STRATEGIC MANAGEMENT (MGT657)

GROUP ASSIGNMENT

COMPANY REVIEW

PREPARED BY:
MIMI SHAFIQAH BINTI HARUN 2018248696
WAN NUR ATASHA BINTI WAN ROSMAN 2018272378
NUR ATIKAH BINTI ISMAIL 2018223494
KU NUR AISAH BINTI KU AHMAD 2018414198

CLASS:
BA2425B

PREPARED TO:
SIR HASNUN ANIP BIN BUSTAMAN

DATE SUBMISSION:
30 NOVEMBER 2020
INTRODUCTION
Nestle is a global food and beverage firm that has been founded in the fields of nutrition,
health and wellness. The founder of the Nestle company was Heinrich Nestle, also known as
Henri Nestle. Nestle Malaysia was founded as an Anglo-Swiss Condensed Milk Company in
Malaysia in 1912. The head office of Nestle Malaysia is now situated in Mutiara Damansara,
Petaling Jaya, Selangor. Maggi, Nescafe, Milo, Kit Kat, Nesvita and pet care products such as
Purina and Friskies are only a couple of the many well-known brands Nestle has in Malaysia.
The organization set a mission to strengthen the social cultural, environmental and economic
factors that will influence societal behavior towards people's lifestyles and diets.

The key dilemma of the Nestle firm is to grow its corporate culture by focusing accessibility
in Malaysia's multi-ethnic society. Nestle strives to accommodate the new Western corporate
cultures and traditions with the multiracial values of Malaysia. This is because multi-ethnic
culture has different views on the benefit of the same goods.

The business culture at Nestle was embraced with a flat and adaptable operational
structure. Nestle has changed the usability advantage in which Nestle staff feel safe to engage
in the decision-making phase of the organisation when they are able to freely express their
thoughts and views on developing product design. In supplying feedback to clients, the staff
have shortened response time as less control layer.

Nestle has made few corporate standards by offering savorier and healthy alternatives for food
and beverage and promoting a good lifestyle, ensuring that the standard of increasing the
quality of consumer life is improved. Nestle states that they will convert the cultures into their
products and services easily. It contains the values of corporate business:

1) Honesty combined with a solid work ethic.

2) The ability to do better work.

3) Contact is polite, open and honest.

4) A spirit of collaboration and openness to others' thoughts and views.

COMPANY BACKGROUND

Not only in terms of sales, but also in terms of product range and global scope, Nestlé is the
largest food, health and wellness business in the world. Nestlé S.A. has been active in the food
and beverage business, offering nutritious and quality food since 1866, when it was founded by
Henri Nestlé (Nestlé SA, 2018). Nestlé encompasses nearly all food and beverage market,
infant formula, baby food, milk, chocolate and confectionery products, instant coffee, ice cream,
cooking products, ready-made frozen snacks, mineral water, and many more.

Nestle is now a leading animal feed producer. Nestlé is the Leader, or at least a dominant
number two, in each of these food categories and in most of those markets. Nestle is a strongly
focused organisation with more than 94 percent of sales generated from the food and drink
market.

Nestlé is active on all continents across the world, with around 230,000 employees employed in
more than 84 countries, and 466 factories and sales representatives in at least 70 other
countries. Almost everybody is familiar with many of their brand names: NESCAFE, NIDO,
MAGGI, POLO, MILO, KITKAT, KOKO KRUNC, and more. Some of their goods have broken
records, consuming 3,000 cups of Nescafe every second. And Kit Kat received a Guinness
Book of World Records entry as the world's best-selling chocolate bar with 418 Kit Kat fingers
eaten around the world every second.
STEP 1 & 2: NESTLE’S EXITING VISION, MISSION, OBJECTIVES AND STARTEGIES

Vision:

Nestlé has an aim to meet the various needs of the consumer every day by marketing and
selling food of a consistently high quality. Good Food is the primary source of Good Health
throughout life. They strive to bring consumers foods that are safe, of high quality and provide
optimal nutrition to meet physiological needs. In addition to Nutrition, Health and Wellness.
Nestlé products bring consumers the vital ingredients of taste and pleasure.

Consumers' confidence in their admired brands is a result of their company's many years of
distribution, research and development expertise, as well as continuity. Consumers respond to
this and conclude that customers should trust their products. The goal of the Nestle Company is
to achieve the highest standard, from key items, choice of supply and transport to recipes and
packaging materials.

