Project Report Business Policy & Strategy

Group Members

Hanan JanJua BBA-193060

Saadain Ahmed BBA-193067
Taimoor Umer BBA-193084
Hamza Asghar BBA-193007
Abdullah Ahmed BBA-193063
Abdullah Lodhi BBA-193080

Submitted to:

Sir, Kamran Naqi

Department of Management Sciences,

Capital University of Science and Technology

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 EXECUTIVE SUMMARY

Nestle is one of the best food companies not only in Pakistan but all over the world. It
has been serving this world for over one hundred and thirty years. It has differentiated itself
through its high-quality product mix and positioned itself as health and Nutrition Company
while targeting the health-conscious people throughout the world. Nestle started its operations
in Pakistan back in1988, by acquiring a diary company Milkpak ltd. when people of Pakistan
actually needed it. The Members working in the Organization are concern about developing
the high standards in the Market. They basically focus on making sure that their products are
best to use.
Since Pakistan is the fifth world’s largest milk producing country therefore Nestle deals mainly
in dairy products. Moreover, it also sells juices, chocolates, prepared food like noodles, baby
food, infant formula milk and breakfast cereals in Pakistan.
Nestle is a low-cost leader with its efficient operations hence it provides its customers with
high quality products and sells them at a premium price. Therefore, it is earning good profits.
Nestle has set its manufacturing plants at in Karachi, Lahore, Islamabad and Kabirwala. The
milk processing plant at Kabirwala district is the Nestlé’s world largest milk processing plant.
When nestle introduced its products in Pakistan people were neither aware nor accustomed to
them. Therefore, nestle ran an extensive marketing campaign to educate people and create a
need for its products. Pakistan is a land where fresh eatables are readily available. Nestle should
sell the same quality of products in Pakistan as it sells abroad. It should also introduce more
brands in Pakistani market which it offers in other markets of the world since consumers in
Pakistan are becoming more demanding day by day.

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 Topic Name Page No.
Organization’s Introduction 4

Vision, Mission and Core Values 4-6

Role of management 7

Competitive Advantage 8

Products and services analysis 9 - 13

Competitors 14 -15

SWOT Analysis 15-21

PESTLE Analysis 22- 24

References 28

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INTRODUCTION
Nestle Pakistan Limited is a Pakistan- based food
and beverages company. The Company is engaged
in manufacturing, processing and sale of food
products. Nestle has been serving Pakistani
consumers since 1988, when their parent company,
the Swiveled- based Nestle SA first acquired a share
in Milkpak Ltd. Nestle Pakistan Limited is
registered on the Karachi and Lahore stock
exchanges for the past ten years.
Company has been declared one of the top 25 companies on the Karachi Stock Exchange by
2014. Nestle Pakistan aims to be a Rs.100 billion company. Nestle, as a social company, offers
tremendous opportunities for career growth and learning at domestic and international levels.
With over 8000 brands preferred for their good quality, taste and health benefits. Nestle is the
number one food company in the world.
Nestle is leading the change in the food industry as it is also the leading food company in terms
of having the largest set up of research and development in food science and nutrition. They
are uniquely positioned to provide products that help consumers live a good life. Many Nestle
brands have benefited from the active ingredients developed by Nestle research and with over
130 years of expertise, consumers know they are getting the best in quality when they choose
a Nestle brand. Happy and healthy consumers are at the heart of what they do. Their philosophy
is summed up in the phrase "Good Food, Good Life: and they remain committed to help
consumers choose better tasting and healthier products to help them enjoy happier, healthier
lives.
CORE VALUES
The Company Core values are as follows:
 They focus on to develop a workforce which is highly motivated and can perform well
in the workplace.
 They focus to meet the requirements and needs of their consumer which comprises of
all age groups. They can be from small infant to older age. They focus on creating high
quality products and provide services which are helpful in capturing great customer
value.
 They also focus on maintaining the shareholder’s wealth but keeping in mind that to
perform their operations well with environmental and social responsibilities.
 Their brands are preferred in comparison of High quality food and Beverage products.
 They Communicate with their customer and provide them with the relevant information
they need.
 They promote their employees and motivate them to compete and to become
specialized in their work.
 They also have milk collection services which help to develop dairy sector in the rural
areas of Pakistan.
 The organization follows proactive approach which helps them to compete in the
market.

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 VISION & MISSION
As the company continued its growth so they also develop new plans and strategies focusing
on their Mission Statement which is “Good Food, Good Life”. These are not just Simple words
there is a meaning of Existence of the Nestle Company which describes the purpose of
company’s existence. That is, they focus on making an influence to the social environment and
operate responsibly and making food which is good for health and utilizing the resources
carefully keeping the environment safe produces good healthy food.
Nestle wants to become a company which is preferred always, like among its competitors the
customer should choose their company. So, keeping their vision and mission in mind they focus
their products and its availability in the market and which is easily accessed by their valuable
consumer.

