STRATEGIC

MANAGEMENT
PROCESS: A Case
Study of NESTLE
Presented by:
Swati Singla
Mayank Aggarwal
Himanshu Sabharwal

INTRODUCTION
Strategic Management is the process by
which managers make a choice of a set of
strategies for the organization that will
enable it to achieve better performance.
Strategic Management Process of NESTLE
is referred to as an illustration.

Model of Strategic Management

NESTLE & Strategic

Management Process
Nestle is a Swiss multinational nutritional
and health-related consumer goods
company headquartered in Vevey,
Switzerland. It is the largest food company
in the world measured by revenues.
Nestls products include baby food, bottled
water, breakfast cereals, coffee,
confectionary, dairy products, ice cream,
pet foods and snacks.

Vision, Mission, Objectives &

Goals
VISION: to meet the various needs of the consumer
everyday by marketing and selling foods of a consistently
high quality.
MISSION: they strive to bring consumers foods that are
safe, of high quality and provide optimal nutrient to meet
physiological needs.
OBJECTIVE: to deliver the very best quality in everything
they do, from primary produce, choices of suppliers and
transport, to recipes and packaging materials.
GOAL:To meet the needs and desires of todays and
tomorrows consumers

EXTERNAL ENVIRONMENTAL
ANALYSIS
The general environment is composed of
dimensions in broader society that influence
an industry and, indirectly, the firms within
it.
They group these dimensions into six
environmental segments such as
demographic, economic, political, sociocultural, technological and global.

Porters Five Forces Model

 The Porters Five Forces Model depicts a

competitive, but profitable market for the food
processing industry.
The model notes a moderate threat of new entrants
into the market and a substantial threat of
substitute goods. In addition, the model shows that
Nestl tends to maintain the upper hand over its
suppliers as commodities have exact substitute in
the market. And also, their customers have a
considerable amount of bargaining power, as
Nestl must adhere to consumer wants and needs
because there are so many close substitutes.

1.High credibility
2.Potential to expand to smaller
towns
3.Improving trends
4.Industry leadership
5.Increase the partnership
6.Product diversity and offerings

1.Highly competitive market

2.Increasing prices of raw
materials
3.Strong rival like Kraft,
Masterfoods, and Unilever
4.Threat of substitute products
5.Bargaining power of buyers

Opportunities

Threats

Opportunities & Threats

INTERNAL ANALYSIS
It discusses the techniques firms can use to
identify and evaluate resources and
capabilities and the criteria for selecting
core competencies from among them.
It also discusses the value chain concept
and examines four criteria to evaluate core
competencies that establish a competitive
advantage to Nestl Company.

Resources of NESTLE
TANGIBLE RESOURCES

INTANGIBLE RESOURCES

Financial Resources
Total Revenue
: CHF 83.64 billion (2011)
Operating income : CHF 12.538 billion (2011)
Profit
: CHF 9.487 billion (2011)
Total Equity
: CHF 62.60 billion (2010)
Total Assets
: CHF 111.64 billion (2010)

Human Resources
Approximately 330,000 people have been employed by
Nestl Company.

Organisational Resources : Nestls governing body is

the Annual General Meeting of shareholders.
Leading the company is the Chairman of the Board and
CEO.
The most relevant of Nestls organisational measures
were the creation of Product Technology Centres, Local
Application Centres and Clusters.

Innovation Resources
Nestl R&D generates the innovative science and
technology needed to build nutritional and health
benefits into products offerings Nestl legendary
sensory excellence.

Physical Resources :Coffee, Water, Ice Cream, Baby

Food, Healthcare nutrition, Confectionary,
Pharmaceuticals
Technological Resources : Nestl moved from being a
technology led company that produced convenient, tasty
foods and beverages for sustenance, to being a science
driven, health and wellness company.
Continual involvement of rapid technological change.

Reputational Resources
Nestl scientists play their part in communicating the
health and wellness benefits of products to consumers.
From consumer need into research priorities.
From emerging science into consumer benefits and
services.

Capabilities of NESTLE
Capabilities are often based on developing, carrying and exchanging
information and knowledge through the firms human capital and also
often developed in specific functional areas, such as R&D, marketing,
manufacturing, management and so on.
Distribution: Nestl distribution network ensures
that every day more than 100.000 tonnes of products
are transported to customers from their factories and
distribution centres.

Management Information System

By using their research for Information Technology,
control all aspects more efficient.

Marketing
Famous brand name and efficient strategy to meet
the taste of each type of consumers.

Management: The day to day management of Nestl

business is taken care of by Executive Board
members composed of company executives and
department heads.

Manufacturing: Nestl produced a probiotic

especially for all infant formulas and created and
patented a spray drying process, used in
manufacturing milk powders and Nescafe was first
used to make powdered paint dispersions.

R&D: Nestls is boosting its research and

development in Switzerland by extending its Product
Technology Centre (PTC) in Konolfingen.