Mission:

The mission of Nestle is "Good Food, Good Life" is to provide they 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 also believe that research can help them make better
food so that people live a better life. As consumers continue to make choices regarding foods
and beverages they consume, Nestlé also helps provide selections for all individual taste and
lifestyle preferences. Study is an important part of Nestlé's legacy and an essential part of the
future of the business. Nestle recognizes that four balanced individuals, nutrition and the role of
food reside in them and the organization aims to look for solutions in order to deliver Good Food
for Good Life to its customers.

Value:

Nestle values are “full legal compliance, honesty, fair dealings, integrity, and respect.” It is not a
wonder that Nestle has managed to cultivate positive practices among all its staffers in all
corners of the globe. These guiding principles foster correct actions when adhering to the
procedures accepted. It also illustrates the existence of friendly links between the respective
parties.
Objective:

Objectives of Nestle: “Marketing objectives are compatible with the overall corporate objectives
of Nestle. Company’s objective is to be the world’s largest and best-branded food manufacturer
while ensuring that nestle name is synonymous with the products of the highest quality”. The
corporate goal of Nestlé is to develop and market the goods of the Company in such a way as
to generate value that can be maintained for shareholders, workers, customers and business
partners over the long term. Then, Nestlé believes that legislation is the most efficient, the
protection of accountability acts is as a general rule, though an additional personnel instruction
in some fields is useful in relation to voluntary business standards. Ensuring that the highest
expectations are fulfilled in the business.

Strategies:

“The choices we make”

Nestle strives to deliver a range of goods that fulfill consumer needs, provide healthy nutrition
and delight the senses, leading to a better, more balanced life and a healthier world. Whether
through product development, innovation, purchase or collaboration, that leads to today's
choices and forms its future portfolio. Nestle claims that healthy food is better provided by Good
Life:

1 Using our nutritional knowledge to improve the health and well-being of individuals
and animals.

2 Satisfying modern consumer needs with balanced, tasty, accessible items for aware,
time-constrained lifestyles.

3 Bringing quality food innovations to the market fueled by consumer insights,

groundbreaking nutritional science, and culinary excellence.

4 Providing a wide variety of plant-based foods as they diversify their diets to be the
preferred option of customers.

5 Using our scale and experience to increase access to nutrition for everyone,
everywhere.
 STEP 3 : NESTLE’S EXTERNAL OPPORTUNITIES AND THREATS
Opportunities
1. Venturing small food start-ups
Under its famous brand name, Nestle has a terrific opportunity to increase the number of small
food start-ups. In order to promote its brand identity, Nestle may also work with the current start-
ups.
2. Online shopping
Nestle has a remarkable chance to improve its online shopping network and e-commerce
pages. To make the shopping experience more convenient and fun, very few CPGs provide
online services. While Nestle has its online stores in a few countries, it will prove a rewarding
decision for the company to extend its online services to more areas..
3. Market penetration for breakfast cereals
The demand for Nestlé's cereals and oats has seen rapid growth in recent years. It would also
be highly beneficial for the company to enter this market further.
4. Expanding ready-to-drink tea and coffee market
The demand for tea and coffee is constantly growing, giving Nestle a more lucrative opportunity
to clean up the market.
5. Partnerships
Strategic collaborations with other food and beverage giants are also a fantastic opportunity for
the business to boost its sales and income.
6. Authentic labeling

For giving inaccurate nutritional details on its labels, Nestle has already been criticized. There is
also an opportunity to strengthen its practices by offering reliable data and correctly marking its
products.

Threats
1. Illegal rainforest destruction controversy
Nestle was rumored to be involved in the destruction of Sumatra's last rainforest tract in 2017.
In this regard, it has faced serious criticism from NGOs and environmentalists.
2. Water scarcity
The production of Nestlé is highly dependent on water consumption. Owing to several factors,
the organization has found it difficult to access clean water from less expensive sources. These
include rising population, climate change, growing food and water demand, increasing pollution,
waste of water and resource overexploitation.
3. Rising competition
Many CPG companies sell similar food and beverage products, such as Mondelez and Unilever.
In a situation where replacement items are readily available, it is difficult for Nestle to compete.
4. Government regulations and prices
Government regulations can impact Nestle's business operations. In addition, rising commodity
prices are pushing the organization to raise the prices of its goods. This will lead to a drop in
revenue as buyers will turn to other products available at low prices.