Existing vision statement

“Nestles global vision is to be the recognized leading nutrition, health and wellness company.
Nestle Pakistan subscribes fully to this vision of being the number one nutrition, health and
wellness company in Pakistan. Envision to:
 Lead a dynamic, passionate and professional work force – proud of our heritage and
positive about the future.
 Meet the nutrition needs of consumers of all ages - from infancy to old age, from
beverage products of the highest quality.
 Deliver shareholder value through profitable long – turn growth, while continuing to
play a significant and responsible role in the social, economic, and environmental
sectors of Pakistan.”
Existing mission statement
“To positively enhance the quality of life of the people of Pakistan by all that we do through
our problem, our brands and products and our CSV activities.”
At Nestlé, we believe that research can help us make better food so that people live a better
life. Good Food is the primary source of Good Health throughout life. We strive to bring
consumers foods that are safe, of high quality and provide optimal nutrition to meet
physiological needs. In addition to nutrition, health and wellness, Nestlé products bring
consumers the vital ingredients of taste and pleasure. As consumers continue to make choices
regarding foods and beverages they consume, Nestlé helps provide selections for all individual
taste and lifestyle preferences.
Nestlé is dedicated to providing the best foods to people throughout their day, throughout their
lives, throughout the country. With our unique experience of anticipating consumers’ needs
and creating solutions, Nestlé contributes to your well-being and enhances your quality of life.
“Research is a key part of our heritage at Nestlé and an essential element of our future. We
know there is still much to discover about health, wellness and the role of food in our lives,
and we continue to search for answers to bring consumers Good Food for Good Life.”

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Proposed vision statement
“To be the number one nutrition, health, and Wellness Company in Pakistan.”

Proposed mission statement

“To positively enhance the quality of life of the people of Pakistan by all that we do through
our world-renowned people, brands, technology, products, and creating shared value (CSV)
activities; in a manner that is consistent with long- term growth.”

Role of Management

Top Level of Management

It contains of board of directors, chief executive or managing director. The top management is
the final source of authority and it manages aims and policies for an initiative. It dedicates more
time on planning and coordinating functions.
 The role of the top management can be summarized as follows:
 Top management broad policies of the enterprise and lays down the objectives.
 It issues necessary instructions for preparation of subdivision procedures, schedules,
budgets, etc.
 It prepares strategic policies & plans for the initiative.
 It appoints the executive for middle level for instance departmental managers.
 It coordinates & controls the activities of all the departments.
 It is also responsible for maintaining a contact with the outside world.
 It provides direction and guidance.
 The top management is also responsible towards the stockholders for the performance
of the initiative.

Middle Level of Management

The branch managers and departmental managers constitute middle level. They are responsible
to the top management for the operative of their department. They devote more time to
directional and organizational functions. Their role can be highlighted as:

 They execute the plans of the organization in accordance with the policies and
directives of the top management.
 They make plans for the sub-units of the organization.
 They participate in training & employment of lower level management.
 They understand and explain policies from top-level management to lower level.
 They are also responsible for inspiring lower level managers towards better performance.

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Lower Level of Management
Lower level is also known as operative/supervisory level of management. It contains of
supervisors, superintendent section, officers etc. Their activities include:
 Assigning of jobs and tasks to various workers.
 They instruct and guide workers for day-to-day activities.
 They are responsible for the quality as well as quantity of production.
 They are also entrusted with the responsibility of maintaining good relation in the
organization.
 They communicate workers problems, suggestions, and recommendatory appeals etc
to the higher level and higher-level goals and objectives to the workers.
 They help to solve the complaints of the workers.

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 COMPETITIVE ADVANTAGE

 For a company to survive the company must maintain and sustain its competitive
advantage. So, these are the major 10 reasons why Nestle Pakistan is still competing
and is successful.
 Nutrition, Health and Wellness: Nestlé’s core aim is to enhance the quality of
consumer’s lives every day, everywhere by offering tastier and healthier food and
beverage choices and encouraging a healthy lifestyle. Nestle express this via their
corporate proposition ‘Good Food, Good Life’. Nestlé Nutritional Profiling System
 Quality Assurance and product safety: Everywhere in the world, the Nestlé name
represents a promise to the consumer that the product is safe and of high standard.
Nestlé Quality Policy
 Consumer Communication: Nestle Pakistan is committed to responsible, reliable
consumer communication that empowers consumers to exercise their right to informed
choice and promotes healthier diets. Nestle respect consumer privacy. Nestlé Consumer
Communications Principles Nestlé Policy and Instructions for Implementation of the
WHO International Code of Marketing of Breast-milk Substitutes.
 Human rights in Nestlé’s business activities: Nestle fully support the United
Nations Global Compact’s (UNGC) guiding principles on human rights and labor and
aim to provide an example of good human rights’ and labor practices throughout our
business activities. International Labor Organization
 Nestlé’s success is based on Nestlé’s people: Nestlé’s treat each other with respect
and dignity and expect everyone to promote a sense of personal responsibility. The
Company recruit competent and motivated people who respect their values, provide
equal opportunities for their development and advancement, protect their privacy and
do not tolerate any form of harassment or discrimination.
 Safety and health at work: Company is committed to prevent accidents, injuries
and illness related to work, and to protect employees, contractors and others involved
along the value chain.
 Supplier and customer relations: The Company require their suppliers, agents,
subcontractors and their employees to demonstrate honesty, integrity and fairness, and
to adhere to their non-negotiable standards. In the same way, they are committed
towards their own customers.
 Agriculture and rural development: The Company is contributed towards
improvements in agricultural production, the social and economic status of farmers,
rural communities and in production systems to make them more environmentally
sustainable.

