See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/335058135

Nespresso Case Study. (Entrepreneurship and Innovation)

Technical Report · August 2019

DOI: 10.13140/RG.2.2.27417.98404/1

CITATIONS READS
0 25,003

1 author:

Paula Jean Ventura Söderberg

University of Birmingham
8 PUBLICATIONS   0 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Paula Jean Ventura Söderberg on 07 April 2020.

The user has requested enhancement of the downloaded file.

 Nespresso Innovation 1

NESPRESSO INNOVATION AND BUSINESS STRATEGIES

By

Paula Jean V. Söderberg, MBA

Business and Innovation

University of Birmingham

United Kingdom

2018

*Teaching note at the end of the essay.

 Nespresso Innovation 2

Abstract

The Nespresso business innovation model is one of the most successful and

widely studied mainly by businesses in the consumer sector. The business idea was not

successful overnight but slowly evolved into a profitable business venture. Nestle put in

place strategies to facilitate the conceptualization of the business unit plans. The

innovation eventually thrived into a successful model. An extensive analysis of the sectors

within the industry identified methods in which Nespresso could transform to attain

efficiencies. The business strategies were able to combat the challenges that came with

its success to gain a competitive advantage in the market. Nespresso venture overtime

achieved its aim of ensuring product uniqueness and value addition to Nestle. This paper

provides a summarized overview of the Nespresso model and its key elements. A brief

historical beginning of Nespresso as an independently operating business unit of the

broader Nestle Corporation is outlined in this essay. Referencing from a detailed study, it

describes how Nespresso systematically integrated and implemented the business idea.

Keywords: Nestle, Nespresso, Business Innovation

Student ID 1735120

Nespresso Innovation 3

INTRODUCTION
Introduction

Nespresso is an “autonomous” worldwide corporation of the Nestlé Group,

contemporaneously in 76 countries with more than 13,500 employees worldwide. (Nestle-
Nespresso, 2018) Nespresso Innovation described the notion “what could we do” as a part
of Nestle s entrepreneurial and innovative activity for being a large organization. Its creativity
was not influenced only by producing something unique but as well as for being a useful
product. Therefore, this assignment is stipulated in order to emphasize the importance of
Nespresso s innovation, if whether or not Nestle Coffee Specialties or NCS was effective in
continuously conceptualizing its idea, by correlating Nespresso Innovation Analysis into
different segments and factors that contributed to Nespresso s success.

Nestle s Business Strategy Canvas Model was plotted and expounded to justify the qualities
of Nespresso s venture. The analysis on Nespresso s industry and market picture after 2003
will further identify Nespresso s different ways of transformation and operational efficiencies.

Nespresso s sales are continuously manageable therefore I will also intricate the factors why
sales targets are arranged and how it is being achieved, as well as the significance of
learning from Nespresso s entrepreneurship, innovation and business strategies.

With accomplishments comes issues, therefore, this task will correspondingly enumerate
some of those risks and threat factors that Nespresso faces, then will convey the
recommendable and considerable actions needed.
Student ID 1735120
Nespresso Innovation 4

NESPRESSO INNOVATION ANALYSIS FOR THE YEAR 1990 2003

Business Model Strategical Canvas and Innovation Analysis from different significant
factors:

Nespresso s Business Model Canvas (Figure 1) is expounded below in different sectors:

1. Value Chain Management:

Nestle s separate organization: Nespresso by Nestle Coffee Specialties (NCS)
Nespresso is considerably a small separate company of Nestle. Its function is to develop
the innovation further, widening its market, develop its own persona, disseminate the
product and services as well as developing and producing the coffee capsules for the
Nespresso machine called the Nespresso pods. Nespresso was “physically moved out
of Nestle so that it could establish credibility and so that it didn t have to fight against all
the company s rules” of Nestle (Miller, 2003) which means that by launching this new
business, NCS can concentrate on the “core business by removing the managerial and
technical burden of activities unrelated to the mainstream business or to facilitate
learning from external sources in the case of enabling technologies or activities” (Tidd
et.al, 2015) Therefore Nespresso was beneficial to Nestle and considerably a corporate
proficiency strength.

3
Nespresso Innovation 5
Nespresso Innovation 6
Nespresso Innovation 7
Nespresso Innovation 8
Nespresso Innovation 9
Nespresso Innovation 10
Student ID 1735120 Nespresso Innovation 11

NE PRE O IND R AND MARKE PIC RE AF ER 2003

5I Ne e inn ai n ill cc ing hi ea ? ha e he e been

incremental significant changes?
Primarily, after Nespresso s 1,700 patents expired in 2012, numerous companies such as
Lavazza, Senseo, and Tassimo began entering the portioned coffee market with similar
capsules, pods, and pads” (Teng, 2017) Therefore, there is a huge increase of competition
during this period. As a counter measure, Nespresso in 2013, ultimately achieved 80%
collaboration with AAA Sustainable Quality (Trademark) Program. This means that
Nespresso covers a higher protectorate over the coffee producers which means that rivals
may have to purchase coffee beans in a more expensive price. Nespresso therefore
strategized its growth into sustainability which will expectedly extent until the year 2020. In
2010, Nespresso had reach 200 boutiques. During the span of 2005 to 2018, Nespresso s
marketing strategy was “a lot of advertising” using Hollywood icons/personalities as well as
continuously increase and manage its sales. The machines and capsules continued to
innovate as well.

