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Case Study

Nestle with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestle and is
today the world’s biggest food and Beverage company. Sales at the end of 2010 were around
CHF 100 bn, with a net profit of over CHF 8 bn. It employs around 250,000 people and has
factories and operations in almost every country in the world.

History

In the 1860s Henri Nestle, a pharmacist, developed a food for babies who were unable to
breastfeed. His first success was a premature infant who could not tolerate his mother’s milk or
any other usual substitutes. People quickly recognize the value of the new product and soon,
Farine Lactee Henri Nestle was being sold in much of Europe. In 1905 Nestle merged with the
Anglo Swiss condensed milk company. By early 1900 the company was operating factories in
the United States, Britain, Germany and Spain. World war 1 created new demand for daily
products in the form of government contracts, by the end of war Nestle’s production had more
than doubled.

After the war government contracts dried up and consumers switched back to fresh milk.
However Nestle’s management responded quickly streamlining operations and reducing dept.
the 1920 saw Nestle’s first expansion into new product – chocolates. Nestle felt the effects of
World War II immediately. The war helped with the introduction of the company’s newest
product Nescafe, which was the staple drink of the us military. The end of the war was the
beginning of a dynamic phase for Nestle. Growth accelerated and companies were acquired. In
1947 came the merger with magi seasonings and soups. Crosse & Blackwell followed in 1960,
as did Findus (1963), Libby’s (1971) and Stouffer’s (1973). Nestle’s improved bottom line in
1984 allowed the company to launch a new round of acquisitions, the most important being
American food giant Carnation.

The first half of the 1990s proved to be favourable for Nestle: trade barriers crumbled and world
markets developed into more or less integrated trading areas. Since 1996 there have been
acquisitions including San Pellegrino (1997), Spillers Petfoods (1998) and Ralson Purina
(2002). There were two major acquisitions in North America, both in 2002: in July, Nestle
merged its U.S. ice cream business into Dreyer’s, and in August, a USD 2.6 bn acquisition was
announced of Chef America, Inc.

Business Principles

Since Henri Nestle develop the first milk food for infants in 1867, & saved the life of a
neighbour’s child, the Nestle company has aimed to build a business based on sound human
values and principles. While Nestle corporate business principles will continue to evolve & adapt
to a changing world, basic foundation of the company is unchanged from the time of the origin,
& reflects the basic ideas of fairness, honesty, & a general concern for people.

Nestle is committed to manufacture & market the company’s products in such a way so as to
create value that can be sustained over the long term for the stakeholders, with the emphasis
on serving the communities and the society, in particular.
Questions

1. How did Nestle follow a variety of strategies of Expansion?


2. How did the drivers of globalization help Nestle to grow at a fast rate?
3. Why did Nestle concentrate on responsibility to the community?

Pankaj Ghemawat’s CAGE Theory


The cultural, administrative, geographic, and economic (CAGE) distance framework
helps managers identify and assess the impact of distance on various industries.

The more two countries differ across these dimensions, the riskier the target foreign
market. By contrast, similarities along these dimensions suggest great potential. Com-
mon currency, for example, boosts trade more than 300%. Also, types of distance af-
fect industries differently. Religious differ- ences, for instance, shape people’s food pref-
erences but not their choices of cement or other industrial materials.

By analyzing the possible impact of dis- tance—in all its dimensions—you sweeten the
odds of investing in profitable foreign markets.

The complete article reference is here:

Application of the CAGE framework requires managers to identify attractive locations


based on raw material costs, access to markets or consumers, or other key decision
criteria. For instance, a firm maybe most interested in markets with high consumer
buying power, so it uses per capita income as the first sorting cue. This would result in
some type of ranking. Any international expansion strategy would still need to be
backed up by the specific resources and capabilities possessed by the firm, regardless
of how rosy the CAGE analysis paints the picture. Think of international expansion as a
movement along a continuum from known markets to less-known markets; a firm can
move to more CAGE-proximate neighbors before venturing into markets that are
portrayed as very different from a CAGE-framework perspective. Each dimension of
CAGE is described below.

Cultural Distance. Culture happens to be the first facet of CAGE, in terms of the
acronym, but it also can be the most practically perplexing facet for managers. Culture
is sometimes referred to as the software of the mind, in that it has a sometimes invisible
but indelible influence on people`s values and behaviors.Cultural distance, then, has to
do with the possible differences existing in relation to the way individuals from different
countries observe certain values and behaviors.

