Business Strategy Of Nestle Assignment Sample

Nestle's Business Strategy: Marketing-Inspired Strategic Thinking for Competitive Advantage

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Introduction Of The Business Strategy Of Nestle Assignment

Business strategy refers to the master plan of an organisation and the management of the company develops this plan for achieving strategic goals. In this research, the company Nestlehas been chosen and the focus has been given to marketing-inspired strategic thinking. It helps to explain the competitive advantage and this research will discuss institutional theory as well as organisational culture. It will discuss the legitimacy of the present organisation. The main aspect of the description here is Nestle’s marketing strategy, marketing mix, strategic thinking for competitive advantage, workplace culture, as well as corporate strategy.

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Marketing strategy of Nestle

The key purpose of Nestle is to enhance the quality of its products and services and contribute to the healthier life of its internal and external stakeholders. The marketing strategy of Nestle has greatly contributed to enhancing the business value, profitability, and productivity of the company. The business of Nestle was established in the year 1905 through the merger of the company’s business with the “Anglo-Swiss Milk Company" (nestle.com, 2022). The company was established by 2 brothers “George and Charles Page” and was founded by Henri Nestle. Nestle has more than 2,000 brands that make “Nescafe, Maggi, and Chocolates”. The company took a leading position in the production of snacks that are collaborated with snacks brands like “Cheerios and Haagen-Dazs”.

The major market competitors of Nestle are Britannia, Kwality, Adani Wilmar, and GlaxoSmith Con. The total rate of business profits of Nestle in the year 2021 was about $95.701 which was nearly 5.96% more than in 2020 as the annual revenue of Nestle in 2020 was $90.321 (moneycontrol.com, 2022). The business strategy of Nestle has been greatly influenced by the business competition in the marketers with its rival companies. The long-term “value creation business model” of Nestle is created on the basis of the “balanced pursuit” of the growth of the top and bottom line of its annual business revenue (nestle.com, 2022). The major objective of the business and marketing of the company is to improve its acapital efficiency and guide 3 strategic pillars. The 3 strategic pillars of Nestle are stated below.

  • Pursuing a value-creation business strategy
  • Business growth through constant innovation in the business model
  • Enhancement in the business operational efficiency to compete with rival companies in target market segments

5 P’s Marketing mix of Nestle

Nestle, a renowned company consists of a Marketing mix of the 5 P’s which includes Product, Promotion, Place, Price, as well as People. It is referred that the approach of price, product innovation, marketing methods, as well as other marketing methods are only examples of these factors (Gonu et al. 2022). These tactics of business are based on the marketing mix of Nestle and they contribute to the success of the brand. These are called the key or important elements that are used for positioning a business strategically. They are called the subject to the internal as well as external marketing environments. These 5 P’s are the business strategy that helps in marketing efforts (Loura, 2018). It also helps to become the marketing effort more efficient with the determination of target customers as well as creating a solid base for converting them into loyal customers. The 5 P’s of Nestle are described below:

Product

Nestle is considered to be a food as well as beverage corporation that has a huge range of products. Coffee, baby foods, chocolates, bottled water, cereals, cuisine, dairy, frozen and chilled food; ice cream, healthcare nutrition, and pet care are considered to be some product categories of Nestle (nestle.com, 2022). There are various recipes on the website of this company and teg matter reveals that the company has extensive products. The product qualities are very good and the products are distributed to the local level also so that they can meet the client’s need.

Price

Price skimming is called a strategy for pricing and it speaks that a company can charge a high price initially and lowers it also over time. It uses this strategy for some of the products at the time of entering the market of a country. This company has the motto to offer various products as well as services as per the demand of the customers (iide.co, 2022). The market of this company decides the price of products and it is made based on the packaging. Nestle also offers competitive prices for other items like Munch and Kitkat.

Place

The distribution channel of this company is huge and it is built up of an intermediate network. This network helps in contributing the items closer to the final customer (Nagarathinam et al. 2021). There is a quality policy within the company and it assures that the products meet quality requirements, regulations, and food safety. It follows the principle of “zero-waste, zero-defect” which is the philosophy of this company.

