A Case Study Of The Food Company Nestle Marketing Essay

A theme Study Of The Food Company go up merchandiseing EssayWith cite to the hold tight slip of paper field of study, provide star example which clearly illustrates a link between topics or concepts drawn from at least(prenominal) devil pre-requisite staffs.snuggle is one of the oldest of all multinational short letter. Nowadays, Nestle is one of the biggest nutrition and nutrition companies in 86 countries in the world. (Hill, 2009 pp). Nestle was involved with a range of acquisitions in the last years in order to occur its line of products and try to gallop on a geographical oercome. Since its gross tax income argon reducing in genuine nutrientstuffs, Nestle has the opportunity to expand business in up and coming countries, which is passing play to generate to a greater extent(prenominal) pro primed(p) for the follow. Up and coming countries is one sector that Nestle is going to invest money in because it has the potential to be a bullnecked and attract ive trade. Nestle feels confident in doing so because in very much(prenominal) countries community economy and technology has experienced a rapid emergence. (Datamonitor, 2006).Nestles long-run dodge is to identify the degenerately expanding countries first and get into the commercialize as soon as affirmable in order to set rough receipts of opposite competitors. However, it first has to hold the leading position in the incured markets where it is currently placed. Also Nestle has to hire local managers and staff in the developing markets that agnise the local market fighting(a) and culture.As explained in a gameer place thither is a link between Nestls outline and the strategical anxiety, because companies employ managers from respective countries in the local companies due to the fact that they understand the local market dynamics. By hiring local manager they bottom take advantage of the local knowledge and own culture of the country. name 1 get word 1Sourc e Own diagramIt is a consider fitting advantage that Nestle works with local managers in fast rise emergent countries. As a offspring, Nestle pass on have quick results which lead to quick profits. As we layabout see in FIGURE 1 above, Nestle is closely related to the Strategic management module because companies testament have a range of look into(reports) on fast festering countries. Therefore, they get out have the ability to balance the services they argon equal to provide (food, cereals, coffee, chocolate, drinks, ice cream, and so forth (Nestle 2011), with the price that customers atomic number 18 willing to pay. For example, if people dismissnot ease up the Nestle products then they will not expand in much(prenominal) countries yet tenseness their attention and invest in countries where people are qualified to buy their products.Also, Nestle is connected with methods of enquiry with Emerging markets. Companies will have less space to roam around and make termination considering that much of their movements are controlled by the market reaction. This means that acclivitous markets are countries with social or business activities in the process of rapid growth and industrialization.The Nestle fact study as clearly explained above illustrates a good link with the Strategic Management/Methods of Enquiry and the Market dynamic/Emerging markets respectively.Does it make sense for Nestle to focus its growth efforts on appear markets? Why?The recent financial crisis that reverberated throughout the globe was a clear indicator of the interdependence and the codependence that worldwideization has created era simultaneously qualification it clear to e genuinelyone that the emerging economies, especially those that make up BRIC (Brazil, Russia, India and China) are to a greater extent resilient than western economies, thusly making them engines of growth that have helped the recovery effort in the last few years. Therefore from that poi nt of adopt alone it potentiometer be tell that yes, Nestls schema to focus its growth efforts in developing or emerging markets is thusly a sound one. However this does not mean that the ability of these markets to recover windy than the western economies should bebe sole reason for such a decision. Rather there are many much and varying reasons that need to be taken into consideration. The onset of world-wideization for one thing has helped turbulence the living touchstones of many in China and India and millions of families have climbed out of poverty and are able to aspire to better life styles and a better standard of living, thus creating new markets companies like Nestle (Latshaw and Choi, 2002, pp. 27).Next as has been state in the case study, the number of individuals who can be considered as middle partition in these two economies alone will exceed 700 million in the coming decade, which is much than the entire population of 500 million in the European expan se or the 300 million in the united States, thus making this a very lucrative market for Nestle and one that inevitably to be exploited with immediate raise (Crook, Bratton, pathway Ketchen, 2006, pp. 409 412). Besides the above Nestle as a multi national participation has a decentralised structure and has often emphasised the need for attracting, recruiting and selecting entertain country nationals to be