Objective

Objective of this project is to analyse the business strategy and growth of Nestlé (focusing
on Néstle India specifically)
About the company
Néstle is a multinational Food, health and beverage related consumer goods company with
its head office located in Vivey, Switzerland. It was started by Henry Nestlé in 1867. It is
located in 477 countries globally. It has around 522 factories located in 82 countries. It not
only has the largest sales but also has the highest product range and Geographical presence.
It ranks #1 in the fortune 500 companies list in the food and beverage sector in 2017. It has
around 333000 employees all around the world. Nestlé is one of the major shareholders in
Loreal, the world’s largest cosmetic company. Henry Nestlé, a German Pharmacist
developed a milk for infants in 1860s, which led to the formation of Nestlé. In 1905, it
merged with Anglo-Swiss condensed milk company, after which the company grew
significantly specially during the first world war. It was during the the second world war, the
company started offering products beyond infant formula products and condensed milk. It
continuously focuses on the wellness of people. So, within 5 years they have innovated and
renovated around 700 products.

Timeline of Nestlé
Nestlé India
Relationship between Nestlé and India started at around 1912, when Nestlé-Anglo Swiss
condensed milk started importing and selling its finished products in the Indian market.
Nestlé started its first factory in India in Moga, Punjab in 1961.
To help in the growth of milk economy, Nestlé’s agricultural services needed to advise,
educate and help the farmers in various aspects of farming and milk production to improve
and increase the milk productivity in India.
Nestlé has a very special relationship with India. It directly or indirectly employees about
one million people in different sectors such as farming, packaging material providers,
services and many others.
Nestlé India manufactures a large number of products which are of international quality
under famous international names such as Kitkat, Maggi, Nescafe, milkybar, Nestea,
Milkmaid. It has also launched many everyday used products keeping the Indian population
in mindset such as Nestlé dahi , slim milk, Nestlé Jeera raita and Maggi in various flavours.
Nestlé India currently has 7 factories all across India all of which keeps the quality in mind.
Vision and Values
To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved
shareholder value by being a preferred corporate citizen, preferred employer, preferred
supplier selling preferred products. (Nestle, 2019)
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.
(Nestle, 2019)
Nestlé’s Business objectives (nestleblog987, 2017)

 To be the world’s largest and best-branded food manufacturer while ensuring that
Nestlé name is synonymous with the products of the highest quality”.
 Nestlé’s business objective is to manufacture and market the Company’s products in
such a way as to create value that can be sustained over the long term for shareholders,
employees, consumers, and business partners.
 Nestlé does not favour short-term profit at the expense of successful long-term business
development.
 Nestlé recognizes that its consumers have a sincere and legitimate interest in the
behaviour, beliefs and actions of the Company behind brands in which they place their
trust and that without its consumers the Company would not exist. So, the needs &
wants of consumers should be considered.
 Nestlé believes that, as a general rule, legislation is the most effective safeguard of
responsible conduct, although in certain areas, additional guidance to staff in the form
of voluntary business principles is beneficial in order to ensure that the highest
standards are met throughout the organization.
 Nestlé is conscious of the fact that the success of a corporation is a reflection of the
professionalism, conduct and the responsible attitude of its management and
employees. Therefore, recruitment of the right people and ongoing training and
development are crucial.
 Nestlé continues to maintain its commitment to follow and respect all applicable local
laws in each of its markets

External Analysis

POLITICAL
 Nestlé have to keep in mind the various rules and regulations related to import and
export of goods and products, the excise duties related to it, taxation and the
government’s permission needed to enter various segments and parts of the country.
 They also have to keep in mind the various rules related to hygiene factors and
introduce hygiene products introduced by various regulated bodies in India.
 They should try to follow the regulations related to food quality standards strictly and
also related to marketing standards
 They also have to changes themselves regularly according to the global regulations and
standardise their practices according to different political practices.

ECONOMIC
 Nestlé have to keep in mind the various economic situations such as inflation, deflation,
economic growth of the country, income levels
 They have to keep a look into the change in the consumer budget, their consciousness
towards the cost and they should price their products accordingly.
 They have to keep in mind the rising price of the raw materials so as to get their supplies
from sustainable suppliers.

SOCIAL
 Nestlé is trying to reduce the salt, sodium, sugar and trans-fat contents in their product
keeping in mind the health of the Indian population.
 They are trying to promote home cooking and increasing family time in world of
convenience.
 They try to understand consumer behaviour so as to have a personal approach in their
marketing strategies.

TECHNOLOGICAL

 Nestlé with the help of social media platforms, is trying to penetrate in different
segments and also trying to promote their different products by launching various
campaigns.
 They can tie up with various e-commerce platforms to sale their products as it has a
tremendous potential for growth.
 They can use technology in improving their R&D and for quality assurance.
 They use state of art technology for the production of various products to meet the
global standard.

