CASE STUDY

ANALYSIS
This case study was prepared for TOBB University of Economy and
Technology Faculty of Social Sciences Master of Business Administration
Program Strategic Management Course.

Nestle: Global
Strategy

CASE STUDY ANALYSIS

INDEX
SUMMARY ............................................................................................................................... 2
INTRODUCTION...................................................................................................................... 2
a.

General Information ............................................................................................................ 2

b.

Detailed Information ........................................................................................................... 3

c.

Validity of Information ....................................................................................................... 3

1.

SYMPTOMS ....................................................................................................................... 3

2.

SCOPE OF ANALYSIS ..................................................................................................... 6

a.

Definition of The Problem .................................................................................................. 6

b.

Critic explanations of the Main Influencers ........................................................................ 6

c.

The Scope of the Analysis................................................................................................... 6

3.

ANALYSIS ......................................................................................................................... 6

a.

Decision of which ideas, models and theories are to be beneficial ..................................... 6

Environment ............................................................................................................................... 7
Structure ..................................................................................................................................... 8
Interaction................................................................................................................................... 8
Competitiveness ......................................................................................................................... 8
b.

Application of these aspects to the situation ..................................................................... 10

Five Forces Analysis ................................................................................................................ 10

SWOT Analysis........................................................................................................................ 11
c.

As new findings appear, renewed analysis of 3a and 3b: ................................................ 12

4.

CONCLUSION ................................................................................................................. 12

a.

Defining contradictions in aims: ....................................................................................... 12

b.

Prioritisation of contradictions and problems, in terms of importance: ............................ 12

5.

APPLICATION PLAN ..................................................................................................... 13

a.

Defining selection criterion to be used in application alternatives: .................................. 13

b.

Finding or exploring applicable alternatives: .................................................................... 13

c.

Review of application alternatives: ................................................................................... 14

d.

Defining application priorities: ......................................................................................... 14

e.

Choosing application steps:............................................................................................... 14

f.

Benchmarks of application steps:...................................................................................... 14

Works Cited ............................................................................................................................. 15

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

CASE STUDY ANALYSIS

NESTLE: GLOBAL STRATEGY

Author

: Merve lk

Case

: Nestle

Department

: MBA Program

SUMMARY
The purpose of this report is to evaluate Nestle Company industry based on the case study and grasp
how the company develops strategic intent for their business organisations following the analysis of
external and internal business environments. The strategic management process will be analysed as
Nestle used to achieve strategic competitiveness and earn above-average returns. The strategy
formulation will be analysed which 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 firms internal
environment to pursue opportunities and overcome threats. In order to do this; Porters Five Forces
Analysis and SWOT analysis were used.
By the end of this assignment, future strategy will be mentioned as well as my recommendations about
Nestle that will fit into strategic orientation in order to perform better in their business world. And
continue to develop and implement its learning approach as the chosen large company by using
different strategies.
INTRODUCTION
a. General Information
This case study provides a case analysis and case solution to a strategic management case study on
Swiss-based Nestle, the world's largest food and beverage company with 2010 sales exceeding
US$116,62 billion. (Rebecca M. Henderson, 2.08.2011)
Nestl S.A. is a Swiss multinational nutritional and health-related consumer goods company
headquartered in Vevey, Switzerland. It is the largest food company in the world measured by
revenues. Nestls products include baby food, bottled water, breakfast cereals, coffee, confectionary,
dairy products, ice cream, pet foods and snacks. Nestl employ around 330,000 people in over 150
countries and have 461 factories or operations in 86 countries.
Nestl history begins back in 1866, when the first European condensed milk factory was opened in
Cham, Switzerland, by the Anglo-Swiss Condensed Milk Company. In Vevey, Switzerland, Nestl
founder by Henri Nestl, a German pharmacist, launched his Farine lactee, a combination of cows
milk, wheat flour and sugar, saving the life of a neighbours child. Nutrition has been the cornerstone
of the company ever since.
In 1905, The Anglo-Swiss Condensed Milk Company, founded by Americans Charles and George
Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

