Swot analysis of nestle


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Swot analysis of nestle

  1. 1. SWOT Analysis of NestleStrength:- BRAND IMAGE Marketing strategies established by the company are innovative and lure customers. Financial, marketing and sales strategies are formulated by gauging the Periodic research carried out to judge market trends. It is a large scale organization, with abundant funds and has the capability of acquiringweaker firms by throwing them out of competition. example for this strength of the company.Multinational. Growing Sales and profits. Major shareholder in the food industry of Pakistan. Aggressive Marketing. Efficient Distribution networks through out the country. Quality Products. Environment Friendly. Skilled labor. Educated staff. Large number of offerings. Pre purchase virtual display. Good background of the company. Easy to approach outlets. Solid Financial position Strong supply chain network Focus on research and development Estimations of UHT Milk Production Consumption up to 2008– 09Year Annual Production(million liters) Annual Consumption(million liters)2008-09 => 648.43 353.71 2009-10 => 753.89 372.05
  2. 2. Weaknesses :- The target market of Nestle MilkPak is upper middle and high class because lower middle andpoor class cannot afford to buy UHT milk due to its premium price. It is a main weakness of MilkPak that there are different companies of milk but the name ofnestle MilkPak is always stand in the last because of low advertising and marketing.Opportunities :- There are substantial growth opportunities considering the average yield of Pakistani animalsat only 1,100 liters/annum as compared to 6,000 liters/annum for animals in Europe and USA.There are nearly 20 million milk producing animals in the country, mostly in Punjab (80%). The overall milk market in Pakistan is 20 billion liters, out of which processed milkcontributes only 3 million liters. Nestlé MilkPak along with other processed milk businessescontribute only 2% to this large market. Nestlé MilkPak has expanded its product range byentering the cold dairy market recently by launching Nestlé plain yogurt and now fruit yogurt isalso added to it. To expand the cold dairy products range, Nestlé fruit yogurt is the latest addition to thisgroup. The cold dairy market offers many opportunities for the company which can capitalize theseproducts by banking on its superior quality milk. The coffee brand also offers many opportunities for the company to expand by tuning the taste of the masses towards coffee. Credit policy can be adopted to increase salesThreats :- Price fluctuations due to rupee devaluation as raw material are imported. The uncertainty ofeconomic conditions poses a great threat as the major funds invested in the country come fromoutside Pakistan. The present economic crisis in the world, led to the withdrawal of foreign management fromthe company and the investment has come to a halt. Competition with Nestlé’s owns smuggled brands.Effect of Seasonality’s upon sales. Imported raw material, in some of the company’s products.Major player may enter target market Legal and ethical issues.
  3. 3. Market segment growth could attract new entrants. Economic slow down can reduce demand. Two main competitors Haleeb and Olpers are main threat for MilkPak especially theOlpers is growingvery fast. Inflation is getting higher and higher so the purchasing power of thepeople is decreasing day by day.There is no entry barrier for new entrants as the Olpers has come in the market. Taste of consumer has already developed which is hard to change. Current market situationStrengths, Weaknesses, Opportunities and Threats (SWOT) Location of Factor TYPE OF FACTOR Favorable Unfavorable Internal Strengths Weaknesses Ability to leverage strong Increasing instances brand name to generate of product recalls sales hampering brand Ability to customize equity products to the local market conditions Strong global operations with diversified revenue base Research and development capabilities External Opportunities Threats Transition to a nutrition Compliance issue and well-being company resulting in penalty Focus on developing payments and emerging Macro economic Economies factors Booming out of home Allegations of unethical business
  4. 4. eating market activitiesNestle’s LC1 division has many strengths. Their first is that they have a great CEO, PeterBrabeck. Brabeck emphasizes internal growth, meaning he wants to achieve higher volumes byrenovating existing products, and innovating new products. His explanation of renovation is that“to just keep pace in the industry, you need to change at least as fast as consumerexpectations.”(Hitt, 2005) And his explanation of innovation is “to maintain a leadershipposition, you also need to leapfrog, to move faster and go beyond what consumers will tell you.”Brabeck has led Nestle into a position to better achieve the internal growth targets with his.Another strength that Nestle has is that they are low cost operators. This allows them to not onlybeat the competition by producing low cost products, but by also edging ahead with lowoperating costs.The main weakness of the LC-1 division of Nestle is that they were not as successful as theythought they would be in France. The launch in France was in 1994, but since the late 1980s,Danone had already entered the market with a health-based yogurt. The second weakness is thatLC-1 was positioned as too scientific, and consumers didn’t quite understand that LC-1 was afood and not a drug. Nestle also has multiple critical resources. They have a great research and development team. James Gallagher and Andrea Pfeifer were the masterminds behind the research on the La-1 cultures in the LC-1 yogurt. They were also the two that decided on selling LC-1 as a functional food. This enabled Nestle to position the product in a way that differentiated it among the other products in the market. They also have four pillars that Brabeck, Nestle’s CEO has identified he believes will help their internal growth worldwide. These are operating excellence, innovation and renovation, product availability, and communication. One opportunity that Nestle has is that health- based products are becoming more popular in the world, including in the United States. Consumers arebecoming more health conscious, and realize that living longer isn’t only by luck and genetics.LC1 has not been introduced in the United States yet. Nestle also has an opportunity of beingeven a larger market leader in Germany with LC-1. Within two years of launching the product inGermany, they had captured 60% of the market. This was due to the fact that they differentiated