employed in its manufacturing plants across the world and this over over again is a very strategic and wise decision (Cesnovar, 2006, pp. 227 229). By decrease unemployment rates, world socially responsible corporate citizen and helping to uplift the standard of living in these regions of the world, the guild is earning the respect of the population, which can soon be converted to public relations win, thus it can be say that this scheme makes immense sense at the open time (Mclean, 2006, pp. 36). start but not least it should too be stated that by gaining first mo ver advantage of providing prefatorial food stuffs through which stigmatise loyalty is created the attach to stands to gain much as most consumers will not switch to otherwise places but rather decide to begin with the trusted brand even when they are ready to move to the more upscale and upmarket products that are provided by the conjunction (Gratton, Hailey, Stiles Truss, 1999). Therefore it can be stated that from each point of view, whether it is as a consumer products shaper or an employer, Nestle stands to gain much through this growth system of focusing on emerging markets.What is the ships smart sets strategy with regard to business phylogeny in emerging markets- Does this strategy make sense- From an organizational perspective, what is required for this strategy to work effectively?As is clear from the information that has been provided in the case study, Nestle uses a word form of diametric strategies to develop its business activities and markets in the e merging markets. While many maybe of the whim that only one or two strategies should be used in order to checker that synergies of scale are gained and that there is consistency across the operations, such a customization of strategy to meet the specific needs of an economy is highly commendable (Marshall, Smith Buxton, 2009, pp. 14 18). For instance in countries like India and China, Nestle has entered the market by providing low personify brand name basic food stuff like condensed milk and infant formula, in doing so the play along has excessively located its manufacturing plants within the countries and the regions, employed innkeeper country nationals and helped uplift their living standards. Thus not only has the gild provided them with a nutrition by employing them and purchasing local produce from local farmers and businessman, but in doing so has also created loyalty to its brand, which is something priceless (Karake-Shalhoub, 1999). As the living standards and th e income levels of these individuals and entrepreneurs increase, they will no doubt continue to be loyal to the Nestle brand and purchase the more upscale and products that are sold by the alliance, when they are ready to move from basic food stuffs to more branded and upscale foods stuffs like cookies and chocolate.Likewise another strategy that is universe used by the company is to enter markets like Nigeria and China and invest in basic infrastructure to check into smooth distribution channels, part many may see this as a waste, in the long run, the company has gained a strong foothold in the marketplace, created job opportunities and further increased the profile of its brand and thus increased entry barriers for the competition (Sims, 2003), thus it can be stated that this is indeed a very good business development strategy that is being followed by the company at the present time.From an organisational perspective for an a strategy to work effectively it is demand to wi tness that the strategy is develop in such a manner that it would fit the market needs and help the company to gain a comparative degree advantage (Oladunjoye Onyeaso, 2007, pp. 592 598). found on everything that has been stated above and the manner in which Nestls is currently operating in China, India, Africa, the Middle East and east Europe, it is clear that the company has take many different succeederful strategies that are helping it to gain a warlike edge in these markets while continuing to benefit from the first mover advantage that it has created for itself.Through research on NESTLE, identify appropriate process indicators. Once you have self-collected relevant data on these, undertake a performance abridgment of the company over the last five years. What does the analysis tell you about the success or otherwise of the strategy adopted by the company?An analysis of Nestls performance indicates that the Company has been able to improve its performance over the y ears. The sales of the Company reached a record of US $73 billion, and growth in profits was 20.7% in 2005. In 2005, Europe amounted to 30% of sales, Americas 34%, and Asia, Oceania and Africa 17% of the sales. Nestle is aware that it need to adjust its offer if it is to reach its target of 5-6% growth per year. (Country Monitor, 2006).Public Image In a world that is becoming increasingly complex, consumer needs and wants continue to blend in more sophisticated on a daily basis. Unlike in the ultimo when companies could s connote mass produce and sell products to the end user, today, consumers are demanding more not only in terms of pricing and quality but also in terms of corporate social responsibility. Therefore it is unavoidable for Nestle to continuously monitor and manage its public image and it is also very important from a strategic