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 Environmental sustainability: The Company is committed to environmental
sustainability. At all stages of the product life cycle they strive to use natural resources
efficiently, favor the use of sustainably-managed renewable resources, and target zero
waste.
 Continuous improvement in water management: The Company recognize that
the world faces a growing water challenge and that responsible management of the
world’s resources by all water users is an absolute necessity. Nestlé Water report Nestlé
continues to maintain its commitment to follow and respect all applicable local laws in
each of its markets.

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 PRODUCTS AND SERVICES
Most people know Nestle through their brands. Their portfolio covers practically all food and
beverage categories. Nestle has a wide range of products across a number of markets. With
over 140 years of experience and expertise they take great pride in bringing us the best products
because happy, healthy consumers are important to them. They develop their products keeping
our preferences, tastes and needs in mind. Their products are carefully aligned to Pakistani
tastes and needs. They always try hard to develop new products and improve existing ones and
serve their consumers in a better way.

List of Products:
 Milk, dairy and chilled diary
 Nestle Milkpak
 Nestle Nido
 Nestle Neslac
 Nestle Everyday
 Nestle Yogurt,
 Nestle Raita & Nestle Desi Ghee
 Nesvita
 Beverages & bottled water
 Nescafe
 Milo & Juices
 Pure Life
 Breakfast & cereals
 Cornflakes
 Honey stars
 Koko crunch
 Chocolate, confectionary & baby
food
 Kit Kat
 Cerelac
 Prepared meals
 Maggi

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 TARGET MARKET OF NESTLE PRODUCTS

Milk, dairy and Chilled dairy

Wide variety of dairy products is available to cater almost every segment of customer. Liquid
Milk especially Nesvita is produced especially for the females as it contains high content of
iron, beneficial for them.
Beverages
It includes Nescafe, Milo, Nesquik, and Nestle Friuta Vitals. Their main target market includes
people of all ages.
Bottled water
Businesses, students, for the people who do not have access to clean drinking water.
Baby food
Target market of baby food is all the parents
Food
It includes Maggie noodles which mostly caters children and teenagers.
Breakfast cereals
Children, teens and adults benefits from it
Chocolates and confectionary
People of all ages.
Sports nutrition
It specifically targets sports persons for a nutritive protein diet

LIST OF SERVICES BY NESTLE PAKISTAN

 Feed improvement
 Livestock breeding and health
 Equipment provision

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 MARKETING MIX OF PRODUCTS

 Product
Three Nestlé’s Products of Milk Category are
selected for the marketing mix.
1. Nestle Milk (Liquid)
2. Nestle Condensed Milk (Dense Liquid)
3. Nestle Everyday (Powdered Milk)

Nestle Launched First Powder milk in 2003 and then they came into Liquid powder. The Nestle
Powder milk because of its good quality helps Nestle to capture a great customer value.
Milk Powder introduced by Nestle has good taste, more stable, ready to drink, and less volume.
The Production of Nestle Every day is carried out in Sheikhupura and Kabirwala. They
improved the quality of milk by the UHT process.
The target markets for these products are the consumers who drink Tea in their daily routine.
Industrial consumers of Nestle Everyday instant milk are PIA, Mc-Donald’s and pearl
continental Pakistan.

 Price
Nestle basically sets prices by keeping in mind that they have to capture a greater customer
value and that their products are in the reach of their consumer i.e., the consumer has the Pocket
to pay for their product. So, in this way the Nestlé’s product demand increases in:
 Profit margin of the product
The Company has set its profit margin high because of their products good quality.
 Price Fluctuation
The product is related to dairy farms. So, there are chances of price fluctuation.
 Scale of prices
There is a price scale which is set to a specific level. So, the consumer can pay for the product.

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  Promotion

 Channels adopted for promotion

They basically promote their products through Media, New papers, magazines, Boarding’s.
 Advertisement Cost
As every company planned their financial year. So, nestle also has a Specific budget for
advertising
 Nature of marketing
The product is marketed aggressively in the market.
 Online promotion methods
Nestle does not have yet adopted online promotion methods in Pakistan but in future it may
be possible.

