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Case Study: Nestle

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Published: Wed, 22 Feb 2017

Case Study Report – Nestle

Introduction:

The case study on the multinational company – Nestle, which happens to be a FMCG global giant reveals the strategies and the well designed plans of the company wherein it tries to shift its image from a food company to that of a nutrition health and welfare company. The moto of the company which has been that of good food, good life is further extended where the company looks forward to enter the arena of health and nutrition products that will encompass products such as infant food, diet food and also that of healthcare products. In the process we see that the company in its process of diversification of its products have also at times failed to achieve its targets. However the general structure of the company happens to be large enough to help the company maintain its position as the leading healthcare company in world with some of the most noted and successful brands.

Main Discussion:

The case study reveals the well calculated plans of he company Nestle where it had made conscious efforts which would change its very image in the market. It has been reflected through the case study that the then ongoing image where Nestle happened to be a leading brand worldwide in the field of food products looked forward to enter the field of the healthcare food products and also dominate the market in the coming span of time. Hence Nestle soon embarked upon a marketing strategy through it could extensively change its image and develop an image of a nutrition, health and welfare fostering company through the tool of its products. Hence quite clearly Nestle set forward to ake up various measures to effect the same. In the process Nestle did and tried a number of different tactuc to achiev the same. It changed the composition of its products by eliminating excess of sugar and salts and fats and by incorporating more healthier nutrients in its products. Once again we also see that Nestle embarked upon a method or business pattern of a large number of acquisitions. Through these acquisitions Nestle tried to buy over certain reputed names of the healthcare product industry and enter the arena on a global scale. It made some of very huge investments in the process of these mergers and acquisitions. In this context one point that can be mentioned which could have been a pressing concern for the company especially during the years that immediately preceded the financial crisis era. The case study reveals that in the year 2005 Nestle did make a drive for the market of the healthcare products nutrition food, which was when the company had to make some huge investments. However as even mentioned by the experts the company could not expect any immediate returns or profits from these investments. In fact the company had to struggle considerably to push the volume of its sales and face a stiff competition from the already existing big layers of the said industry.

Another point that happens to be an addition to the mentioned point is that in the effort of being a world player in the NHW segment the company did make huge and well diversified investments. This also could have posed a challenge to the company especially during the recession period. In fact we also see that as mentioned by the then CEO Bulcke, maintaining the company position in those challenging times happened to be quite critical. In those time we see that the company had taken a strategy that tried to maintain its market index and also increase the sales and business volume as far as possible. In fact we do see that in the strive of being a world renowned NHW segment company and of changing the brand image of the company, the management of the company had invested heavily on various measures of entering the industry of NHW and of fortifying the market position of the company in the said industry segment. In comparison to the same not as an aggressive stand was taken by the company in boosting its sales vigor and of taking an equally dynamic marketing endeavors. As result we see that the company even failed to achieve its said initial targets which it had set for itself when it entered the NHW sector.

Once again we also see that the company at least to some extent did digress away from its path of being a NHW company, when it also bought over some fast food chain. This is company said was a calculated measure since it could not do away with the strategy of being a diversified company. However the company did induce certain health measures in to the fast food items and did incorporate some healthy items into the menu preparations.

It can be said that the mission of the company happened to be of providing its customers with a good taste and a healthy life style through its products. To implement the same to an excelled level and to make mark in the market in the longer run the company did embark upon this journey of entering the health and nutrition products. In doing so we see that the company was faced with a serial of advantages that arose from its strengths and also disadvantages that arose from its weaknesses. In the following part of the discussion we take a look at both of the considerations:

Strengths:

  • The company that is Nestle happens to be a big name which ensures that the brand already has an acknowledgment in the market and the consumers or the retailers does not need to be briefed regarding the profile of the company. This facet was a particular strength of the company that enabled certain percentage of market penetration.
  • The company had enough capital power which could enable the company to indulge into strategies of acquisition and of elaborate R&D endeavors.
  • Nestle was already into the food industry, which gave it considerable leverage.

Weaknesses:

  • The company went into a very elaborate process and method of acquisition and mergers which definitely ate into a considerable amount of the financial resources of the company. This could have posed a challenge during the financial crunch period.
  • Nestle in its strive to be a world leader in the arena of the NHW sector did not put enough stress on the marketing part, which led to loos of target achievement.
  • It did pose a contradictory figure when the brand bought over fast food item chains. It helped its critics criticize its image as a NHW company.

Conclusion:

Quite surely the strategy of Nestle to enter the NHW sector was a well tailored plan that will yield high returns in the future, nevertheless a more profit oriented endeavor could have helped the company overcome its revenue issues that did surface during its transition phase.

Recommendation:

It could be recommended to the company that the brand instead of trying various products in the NHW field could single out a more streamlined array of products in which the company will try concentrate during its initial period of entering the NHW industry or market segment. This would also help the company streamline its marketing procedure and the company can adopt more aggressive marketing endeavors that will help the company achieve better sales volumes. With time these returns could again be profitably used in the R&D endeavors that will help the company come up with better and improved brands and also at the same point establish itself as a global ,market leader.


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