CASE STUDY ANALYSIS

Page, merged with Nestl after a couple of decades as fierce competitors to form the Nestl and
Anglo-Swiss Milk Company. The company grew significantly during the First World War and again
following the Second World War, expanding its offerings beyond its early condensed milk and infant
formula products.
In 2011, Nestl was listed No.1 in the Fortune Global 500 as the worlds most profitable corporation.
The Nestl Corporate Business Principles are at the basis of the companys culture, developed over
140 years, which reflects the ideas of fairness, honesty and long-term thinking. Nestl believes that not
only possible to create long-term value for their shareholders if their behaviour strategies and
operations also create value for the communities where they operate, for their business partners and of
course, for their consumers.
Nestl vision is to meet the various needs of the consumer everyday by marketing and selling foods of
a consistently high quality. Their objectives are to deliver the very best quality in everything they do,
from primary produce, choices of suppliers and transport, to recipes and packaging materials. (Nestle,
2015)
b. Detailed Information
In Nestle; responsibility for operating decisions is pushed down to local units, which typically enjoy a
high degree of autonomy with regard to decisions involving pricing, distribution, marketing, human
resources, and so on.
Running in parallel to this structure is a regional organization that divides the world into five major
geographical zones, such as Europe, North America, and Asia. The regional organizations assist in the
overall strategy development process.
The research and development operation has a special place within Nestl, which is not surprising for
a company that was established to commercialize innovative foodstuffs. The R&D function comprises
18 different groups that operate in 11 countries throughout the world. Nestl spends approximately 1
percent of its annual sales revenue on R&D and has 3,100 employees dedicated to the function.
Around 70 percent of the R&D budget is spent on development initiatives.
The company also has longer-term development projects that focus on developing new technological
platforms, such as non-animal protein sources or agricultural biotechnology products.
c. Validity of Information
This case study was prepared by using information gathered from Nestles own web site, where as a
global company, Nestle is obligated to provide sheer information for its investors and other third party
users such as us. Apart from this; several reports regarding the subject matter where strategic
management decisions of Nestle were used. All of these are gathered from relevant academic web sites
and research centres; provided in the Works Cited section of the case study.
1. SYMPTOMS
Upon analysing the company; its been observed that Nestles strategic management approach is

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

CASE STUDY ANALYSIS

compatible with Soccer Theories studied in our lessons.

In Soccer Theories the key aspects are as follows:

Envronment
Statc
Planned
Actons

Interacton

Structure
Complcated
Employee
Based

Mutual

Compettvene
ss

Strategc
Approach

Drect
Product And
Market Share

Organc And
Mechancal
Busness
Strateges
Statc
Intense/Dyna
mc Intense

Detailed information regarding the theories and their relevance to the company; will be evaluated in
the third section of the case study.
Despite its undisputed success, Nestl realized by the early 1990s that it faced significant challenges in
maintaining its growth rate. The large Western European and North American markets were saturated.
In several countries, population growth had stagnated and in some there had been a small decline in
food consumption. The retail environment in many Western nations had become increasingly
challenging, and the balance of power was shifting away from the large-scale manufacturers of
branded foods and beverages and toward nationwide supermarket and discount chains. Increasingly,
retailers found themselves in the unfamiliar position of playing off against each other manufacturers of
branded foods, thus bargaining down prices.
In 1997, Nestl committed to a strategic vision of becoming the leading nutrition health and wellness
(NHW) company in the world. Then CEO and Chairman Peter Brabeck felt this would help Nestl
build real differentiation with consumers and drive higher profit margins.
Over the next 13 years, the NHW strategy guided strategic decisions and choices at Nestl including
merger and acquisition choices, strategies for improving products, and packaging innovations that
helped Nestl built credibility with the consumer in NHW, raised profit margins continued strong
growth and differentiated the firm.
Brabeck launched a number of important initiatives during his twelve year tenure, including
restructuring of the R&D department to be more responsive to consumers, drive renovation and
innovation and support organic growth; launching a 60/40 preference rating system for products; and
developing GLOBE (Global Business Excellence), a comprehensive information system designed to
tie all of Nestle's businesses together under a common technology infrastructure. (Jones, 2012)
The 60/40 Strategy is a metric developed in 2003; through which Nestl objectively measured and
then improved the nutrition of its products.9 The metric built on Nestls existing 60/40 standard,
which required that consumers prefer the Nestl product to the top competitors products at least 60%
Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