perspective that the company is seen as a socially responsible corporate citizen (Niederhut-Bollmann Theuvsen, 2008, 63 68). Compared to many other multi national companies, Nestls has not earned the public ire for being irresponsible socially, however as the global slave trade for chocolate manufacturers comes to light it is essential that Nestls looks at ways and means to ensure that it is not ensnared in such a public relations nightmare. sales Growth This is a very important performance indicators and should give the company a sense of its successes and failures in terms of strategy. Currently the company has been doing very wholesome on this front and should carefully monitor the external and the intrinsic environments for any factors that may pose a threat to its continued success in this area (Roberts, 2001, pp, 25 28). Following a growth strategy in emerging markets is actually a very good strategy that has paid off and continues to pay off, however this does not mean that the company can afford to be laid back on this score.Market Share By gaining first mover advantage the company has been able to gain and retain its market share through the years, however it is also necessary that the company continues to learn from its past mistakes in Japan and other countries, where it did not take the competition seriously and whence has lost much in terms of market share that it could otherwise have gained (Odagiri, 1992). sombre Ocean Strategies As markets continue to mature and other markets continue to develop it is imperative that the company focuses its attention on research and development and creates muddy oceans in order to find new markets (Gubman, 2004, pp. 13). This is something that Nestle is currently lag at and needs to pay particular attention to with immediate effect.Based on everything that has been stated above it is therefore clear that while the company does excel in areas such as managing its public image and sales growth, there is much more improvement needed to be make in the search for innovative market strategies that will help host it to success in the upcoming .How would you describe Nestls strategic posture at the corporate level is it pursuing a global strategy, a multidomestic strategy an international strategy or a international strategy?Figure 2 Which Structure to Choose?Source http//www.wiziq.com/tutorial/380-International-StrategyIllustrated above is a depiction of the different corporate level strategies that can be adopted by multi national companies the world over. Such strategy is often elect on the degree of need for global consolidation and local market reactivity (Kaplan and Norton, 2001, pp. 87). Based on the information that has been provided in the case study it is clear that Nestle is a company that need to gain a high level of local market responsiveness due to the variety of different business development related strategies that is pursuing in different parts of the world. For instance while in the Middle East it has entered the markets by building five different lines of products that it hopes will be distributed across the region as trade barriers fall, in countries like China and India, it is pursuing a different strategy of meeting the basic food needs of the population with items such as infant formula and condensed milk. It is the intention of the company in these markets that once standards of living increase, they can leave these Niche markets and provide consumers with more upscale and upmarket products like chocolates and cookies.Further it can also be stated that as a company with only 1% of its revenue being earned in the home country and 8000 different brands, global consolidation is a must (Lowson, 2002). Therefore it is the opinion of the writer that Nestle need to choose between the multi domestic strategy and a transnational strategy and not swing from one to another, because doing so would only result in the company loosing focus of its final aim, which is to be a global consumer food products leader (George, 2007, pp. 66 71). Based on the information that has been provid ed in the case study it is the opinion of the writer that Nestls should choose a transnational strategy because it balances twain the global integration needs of the company and the local market responsiveness that is necessary to ensure that the companys products will be competitive and continue to meet the needs of the local population in the emerging markets that it is operating in (Marks, 2005, pp. 1). While many maybe of the opinion that the company should continue to pursue its multi domestic strategy as it has worked well for it in the past, the changing needs of the global environment and the development fetching place in the emerging markets make it necessary to gain synergies of scale and global integration for the many brands that it has under its belt and therefore a transnational strategy is the best option for Nestls in the prospective (Barney and Hesterly, 2008).Does this boilersuit strategic posture make sense given the markets and countries that Nestle participat es in? Why?The overall strategic posture of Nestl makes a make do of sense given the fact that it is operating in virtually every country in the world, with a huge presence in the emerging markets. According to Hill (2006), that multidomestic strategy is