Nestle is a publically traded multinational corporation that mainly specializes in various food and beverage products. The company has over 29 brands that are sold in more than 447 factories that are located in 194 nations (Girard, 2005). The company has more than 333,000 employees and it generates an average of $ 1.1 billion annual sales. Based in Switzerland, Nestle manages its products through specific business locations that are situated in the various continents of the world. The different segments under which the food and beverage business is managed include Nestle baby food, Nestle Water and Nestle cereal and nutrition products among others. The company was founded in 1905 after the Anglo-Swiss Company merged with the Farine Cactee Nestle. The company strengthened its foundation during the entire First World War era, which enabled it to expand its specialization beyond the initially compressed infant milk formula goods. The company is ranked as the world’s leading food and beverage company as well as the best provider of the “out of home” food products (Nestle, 2010). This paper aims at establishing how various company attributes that include vision, mission, primary stakeholders, SWOT and business strategy have impacted the company’s level of success.
The Impact of the company’s vision, mission and primary stakeholders on Nestlé’s overall level of success
Although Nestle has faced severe competition from rival companies that include Kraft food and Pepsi Co, it has increasingly emerged as the most successful global company with the highest revenues and profits. Among the major company attributes that have significantly contributed to a high level of success include its vision, which includes becoming the most successful food and beverage corporation that is capable of providing its clients with high quality products at the fairest prices while on the other hand promoting a high degree of viability and profitability for the company. This commitment has ensured a significant level of success for the company as it has ensured that innovativeness is integrated at the heart of every production activity (Girard, 2005). This ensures that food products are made tastier and healthier at limited cost to meet customer needs and demands while promoting the overall performance for the company at large. The vision attributes to a significant level of success by ensure that reliable and innovative skills are employed to develop high quality products that meet customer needs while on the other hand reducing the overall production expenses incurred by the company.
The company’s mission, which includes becoming the friendliest and caring company that is capable of providing its customers with safe, nutritious and healthy products, has equally contributed to its significant level of success. While the company is committed to offer its customers with high quality products that are central to health and wellness, it has continually adopted unmatched research and development to ensure that it can develop safe and nutritious products that can significantly improve customers’ quality of life. This has significantly increased customers’ loyalty to the company’s wide range of products thereby promoting a high degree of sales. Nestlé’s primary stakeholders have as well played an important role in contributing to its overall success (Nestle, 2012). The company’s suppliers and employees are committed to a series of basic corporate principles that guide the way in which these stakeholders operate. The suppliers are thus committed towards ensuring that the supplied raw materials are of high quality to protect safety of the end consumers. Employees are equally committed towards ensuring that quality and safe production procedures are followed to ensure that end products remain healthier and tastier to meet consumer demands. Conversely, the consumers have partnered with the company to ensure that it is well updated of their demands and expectations so as to ensure that the company’s products remain competitive in the market.
How the five forces of competition impact the company
A significant analysis of the five forces of competition can help us to understand where Nestlé’s power that pertains to its business position lies. Threat of new entrants is a major force that might impact Nestle’s level of competition in the industry. As explained by Girard (2005), it is often easy for new entrants to invade the food and beverage industry especially because the capital requirements needed to start off businesses in this industry is relatively low. There is equally no specific legislation regulating the degree of entry into the industry, which means that as many companies as possible can enter the industry. This might expose Nestle to a high degree of competition as new entrants might invade the industry. Nestle is however operating at a global scale where it has already developed a global marketing strategy, which limits new entrants that mainly include local companies from competing with it (Nestle, 2013).
Threat of product substitute is another important force that might affect the company’s ability to compete in the food and beverage industry. There is sufficient evidence that threat of product substitute is intense in the food and beverage industry as most companies can develop substitute products to win a huge market share. Nestle however has a wide range of products that can always serve as substitute products (Nestle Professional, 2012). This means the company’s products may not be easily substituted as it always has an equivalent product to suit different customers’ preferences.