CASE STUDY ANALYSIS

of the time in a blind taste test. (Rebecca M. Henderson, 2.08.2011)

With the introduction of GLOBE in the mid-2000s, Nestle initiated an era of capturing data by tying
all of Nestl's entities together under a common technological platform. This led to the company
standardizing its data to manage its vast information and create and share knowledge among its
Strategic business units, manufacturers and retailers. The main idea was to use shared knowledge to
enhance the collaboration between all the different units of the company which can reduce costs and
produce value all over the organisation. A good example would be the fact that the Globe system
allowed for a synchronization of data leading to an improvement in order fulfilment between
manufacturers and retailers. This has allowed Nestl to sustain its competitive advantage by adapting
much faster to change and delivering value to customer. Therefore, knowledge sharing has the
potential to play a big role in helping Nestl maintain its competitive advantage. (Essays, 2015)
Besides health, nutrition and wellness, the three other platforms are "emerging markets"; "out of home
consumption" and "premiumisation of existing products" (developing exclusive, high-quality versions
of existing products and appealing to higher income customers. (Jones, 2012)
In general, the companys strategy has been to enter emerging markets earlybefore competitors
and build a substantial position by selling basic food items that appeal to the local population base,
such as infant formula, condensed milk, noodles, and tofu. By narrowing its initial market focus to just
a handful of strategic brands, Nestl claims it can simplify life, reduce risk, and concentrate its
marketing resources and managerial effort on a limited number of key niches. The goal is to build a
commanding market position in each of these niches. By pursuing such a strategy, Nestl has taken as
much as 85 percent of the market for instant coffee in Mexico, 66 percent of the market for powdered
milk in the Philippines, and 70 percent of the market for soups in Chile.
Nestl purpose is to offer safe, tasty, convenient and nutritious foods to improve health and well-being
of consumers of all ages all over the world. To meet the needs and desires of todays and tomorrows
consumers, Nestl is strongly committed to Research and Development (R&D) to improve products
and develop new foods with specific health benefits. (Nestle, 2015)
Throughout the transformation of Nestl from a food and beverage company to a food and NHW
company, nutrition was the focus of Nestls R&D efforts. Nestls R&D group included more than
5,000 employees, and an average annual investment of close to $2 billion. The R&D operation
included the Nestl Research Center in Switzerland, which was the worlds largest private facility for
research on food and nutrition, and Nestl also partnered with 1,500 universities and more than
100,000 scientists across suppliers and governments to develop new nutrition technology. Nestls
R&D efforts closely resembled a pharmaceutical model, with core technologies, trials, regulatory
approvals and an innovation pipeline with various projects in different phases. (Rebecca M.
Henderson, 2.08.2011)
Around 70 percent of the R&D budget is spent on development initiatives. These initiatives focus on
Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

