NESTLE CASE STUDY ANALYSIS

Strengths

Strong capability of research and development – one of the key strengths of this organisation is the greatest capability of research and development. Researchers have mentioned that the company spent almost 1.678 billion on CHF. It is equivalent to US dollar 1.967 billion during the year of 2015. It resulted into 1.89% of the entire revenue of the organisation. comparing to this, the famous beverage company Coca Cola spent almost 0 % of their revenue on research and development procedure that only raised 1.2% revenue as a result. Secondly, the company is observed with a stronger geographical presence. They provide a diversified products to almost 189 countries. Their service area mainly divided into three different geographic areas including the Americas, Europe the Middle East as well as North Africa and Asia, and the Oceania and Sub-Saharan Africa. Unlike the other food and beverage organisation, Nestle is not completely depended on a particular country. The company depends on various countries to generate most of its revenue. Finally, the most significant strength of the organisation is to concern about the notion of environmental sustainability. The company is proud enough for its efforts related to sustainability development. The initiatives taken by the organisation help to reduce the waste materials, use of sustainable materials for packaging and keeping the environment clear for a longer run.

Weaknesses

Apart from the strengths, the company is also criticised for few weaknesses. Researchers have mentioned, for many a year, the company is observed with huge unethical promoting of the baby formula, continuous claiming of the company regarding privatisation of water bodies, continuous demand of debt payment from most probably a famine attacked country, misguiding labelling, resourcing the materials from the suppliers through forced labour or child labour and finally anti-unionism. Secondly, the company was alleged with contaminated food recalls. Despite the strongest control over measuring the quality of the food, the company had to recall few products within the markets due to different forms of contamination. During the year of 2014, the company had to recall as well as destroy almost 37,000 tons of Maggi noodles from India due to its contamination. The company observed a huge loss of revenues in this regard.

Opportunities

Firstly, the company can use a clear, transparent and accurate labelling for their products. It refers to mentioning the right ingredients, their quantity and nutritious values in the labelling. It will help to maintain a strong relationship with the potential consumers and the company can earn more revenue. Secondly, the company contains a rich history of providing misguiding products. Maintaining a transparent labelling for the consumers will be helpful for the organisation to clearly display the nutritional values of the used ingredients. Thirdly, the company need to understand that there are huge numbers of new entrants in this marketplace. They are raising much money from the foods and beverage industry. Hence, Nestle can make a tie with this start-up business to promote their name and raise their own benefits. Finally, the US marketplace or the Asian market place is observed with increasing rate of ready to drink beverages. It includes tea as well as Coffees. Hence, Nestle can take initiative to promote own Ready to drink products to reduce the challenge. Even, the marketplace is filled with huge range of alternative products, the company still have multiple opportunities to increase their revenues and maintain a successful position within the entire marketplace.

Threats

Considering the weaknesses of the organisation, there are certain emerging threats for the organisation that can cost their fortune at a greater rate. Apart from the aforementioned weaknesses, the company is associated with poor water quality or water scarcity. Researchers have mentioned that almost 25% of the sales of Nestle contains the use of water. The production of bottle water is itself contain 8% of the entire water bodies. Secondly, the company is observed with extreme rivalry or competition within the marketplace. Competitive rivalry is remaining a threat for a longer period. Finally, the entire industry is affected by the increased price of the coffee beans. The weather is not remaining favourable for a longer run. Hence, the production of coffee is increasing the expenditure of the organisation.

Factors

Analysis

Political

As shown in the aforementioned matrix, the company is dwelling across 189 countries covering the entire world. The company is also providing equal importance to different countries to generate their revenue instead of one particular country. Hence, it is the responsibility of the organisation to track different changes in different policies and regulations provided by the governments including – export, import, taxation, and regulation related to environmental protection. These changes may favour or not favour the organisation. For example, the alteration in the employment law prohibiting child labour was challenging for the organisation.

Economic

The company is dwelling in multiple countries covering the entire world. It is mandated to comply with the economic policies related to the economic condition of the country. In this regard, the company needs to alter their pricing strategy according to the economic condition of the selected country. Along with this, the company needs to understand that the prices of raw materials are also increasing. The lesser increase in the disposable income is limiting the progress of the organisation. For example, due to the same reason, the company has declined the pricing almost 0.7%.

Social

The consumer base of Nestle is quite strong and loyal from the initial stage of their journey. The company works greatly to support the community. They work together to improve the health of the consumers and try to indicate that the products are containing low sugar, saturated fats and sodium. The company also contain different products that prevent them from handling the preparation as well as storage of different brands including the taste, quality, relevancy and competitive or innovative products. The company also has inaugurated solar plants in UAE to support the environmental sustainability. The company promises to continue their work to support the community.

Technological

The company solely believes in integrating digital technology with the business. In this regard, the company wish to incorporate the digital technology in their service models both in the internal and external environment. Along with this, Nestle is using different digital technologies to secure their information and in the procedure of research and development. Research and development is solely depended on the technological integration as it needs to understand the real time needs of the consumers. The consumer demands are changing day by day. Hence, continuous research and development has become an integral part of the business management.

Legal

Legal factor is an important aspect for all the business organisations. It includes maintaining all the legalities of a particular country. There needs to be a team of experts to constantly checking the compliance related alterations within a particular country. Being a participant of the food and beverages industry, the company needs to comply with the health as well as safety considerations for the employees and the consumers. Maintenance of the quality, hygiene and trademarks by the organisation is mandatory in this regard. Nestle is observed with managing the trademark for its favourite brand KitKat in the particular countries of Australia, France and Canada.

Environmental

Nestle is a firm believer of developing a shared value for striving a zero environmental effect through the operations. The efforts of the organisation include the reduction of plastic in their packaging products. They are using 100% recyclable plastic for the packaging materials. The company is also moving towards the sustainability with the progressive countries. Researchers also mentioned that the company was once suspended by the REPO for failing to submit the sustainability reports of palm oil. However, the company is now completely focused for supporting the sustainability agenda for the entire globe.