STEP 4 : COMPETITIVE PROFILE MATRIX (CPM)

NESTLE DUTCH LADY YEO’S

CRITICAL SUCCESS WEIGH RATING SCORE RATING SCORE RATING SCORE
FACTORS T
Product Quality 0.1 4 0.4 3 0.3 3 0.3
Advertising 0.1 4 0.4 4 0.4 4 0.4
Management 0.1 4 0.4 4 0.4 4 0.4
Price competitiveness 0.1 3 0.3 3 0.3 3 0.3
Financial position 0.2 4 0.8 3 0.6 2 0.4
Customer loyalty 0.2 4 0.8 3 0.6 3 0.6
Market shares 0.1 4 0.4 3 0.3 3 0.3
Global expansion 0.1 4 0.4 3 0.3 3 0.3
TOTAL 1 3.9 3.2 3.0
 STEP 5 : EXTERNAL FACTOR EVALUATION (EFE) MATRIX

Key External Factors Weight Rating Weighted Score

Opportunities
Venturing small food start-ups 0.09 2 0.68
Online shopping 0.08 3 0.18
Market penetration for breakfast cereals 0.04 4 0.10
Expanding ready-to-drink tea and coffee market 0.13 3 0.24
Partnerships 0.13 2 0.16
Authentic labelling 0.07 3 0.20
Threats
Illegal rainforest destruction controversy 0.14 3 0.48
Water scarcity 0.12 2 0.20
Rising competition 0.11 2 0.18
Government regulations and prices 0.09 3 0.38
1.00 2.80

STEP 6: NESTLE’S INTERNAL STRENGTHS AND WEAKNESSES

Strength

1. Reputed Brand Name

Nestle is the most eminent brand on the planet. It has built up a regarded notoriety in the food
and refreshments area offering great items for ordinary use over the globe.

2. Globally Recognized Brand

Through its compelling publicizing and marking systems, it has made huge mindfulness and
built up an effective brand picture far and wide. As per the Fortune Global 500, Nestle is among
the world's biggest enterprises and is positioned at 69th situation in 2018 rundown.

3. Exceptionally Enhanced Organization

Nestle sells its items in 189 nations Instead of depending on a couple of business sectors, it has
caught the sizeable market in a ton of created and agricultural nations to acquire the greater
part of its income. Its driving business sectors incorporate the US, China, France, and Brazil. In
2017, It produced CHF 26.7 billion from the US market alone.

4. Proficient R&D Framework

Nestle has the world's biggest food and sustenance research association with 21 R&D focuses
Its innovative work capacity is one of its key upper hands. There are in excess of 5000 workers
engaged with R&D tasks. It spent almost 1.72 billion Swiss Franc on R&D in 2017.
5. Environmental Sustainability Practices

Nestle invests generous amounts of energy in natural supportability practices and take inventive
activities in improving its nature of items. It streamlines progressed answers for diminish
squander, water use, non-environmentally friendly power use, and bundling material use. In
2017, 253 of Nestle processing plants arrived at zero waste creation. To convey supportability
benefits with its clients and keeping the climate clean, nestle dispatched a free portable
application that encourages individuals to reuse squander bundling material accurately.

Weakness

1. Price Fluctuations by Retail Giants

Nestlé's staple deals are accomplished significantly through gigantic retail monsters like
Walmart, Tesco, and Kroger. Any decrease or expansion in costs by these retailers can
influence Nestlé's deals.

2. Length of control and organizational structure

Nestlé is coordinated in a lattice structure. That implies an enormous number of brands are
under a similar umbrella gathering which makes it to some degree testing to deal with the huge
Administrating quite countless individual brands can regularly bring about disagreement and
irreconcilable situation.

3. Water Controversy

Recently, nestle was blamed for unlawfully siphoning a great many litres of water in 6 countries
where occupants are denied of drinking water.

4. Social Reactions

Nestle has become an objective of media consideration ordinarily. The case to privatize water,
deceiving naming, and a claim for chocolate making utilizing kid and slave work are a portion of
the models that need to debilitate its market notoriety.