CASE STUDY ANALYSIS

developing products and processes that fulfil market needs, as identified by the SBUs, in concert with
regional and local managers.
2. SCOPE OF ANALYSIS
a. Definition of The Problem
The main symptom of Nestles strategic management approach is observed as its rapid adaptation to
new markets and R&D. The main goal of the company seems to be meeting the goals where growth
and performance are emphasised.
Nestles main rivals; such as Danone, Unilever, Cadbury, Roche and such companies, which all of
them are more or less multinational food and beverage companies or companies which have such
divisions internationally.
Nestle must formulate and implement the optimal strategy which will allow it to meet the growth and
performance goals related to the Nestle Model while at the same time achieving a sustainable
competitive advantage within the global food giant's broader vision of transitioning to a health,
nutrition and wellness company, and responding to threats and opportunities in the external
environment. (Essays, 2015)
b. Critic explanations of the Main Influencers
As mentioned above; by the early 1990s that it faced significant challenges in maintaining its growth
rate. In 1997, CEO and Chairman Peter Brabeck felt becoming the leading nutrition health and
wellness (NHW) company in the world would help Nestl build real differentiation with consumers
and drive higher profit margins.
Brabecks initiatives as a CEO of the Company; during his 12 year duty are as follows:
Restructuring of the R&D department to be more responsive to consumers,
Drive renovation and innovation and support organic growth;
Launching a 60/40 preference rating system for products;
Developing GLOBE (Global Business Excellence),
A comprehensive information system designed to tie all of Nestle's businesses together under
a common technology infrastructure. (Jones, 2012)
c. The Scope of the Analysis
As mentioned above, the scope of analysis is to determine Nestles strategic approach within Soccer
Theories. The environment, structure, interacton, compettveness aspects will be analysed along with
Porters Five Forces Analysis, and SWOT Analysis.

3. ANALYSIS
a. Decision of which ideas, models and theories are to be beneficial
An analysis of the problem and an appraisal of Nestle are provided below with the assistance of two
analytical tools within the scope of Soccer Theories mentioned above: Porter's Five Forces analysis,

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

CASE STUDY ANALYSIS

and S.W.O.T. (strengths-weaknesses-opportunities-threats) analysis.

As mentioned above, Nestle as a company; is compatible with Soccer Theories where the main aspects
of the theory is as follows:

Envronment
Statc
Planned Actons

Structure
Complcated
Employee Based

Interacton
Mutual

Compettveness
Drect
Product And
Market Share

Environment
Capacity: Nestle; as a global company is observed as having a plain environment in terms of
capacity. This means that the company, by using its limited resources awards efficiency and makes
mergers when entering new markets. The competitiveness approach of Nestle is to start with niche
markets.
In general, the companys strategy has been to enter emerging markets earlybefore competitors
and build a substantial position by selling basic food items that appeal to the local population base,
such as infant formula, condensed milk, noodles, and tofu. By narrowing its initial market focus to just
a handful of strategic brands, Nestl claims it can simplify life, reduce risk, and concentrate its
marketing resources and managerial effort on a limited number of key niches. The goal is to build a
commanding market position in each of these niches. By pursuing such a strategy, Nestl has taken as
much as 85 percent of the market for instant coffee in Mexico, 66 percent of the market for powdered
milk in the Philippines, and 70 percent of the market for soups in Chile. As income levels rise, the
company progressively moves out from these niches, introducing more upscale items, such as mineral
water, chocolate, cookies and prepared foodstuffs. (Academia. Edu, 2015)

Similarity: Nestl's environment is observed as homogeneous, although the companys

approach towards global markets is through niche markets, the company, doesn't change the product
diversity in terms of food and beverage.

Stable / Unstable: Nestl's environment is observed as stable; where the company has been a

relatively fast growing company since the beginning of its life. Also; its been observed that the
company has a bigger growth rate among its rivals.

Concentrated / Dispersed: Since Nestle uses Strategic Business Units (hereinafter SBUs) in

accordance with the counties it works, it can be said that the company has a concentrated environment.

Consensus / Dispersed: Since the NHW strategy guided strategic decisions and choices at

Nestl including merger and acquisition choices, strategies for improving products, and packaging
innovations raised profit margins (Rebecca M. Henderson, 2.08.2011); it is observed that the relevant

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

CASE STUDY ANALYSIS

decisions constitute Nestl's environment as consensus.