appropriate in a market where the pressures for local responsiveness is very high and as a results the pressures for the cost reduction is low. Especially, pressures for local responsiveness can be very high in some productions, such as food, chocolates, dairy nutrition and etc. From the time when consumers have many national differences in tastes and preferences, distribution channels, competitive conditions, business practices, culture and government policies in the markets in which Nestl operates, therefore interest a multidomestic strategy is beneficial for the Company. The difference in cultures and purchasing top executive (Prahalad et al, 1998) in the middle class population in emerging markets imply that in order for a fi rst mover to gain advantage, it must be willing to adapt its product and offer in unity with the needs of the local market.Figure 3Source http//www.docstoc.com/docs/5632428/Ethnocentric-Polycentric-Geocentric-DiagramsAs stated in the previous section the overall strategy that is currently being followed by Nestles is one that focuses on local market responsiveness over global integration, which in effect results in a multi domestic strategy (Shackman, 2007, pp. 479 488). It is no doubt however that such a strategy has indeed helped the company to gain the level of success that it currently enjoys in emerging markets, and therefore can be considered as good. However we should always call up that strategies should promise equal or more success in the future as they do for the company today (Cabrera and Cabrera, 2003, pp. 41) and therefore reviewing the strategy from such an angle would work to the benefit of the company in the long run. The company currently follows a regiocentric attitude as is clear from the illustrations above, while it can be reiterated that this type of structure and strategy works to the advantage of the company, in the long run as the emerging markets being to mature and the company continues on its mergers and acquisitions strategies to enter new markets in Eastern Europe, it will become essential that the company gains some level of global synergy and integration (Mcwilliams, Van Fleet, Wright, 2001, pp. 1). Therefore it is the recommendation of the writer that the company begins to embark on a transnational strategy with a Geocentric attitude, which will finally help it to have a more global view with tractability to make necessary changes at local level whenever and as much as needed (Donaldson OToole, 2002). Therefore in conclusion it can be stated that even though the current strategic posture makes sense, it needs to be reviewed and modified if the company is to continue to penetrate, gain and retain market share in the eme rging economies as well as the developed economies the world over (Mockler, 1999).Is Nestles management structure and school of thought aligned with its overall strategic posture?The overall structure and the strategy of the company as stated previously and has been made clear to the reader throughout the case study, is that the company pursues a multi domestic strategy, due to the need to have a high responsiveness to the local market needs (Drejer, 2002). While this is impressive, the company goes further to also ensure that it is staffed by local nationals in the host countries and that power and authority is decentralised as much as possible, again indicating that the management structure is indeed very much aligned to its philosophy of local autonomy and its multi domestic strategy (Silverman, 2002). However instead of relying on the local managers alone, the company also has a pool of at least 700 expatriate managers who travel from one country to another ensuring that the lo cal and regional strategies of the company are upheld and global integration is a possibility (Mintzberg Rose, 2003, pp. 270 277), while this may sound like a sound and often a wise move on the part of the company, the fact that none of the regional international managers get involved in local level stratey founding and the fact that none of the local level managers are involved in the global strategy design and development leaves a disconnect that can cost the company dearly in the long run and therefore it is necessary to take a close look at the integration of both and make changes wherever necessary (Betz, 2001).Based on everything that has been stated above, it is therefore the opinion of the writer that greater global integration is necessary as the company moves forward and hopes to retain its place as a market leader by gaining large shares of the market in emerging economies, which it has strived hard to build over the last few decades. In effect it is therefore necessar y to ensure that there is high levels of global integration and simultaneously ensure that there is high levels of local market responsiveness as well (Lefkowith, 2001, pp. 20). As stated previously this is only possible if the company follows a transnational strategy and this strategy and philosophy should be made a possibility by changing the current management structure within the company to one that allows for regional managers to gain an sympathy of local issues and challenges and vice versa. This will help the company to align its goals and objectives both on an international local level and thus be more integrated in both spheres.