1. Company Background
Key Issues
Mission and Vision
2. Unilever Company Application
3. Ice Cream Competitive Environment Application
Company Background
Nestlé is a Swiss based company and its core was formed by two different Swiss companies in 1867, Anglo-Swiss Condensed Milk Company in Switzerland (About Us n.d. para 5). Henri Nestlé sold his company and factory to three businessmen and by 1878 Milkmaid and Nestlé were the main competitors in the European market as they started offering similar products (About Us n.d. para 5). In 1902, Milkmaid, sold off all of its operations based in the United States, paving the way for its merger with Nestlé. In 1904 Henri Nestlé and others created and developed the first chocolate named Nestlé. As the First World War approached, Nestlé began its ‘Beautiful Age’, and become an internationally recognized dairy company. Nestlé acquired Maggi Soups by 1947.
Key Issues
One of the biggest issues that Nestle faces is that there is the issue of customer demand being volatile. This is further aggravated by the weather conditions and natural calamities. A big event at any part of the Nestle supply chain leads to disastrous results. As Nestle relies on the suppliers of raw materials it is imperative that Managers of the company foster better relationships with the suppliers. In order to do so they can also rely on the Dealer Management System, which is a software that can help in building the relationships of dealers and their respective customers. (Brosekhan and Velayutham, 2013).
Nestle’s market is the food processing market. Within this market, its biggest competitor is Unilever. The key issues that are faced by this market are that there is a lot of competition as there are hundreds of brands to choose from, in each particular area. A problem that is currently threatening this industry is the retailer consolidation, as it is a global trend, especially in the developed countries. In Europe, this trend is particularly rampant as almost 90% of France’s retail market is owned by five of the world’s top supermarkets (Ülkü, M. n.d) Suppliers have a lower chance of penetrating more markets. (Barrett,2010). In the food industry another big issue is that the consumer in the food industry is highly probable to change. An example of this is that in the years of 2010 the food trend changed from a 25% demand of Natural and Wholesome products to 48% in 2011. (Annual Report, 2014)
Nestle faces a huge competition in various regions by the local brands competing in the same category. Local products give a hard time as they have an edge when it comes to better understanding the consumer needs.
Mission and Vision
The vision of Nestle is to be the world's biggest and leading company to develop and deliver Nutritional products as well as Health and Wellness products. Its mission statement is ‘Good Food, Good Life’. Its objectives also include being compatible with international voluntary standards regarding the environmental management systems as well as to monitor progress. (Mission and Vision n.d. para 3).
Nestle has alliances with a number of groups. Some of its key partnerships include partnerships with The Consumer Goods Forum as well (2016). Last year the Forum’s Board, which also includes the current CEO of Nestle, helped bring about new resolutions on food waste management (2016). The current Strategic Position of is to be hailed as one of the most environmentally friendly product processing companies. To do so it is currently engaged in a number of different programs, including energy sustainability as well as increasing efficiency of products (2016).
Unilever Company Application
The mission of Unilever is to create a better future and to help people feel good, look good and enjoy their lives by getting more out of life. Unilever is trying to build a more diversified and broad portfolio in 1960s.Their portfolio has been in constant flux and by 2000 -ies created its 5 year strategy; the Path to Growth. Over a period of 10 years its turnover percentage for Personal care products has increased from 27% to 38% (Portfolio Performance by Category n.d. para 4). However the Food product’s turnover percentage has decreased consistently from 35% to 24%. The Operating margin percentage for Personal Care products has increased from 17.1% to 18.1% (Portfolio Performance by Category n.d. para 4). In 2013 Unilever partnered with Green Mountain Roasters to introduce tea capsules in coffee machines. Then in April 2013 Unilever also acquisitioned the Czech Republic Home Brands which improved its presence in Central and Eastern Europe’s Home Care brands. (Dover, 2014).
Unilever, being the business leader in most of the countries it operates, has always been looking for businesses that can add on to the profitability of the company. In all the regions where Unilever operates, it has acquired numerous ongoing businesses and have been them flourish even better. This has also helped Unilever in curbing competition in the regions where it operates and become the leader in the respective category.
Another reason for going ahead with mergers for Unilever is that since the company aims at enhancing consumer’s life so through acquiring local products they are able to integrate into the consumer’s life by increasing their brand portfolio.
Ice Cream Competitive Environment Application
The ‘Manchester Method’ is used. There are variation and differentiation in the cost structure based on the Geographic scope of the brand’s operations. As the ice cream trade is seasonal in Europe and North America, Unilever focused its energies around the equator where the business is booming. Unilever has also tried to do different things with the Ice cream business by pairing their flavors with different variants. The trend to snacking was seen as accounting for almost a quarter of all sales globally by Euromonitor (July 2015). Keeping this in mind it was seen that Unilever was one of the companies which capitalized on this (July 2014, UK). Because of all these Mega trends (trend to wellness, try something different and snacking) Unilever has increased the launching of new products and limited edition products and by doing so it has been successful in increasing customer interest from 1:10 in 2010 to 1:5 in 2014 (Mintel data). (Portfolio Performance by Category n.d para. 2)
The variation in flavors and localization has helped the ice cream division of Unilever to grow in each country. In most of the countries, Unilever has acquired the local ice cream brands which have helped them in getting closer to the taste buds of the local citizens. The ice cream section of Unilever has to face some serious competition from various competitors which fall into broad categories like Ben & Jerry’s, which is famous for its wide flavors to Hagn Dazs which has positioned itself as a premium ice cream in the consumer’s mind.
References
Portfolio Performance by Category, n.d. [Online] Available from https://www.unilever.com/Images/charts_2005-2015_ar14_tcm244- 416973_en.pdf [Accessed: 3rd June 2016]
Ülkü, M. n.d. Strategic Management Analysis - Case Study of Nestle (Masters of Business administration). Tobb University of Economy And Technology, Faculty Of Social Sciences.
Barrett, B., (2010). Canada Trends – Natural/ Health Foods. Gain Report Number: CA 0047, Ottawa, Canada. [Online] Available from
http://www.b-for.com/Forms/CanadaTrendsNaturalHealthFoods.pdf [Accessed: 3rd June 2016]
Brosekhan, A., A., & Velyutham, C., M., (2013). Consumer Buying Behavior – A Literature Review. IOSR Journal of Business and Management (IOSR-JBM), pp. 08-16.
Dover, J., (2014). Eleven Trends and Factors Affecting Canada’s Foodservice Industry. Restaurant Central.ca, Canada go-to site for foodservice professionals. [Online] Available from http://www.restaurantcentral.ca/trendsfactorsCanadasfoodserviceindustry.aspx [Accessed: 3rd June 2016]
Annual Report. (2014) Nestle. [Online] Available from: https://www.nestle.com/asset-library/documents/library/documents/annual_reports/2014-annual-report-en.pdf [Accessed: 3rd June 2016]
Mission & Vision. (n.d.). Nestle. [Online] Available from http://www.nestle.pk/aboutus/nestleinpakistan/missionandvision [Accessed: 3rd June 2016]
About Us. (n.d.). Nestle. [Online] Available from http://www.nestle.com/aboutus [Accessed: 3rd June 2016]