Turbulence: In terms of turbulence; Nestls environment is observed as the company has

actual links between the SBUs.

As a result; the environment of Nestle is observed as static intense.
Structure
In terms of structure; Nestle is observed as a complicated company; where decisions are made through
CEOs and applied to the global market in accordance with their management structure.
The management structure/ organisational structure of the company is as follows:

Source: http://www.nestle.com/csv/what-is-csv/governance
Interaction
The interaction of Nestle is consistent with Soccer Theories; where it is described as mutual. Since the
company has a relatively centralised decision making structure; the interactions between the SBUs
are mutually applied to the markets.
Competitiveness
Since Nestle is a global/multinational company, the main problem of Nestle; as mentioned above; is its
competitiveness along with its growth rate. The companys CEO and his decisions/initiatives
regarding the subject matter have greatly influenced the problem.
Competitiveness is evaluated in 10 different aspects:

Structural size of rivals / the number of rivals: As it was mentioned in our classes; if the

structural sizes of the rivals and /or the number of rivals are bigger than average; then that particular
company can be analysed by Sailboat Theories. In this case; in order to decide whether Nestle is
compatible to Soccer Theories, the size of Nestle and its rivals should be compared.

Market share of the company: If the market share of the organisation is smaller than the

market share of its rivals; then the company should be analysed in accordance with Soccer Theories,
since the competitiveness of the rivals is less effective to the company.

Growth rate of the sector: If the growth rate is higher; then the company is directly affected;

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

CASE STUDY ANALYSIS

making it fit more into the Soccer Theories.

Fixed cost increase rate: If the fixed cost increase rate is higher, then the effect of

competitiveness is affecting the company more indirect way.

Similarity of products: If the similarity level of the products between Nestls products and its

rivals products is high; then the competitiveness of its rivals will affect the company directly. Since;
as it is seen in the table below, in this case; Nestle doesnt fit into this explanation. So; it can be said
that Nestle is not directly affected by the similarity of its products.

Dependency of products: If the dependency of the products is high; then the competitiveness

of Nestls rivals is indirectly affecting Nestle.

Cost of changing customers: If the cost of changing customers is high; then the

competitiveness of Nestls rivals is indirectly affecting Nestle.

Diversity of customers: If the diversity of customers is high; then the competitiveness of

Nestls rivals is indirectly affecting Nestle.

Production capacity: If the production capacity is high; then the competitiveness of Nestls

rivals is indirectly affecting Nestle

Output costs: If the output costs are high; then the competitiveness of Nestls rivals is

indirectly affecting Nestle.

All of these explanations are supported by the table below:

Source: http://www.moneycontrol.com/competition/nestleindia/comparison/NI

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

10

CASE STUDY ANALYSIS

b.

Application of these aspects to the situation

As it was stated above; for the application of the analysis Porters Five Forces Analyses and Swot
Analysis will be used.
Five Forces Analysis
Porter Five Forces Analysis is a framework to analyse level of competition within an industry and
business strategy development. It draws upon industrial organization (IO) economics to derive five
forces that determine the competitive intensity and therefore attractiveness of an Industry.
Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is
one in which the combination of these five forces acts to drive down overall profitability. A very
unattractive industry would be one approaching "pure competition", in which available profits for all
firms are driven to normal profit. This analysis is associated with its principal innovator Michael E.
Porter of Harvard University. (Wikipedia, 2015)

Bargaining Power
Of Suppliers

Threat Of New
Entrants

Threat Of
Substitues

Bargaining Power
Of Buyers
Industry
Rivalry

Threat of New Entrants (Low-Medium)

Even though food and beverage is in many ways analogous to a commodity business, barriers to entry
as a result of supply-side economies of scale, demand side benefits of scale, capital requirements,
incumbency advantages and unequal access to distribution channels keep the threat of new entrants
relatively low.
Power of Suppliers (Medium)
Porter notes that "powerful suppliers capture more of the value for themselves by charging higher
prices, limiting quality or services, or shifting costs to industry participants". For most major firms in
the food and beverage industry, the power of suppliers is medium to medium high. For Nestle, the
power of suppliers is quite low as a result of extensive vertical integration by Nestle.
Power of buyers (low)
For Nestle and most other buyers in the industry, the power of suppliers has been kept quite low
because of the fact that buyers are numerous and cannot credibly threaten to integrate forward and
Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

11

CASE STUDY ANALYSIS

assume their business.

