1. 1 | P a g e N e s t l e C o m p a n y
Executive Summary
The purpose of this report is to evaluate Nestle Company Industry based on the case study and
comprehend how the company develop strategic intent for their business organization
following the analysis of external and internal business environments. I will analysis the
strategic management process as firm used to achieve strategic competitiveness and earn
above- average return. I will discuss the strategy formulation that includes business- level
strategy and corporate- level strategy.
It also aims to identify market place opportunities and threats in the eternal environment and
to decide how to use their resources, capacities and core competencies in the firmâs internal
environment to pursue opportunities and overcome threats. In order to strengthen this
assignment about Nestle, there are several methods of gathering data has been conducted, such
as Porterâs five forces model and SWOT analysis.
Nestle that will fit into strategic orientation in order to perform better in their business world
and continue to develop and implement its learning approach as the chosen large company by
using different strategies.
2. 2 | P a g e N e s t l e C o m p a n y
Table of Contents
Introduction................................................................................................................................4
Industry and Nestle summary ....................................................................................................4
EXTERNAL ANALYSIS..........................................................................................................5
General Environment Analysis ..............................................................................................5
Demographic Segment ...........................................................................................................5
Economic Segment.................................................................................................................5
Political/ legal segment ..........................................................................................................5
Socio-cultural Segment ..........................................................................................................5
Technological Segment..........................................................................................................6
Global Segment......................................................................................................................6
Porterâs five force model............................................................................................................6
Threat of New Entrants ..........................................................................................................6
Bargaining Power of Supplier................................................................................................6
Bargaining Power of Buyers ..................................................................................................7
Threat of Substitute Products .................................................................................................7
Intensity of Rivalry among Competitor .................................................................................7
Competitive Environment..........................................................................................................7
Opportunities and Threats of Nestle ..........................................................................................7
Opportunities..........................................................................................................................7
Threats....................................................................................................................................8
Internal Analysis ........................................................................................................................8
Nestle Resources, Tangible and Intangible Product...............................................................8
Financial Resources................................................................................................................8
Organizational Resources.......................................................................................................8
Physical Resources.................................................................................................................8
Technological Resources........................................................................................................9
Intangible Resource of Nestle....................................................................................................9
Human Resources...................................................................................................................9
Reputational Resources..........................................................................................................9
SWOT Analysis .........................................................................................................................9
Strengths.................................................................................................................................9
Weakness..............................................................................................................................10
Opportunities........................................................................................................................10
3. 3 | P a g e N e s t l e C o m p a n y
Threats ...................................................................................................................................10
Conclusion ...............................................................................................................................10
References................................................................................................................................10
The External Environment.......................................................................................................11
Porterâs Five Forces Model......................................................................................................12
7. 7 | P a g e N e s t l e C o m p a n y
Bargaining Power of Buyers
Customers have a large amount of bargaining power regarding to their consumption of
Nestle products. There are close substitutes for Nestle product which allows for the
preference of the customer to be very influential. Nestle understand the power of the
consumer and has taken specific steps to meet the needs of its products consumers.
Threat of Substitute Products
Nestle is afflicted with the threat of substitute goods. Ranging from ice cream, frozen foods
and confectionaries food, similar products that compete directly with Nestle, and
continuously find new way to improve its products and generate new sources of growth for
the companyâs future expansion. Nestle has focused on the health of its product to maintain
its edge in the market.
Intensity of Rivalry among Competitor
Nestle was also facing strong competition at national and regional level. They companies,
among others are in a constant and continuous battle to outperform one another. Nestle was
increasingly facing competition as many food producing rivals had achieved significant
improvements in their operating efficiency.
Nestle in a somewhat comfortable position within the food processing industry. The model
shows that Nestle tends to maintain the upper hand over its suppliers as commodities have
exact substitute in the market. Customers have a considerable amount of bargaining power
as Nestle much adhere to consumer wants and needs because there are so many close
substitutes. Large amount of rivalry within the food processing industry.
Competitive Environment
Nestle company face higher level of competition than it currently experiences. Any increase of
competitive environment may have an adverse effect on Nestle business, earning and growth.
The brand image of Nestle is one of the most competitive advantage.
Opportunities and Threats of Nestle
Opportunities
High Credibility
Potential to expand to smaller towns
Improving trends
Increase the partnership
Product diversity and offering
8. 8 | P a g e N e s t l e C o m p a n y
Threats
Highly competitive market
Increasing price of raw materials
Threats of substitute product
Bargain power of buyers
Internal Analysis
Resources and capacities in developing core competencies, which are sources of the farmâs
competitive advantage.
Nestle Resources, Tangible and Intangible Product
Resource are the source of the firmâs capabilities. Some firmâs resource are tangible and
intangible. Tangible resource are assets that can be seen. Intangible resource are relatively
difficult for competitor to analyze. Some tangible assets of Nestle are:
Financial Resources
Total Revenue CHF89. 46 billion (2016)
Total Operating Income CHF13.16 billion (2016)
Total Profit CHF8.88 billion (2016)
Total Asset CHF131.9 billion (2016)
Total Equity CHF65.98 billion (2016)
Organizational Resources
Nestle governing body in the Annual General Meeting of shareholders.
Leading the company in the chairman of the Board and CEO Paul Bulcke
9. 9 | P a g e N e s t l e C o m p a n y
Physical Resources
Coffee
Water
Ice Cream
Baby Food
Confectionary
Technological Resources
Continually involvement of rapid technological change.
Technology led company that produce convenient, testy food and beverage for sustenance.
Intangible Resource of Nestle
Human Resources
Approximately 328,000 peoples have been employed in Nestle Company.
Reputational Resources
Nestle scientist play there part in communicating their health the consumers.
Consumer needs into research priorities.
Emerging science into consumer benefit and services.
SWOT Analysis
Strengths
ï Have a very long history over 150 years of Good Food Good Life.
ï Operates in 194 countries a truly global company
ï Nutrition sector with over 3500 scientists in company R&D network.
ï Offering 2000+ brands worldwide. .
ï Have a great CEO, Paul Bulcke and very strong workforce.
ï 191 of countries sell their products.
ï People trust on products due to proper healthy and safety measures.
ï Company always adapts the new technology.
11. 11 | P a g e N e s t l e C o m p a n y
The External Environment
Intensity of Rivalry
among Established Firm
Bargain Power of
Buyers
Bargain Power of
Suppliers
Risk of entry by
Potential Competitors
Threats of
Substitutes
Political and
legal Force
Demographic
Force
Global Force
Technological
Force
Social ForceMacroeconomic
Force
12. 12 | P a g e N e s t l e C o m p a n y
Porterâs Five Forces Model
Intensity of
Rivalry among
Established
Firms
Risk of entry by
potential Competitors
Bargaining
Power of
Buyers
Threats of Substition
Bargaining
Power of
Suppliers