A number of researchers have identified significant cultural differences among coun-


tries. Distinct cultural differences are observed around the following dimensions: power
distance (the extent to which individuals accept the existence of inequalities between
subordinates and superiors within a hierarchical structure); uncertainty avoidance
(individuals` willingness to coexist with uncertainty about the future); individualism (how
the individuals in a society value individualistic behaviors as opposed to collective
ones); predominant values (regarding quantity or quality of life, that is, whether more
importance is given to material aspects or a stronger emphasis is laid on interpersonal
relationships); and long-term or short-term orientation (the focus on future rewards or
the concern about the maintenance of the stability related to the past and the present).

Administrative Distance. Administrative distance reflects the historical and present


political and legal associations between trading partners; for example, colonial ties
between trading partners, or participation in common trading blocs. This facet of CAGE
asks you to examine whether there are historical or current political factors that might
favor or impede a business relationship between a company and a new country market.
NAFTA, for instance, decreased the administrative distance between U.S. firms and
Mexico and Canada. Similarly, historical political hostilities between the United States
and Cuba make it virtually impossible (and illegal) for most U.S. firms to do business
there. Trade practices between countries can be significantly affected by laws and
regulations enacted at the national or international level. Because they affect
fundamental business practices, they often affect the competitive position of firms as
well.

Geographic Distance. How far apart are trading partners in physical terms: the size of
the country, differences in climates, and nature of transportation and information
networks? You can think of geographic distance as absolute, in terms of the miles or
kilometers that separate a firm from another market or supplier. Technology and the
Internet, however, has shrunk distance in terms of transportation time, and now with
digital products and services, almost entirely eliminated geographic distance as a
constraint of trade between some markets.
Economic Distance. Finally, economic distance captures fundamental differences
relating to income, the distribution of wealth, and the relative purchasing power of
segments of a geographic market. This has been one of the biggest barriers, for
instance, in the way of U.S. firms` success selling products in emerging markets. In
global terms, this is the four billion people who live on less than $2 per day. The phrase
“bottom of the pyramid” is used in particular by people developing new models of doing
business that deliberately target that market, typically using new technology. An
example of a product that is designed with the needs of the very poor in mind is that of a
shampoo that works best with cold water. Such a product is marketed by Hindustan
Lever (part of the Unilever family of firms).

Answers

Q.1) How did Nestle follow a variety of strategies of Expansion?

Ans:- Industry Analysis: Porter’s Five Forces Model: The intensity of industry competition
and an industry’s profit potential are functions of five forces of competition. Porter’s Five Forces
Model was created to act as a framework for industry analysis and business strategy
development. Porter singled out five different forces that impact competitive intensity which
portrays an image of the overall attractiveness and profitability of a market.

Threats of New Entrants: The food processing industry is very large and competitive. It is
uncommon for firms within the industry to do quite well. As a result, many companies enter into
the market every year in an attempt to gain a portion of the profitable market. For Nestle, the
company luckily has been around for over a century and boasts a long history of quality products
and consumer satisfaction, which has allowed the company to obtain a considerable share of the
market. As a result, new entrants into the industry must attempt to seize a portion of Nestlé’s
market share in order to survive. Essentially, Nestlé is constantly a target, and so the threat of
new entrants is moderate.

Threats of Substitute Products: Due to the nature of the industry, Nestlé is afflicted with the
threat of substitute goods. Ranging from ice cream, frozen foods and confectionaries to pet food,
there are arrays of similar products that compete directly with Nestlé. It is vital for Nestlé to
continuously find new ways to improve its products and generate new sources of growth for the
company’s future expansion because competition is so violent. In recent years, Nestlé has
focused on the health and wellness aspects of its products to maintain its edge in the market.

Bargaining Power of Supplier: Nestlé prides itself on creating and maintaining positive
relationships with its suppliers all over the world. Due to the large purchasing power of Nestlé,
and because the suppliers of agricultural commodities offer a product that is far from unique,
Nestlé holds more bargaining power than its suppliers. Aside from this, Nestlé prefers to create
and preserve long term relationships with its suppliers as this helps to ensure the quality of the
raw materials being purchased. In addition, Nestlé also offers useful advice to its suppliers on
how to perform more efficiently to minimize unnecessary costs.