 Placement

 Outlets of product located

Nestlé’s products are located all over in Pakistan regardless of big and small cities.
 Directly sales to the consumers or via distributors
Nestlé’s products are not sold directly to the customers because of the extensive consumer
groups. It’s the reason they use the sale the products through distributors for easiness of
company.
 Insurance policies of companies
Nestlé’s insurance policies are maintained but they are highly confidential.
 Warehousing facilitation of company
Nestle has its own warehouses for the storage of products as well as it has also hired some
warehouses.
 Transportation modes of the product
Usually Nestlé’s mode of transportation is road.

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 COMPETITORS
Nestlé is the market leader in the water industry. It is the first company which launched bottled
water for first time in Pakistan and that’s why it has maximum market share than others because
of being pioneer in this industry. Nestle Pure Life introduce the bottled water culture. No doubt
Nestle pure life is currently a dominant leader in Pakistan market in Mineral Water Industry.
Nestle Pure Life is currently dominating more than 80% of bottled water market share. It is
also leading the other firms in new product introductions, distribution coverage, and promotional
intensity.

Competition typically is defined as among forms within an industry producing products

that are substitutes for one another. Therefore, the identification and evaluation of
marketplace competitors is a key element of strategic marketing and a vital element of
the corporate survival.
For different product categories there are different competitors of Nestlé. Nestle pure life
(NPL) major competitors at this time who are also offering their water product in market are
following:
 Pepsi is offering Aqua Fina
 Askari water
There are also other small competitors as well e.g. Classic, Nova etc., which have very low
market segments.
According to market view, competition is defined as:
The competition between the firms, which are satisfying the same customer, needs.
So according to concept the competitors of NPL are all those companies, which are satisfying
the need of thrust of the customers are the competitors of the Nestle.

Main Competitors:
Engro foods and Haleeb foods are the main competitors of Nestle in Pakistan
& the main strong competitor is Shezan.
 Engro Foods Pakistan Major product lines: Olpers milk, Olwell, Olper Cream, Tarang
Tea whitener, Tarkka Ghee
 Haleeb Foods Major product lines: Bread, snacks, desserts and meals.
 Shezan Foods Pakistan Major product lines: Food Products, Jams Jellies &
Marmalades, Tomato Ketchup, Sauces & Pickles, Fruit Juices Syrups & Squashes
The other main competitors of Nestle Pakistan are:
 Unilever
 Proctor and Gamble
 Tapal danedar
 Pepsi
 Coca cola

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 Gourmet is also giving a very tough competition to Nestle pure life as their price is less
than Nestle pure life. Moreover, gourmet is approaching the other cities and rural areas of
the country and possibly will emerge as a strong competitor of Nestle pure life in near
future.
 There are also other competitors found within a local market which include Sparklet,
Acqacare, Pure, Aafi, Oura, Aabshar and many other local brands, but their market share
is very low as compare to the Nestle Pure Life.

ANNUAL OBJECTIVES
Annual objectives of Nestle Pakistan are simple & well designed with the core strategy to meet
the demand of the consumers & to fulfill the needs of the customers. Annual objectives are
compatible with the overall corporate objectives of nestle. Company’s biggest objective is to
be the country’s largest and best branded food manufacturer while insuring that nestle name is
synonymous with the products of the highest quality.
The other annual objectives are:
 To be the best & quality brand in Pakistan
 To meet the needs & requirements of the consumers
 To capture the desired market share
 To dwell in to the life of people & consumers
 To be the number one nutritious company of Pakistan
 To be the leading FMCG company around the world as well as in Pakistan
 To be the socially responsible company & be helpful in bad times.
 To achieve compatibility with international voluntary standards on environmental
management systems.
 To build mutual trust with consumers, governmental authorities and business partners.
 To ensure continuous improvement of nestles environmental performance.
 Conservation of natural resources and minimization of waste.
 To establish the benchmark for good business practice.
 Employing new technologies and processing.
 Nestle aims to be proactive innovation and renovation culture, which is the key to Nestle’s
success in the marketplace.
 Nestle aims to have fully integrated systems with suppliers & retailers so that every single
market can be tapped & focused

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 SWOT ANALYSIS
This section presents a SWOT analysis to review the micro environment of the firm reflecting
specifically upon the strengths and weaknesses of Nestle Pakistan and the opportunities and
threats the firm must respond to through an alignment of firm strengths to such forces. A SWOT
analysis is often used, as a strategic tool to allow a presentation of the firm’s resources and
capabilities, which can be further, developed to aid competitive advantage. A SWOT analysis
therefore underpins the development of future strategic options. A desirable competitive
advantage is one obtained through a minimization of threats aligned with the seizing of
opportunities.

