CASE STUDY OF NESTLÉ

History of Nestlé
Nestlé was founded in 1866 by Henri Nestlé in Vevey, Switzerland. Nestlé started as a food company
specializing in the production of milk-based baby food. In 1905, Nestlé merged with the Anglo-Swiss
Condensed Milk Company, which had been founded in 1866 by brothers George and Charles Page. The
merger was a huge success and the company grew rapidly. By the 1920s, Nestlé had become one of the
world's largest food companies. (Nestlé, 2022)
Emerging markets refer to countries or regions that are undergoing rapid economic growth and
development, and are seen as having significant potential for future growth. In the food and beverage
industry, emerging markets are often characterized by a growing middle class with increasing disposable
income, and a corresponding increase in demand for high- quality, diverse, and convenient food and
beverage options. These markets present opportunities for companies to expand their operations and gain
a foothold in new regions, and for investors to capitalize on the potential for growth in these markets.
(Orendorff, 2022)
Nestlé is a global company, so its long-term strategic resources are likely to be diverse and varied.
However, some key resources for the company are likely to include its strong brand recognition and
reputation, its extensive distribution network, and its broad portfolio of products in the food and beverage
industry. Additionally, the company has a robust supply chain and efficient manufacturing processes,
which help it to produce high-quality products at scale. These resources, along with a dedicated and
experienced workforce, are likely to be key to Nestlé's long-term success. (Nestle, 2012)

A value chain analysis is a tool used to identify the various activities that a company performs in order
to create value for its customers. This analysis can be used to understand the sources of a company's
competitive advantage, as well as to identify potential areas for improvement. (Porter, 1980)
In the case of Nestlé, a value chain analysis might focus on the activities involved in the development,
production, distribution, and marketing of its products. For example, Nestlé's R&D activities, which
focus on creating new products and improving existing ones, could be seen as a key source of its
competitive advantage. Additionally, the company's extensive distribution network, which allows it to
reach customers in markets around the world, could also be seen as a key strength. Other activities that
might be included in a value chain analysis of Nestlé could include sourcing raw materials,
manufacturing, packaging, and marketing.

The BCG matrix is a tool used in business and marketing to help companies understand the relative
performance of their different business units or product lines. It is often used in conjunction with portfolio
analysis, which is a technique for evaluating the mix of products or businesses that a company has in its
portfolio.
In the case of Nestlé, a BCG matrix and portfolio analysis could be used to evaluate the company's
various product lines and business units in relation to their potential for growth and market share. For
example, Nestlé's core business in the food and beverage industry could be considered a "cash cow" if it
has a high market share and generates a steady stream of revenue and profits. On the other hand, a new
product line or business unit that is still in the early stages of development and has a low market share
might be considered a "question mark." (Sadeghi & Askarzadeh, 2012)
It is not possible to say with certainty whether Nestlé uses the decoy effect to attract customers, as this
information is not publicly available. The decoy effect is a psychological phenomenon in which people's
preferences can be influenced by the presence of a third, "decoy" option. (Hovland & Mandel, 1964)
While it is not known whether Nestlé specifically uses the decoy effect in its marketing and pricing
strategies, it is possible that the company employs similar tactics to influence customer behavior. Nestlé
offers a wide range of products across many different categories, and it is likely that the company uses a
variety of pricing and marketing strategies to encourage customers to choose its products over those of
its competitors. However, without more information, it is not possible to say whether the decoy effect
specifically is one of these strategies.

At Nestlé, the responsibility for making strategy is likely to be shared among several different levels of
the organization. At the highest level, the company's Board of Directors, which is composed of elected
representatives from different parts of the business, is responsible for setting the overall direction and
strategy for the company.
Below the Board of Directors, Nestlé's executive team, which is composed of the company's top
executives and leaders, is responsible for implementing the company's strategy and achieving its goals.
The strategic choice decision of an organization is the process of selecting a specific course of action to
achieve its goals and objectives. This decision is typically based on an analysis of the organization's
internal strengths and weaknesses, as well as its external opportunities and threats. (Mahajan, 2021)

A Competitive Profile Matrix is a tool used to compare a company's strengths and weaknesses to those
of its competitors. The resulting chart can then be used to identify the company's relative strengths and
weaknesses, and to develop strategies for improving its competitive position. To construct a competitive
profile matrix for Nestlé, one would first need to identify the company's key competitors in the global
food and beverage industry. Some of Nestlé's major competitors include companies such as Coca-Cola,
PepsiCo, and Unilever. Next, it’s needed to identify a set of key attributes that are relevant to the industry
and important for evaluating a company's competitive position. Examples of such attributes might
include market share, product quality, innovation, brand recognition, and distribution network.
For example, if Nestlé has a higher market share than its competitors, this would be considered a strength,
while a lower product quality score would be considered a weakness. By analyzing the resulting matrix,
you can gain a better understanding of Nestlé's competitive position and develop strategies for improving
its performance and maintaining its competitive advantage.

A TOWS matrix is a tool used in strategic planning to help a company understand the relationship
between its internal strengths and weaknesses and external opportunities and threats. This matrix can be
used to identify potential strategies that the company can pursue in order to take advantage of its strengths
and opportunities, while also mitigating its weaknesses and threats.