Bargaining Power of Buyer: Customers have a large amount of bargaining power regarding to
their consumption of Nestlé products. There are close substitutes for Nestlé products which
allows for the preferences of the customer to be very influential. Nestlé understands the power of
the customer and has taken specific steps to meet the needs of its products consumers.
Specifically, Nestlé’ is incorporating health and wellness into the creation of its products as
society has started becoming more health conscious.

Intensity of Rivalry among Competitors: Nestle is powerhouse in the food processing industry
but so are Kraft, Masterfoods, and Unilever, Nestle was also facing strong competition at the
national and regional level. These companies, among others, are in a constant and continuous
battle to outperform one another. Nestle was increasingly facing fierce competition as many food
producing rivals had achieved significant improvements in their operating efficiency. Rivalry is
fierce in the food processing industry, and this is a good thing for consumers. As long as these
companies continue striving to one up one another, consumers will continue to enjoy ever-
improving product lines.

SWOT Analysis:
Strengths:
 Have a very long history over 140 years.
 Company’s name Nestlé” signifies the quality image high standard and quality product.
 Loyalty from customers is also the major strength for the company.
 Operated factories in 77 countries in all six continents, a truly global company.
 Considered the innovation leader in the global food and nutrition sector with 3500
scientists in company R&D network.
 Offering thousands of local products, research and development capabilities.
 Company has the ability to compete in a dynamic environment.
 Company always adapts the new technology.
 Has a very strong workforce.
Weaknesses:
 Less consumer research in few areas.
 Increasing instances of product recalls hampering brand equity.
 Entering into markets that are already mature and can give a tough competition to new
entrants.
 The distribution cost is high as compared to the competition in the local market.
Opportunities:
 Well-known company and strong brand name.
 Health based on products are becoming more popular in the world, including United
States.
 Ranked first in nearly all the product segments in which it operated (market leader)
 Company is trying to open stores in universities.
 They can provide incentives to retailers to increase sales volume.
Threats:
 Some markets they are entering are already mature.
 Global competitors.
 Increasing prices of raw materials.
 Highly competitive market, multinational companies are very organized and financially
strong.
 Company like Cadbury is giving more discounts to retailers as compared to distributors
due to which retailers prefer its products for sale.
 Existing companies are increasing their product lines that can prove to be a threat in the
coming years.

Critical Success Factors of Nestle:

Localization amidst globalization: Successfully achieving localization in the increasingly


globalized food industry Product planning, production, marketing and services form a strategy of
successful localization of a global company. Nestle has 2 organizations that focused on
leveraging its global reach to achieve operational efficiencies: GLOBE and GNBS provide the
process, organization and technology infrastructure to allow Nestlé to leverage its global size
GNBS will enable Nestlé to leverage its scale to increase the efficiency and effectiveness of its
"back office" whilst enabling the markets and businesses to focus on demand generation and
profitable growth. Nestlé’s Swiss sales is only 2% of their total global sales.

Global brand strategy: Nestle has products that resonate all over the world under a unified
brand. These brands are unified under the Nestle banner, which delivered a value and reputation
of a “global food company” while the products delivered Its own specific attributes. The global
corporate brand was the brand platform for delivering localized products and brand. Nestle has
built global brands such as Nescafe, Nesquik, Nestea, Taster’s Choice, Haagen-Dazs.

Successful M&A: Nestle has grown thru organic growth but really thru successful M&A. Nestle
has acquired to enter both emerging and developed markets, and new product categories. Clear
strategic focus: Food & Beverages, Nutrition, Health & Wellness, adjacencies to existing core
businesses. Within these strategic focuses, 12 of their brands represent 70% of sales, most are #1
or #2 in Market Share (4 of these brands are billion dollar brands) Clear criteria for transactions:
Enhancing key metrics, strong market positions, brands, capabilities, ease of integration (culture)
Global scope but focus on bolt-ons: both emerging and developed markets. M&A drives
profitable growth thru competitive advantages, growth drivers, and operational pillars.

