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STRATEGIC MANAGEMNT

“STRATEGIC MANAGEMENT
PROJECT”
SUBMITTED TO:

SIR USMAN ALEEM

PRESENTED BY:

1. HAFSA SAMAD (60849)

2. USHNA AMJAD (60742)
3. SHATBAH SALEEM (60796)
4. UZMA ALAM (61671)
5. HUSSAIN (59472)

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“In the name of Allah, the most gracious and

the most merciful.”

ACKNOWLEDGEMENT
Alhamdulillah, all praises to Allah for the strengths and his blessings in completing this
report. Special appreciation goes to our teacher, DR. USMAN ALEEM, for her
supervision and constant support. Her invaluable help of constructive comments and
suggestions throughout the report works have contributed to the success of this report.

Sincere thanks to all our friends for their kindness and moral support during our study.
Thanks for the friendship and memories.

Last but not the least, our deepest gratitude goes to our parents for their unconditional
support, both financially and emotionally, throughout our report and also to our siblings
for their endless love, prayers and encouragement. To those who indirectly contributed in
this report, your kindness means a lot to us. Thank you very much.

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Executive Summary:

This report is prepared to analyses the strategy of the Nestle Company and comprehend
how the company develop strategic intent for their business organizations following the
analysis of external and internal business environments. We will analyses the strategic
management process as firm used to achieve strategic competitiveness and earn above-
average returns. We will discuss the strategy formulation that includes business-level
strategy and corporate-level strategy. It also aims to identify market place opportunities
and threats in the external environment and to decide how to use their resources,
capabilities and core competencies in the firm’s internal environment to pursue
opportunities and overcome threats. In order to strengthen this project about Nestle, there
are several methods of gathering data has been conducted, such as PESTLED analysis, 5
forces model and SWOT analysis.

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INTRODUCTION:

Nestle company is founded by the Henri Nestle in 1866 on a particular product which was
produced to protect the life of the child of neighbor. From that time straight on the essential
plan & strategy of the Nestle Company has been to produce the importance and value for
society, by organizing that produces the value for investors. Consequently, the strategy
assists the Nestle Company to develop a minor business to a World’s greatest and leading
Food, Health and wellness Company. Though, creating the communal values for the people
as well as the shareholders means going successful beyond the benefit of the consumer.
Making Shared Value also concerns about carrying value to the growers who are sellers of
Nestle, to employees and to other portions of civilization. It investigates the numerous facts
where the Company touch with the society and creating very continuing reserves that
mutually provide advantage the community and value to investors of the Company, in case
of the revenues Nestle is the leading food company of the World. There are various
products of the Nestle which includes the cereals, mineral waters, coffee, ice creams and
many other food items. The vision of the Nestle is to bump into the various everyday
requirements of the consumers by selling high quality food which is good for health and
nutrition. The aim of the Nestle Company is to serve the high quality food that are safe for
the consumers. Nestle also helps offer assortments for all distinct taste and routine
favorites. As the day the Nestle came into being their mission is to provide the health,
nutrition and wellbeing of the people from all over the world. The 140 years history of the

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company just focuses on the nutrition of the company. The company is fully dedicated
towards their consumers.

NESTLÉ’S MISSION &

VISION Corporate
Mission:
At Nestlé, we believe that research can help us make better food so that people live a
better life. As consumers continue to make choices regarding foods and beverages they
consume, Nestlé helps provide selections for all individual taste and lifestyle preferences.
Research is a key part of our heritage at Nestlé and inessential element of our future. We
know there is still much to discover about health, wellness and the role of food in our
lives, and we continue to search for answers to bring consumers Good Food for Good Life.

Corporate Vision:
Nestlé has an aim to meet the various needs of the consumer every day by marketing and
selling food of a consistently high quality. Good Food is the primary source of Good Health
throughout life. We strive to bring consumers foods that are safe, of high quality and
provide optimal nutrition to meet physiological needs. In addition to Nutrition, Health and
Wellness, Nestlé products bring consumers the vital ingredients of taste and pleasure.
Confidence that consumers have in our respected brands, is a result of our company’s
many years of knowledge in marketing, research and development, as well as continuity
consumers relate to this and feel they can trust our products. The objectives are to deliver
the very best quality in everything we do, from primary produce, choice of suppliers and
transport, to recipes and packaging materials

NESTLE MANAGEMNET:

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NESTLE STRATEGIC BUSINESS UNIT (SBU):

Nestle is a decentralized organization where responsibility for operating decisions is
delegated to local units, which have a high degree of autonomy concerning pricing,
distribution, marketing, etc.