Promotion

Nestle did marketing activities for boosting the performance of the company which can influence the growth of its market share. Promotion is an important aspect of the sales of the products and it determines the brand value also. Nestle used different channels for marketing its products such as broadcasting, direct marketing, print, advertising, coupons, as well as in-store display and promotions (Gonu et al. 2022). Companies like Nestle did promotional activities so that they can move their stock through the distribution channels. The company gives an effort in advertising selected products throughout the year for increasing their cells in the long term. It also used mainstream media, the internet, banners, and posters for advertising. This company used youth appeal for advertising Nescafe with the use of a branded mug.

People

Nestle is a huge corporation that employs more than 308000 people and it is situated in Vevey, Switzerland. It is called a worldwide corporation and the products of this company have been sold in 190 countries (iide.co, 2022). The company is focused on the innovation of healthier products for customers. This corporation recently released 1300 new goods in the market and the products aim to fulfill the shortage of nutrition in babies, new moms, as well as pregnant women.

Competitive issues affecting Nestlé’s business operations and strategies

Nestle has adapted some major marketing tactics to mitigate the competitive issues in its target market segments across the globe. The major competitive market issues that nestle generally faces include “inattentiveness to consumer needs” and lack of attention to global marketing opportunities (Akpoviroro et al. 2019). Other competitive issues that the company is facing currently include the deterioration of the spirit of competition among the company’s project managers and employees. The company workers feel demotivated when they notice that other companies grow their business compared to the present company.

The absence of a flexible “marketing strategies and a volatile business environment” highly affects the internal and external business environment of Nestle. A flexible marketing strategy is most important for any kind of business and when a company does not possess a flexible strategy, it faces issues. The volatile environment in a business refers to the required changes by the organisation as well as dynamics for creating value for the customers (Salim, 2018). The present company faces issues related to these matters and these issues affect the business operations as well as strategies of Nestle. Lack of proper planning is another problem that affects business operations and strategies.

Several innovative business strategies that the company has selected to mitigate the issues in its competitive market are stated below.

  • Appeal to all consumers and stakeholders by multiple products and services. The pricing strategies that include premium quality products at an affordable price are made here (marketingmind.in, 2022).
  • Incorporating a “multifarious portfolio” to lower the business risks during penetrating new market segments (Salim, 2018).
  • Adapting a unique products mix strategy that will attract “cost-conscious prospects”
  • Creation of constant goals and clear visions to enhance business performance and profitability in the upcoming days
  • Product-driven advertisements can be used to have a large “product line” and localizing the products (Salim, 2018).
  • Maintaining brand equity to maintain the brand image and collaborate with other leading brands
  • Promoting environmental sustainability through business strategies to enhance brand value and create a mark in the competitive market.

Marketing-Inspired strategic thinking for Nestle’s competitive advantage analysis

Nestle is considered to be the largest beverage as well as a food company in the world. It mainly follows the strategy “good food, good life” and the company has more than 270000 employees as well as 2000 brands in 186 countries (nestle.com, 2022). It has achieved great benefits from the products and the company employed the “product mix strategy” for its business operations. It sometimes releases special offers, buy-one-get-one price promotions, as well as discounts. This strategic thinking of this company has been inspired by the market and it gives a competitive advantage to the present organisation. The advantages include:Operations strategy of Nestle

Figure 1: Operations strategy of Nestle

(Source: Akpoviroro et al. 2019)

  • Strategic advantage: Nestle company has a strategic advantage over its competitors and this factor will increase the value of Nestle. The value has been increased by ensuring the fact of availability of raw materials as well as water (ipl.org, 2022). It secures the supply of raw materials and the quality is better it also helps in the production of products with the improvement of the environment. It helps in the matter of consumer performance as well as profitable growth.
  • Advantage of positive orientation: The main strategy of Nestle is to attract more customers and that is the reason this company focuses on the establishment of a positive orientation. The orientation is towards the addition of nutritional value towards the products. The strategic thinking that is inspired by the market for Nestle gives the present company advantage to focus on communication as well as brands (Akpoviroro et al. 2019). This matter included the nutrition as well as health dimension of the brands and their value. The networking system of Nestle is another competitive advantage of this company. This company has a huge “R&D centres' network” of foods and this superiority of the company gives a sustainable competitive advantage as well as long-term success to the company.