 STRENGTHS

1. Brand Image
Making a good first impression is important, especially in business. Consumers create an
impression of the business and brand based on a variety of factors, such as the way employees
are dressed, their website, business cards, the cleanliness of store and more. Call it superficial,
but these small details are points of contact.
Brand image (describes the consumer’s belief and thoughts towards a specific product)
enhances the consumer’s trust and enables the company to differentiate its services
from other enterprises in the industry and to satisfy the consumers.
In this case, presentation is everything.
 Over the years, Nestle Pakistan with positive brand image have attracted the clients
and built associations which have ultimately cultivated better profits.
 Nestle Pakistan has witnessed a steady growth on the back of the strong brand image.
The company reported overall earnings of 4.10 billion for the three months ended on
March 31, 2017 as compared to 3.44 billion in the corresponding period in 2016.
 For over two decades, Nestlé Pakistan, have strived to bring high quality products
that have won the hearts of all Pakistanis. Their bedrock values of respect, trust,
integrity and teamwork have helped them become the premier Nutrition, Health and
Wellness Company and earn a positive brand images in the minds of the customers.
 Brand name has helped the Nestle Pakistan to differentiate the products of its
companies.
 Nestlé Pakistan today is the leading Food & Beverages Company in Pakistan with key
focus on nutrition, health and wellness and reaching the remotest of locations
throughout Pakistan to serve the consumers.
 Today more and more consumers mirror their emphasis on nutrition, as they realize that
food choices affect their health and quality of life.
 Development of trust and loyalty highlight the capability development of the firm.
 So, brand image in either perspective, directly or indirectly, more or less, early or late
whatsoever the case may be, it has affected the company’s profitability.

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 2. Market Share
Nestle juices has a highest market share
almost in every SBU’s line, such as in
Milk pack & Nestle pure life.
High market share always depicts
the quality of the firm & its strong
management decisions.

Although the competition is growing

around Nestle, however, it has a firm
foot on the ground. Over the years, the
Company has invested quite significantly in its product development and enhancing its market
share. The Company has the potential to continue its growth on account of an unprecedented
hike in consumption of packaged food and drinks by a middle class that is rapidly expanding
in numbers, the food producing giants the likes of Engro and Nestle have been faring
remarkably well over the course of the last five years.

Skilled labor
Skilled labor is a segment of the work force with a high skill level that creates significant
economic value through the work performed (human capital).
Skilled labor is generally characterized by high education or expertise levels and high
wages.
 Skilled labor in an increasingly global competitive world is essential and Nestle is
creating competitive edge by its high skilled labors.
 With rapid changes in the economy with respect to the growth of knowledge-based
jobs, skilled labor of the future may be different from the skilled labor of the past and
present and Nestle Pakistan provides training to its labors to meet the requirements of
the present and future.
 The "rise of the machine" is engendering great debate and a certain level of anxiety
among skilled workers. Labors in Nestle does not have to wonder if they will eventually
be replaced on the job by a robot or a computer algorithm.
 Reduced costs because of skilled labors.
 Reduced downtime.

Strong supply chain network

Businesses are often part of a larger network of organizations, a supply chain network can be
used to highlight interactions between organizations; they can also be used to show the flow of
information and materials across organizations.
 Supply chains and supply networks both describe the flow and movement of materials
& information, by linking organizations together to serve the end-customer.

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 To create value among suppliers, technical training is provided to farmers level which
in return will improve quality.

factory

Carrying and forwarding agent

Distributor Super-Stockiest

Wholesaler Distributor

Retailer Retailer

Consumer

 The Nestlé Supplier Code establishes non-negotiable minimum standards. They ask
their suppliers, their employees, agents and subcontractors to respect and to adhere to
always when conducting business. The Nestlé Supplier Code helps to implement
commitment. To ensure both responsible sourcing and supplier relationships that
deliver a competitive advantage
 Replicable and consistent quality and food safety
 Predictable timing and volume
 Increased price stability
 Sustainable production
 Farmer loyalty

Efficient Distribution networks

A distribution network is an interconnected group of storage facilities and
transportation systems that receive inventories of goods and then deliver them to
customers.
 Efficient Distribution networks throughout the country
 Nestle employs different distributers for different areas

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  Increasingly considered a critical asset in this new age

Parent support
Nestle Pakistan has a strong support from its parent company, which is the world’s largest
processed food and beverage company, with a presence in almost every country.
 The company has access to the parent’s hugely successful global folio of products and
brands
 Good background of the company
 Nestlé has a place in the heart of consumers due to its longstanding history.
 Global recognition driven by the number of strong brands within the firm’s portfolio.
 Diversified and varied brand portfolio.