Nestle is one of the world’s largest food company and has successfully grown and increased
its market share since its foundation in 1866. This already indicates that Nestlé’s overall
strategic posture makes sense given the markets and countries Nestle participates in.

Nestle is organized into seven different worldwide strategic business units (SBUs). These
have responsibility for high-level strategic decisions and engage in overall strategic
business development, including acquisitions and market entry strategy. Parallel to this
structure, there is a regional organization that divides the world into five major
geographical zones, such as Europe, North America, etc. The regional organizations are
responsible for developing regional strategies and assist in the overall strategy development
process. However, neither SBU nor regional managers get involved in local operating
decisions.

MACRO ENVIRONMENTAL ANALYSIS

• Political/Legal Environment:

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Political factors are important especially in food industry. The company policies are
affected and its budget is also affected. Nestlé provide food assurance to provide assurance
to the consumers that Nestles products are manufactured, imported and distributed under
the strictest hygienic and sanitary condition. Besides that, to ensure that consumers do not
buy any fake products, Nestles products are always come with the seal of guarantee. By
having the seal of guarantees, consumers are now more confident and trust of Nestles
products. Strict quality control played a role in political factor too. ) it means that Nestles
products quality will not be different with other countries. Consumers are guarantees with
full satisfaction of the products all over the world.

• Economic Environment
Although Nestlé is leading food industry, it shares its knowledge and expertise with local
small and medium companies. It helps entrepreneurs to compete in the new free trade
environment which will ultimately benefit the industry and the economy by making the
market growth. Besides that, Nestlé also collaborates with local government to provide
technical assistance to farmers in planting and harvesting crops. The farmer will get income
and Nestlé will get to purchase good and fresh raw materials to produce their food. By
having own local productions, Nestlé should no longer needs to import any raw materials
from other country where they will save much more money. It will also benefit the
consumers whereby consumers could enjoy the local productions with low price. More
consumers will use this product and therefore Nestlé will gain more profit from that.

• Socio-Cultural Environment:
A good diet and adequate food supply, the central for promoting health and well-being is
the focus of every person even these days; whether people tend to value products that
incorporate with them healthy benefits. Obviously, these types’ of goods are preferred
more than that of junk foods and its relative products. Moreover, generation Y cohorts,
those born from 1980s-2000s, possess characteristics such as acceptance to change and

being technologically savvy. These kinds of characteristics should coincide to the firms
aggressiveness of using technology especially that this is also the tie of the influx of
technology in the Europe.

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• Technological Environment:
Internet and Mobile Technology is currently growing so rapidly in the market where
almost all of the people nowadays will get contact with it. Nestlé could use this advantage
to benefit them by using technology to promote their products over those advanced
technology. Customer could get any information from their site. Nestles employees could
use this internet service to connect to its industry in other country such as Australia,
Singapore, U.K and more. They did research and development by using the technology to
find more information to satisfy the local tastes and cultural flavors in each country
market. By understanding what each country asks for, Nestlé could market difference
product according to the customer demand in difference country. It is already proven that
the technology factors are important for Nestlé Company.

• Global Environment:
Nestlé Company improves their operational efficiency by integrating the companies
businesses on a global scale. They are now transitioning to become genuinely global food
company, to behave as one. Nestlé has a dynamic global network of Nestlé R&D centers
working on scientific research and product development. They have the world’s largest
food and nutrition research organization, with about involve in R&D. Nestles global R&D
is applied locally to meet different consumer needs and preferences through over
300Application Groups worldwide.

• Demographic Environment:
Nestles product is for everyone. People from any area, any culture, any age, and income
will drink water. It is not any luxury item which is used by a specific people. Nearly all age
from young to old people can produce Nestlé. And all six continents are their customer.
For instance, Nestlé segment into different of age. For baby, they have Nestlé baby foods
while young people can drink Milo, Nescafe or eat ice cream, chocolate and cookies. In
Vietnam, Nestle has the Maggi brand with many kinds of Asia sauce, but Maggi do not
exist in England because of the different in the geographical taste.

