FIVE FORCES ANALYSIS OF NESTLE

Nestle SA (Nestle) is a food and beverage manufacturer and marketer.

Baby foods, bottled water, cereals, chocolates and confectionery, coffee,
culinary products, chilled and frozen foods, dairy products, nutritional
products, ice cream, and pet products comprise the company's product
portfolio. Nestle also sells nutritional products, sausages, and meal
delivery services directly to consumers. Aero, Alpo, Milkybar, Nestle Ice
Cream, Cerelac, Nescafe, Nespresso, Nestea, Milo, Maggi, Buitoni,
Cailler, Movenpick, Freshly, Purina, Boost, Gerber, and Kit Kat are
among its major brands. The company operates in Asia, Oceania, and Sub-
Saharan Africa, as well as the Americas, Europe, the Middle East, and
North Africa. Nestle's headquarters are located in Vevey, Waadt,
Switzerland.
Threat of New Entrants:
 Firms in the industry sell differentiated products rather than standard
products, demonstrating the industry's strong emphasis on product
differentiation. Customers are also looking for products that are
unique. Advertising and customer service are also prioritized.
 Since the industry has high capital requirements, it is challenging for
new entrants to launch businesses because significant expenses must
be incurred.
 Access to distribution networks is simple for new entrants, who can
quickly establish distribution channels and enter the market. With
only a few retail outlets selling the product type, any new entrant can
easily get their product on the shelves.
 Before a company can begin selling, government policies in the
industry require strict licensing and legal requirements to be met.
This makes it difficult for newcomers to break into the industry.
Bargaining Power of Suppliers
 There are many more suppliers than buyers in the industry in which
Nestle operates. As a result, suppliers' ability to influence prices is
diminished, which weakens their negotiating position.
 These suppliers' products are fairly standardized, less differentiated, and
have low switching costs. Due to this, switching suppliers is made
 simpler for customers like Nestle. As a result, suppliers' bargaining power
is weakened.
 Suppliers are not competing with other products in this industry. This
means that there are no alternatives to the product other than those
provided by the suppliers. As an outcome, suppliers' bargaining power
becomes a more powerful force in the industry.

Bargaining Power of Buyers

 There are a lot more suppliers than producers of the products in the
industry in which Nestle operates. This means that buyers have few
firms to choose from and, as a result, little price control. As a result,
customers have less clout when it comes to negotiating in the market.
As a result of the high levels of product differentiation within the
sector, consumers are unable to locate alternative companies that
produce a given good. Because switching is difficult, buyers'
bargaining power within the industry is weakened.
 The buyers in the industry have a low wage. This means that buyers
are under pressure to buy at low prices, attempting to make them more
price sensitive. 
 The industry in which Nestle operates has many more suppliers than
producers of the goods. As a result, buyers have few options and, as a
result, little price control. As a result, customers have less bargaining
power in the marketplace.

Threat of Substitute Products or Services

 There are few substitutes for the products manufactured in the
industry in which Nestle operates. The few available substitutes are
also manufactured by low-profit industries. This means that there is
no maximum profit limit for firms in the industry in which Nestle
operates.
 The few available substitutes are of high quality but significantly
more expensive. Firms producing within the industry in which
Nestle operates sell at a lower price than substitutes while
maintaining adequate quality. As a result, buyers are less likely to
switch to alternative products. As a result, the threat of substitute
products is low within the industry.
Rivalry Among Existing Firms
 Nestle's competitors are few and rare in the industry in which it operates.
Also, the majority of these are big in size. This means that companies in
the industry will not make moves that go unnoticed. The small proportion
of rivals holds a sizable portion of the market. This indicates that they
will engage in aggressive competition to establish themselves as market
leaders.
 Nestle's industry is growing year after year and is expected to do so for
the coming years. Positive industry growth means that competitors are
less likely to engage in competitive actions because they are not
competing for market share.
 Nestle's fixed costs are high in the industry in which it operates. This
causes the industry's companies to operate at full capacity. This also
implies that when demand falls, these businesses will lower their prices.
 Nestle's products are highly differentiated within the industry in which it
operates. As a result, competing firms find it difficult to win each other's
customers because each of their products is unique.
 Due to the variety of their strategies, the companies in the industry are all
distinct from one another. As a result, they run into each other in terms of
strategy.

BY AFRIN AKHTER