Nestle Case Study
The Swiss multinational food and drink processing conglomerate, Nestle, has emerged into one of the most successful, yet controversial, multinational business organizations. Being the largest food company in the world, the Nestle case study should be considered an imperative in order to ascertain how successful multinational business organizations operate amidst different market factors and environments. It is to be noted that for the sake of evaluating the growth prospects of Nestle, it is essential to conduct the Nestle case study through conducting a thorough SWOT and PESTLE analysis of the Company. Such analysis will provide a deeper insight into the concerned issues.
Nestle Swot Analysis
The Nestle case study should begin with a Strength, Weakness, Opportunities and Threats (SWOT) analysis of Nestle. This initiation is needed to ensure a logical flow in the Nestle case study.
Being the most renowned brand in the world is the primary strength of Nestle. This brand image has enhanced and sustained Nestle’s global market reputation. Moreover, being a globally recognized brand, it has become easier for Nestle to venture into new markets across the globe. Brand positioning and proper advertising are two of the main strengths of Nestle that have paved the way for raising the awareness of the global customer segments. Being a highly diversified company has also added to the strength of Nestle. A particular strength of Nestle has been its ability to sell its product to more than 180 countries, and this has allowed the Company to keep at bay the need of relying on a few markets for revenue generation and for business development. It leads the market in the United States, France, China, Brazil, and India, turning the financial advantage into its favor. The Nestle case study reveals that it has been able to sustain its reputation as world’s most valuable brand in terms of revenue, assets, and market value (Business Strategy Hub, 2019). Harnessing an extensive product portfolio has also catered to the need of strengthening the Company. In this respect it is to be noted that Nestle owns more than 2000 brands on a global basis and over the years it has renovated over 8000 products for emphasizing nutrition and health needs (Nestle, 2017). A broad product portfolio indeed is one of the greatest strengths of Nestle. Moreover, an efficient research and development (R&D) system is yet another strong point of Nestle. Furthermore, ownership of a large and extensively diversified distribution system should also be considered as strength of Nestle.
One of the greatest weaknesses of Nestle is that; as the Company has to accomplish its sales through retail giants like Walmart, Kroger etc, price fluctuations by such retail giants hamper Nestle’s global business. It has also been observed that managing the matrix organization structure of Nestle is a tough proposition of the top management of the Company, and quite often different administrations of different brands under Nestle suffer from dispute and conflict of interest. Controversies have also weakened the market position of Nestle on many occasions. Quite recently the Company was accused of wasting water in nations where drinking water scarcity is a burning truth. Hence, social criticism should be considered a major weakness of Nestle.
Nestle case study reveals that Nestle has the opportunity to sponsor small food start-ups and it has also got the opportunity to collaborate with start-ups for promoting its own brand name on a global basis. Moreover, considering the growth and expansion of e-commerce and taking into account the scopes of expanding business through online presence, the Nestle case study reveals that the Company has got ample opportunities to improve its global and regional Websites along with making its social media and social networking presence more pronounced (for catering to the needs of more targeted customers). Moreover, Nestle still has the opportunity to develop its labeling practices and thereby appealing to the nutritional needs of more customers worldwide.
Nestle case study reveals that Nestle is prone to some specific threats like the threat of controversies owing to its present business practices that have been shown to be depleting different types of natural resources, especially water (Business Strategy Hub, 2019). The rising competition in the market is also a great threat to the business prosperity of Nestle. There are several CPG companies like Unilever that offer products quite similar to Nestle, and this creates a steep competition that Nestle has to overcome. Moreover, availability of substitute products is one of the greatest threats that Nestle face today.
Nestle Pestel Analysis
The fruitful completion of the Nestle case study requires a thorough analysis of the political, economic, social, technological, and legal environments in which Nestle operates, and ascertaining the environmental factors impacting on the Company’s business is also needed to accomplish the objective.
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Political conditions play a major role in determining the success or failure of a business. In this respect it is very much essential for the Nestle case study to focus on the political environment in which Nestle operates. It should be noted that Nestle has a huge market in the United States and it has eyed at expanding its business in China. But the political struggle between the United States and China has affected the business policies of Nestle, and this has impacted negatively on the Company’s revenue growth in both the United States and China (Pratap, 2019). Moreover, extensive government control over the economy in China has also affected Nestle’s business in China.
Economic conditions like recession can impact disastrously on the business prospects of a large multinational company. In this respect, Nestle is no exception. But, thanks to the budding economic growth in the 2018, that the Company has experienced huge success in terms of securing its financial gain. Moreover, it has been observed that the improving economy of the Americas and the Asia Pacific region in general has boosted the business of Nestle in the United States, and this has led to the generation of huge revenue for the Company in a stable and sustainable manner. Such environment factors have contributed to the vigor of Nestle’s business.
Social/socio-cultural environment plays a decisive role in ascertaining the fate of a business in a particular country. This truth is applicable to Nestle too. Nestle, till date, has been able to continue its success journey by conducting research on the society and cultural needs of the market prior to entering the same. It is owing to such tendency that the Company has succeeded to build its business strongly in different countries. For instance, in India, Nestle has framed its advertisements and marketing approaches in such a manner that it appeals to the social and cultural needs of the Indians. Such strategy has helped the Company to experience success in the Indian markets.
Technological innovations play a major role in boosting the business of a company. Proper utilization of advanced technologies provides opportunities to a company to expand and develop the business. Nestle has been able to grab the opportunity for success by utilizing technological innovations in its research and development (R&D) endeavors. And this has paved the way for Nestle to appeal to the rationality and purchase needs of millions of customers across the globe. The use of advanced technology in the field of customer service has also helped Nestle to boost its customer relationship in a thorough manner.
Nestle has operated in tough legal environments. Lack of compliance to the laws has often landed Nestle in utter distress. In the past, in countries like India, Nestle had been centre of controversies and such controversies had revealed Nestle’s non-compliance with laws of the land. Such legal scenarios have put Nestle in utter trouble, affecting its business and hampering its market reputation on a global basis. It is to overcome controversies like the Maggi controversy in India that Nestle had to spend a lot, putting its financial well-being at stake in the concerned markets.
Environmental factors play a decisive role in ascertaining the future of a business in a certain region. Environment factors lead to the demand for proper execution of social responsibilities. In this respect Nestle quite often has failed to uphold the principles of corporate social responsibility (CSR) and controversies like water-wasting and rainforest deforestation controversy are pointers to the fact that Nestle has to improve on its environmental compliances. This must be done in order to ensure that Nestle is a socially responsible business organization that strives for sustainability and eco-friendliness.
The Nestle case study has revealed that the Company has been able to sustain its success and market reputation by utilizing its strengths, understanding its weaknesses, utilizing its opportunities and gauging the threats. Moreover, Nestle has succeeded in coping with different socio-economic, legal, and political factors, but it must strive for becoming more sustainable and environment-friendly.
Business Strategy Hub (2019). Nestle SWOT Analysis 2019 | SWOT Analysis of Nestle. Retrieved August 6, 2019, from https://bstrategyhub.com/nestle-swot-analysis-2019-swot-analysis-of-nestle/
Nestle (2017). Annual Review 2017. Retrieved August 6, 2019, from https://www.nestle.com/asset-library/documents/library/documents/annual_reports/2017-annual-review-en.pdf
Pratap, A. (2019). Nestle PESTLE Analysis. Retrieved August 6, 2019, from https://notesmatic.com/2019/04/nestle-pestle-analysis/
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