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NESTLÉ SWOT ANALYSIS:

STRENGTHS WEAKNESSES

• Criticism over high water usage, selling

• Unmatched research and contaminated food, anti-unionism,
development capability forced child labor and using other
• Strong geographic presence, with one unethical practices
of the best geographically diversified • Contaminated food recalls
revenue sources
• Unrivaled product and brand portfolio
• Environmental sustainability efforts
• Ownership of some of the most
recognizable brands in the world

OPPORTUNITIES THREATS

• Poor quality water and its scarcity

• Clear and accurate labelling indicating • Increased competition in the beverage
of any harmful products and food industries
• Transparency in material sourcing • The price of coffee beans could
• Growing number of small Silicon significantly rise due to major weather
Valley based food startups disasters
• Growing ready-to-drink (RTD) tea and
RTD coffee markets

PESTLE ANALYSIS:

Let us start the Nestle PESTLE Analysis:

Political Factors:

The political factors in the Nestle PESTLE Analysis can be explained as follows:

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According to recent reports, Nestle operates across 190 countries and thus several political
factors affect the day to day operations of the organization are many. A major task that the
organization needs to perform is to keep a track of the various changes that are made in the
various policies related to import, export, taxation, environmental regulations, etc. in these
countries. These changes may sometimes be in favor of the organization, but sometimes are
major bottlenecks to production in certain countries. For. e.g. The change in labor laws,
which prohibit/shun the use of child labor in cocoa farms are getting stringent, which
according to reports will affect the operations of the company indirectly. Multinational
companies like Nestle, perform well when the global scenario is stable. An unstable phase
happened during the Brexit period, where Nestle faced a high-pressure situation. The
situations forced the company to rethink its decision of continuing in the country, in fact, the
giant even thought of relocating to a new region such as Poland. When such a move will
happen, it will leave behind a lot of people jobless, further creating a tensed environment.
When certain food regulations change, the organization must undergo rigorous brainstorming
and extensive testing to recreate the product in newer forms and still meet customer demands.
This was witnessed in the case of Maggi, which has resurfaced with the same issue of lead
content being present in it. A positive for Nestle happened when India reduced its corporate
tax in its latest budget. This gives the group an advantage to produce more and better-quality
products at a lower cost and serve the society better.

Economic Factors:

Below are the economic factors in the PESTLE Analysis of Nestle:

With the Nestle group operating across multiple countries, it becomes a mandate to create
various economic policies, relating to the economic conditions prevailing in that country.
With affordability being a major factor, providing quality foods for all in a market where the
prices of the raw materials keep fluctuating due to various political and environmental factors
is a major challenge. The cost of the raw materials for Nestle has been increasing, with trade
wars continuing between China and the US creating further unrest between suppliers. The
lower rise in disposable incomes, posed by the difficulty of producing and supplying quality
food for the same price is a major hurdle. With deflationary period continuing across Western
Europe, there was a 0.7% decline in pricing. Such situations are common when the rate of the
exchange rate of currency drops or increases or there is some political unrest in the region.

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Nestle has taken various initiatives to promote local-level production of raw materials to
increase the efficiency of the various agricultural sectors across its countries of operation.
With the US and China being its major markets, improved economic activity in this region
will lead to better performance as well as higher sales and profits.

Social Factors:

Following are the social factors impacting Nestle PESTLE Analysis:

Any company that works on such a large scale, gets affected by even the slightest change in
trends created by the consumers. Working towards trends related to improved health, the
group has decided to work on products with low sugar, sodium, and saturated fats. The Group
has policies, processes, controls and regular monitoring systems that ensure high quality
products thus preventing health risks arising from handling, preparation, and storage
throughout their value chain. The success of the Nestle depends on their ability to anticipate
the needs of the customer, and be able to offer high quality, competitive, relevant and
innovative product. In context to growing awareness among the millennial generation
regarding sustainability, the group has inaugurated the largest ground-mounted solar plant in
UAE. With increasing concerns regarding the consumption of canned and precooked food,
the company has strived to eradicate these beliefs by investing into research and
development, so that a scientific basis can be created through which the public can be
convinced. In context to satisfying the growing customer demand, the group decided to role
out custom made Nestle KitKat in the UK market. With continuous efforts like these to keep
everything and everyone covered, Nestle is working towards a brighter, more profitable and
innovative future.