Evaluation of Business Strategy: Nestlé Roadmap to Good Food, Good Life


Nestlé has around 468 factories, operates in 86 countries around the world, and employs around
330,000 people. It is one of the main shareholders of L’Oréal, the world’s largest cosmetics
company (Nestlé). The mission of Nestlé nowadays – “Good Food, Good Life” – is to provide
consumers with the best tasting, most nutritious choices in a wide range of food and beverage
categories and eating occasions and to put a strong emphasize that leadership is not just about
size; it is also about behavior and trust earned over a long period of time by consistently
delivering on promises. It is quite important to present Nestlé’s internal resources when
analyzing company’s strategic position – the key strengths and weaknesses. Nestlé’s Chairman
and CEO Paul Bulcke had set Nestlé on the path of achieving worldwide sustainable
competitiveness through the following strategic “pillars” such as low-cost, highly efficient
operations; renovation and innovation of the Nestlé product line; universal availability and
ability to customize products to the local market conditions; improved communication with
consumers through better branding; research and development capabilities with a focus on
meeting today’s needs without compromising the ability of future generations to meet their
needs, and to do so in a way which will ensure profitable growth year after year and a high level
of returns for shareholders and society at large over the long-term. The company has the largest
R&D network of any food company in the world; with 32 R&D centers and over 5,000 people
directly involved in R&D. Nestlé’s long-term corporate objectives are to be recognized as the
world’s largest and best branded food manufacturer and leader in Nutrition, Health and
Wellness, trusted by all its stakeholders, whilst ensuring that the Nestlé name is synonymous
with products of the highest quality as well as achieving the status of “Nestlé Model”, a term
which referred to Nestlé’s objectives of “organic growth between 4% and 6% each year;
continued year-after-hear improvements in earnings before interest and tax. In recent years, the
company has pursued a policy of expansion and diversification (brands diversified into specific
product groups like baby foods, bottled water, coffee, drinks, food service, sport nutrition and
weight management etc.) through acquisition and divestment to achieve a more balanced
structure to the business (as an example, Nestlé‘s 2012 acquisition of Pfizer Nutrition, enhancing
its position in global infant nutrition). To stay ahead of the competition, Nestlé centralizes
expertise in the system technology. Nestlé has marked recently the official opening of a new
System Technology Centre (STC) in Switzerland that brings together on one site the expertise
used to combine products, capsules and machines such as those used in its Nespresso and
Nescafé Dolce Gusto beverage systems what will significantly affect the company’s profits in
the future. The company has also set up a new institute to combine nutritional and biomedical
research, in the hope of creating foods that provide a medicinal benefit. Nestlé is examining its
entire portfolio to make sure its products are healthier and tastier than those of its direct
competitors.

Q.2) How did the drivers of globalization help Nestle to grow at a fast rate?

Ans: Market Drivers: There is a sudden increase in the potential of the different regional
markets to house Nestle products. This was done through its aggressive campaign featuring the
culture and values of its clientele through packaging. For example in the United States, Coffee-
mate is being sold in 32 oz pack. This does not hold true when it is being sold in Europe and
Asia. This is because the Europeans and Asians find it inconvenient to avail this much of a
creamer. Nestle also consider the existing economic conditions of the region. (Nestlé’s
packaging wraps up the world: a truly international food company combines local and global
strategies in packaging its huge array of products, 2004) As an example, a seasoning, Maggi
bouillon in West Africa is being sold in cubes of 1.5 grams while for other countries it can be
sold until 25 g since they have a higher purchasing power. (Demetrakakes , 2004) Asian markets
are more into soft packs and pouches which Nestle utilizes in its products while in the US, plastic
container are still the trend. This simple consideration of the company to the nature of the
regional market has helped them establish their name in the said regions. Nestle also believes in
satisfying the needs of its consumers. With the current trend of saving the environment, Nestle
have already established an environmental marketing approach. The company together with its
affiliates seeks ways of advertising and more importantly packaging their products in agreement
with specific requirements and causing no damage to the environment. It is the thrust of the
company to promote minimal wastage in its promotional materials, which includes the materials
used and the printing process that was done. These efforts of Nestle would help them market
their products since most of the consumers nowadays are also seeking to support companies that
could help save the environment. In today’s fiercely competitive environment, no company can
rely on the successful launch of a new product. Product life cycle is growing increasingly
shorter, and the more successful firms are reducing new product development times to a fraction
of what they once were. This is because competition has the ability to react more quickly to
changes in the marketplace thereby substantially reducing the advantages of any one new
product introduction. As such, companies need to invest on (a) generate new product ideas (b)
convert these ideas into functional and reliable designs that are user-friendly and (c) ensure that
these designs are readily producible and answering the needs of the consumers. (Eisenhardth,
1998) Nestle also takes pride in its innovation of having an integrated and developmental
research aimed in improving the different products. More so, Nestle invests on endeavors
involving research aimed at the physiology of its consumers including his physiology, health and
nutrition. This is crucial since the different food products offered by the company must be able to
sustain its users and at the same time serve as a source of survival. The primary production of the
different products is being done by Nestle but its raw products are being outsourced. It is the
practice of the company that strict quality check be done to ensure that these raw materials are
safe and free from environmental contaminants. In addition, the company has already pledge its
support to the different agricultural and livestock methods that preserve soil and protect water
supply, uses least amount of energy and uses only safe chemicals. Protecting the rights of its
potential market is important to ensure their support to the products. Aside from this research,
the company is also engage in seeking innovations in its packaging. The company not only to
ensure the quality of existing products but more importantly to encourage and help resolve the
different environmental problems spearheaded this. Nestle, with its research and development
group seeks to transform materials that would be harmless and suitable to the needs of the
consumers. Nestle also utilizes the different cultures, mentalities and realities of their region of
operation. This is what they refer to as decentralization. While it is true that the mother company
is stationed in Switzerland, policies and practices of the company needs to be attuned with that of
their regions. This move of Nestle would help them ensure that employees who have genuine
care for the company maintain their market. This is because they share the same value system
and beliefs as their management. This is essential in making the existing market more pleasant
and acceptable to the region.