5. Maggi Noodles Contention

In 2017, Nestle neglected to clear a lab test in India. This made an exposure publicity as
individuals boycotted Nestle, prompting the deficiency of 80% of piece of the pie in the nation.
Settle guaranteed 'No additional MSG' in the Noodles bundles. Notwithstanding, multiple times
more lead was found in the item in the wake of testing.
STEP 7: INTERNAL FACTOR EVALUATION (IFE) FOR NESTLE

IFE Internal Factor Evaluation Matrix of Nestle

Key Internal Factors Weight Rating Weighted

Score
Strengths
1. Reputed Brand Name 5% 3 0.15
2. Globally Recognized Brand 17% 4 0.68
3. Exceptionally Enhanced Organization 10% 4 0.40
4. Proficient R&D Framework 8% 4 0.32
5. Environmental Sustainability Practices 20% 3 0.60

Weakness
1. Price Fluctuations by Retail Giants 6% 2 0.12
2. Length of Control and Organizational 9% 1 0.09
Structure
3.Water Controversy 12% 1 0.12
4. Social Reactions 5% 2 0.10
5. Maggi Noodles Contention 8% 1 0.08
major weakness (1), minor weakness (2), minor strength (3), major strength (4)

Total 100% 2.66

Based on the IFE Internal Factor Evaluation Matrix of Nestle above, it shows that the
total of weighted score is 2.66 So, we can say here that Nestle have a strong internal position. It
is because the value of weighted score that above of 2.50, it means that it has strong internal
position.

STEP 8: STRENGTH-WEAKNESSES-OPPORTUNITIES-THREAT (SWOT) MATRIX

SWOT, which represents for Strengths, Weaknesses, Opportunities and Threats, is an
logical system that recognizes the inner and outer component that are favourable
and unfavourable of an organization.
 Helpful Harmful
STRENGTHS WEAKNESSES
- Reputed Brand Name
- Price Fluctuations by Retail Giants
- Globally Recognized Brand
- Length of Control and
- Exceptionally Enhanced
Organizational Structure
Organization
Internal - Water Controversy
- Proficient R&D Framework
- Social Reactions
- Environmental Sustainability
- Maggi Noodles Contention
Practices

OPPORTUNITIES THREATS
- Venturing small food start-ups - Illegal rainforest destruction
- Online shopping controversy
- Market penetration for breakfast - Water scarcity
External cereals - Rising competition
- Expanding ready-to-drink tea and - Government regulations and prices
coffee market
- Partnerships
- Authentic labelling
STEP 9: RECOMMENDED STRATEGIES AND LONG-TERM OBJECTIVES
Strategies: Horizontal Integration
Horizontal integration refers to a strategy of seeking ownership of or increased control over a
firm's competitors. One of the most significant trends in strategic management today is
the increased use of horizontal integration as a growth strategy. Mergers,
acquisitions, and takeovers among competitors allow for increased economies of scale and
enhanced transfer of resources and competencies.
Increased control over competitors means that you have to look for new opportunities either by
the purchase of the new firm or hostile take over the other firm. One
organization gains control of other which functioning within the same industry. It should be done
that every firm wants to increase its area of influence, market share and business.

Long term objectives:

Objectives of Nestle: “Marketing objectives are compatible with the overall corporate objectives
of Nestle. Company’s objective is to be the world’s largest and best-branded food manufacturer
while ensuring that nestle 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 favor 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 behavior, 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 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
STEP 10: HOW STRATEGIES AND LONG-TERM OBJECTIVES CAN BE IMPLEMENTED
AND THE RESULTS
Strategies : Horizontal Integration

Nestle Corporation adopted horizontal integration with other companies, to increase revenue,
profit and market share. Nestle started acquiring good human talent, quality equipment,
technology of the competitors. Since, it is good to put an eye on competitor, what they are
doing. Good and innovative things must be adopted to upgrade product and services and to
give tuff time to competitor.

By integration with other firms, Nestle managed to come up with attractive product line. Today
Nestle exists almost in every part of the world with large market share. Most of big integration in
1980 with Rowntree Mackintosh amounted to euro 2.55b. This integration helped Nestle to bring
attractive product line in confectionery market. It also ensured competitive advantage, higher
market share, more profit and long term existence for Nestle.