Technological Factors:

The technological factors in the PESTLE Analysis of Nestle are mentioned below:

The Nestle group believes in the integration of digital solutions, services, and models, both
internal and external. With increasing cyber-attacks disrupting the reliability, security, and
privacy of data, a contingency plan needs to be developed to avoid major mishaps while
trying to expand into the digital segment. With real-time data being proposed for water
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quality, the company has invested in a start-up to turn this dream into reality. With real-time
data of its water use, its operations will become more efficient in terms of water
consumption. With trials undertaken in using blockchain for better transparency between the
consumers and the group's supply chain, Nestle is willing to change the way the game is
being played. Implementation of various portals, to check the nutritional information of its
various products, Nestle has partnered with various governments. In the United States, Nestlé
has joined the SmartLabel® transparency initiative, and provides online information about
nutrition, ingredients, and allergens for around 87% of its products. With such innovative
ideas and dedication towards making life better for people, Nestle is proving to be a
trendsetter as well as a go-getter in the field of technological advancement.

Legal Factors:

Following are the legal factors in the Nestle PESTLE Analysis:

The legal requirements across various countries need to be analyzed and complied with
accordingly. A team of experts needs to be in constant check for compliance related to the
changes brought about. The laws related to health and safety of the employees, quality and
hygiene of its products and labor laws established in different countries need to be followed.
Apart from these, trademark and IPO rules need to be kept under constant watch, along with
environmental laws. A major issue that the company has faced over the years, is preventing
its unique chocolate designs from other competitors. A case that surfaced was when Nestle
was denied legal protection in Europe for its one of a kind wafer chocolate KitKat. Though
not in Europe, Nestle has managed to secure a trademark for the KitKat shape in countries
including Australia, Canada, and France. Nestle has been facing the heat in India for
supporting research for breast milk substitutes which is proclaimed to be against the local as
well as international laws. These cases make it very critical a segment that Nestle needs to
keep a tab on. Once a legal compliance is violated, the entire group faces the shame of it.

Environmental Factors:

In the Nestle PESTLE Analysis, the environmental elements affecting its business are as
below:

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Nestle believes in creating shared value and strive for zero environmental impact via its
operations. The group's efforts to reduce the use of plastic in its products and their target to
make 100% recyclable plastic in all its packaging material is a major feat towards
environmental sustainability since its one of the four major groups that are responsible for
production of 6 million metric tons every year. With major countries moving towards
sustainability, the need to keep a track of all these changes across its various countries of
operations is primal. If any of these policy changes are missed the group faces major
setbacks. This fact was evident when Nestle was suspended by RSPO when it failed to submit
palm oil sustainability reports. Nestle group's efforts, though not completely bleak are seen as
a part of their annual review. The report boasts a 2.6% reduction in indirect greenhouse gas
emissions per tonne of product produced, along with 293 companies claiming zero-waste
production. The group proposes to be developing plant-based offerings and promoting
sustainable nutrition worldwide. A major project that they have undertaken is to promote
water efficiency and sustainability across the various operations as well as promote these
policies and stewardship.

To conclude, the above Nestle PESTLE Analysis highlights the various elements which
impact its business performance. This understanding helps to evaluate the criticality of
external business factors for any brand.

NESTLE STRATEGY:

NESTLE describes itself as a food, nutrition, health, and wellness company. They believe
strengthening their leadership in this market is the key element of their corporate strategy.
This market is characterized as one in which the consumer’s primary motivation for
purchase is the claims made by the product based on nutritional content. In order to
reinforce their competitive advantage, Nestlé created Nutrition as an autonomous global
business unit within the organization, and charge it with the operational and profit and loss
responsibility for the claimbased 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 businesses. This unit will
drive the nutrition, health and wellness organization across all their food and beverage
businesses. It encompasses a major communication effort, both internally and externally,
and strives to closely align Nestlé’s scientific and R&D expertise with consumer benefits.
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This unit is responsible for coordinating horizontal, cross-business project that address
current customer concerns as well as anticipating future consumer trends. Nestlé business-
level strategy is integrated cost leadership or differentiation with wide range of products
and low cost operators. Nestlé strategic leadership is to force the business to become more
efficient, to create a regional manufacturing network, integrate the company’s business on
a global scale and to reduce marketing expenditures by exploiting the synergies between
brands. Their strategy to develop R&D network by improving existing products and
creating tomorrow’s nourishments, two third of company’s R&D activities are dedicated
to renovating existing products, the remaining third is reserved for radical product
innovations, improve on operational level and a number of organizational changes.

