Nestle India

SUBMITTED TO Submitted By
Adwait Dwivedi
PROF. SHRIPAD KULKARNI
Khushal solanki
Ruchika Agarwal
Somanath singh
Introduction

• Most crucial aspect of the business for Survival is LPG

• Analysis of internal and external factors
• Industry competitive analysis
• SWOT Analysis
About the company

• It has started in 1912 by entering into dairy business.

• In 1961 Nestlé set up its first factory in Moga, Punjab.
• Nestlé India today has 8 factories across the country. Quality is
the core value that unites them.
• It took Nestlé almost three decades to build a beloved noodle
brand in India.
Vision

to a leading, competitive, nutrition, health and

wellness
be company delivering improved shareholder value
by being a preferred corporate citizen, preferred
employer, and preferred supplier selling preferred
products.
Mission
"Nestlé is...the world's leading nutrition, health and wellness company. Our mission of
'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, from
morning to night."
These statements mirror the organization's long haul business strategy. With regards
to its guaranteed commitment to nutrition to improve health and well-being of its
consumers, Nestlé has also invested into scientific research on the nutritional value of
the products it offers. For instance, it has concentrated the impacts of chocolate on
digestion and gut microscopic organisms. The focus of the company is to meet needs
and desires of today’s and tomorrow’s consumers.
Objective

Our objective is to be the leader in Nutrition, Health

andWellness, and the industry reference for financial
performance, trusted by stakeholders.
External Analysis
Political/Legal Segment

Nestlé's products are accompanied with the seal of assurance.

Strict quality control plays important part in political variable
as well.
It gives the guarantee that customer does not purchase any fake
item.
Economic Segment

It imparts its knowledge and expertise to local small

andmedium organizations.
Nestle works along with the local government to help
the farmers in planting and reaping crops.
It will benefit the customers whereby they will be geting
the products at low prices.
Social Factors

Decent eating regimen

Satisfactory food supply
Maintaining health and hygiene
forcefulness of utilizing innovation.
Technological Factors

Web and Mobile Technology

By analysing data to identify the need of the customer.
Environmental Factors

Conscious to have clean environment

Attention towards the social contribution
Recycling and the issues pertaining to the packing
Porter ’s Five Forces Model
Threat of New Entrants

Economies of Scale
Switching Cost
Government Policies
Capital Requirement
Industry Profitability
Bargaining Power of Supplier

Differentiation of inputs
Switching costs
Substitute Products
Supplier concentration relative to industry concentration
Treat of forward integration
Bargaining Power of Buyers

Differentiation of outputs
Presence of substitute
Industry concentration relative to buyer
Threat of backward integration
Threat of Substitute Products

The relative price performance of substitutes

Switching cost
Buyer propensity to substitute
Intensity of Rivalry among Competitors

Industry growth rate

High fixed cost
Intermitted over capacity
Switching costs
Brand Identity
Competitive Environment

Taste Vs. Nutrition

Need high level R&D capability
Price of the products
Competitive advantage

People culture values and attitude

Unmatched geographic presence
Unmatched research and development capability
Unmatched product and brand portfolio
Internal Analysis: Core Competencies
Analysis

Innovation and renovation

Whenever, wherever and however
Operational Efficiency
Consumer Engagement
Value Chain Analysis
Primary Activities: Inbound Logistics

Raw materials
Warehouses
Training to the farmers
Operations

Processing
Packaging: The Design lab |QR code
11 Internal and external laboratories to ensure food
safety
Adopted 3R methodology (For Water) – Reduce, Recycle,
Reuse
Outbound Logistics

 Inventory management
 On time delivery
 Transaction management
 Order fulfilment
 Invoice accuracy
Marketing and Sales

Price
Brand loyalty
Habitual to taste
Public Relation
Services

2 Minutes Cooking time strategy

Maggi masala
Cuppa Maggi Noodles
Supporting Activities: Procurement

It provides sustainable and profitable development

for the company
Supply of raw material at specified quality, quantity
andlow cost
Technological Development

Focuses more on Research and development

Continuously improving their technology to increase
the efficiency
Human Resources Management

Right people with right skill

Almost zero percentage attrition rate of the employees
Trust factor among the employees
Single objective
Management training program to develop young employees
Firm Infrastructure

Nestlé India today has 8 factories across the country.

Quality is the core value that unites them.
Manufacturing plants have helped to create large skiled
labor forces in rural areas.
Its infrastructure strives to identify external opportunities
and threats.
SWOT Analysis: Strengths

Unmatched research and development capability- Nestlé’skey

competitive advantage is its R&D. It has the largest R&D centres’
with one of the best geographically diversified revenue sources-
Nestlé operates and sells its products in 189 countries, reaching
almost the entire world.
Maggi. Brand awareness helps the company to introduce n
ew
products and sell the current products more easily.
 Nestlé’s product portfolio is wider than any of its rivals in the
industry.
Environmental sustainability efforts- Nestle pride itself on
company’s sustainability efforts.
Ownership of some of the most recognizable brands in the
world-Nestle owns and markets a few well recognized brands, such as
Nestlé, Nescafé
Weakness

