Project On Nestle Company

History of Nestle globally:

In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who were unable
to breastfeed. His first success was a premature infant who could not tolerate his
mother's milk or any of the usual substitutes. People quickly recognized the value of the
new product, after Nestlé's new formula saved the child's life, and soon, Farine Lactée
Henri Nestlé was being sold in much of Europe.

In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early
1900s; the company was operating factories in the United States, Britain, Germany and
Spain. World War I created new demand for dairy products in the form of government
contracts. By the end of the war, Nestlé's production had more than doubled.

History of Nestle Pakistan:

Nestlé has been serving Pakistani consumers since 1988, when our parent company,
the Switzerland-based Nestlé SA, first acquired a share in Milkpak Ltd.
Today we are fully integrated in Pakistani life, and are recognized as producers of safe,
nutritious and tasty food, and leaders in developing and uplifting the communities in
which we operate.
We at Nestlé Pakistan ensure that our products are made available to consumers
wherever in the country they might be. Convenience is at the heart of the Nestlé
philosophy, and our aim is to bring products to people's doorsteps.
To meet the demands of the large food market that Pakistan offered, Nestle Milkpak
reorganized and reinforced the production of existing brands and gave shape to new
production lines.
The Milkpak Sheikhupura factory commenced operations in 1981 as a producer of UHT
milk. By 1988, it had expanded its operation and was also producing butter, cream,
desighee all under the brand name of MILKPAK and juice drinks under the brand name
FROST.
With the installation of the roller dryer in 1990, the first such product to come was
CERELAC - an internationally recognized brand of infant cereal. This was followed by
LACTOGEN 1 & 2 in 1991.

The year 1992 saw the introduction of tea whitener EVERYDAY. Local packing of
imported coffee under the name of NESCAFE 3 in 1 commenced the same year.
In 1996, Nestle Pak Ltd first confectionery plant of POLO Mint was installed and the
production of NESTLE PURE ORANGE JUICE commenced.
In 1997 Two variants of POLO was introduced i.e. Strawberry and
Orange was introduced.
A new variant Lemony was added to the range of popular FROST fruit drink flavors and
a new 1-liter packing of FROST was introduced.
Flavored milks under the brand FRESH & FRUITY came under production on the new
Tetra Filling Machine equipped with the modern "slim" format. MILO and UHT.
Nestle Milkpak also contracted to supply dairy mixes to McDonald's, for its popular soft
serves and milk shakes.
NESTLE PURE LIFE was also commissioned in December2000. Based on the latest
water treatment and bottling technology, this marked the entry of Nestle Milkpak in the
Pakistan water market and that of Nestle in the world water market.
The year 2000 saw the production of some exciting products. First came NESCAFE
Frothe Original, followed by its two other flavors: Mocha and French Vanilla. NESCAFE
Frappe RTD was to come next.
The fruit juice range was expanded by the production of Mango and Orange-Mango
Mix.

VISION STATEMENT

The strategic priorities of Nestle Pak Ltd are focused on delivering shareholder value
through the achievement of sustainable, capital efficient and profitable long term growth.
Improvements in profitability will be achieved while respecting quality and safety
standards at all times.

In line with this objective, Nestle Pak Ltd envisions to grow in the shortest possible time
into the number one food company in Pakistan with the unique ability to meet the needs
of consumers of every age group - from infancy to old age, for nutrition and pleasure,
through development of a large variety of food categories of the highest quality.

Nestle Pak Ltd envisions the company to develop an extremely motivated and
professionally trained work force, which would drive growth through innovation and
renovation.

It aspires, as a respected corporate citizen, to continue playing a significant role in the

social and environmental sectors of the country.
 MISSION STATEMENT

Nestlé’s mission is to provide the best food to people throughout the world.

The condition of the company in that Industry:

Nestle provides excellent quality product to their customers. That’s why customers rely
on nestle just because of their quality products.
Nestle is a Market Leader in food and breviges industry. Their aim is to provide quality
products to there customers.
Nestle objectives are to deliver the very best quality in everything they do, from primary
produce, choice of suppliers and transport, to recipes and packaging materials. Our
operations and collaboration in the Nordic countries gives us greater opportunities to be
efficient.
These are the reasons that Nestle is stay for a long period of time in any country or in
Pakistan.

The General Enviourment:

Pakistan Economy registers a six to seven percent economic
growth with its foreign direct investment escalating day by day. Pakistan, from the time of
its independence started with a purely agricultural economy. But soon its industrial wing
gathered momentum and soon Pakistan became the role model world over.
It is one among the growing economies of the World. The economic potentiality of the
country is better judged only when we mark the positive growth rate of the economy since
1951.