Environment Friendly
Nestle Pakistan understands the sense of well-being requires that its products are made in a
caring and responsible way that preserves the environment for future generations.
Company is focusing on three areas and is supported by these commitments:
Caring for water
 Work to achieve water efficiency and sustainability across their operations
 Advocate for effective water policies and stewardship
 Treat the water that is discharged effectively
 Engage with suppliers, especially those in agriculture
 Raise awareness on water conservation, and improve access to water and sanitation
across our value chain
Acting on climate change
 Provide climate change leadership
 Promote transparency and proactive, long-term engagement in climate policy
Safeguarding the environment
 Reduce food loss and waste
 Improve the environmental performance of their packaging
 Assess and optimize the environmental impact of their products
 Provide meaningful and accurate environmental information and dialogue
 Preserve natural capital, including forests
Packaging Achievements
Company is opposed to labelling with a single indicator, such as water footprint, because it is
misleading to consumers and neglects other important factors such as the product's impact on
CO2 emissions and non-renewable energy resources.

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  WEAKNESSES

1. Target market
Target market of any company should be well defined and match with the economic
circumstances of the country. Price should be like that customers are motivated to buy more.
 Target market of Nestle products is upper middle and high class because lower middle
and poor class cannot afford to buy. Only A class and B+ class have enough purchasing
power to become a regular costumer of a Nestle product.
 The target of this brand is the urban areas of the country and along with the use in
offices and business class as well.
 Price of Nestle is not very economical and income level of Pakistan and most of the
people lies in lower middle class so they cannot afford most of the Nestle products.
Nestle products due to its premium price compare to other companies like Shezan etc.
 It can be considered as the major weakness in a country like Pakistan where most of the
people are living below average life.

2. Nestle Milkpak
Milk Pak was the first to introduce the packaged milk category, processing the milk through
UHT (Ultra-High Temperature Processing) treatment and offer quality milk. Olper's however,
came up with aggressive marketing strategies and appealing packaging and became a well-
known brand in the market.

 OPPORTUNITIES

1. Intangible capabilities
Development of intangible capabilities to aid competitive advantage.
Intangible capabilities like leadership qualities, tacit knowledge and skills, teamwork,
organization cultures, business processes, partnership, etc. can help Nestle in building
competitive edge over its competitors.
Competitive advantage is achieved through inimitability and this should be a focus of the firm.

2. Backwards integration
To gain more control over the supply chain of the firm. Now companies are improving their
production by adopting different strategies in which backward integration is one of them.
In backward Integration, a company gets control over its suppliers to improve the
efficiency and save the cost which improves its profit margins and make the firm more
competitive.
Nestle can do backward integration through acquiring input suppliers, establishing long-term
contracts with existing suppliers or investing in new input production capacity through internal
corporate growth. For example, nestle can own its own dairy form.

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  It can help the company in
 decreased marketing expenses,
 the stability of operations,
 the certainty of supplies of materials,
 much control on the distribution of products,
 tighter quality control,
 the on-time review of fabrication and allocation policies,
 more control over inventory,
and additional profit margins or the ability to charge lower prices on final products.

 THREATS

1. Lower loyalty
Higher levels of buyer power within the industry is fueled by greater choice and
lower loyalty.
The days of customers staying loyal to companies for long periods are numbered. The amount
of trust consumers put in brands is decreasing all the time, and a typical consumer will now
switch brands without hesitation if they get a better offer. Decrease and freedom of loyal
customers has become a key threat for long-term success of Nestle Pakistan.
 The globalization of competition
 saturation of markets
 and development of information technology have enhanced customer awareness and
created a situation where long-term success is no longer achieved through optimized
product price and qualities.

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 PESTLE ANALYSIS

A PESTLE analysis is used as a strategic tool to

measure industry dynamics through recognition of
the core political, economic, social, technological,
legal and environmental forces/changes having
influence on the industry. The PESTLE analysis
below identifies a number of forces, which have an
influence on industry dynamics. Of these forces,
perhaps the most prominent are social forces, which
relate to differences in consumer behavior. Nestlé
have to be able to ensure a level of adaptation,
which is appropriate to different markets driven by
different cultures and consumer preferences.
The main theme of PEST analysis is to measure
market potential and situation, by indicating growth or decline. PEST analysis can be used for
marketing and business development assessment and decision-making, and the PEST analysis
encourages proactive thinking, rather than relying on habitual or instinctive reactions.

