Hilere’s Presentation

Assignment 2: Nestle
• Nestle Corporation is a Swiss Food and drink conglomerate founded
in 1866 by Henri Nestle.

• . It began with the formation of the Anglo-Swiss Condensed Milk

company and has grown into a multinational company that works
globally and has became the largest food company hosting about 500
factories in over 80 countries worldwide.

• Nestle has positively influenced the economy in many countries

globally. The company has created jobs opportunities and training for
people from different countries.

• . Nestle’s products and sales target a wide range of customers, and very few competitors can counter her by
producing the same products. The marketing strategy breaks the geographic boundaries by globally making
their products reach their customer though expert salespeople and the transportation system.

• The biggest challenge that faces Nestle is uncertainty about the future. Even though Nestle is among the
leading food companies globally. It admits that uncertainty about the future poses a more significant threat.
For instance, the covid-19 pandemic has dramatically affected the company’s operations, making the
corporation report significantly losses of times
Nestle Organizational Structure
Nestle’s Workforce Diversity

Race

Sexual
Ethnicity
Orientation

Workforce
Diversity

ablility Age

Religion
 Nestle SWOT Analysis
STRENGTH
 Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any
supply chain bottlenecks.
 Highly skilled workforce through successful training and learning programs. Nestle is investing huge resources in training and
development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
 Superb Performance in New Markets – Nestle has built expertise at entering new markets and making success of them. The
expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it
operates in.
 Successful track record of developing new products – product innovation.
 Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated
number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
 Highly successful at Go To Market strategies for its products.
 Strong Brand Portfolio – Over the years Nestle has invested in building a strong brand portfolio. The SWOT analysis of
Nestle just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new
product categories.
 Strong Free Cash Flow – Nestle has strong free cash flows that provide resources in the hand of the company to expand into
new projects.
WEAKNESS
 Need more investment in new technologies. Given the scale of expansion and different geographies the
company is planning to expand into, Nestle needs to put more money in technology to integrate the processes
across the board. Right now the investment in technologies is not at par with the vision of the company.
 Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest
that the company can use the cash more efficiently than what it is doing at present.
 High attrition rate in work force – compare to other organizations in the industry Nestle has a higher attrition
rate and have to spend a lot more compare to its competitors on training and development of its employees.
 The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale
but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this
segment from the competitors.
 Days inventory is high compare to the competitors – making the company raise more capital to invest in the
channel. This can impact the long term growth of Nestle
 Limited success outside core business – Even though Nestle is one of the leading organizations in its industry
it has faced challenges in moving to other product segments with its present culture.
 Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its
competitors. One of the reason why the days inventory is high compare to its competitors is that Nestle is not
very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
OPPORTUNITY
 Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an
opportunity for Nestle to capture new customers and increase its market share.
 Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE
healthcare research helped it in developing better Oil drilling machines.
 New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It
represent a great opportunity for Nestle to drive home its advantage in new technology and gain market share in the new
product category.
 Opening up of new markets because of government agreement – the adoption of new technology standard and government
free trade agreement has provided Nestle an opportunity to enter a new emerging market.
 Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Nestle’s products thus
providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain
market share.
 The new taxation policy can significantly impact the way of doing business and can open new opportunity for established
players such as Nestle to increase its profitability.
 Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company
can invest in new technologies as well as in new products segments. This should open a window of opportunity for Nestle in
other product categories.
 The new technology provides an opportunity to Nestle to practices differentiated pricing strategy in the new market. It will
enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented
propositions.
THREATS
 Intense competition – Stable profitability has increased the number of players in the industry over last
two years which has put downward pressure on not only profitability but also on overall sales.
 Changing consumer buying behavior from online channel could be a threat to the existing physical
infrastructure driven supply chain model.
 Rising raw material can pose a threat to the Nestle profitability.
 Liability laws in different countries are different and Nestle may be exposed to various liability claims
given change in policies in those markets.
 The company can face lawsuits in various markets given - different laws and continuous fluctuations
regarding product standards in those markets.
 Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead
to serious pressure on profitability of Nestle
 The demand of the highly profitable products is seasonal in nature and any unlikely event during the
peak season may impact the profitability of the company in short to medium term.
 As the company is operating in numerous countries it is exposed to currency fluctuations especially
given the volatile political climate in number of markets across the world.
 Nestle PEST Analysis
Political Factor
According to surveys, Nestle works across 190+ countries and it is heavily influenced politically due to
different rules and regulations of countries. They experience different challenges on daily basis due to its huge
size. They have to look at things closely and carefully such as environmental regulations, taxation, and
import/export laws of several countries. Sometimes these things work in the favor of the company but
sometimes they have to face severe consequences. The change in labor laws is also a big problem for the
organization because it forbids the exploitation of child labor in cocoa farms. According to reports, this thing
can affect the company’s operation indirectly. It is a fact that big global companies like Nestle perform well in
suitable and favorable conditions.
The instability creates a bad impact on the working and operation of the company. For example, the Brexit
period was really challenging for the company. This thing forces the company to rethink its decisions in this
country. This type of instability disturbs the working of Nestle. It creates several problems for both companies
and people in the form of unemployment and low wages. Due to strict food regulations, the company has to
face stringent and extensive testing in order to create new products according to the regulations. You can take
the example of Maggi which faces the same problem. Recently, India reduces the corporate tax which is really
welcoming for Nestle. It gives Nestle a good opportunity to form better and more products at an economical