Threat of Substitute Products (High)
It would be difficult to name or think of a food or beverage product which did not have a near or
identical substitute.
Rivalry of existing competitors (Medium High to High)
Porter notes that the intensity of rivalry is greatest when competitors are numerous or roughly equal in
size and power, industry growth is slow; exit barriers are high and firms cannot read each other's
signals very well. Many of these conditions have been met, thus the intensity of rivalry would be
assessed as fairly intense. (Jones, 2012)
SWOT Analysis

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

12

CASE STUDY ANALYSIS

c.

As new findings appear, renewed analysis of 3a and 3b:

Upon the analysis made above; its been understood that even though a company becomes one of the
biggest in its sector; there is always room for change. This change could not only be in terms of
management, its also crucial for decision making and policy application throughout the world.
4. CONCLUSION
a. Defining contradictions in aims:
Nestls objectives are to be recognised as the world leader in Nutrition, Health and Wellness, trusted
by all its stakeholders, and to be the reference for financial performance in its industry. They believe
that leadership is not just about size, it is also about their behaviour. They recognise trust is earned
only over a long periods of time by consistently delivering on their promises. These objectives and
behaviour are encapsulated in the simple phrase, Good Food, Good Life, a phrase that sums up their
corporate ambition.
In order to reinforce their competitive advantage, Nestl created Nutrition as an autonomous global
business unit within the organisation, and charge it with the operational and profit and loss
responsibility for the claim-based business performance by offering consumers trusted, science based
nutrition products and services.
Nestls long-term goal remained to be the worlds leading NHW company. Bulcke looked to refine
that mission and find even better margins. Nutrition, health and wellness has been our basic agenda
over the last few years. Now we are looking at deeper, scientific solutions to personalized nutritional
problems and answers to chronic diseases. (Rebecca M. Henderson, 2.08.2011)
b.

Prioritisation of contradictions and problems, in terms of importance:

Nestl strategic leadership is to force the business to become more efficient, to create a regional
manufacturing network, integrate the companys business on a global scale and to reduce marketing

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

13

CASE STUDY ANALYSIS

expenditures by exploiting the synergies between brands. Their strategy to develop R&D network by
improving existing products and creating tomorrows nourishments, two third of companys 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 organisational changes.
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 organisational
culture. Nestl 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.
5. APPLICATION PLAN
a. Defining selection criterion to be used in application alternatives:
Since Nestle is more close to the Soccer Theories; it can be stated that the company can use some
more energy and time to develop its strengths and reduce the weaknesses which were mentioned in
SWOT Analysis above. Even though the company has a priority where the CEO states looking at
deeper, scientific solutions to personalized nutritional problems and answers to chronic diseases,
losing focus on the local markets and niche markets; may cause redundancy on the work load and
resulting in declining efficiency.
Nestle may spare funds to research nutritional problems and chronical diseases, but the funds will
come from their sales. Also; according to

the article published in 2012 in Naturalsociety.com;

Nestle has been using genetically modified organisms in their products. Please see:
http://naturalsociety.com/corporate-giant-nestle-contradicts-gmo-stance/
These kinds of news, bring up the question of trust and contradicts with the Company motto Good
Food, Good Life
The fact that local markets are more in touch with their residents; hence foreseeing the possible
changes in the market, and increasing their competitive advantages.
Another contradiction is that the increasing cost of raw materials may end up increasing their product
price; resulting in customers changing their decisions towards local rivals. Although increase in
wealth in poorer countries may help their sales, the increase in prices may cause local rivals to be
chosen against Nestls products in such countries. For example; in Pakistan; where Nestle sells its
Pure Life the population without access to safe drinking water cannot afford to buy it. All of which
raises Human rights questions and obvious contradiction to Nestles aid in United Nations. (Roseman,
2005)
b.