The choices we make

We aim to offer a portfolio of products that evolve with consumer needs, offer good
nutrition and delight the senses, contributing to healthier, balanced lives and a healthier
planet. This guides the choices we make today and shapes our portfolio for tomorrow –
whether through product evolution, innovation, acquisition or partnerships.

We believe that Good food, Good life is best delivered by:

• Applying our nutrition expertise to enhance the health and wellness of people
and pets.
• Meeting the needs of the modern consumer with healthy, delicious, convenient
products for conscious, time-constrained lifestyles.
• Bringing premium food innovations to market fueled by consumer insights,
pioneering nutrition science, and culinary excellence.
• Offering a wide array of plant-based foods, to be consumers’ preferred choice
as they diversify their diets.
• Using our scale and expertise to increase access to nutrition for everyone,
everywhere.

We play to win in all our categories while pursuing higher growth in coffee, pet care, infant
nutrition, water and nutritional health.

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INDUSTRY ANALYSIS:

Companies in the food processing industry deal with the transformation of finished food
products from raw agricultural ingredients, lengthening the shelf life of products in
compliance with hygiene and health standards (SHARP). Food processing industries include
the following: cannery, meat processing, food packaging etc. These foods are often sold to
wholesalers or retailers for distribution to consumers. The industry is characterized by intense
competition, with the most reliable firms, such as Nestle, performing well by focusing on
efficiency in terms of fast processing and distribution (ReportLinker). More often than not,
the most successful companies within the food and beverage industry (such as Nestle, Kraft
and Mars, Inc) implement a diversification competitive strategy where they spread out and
add related or similar products to its existing core business.

Economically speaking, the effect of the global economic meltdown has had a less impact in
food processing industry than in other industries due to its rising demand for convenience
food and ready to serve products. However, one of the challenges that all food processing
companies face today is the rising price of raw ingredients such as corn, wheat and dairy.
Other factors that affect demand for processed food are issues concerning dieting and obesity,
allergens, and increased interest in the use of quality ingredients. One major key segment in
the food processing industry is the increasing growing market for organic food and health
products. The Organic Trade Association reports that sales of organic food grew to over
$28.6 billion, making up 4% of total food sales. Sales growth was strongest for organic meat,
dairy, fruits and vegetables, and bread and grains (US Organic Trade Association).
Companies that wish to find success in the food processing industry must adhere to these
factors, as they have an undoubtedly major effect on the industry.

As the largest food company in the world in virtually any way that can be measured, Nestle is
the food processing industry’s undisputed leader. In fact, Nestle currently has over 29 brands
that independently earn revenue upwards to a billion Swiss francs every year (DuBois).
Additionally, with only 42% of its food and beverage sales coming from the United States,
Nestle solidifies itself as the most geographically diverse of all major food and beverage
companies. For the company, it’s all about creating long-term value and catering to

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customer’s wants and needs by employing a decentralized approach to its market (DuBois).
Although Nestle derives much of its success from superior marketing and strategy, former
vice president, Allan McIntosh, asserts that its true competitor advantage is due to its
manufacturing operations. All manufacturing of Nestle products take place in its own plants
“to better control all aspects of value creation, from marketing and supply chain factors to
technology and plant processes (Sperber)”.

In response to the current trend in the food processing industry, Nestle has focused its core
competencies toward advancing health and nutrition. Illustrated by its tagline, Good Food
Good Life, Nestlé’s stated goal is to be recognized globally as the leader in nutrition, health,
and wellness. This is accomplished by Nestlé’s attempt to promote its nutritional value in its
products and to expand into new areas of nutritional food- and food-based products. Nestlé’s
creation of the Nestle Health Science Company further demonstrates its commitment to
nutrition, health, and pharmaceutical foods (Nestle Health Science). This wholly-owned
subsidiary operates under the objective to bridge the gap between pharmaceuticals and food
and untangling the accessibility of food, drugs, and disease. The main driver in the food
processing industry is technological innovation. In addition, in order to maintain its leading
global position, Nestle has a notably huge R&D budget of $2 billion which is invested in new
food technologies for chilling, dehydrating, and freeze-drying (DuBois). In sum, Nestle has a
clear competitive advantage over its competitors, allowing the company to be an impressive
leader in the industry and to dominate markets.