rate. It directly gives benefits to customers.
Economic Factors:
Nestle is a global organization that is operating in various countries. It is really crucial for the company to
make several economic policies according to the economic situations in a specific country. As affordability
is the biggest factor, so it is really hard to provide more and better-quality products in those markets where
the prices of raw material keep fluctuate due to economic and political factors. As the cost of raw material is
increasing on daily basis and the trade tension between the US and China also creating problems, so it is
really challenging for Nestle to manage things properly. This thing creates instability between suppliers.
Disposable incomes are also a big hurdle in the way of best quality products. Political unrest and fluctuating
exchange rates are also problematic for the organization. The company is trying to improve local production
in order to reduce the manufacturing cost. The increasing cost of agricultural products and different
segments are influencing the profitability of Nestle. As China and US are two major markets of Nestle, so
the political stability in these markets increase the revenue system and offer growth opportunity to Nestle.
Social Factors:
No doubt, Nestle is a big organization. These kinds of large-scale organizations are easily influenced by
changes in trends formed by the customers. The company is trying to manufacture healthy products such as
low fats and sugar items for health-conscious consumers. The company has strong monitoring, processing,
and manufacturing system that provides high-quality products. These products are minimizing health risks.
It is due to the effective storage and supply chain network. The biggest success of Nestle is its better
planning and strategy because they understand the needs of consumers.
Due to the rising sustainability goals, the company has inaugurated the ground-mounted solar plant in the
United Arab Emirates. As people are more concerned about pre-cooked and canned products, the company
ensures the quality of products by investing a huge sum in the R&D sector in order to satisfy the customers.
In order to fulfill the requirements of customers, the company is really improving its working environment
by implementing innovative technologies which surely increase the profitability and popularity of Nestle.
Technological Factors:
Nestle firmly believes in the assimilation of digital solutions, models, and services. They are essential
factors for both the internal and external integrity of the company. Due to the rising cyber-attacks, privacy
of data, security issues, and reliability, it is crucial to develop a solid plan to protect the system in case of
any emergency or mishap. For achieving desired goals, the company heavily invested in technology
segments such as real-time data. They are also investing in different programs that help to check the
nutritional information of different products. To complete this plan, Nestle has partnered with several
authorities.
In the US, the company has partnered with SmartLabel transparency which helps to give information about
allergens, nutrition, and ingredients. With such dedication and innovation, Nestle is continuously trying to
improve the life of people with its products and services. There is no doubt that Nestle is a trendsetter in
the relevant field. They just need to improve their technology on a constant basis in order to remain
competitive in the market.
Legal Factors:
It is really necessary to abide by the legal formalities of the different countries in which Nestle is currently
operating. It requires a strong legal team that observes these legalities in every aspect and finds solutions
for the company. Basically, these laws are designed for the safety and health of consumers and employees
such as labor laws and consumer safety laws. They need to follow all the rules and regulations of countries
for smooth and constant growth. On the other hand, it is also essential to watch out for IPO and trademark
rules occasionally along with environmental laws.
In case of any breaking rules, the company has to face severe problems in the form of court cases and
public trials. They also face criticism for supporting studies for breast milk which is against international
and local laws. These kinds of negative things can break the reputation and image of Nestle globally. These
things can be threatening for the profitability and market position of Nestle.
Environmental Factors:
Nestle is trying to reduce its environmental impact by adopting eco-friendly options. They are reducing the
use of plastic in their products and also focusing on creating 100 percent recyclable packaging. This thing
really contributes towards the sustainability of and also welcoming for eco-conscious people. In case of any
severe changes in environmental laws, the company has to face real problems in its operation. They were
suspended by RSPO for the reason that they fail to submit the sustainability report on palm oil. They are
also working to reduce its footprint of greenhouse gas emissions.
The company officials are also claiming zero-waste production in their manufacturing plants. They are also
planning to develop sustainable goals globally in order to catch the attention of consumers. Recently, they
are working on a water efficiency program. In short, they are trying their best to fulfill the environmental
laws that can contribute to its success and growth.
 Nestle’s Recent Issue
Nestlé, the largest food company in the world, has been the target of major boycotts for many different reasons over the
years. From child advocacy to plastic pollution. At the Lakota People’s Law Project, they are inspired by the decades-
long intersectional coalition grown out of concern for Nestlé’s practices. They stand arm in arm with their fellow global
citizens who abstain from its lengthy list of products. In 2018, they penned “THE CASE AGAINST NESTLE” and
launched the Nestle’s Pledge: a commitment consumers can make to disavow themselves from Nestlé.
their movement builds on generations of work by other activists who’ve held Nestlé accountable in the court of public
opinion. Below are the reasons the Nestlé Pledge was created:
• In the 1970s, Nestlé aggressively marketed infant formula to mothers in overexploited countries, sometimes even
paying healthcare to start feeding the formula to babies. The Swiss company did this knowing the mother’s ability to
lactate could be compromised or the babies could start rejecting breast milk. Furthermore, seeing as many of these
mothers lacked access to clean potable water to mix with the formula, some infants suffered malnutrition and even
death. In 1974, the first mass boycott of Nestlé began after it was branded “The Baby Killer”
• Nestlé has a reputation of exploiting freshwater resources to turn profit in its plastic bottling operations. The
company has been criticized for millions of gallons of water from a California forest during the 2011–2017 drought. It
used a permit that expired in 1988, which “allowed” its Arrowhead label to pump water for only $524 per year. The
company also has a spotted history in the midwest, pumping hundreds of gallons of water per minute from Evart, MI —
even as a lack of clean water in nearby Flint caused lead poisoning in its residents.
• Because the company uses palm oil in many of its products, Nestlé has drawn fire over its extraction in the Global
South, especially from land defenders and environmental groups. Overexploitation of palm oil and cocoa, specifically
the practice of Nestle and similar international companies, are linked to extreme environmental degradation and human
right abuses.
 Nestlé continues to stay in business, despite all the bad press. Whether it's from the company’s shift to
plant-based products or noteworthy legal challenges, there’s nary a dull moment in the Boycott Nestlé
corner of the internet. Let’s take a look at what Nestlé’s been up to in the past couple years.