LEGAL
 Nestlé has to comply with the legal norms set by a country.
 Nestlé earlier had to face many legal issues as it claimed their infant milk substitute is
better than breast feeding. So, they had to take back those campaigns and had to pay a
huge amount for these.
 They should try to abide by the regulations set by the food and safety norms, because of
which they had to face the Maggi crisis in India, in which Nestlé was accused of using
lead in their products in an excessive amount.
 Nestlé was also charged of using child labours in their factories.
 They also had to face issues related to excessive use of water in their factories.
ENVIRONMENTAL

 Nestlé has increased their attention towards corporate social responsibilities.

 They are now trying to use products for clean environment.
 They try to use recycled packages.
 They are also now recycling their coffee grounds with some other plantations.

SWOT ANALYSIS
Strength

 The main strength of Nestlé is its brand. It is a fortune 500 company and also it has a
strong geographic presence. It is located in 477 countries globally.
 It does individual branding of the different products they have in the market so that if
one of their products is affected it should affect the branding image of its other
products.
 It has a very extensive distribution network. They have adapted local distribution system
and decentralised the supply chain.
 They have more than 8000 products under their name from coffee to chocolates, instant
noodles and many more. They have deep understanding about the different needs of
their consumers.
 They have a large number of workforces who are dedicated towards Nestlé.
 Nestlé spends a huge amount in their R&D sector also. About 5000 employees are
engaged in the R&D segment. The innovated and renovated almost 7000 products in the
last 5 years.
 Its rank is 62 in global most preferred brand.
WEAKNESS

 One of the main problems suffered by Nestlé India was the maggi ban in 2015 which
affected the brand name of Nestlé. But it did not take much time to regain its old fame
again when maggi was relaunched.
 Nestlé manages a large number of brands under a single umbrella. So sometimes
managing a large number of individual brands can create an issue of conflict between
the products.
 Nestlé faced a lot of legal controversies regarding the infant milk products, child labour,
water wastages. These sometimes affects the brand image of Nestlé.
OPPORTUNITIES

 Nestlé is still to get its market share in healthy food category. It launched products such
as maggi oats, or its recent product Nesplus is yet to gain its popularity. So, Nestlé need
to work more penetrate the healthy food category segment.
 Growth in online retailing and distributing can help to target more and more customers.
 Changes in lifestyle, increasing number of working women, more working hour has
increased the demand of ready to eat meals and pre-processed food.
 Increase in consciousness towards health and nutrition will lead to increase in the
demand of food in the healthy food sector. So, products such as oats maggi, Nesplus can
tap those markets.
 Forming more and more strategic alliances with big companies such as Coca Cola, will
open further door of opportunities.
 They could bring up more products with local flavours
THREATS

 There is a large competition in the food and beverage sector not only from the big
national and international companies, but some of the local brands also gives a tough
competition too.
 Increase in the price of raw materials, labour cost further increases the cost of
production of the product which reduces the contribution margin of the product,
reduces the sales and increases the brand switching.
 Change in government regulations and increase in oversights may affect the existing
market and may sometime lead to call out of a product like the Maggi case.

Business Strategies
Localization amidst Globalisation
Nestlé being a global company it has successfully achieved localisation through its product
planning, processes, production, marketing and services. It keeps in mind to provide value
to each of its consumer by specifically designing products for each segment. The strategy of
bringing in new Maggi flavours just to target its local market was an example of localization
amidst globalisation. Maggi recently came up with 6 new flavours just to tap each region of
India and increase its market share in every way. Being a global company it does pays
attention to the small things due to which it can create customer value and develop a small
relationship with them.

Global Brand Strategy

The products of Nestlé are available around the world under a unified brand name. All these
brands are bundles together under one single name “Nestlé”, which results in a value and
reputation of Nestlé as “Global Food Company” while each product delivered has its own
specifications and specialities. The global food brand is a brand which acts as an umbrella
delivering localised products and brands. Some of the global brands of Nestlé are Nescafe,
Nestea, Nesquik, Haagen-Dazs.
Successful Mergers & Acquisitions
Although Nestlé has grown organically but its major success is due to the mergers and
acquisitions of developed and emerging brands with new product categories. Its focus is
clearly in Food & Beverage, Nutrition, Health & Wellness and extenders to the present core
business. Majority of Nestlé’s brands are No. 1 or 2 in terms of market share in their
respective industries with some of it are billion dollar brands. Its clear targets for any M7A
activity are strong market position, key enhancer, ease of integration and global scope and
focus on emerging and developed markets. M&A provides competitive advantage,
operational profits and growth drivers.