Strengths: Weaknesses: Opportunities: Threats:

1.Established 1.Regulatory 1. Growing demand: 1. Rising costs: The
distribution channels: restrictions: The food The demand for food cost of ingredients and
Food and beverage and beverage industry and beverage products equipment used in the
companies usually have is subject to strict is increasing as the production of food and
access to established regulations, which can population grows and beverage products are
distribution channels limit the ability of health concerns constantly increasing,
that have been companies to innovate become more which can reduce profit
developed over a long or compete. prevalent. margins and make it
period of time. difficult to remain
competitive.
 2. Brand recognition: 2. Health risks: As food 2. Expansion into new 2. Intense competition:
The food and beverage and beverage products markets: The food and The food and beverage
industry is highly are often consumed by beverage industry has industry is highly
competitive, and many large numbers of the potential to expand competitive and there
companies have built people, there is an into new markets, such are many companies
up strong brand increased risk of health as emerging economies vying for the same
recognition over time. problems associated and developing customers.
with their consumption. countries.
3. Cost efficiency: The 3.High cost of 3. Innovation: The food 3. Consumer trends:
food and beverage production: The cost of and beverage industry The tastes and
industry is typically producing food and is constantly evolving preferences of
able to produce goods beverage products can and there is always the consumers are
at a lower cost than be high, as there is often potential for new constantly changing,
many other industries. a need to purchase products and services to which can make it
This allows them to ingredients and be created. Companies difficult for companies
maintain competitive equipment in bulk. This that are able to innovate to stay ahead of the
prices and offer value to can drive up costs and and stay ahead of the curve and remain
their customers. make it difficult to competition can gain a profitable.
remain competitive. competitive advantage.

The ANSOFF Matrix is a tool used in strategic planning to help companies understand the relationship
between their existing products and markets, and potential new products and markets. This matrix can
be used to identify growth opportunities and develop strategies for achieving them. The company's
existing markets could include regions where it already has a strong presence, such as Europe, North
America, and Asia. In terms of potential new products and markets, Nestlé could consider launching new
products in existing markets, such as healthier or more sustainable versions of its existing products. The
company could also explore opportunities to enter new markets, such as emerging economies where there
is growing demand for its products. For example, Nestlé could pursue a market penetration strategy by
launching new versions of its existing products in its existing markets.
As a global company operating in the food and beverage industry, Nestlé has many different rivals across
its various businesses and markets. Some of the company's major rivals include companies such as Coca-
Cola, PepsiCo, and Unilever. These companies are among Nestlé's key competitors in the global market
for food and beverage products, and they compete with Nestlé for market share, brand recognition, and
customer loyalty. In addition to these global rivals, Nestlé may also face competition from local or
regional players in the markets where it operates. For example, in the market for coffee, Nestlé competes
with companies such as Starbucks and Dunkin' Donuts, while in the market for chocolate, it competes
with companies such as Mars and Hershey's. Overall, Nestlé's rivals are a diverse and varied group of
companies that compete with the company for customers and market share across many different markets
and product categories. In order to maintain its competitive advantage, Nestlé must continuously monitor
and adapt to the changing competitive landscape and the strategies of its rivals. There are several ways
in which Nestlé can use generic approaches such as cost leadership and differentiation to gain a
competitive advantage in the global food and beverage industry. One way for Nestlé to gain a cost
leadership advantage is by focusing on reducing its costs of production and distribution, and passing
these savings on to consumers in the form of lower prices.
Overall, by combining cost leadership and differentiation strategies, Nestlé can gain a competitive
advantage by offering a broad range of products at competitive prices, while also differentiating itself
through its focus on innovation and product quality. By leveraging its strengths and capabilities in these
areas, Nestlé can maintain its position as a leader in the global food and beverage industry.

A Stakeholders Analysis is a tool used to identify and evaluate the interests and influences of the different
groups that have a stake in an organization or decision. In the case of Nestlé, some of the key stakeholders
that the company would need to consider in a stakeholders analysis could include its shareholders,
employees, customers, suppliers, and local communities. For example, Nestlé's shareholders are likely
to be interested in the company's financial performance and profitability, as well as its overall direction
and strategy.
By conducting a stakeholders analysis, Nestlé can identify the key groups that have a stake in its
operations and decisions, and evaluate their interests and influences. This analysis can help the company
understand the potential impact of its actions on different stakeholders, and develop strategies for
managing its relationships with these groups in order to maintain its reputation and long-term
sustainability.

A Power/Interest Matrix is a tool used in stakeholder analysis to help organizations understand the
relative power and interest of different stakeholders. This matrix is typically constructed by plotting the
stakeholders on a grid, with power on one axis and interest on the other.
To construct a power/interest matrix for Nestlé, is first needed to identify the company's key stakeholders,
such as its shareholders, employees, customers, suppliers, and local communities. Next, is needed to
evaluate the power and interest of each stakeholder group. Once the power and interest of each
stakeholder group has been evaluated, these values can be added in a matrix, with power on one axis and
interest on the other. For example, Nestlé's shareholders might be considered high-power, high-interest
stakeholders, while local communities might be considered low-power, high-interest stakeholders. By
analyzing the resulting matrix, Nestlé can gain a better understanding of the relative influence and
importance of different stakeholders, and develop strategies for managing its relationships with these
groups. For example, the company may need to devote more time and resources to engaging with and
addressing the concerns of low-power, high-interest stakeholders in order to maintain its reputation and
long-term sustainability. (Rentschler & & Boer, 2015)
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Available at: https://www.nestle.com/about/history

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