"Kayaktivists" protesting
Nestlé at Ginnie Springs,
2019. Photo by Sum of
Us.
In 2019, consumers across eight states brought a class-action lawsuit against Nestlé brand Poland Spring
water. The consumers argue that Poland Springs water doesn’t come from springs as is claimed on the bottles,
but is instead sourced from drilled groundwater. This suit sounds eerily similar to a case Nestlé settled in
2003which claimed that the water was “not sourced from deep in the Maine woods.” Nevertheless, Nestlé
staunchly defends its bottled water, claiming that it complies with FDA standards for “what can be described
as spring water.”
Some Floridians have recently joined the anti-Nestlé campaign, too, following the company’s move to pump
more than a millions of gallons of water per day out of the state’s beloved Ginnie Springs. Nestlé has operated
in Florida under its Zephyrhills and Pure Life brands previously, but as environmentalists point out, Ginnie
Springs’ scenic blue waters are already in steady decline. Increasing pollution, algae blooms, and starving
wildlife give cause to the coalition of environmental organizations and concerned citizens mounting an
offensive against Nestlé. Last summer, “kayaktivists” interrupted traditional recreation activities to protest the
food giant’s permit request, paddling into channels with decorated canoes while chanting “Water for Life! No
to Nestle!”
Changes, however, are imminent for Nestlé’s North American water operations. The company apparently
considering selling many of its North American facilities and expanding its international lines like Perrier and
S.Pellegrino. According to reporting by The Morning Call, the company’s 2019 organic growth in North
America was only 0.2 percent, and only that much thanks to price increases. Some speculate that this
performance decline is related to Nestlé’s various controversies in North America, while the company
claims that North Americans simply spend less on bottled water than Europeans do. Regardless of the
outlook, it is true that, thanks to the internet, more consumers are aware of Nestlé’s unscrupulous business
practices than at any other point in the company’s history.
As Nestlé looks for buyers for some of its subsidiaries, the firm also sold its North American brand of pasta,
Buitoni, earlier this year. This sale follows several other notable removals from Nestlé’s product lines,
including its U.S ice cream brands and confectionary business. The Swiss company’s offloading of certain
assets seems to be making room for Nestle aggressive push toward the plant-based market which was a move
that some activists brand as clear corporate greenwashing.
In my personal opinion, Nestle can solve this issue by organizing an event that can repair the environment that
nestle has caused such as campaign to reduce the pressure of the activist towards Nestle. Secondly, Nestle
need to reconsider on their method to extract the natural resources that was needed for the production in the
company. Their method should be environmental friendly so the environment wont be damaged by the
extraction process and therefore the local citizen wont be angry and therefore go against Nestle