Abstract
This paper intends to evaluate a case study that proposes Nestle with business plan. The case focuses on various essentials such as strategy formulization, SWOT analysis, and Porter’s Five Forces Model to generate insights and develop systematic framework accordingly. However, clear mission and vision is absent, which introduce various ambiguities in plan. Over the years, Nestle faced various environmental challenges that altered decision-makings and corporate earnings. However, the company has some strong competitive advantages and competencies that differentiate their products from competitors. Among these advantages, research and development (R&D) activities is a noticeable investment made by Nestle. The company is recommended to increase scope of plan by considering a tool called balanced scorecard. This tool has potential of creating an integrated synergy impact that can extend leadership sustainability. The overall case analysis is positive but conventional. Nestle is suggested to use modern tools that can regulate company according to trends.
The case research conducted by Ulku (2015) has maximum adequacy in executive summary from the perspective of business plan. In order to propose a business plan to giants such as Nestle, few elements are extremely essential. First, a clear mission and vision of business comprising with core values, competencies and objectives. In case of Ulku, the summary and research does not specify mission and/or vision that integrate with Nestle.
On contrary, the author has discussed other essentials such strategy formulization. The summary clearly states that research will develop strategy for Nestle so persuasion is precise. Further, summary discussed tools such as SWOT analysis and Porter’s Five Forces analysis to evaluate environment and unique selling points (USPs) of Nestle for appropriate compliance. Lastly, Ulku (2015) clearly stated implementation plan in her research summary in compliance with proposed strategies.
Evaluation of Research Content
Ulku (2015) has segmented each feature of business plan in a systematic manner. The alignment of the proposal is done with proficiency and transparently. Discussing, the paper initiates with introduction of the company and current market positioning. After in-depth analysis of industrial standing of Nestle, the author highlighted and specified a clear research problem to strict the business plan.
While analyzing the company, Ulku (2015) has kept few elements into consideration; first, the environmental analysis was done to understand nature of industry and detect potential threats. Second, the structural analysis was conducted in order to understand internal competencies and lacking of Nestle. This aspect assisted in implementing change with effectiveness. Lastly, competitiveness was examined to identify competitors and their strengths. Moreover, this section also caters market share acquired by Nestle over the years in order to include inclining strategies. In personal opinion, the proposal is written off by the author in effective and precise manner, which increases the probability of acceptance.
Marketing Issues & Competitive Advantages of Nestle
The first marketing concerned raised for Nestle was related to operating decisions. These routine decisions were delegated to local distributors of the company, which disturbed product elements such price, marketing activities, selling and distribution, etc. It must be notified that the company operates in five huge districts, which include Europe, Asia, and North America (Ulku, 2015).
Proceeding, the demographics in these regions were modified since 1990, particularly in European and North American regions. The population structure started to decline, which shrunk the market size. The change in demographics in Europe and North America has reduced consumption of food significantly. On contrary, the remaining market size became health conscious and minimized consumption of unhealthy or weight gaining foods (Ulku, 2015).
Moreover, bargaining power became another critical concern for Nestlé’s profitability figures. The retail sector had maximum balance of power related to pricing of product. The food-manufacturing giants such as Nestle had lost grip on price negotiation during 1990. Consumers tend to visit hypermarkets and discount hubs for competitive pricing. The changing nature of target audience enforced Nestle to reduce their prices considerably, which had influenced corporate profitability.
Nonetheless, Nestle fired back with changing trends of market by launching nutrition health and wellness (NHW) program strategically (Nestle, 2016). This program allowed the company to offer noticeable differentiation in products, appealing product packaging, value-addition to consumers. The NHW program helped the company to improve profit figures after 13 years efforts (Ulku, 2015).
The food and beverage industry is highly competitive and consumers have range of alternatives. For Nestle, early penetration into emerging segments and markets was key strategy to deal with tendency of competitiveness. Over the decades, Nestle was positioned as pioneer and sustained market leadership in segments like noodles, condensed milk, infant products, etc. These segments were initially focusing on niche class of target audience and developed adaptability for masses with time. As evidence, Nestle successfully took over 85% of coffee segment in Mexico, 66% of powder milk in Philippines, and 70% market share of soup in Chile. With the inclination of purchasing power among target audience, Nestle initiated to offer mineral water, chocolates, and ready to cook food items in order to expand product portfolio (Ulku, 2015).
Discussing the competitive advantages of Nestle, the product portfolio is extremely diverse. This allows Nestle to diversify its costs and losses systematically and reduce risks. Moreover, the company is highly trusted among target audience with each product. Hence, the company is able to cater every social class around the globe with wide range of products (Ulku, 2015).
Second, the research and development (R&D) activities of Nestle is among USPs of the company (Mohammad, 2012). As mentioned in the case, the company owns one of the largest private research facilities in food and beverage industry. Each year, Nestle invests more than $2 billion for R&D activities and increase product portfolio accordingly. This approach allows them to enter markets that are emerging with highest success potential. The company is in collaboration with more than 1,500 universities and employed 100k scientists in order to conduct reliable and effective researches related to products (Ulku, 2015).
In personal opinion, Nestle has all the elements to face challenges related to marketing since the core competencies and competitive advantages of the company are highly diverse. The market sustainability and future expansion are most promising for Nestle compared to other brands operating in global food and beverages industry.
Recommendations
The business plan proposed by Ulku (2015) lacks few elements that can enhance entire framework. First, there is an essential need of specifying mission and vision statements separately. With absence of these statements, Nestle would not be able to identify final and/or core objectives of the plan. In other words, the statements define purpose of implementing proposed plan. Since mission and vision are not specified adequately, Nestle has no reason for considering the proposal initially.
Second, a balanced scorecard should be used in order generate accurate financial and non-financial insights contemporarily. It encompasses internal business processes, customer, financial, and learning and growth while outlining business objectives. The balanced scorecard would allow Nestle to enhance flow of communication between different divisions, departments, teams, and organization. Moreover, it will reduce environmental uncertainty and sustain market position of the company. With inclusion of balanced scorecard to define business plan, Nestle can easily create a synergy impact and develop multiple alternatives while making decisions (BSI, 2016).
Lastly, the core focus of the entire proposal is R&D activities. R&D is not denied but other areas such as supply chain management (SCM) and customer relationship should be considered equally in order to maintain balance in resource allocation. In personal opinion, the overall plan implementation will strengthen Nestle on global platform.
References
BSI,. (2016). What is the Balanced Scorecard?. Balancedscorecard.org. Retrieved 12 July 2016, from http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard
Mohammad, A. (2012). Competitive advantage and value chain Nestle. Alfi Mohammad Word Press. Retrieved 12 July 2016, from https://alfimohammad.wordpress.com/2012/11/22/caompetitive-advantage-and-value-chain-nestle/
Nestle,. (2016). Strategy. Nestle.com. Retrieved 12 July 2016, from http://www.nestle.com/aboutus/strategy
Ulku, M. (2015). Strategic Management Analysis - Case Study of Nestle. Tobb University Of Economy And Technology, 1-16. Retrieved from https://www.academia.edu/11731894/Strategic_Management_Analysis_-_Case_Study_of_Nestle