VALUE CREATION MODEL:

Our long-term value creation model is based on the balanced pursuit of resource efficient
top- and bottom-line growth as well as improved capital efficiency. We create value by:
▪ Increasing growth through innovation, differentiation and by offering relevant
products and solutions to our consumers. We are committed to reach a sustainable
midsingle-digit level of organic growth.
▪ Improving operational efficiency with the goal to increase our underlying trading
operating profit margin to between 17.5% and 18.5% in 2020 (from 16.0% in 2016).
▪ Allocating our resources and capital with discipline and clear priorities,
including through acquisitions and divestitures.
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NESTLE BCG PRODUCT:

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Social Factors:

As a producer of finished consumer goods, Nestlé is hugely dependent upon customer

satisfaction and desirability of its product range to achieve success (Jones, 2012). The
company, thus, chooses to embark on huge spending in its competitive sectors to maintain its
brand image and to enhance product desirability. Competitive advantage in the sector
requires continuous research and development leading to the frequent introduction of new
products and redesign of products (Interbrand, 2013). This is a significant strength of Nestlé
and among the notable factors upon which its industry, sector or market leadership is based
(Nestlé, 2013).
There is an increasing trend towards healthy eating which is increasing demand for healthier
food products. This is laden with potential to affect product lines such as chocolate drinks
(Jones, 2012). The company has taken specific steps such as the acquisition of specialised
start-ups, and successful partnerships to meet the needs of health conscious consumers and
thereby to take advantage of emerging market trends and opportunities (Vandewaetere,
2012). Nestlé is therefore considered to be well adjusted to its market segments given its
focus on this growth driver as well as its focus on popularly-positioned products which aims
to provide a brand to meet every need. Its more than 8,000 brands enable it to achieve this
strategic focus and to compete successfully against corporate rivals (Interbrand, 2013).

Technological Factors:

The fast pace of technological development and associated capabilities portend significant
challenge for competitiveness in modern industry. Nestlé has endeavoured to keep up through
enormous investments in research and development to enhance its capability, as well as
process efficiency which have enabled its successful differentiation and enhanced
competitiveness (Nestlé, 2013). However, the company still experiences challenges in its
quality control with its inability to provide consistent quality in food products hurting
company image and affecting sales (Jones, 2012). The company’s response in this regard has
been quite appropriate enabling it to weather this challenge successfully. It has endeavoured
to ensure quality in the foregoing and to safeguard confidence in its products through its seal
of guarantee initiative (Interbrand, 2013).
Environmental factors
Nestlé is involved in numerous programs aimed at making the company more eco-friendly
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which are inherent in its CSR initiatives. However, the company is criticised for its weak
approach and over the effectiveness of their programs (Jones, 2012; Interbrand, 2013). With
the scale of their operations across the globe and massive quantity of output, it is imperative
that the company should enhance focus on its environmental impact which is a notable
concern in modern industry. This factor has capacity to ruin reputations and affect
performance (Hill, 2006).

• Total Federal Spending for R&D:

Nestle spent 1.72 billion Swiss francs ($1.73 billion) on R&D last year, down slightly from
2016 but up 22 percent from 2012. The company's sales fell 2.6 percent over the same
period.

• Focus of Technological Efforts:

Technologies that are currently used by Nestle are the ERP ( Enterprise Resource Planning),
it is a computer based system that is used to manage internal and external resources which
includes tangible assets, financial resources, materials and human resources. The main
purpose of the software is to help the flow of information between all business functions
within the organization and also manage connections outside stake holders. Businesses use a
large number of softwares and processes and introducing an ERP system which is usually
complicated impose some serious changes in the staff work.

SAP is the kind of ERP system Nestle uses. In fact, Nestle uses five modules of SAP
namely,
purchasing, financials, sales and distribution, accounts payable and accounts receivable. SAP
systems are used for accessing, distributing and sorting the information.

Manugistic’s Supply Chain system is currently used by Nestle for automating its supply chain
operations.

Intranet is widely used technology by almost all the organizations in the world. Sharing
information amongst different departments is easier with the help of intranet. It is used in
Nestle for delivering tools and applications, e.g. collaboration (to facilitate working on
groups or teleconferencing)
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Or corporate directories, sales and CRM tools, project management etc. to improve the
productivity.

CRM (Customer Relationship Management) Nestle Food service have adopted CRM. It is a
tool that is designed to help the customers to get closer to them

• Patent Protection:

As of November 2019, the patent office which protected the highest number of active Nestlé
patent families was the office of the United States, which was closely followed by the
Chinese patent office, with 1,676 and 1,587 patent families, respectively. The statistic is
based on data provided by PatentSight.

