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    Strategic Management: Semester III Assignment 3

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    medha sur
    Nestle is the largest food and beverage company in the world operating in nearly every country. It markets over 7,500 brands across various categories. Porter's Five Forces analysis identifies competitive rivalry and threat of substitutes as high impacts for Nestle due to many competitors and substitute products. Key drivers for change include understanding consumers, accelerating growth through innovation, increasing efficiency, and maintaining a global nutrition and health strategy through mergers and acquisitions.

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    Strategic Management: Semester III Assignment 3

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    medha sur
    49 views5 pages
    Nestle is the largest food and beverage company in the world operating in nearly every country. It markets over 7,500 brands across various categories. Porter's Five Forces analysis identifies competitive rivalry and threat of substitutes as high impacts for Nestle due to many competitors and substitute products. Key drivers for change include understanding consumers, accelerating growth through innovation, increasing efficiency, and maintaining a global nutrition and health strategy through mergers and acquisitions.

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    Nestle is the largest food and beverage company in the world operating in nearly every country. It markets over 7,500 brands across various categories. Porter's Five Forces analysis identifies competitive rivalry and threat of substitutes as high impacts for Nestle due to many competitors and substitute products. Key drivers for change include understanding consumers, accelerating growth through innovation, increasing efficiency, and maintaining a global nutrition and health strategy through mergers and acquisitions.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    49 views5 pages

    Strategic Management: Semester III Assignment 3

    Uploaded by

    medha sur
    Nestle is the largest food and beverage company in the world operating in nearly every country. It markets over 7,500 brands across various categories. Porter's Five Forces analysis identifies competitive rivalry and threat of substitutes as high impacts for Nestle due to many competitors and substitute products. Key drivers for change include understanding consumers, accelerating growth through innovation, increasing efficiency, and maintaining a global nutrition and health strategy through mergers and acquisitions.

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    of 5

    STRATEGIC MANAGEMENT

    Semester III
    Assignment 3

    TOPIC: PORTER'S 5 FORCES ANALYSIS ON YOUR


    ORGANIZATION AND IDENTIFY KEY DRIVERS FOR
    CHANGE

    Company: NESTLE

    Submitted To:
    Prof. Pradip Mittra

    Submitted By:
    Nestle
    Sector:
    Fast Moving Consumer Goods (FMCG)

    Company Introduction:
    • Nestlé S.A. is the largest food and beverage company in the world.
    • With a manufacturing facility or office in nearly every country of the world, Nestlé
    often is referred to as "the most multinational of the multinationals."
    • Nestlé markets approximately 7,500 brands organized into the following categories:
    baby foods, breakfast cereals, chocolate and confectionery, beverages, bottled water,
    dairy products, ice cream, prepared foods, foodservice, and pet care.

    Tagline:
    Good food, Good life

    PORTER’S FIVE FORCE MODEL


    1. Threat of new entrants
    2. Threat of substitutes
    3. Bargaining power of suppliers
    4. Competitive Rivalry
    5. Bargaining power of buyers
    Threat of new entrants- Moderate impact Bargaining power of buyers- Moderate /
    • This requires huge investment in setting up High impact
    distribution network and promoting brands. • FMCG sector has variety of products of which some
    • Advertising spend is also aggressive.

    Threat of new
    are durable and some are non- durable.
    • Customer loyalty for example, if you are a loyal • Bargaining power of buyers vary from moderate to

    entrants
    customer to Nestle you won’t compromise your high as many factors are taken into account such as
    quality and switch to other new brands whereas, some quality, nature, durability etc., of the products.
    may price sensitive customers may switch if there are • There are number of companies that sell similar
    price discrepancies. products but nestle recognizes this bargaining power
    • Existing companies have developed strong of buyer and strives to ensure that customers of nestle
    distribution networks and economies of scale that remain satisfied.
    allow them to produce and deliver at low costs.
    • Brand loyalty of consumers is very high

    Bargaining power of Competitive Bargaining power of


    suppliers Rivalry buyers

    Bargaining power of suppliers- Low impact Threat of substitutes- High impact


    • Big FMCG companies are able to dictate the prices • Presence of multiple brands, narrow product
    through local sourcing from a fragmented group of substitutes differentiation under many brands & price wars.
    key commodity suppliers. Threat of • For example, in case of Nestle, Coffee has substitute
    • For example, Nestle being one of the largest product in form of tea, Ice tea has substitute in form of
    conglomerates in this sector, has been having an upper aeriated and non- aeriated drinks, etc.
    hand while deciding the price of the products sold and • There are also allegations against some of the products
    manufactured. of nestle as not being healthy, this has led to increase
    • Nestle holds largest market share in the industry as a the sale of substitute.
    result it requires supplies in a massive quantity this • Nestle products such as bottled water and pasteurized
    makes it ideal buyer for supplier. milk have substitutes that are readily available in the
    • Nestle prefers long term relations with suppliers to market.
    ensure the quality of raw products.
    Competitive Rivalry- High impact
    • FMCG sector is a very competitive sector.
    • Private label brands by retailers are priced at a
    discount to mainframe brands limits competition for
    the weak brands.
    • Highly tapped and fragmented industry, as more
    MNCs are entering.
    • For example, Nestle one of the largest FMCG
    conglomerate, faces stiff competition for all of its
    products. Nestle Chocolates face stiff competition
    from Cadbury, Hershey’s, Mars etc.
    • Nestle Maggi faces competition from Yippee Noodles,
    Ching’s Noodles etc.
    • HUL, Heinz, Amul are some Nestle’s other
    competitors.

    KEY DRIVERS FOR CHANGE


    1.Understanding and serving the consumer
    • Well positioned portfolio for growth

    • Remains at the forefront of the FMCG industry

    • Largest research and development network in the food and beverages industry

    • Continues innovation of portfolio to meet changing consumer demands

    2.Accelerating growth

    • Long-term value creation is the result of both growth and operating efficiency

    • Core of value creation comes from product, service and business model innovation

    • Fully committed towards digital marketing and e commerce platforms as avenues for
    growth

    3.Creating Shared Value


    • Creating value for both shareholders and society

    • Understanding that the prospects of their business are linked to the health and
    resilience of the society and world

    4.Increasing efficiency
    • Optimizing manufacturing footprint

    • Increasing efficiency throughout operations

    • Scaling up the use of shared services brings further efficiency.


    • Aims to increase the availability and use of shared services to 50% by 2020.

    5.Building on our Nutrition, Health and Wellness strategy


    • It is built on its Nutrition, Health and Wellness strategy

    • Good nutrition is a key to a healthy life

    • Their aim is to provide the tastiest and healthiest choices at all times of the day and
    for all stages of life

    • ‘Good food, Good life’

    6.Global brand strategy


    • Successfully achieved localization in the increasingly globalized food industry

    • Product planning, production, promotion, marketing and services act as an important


    driver in success

    7.Successful merger and acquisition


    • Clear strategic focus on Food and beverages, nutrition, health and wellness to existing
    core businesses made them stronger in the market

    • Nestle has acquired to enter both emerging and developed markets, and new product
    categories.

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