Nestlé is a global food and beverage company established in 1905 in Switzerland. It has grown significantly through acquisitions and innovation to offer products from morning to night including baby food, bottled water, cereal, chocolate and other confections. To continue growing, Nestlé focuses on emerging markets, health and wellness products, and out-of-home consumption. It aims to increase organic growth and profit margins through constant efficiency improvements and investments in research and development.

1. Nestlé Case Study
Lauren and Florian

2. Mission
“To provide consumers with
the best tasting, most
nutritious choices in a wide
range of food and beverage
categories and eating
occasions, from morning to
night.”

3. Nestlé Overview
∗ Nestlé S.A. is a Swiss company, established in 1905
∗ The company started with condensed milk and infant
formula
∗ Now Nestlé sells baby food, bottled water, cereal,
chocolate and other confections, frozen food, dairy,
drinks, food service, health and sports nutrition, pet
care, and weight management products

4. Brief Summary of Case
∗ Nestlé was in a good position, but needed to grow
internally
∗ The company was able to increase its competitive
advantage by continuing to innovate or renovate
products, acquire firms that fit its brand, and divest
itself of lines that were not contributing to earnings

5. Core Competencies
as Illustrated in the Case
∗ Global market share and brand recognition
∗ Innovation and market predictions
∗ Ability to acquire new firms and divest itself of
unprofitable lines in order to strengthen branding and
earnings
∗ Successful programs to increase efficiency

6. SWOT Analysis Based on Case Facts
∗ Strengths: Diversified global food company, scale and market
reach, knowledge of global markets, greatly improved operating
efficiency, R&D and innovation
∗ Weaknesses: In the past the firm’s revenue was 70% in markets
with limited potential for growth, weak profitability due to some
of its acquisitions, some low-margin products
∗ Opportunities: Goal of 4% new organic internal growth, improved
efficiency, health food industry, maintain momentum
∗ Threats: Fierce competition, food-producing rivals had improved
operating efficiency, possible brand overextension

7. Developments Since 2007
∗ Current CEO is Paul Bulcke
∗ The company continued to acquire and divest itself of
product lines and brands
∗ Global economic downturn
∗ Invests in countries where raw materials are produced
∗ Increased emphasis on environmental awareness and free
trade and sustainable farming techniques in developing
countries

8. Nestlé’s Current Position
∗ Strong sales, operating cash flow, and returns to
shareholders
∗ Continued momentum, but with volatile currency values
and raw material prices
∗ Consumer confidence shaky, but balanced by emerging
markets
∗ 2011 goal of 5-6% organic growth and EBIT margin
improvement
∗ Focus on functional foods with higher margin, which
means increased spending in R&D

9. Competitive Advantages
and Growth Drivers
Nestlé’s growth drivers are:
∗Nutrition, health, and wellness
∗Emerging markets
∗Out-of-home consumption
∗Premiumization
Competitive Advantages

11. Financial Information
∗ The Group achieved organic growth of 6.2% in 2010
∗ Sales Group 2010: CHF109.7 bn (88.8€ bn)
∗ EBIT 2010: CHF 16.2 bn (13.1 € bn)
∗ Net profit 2010: CHF 34.2 bn (27,7 € bn)
∗ Dividend in 2010 was CHF 1.85 (1.49 €) per share to
shareholders (an increase of 15.6% compared to 2009)

12. Recommendations
General
∗ Continued focus on sales in emerging markets such Asia,
Africa, and Latin America
∗ Perhaps raw materials can be sourced from some of these
emerging markets, provided there is stability
∗ Follow through with constant streamlining of operating
processes to increase efficiency
∗ Increased advertising: due to Nestlé's strong position it can
afford to advertise when their competitors might not be
able to, at the same level

13. Recommendations
Specific
∗ Continue to strengthen presence in frozen and
convenience food industry, as well as the area
between health food and pharmaceuticals
∗ Strengthen the connection to Nestlé’s commitment
to ‘green’ movement and sustainable farming to
brands
∗ Tighten up brand cohesion; may be necessary to
continue to divest product lines that are not a good
fit for the company

14. Conclusion
∗ Through smart strategic management decisions
Nestle succeeded and became a multinational
∗ Today, Nestle is still the largest food and nutrition
company in the world in terms of sales (#42
Fortunes in 2010)

15. Sources
∗ Course text’s Nestle case
∗ www.nestle.com
∗ Nestle 2010 Annual Report
∗ http://www.economist.com/node/14744982
∗ www.hoovers.com