Nestlé is a Swiss corporation based in Vevey. The company is a producer and processor of
food and drink products. In 2018, it was the largest Fast-Moving Consumer Goods (FMCG)
company in the world measured by net sales.

• Wireless Communications:

• Nanotechnology:

Every now and then something reminds me about food nanotechnology, the use of molecular
size nanoparticles to whiten or improve the safety or shelf life of processed foods.

What brought this on is a recent report from Australia that sounds all too familiar. Friends of
the Earth commissioned tests and found “nanoparticles of titanium dioxide and silica in 14
popular products, including Mars’ M&Ms, Woolworths white sauce and Praise salad
dressing.” Australian regulators, however, have denied that nanoparticles are in use “because
no company had applied for approval.”

Last year, Friends of the Earth did the same in America. Its report, “Tiny Ingredients Big
Risks,” documents nanomaterials in more than 90 food products, among them Jet Puffed
Marshmallows, Trix Cereal and Nestle Original Coffee Creamer.

Nanoparticles are really small (10-9 meters, or one millionth of a millimeter). How they work
and what they might do to the human body is greatly in need of research.
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• Productivity Improvements:

Nestlé invested in improving staff skills and confidence at its Halifax site and has
boosting productivity as a result. It has reduced the frequency in which a machine used to
make Quality Streets broke down from once every eight hours to up to two months.

• Genetic Engineering:

Genetically modified organism (GMO). In food production, scientists select GMOs with
desirable traits – for example, they might be more resistant to insects, weeds and diseases –
and place them in plants to improve crop yields. Widely grown GM crops include corn,
soybeans, canola and sugar beets.

Are GMO crops and ingredients safe?

Regulatory agencies around the world including the European Food Safety Authority (EFSA)
have concluded that authorized GM crops and food ingredients derived from them are safe
for human consumption.

At Nestlé, consumer safety is our priority, and we support use of innovative technologies
provided they are safe for animal and human health.

Do you use GM ingredients in Nestlé products?

Sometimes, yes. We support the responsible use of any innovative, safe technology. We
decide whether to use ingredients derived from GMOs at a local level, based on consumer
expectations and local regulations.

We believe ‘GMO ingredients’ have a potentially important role to play in increasing food
production, to support sustainable agriculture and help feed a growing world population.

Does Nestlé produce GM crops?

No, Nestlé does not grow GM crops.

Do you support consumers’ rights to know what is in their food?

Absolutely. We fully support people’s right to know what is in their food. We are committed
to providing information about use of ingredients derived from GMOs in Nestlé products
worldwide.
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Are you in favor of GMO labeling or disclosure regulations?

Nestlé fully supports the disclosure of ingredients derived from GMOs to promote
transparency in packaged foods. We also support the disclosure of the presence of GMOs
or GMO-derived ingredients in non-packaged and restaurant foods. Depending on local
regulations and cultural differences, disclosure can be in the form of information on a
company or industry website, or on-pack. In the U.S., which is by far our biggest market, we
have chosen to use SmartLabel® as one way to disclose the use of GMO ingredients in
relevant food and beverage products. SmartLabel® is a digital tool used by a growing
number of companies to provide U.S. consumers easy and immediate access to detailed
product information to further help them make informed purchasing decisions. In the U.S., a
national standard requiring disclosure of bioengineered food and bioengineered food
ingredients will take effect on January 1, 2022.

Do you use 'non-GMO' claims on the labels of Nestlé products that do not contain GM-
derived ingredients?
Yes, we do based on regulations, certification bodies and an internal guideline we developed
for countries where regulations or certification bodies are missing. When our internal
guideline is used, markets must make it publicly available so that consumers have a clear
definition of what non-GMO means.

Economic Factors:

The global business environment has recently been significantly hindered by economic
setbacks due to downturn and global recession. These have adversely affected demand for
products through its effect on consumer spending. However, recovery has been swift and the
continuing globalization and consolidation has further enhanced growth and demand for
product with the convergence in consumer tastes and preferences globally (Hanson et al.,
2011). The rise in emerging market economies portends surplus buying power, as well as
economies of scale which proffer added economic advantage (Vandewaetere, 2012).
The leverage of huge resource capital and R&D capability into continual introduction and
redesign of products enables Nestlé to strengthen its competitive advantage. Through the
localisation of operations in over 100 countries across the globe, the company manages to
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address the impact of foreign currency fluctuations on import and export aspects of trade
(Jones, 2012).

