Industrial analysis of Nestle with Porters Model, VRIO Framework, PEST Analysis and other details as per 2017.

1. INDIAN FOOD PROCESSING
INDUSTRY
NESTLE INDIA LTD
07-02-2018

2. INTRODUCTION
2
INDIAN FOOD PROCESSING INDUSTRY NESTLE INDIA LTD
 One of the largest industries in India and ranks 5th
in terms of production, consumption and exports.
 It constitutes 14% to India’s GDP through
manufacturing.
 Main export destination for food products have
been the middle east and south east Asia.
 In financial year 2017, India’s exports stood at $ 1.3
Billions.
 Major players –
Chocolate and Confectionary- Nestle, ITC,
Cadbury, Snickers etc.
Milk Products- Amul, Nestle, ITC etc.
 Subsidiary of Nestle S.A of Switzerland
 First factory in 1961 at Moga, Punjab
 Presently worlds largest and most diversified food
company.
 It has seven factories spread cross the country
complying with Nestle quality management systems
and have been certified by ISO
 Nestle includes milk products and nutrition,
beverages, prepared dishes and cooking aids,
chocolates and confectionary.
 Total revenue – Rs. 92,238 millions.
 Total Profit – Rs. 9265.4 millions.
 ROCE -31.78
 ROA -14.37

3. INDUSTRY ANALYSIS
THREATS OF NEW ENTRANTS
 Diversity makes it tough for
a new entrants.
 Hold large market share.
 Have well experienced and
understanding of consumer
needs.
 Increased costumer loyalty.
BARGAINING POWER OF BUYERS
 High level of competition
makes bargaining power high.
 Switching cost is low for
consumers.
 Companies sell similar
products.
 Ensure customer satisfaction
which creates brand loyalty.
THREATS OF SUBSTITUTES
RIVALRY AMONG EXISTING
COMPETITORS
BARGAINING POWER OF SUPPLIERS
 Readily available substitute
products.
 Allegations against Nestle
products as not been
healthy for consumption.
 Increase the sale of
substitutes amongst health
conscious people.
 Largest player with more
experience.
 Firm spend large amount
on marketing and
advertisement especially
during product launches.
 Competition is not just
for price but for product
variety, creativity and
promotional offers.
 Due to largest market shares,
it requires suppliers in
massive quantities – ideal
buyer for suppliers.
 Long term relations with its
suppliers to ensure quality of
the row products
 Switching cost is moderate.

4. PEST Analysis
Political Economical Social Technological
• The company should
also consider the
government stability
and recognize risks
involved
• Nestle needs to
consider the
changes in global
regulations and
maintain its quality
standards
• Consumer being
price conscious,
Nestle should price
their products
accordingly.
• It is important to be
aware of changing
inflation, income
levels of the
consumers and
economic growth
rates.
• Nestle promotes
family time in a
world of
convenience
through its Maggi
Noodles
• The company
adheres to its strong
values and
principles in order
to build the trust of
its consumers
• There is a
tremendous scope
in using e-
commerce as a
platform for
marketing
• With the help of
social media, Nestle
should try to
penetrate different
segments and
create awareness
about its products
through various
campaigns.

5. Product Positioning

7. Resource Based View of Nestle

8. Intangible Resources of Nestle
• Human Resources
• Approximately 330,000 people have been employed by Nestlé
Company.
• Innovation Resources
• Nestlé R&D generates the innovative science and technology needed
to build nutritional and health benefits into products offerings Nestlé
legendary sensory excellence.
• Reputational Resources
• Nestlé scientists play their part in communicating the health and
wellness benefits of products to consumers.
• From consumer need into research priorities.
• From emerging science into consumer benefits and services.

9. VRIO Analysis of Nestle
Value
• Resources are valuable if they help
organizations to increase the
perceived customer value. In 2006
Nestle became the first company to
introduce the shared value
approach. Nestle has focused on
shared value by focusing on sectors
like rural development, water and
nutrition. This also builds a strong
base of performance in environment
sustainability and compliance.
Rareness
Nestle has been world leader in
larger number of nutritional
technologies like fermentation and
probiotics, extrusion, healthy fats,
foam booster technology, malt
extraction, portion distribution.
The company has a dedicated
group of food scientists who have
successfully patented a lot of their
offerings, hence ensuring a
competitive advantage for Nestle.

10. Inimitability
• Nestle has been the market
leader in snack with their most
popular offering, Magi.
Although the inimitability is
significantly low, Nestle has
been able to sustain the market
share with continuous and
rigorous R&D and marketing.
Organization
Nestlé’s strategy has always been
guided by its fundamental and core
principles which stresses on growth
through innovation and renovation
while maintaining a balance
between geographic activities and
product lines. The company’s
priority has always been to bring the
best and most relevant products to
people which make a difference in
their lives.

11. BUSINESS STRATEGIES
1. Improve penetration across product portfolio:
2. Making healthier products
3. Nestle India tying up with PayTM

12. References
• https://www.marketing91.com/marketing-strategy-nestle/
• https://simconblog.wordpress.com/2017/08/06/nestle-india-
company-analysis/
• www.nestle.in
• https://www.equitymaster.com/stock-research/compare/ITC-
NEST/Compare-ITC-LTD-NESTLE
• https://simconblog.wordpress.com/2017/08/06/nestle-india-
company-analysis/

13. THANK YOU