Suppliers’ bargaining power may not negatively impact Nestle, as it is always able to obtain its raw materials from a wide range of suppliers. This is especially because the company purchases the raw materials in non-processed form, which allows it to source agricultural materials direct from the farm. This limits the suppliers’ bargaining power as the company can always seek for alternative but cheap sources of the materials.
The company experiences a moderate degree of consumer bargaining power in that the dire need to generate a strong customer base demands that the company would sell its products at a relatively low cost. The company however offers high quality as well as highly differentiated products that are always on consumers’ minds. This limits their bargaining power, as they are always concerned about quality, safety and wellness and not about the prices (Nestle, 2010).
Nestle experiences a high degree of industry rivalry, which is characterized by stiff competition among different companies operating in the industry. As explained by Nestle (2013), the food and beverage industry has a unique level of attractiveness that encourages new comers to enter into the industry. Nestle however stands at an advantage in that it operates at a global scale thereby enjoying a huge share in the global market.
Nestle has major strengths that might enhance its level of success. The company has a huge brand portfolio that can meet different customer demands and expectations. It employs unique research and development strategies that allow for the creation tasty and health products. The company derives raw materials directly from the farm, which reduces production cost thereby increasing its overall profitability. The company has major weaknesses that might impact its overall success. The company has for a long time experienced transportation and storage problems, and this might interfere with the product quality (Nestle Annual Report, 2013). The company has not been able to ensure consistency in the quality of its wide range of product brands. Nestle has witnessed various opportunities that might perpetuate its future success. There is a growing demand for healthier food products, which creates a huge opportunity for the company to succeed particularly because it is committed towards promoting consumers’ health and wellness. The company has a huge opportunity to establish new ventures, which might create a favorable platform upon which the company can succeed. The company has however been facing severe threats that might affect its ability to succeed. There is a high probability of food contamination that might result from the transportation and storage problems that the company has continued to face. The growing trends intended to promote healthy eating might see most Nestle customers drifting their loyalty from the company’s sugary brands. The rapidly growing raw food prices might see the company increasing the overall product prices, thereby threatening its ability to maintain a strong customer base (Girard, 2005).
A strategy that the company can use to capitalize its strengths and opportunities and minimize its weaknesses and threats
In order to ensure that Nestle is capable of capitalizing on its strengths and opportunities while minimizing its weaknesses and threats, it should adopt a renovation and innovation strategy that can allow it to develop quality new products while ensuring quality of the existing ones. Despite the fact that Nestle has for a long time been able to develop healthy and tasty products that ensures a high degree of customer loyalty, it has not always been able to ensure consistency in product quality especially because it retains a huge portfolio of brands that may have been developed using old-fashioned technology (Nestle Professional, 2012). The strategy would however ensure that the company is able to constantly upgrade old products to match the new ones thereby increasing consistency in quality. The strategy would as well help to upgrade production and storage activities, which would help to maximize the product quality while minimizing the likelihood of product contamination. Renovation and innovation further reduces the possibility of product duplication by rival companies while on the other hand ensuring that the company products are able to meet the demands posed by the growing trends towards healthy eating.
The various levels and types of strategies that Nestle can use to maximize its profitability and competitiveness
Nestle should adopt different levels and types of strategies to promote its overall profitability and competiveness. The company should adopt a product differentiation strategy, which is a marketing level strategy that can enable it to distinguish its products from a wide range of products offered by the rival companies. This could ensure that the company is capable of attracting a huge number of customers thereby promoting its overall competiveness and subsequent profitability in the industry. Market leadership, which is a business level strategy, is equally important in promoting Nestlé’s competitiveness and profitability (Nestle, 2013). Nestle should always seek to be a first entrant in any given market, which would ensure that it has developed a strong customer base before other companies copy the trend. This would create a suitable opportunity for the company to earn customers’ loyalty, which might limit the ability of other companies to do so. Low-cost, which is a marketing level strategy, can help Nestle to remain profitable and competitive. Selling quality products at a relatively low cost compared to the rival companies can help Nestle to attract a huge number of customers that might be seeking for high quality products at an affordable price (Nestle Annual Report, 2013). This would enable the company to sell a significant amount of products within a short duration of time hence generating huge profits within a short while. This would as well ensure that the company is able to remain competitive, as most people seeking for quality products at affordable costs would increase their loyalty to the company products.
