Thesis Statement
Businesses operations in today’s world cannot survive without providing benefits to the society within which they operate. Creating Shared Value (CSV) is an idea that gained prominence in 2011, and it goes beyond the corporate social responsibility of a company which several companies adopt in a vain effort to create a false picture of societal concern. Nestle decided to go against the latter and took the idea in 2006, and this paper elaborates how it has gone about it, the company's vision and mission statement and its current standing via a SWOT analysis.
Theory of the Firm
Nestle is a company committed to Creating Shared Value where they not only create wealth for themselves but also address the challenges of the society and it is demonstrated from the very beginning in 1886 when the proprietor Henri invented the Farine Lactee to alleviate infant malnutrition. The company blends value creation within its boundaries of wellness and health by establishing programs where they partner with local farmers for quality raw material production. The boundaries as illustrated by Zenger (2008) are important for a firm as it allows it to harness value creation in the market niche it occupies. Nestle made this commitment in 2006 when the capitalist dominated method of conducting business started to fall apart. Too stay relevant, the company came up with this new strategy that has since been adopted by other business conglomerates like Wal-Mart. (Harvard Business School, 2015). The company has been on the fore front of tending to the needs of the small impoverished coffee farmers where they provide them with agricultural products to improve their yields.
The establishment has been able to carve out a name for itself in this way where they are seen taking care of the challenges of the society. They create value for the needy in the society, enlarge their markets and give them the opportunity to tap into new product lines and more raw material supply. Another major goal of CSV is to enable the company to create a sustainable future market by “extending the pool of economic and social value.” (Porter and Kramer, 2011). The company shows commitment towards investing in both human and capital resources and collaborating with several humanitarian oriented organizations like the United Nations. Not to be confused by mere philanthropy, the company has invested a stake in the society to encourage sustainability for future generations. Nestle has a strong adherence to their Nestle Corporate Business Principles, Laws and Code of Conduct that guides it in ensuring they achieve creating the shared value.
Vision and Mission Statement
Nestle is the world’s leading nutrition, health and wellness company. It has a simple but strong mission statement, “Good Food, Good Life.” So far, it has stayed relatively true and committed to this mission. It has some of the world’s leading brands of dairy products that are known and preferred the world over for their distinctive tastes.
The company has a vision to not only produce the best beverages and foods with high nutrition quality in the world but also lead the way in producing healthier products too to improve the lives of people. The business has put considerable efforts to improve their product quality and has set up thirty four research and development facilities all over the world, the most of any company. They have numerous teams of dedicated scientists and nutritionists working towards this vision of making healthy and safe foodstuff.
Goals and Product Divestiture in Support of the Mission and Vision
In connection to alleviating the lives of people, Nestle has been committed in the fight against malnutrition in children and women specifically anemia in recent years. Nestle has come up with a bouillon Maggi cube that has the ability to provide all the iron nutritional requirements in an adult. The product was previously just another food condiment but Nestle through its R&D programs was able to fortify it by introducing potent amounts of iron in it and provide it to developing countries in West and Central Africa at very affordable prices.
Another goal geared towards creating shared value as well as providing healthier beverages to people, Nescafe, one of Nestle leading brands launched a Nescafe Dolce Gusto capsules. These capsules are made with pure matcha green tea which has been associated with great health benefits due to its high content of antioxidants. The capsules were introduced in Japan to make the beverage available to all. The capsules will be made with tea sourced exclusively from the Uji region near Kyoto in Japan supporting local farmers and sharing the value of the product.
SWOT Analysis
Strengths
1. Nestle is a worldwide recognized company with several stronghold brands under it that have been key profitable products. It also has a wide range of products which makes it possible for them to dip into any market within the food and health industries. Such brands have the ability to weather turbulent economic times and help the company stay solvent.
2. Nestle is a highly diversified company with their products being sold in over 100 countries in the world. It gives them a larger customer base and competitive advantage over other companies.
3. Nestle has strong established partnerships with other huge companies and organizations for humanitarian efforts. It has partnered with Coca-Cola, General Mills Inc. and the International Federation of Red Cross and Red Crescent. Not only does this increase their customer bases already created by these companies but also demonstrates its commitment t it vision.
4. It has a strong R&D that is unmatched by any company that makes it at the forefront of the emerging needs and changing tastes of their customers.
Weaknesses
It is tasked with designing specific R&D facilities specific for each country as tastes differ from one geographical region to another.
There are conflicts between different managing teams located all over the world. Such disagreements could have negative impacts on the company’s economy.
The company is constantly criticized for child labor and other unethical labor practices especially in Cote d’Ivoire where they source cocoa.
Opportunities
Nestle is provided with the rare opportunity of grabbing the emerging market as the working class of developing countries grows.
With its vast capital and brand recognition, they can seize the opportunities to acquire startups.
With its large brand recognition, they have the unique opportunity to develop healthier beverage options as customers become more health conscious.
Threats
Major competition from other established certain brands. Gerber, their baby formula is now being ebbed out by Lactis.
There is an increase in the price of raw materials they source from developing countries. These products will get more expensive due to high demands and lead to higher prices. (Nestle, 2014).
Conclusion
Created Shared Value is a strong theory of firm being employed by businesses all over the world. Nestle is a worldwide recognized companies with brands that are trusted by its consumers and hold a large market share. Adopting the CSV only strengthened the company’s good standing with its consumers and has helped it during tough economic times that have rocked the world recently. As Porter (2011) put it, pure utilitarian capitalism is no longer a solution in running today’s businesses.
References
Porter, M. E. and Kramer, M. R. (2011). Creating shared value: How to reinvent capitalism- and unleash a wave of innovation and growth. Harvard Business Review, January/February 2011.
Nestle. (2016).- Our Story.
-Annual report, 2013. Retrieved online www.nestle.com
Nickerson, J. A. and Zanger, T. R. (2008). Envy, comparison costs and the economic theory of firm. Strategic Management Journal. Wiley Interscience. Retrieved online www.interscience.com
The Economist. (2015). Management theory: Survival of fittest. Retrieved online www.economist.com