Institutional theory to explain Nestlé’s legitimacy

“Institutional theory” is referred to as an approach that helps to understand management and organisational practices. This theory is able to explain the behaviors of an organisation for defying economic rationality (Agrawal et al. 2021). The growing legitimacy of the enterprises is an important aspect here and this theory has been used for explaining the legitimacy of Nestle. It discussed the political, social, as well as economic systems where the companies operate as well as achieve their legitimacy.

Legitimacy theory

Figure 2: Legitimacy theory

(Source: Agrawal et al. 2021)

It has been presented that Nestle has been focused on CSR activities. The major focus is given to sanitation and water, nutrition, as well as rural development. This company has reduced the consumption of water in the factories where the production of different products needs less water (nestle.com, 2022). Nestle has also adopted renewable solar energy for pet-food production and in this way they maintain sustainability. This company also creates value for the stakeholders and society and focuses on helping global as well as local issues.

Organisational Culture Theory to explain Nestle’s legitimacy

“Organisational Culture Theory” is built up for sharing beliefs, values, and assumptions of how people should interact and behave. It is also related to making decisions and the work activities within the organisation. This theory can help in explaining the legitimacy of the present company. Nestle is aimed to value the employees as well as other members related to the organisation with their culture (nestle.co.uk, 2022). The main reason behind this is that the company respects culture as well as promotes it in a standard position. The legitimacy of nestle has used or followed some basic principles. They avoid any kind of conduction that can harm or risk their reputation. This company acts honestly as well as legally and is committed to providing better service. Nestle goes with the vision of “Good Food, Good Life” and it is the ultimate philosophy of this company.

Corporate strategy of Nestle (BCG matrix)

BCG matrix is referred to as the model that is applied for analysing the products of a business and it also helps in long-term strategic planning. This model helps the companies in identifying opportunities for new growth and to decide where to invest. Nestle is mainly focused on building as well as showcasing expertise in nutrition, wellness, and health for helping people live healthier as well as happier lives (Johnson and Duckett, 2020). The main motto of it is to make affordable as well as innovative products for meeting the needs of the customers.BCG matrix of Nestle

Figure 3: BCG matrix of Nestle

(Source: businessmavericks.org, 2022)

Therefore, it can be said that this matrix can help the present company in following its motto. This matrix of the present company includes four aspects which are the stars, dogs, question marks, and cash cows (businessmavericks.org, 2022). This matrix helps the present company in analysing the low-growth products, high-growth products, and sales-attracting products.

Recommendation to mitigate competitive issues

Recommendations are most important for mitigating any kind of issues. The present company has faced competitive issues that affect the business operations as well as strategies of the company. The issues can be mitigated by adopting some strategies and they are described below:

  • It can be recommended that the present company can pay attention to customer needs as well as to the opportunities of global marketing (Barthel et al. 2019). This can help this company to mitigate the issue and to attract more customers.
  • It can be suggested that Nestle can arrange monthly basis seminars or programmes to keep their employees motivated. Employer-employee relationships can be maintained or developed by giving motivation to the management.
  • According to Lafuente et al. (2020), adopting a flexible marketing strategy can help in maintaining the business environment as well as business operations effectively. Therefore, it can be suggested that this company can make its marketing strategies flexible to acquire the market.
  • It can be suggested that Nestle can make proper planning before any kind of business operations and it will help them in achieving success.
  • This company can invest in making the company culture effective and it will help them in building a strong relationship with the customers and stakeholders.
  • Nestle can apply a technological approach for making the company's performance better and it will help them in achieving customers and dealing with competitors.

Conclusion

The present assignment is based on the business strategy of Nestle and it has been described that the research has focused on strategic thinking. In this study, the competitive advantage of the present company has been made and the competitive issues have been described. The issues describe how it affects the business operations as well as strategies of Nestle. Two theories have been presented for explaining the legitimacy of Nestle and they are “Organisational Culture Theory and Institutional theory”. The marketing strategy as well as the corporate strategy of this company has been described. 5 P’s of marketing mix is presented here that discusses the price, place, promotion, people, and product of the company. BCG matrix has been discussed for describing the corporate strategy of this company and recommendation has been made for mitigating the competitive issues. Therefore, it can be said that the business strategy of this company is an effective one for describing different factors.