Making healthier products

Nestlé always believe in nutrition and wellness for all as its main motive and with the same
belief it has come up with an all new range of healthy food under the brand name of
Nesplus which has a product range of breakfast cereals and also protein bars. Along with
that it keeps the health and nutrition quotient high in all its products ranging from coffee to
chocolates. The founder of Nestlé, Mr. Henri Nestlé always believed that good nutrition is
the key of healthy life, with this aim they earnestly try to produce healthies and tastiest
foods and beverages.

Tying up with Ecommerce sites

Nestlé is known for going out of the way and tying up with various Ecommerce sites to
create a buzz about its product to wide range and be available to its customers present
across the country. After 2015 Maggi Controversy when it came back to market it chose to
take online platform by tying up with Snapdeal and it created such an excitement among its
consumers that it went out of stock within 2 hours. Also Nestlé launched its 6 different
flavours of Maggi on PayTM for selling it to its consumers.
Strategic Roadmap of Nestlé

The Strategic Roadmap of Nestlé is projected to align the people connected to organisation
under a unified set of strategic priorities which will fast-track the achievement of its
objectives. These goals demand from employees of Nestlé a balance of long-term
motivation needed to build for the future and short-term entrepreneurial actions, delivering
the essential level of performance.
Competitive advantages
Competetive Advantage

 Unmatched product and Competitive advantage is achieved from a mix of

brand portfolio
hard-to-copy advantages along the value chain,
 Unmatched R&D
capability built up over decades.
 Unmatched geographic There are essential links between boundless
presence
products and robust R&D, between the
 People, culture, values
and attitude comprehensive geographic presence and an
entrepreneurial spirit, between great individuals
and strong values.

Growth Drivers

Exhilarating projections for progress are provided

 Nutrition, Health and
Wellness by these four areas particularly which are valid
 Emerging markets and across all its products and variants around the
Popularly world.
Positioned Products
All the activities done by Nestlé are motivated by
 Out-of-home
 Premiumisation its Nutrition, Health and Wellness agenda, Good
Food, Good Life, which pursues to offer
consumers products with the best nutritional
profile in their categories.

Operational Pillar

Nestlé must outshine at each of these four core

 Innovation & Renovation
competences as these lead to product
 Wherever, whenever, however
 Consumer engagement development, renewal and quality, operational
 Operational efficiency performance, interactive relationships with
consumers and other stakeholders and
differentiation from its competitors.
If Nestlé excels in the shown areas it will be
consumer-centric, it will fast-track their
 performance in all key areas and hence will
achieve excellence in execution.

Porter’s 5 Forces

Competitive Rivalry- High

Nestlé is a part of consumer food industry which suffers an extreme competition. Nestlé’s
major competitors are Kraft Foods, Group Danone and P&G. While taking specific products
like Nesplus which has breakfast cereals its major competitor is Kellogg’s. Though being one
of the oldest companies with about 150 years of experience Nestlé still faces competition in
the industry. Nestlé holds a particular market share but the competition is majorly due to
the high spending by others in promotion majorly on product launch. In the industry the
competition is not only in terms of price but also in the varieties, creativity and promotional
offers that all the companies provide. As a result, Nestlé faces a high competitive rivalry.

Threat of New Entrants- Low

The new entrants find it very difficult to enter the Consumer Food Industry due to its diverse
nature. There are a large number of barrier on entry and the existing players clench a large
market share. Due to their large experience they understand customer needs and also have
developed loyalty with their consumers. A large number of new entrants enter the market
every year but only few succeed as the have developed strong distribution network and
economies of scale due to which they can produce at low cost and more efficiently. This
makes the threat of new entrants’ low for Nestlé.

Bargaining Power of Suppliers- Low

Nestlé is leader in the Consumer Food Industry, due to which it requires massive quantities
of supplies which makes it a supreme buyer for the supplier. Therefore, once a supplier
starts supplying to Nestlé, it never attempts to bargain or influence the prices. Nestlé in
term maintains relation with its suppliers to ensure best quality of raw materials. The
switching cost of Nestlé is moderate as it will have to enter in contract with new supplier
and work to ensure quality of raw products from supplier.

Bargaining Power of Buyers- High

High level of competition in the industry leads to high bargaining power of buyers.
Consumers can easily switch from one brand to another, if Nestlé tries to increase price or
influence the market. Since there are many companies which sell similar products the
switching cost of buyers is low. Nestlé understands this power of buyers and constantly tries
to ensure that consumers are satisfied by its products. These all led Nestlé develop brand
loyalty from many of its consumers.

Threat of Substitutes- High

Many of the products of Nestlé such as pasteurized milk has substitutes which are readily
available while many of its products like baby food has home-made substitute. After the
Maggi controversy, many new substitutes took this an advantage and gained the market
share of the health conscious people. Nestlé is trying to tackle this situation by highlighting
its aim of healthy and nutritious food and gaining the confidence of its earlier consumers.

Bibliography
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https://www.academia.edu/14542553/strategy_of_the_Nestlé_Company

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