Objectives

One of the objectives that nestle achieve is to be the world’s largest and best-branded food
manufacturer. Nestle is the largest food company in the world. It is present in all five continents,
has an annual turnover of 74.7 billion Swiss Frances. There are 509 factories are running in 83
countries, having 231,000 employs.

STEP 11: RECOMMENDED SPECIFIC ANNUAL OBJECTIVES AND POLICIES

Annual Objective:

1. Increase growth

Nestle aims to increase the growth of their products. We have a worldwide impression with
presence in 187 nations. Thus, nestle incorporates in excess of 2000 brands, from worldwide
symbols, for example, Nescafé to neighbourhood top choices like Bear Brand. Among these, 34
brands produce over CHF 1 billion each in yearly deals at retail level. So, it enables to compete
the product in markets.

2. Increase customer services

Every company engage their customer through the customer services. Nestlé perceives that
their customers have a genuine and authentic interest in the conduct, convictions and activities
of the company behind brands in which they place their trust and that without its buyers the
organization would not exist. So, the necessities and needs of customers should be thought of.

Policies:

1. Guarantee food safety and full compliance

The team of Nestle should be able to provide the product and must be ensure that the products
are in safety and full compliance. This is because their respect to the policies of nestle and
follow the standards with full transparency.

2. Ensure preference and consistency to delight consumers and customers

The employer should be ensuring that preference and consistency to enchant customers and
consumers by esteeming what they esteem and by offering items, frameworks and
administrations that consistently meet or surpass their desires.

3. Providing training to employees

The employer should train the new employers with the production skills such as practice
packaging, marketing and others. The employees should be train on how to improve their skills
which is important when they are produce the nestle’ product. The employer should be provide
class for the employees to improve efficiency to make sure Nestle can maintain the quality of
product.

STEP 12: EVALUATION

After reviewing the Competitive Price Matrix, we can see the key success and the limitation for
Nestle. Our recommendation procedures for strategy review and evaluation will be based on the
evaluation from CPM. The recommend for strategy review and evaluation:

1. Improve management

From CPM, we can see that Nestle have same rating with Dutch Lady and Yeo’s. So, the
company can improve their management by building up an able group that is continually
attempting to improve the exhibition of the organization. To improve the management, the
organization should be sure about vision, mission and goals. Along these lines, all the
representatives will pursue every one of those things. By improving management of the
management, it will lead the expanding in effectiveness. So, it ensures that Nestle can compete
Dutch Lady and Yeo’s in term of management.
 2. Improve financial position

Based on CPM, we figure out here that Nestle have the highest rating compare to Dutch Lady
and Yeo’s. To improve financial position, the company must get advice from the professional
such as accountant and business advisor. From that, they can suggest the options and what the
company have to do to make sure their financial position maintain to be highest recorded. More
than that, the company can use new marketing techniques in order to generate more sales.

3. Develop advertising skills

From CPM, it shows that the advertising that been recorded for Nestle is same with Dutch Lady
and Yeo’s. So, we must to improve the Nestle so that it can match the other two competition. To
improve it, Nestle must be responsible to discuss with marketing advisor to get new ways or
options to make sure that the product of Nestle known and been used to all the consumers. By
the way, the company can create the slogan or logo that been easy to remember by the
consumers. But now, Nestle have already logo for their product but it can be improve it to tackle
the more interest of the consumers. For example, it can create the logo to make sure the target
customer become familiar with the Nestle’s products. So, this can make Nestle can compete
with other two that are Dutch Lady and Yeo’s.
CONCLUSION

As a conclusion, from this review it is safe to say that Nestle has a lot of positive
attributes backing its larger than life product portfolio and therefore the company has managed to
sustain its position in the list of the fortune five hundred companies. They also have their own
mission and vision that they need to achieve by find out the opportunities and treat in external
analyzed and also handle their weakness and strength by internal analyzed. The company
through the use of efficient management procedures, innovation, capital infusion and research
and development continue to expand its portfolio and also serves as an example of not just an
exceptional food and nutrition providing company but also a real multinational corporation. In
addition, there are many lawsuits against the company and it is also generally considered to be
one of the world’s most boycotted companies and despite all off that the revenues of the
company have hardly slumped since its inception. That is a testament to their value chain
creation and streamlined processes that ensure that nestle becomes a part of the livelihood of the
people of the 130 countries it serves.