• GDP Trends:

Organic growth of 3.0%, with continued strong real internal growth (RIG) of 2.5%
and pricing of 0.5%. Growth was supported by stronger momentum in the U.S. and
China, as well as in infant nutrition.
Total reported sales increased by 2.1% to CHF 91.4 billion (2017: CHF 89.6
billion). Net acquisitions had a positive impact of 0.7% and foreign exchange reduced
sales by 1.6%.
The underlying trading operating profit (UTOP) margin reached 17.0%, up 50
basis points. The trading operating profit (TOP) margin increased by 30 basis points
to 15.1%, reflecting higher restructuring-related expenses.
Earnings per share increased by 45.5% to CHF 3.36 on a reported basis.
Underlying earnings per share increased by 13.9% in constant currency and by 13.1%
on a reported basis to CHF 4.02.
Free cash flow of CHF 10.8 billion, up 15%.
Proposed dividend increase of 10 centimes to CHF 2.45 per share. Nestlé intends
to complete the current CHF 20 billion share buyback program six months ahead of
schedule by the end of 2019, reflecting the strong free cash flow generation. During
2018, CHF 13.9 billion were returned to shareholders through dividends and share
buybacks.
Nestlé will explore strategic options for the Herta charcuterie (cold cuts and meat-
based products) business as a further step in positioning the portfolio towards
attractive high-growth categories.

2019 Outlook: continued improvement in organic sales growth and underlying

trading operating profit margin towards our 2020 targets. Underlying earnings per
share in constant currency and capital efficiency are expected to increase.

• Interest Rates:

Nestlé tightened up its defences against rising interest rates in 2017 by hedging billions of
newly-issued debt with derivatives. Taking into account the use of these instruments, the
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proportion of Nestle’s outstanding debt subject to fixed rates for longer than one year stood at
59% in 2017, up from 45% in 2016. It’s the highest proportion since Nestlé started publishing
the data in 2014.

SUMMARY:

Nestle company is health, nutrition and wellness firm that supplies, manufactures and
produces ready dishes and cooking aids, pharmaceuticals and ophthalmic goods, milk based
products cereals and baby foods. The company operates across six zones that include zone
America, zone Oceania, zone Africa and Asia. Nestle was formed in 1866 by Henry Nestle
and its main headquarter is in Switzerland. With employment of different business strategies
and introduction of new products line, Nestle boosts of employing approximately 339,000
personnel with operations in all regions all over the globe. The company aims to be the leader
in the food industry more specifically health, wellness and nutrition. Despite its success in the
market, Nestle still faces internal and external challenges thatthey need to overcome in order
to reach their goals. With the dynamism in the market Nestle tends to embrace change and
comes up with products suitable for its customers while still improving on the quality of its
original products line. Improvements on the technology, organizational structure, marketing
mix, operations as well as human resource management led to more profit margins of the
company. Nestle has a lot of challenges especially external ones that seem to grow each day.
But with thesecomes opportunities that need to be explored. Nestle enjoys high credibility
among customers because of its quality products and loyalty and trust among its customers. It
also has the chance to be able to cooperate and forge partnerships with other local industries
to boost their image in whichever region they are based. With dynamism comes new trends
that need embracing to be able to conquer certain markets. Competition is good as it makes
companies think and come up with strategies that enable them stay above competition.Every
organization is established in a society; with goodwill at heart, these companies can easily
forge good relations that will go a long way to market their products. Corporate social
responsibility can be to improve customers relation, saving the environment.
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CONCLUSION:

The theory based frameworks and models might be very useful but the application in practice
might be achieved very hard. It will also depend on the execution skills of the companies and
the organizational culture. Nestlé Company is an international company which came to the
stage it is today by gaining superior competitive advantage over its rivals. The focus product
differentiation strategy has been very successful although it may not work for other firms. The
company is able to create and deliver value not only by offering distinguished products but also
gaining effectiveness and efficiency by reengineering its business processes. By doing all
recommendations and follow all these steps of strategic management processes, I am sure that
Nestlé Company will do better in the future than their competitors and might be the new
trendsetter in some criteria and also gain its above-average returns to their company.
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