Criticism over high water usage, selling contaminated food, anti-

unionism, forced child labour and using other unethical practices
Contaminated food recalls- In 2015, Nestle recalled anddestroyed
35,000 tons of contaminated Maggi noodles in India. This
resulted in hundreds of millions in lost sales and damaged brand
reputation
Complex supply chain configuration.
Opportunities

Nestle, which has a history of providing misleading nutritional

information on its labels should improve its practices and clearly label
the products.
Nestlé could start sourcing all of its materials from sustainably grown
plantations and farms.
where the established brands are losing sales and the capital is stil
very cheap, Nestlé could increase its investments in start-ups that will
help the company to meet the future challenges and increase the
sales.
Threats

In the future, water scarcity will likely become a more significant

problem that will negatively impact company’s operations.
Food and beverage markets are growing very slowly and with so
many new start-ups, Nestle will find it hard to compete in the future.
Nestlé’s profit margins are dependent, to some extent, on the price
of coffee beans, which over the past several years has been very
volatile
BCG Matrix
Ratio Analysis

Profitability Ratios 2015 2014 2013 2012 2011

PBDIT Margin (%) 20.36 21.5 22.31 22.27 20.57
PBIT Margin (%) 16.11 18.07 18.68 18.94 18.53
PBT Margin (%) 9.95 18 18.43 18.62 18.46
Net Profit Margin (%) 6.88 12.02 12.27 12.81 12.79
Return on Net worth / Equity (%) 19.98 41.75 47.16 59.38 75.47
Return on Capital Employed (%) 12.23 26.53 22.49 26.53 32.76
Return on Assets (%) 9.26 20.35 17.69 20.68 21.84
Total Debt/Equity (X) 0.01 0.01 0.5 0.58 0.76
Asset Turnover Ratio (%) 134.45 169.34 144.13 161.39 170.71
Liquidity Ratios
Current Ratio (X) 1.68 1.45 1.71 1.31 0.88
Quick Ratio (X) 1.12 0.83 1.16 0.65 0.38
 9.96 11.67 12.37 11.18 10.24
Inventory Turnover Ratio (X)

Basic EPS (Rs.) 58.42 122.87 115.87 110.76 99.73

Dividend Payout Ratio (%) 83.01 51.27 41.85 43.78 48.63

 Net Profit Margin has significantly decreased in 2015 by
almost half proportion. This is because of the huge losses Nestle
Maggi has incurred due to its ban in June, 2015. Almost 35000
tonnes of Maggi was called back and destroyed.
This has also reduced return on equity for shareholders.
Inventory turnover ratio has also decreased in 2015
due to reduction in inventories.
Earnings per share has also decreased substantially in 2015
Strategy

Your Company’s objective is to provide consumers with the best

tasting, most nutritious choices in a wide range of food and
beverage categories and eating occasions and help consumers
maintain optimum Nutrition, Health and Wellness. Your Company
has access to the extensive global network of Nestlé R&D. This is a
competitive advantage in the rapidly emerging areas of technology
and scientific research and enables your Company to provide safe
and nutritious products of very high quality.
 The ‘Chocolate and Confectionery’ business worked
onimproving consumer insights and has been working
with Nestlé R&D to innovate and renovate products that
will strengthen its portfolio. The focus was also on
portfolio optimization for long term benefit, though it
impacted short term growth.
Towards the end of the year it launched MUNCH NUTS,a
new extension of the ever popular MUNCH.
 Nestlé ‘Start Healthy Stay Healthy’ reached out to the
supporting eco system of mothers to emphasize the
importance of their role in continued breastfeeding with
the objective to build greater awareness and advocacy.
The key message was‘Breastfeeding is not just a
mother’s responsibility’. The campaign received 9.1
million views out performing industry benchmarks.
 During the year your Company enhanced labelling of products
with QR codes. This enables consumers to use their mobile
phones to scan the QR code on the label for information on
Nutrition, Environment and Community as relevant to the
product.
During the year your Company also created ‘The Design Lab’
to inspire a strategic shift in packaging design keeping the
consumer experience in mind and to achieve operational
excellence.
 During the year, 54 Energy reduction projects and 40 water
reduction projects were completed in factories.
During 2015 your Company consolidated and further
accelerated the current improvement programs. It
continued to upgrade its warehousing infrastructure with
key distribution centers ready to operate in the future with
proper infrastructures, systems, processes and a sound
safety
 During the year your Company has successfully piloted a new
demand forecasting system based on analytics and also
automated the replenishment to the distribution centres in all
factories, improving accuracy and people productivity.
The roll out of the ware house management
systems (WMS)with Radio Frequency (RF) technology has been
extended to additional factories. During the year your
Company focused on further improving freshness of products
‘on shelf’ for consumers and reduce waste.
 Nestlé’s approach to business is Creating Shared Value
or ‘Saanjhapan’ as used by your Company and it is about
the impact of the business and engagement through it.
Your Company has been conducting business in a way
that both deliver longterm shareholder value and benefit
society under approach of “Creating Shared Value”
(hereinafter ‘CSV).
Strategy

2013 focused on Nutrition, product development

2014 Renovation and innovation, market development,
product development
2015 Renovation and innovation, market development,
product development
Continually development in supply chain
Thank You