Q1. What Nestle thinks they are doing?

Nestlé is implementing an accelerated long-term value creation strategy. The company expects to
see sustained future revenue growth from investing in its brands and innovation. Nestlé is more
and more geared towards healthier foods and beverages that help enhance the quality of life. In
line with this new trend towards healthier eating, consumers are prepared to spend more of their
available income on good food. The key to our long-term success continues to be dependent on
understanding and serving the needs of the consumer. By identifying consumer trends early and
acting quickly to capture them, we remain at the forefront of the fast-moving consumer goods
industry. People today know the importance of good nutrition and of managing their health more
proactively. They want products with simple, understandable ingredients, natural or organic, and
ideally locally produced giving the company the opportunity to focus on products with nutrition,
health and wellness benefits. The consumers concern about the nutrition of the products
consequently leads to the adaption of The Nutrition, Health and Wellness strategy.

Furthermore, Nestle expects sustained future revenue growth to come from investing in our
brands and innovation. Rapid innovation and bringing products to market faster are key
dimensions of our growth agenda. At the same time, they continue to invest in cutting-edge
science and technology to address evolving consumer expectations through new offerings and
product reformulations. Innovation also helps us to premiumize our offering and contributes to
margin improvement.

Q.2 How are they executing this strategy?

Nestle through enhancing quality of life and contributing to a healthier future, Nestle aims to
deliver sustainable, industry-leading financial performance and earn trust.The mission of Nestlé
– “Good Food, Good Life” – is to provide consumers with the best tasting, most nutritious
choices in a wide range of food and beverage categories and eating occasions and to put a strong
emphasize that leadership is not just about size; it is also about behavior and trust earned over a
long period of time by consistently delivering on promises. It is quite important to present
Nestlé’s internal resources when analyzing company’s strategic position – the key strengths and
weaknesses. Nestlé is on the path of achieving worldwide sustainable competitiveness through
the following strategic “pillars” such as

 low-cost
 highly efficient operations
 renovation and innovation of the Nestlé product line
 universal availability
 ability to customize products to the local market conditions;
 improved communication with consumers through better branding;
 research and development capabilities with a focus on meeting today’s needs without
compromising the ability of future generations to meet their needs,
 to do so in a way which will ensure profitable growth year after year
 a high level of returns for shareholders and society at large over the long-term.

The company has the largest R&D network of any food company in the world; with 32 R&D
centers and over 5,000 people directly involved in R&D. Nestlé’s long-term corporate objectives
are to be recognized as the world’s largest and best branded food manufacturer and leader in
Nutrition, Health and Wellness, trusted by all its stakeholders, whilst ensuring that the Nestlé
name is synonymous with products of the highest quality as well as achieving the status of
“Nestlé Model”, a term which referred to Nestlé’s objectives of “organic growth between 4%
and 6% each year; continued year-after-hear improvements in earnings before interest and tax. In
recent years, the company has pursued a policy of expansion and diversification (brands
diversified into specific product groups like baby foods, bottled water, coffee, drinks, food
service, sport nutrition and weight management etc.) through acquisition and divestment to
achieve a more balanced structure to the business (as an example, Nestlé‘s 2012 acquisition of
Pfizer Nutrition, enhancing its position in global infant nutrition). To stay ahead of the
competition, Nestlé centralizes expertise in the system technology. Nestlé has marked recently
the official opening of a new System Technology Centre (STC) in Switzerland that brings
together on one site the expertise used to combine products, capsules and machines such as those
used in its Nespresso and Nescafé Dolce Gusto beverage systems what will significantly affect
the company’s profits in the future. The company has also set up a new institute to combine
nutritional and biomedical research, in the hope of creating foods that provide a medicinal 11
benefit. Nestlé is examining its entire portfolio to make sure its products are healthier and tastier
than those of its direct competitors

Q5. What is Nestle focused on? Would you decide that for your firm?

Nestle focuses itself to become a world leader in food, nutrition, health, and wellness company
trusted by all its stakeholders, and to be the reference for financial performance in its industry.
They believe strengthening their leadership in this market is the key element of their corporate
strategy. They also believe that leadership is not just about size, it is also about their behaviour.
They recognise trust is earned only over a long periods of time by consistently delivering on their
promises. These objectives and behaviour are encapsulated in the simple phrase, “Good Food,
Good Life”, a phrase that sums up their corporate ambition. The Nestle Roadmap is intended to
create alignment for their people behind a cohesive set of strategic priorities that will accelerate
the achievement of their objectives. They are not investing for the future to ensure the financial
and environmental sustainability of their actions and operations in capacity, technology,
capabilities, in people, in brands, in R&D but they aim to meet today’s needs without
compromising the ability of the future generations to meet their needs, and to do so in a way
which will ensure profitable growth year and a high level of returns for their shareholder and
society at a over long-term.

This market is characterised as one in which the consumer’s primary motivation for a purchase
in the claims made by the product based on nutrition content. In order to reinforce their
competitive advantage, Nestle created Nutrition as an autonomous global business unit within
the organisation, and charge it with the operational and profit and loss responsibility for the
claim-based business performance by offering consumers trusted, science based nutrition
products and services. The Corporate Wellness unit was designed to integrate nutritional value-
added in their food and beverage business. This unit will drive the nutrition, health and wellness
organisation across all their food and beverage businesses. It encompasses a major
communication effort, both internally and externally, and strives to closely align Nestle scientific
and R&D expertise with consumer benefits. The unit is responsible for coordinating horizontal,
cross-business project that address current customer concerns as well as anticipating future
consumer trends

Nestle focuses on taking the first mover advantage to capture the market with their Nutrition,
Health and Wellness products i.e to become the world leader in food and nutrition. They have
used the best use of the R&D department which had helped them recognize the needs and wants
of the consumers and the un-captured area in the food industry which helped them to take the
first movers advantage over their competitors. Similarly, I would target the un- captured areas to
have an competitive advantage over my competitors

Q. 2 Under what circumstances these types of commitments are useful?

The core concept of nestle brand is good food must be for good life. Therefore we can say that
Nestle is shareholder friendly that depicts the welfare of society as a whole. The strategies
adopted by the Nestle Company may not be profitable to the other companies who adopt these
types of strategies. The strategies adopted by the Nestle are useful to them because of the
following circumstances:

1. Strategic Alliances: Nestle is already engaged in partnerships with a number of major

companies, such as Coca-Cola, and several others, opening doors of opportunities for the
company. It is one of the main shareholders of L’Oreal, the world’s largest cosmetics  So
partnering with other food giants will help the company in further growth.
2. Focusing more on R & D to handle ethical issues: Recent outcry of Maggi Noodles in
India for lead presence like issue will create hindrances in the future growth of the
company. So in order to handle these health issues Nestle must invest in R & D further to
come up with more hygienic food products.
3. World Renowned brand: It is fortune 500 Company and is world’s largest
food company measured by revenues (2014). Nestle does individual branding of their
different food brands which help them in creating awareness about their various food
brands. This also helps them because if a brand like Maggi is affected, it does not affect
the sale of Coffee.
4. Broad Product portfolio: Nestle has more than 8000 brands / products under its name
which ranges from beverages like Coffee & Mineral water, Breakfast cereals, Soups &
sauces etc. Under each product categories Nestle have deep assortments to satisfy
different needs & wants of the consumers.