The Economic Situation of the industry.

With the increase in Pakistan economy the industry of water and milk have a
chance to grow in this country. Now people are more aware to use different types of
product. People in this country are quality concisions and they want those products
which are good in quality.
The industry which gives good quality products they can stay for longer period of time.
Not only by giving them the right product but the quality product.

Relationship with Dealers\ wholesalers\ retailers:

Nestle make relationship with their Dealers, Retailers, and Wholesalers. The reason of
this relationship is that the consumer can easily but their products. With this relationship
products are available in all types of market.
Nestle is in contact with their Retailers, dealers, wholesalers. Wholesalers are attached
with retailers in this way all process to deliver products are going on.

The distribution set up of Nestle is working in all over Pakistan. Different sales department
are working in different cites. And control all retailers and wholesalers demands.

In Lahore they have two regional office and five distribution channels that supply the
Water to the whole Lahore

SWOT ANALYSIS OF NESTLE

STRENGTHS ----------------- TO BUILD ON

WEAKNESESS --------------------- TO COVER ON
OPPORTUNITIES ------------------------- TO CAPTURE
THREATS ----------------------- TO DEFEND ON

STRENGHTS
The greatest strength of nestle is that it includes a culture that is team focused and an
open door policy. Nestle focus on collectivism and performance orientation attitude
which encourages employees to work harder. Another thing is high level of market
share and that people all over the world trust and recognizes Nestle as a big brand
name. Strength is that people trust on Nestle. It looks at achieving higher volumes by
renovating existing products and innovating new products. Strength is that they are low
cost operators which allow them to not only beat competition but also edging ahead
operating excellence, innovation, renovation, product availability and communication are
major strengths. It is an important aspect that people all around the world are becoming
more conscious about health, that’s why they prefer Nestle.
WEAKNESESS
One major weakness of Nestle is that it is entering into markets that are already mature
and can give a tough competition to new entrants. Nestle Plain Yogurt has proved to be
a Nestle weakness because it has been unable to make its market place in USA. But
Nestle by analyzing the sensitive areas can overcome its weaknesses.

OPPORTUNITIES
Nestle in Pakistan has a great opportunity for expanding its markets because in
Pakistan there is a large ready market of food and beverages due to trends of eating
and the increasing .I t also has opportunities largely in China and India as well. Through
proper marketing research Nestle can cash on to these opportunities.

Threats
Nestle is facing the threats by worldwide community due to its violation of international
marketing standards. Many conferences and campaigns have been held against Nestle
in this regard which can damage the name and trust of its customers. Another threat is
due to the increasing popularity of its competitor OLPERS in local and international
markets.

MARKETING ENVIRONMENT:

1) Internal environment
2) Micro environment
3) Macro environment

1) Internal Environment:
 In Nestle Internal environment ensures

 Employees are on side with the goals of an organization.

 They have direct impact on product quality, dependability and overall productivity.
 They are internal market, which impact every department within an organization; a
satisfied internal market will be better able to satisfy external market.

Nestle under the supervision of top management runs the departments of finance,
operations, accounting, sales and marketing, research and development to achieve the
goals of organization.

2) Micro Environment:

In Nestle microenvironment includes:

a) Suppliers:
Suppliers provide the resources like labor and material resources to produce goods and
services. They add to customer overall value delivery system.
Labor supplies include handling of
· Quantity of labor
· Quality of labor
· Labor strikes
· Labor relations
Material supplies deals with the
· Quantity of material
· Quality of material
· Price of material
· Stability of material inputs
· Delivery delays
 Nestle efficiently handles the quality, quantity, price and stability of both material and labor
supplies. Management maps out the strategies for labor strikes, supply shortages and
delays to avoid increasing the cost of production, which can badly affect sales in short
run and customer satisfaction in long run.

b) Marketing Intermediaries:
It includes the firms that help the company to promote, sell and distribute its goods to final
buyers.

· The physical distribution firms determine the ways to store and ship goods to reach
their destination.
· Marketing service agencies including marketing research firms, advertising agencies
and media firms are also hired to target and promote product to right market.
· Financial intermediaries like banks, insurance companies helps to finance transactions
and insure against risks associated with buying and selling of goods.

Nestle works in coordination with marketing intermediaries to make its product Pure Life
Water available and visible to its valuable customers.

c) Customers:

Nestle deals with the reseller customers who buy the product Pure Life to resell at a
reasonable profit.