  5. 5. the product, and Germans simply preferred the taste. Another opportunity of LC1 is that, becausethey are a market leader, they can introduce more health-based products in Germany.A threat to Nestle is the fact that some markets they are entering are already mature. Danone hadan established leadership position in the yogurt market in France. Since Danone was the first toarrive in the market, they have always been the market leader there. Also consumers in Franceliked the taste of LC-1, but researchers believe they did not repurchase the yogurt because theypreferred the taste of Danone products better. Another threat to Nestle is that there is intensecompetition in the United States yogurt market. General Mills’ Yoplait division is the leader inthe yogurt market in the United States. Yoplait has been the leader for years and is constantlyinnovating new health products.General Mills has been a strong competitor of Nestle and they are not short of experience andstrength. One strength that they have is their brand recognition. One of their main goals has beento deliver brands that consumers trust and value and they have succeeded. Another strength theyhave is their distribution. Yoplait is distributed to more stores in the United States than any otherbrand of yogurt. This is one of the reasons why they have been the market leader in yogurt for solong. Another strength that General Mills has is the fact that consumers simply know Yoplait ishealthy. Yoplait is the only leading brand of yogurt to offer vitamin D and this vitamin isespecially important for adult women.(Yoplait.com) It is not just a coincidence that Yoplait hasvitamin D, but they have purposely added this vitamin to target female consumers.General Mills also has some weaknesses. They fact that they are the market leader in the UnitedStates may be hindering them from innovation. They have been producing Yoplait yogurt formany years, and have offered a series of new products in the past few years in the nutritiondepartment. Most of these products however, are very common, and are widely offered in theUnited States. The health food industry in the United States has been booming and General Millsdoes not offer enough products in the smaller niche markets. They have not entered into manyunknown areas because of their success in the yogurt market.An opportunity General Mills has is that its Yoplait division is so successful. Yoplait is the onlydivision of General Mills that is currently earning a profit. They have a large market share overtheir main competitors in the yogurt market. Another opportunity that they share with Nestle isthat the health-based and nutritional food market is booming. They are continually releasing andmarketing new products in these markets and they will continue to do so while the marketcontinues to yield profits.The main threat that challenges General Mills is that there is intense competition amongst the topplayers in the yogurt and related markets. Nutrition and health is becoming more and moreimportant to consumers in the United States, and worldwide. Along with this comes increasedcompetition to gain market share. Simple supply and demand theories are prevalent in thesemarkets. Another threat General Mills has is that smaller companies are producing similarproducts with the same or added nutritional benefits.
  6. 6. Strengths Global food producer, located in over 100 countries. Consistently one of the worlds largest producers of food products, with sales in the USA in 2008 of $10 billion; sales and earnings in 2008 were better than expected, even in a downturned economy. Global sales in 2008 topped $101 billion. Repeatedly ranked as the worlds largest bottled water company and have set up facilities to operate water resources in a responsible manner. In 2008, Nestlé was named one of "Americas Most Admired Food Companies" in Fortune magazine for the twelfth consecutive year. Nestlé provides quality brands and products and line extensions that are well-known, top-selling brands including: Lean Cuisine, Yoplait, Maggi, Dryers/Edys, Haagen-Dazs, Stouffers, Boost, Dibs, Hot Pockets. Chocolate and Candy: Kit Kat, Toll House, Butterfinger, Baby Ruth, Crunch Bar, the Willy Wonka Candy line.Your marketing qualificationWere delighted to offer you online marketing courses which give you total flexibiltiy and thefreedom to learn marketing when you like - from anywhere in the world. You can sign up to acourse today. It takes 5 minutes!Marketing Teacher is the most popular marketing education content site in the world. You cangain certification and qualfications from Marketing Teacher. Pet Products: Purina, Alpo, Cat Chow, Fancy Feast, Friskies, Tidy Cat. Drinks: Carnation, Perrier, Nesquik, S. Pellegrino, Nescafe, CoffeeMate, Tasters Choice, Juicy Juice. General Mills: subsidiary which makes Betty Crocker, Bisquick, Hamburger Helper, Pillsbury, Old El Paso, cereals, fruit snacks, frozen pizza, canned soups, frozen vegetables, ready-made frozen meals. Gerber: baby formula, prepared baby foods, baby cereals, water, juice, yogurt, foods for infants, toddlers and preschoolers. Professional brands sold to restaurants, colleges, hotels, and food professionals including Jenny Craig meals, Impact liquid meals for trauma patients, liquid meals for diabetics, and OptiFast weight loss products. Successful due in part to their unquestionable ability to keep major brands consistently in the forefront of consumers minds (and in their shopping carts) by renovating existing product lines, keeping major brands from slipping into saturation/decline and having superior access to distribution channels.