Cost Drivers: Within every industry, there is usually a segment of the market that buys strictly
based on low cost. To successfully compete in this niche, a firm must necessarily, therefore be
the low-cost producer. However, one should take note that this does not always guarantee
profitability. With the acceleration of technological advancement and innovation, the cost of the
products can now be manipulated benefiting both the company and the consumers as
well.(Flaherty, 1996) Through globalization, different developing countries are being known to
be able to manufacture different food products with high quality and low labor costs. This
interchange of resources is made possible through advancement in transportation and of course
information technology. Nestle is able to recognize possible sources of their raw materials. As
such, this would mean job opportunities to the said regions. Nestle is known to have imported
4,886 tons of powdered milk from Uruguay and Argentina. (Paez, 2002) In Antioquia, with the
daily production of 224,000 liters of milk, 65% is being imported. In 2005, Nestle announced
that their new coffee brand called “Nescafe Partners Blend”, supports fair-trade. (Nestle and
Fairtrade, 2005). This implies that the production of this coffee brand supported the living wages
of its local farmers to name one. While Nestle is able to outsource their production to minimize
the price, in general, they also help the economies of these nations. This was made into a reality
because of globalization. However, in spite of a benefit that is being obtained from the labor
forces that is utilized by Nestle, controversies are also plaguing the multinational company. The
first issue is on outsourcing. Due to immense demand for the raw materials on these products, the
local companies supplying it are already exploiting their own resources just to meet the demands.
As such, some of these raw materials are not of high-grade quality, as it is not strictly monitored.
One of its suppliers reported this that the product already causes diseases to its consumers. The
next issue is on labor policies. It is said, that Nestle with its efforts to ensure maximum
production instill stringent policies in the manufacturing companies. In Colombia for example,
the right of the workers to privacy is violated through the installation of video cameras in the
workplace. (Paez, 2002) There is also a reported halting of the production line and even
harassment of the workers. It was said that management of this factory have disregarded the
function of the union leaders. This of course had greatly affected the families of the workers.
Another report was given that in the Philippines, police brutality was employed. This happened
in the height of the workers strike with respect to violations of the rights of the pensioners. Once
again, the leaders of the workforce was disregarded and created terror in the community.