3) Macro Environment:

Macro environment include political, cultural, economical factors but as for as Nestle Pure
Life Water is concern none of above factors affect on it. Because it is not at luxury item
they are selling necessities of life which can never be affected.
Demographic Environment:
Demographic environment including age, sex and income also not effect Nestle Pure Life
water. Because Water is for every gender, every age and for every class.

Theoretical background

Nestle Pakistan has being at the forefront of development of food and beverages sector
in Pakistan as major industrial stake holder for a while .internal efforts and some
initiatives with government have being going on since long in order to maximize the
development of the sector .still, a need for sector wise coordination and combine efforts
was there to ensure utilization of all available resources to move forward in the
direction.

NESTLE BUSINESS PRINCIPALS:

 Nestlé's business objective is to manufacture and market the Company's

products in such a way as to create value that can be sustained over the long
term for shareholders, employees, consumers, and business partners.
 Nestlé does not favor short-term profit at the expense of successful long-term
business development.
 Nestlé recognizes that its consumers have a sincere and legitimate interest in the
behavior, beliefs and actions of the Company behind brands in which they place
their trust and that without its consumers the Company would not exist.
 Nestlé believes that, as a general rule, legislation is the most effective safeguard
of responsible conduct, although in certain areas, additional guidance to staff in
the form of voluntary business principles is beneficial in order to ensure that the
highest standards are met throughout the organization.
 Nestlé is conscious of the fact that the success of a corporation is a reflection of
the professionalism, conduct and the responsible attitude of its management and
employees. Therefore recruitment of the right people and ongoing training and
development are crucial.
 Nestlé continues to maintain its commitment to follow and respect all applicable
local laws in each of its markets.
STARS: The two Sbu’s, Mineral water and Confectioneries fall into this category of the
BCG. These SBU’s have high market share and high industry growth rate. These Sub’s
are requiring lots of investment to compete in the growing market. For example, lots of
money is being spent and aggressive marketing strategies have been implemented for
the Mineral water to build and maintain market share. Nestle Pure Life has captured 50
% of the bottled-water market in Pakistan since it was introduced in 1998. Its approximate
sales for 1999 are RS. 70, 401000. This sales figure is quite impressive as the sales rose
quite high in only one year. It is predicted that there will be additional growth in the mineral
water category in coming years. The sales of the confectioneries rose to RS. 106,559
000 from RS. 87,758 000. The huge increase of RS. 18, 801 000 puts this SBU in the
stars category and shows its increasing market share. There is a growing market for the
products in confectioneries for example Kitkat (eventhough it’s imported), Polo Smarties
etc. This can be proven from the fact that Nestle keeps introducing new products in this
category for example Allen’s Soothers were launched during the last quarter of 1998.

CASHCOWS: Milk products, Coffee and Dietetic and Infant food have a high market
share and are doing business in mature industries. Since the customers of this product
category are loyal, the marketing costs of these SBU’s is quite low and as a result a large
amount of cash can be generated. Customer Loyalty is a must for these Cashcows to
maintain their market share. The sales of the Milk products have increased to RS.
108,430000 from RS. 87,758000. This huge increase in sales reflects the high market
share of this SBU. However, its growth rate is low because in general this category is in
its maturity stage – that is – a number of milk products have been launched by Nestle,
most of which are quite old. An innovation has not really been made in this category. The
same conclusion can be made about Coffee. There is an already existing market for
Coffee which is not increasing further by a large amount. The sales of Coffee were Rs.
46,89 000 in 1999 and Rs. 392,00 000 in 1998. This huge difference shows that a great
amount of cash is being generated from this SBU. Sales of Dietetic and Infant food rose
to Rs. 60,935 000 from Rs. 52,655 000. The infant foods unit of Nestle is operating in a
mature industry. Like the milk products, the infant foods have been around for a long time
without barely any new product line being started in this category.

QUESTION MARKS: Included in this section is the culinary products of the

organization. The products such as Maggi 2-minute Noodles and Maggi cold sauces
have a low market share and a high growth rate. These products especially the cold
sauces are operating in a highly competitive market. The approximate sales were Rs.
 79,919 000 in 1999 and Rs. 60,818 000 in 1998. This figure represents a great potential
for growth in future. However, in contrast, the market share of the products in this
category is not very high currently. A reason for this is that Nestle just recently introduced
cold sauces such as “Emily sauce” etc. However the enthusiasm with which the
customers received the different flavors of sauces, portrays a very high potential for future
growth. The firm needs to focus on differentiating its products in the competitive market
to gain customers.

