Product development in simple words is the process of improving the existence of products

or creating a new one for the customer where it can involve the internal and external customers in

the firms. According to TechTarget Contributor (2021), product development can be known as

new product management where this process are focusing on designing, conceptualizing,

developing, and marketing newly created or rebranding products and services. The major goals

and objectives of the product development are to maintain, cultivate, and increase the firm’s market

share at the same time to satisfy consumer demand.

Nestle is one of the companies that shows fast traveling throughout the world where in

terms of their quality of the products that has reached the high standard and high peak performance

where they are very committed in creating product developments. Despite the achievement of the

product qualities, Nestle can measure other scope of improvement and development which is in

term of their labelling on the products where Nestle should improve the accuracy, transparency

and easy to understand by a consumers to avoid the misunderstanding when their customers want

to purchase their products since there is an issue that involve the social criticism on their labelling

products. For an example, Nestle can improve their labelling on their information in terms of the

ingredients such as sugar content that should be tally as in real situations.

In addition, Nestle can improve their products developments by improving the home

delivery services since in the recent decades the uses of home delivery services have attract the

attention of the people in worldwide where Nestle can delivery their products direct to the

customer’s home rather than make a purchase at the supermarket or any store where it will take

times for the consumers to make a purchasing transactions. Nowadays, people are required to avoid

44
the crowded situations due to the new norms, so Nestle can take the opportunity by using this

improvement since most of the people like to make online shopping to purchase the products that

they wants. Hence, Nestle also can use their existence website or make a new applications to

develop and enhance the customers interest towards their products.

4.2: STRATEGY 2: MARKET PENETRATION

Nestle is a leading confectionery company in the globe. While this may appear to be a

favourable situation, it actually necessitates a very competitive marketing plan from Nestle. As a

result, it must be proactive in responding to external change, and it must be created to support the

overall business strategy, which is a vital success factor for large, global corporations. This is

required not only to sustain the company's global competitive position as a market leader, but also

to expand sales.

During market penetration, Nestle tries to sell its existing products in its existing markets.

Nestlé’s first marketing approach is to be aggressive. It advertises its products, flavours, and

container sizes through a variety of ways. Different products are released in various sizes to allow

those who cannot afford large-size packaging to acquire them. In order to lessen rivalry in its

present markets, the corporation is known to purchase smaller competitors in numerous fields.

Nestle also encourages its customers to buy more of its products. In the case of baby food, for

example, it promotes the idea that the more the infant eats, the faster he or she will grow and

remain healthy. In addition, the organisation offers a variety of promos.

The goal of market penetration is to increase or maintain sales of an established product in

the present market. This frequently entails modest product adjustments, as a result, this technique

has less risk though the pay-off is limited. As a result, this strategy is suitable for huge companies

like Nestle that have mature products and need to just maintain their competitiveness. It should

45
come as no surprise, then, that the product has been altered multiple times, including different

sizes, flavors, and even a brand extension into hot beverages and ice creams.

4.3: STRATEGY 3: MARKET DEVELOPMENT

Market development strategy is a growth strategy that being taken by a company to develop

the existing market rather than looking for a new market. In market development, Nestle company

can introduce their present products into a new geographic area. According to Nestle Worldwide

maps, country in Arabic such as Iran, Yemen, Iraq, Pakistan, Syria, Oman and more did not have

Nestle products at their market. So, Nestle company can grab these opportunities to launch their

products at country in Arabic. These countries will be a new geographical area for Nestle company.

It can enhance their products into a worldwide and be an international healthier product since

Nestle company have more healthier products such as Nestum, Milo, Omega, Oats and many more.

Other than that, Nestle can imposed a new channel of distribution. Basically, channel for

distribution for Nestle company is from the producer to distributor to retailer and lastly to the

consumer. So, Nestle can add agent/stockiest as their new channel of distribution to boost their

sales. For example, Kit Kat being highly popular in the market, and it is continuously distribution

running round the clock for Nestle. This generates high profit for Nestle as compared to other

products. By having these opportunities, Nestle can uses new channel to distribute the products

with agents/ stockiest. Unintentionally, it also can create job opportunities to the teenagers for

being an agents as their part time jobs.