A communication plan the company would use to make the strategy known to all stakeholders
In order to make the proposed strategy known to all stakeholders, Nestle should adopt a communication plan that would ensure that the right information is passed on to the right people. The plan should begin by establishing the specific goals governing the intended communication. The key information that the company would be intending to convey to various stakeholders should be identified. The company should then determine the specific stakeholders that would need to receive the intended messages. Specific messages intended for each individual should also be identified. The company should then identify the specific strategy that would be used to convey information to each stakeholder (Nestle, 2010). The company should then identify individuals that would undertake the role of conveying messages to different stakeholders. A communication calendar that would be repeated after a given duration of time should then be developed. An evaluation strategy that would help to assess communication outcomes should then be developed.
Corporate governance mechanisms employed at Nestle
Nestle employs unique corporate governance mechanisms that allows it to effectively control its managerial actions. Employing a board of directors is a key mechanism that Nestle has adopted to help govern the various management activities within the company (Girard, 2005). The board’s effectiveness in controlling the company’s managerial functions is exhibited in its ability to oversee the supervision of different company activities while offering the necessary leadership directions. Shareholder participation is another important mechanism employed at Nestle to help control various managerial functions. Various stakeholders related to the company are usually entered in a stakeholder register after which they are allowed to exercise voting rights pertaining to various managerial functions taking place within the company. This helps to effectively control these functions as different stakeholders can vote for or against such functions depending on their perceived suitability (Nestle Professional, 2012).
Effectiveness of leadership within Nestle
Nestle has an effective leadership strategy that is inclined towards long-term commitment for organizational and people development. The company mainly relies on innovative ways through which employees can be effectively aligned to ensure that their aspirations and circumstances are effectively transformed. The company particularly relies on short-term projects, weekly assignment and global job rotation to ensure that quality skills that can help individuals to improve their experience to help address their personal circumstances are developed (Nestle, 2013). The company’s leadership strategy is however inclined towards improving experiences that can help address organizational and personal needs. The strategy should however extend its objectives towards promoting leadership skills that can help to develop common employees into effective organizational leaders. The strategy should equally seek to enhance employees’ career development to ensure that their career and not just personal needs are met.
Nestlé’s efforts to become a corporate citizen
Nestle has shown a major commitment towards promoting the wellbeing of the wider society. The company is committed towards Created Shared Value by ensuring that the wider society is able to reap significant benefits from its various production activities (Nestle, 2012). Nestle has for example established a project that is commonly known as the Cocoa Plan. The plan is mainly aimed at ensuring that cocoa farmers are able to generate high profits from the rising market prices so as to increase their overall productivity. Nestle has equally established its membership in various Cocoa Plan initiatives that mainly address various social problems that include child labor and poor access to quality health (Nestle Annual Report, 2013). Such commitments have attributes to the overall success of the company at large since it has managed to develop a strong supplier base thereby ensuring that it can access quality raw materials at an affordable cost.
Nestle has established various business strategies and approaches that significantly contribute to its overall success. The company’s vision, mission and primary stakeholders have contributed to its current level of success by ensuring that production activities are integrated with the positive intentions defined by these concepts. The company equally has major strengths and opportunities that tend to overshadow its weaknesses and threats thereby ensuring that it stands a suitable opportunity to succeed. The company equally has recommendable leadership strategies as well as corporate governance that ensure proper coordination of activities. Specific strategies can thus be incorporated to ensure that the company has attained a competitive edge while generating a huge amount of profits.
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