DOGS: Chocolate and Fruit drinks fall into this category and they possess a low market
share and a low growth rate. Chocolate drinks had sales of Rs. 19639000 in 1999, which
rose from Rs. 19541000 in 1998. This is quite a small increase considering the rise in
the sales of other SBU’s. However, the chocolate drinks are still profitable so the firm
does not have to worry about liquidating or getting rid of this SBU. The sales of Fruit
drinks rose to Rs. 40,620 000 in 1999 from Rs. 38,103 000 in 1998. There has been a
small amount of increase; however it is not a lot compared to other SBU’s. Firstly, there
is not a huge market for chocolate drinks in Pakistan. People usually tend to buy light
juices like apple or orange juice or Pepsi instead of chocolate drinks. Secondly, regarding
the fruit juices, there are not a lot of flavours available currently in this category. Nestle
needs to introduce new flavours such as apple, grape etc. to capture the market that
prefer these flavours. This will not only increase the sales of the SBU, but it will also
increase its market share. At the moment, additional amount of money is not being
invested in these SBU’s, as they are not very profitable. Nestle is currently trying to
maximize profits from this category by minimizing expenditures and by differentiating the
product to build market share.

Marketing programs:

Promotion:
Now in marketing program what are the advertising and promotional programs of
Nestle?
Nestle is using different promotion tools. They use advertising tool for the promotion of
their products. In Advertising:
Ø Print and broadcast ads
Ø Motion picture
Ø Symbols and logos
Ø Display signs
Ø Billboards
Ø Posters
Ø Brochures
These programs are use for Advertising.

Sales Promotion:
Ø Sales presentation
Ø Sales meeting
Ø Incentive programs
Ø Samples

In Direct Marketing:
ü Mailings
ü Telemarketing
ü Electronic
Through Electronic Media they create awareness about their product. Media is strong
tool for promotion of the product.
They also create relationship with their customers. This relation give more benefits for
their promotion.

Organizational structure

Management of Nestlé Pakistan is mostly foreign. The top management involves MD

and three senior mangers (Production, marketing, Finance). They all are expatriate with
only one exception which is that for the first time in the history of Nestlé Pakistan one
Pakistani has gained position among these four management seats. It is the Marketing
Manager Mr. Rashid Aleem Qureshi.
The strategic leadership of nestle Pakistan are to force the businesses to become more
efficient and to create a regional manufacturing network.it also focuses on the
integration of the company’s business on a global scale and most importantly to reduce
marketing expenditures by exploiting the synergies between brands
It is understood that the performance of any organization is depended on the overall
performances of its employees, and they could only perform well when they are
 motivated and have an example (hero) from within the organization that sets a
benchmark.

Nestlé’s developments and implications on the organization

Some of the latest developed areas which are implemented by Nestle Pakistan

Research & Development( R & D)

Nestle, the world's biggest food Group, is also the global leader in the industry with
regard to Research and Development (R&D), No other food company matches the R&D
presence of Nestle, with a worldwide network of centres in 17 locations on four
continents. No other food company dedicates so many human and financial resources
to R&D: an international staff of 3500 engaged in the search for innovative new
products and the renovation of existing ones.
Nestlé’s objective is to consolidate and strengthen its leading position at the cutting
edge of innovation in the food area, in order to meet the needs and desires of
consumers around the world, for pleasure, convenience, health and well being.

Global business excellence

In the year 2005 the successful launch of GLOBE remained probably the most
significant achievement for Nestle Pakistan. It was recognized locally as well as in the
Nestle world as the most successful implementation of GLOBE.
GLOBE is a worldwide program/project designed to align Nestle Pakistan with other
Nestle companies around the world and to learn and benefit from each other’s
experience.
The project has three main objectives;
q Creation and adoption of common business practices across all countries where Nestle
operates.
q Standardization of data and,
q Standardization of information technology system.
Migration to an ERP

The final phase of the project entails migration of Nestle Pakistan to an ERP (Enterprise
Resource Planning) called SAP (System Application Products), which is one of the most
integrated business application software in the world. Nestle Pakistan achieved this final
migration on February 7, 2005. On that date all Nestle sites including the head office, all
factories, distribution centers and three zonal offices went live on the new application.

Information system and Purchasing

Purchasing task will be greatly facilitated by standard IS/IT infrastructure, common

business applications and best practices, Visibility of standardized, real-time purchasing
data/information will permit aggregated spend category analysis. This will help identify
opportunities and define more effective purchasing strategies with the objective of
achieving lower total cost.