References

Journals

Agrawal, S., KH, K.H. and Setia, P., 2021. How Digital Technologies Impact Tolerance to Modern Slavery in Supply Chain Networks: An Institutional Theory Perspective. Pankaj, How Digital Technologies Impact Tolerance to Modern Slavery in Supply Chain Networks: An Institutional Theory Perspective (December 31, 2021).

Akpoviroro, K.S., Amos, A.O. and Olalekan, A.O., 2019. Exploring the Link Between Competitive Strategies and Organizational Performance in Beverage Industry.(A case of Nestle PLC).

Barthel, S., Isendahl, C., Vis, B.N., Drescher, A., Evans, D.L. and van Timmeren, A., 2019. Global urbanization and food production in direct competition for land: Leverage places to mitigate impacts on SDG2 and on the Earth System. The Anthropocene Review, 6(1-2), pp.71-97.

Gonu, E., Asare-Larbi, M. and Abdul-Rahman, M., 2022. Marketing strategies and consumers’ purchasing behaviour in Ghana: A case of Nestle Ghana Limited. African Journal of Business Management, 16(5), pp.104-116.

Johnson, D.A. and Duckett, L.J., 2020. Advocacy, strategy and tactics used to confront corporate power: The Nestlé Boycott and International Code of Marketing of Breast-Milk Substitutes. Journal of Human Lactation, 36(4), pp.568-578.

Lafuente, E., Leiva, J.C., Moreno-Gómez, J. and Szerb, L., 2020. A nonparametric analysis of competitiveness efficiency: The relevance of firm size and the configuration of competitive pillars. BRQ Business Research Quarterly, 23(3), pp.203-216.

Loura, I., 2018. 5Ps: A Conceptual Framework for Digital Marketing Campaign. ASBM Journal of Management, 11(2), pp.65-77.

Nagarathinam, M.V., Dhanvarshini, S., Ahamed, A.I., Ajith, S. and Yuvaraj, P., 2021. A Study on Marketing Mix of Nestle Product. NVEO-NATURAL VOLATILES & ESSENTIAL OILS Journal| NVEO, pp.4820-4825.

Salim, M.S., 2018. An investigation of strategic management on the corporation NESTLE.

Websites

businessmavericks.org, (2022), BCG Matrix of Nestle in a Simplified Way, Available at: https://businessmavericks.org/bcg-matrix-of-nestle/ [Accessed on: 2nd November, 2022]

iide.co, (2022), The Complete Marketing Mix of Nestle – 4Ps and Company Overview Covered, Available at: https://iide.co/case-studies/marketing-mix-of-nestle/#:~:text=Marketing%20mix%20of%20Nestle%2C%20which,contribute%20to%20the%20brand's%20success. [Accessed on: 2nd November, 2022]

ipl.org, (2022), Competitive Advantage of Nestle, Available at: https://www.ipl.org/essay/Competitive-Advantage-Of-Nestle-P358F92PC4DR [Accessed on: 1st November, 2022]

marketingmind.in, (2022), Nestle Is a Lifestyle, Available at: https://www.marketingmind.in/interesting-facts-nestle-will-blow-mind/ [Accessed on: 1st November, 2022]

moneycontrol.com, (2022), Nestlé’s competitors, Available at: https://www.moneycontrol.com/competition/nestleindia/comparison/NI [Accessed on: 1st November, 2022]

nestle.com, (2022), About Nestle, Available at: https://www.nestle.com/about [Accessed on: 1st November, 2022]

nestle.co.uk, (2022), Culture of Nestle, Available at: https://www.nestle.co.uk/en-gb/sustainability [Accessed on: 2nd November, 2022]

simplilearn, (2022), 10 Key Takeaways from the Nestle Marketing Strategy, Available at: https://www.simplilearn.com/tutorials/marketing-case-studies-tutorial/key-takeaways-from-nestle-marketing-strategy [Accessed on: 1st November, 2022]

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