5
Question inspired from the Apple-Android Case
10
 Student ID 1735120

Student ID 1735120

Nespresso Innovation 12
6Ha an hing like c ea i e de c i n cc ed ?
6Ha an hing like c ea i e de c i n cc ed ? destruction” (Tidd et.al, 2015) due
Nespresso s innovative idea is considerably a “creative
to that espresso
Nespresso coffee,idea
s innovative regarded as a high-end
is considerably coffee
a “creative indulgent,(Tidd
destruction” in which
et.al, a2015)
suitable
due
espresso is well-known
to that espresso its “fine taste
coffee,byregarded as aand its crema,
high-end the visually
coffee distinctive
indulgent, creamy
in which foam
a suitable
on the surface,
espresso which coffee
is well-known by its connoisseurs
“fine taste andconsidered an visually
its crema, the essential part of the
distinctive espresso
creamy foam
experience”, (Miller, 2003) affected the value of the espresso and the other special
on the surface, which coffee connoisseurs considered an essential part of the espresso variety
of coffee when
experience”, Nestle
(Miller, commercialized
2003) affected thecoffee
value machines through
of the espresso serving
and it at-home,
the other specialas well
variety
the non-partner
of coffee coffeecommercialized
when Nestle machine manufacturers. Big coffee
coffee machines restaurant
through servers
serving are affected
it at-home, as well
as
thewell for instance,
non-partner themachine
coffee market share of Starbucks
manufacturers. Bigand of many
coffee others.servers are affected
restaurant
as well for instance, the market share of Starbucks and of many others.

CONCLUSION AND RECOMMENDATION

Conclusion and Recommendation
CONCLUSION AND RECOMMENDATION

To sum up, Nespresso continued to fulfill its value proposition in bringing in-home,
personalized coffee while at the same time conducting a long-lasting relationship with the
To sum up, Nespresso continued to fulfill its value proposition in bringing in-home,
customers. As the world evolve, I learn that the Nespresso s management is very much
personalized coffee while at the same time conducting a long-lasting relationship with the
capable of adopting to changes whilst being sequestered with its innovation creative ideas.
customers. As the world evolve, I learn that the Nespresso s management is very much
It also enhanced my perspective after analyzing this case that force-able decision making
capable of adopting to changes whilst being sequestered with its innovation creative ideas.
is as important as being open to many dispositions, since being aggressive, could mark an
It also enhanced my perspective after analyzing this case that force-able decision making
innovative idea into position. If Lang had not taken the fierce leadership strategy, Nespresso
is as important as being open to many dispositions, since being aggressive, could mark an
would not have been materialized and developed today. For instance, Steve Jobs of Apple
innovative idea into position. If Lang had not taken the fierce leadership strategy, Nespresso
had the same “to-do” aggressive attitude. Therefore, Nespresso s management is very
would not have been materialized and developed today. For instance, Steve Jobs of Apple
effective in implementing success in its environment.
had the same “to-do” aggressive attitude. Therefore, Nespresso s management is very
I had ascertained as well that marketing research for commercialism/entrepreneurial
effective in implementing success in its environment.
business is very essential to avoid additional costs in majorly relying into trial and error
I had ascertained as well that marketing research for commercialism/entrepreneurial
learning as previous facts and data as well as the current influences will formulate a much
business is very essential to avoid additional costs in majorly relying into trial and error
clear description of any business ecosystem.
learning as previous facts and data as well as the current influences will formulate a much
Therefore, upon identifying Nestle s Business Strategy Canvas Model, the analysis on
clear description of any business ecosystem.
Nespresso s industry and different ways of transformation and operational efficiencies, as
Therefore, upon identifying Nestle s Business Strategy Canvas Model, the analysis on
Nespresso s industry and different ways of transformation and operational efficiencies, as

6
Question inspired from the Apple-Android Case
11
6
Question inspired from the Apple-Android Case
11
Nespresso Innovation 13
Student ID 1735120 Nespresso Innovation 14

Reference:
Away-from-Home vs In-Home, R&G and Instant Coffee (world-wide consumption in billions of cups: 1996),
Nespresso Case, Miller 2003, University of Birmingham Canvas, [Online] Available at
https://canvas.bham.ac.uk/courses/29973/assignments/118546 (Accessed April 15, 2018)

Contrasting Capabilities, complementary capabilities, Tidd and Bessant, 3rd Edition, 2015, p. 416 [Online]
Available at: https://online.vitalsource.com/#/books/9781119088752/cfi/6/52!/4/2/8/30/2@0:95.3, (Accessed
April, 18, 2018)

Entrepreneurship and Innovation, MBA, University of Birmingham Canvas, Final Assignment, 2018 [Online]
Available at https://canvas.bham.ac.uk/courses/29973/assignments/118546 (Accessed April 15, 2018)