Legal Drivers: In as much as the Nestle wants to continue its trade, the legal aspect of its sales
and outsourcing must also be considered. Due to globalization, more and more companies,
including nestle has become internationally oriented. This is because because of this
phenomenon, there are more global alliances that are being formed. To support this, the different
government had imposed economic policies such as reduction of tariff barriers and non-tariff
barriers. Thus, market liberalization and privatization is being employed. In addition, common
standards among the countries are also evident. Nestle respects the by-laws of the state and
supports its policies. Management of the satellite companies are active participant in panel
discussion on food legislation and regulations. They also take part in support of policies
pertaining to the environment. Nestle also promotes their policy on environment and transmits
this information from their company to all subsidiaries all over the world. Economy and Nestle
Monetary policies have become the central constituent of the stabilization strategy of different
countries because it is faster and more flexible than fiscal policy. In addition, monetary policy is
secluded from political demands. There are three main monetary tools by which it can control
and influence the money creating abilities of the commercial banking system. They are the open
market operations, reserve ratio and discount rate. These tools influence the money supply and
affect macroeconomic factors. These tools are important as it strikes a balance between
economic growth, low inflation, and a reasonable rate of unemployment. The amount of money
circulating in the economy can be adjusted through open-market operations, specifically with
selling and acquiring government securities bonds in the bond market. The federal funds rate
dictates the interest charge at which commercial banks loan balances at the Federal Reserve to
other reservoir organization overnight. If the supply of money is more than the production of
goods, the government will increase interest rates and bring money supply downward to what it
deems to be the “equilibrium” level. Likewise, if the government deems that economic
expansion is more than the money supply, which leads to deflation, interest rates are then
lessened. The implication of a lower interest rate is that it will be cheaper for individuals to
obtain loans in new business ventures or procure goods and services. This also means dejecting
them from keeping their money in a bank since its interest is much lower. (NematNejad, 2007).
Nestle maximizes these resources and utilizes it to engage in new investments and develop their
research project as they geared on ensuring quality products for their consumers. On the global
fronts, Nestle choose carefully the foreign trade partners based on the questions i.e. "what to
produce" and "for whom to produce", on one to one basis. While working on for the overseas
buyers, one analyzes the overseas buyer’s demand sensitivity on two fronts - price elasticity &
cross elasticity which helps in finding answers of “how to produce". This further leads to the
analysis and determination of the costs structure at the optimum production level to meet its
overseas buyer’s requirements.

Q.3) Why did Nestle concentrate on responsibility to the community?


Ans: Nestlé is a household name within the UK, producing some of Britain’s most popular
brands such as KIT KAT®, NESCAFÉ®, SMARTIES®, GO CAT® and SHREDDIES®. In
Business Studies curriculum terms, Corporate Social Responsibility (CSR) involves the business
taking a broad view of its activities, looking beyond profits for shareholders and focusing on
other stakeholders. For companies like Nestlé, which work with suppliers from a range of
countries, many in poorer regions of the world, it is becoming increasingly important to take a
wider view of its responsibilities. Nestlé believes for a company to be successful in the long term
and create value for its shareholders, it must also create value for society. It calls this Creating
Shared Value. Creating Shared Value goes beyond compliance and sustainability. It aims to
create new and greater value for society and shareholders in the areas where the company can
have the biggest impact – nutrition, water and rural development. These are core to its business
activities and vital for its value chain: • Water: because the ongoing quality and availability of it
is critical to life, to the production of food and to Nestlé’s operations. • Rural development:
because the overall well-being of farmers, rural communities, workers and small businesses and
suppliers is intrinsic to the long-term success of Nestlé’s business. • Nutrition: because food and
nutrition are the basis of health and of Nestlé’s business as the leading Nutrition, Health and
Wellness company. Nestlé operates within complex supply chains. Nestlé sources materials from
thousands of farms, many of them small farmers in poorer rural regions of the world. In many
rural communities, a lack of investment in infrastructure has a serious impact on the quality and
quantity of raw materials that Nestlé and other companies rely on. Nestlé provides training in
order to encourage sustainable production, protect the supply and quality of its raw materials and
have a positive, long-term impact on the local economy and farmers’ standards of living. The
Nestlé Cocoa Plan was launched in October 2009 in the Côte d’Ivoire, Africa. It is a prime
example of Nestlé’s Creating Shared Value approach to business and involves investment of £67
million between 2010 and 2020, building on £37 million in the 15 year before the plan. The
initiative aims to help cocoa farmers to run profitable farms, respect the environment, have a
good quality of life and give their children a better education. However, it also aims to ensure a
sustainable and high quality supply of cocoa for Nestlé in the long-term. Some of the areas it
focuses on to achieve this are improved farmer training, buying from cooperatives and paying a
premium, and working with certification programmes such as Fairtrade. This creates value
through the supply chain, particularly for farmers and their families along the way. For Nestlé,
engaging with stakeholders underpins Creating Shared Value. It enables it to identify emerging
issues, shape its responses and continue to drive improvements in its performance. Topics raised
by stakeholders are discussed with them in a variety of local and international forums. These
include: nutrition, health and wellness; education and access; Nestlé’s role in public policy
issues; auditing and disclosure of infant formula marketing practices; and food safety. Creating
Shared Value has enabled Nestlé to adopt a wider focus to its responsibilities. In doing so, it has
been able to bring about a whole series of benefits to stakeholders, whether they are farmers and
their communities, shareholders or consumers.