Finding or exploring applicable alternatives:

Nestle should explain the R&D funds and their expenses and aims to the customers and other

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

14

CASE STUDY ANALYSIS

stakeholders. My personal opinion is that the company will not do this no matter what; and this will
cause lots of hostile debate against the company worldwide.
c.

Review of application alternatives:

On the topic of using GMOs in their products; its seen that the company has removed the products
from its markets located in South Africa but not from the USA. However, the companys corporate
head of sustainable agriculture, Hans Jhr stated that as a company; We have a very simple way of
looking at GM: listen to what the consumer wants. If they dont want it in products, you dont put it in
them. Please see: http://naturalsociety.com/corporate-giant-nestle-contradicts-gmo-stance/
On the topic of local markets and their advantages of feeling the change, Nestle has an advantage,
for it uses immense technological infrastructure to gather necessary information from such markets.
d.

Defining application priorities:

In my opinion the first priority on Nestle is to decide whether to increase efficiency or to reduce costs.
On one hand there is the resolve to improve efficiency in the factory and, on the other hand, there is
the resolve to reduce cost. Maintenance is crucial to doing a good job in the best conditions but it has a
cost, and there is pressure to reduce this cost.
Second priority is Nestls production of Pure Life and the related extraction of groundwater are
obviously exceeding the renewable volume and can therefore be considered as not sustainable.
Although this finding is in contradiction with Nestls own Corporate Business Principles, it only
raises certain human rights concerns while not automatically constituting a violation as such. In order
to judge these human rights concerns, one has to identify a direct impact of Nestls Pure Life
production and distribution on peoples human rights, like the right to water, health, food or freedom
from discrimination. (Roseman, 2005)
e.

Choosing application steps:

The steps of applications are thought to be as such:

Defining the expenses regarding the R&D fundings.

Defining the food additives and/or GMOs used in products

Answering to the obvious breaches of human rights and sustainability approach questions.

f.

Benchmarks of application steps:

Unfortunately; the application steps mentioned above, have such benchmarks; where the company
needs to officially answer and define the relevant situations via newspapers, internet or through
television. These steps shall be regarded as successful insofar the explanations are made.

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil

15

CASE STUDY ANALYSIS

Works Cited
Academia.
Edu.
(2015,
March
23).
Academia.
Edu.
Nestle:
Global
Strategy:
https://www.academia.edu/5366973/Nestl%C3%A9_Global_Strategy_INTRODUCTION adresinden
alnmtr
Essays, U. (2015, March). UK Essays. Strategic Analysis Of Nestle Company Management Essay.:
http://www.ukessays.com/essays/management/strategic-analysis-of-nestle-company-managementessay.php?cref=1 adresinden alnmtr
Jones,
S.
(2012,
May
15).
Articles
Base.
Strategic
Management
at
Nestle:
http://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.html
adresinden alnmtr
Nestle. (2015). The Worlds Leading Nutrition Health and Wellness Company Management Report 2008. Nestle.
Rebecca M. Henderson, R. J. (2.08.2011). Nestle SA: Nutrition, Health adnd Wellness Strategy. Harvard
Business School.
Roseman, N. (2005). ActionAid Pakistan. Swiss Coalition of Development Organisations.
Wikipedia.
(2015).
Porter
Five
Forces
Analysis.
Porter
Five
Forces
Analysis:
https://en.wikipedia.org/wiki/Porter_five_forces_analysis adresinden alnmtr

Tobb University Of Economy And Technology, Faculty Of Social Sciences, Mba Program, Strategc
Management Course, Dr. Yavuz Ercil