Next, Nestle can divided each division into geographical segments in different zones. For

example, in Malaysia we have 2 seasons which are summer seasons and winter seasons. So, Nestle

can create one product that people can consume for both seasons. When summer season, people

can consume that product with ice while when it comes to winter season, people can consume it

46
with hot water. In addition, it is great when this product comes with 3 in 1 which is exclusively for

those customers who are really busy and do not have enough time to prepare it. From this, we can

see that Nestle is creating a new product that gives benefits to the consumers.

Lastly, Nestle can upselling their products to the existing customers. Which means,

upselling is used to get customers to buy a bigger, better version of the product they selected. If

Nestle launch a new product, they can give free tester to their customers. For example, Maggi is a

well-known product from Nestle. So, if there is a new flavor from Maggi’s products, they can give

a free tester for their customers who purchase new flavors of Maggi. By this market development,

existing customers will keep loyalty to buy products from Nestle with their new innovation.

4.4: CONCLUSION

For the conclusion of Chapter 4, there are three types of strategies that Nestle implements

and adapts in their company’s brands which are product development, market development and

market penetration. All of these strategies are with the purpose to strive in their market and brands

also to increase their profits.

47
5.0: CHAPTER 5: CONCLUSION AND RECOMMENDATION

Nestlé is making strides toward its objective of becoming a pioneer in the Nutrition,

Wellness, and Fitness business by offering consumers with higher-performing products. Nestlé

consistently analyzes a need and wants of customers from beginning to end and provides as much

attention as possible. Their capabilities, such as massive economic competence, outstanding

business communication, solid research and development, and openness and honesty, have helped

everyone overcome some obstacles. Throughout it all, the company remains focused on its own

objectives and maintains stability while taking practical actions to expand the market and deliver

on the "Fresh Food, Healthy Life" promise around the world. Some recommendations will be

discussing in order to enhance the performance.

Nestle should invest in research and development in attempt to think of new items, they

really should focus on this. Nestle may continuously upgrade ways to supplement their products

with minerals and vitamins that will offer youngsters with their recommended daily consumption,

as well as moms, because the company started feeding infants in need of nutrition. Because they

should begin with the health of moms in order to provide for the wellness of infants. Particularly

recently, when youngsters, among other problems, suffer from diabetes, they require more

attention than in the past.

A greater standard of quality assurance is obligated. There are four steps to enhancing it.

Make a commitment initially. The topmost managers and supervisors must be committed to

providing the best. Next, keep track of previous mishaps so they do not even commit it again.

Thirdly, invest heavily into training and education and improve moral conduct. Finally, Nestlé's

management system may have introduced a new department charged with enforcing quality

controls across all divisions. These enhancements will help to avoid potential food-quality issues.

48
 Lastly, Nestle would rethink about offering their products in environmentally friendly

packaging. Because the packaging is eco-friendly, it is constructed of environmentally friendly

materials and has a long-term beneficial effect. When opposed to plastic, the material is

biodegradable and has a minimal environmental impact. Furthermore, it will improve Nestle's

company image. People will remember that Nestle is a conscientious firm if consumers discover

that sustainable resources are being used. As a result, the company's corporate reputation has risen,

and the ROI and profit have increased.

49
6.0: REFERENCES

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Forbes. (2021, May 13). “Nestle”. Retrieved January 27,2022, from

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Cox, L. K. (2021, December 16). The simplest answer to, "what is product marketing?". HubSpot
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product-marketing

Department, S. M. (n.d.). Nestle Swot Analysis Matrix (Strengths, weakness, opportunities,

threats). Fern Fort University. Retrieved January 30, 2022, from
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Mahajan, T. (2020, December 29). SWOT analysis of Nestle [detailed]. Super Heuristics.
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What are the 4 types of advertising. Healthy Ads. (2020, October 1). Retrieved January 30, 2022,
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report-2011-fr.pdf

51
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