Case: NESTLE: HOW TO KEEP THE MAGIC GOING....

1. NESTLE: HOW TO KEEP THE MAGIC
GOING....
Getting to Know Nestlé
Presented by,
Nishad Kilikkottu
PGDM-IB
.

2. ABOUT THE COMPANY
 Founded by Henri Nestlé
 World’s biggest Food and Beverage Company
 Developed first milk product in 1867
 Merger with the Anglo-Swiss Condensed Milk
Company.
 Was listed number 1 in fortune global 500 as the
world’s most profitable organization.
 Ranked no. 13 in FT global 2011 with market
capitalization of $200.
 Mainly deals in chocolates, milk products, Maggi,
soup, sauce, coffee, tea, milkmaid, and mineral water
etc..
.

3. Cont..
 Nestlé's first expansion is into chocolate activity
 Introduction of Nescafe, a staple drink of US Military
 In 1947 came the merger with Maggi seasonings and
soups.
 Acquisition of American Food Giant and Dreyer’s
.

4. PRINCIPLES AND OBJECTIVES
 To create value
 Nestle does not favor short term profit
 Create trust among the customer
 Ensures that the highest standards are met throughout
the organization.
 Recruitment of the right people & on going training &
development
 Continue to maintain its commitment
.

5. Global Organization
 Swiss company - global reach.
 Peter Brabeck CEO of the company-1997.
 approximately 254,000 people working.
 Operating in more than 70 countries.
 World´s leading food & beverage company.
 People, brands & products are key.
.

6. Our Responsibility
Environment Infant Formula Quality Coffee Prices UN Global
Policy Compact
Sustainability Gene Nestlé Water Nestlé in the
Technology Donations Community
.

7. Marketing and Nestle
.

8. Marketing and Nestle
 Nestle uses the World Wide Web/Intranet/Extranet
 Nestle – E-commerce- Increased Effieciency
 Nestle- Interactive Marketing
 Nestle- EIS
 Nestle implemented six -SAP modules- purchasing,
financial, sales and distribution, accounts payable,
accounts receivable and advanced planning and
optimization.
.

9. Business Strategy
 Grow existing businesses
– focus on priority groups with growth and profit potential
– achieve 60/40
– improve brand positioning and communication
 Develop new businesses
– improve innovation & renovation
– select acquisition candidates
 Reduce cost
– reduce structure cost
– reduce production cost
– restructure business portfolio
.

10. Benchmarking
 Benchmarking is the process of comparing one's
business processes and performance metrics to industry
bests or best practices from other industries.
 Dimensions typically measured are
– Quality
– time
– cost.
.

11. 12 Stage approach to Benchmarking
 Select subject
 Define the process
 Identify potential partners
 Identify data sources
 Collect data and select partners
 Determine the gap
 Establish process differences
 Target future performance
 Communicate
 Adjust goal
 Implement
 Review and recalibrate
.

12. CONT..
 Benchmarking is a continuous systematic procedure that
measures a firm’s product and process against industry
leaders.
 As NESTLE is industry leader in food products, each
factory has its benchmark to improve quality.
 Nestle Milk Pak Kabirwala takes NestleTambula factory
Australia as bench mark, which is the best Nestle factory
in all over theworld. Nestle Milk Pak Kabirwala is at 2nd
number.
.

13. How can Nestle effectively utilize
benchmarking?
How well Nestle is performing
compared to other companies?
(competitors).
 What are the best practices? (technology)
 What improvement opportunities should
Nestle focus on? (future)
Internal growth rate? (performance)
.

14. Swot analysis- strengths
1.Nestlé is adapting its industrial base to the changing
requirements of the business environment.
History Present
Nestlé's industrial set-up - operating with a modern
 Falling trade manufacturing base,
is largely based on the barriers.
economic and – economies of scale,
 Decreasing
– flexibility,
political realities of the transportation
cost. – appropriate technology
60's, 70's and 80's: & design,
 Importance of
• Local markets IT. Etc. – low cost operation &
• Local production location,
- Nestlé is striving for an
optimized,
-industrial base to ensure
long-term
competitiveness.
.

15.  High market share
 Size and financial power
 Strong brand portfolio
 Operational efficiency
 dedicated & focused company
 experience & competences
 consumer insight
 constant renovation + innovation
 consistent sales & marketing support
 specialist brand
 HQ + Factory + strong R&D team.
.

16. Weakness
 Limited presence inn organic food
 Subsidiaries difficult to manage.
 Lack of retailed presence.
 Too much products distract from
core business.
 Slow growth rate of Chocolate & Dairy
products .
.

17. Opportunities
 Continuous growth in US coffee market
 Further development of global brands.
 Partnerships & farmer support.
 Ethical business activities and growth
 Emerging market penetration.
 More health based products in
Germany & US.
.

18. Threats
Private label growth
Increased competition in bottle water
from niche brands
Global image may harm all brands if
One brand fails.
New diet trends.
Competitors like HUL, DANONE,
HERSHEY FOODS, CADBURY
SCHWEPPERS.
.

19. .