 POLITICAL
This refers to the involvement and intervention of the government within the economy. Nestle
has to operate within the framework of laws set by Parliament, and that’s why it depends on
political considerations. Government plays vital role by imposing the law and regulation on the
companies. Government set standard laws for companies that has to meet otherwise they have
to pay fines. The rules of government of Pakistan do affect the company and its brand. The
company policies are affected, and its budget is also affected. Nestle is trying to meet all the
standard laws which are set by the government
Following are some of the political factors which affect the company.
 Changing regulation surrounding food standards and marketing actions.
 Health and Safety Act, Disability Act
 low trade restrictions and low barriers of market entry
 Government laws and regulation in accounting standards
 ECONOMIC
Nestle needs to have enough information about the country inflation rate, economic growth
rate, and national per person capital income, in which they are willing to start their business.
Economic condition varies from country to country. Following are the factors that Nestle has
to consider before setting corporate objectives:
 Inflation Rate
Awareness and knowledge of changing inflation, economic growth rates and income levels.
Now in Pakistan inflation rate is almost 22.3%, which decreases the purchasing power of
consumers. So, if any increase in inflation rate then increase in prices of Nestle products which

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eventually affects the Nestle Pakistan. So, inflation rate affects mostly everyone in the industry
so as nestle but nestle by the great decision making able to retain 55% of market share in Milk
& Nestle Pure life.
But high inflation also creates higher impact on those products which transform from another
product like packed milk & powder milk because these is already sell on high prices in market
because of high quality so this whole scenario directly create impact on those organization
whole deals or manufacture these products like Nestle, it has two options in this situation either
to sustain prices or to decrease prices.
Increases the prices of light and petrol effect transportation and other costs also affect business.

 SOCIAL
Social or cultural environment had great impact on Nestle. Social change involves changing
attitudes and lifestyles. The social and cultural environment is constantly changing. Different
regions of country had different culture (language, beliefs, food, family, clothing and their
lifestyle). These are cultural demographic variables and aspects which are closely linked to the
market and customers need. Nestle has to develop effective strategies in order to meet different
lifestyle consumer behavior. Nestle has to take some following social and cultural factors under
consideration in order to achieve their strategic objectives:
 Changing consumer attitudes
Changing lifestyle – Product or services cannot be successful until company has enough
information about the consumer lifestyle. The need to adapt to different cultural settings i.e.
language, religious beliefs and family settings. Understanding of consumer behavior is crucial
to ensuring a personal approach to marketing.
 Health Consciousness
Today, people move towards healthier products in line with government initiatives supporting
balanced diets and the dangers of sugar. Nestle by identifying this need of the people t also
producing health conscious products with more elements of pure & quality, which create the
market for Nestle & trend of its products in the market. However, when launches it Milk in
1988 back then it was not so much popular but now a day’s people are more health conscious.

 TECHNOLOGICAL
Technological change has the most rapid, persistent and profound effect. It creates
opportunities for new products and product improvements and of course new marketing
techniques- the Internet, e-commerce. Nestle uses technology by taking orders via telephone
and online by internet. Moreover, nestle uses technology in various business activities such as
record of their customers and employees. Rise of social media, consumers interacting with
firms and being able to do so across a range of platforms. Following factors affect the company:
 New Products
Nestle are diversifying according to changing demand of customers and trends. Nestle wants
to diversify its portfolio with the change or need of market needs. E-commerce is a platform
for development for Nestle. But the risks and costs attached with such developments are high.
 Product innovation

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Innovation is fueled by technological developments. Product innovation is becoming more
necessary for the organization because of globalization people are becoming aware about the
changes being taken place around them so in order tackle the situation nestle is focusing on
product innovation by introducing new products with help of technological factors.

 LEGAL
The legal factors are related to the legal environment of the organization and the impact on the
demand and cost. For an instance, nestle created and provided a health and safety covers for
their employees. Nestle would pay the fee for their employees via their free legal help scheme
with personal medical/ legal cover. Some of these legal factors affect the company:
 Changing nature of regulation.
 Need to adhere to global regulations and changes across different international markets
 technological and industry concentration
 increasing automation
 government regulations
 technological capacity
 development risks
 increase in development costs
By being briefed with the country’s' laws and regulations, Nestlé would be able to create a
good relationship with the country's government for the future of their corporation. Nestle
could use these relations to be able to test out and market new products, gaining an overall
competitive edge against rivals and creating a bond between Nestle and a country.

MARKETING MIX OF NESTLE

The Marketing mix of Nestle discusses the 4P’s of one of the strong FMCG companies of the
world. The Nestle marketing mix shows Nestle has a strong product line which boosts its
marketing mix. Below are the products, price, placement and promotions of Nestle.

P roduct P rice
Marketing
Mix

P lace P romotion

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Products
There are 4 different strategic business units within Nestle which are used to manage various
food products.

 Beverages: One of the most known coffee brands Nescafe, belongs to the house of Nestle
and is one of the cash cows for Nestle. However, it is not the biggest cash cow. Nestle has
a worldwide distribution and has many different variants. Looking at India, nestle has
also launched Nestea.

 Milk and Milk products: Nestle everyday, nestle slim and Nestle Milk maid are some of
the milk and milk-based products from the house of Nestle.