VALUE CHAIN ANALYSIS

SWOT Analysis
Have a very long history over 140 years
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.
Have a great CEO, Peter Brabeck and very strong
workforce.

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.

Strengths

Weaknesses

Opportunities

Threats

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)

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

Alternative Strategies
Long term objectives:
5-6% annual organic growth
Continued year-to-year improvement in EBIT
margin
Improved capital management
As well as be consistent with CEO Bulcke's
stated mandates of stressing internal growth as
the primary source of future growth, using
GLOBE as a vehicle for continuous
improvement, and making the health, nutrition
and wellness strategy the mainstream of
Nestle's business.

Alternative Strategies
Full support of Nestle's CEO.
Provides a moderate degree of consistency with
the previous strategy.
Builds on some of Nestle's major strengths,
including its broad product and brand portfolio
and its strong international presence.

Adhere rigidly to
Bulcke's basic
outline with the
4
Complementary
Platforms for
growth.

Internal growth: forgoes possible benefits accrued

through judicious acquisition as acquisitions
might be able to counteract weaknesses (health &
nutrition) more quickly than internal growth.
Health, nutrition and wellness a mainstream
characteristic: many challenges can be faced in
key divisions like confectionary, powdered and
liquid beverages, ice cream, and many of the
prepared foods.
Four complementary growth platforms :not yet
proven to be complementary and at face value,
seem to be on some levels contradictory

Build
greater
flexibility into the
model, allowing
for
a
slower
transition to the
company-wide
health, nutrition
and
wellness
model,
and
possibility
of
modification
and/or elimination
of one or more of
the other three
growth platforms
(as well as the
possible addition
of a different
growth platform).

Increasing the potential of meeting

growth and profitability goals
Possibility of "discovering" another
potential growth platform.
Possibility of speeding growth and/or
progress towards the goal of
transitioning to the "health and
nutrition" model via judicious
acquisitions as opposed to a sole
reliance on internal growth

CEO Buckle may not give it his full

support because it is not fully consistent
with his plan
May delay Nestle's progress towards the
health and nutrition model
May foster inconsistencies in its business
strategies and objectives and create
confusion, conflicts and/or contradictions
between product areas/business units.
Also provides an opportunity to backaway
from health & nutrition model if it proves
difficult to execute

Add a program of
acquisition and divestiture
to Bulcke's basic model

Acquisition portion: allow for

the addition of new resources,
including new resources and
businesses which may
complement existing businesses
and lead to synergies
Divestiture strategy: allow
Nestle to exit businesses not
meeting its overall guidelines
and strategic objectives in a way
which is likely to contribute
favourably to both its financial
objectives and its objective of
building an integrated health,
wellness and nutrition company .

As with alternative #2, this

alternative carries the risk of
failing to attract support from core
employees as well as the risk that
the CEO will oppose it.

 Recommendations:
NESTLE should combine the alternative #2
and #3 i.e. building flexibility into the strategy
overall, slowing the planned transition time for
moving to a unified health, wellness and
nutrition company, and allowing the firm to
focus on its core resources and business
opportunities by using the tools of acquisition
(adding strength in selected areas and/or
counteracting weaknesses in some areas) and
divestiture (shedding unprofitable businesses
and products, getting rid of businesses which
do not fit into the profile of a unified health,

wellness and nutrition company.

STRATEGY FORMULATION &

IMPLEMENTATION
This involve a 5 step process (Grant, 1991,
p. 115):
1.Identifying and classifying Nestle's resources within the three
primary categories of physical capital, human capital, and
organizational capital and then do the SWOT analysis.
2.Identify Nestle's capabilities what can Nestle do more effectively
than its key rivals?
3.The strategy team should then appraise the rent-generating potential
of resources and capacities.
4.Based on the preceding work, the Nestle strategy team should then
select a strategy or collection of strategies which best exploits the
firm's resources and capabilities relative to external opportunities.
5. Finally, Nestle strategy managers should identify resource gaps
which need to be filled, as well as invest in replenishing,
augmenting and upgrading the firm's resource base.

Once this initial assessment/strategy formulation is

completed, the strategy team should:
1. Survey and assess the identified resources and
capabilities in terms of their level of fit with Nestle's
goal of transitioning from a food company to a health,
nutrition and wellness company.
2. Target non-producing or inappropriate (those which
don't fit with the rest of the portfolio or the strategic
objects) for divestiture and develop a timetable and
plan for such divestiture.
3.Examine the identified "resource gap" areas and
determine if these gaps can be filled through internal
development (e.g., R&D, internal growth) and/or
strategic acquisition. If acquisition, begin scanning the
environment for likely acquisition targets.

REFERENCES
Jones, S. (2012). Strategic Management at
Nestle.
Retrieved JULY 23, 2015, from http
://www.articlesbase.com/management-articl
es/strategic-management-at-nestle-5907881
.html

THANK YOU!!
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