Factors influencing new product success, Nespresso, Tidd and Bessant, 3rd Edition, 2015, p.328 [Online]
Available at: https://online.vitalsource.com/#/books/9781119088752/cfi/6/46!/4/2/8/6/2@0:24.3 (Accessed
April 23, 2018)

Figure 1: BMC Model Canvas, Nespresso Strategy Business Model Article: “A better way to think about your
business model” Alexander Osterwalder, May, 06, 2013 [Online] Available from: https://hbr.org/2013/05/a-
better-way-to-think-about-yo (Accessed on April 19, 2018)

Financial Resources, Nespresso Strategy, J. Miller, 2003, University of Birmingham Canvas, Final
Assignment, 2018 [Online] Available at https://canvas.bham.ac.uk/courses/29973/assignments/118546
(Accessed April 15, 2018)

Ideas Factory, Types of Strategy, University of Birmingham Canvas, [Online] Available at

https://canvas.bham.ac.uk/courses/29973/pages/7-dot-2-3-strategy-options-for-start-
ups?module_item_id=879036 (Accessed April, 20, 2018)

Independent Business Units, Tidd and Bessant, 3rd Edition, 2015, p. 403 [Online] Available at:
https://online.vitalsource.com/#/books/9781119088752/cfi/6/50!/4/2/10/22/2@0:0.967, (Accessed, April 21,
2018)

Innovation and Renovation: The Nespresso Story, J. Miller, 2003, University of Birmingham Canvas, Final
Assignment, 2018 [Online] Available at https://canvas.bham.ac.uk/courses/29973/assignments/118546
(Accessed April 15, 2018)

Knowledge Push, Market/Need Pull innovation, Tidd and Bessant, 3rd Edition, 2015, p. 164 [Online]
Available at: https://online.vitalsource.com/#/books/9781119088752/cfi/6/32!/4/2/6/6@0:53.5, (Accessed
April 20, 2018)

Market Coverage, Nespresso Club, J. Miller, 2003, University of Birmingham Canvas, [Online] Available at
https://canvas.bham.ac.uk/courses/29973/assignments/118546 (Accessed April 15, 2018)

Nespresso Patent, J. Miller, 2003, University of Birmingham Canvas, [Online] Available at

https://canvas.bham.ac.uk/courses/29973/assignments/118546 (Accessed April 15, 2018)

Nespresso facts and figures, Nestle-Nespresso, 2018 [Online] Available at: https://www.nestle-
nespresso.com/about-us/facts-and-figures, (Accessed April 22, 2018)

Nestle Coffee Specialties, J. Miller, 2003, University of Birmingham Canvas, [Online] Available at
https://canvas.bham.ac.uk/courses/29973/assignments/118546 (Accessed April 15, 2018)

13
Nespresso Innovation 15
 Nespresso Innovation 16

Teaching Note:

Nespresso Innovation and Business Strategies

Nespresso is a business unit of the Nestle Group autonomously operating in 76

countries around the world. Nespresso has more than 135,000 employees worldwide.

The Nespresso innovation aimed to portray product uniqueness as well as become a

valuable product to the broader organization. Peter Brabeck, a former CEO for Nestle,

formed a new business unit, Nestle Coffee Specialties (NCS), to conceptualize the ideas

of Nespresso. One of the significant threats that the Nespresso business idea faced was

the existing Nestle business model. The purpose of this paper is to highlight the

significance of Nespresso's innovation. Evaluate whether NCS continuously succeeded

in the conceptualization of its plans. Identify whether or not NCS effectively coordinated

the innovation analysis to various business units that contributed to the future success of

Nespresso.

Additionally, in the business world today, turning creative business ideas into a

profitable business is tough, and therefore, companies will show resistance at first. Nestle

is not an isolate. Nespresso research and development (R&D) teams had to present a

persuasive case for the innovation to move to adoption. To adequately justify Nespresso's

venture, an analysis of both the Nestlé's Business Strategy Canvas and the innovation

was key. Nespresso's business model was expounded from a perspective of various

industry sectors affecting its success. The segments analyzed included the value chain,

manufacturers and suppliers, ownership of patents, market share, organization

committee, and financial resources. Technically, Nespresso was moved out of Nestle
 Nespresso Innovation 17

building to free it from Nestle business rules and effectively concentrate on its core

functions.

Although Nestle hired Lang to spearhead the NCS organization, in 1988,

Nespresso became a strength and beneficial to nestle by allowing it to operate on its own

(Söderberg 2019, 6). The analysis of the innovation ensured the continuous push of

Nespresso's business strategic plans steering unimaginable success. However, the

victory came with its challenges. Nespresso's well-positioned strategies effectively

combated the threats and maintained sustainable growth that is evident until today.

Nespresso's business management model is flexible in adapting to changes despite high

reliance on its own creative and innovative ideas.

Reference:

Söderberg, P. J. V. (2019, August 8). Nespresso case study (Entrepreneurship and

innovation) (DOI: 10.13140/RG.2.2.27417.98404). The University of Birmingham.

https://www.researchgate.net/publication/335058135_Nespresso_Case_Study_E

ntrepreneurship_and_Innovation

View publication stats