 Prepared dishes and cooking aides: Nestle has a third category of products which comes
into prepared dishes and cooking aides. The major cash cow of Nestle lies in this segment,
which is Maggi Noodles. Probably one of the most widely sold ready to cook noodle brands
is Maggi. Maggi has a fantastic taste and quality. Thus, it was not a surprise, that Nestle
expanded the Maggi brand to create an umbrella of different products like Maggi pasta,
Maggi sauce, Maggi cubes etc. The Maggi range contributes vastly to the bottom line of
Nestle.

 Chocolates: Nestle has some popular chocolate products, most popular being Nestle
KitKat, Munch, Milky bar, Eclairs and Polo. The newly introduced Alpino is targeting the
gifting segment in response to various chocolates like Dairy milk and Bourneville by
Cadbury. The chocolates segment of Nestle is a star, where the competition is high, and the
expense is high but at the same time the market size is huge as well.

As we can see, two major brands of Nestle are a very high contributor to its Brand equity –
Nescafe and Maggi. These are two brands sold across India in small as well as big shops and
super markets. There have been many competitors for these products, like Brui for Nescafe and
Top ramen and Sunfeast Yippie against Maggi.
The appreciable factor in Nestle is that quality maintenance of products is up to mark and there
are hardly any complaints about Nestles products in the market. This is a major achievement
for a company which relies majorly on food products.

Price
The price is dependent on the market of each individual products.
Nescafe and Maggi being the clear leaders are priced with higher margins for the company as
compared to competition. This is because the product quality is good enough and a bit of
skimming price will not cause the customer to switch brands.
The strength of pricing for Nestle comes from its packaging or consumption-based pricing. For
Nescafe as well as Maggi, nestle offers a lot of sizes and package options. In supermarkets,
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you can even find a 16 packet Maggi whereas in small retail shops, you can find Rs.15 Maggi.
Thus, with the variety available, customer can make his own choice based on his consumption.
In other products like KitKat and Munch, due to tough competition from other companies,
nestle offers competitive pricing. You will find that nestle will be similar priced to many of
Cadbury’s Products in the chocolate segment.

Placement

Nestle follows the FMCG strategy of distribution which involves breaking the bulk. The typical
distribution strategy of Nestle is as follows:
Manufacturing >> C&F agent >> Distributors >> Retailers >> Consumer
Manufacturing >> Bulk buyers >> Consumer

These are the two different forms of distribution which Nestle has. It is typical of any FMCG
company. However, the Nestle channel is known to be strong with a good marketing and sales
network for channel distribution.
On top of it, nestle regularly introduces trade discounts and various tactics to keep the channel
motivated.
The major challenge is in the distribution of Maggi which is the most in-demand product along
with Nescafe. Due to these two products, nestle is able to drive other products in the market as
well. Thus, on purchase of one weak product, the distributor might get a discount on the
stronger product or vice versa.
The challenge for Nestle is in the chocolate segment where it faces stiff competition from
Cadbury and hence selling the chocolates becomes difficult. Kit Kat might have its own brand
positioning, but it is not better than Dairy milk.
Thus, converting retailers to sell Nestle instead of Cadbury is the toughest task for Nestle. This
is converted mainly through promotions.

Promotions

One of the most widely known tunes is the Nescafe tune. It was one of the best advertising
campaigns and was launched at least 2 decades back. However, that campaign brought Nescafe
strongly in the market.
On the other hand, Nestlé’s brand was pushed by the excellent product quality of Maggi and
the witty and innovative campaigns of Maggi. Where Nescafe focuses on value and the good
things in life, Maggi focuses on moments you had with your Maggi. The recent campaign
was completely focused on your Maggi story, where people had to come out with various
innovative ways that they had their Maggi.
Promotions for other products too are done smartly. Kit Kat focuses on “Take a break” and has
done some good marketing for the same. Kit Kat website too is very innovative and shows
nothing but asks the visitor to take a break and have a Kit Kat.

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The major push expected of a FMCG company is in sales promotions at the ground level. This
is where Nestle really rocks. Nestle focuses on its strength which is Maggi, Nescafe and Kit
Kat which are the most promoted brands in the market on ground level.

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 REFERNCES
 http://www.academia.edu/
 http://www.marketing91.com/
 https://en.wikipedia.org/
 www.slideshare.net/
 http://www.nestle.com/
 http://www.strategicmanagementinsight.com/
 http://bib.kuleuven.be/
 www.gotabout.info/
 Strategic Analysis: Nestlé Pakistan Limited by AMC ATA on Prezi
 http://pestleanalysis.com/swot-analysis-nestle/
 https://www.coursehero.com/file/p2bh595/Nestle-nd-STraTegy-Online-Available-at-
hTpwwwnestlecomaboutusstrategy-Accessed/
 http://freepestelanalysis.com/pestel-pestle-analysis-of-nestle/
 https://www.nestle-nespresso.com/about-us/strategy
 https://www.nestle-nespresso.com/about-us/strategy
 https://marketpublishers.com/report/consumers_goods/food_beverage/nestle_pakistan_li
mited_swot_analysis_bac.html

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