Case:Nestle global strategy

Presented by: Zareen Mahmood l1s08bbam2158

presented to: prof. Zahid riaz

 Oldest & Largest nutrition and foods company in the world

Founded and headquarterd in Vevey, Switzerland

Nestle originated in a 1905 merger of the Anglo-Swiss Milk Company which was founded by Henri Nestle in 1866

In 1929 nestle moved in the chocolate business

Company grew significantly during the WWI and WWII Operates in 86 countries Employees 283,000 individuals.

 Nestle has 8500 brands with a wide range of products across a number of markets including: coffee bottled water other beverages

chocolate
ice cream infant foods pet food etc...

Growth Strategies
Forced by Switzerlands small size Established its first foreign offices in U.S.A and Great Britain in the late 19th century

Australia, South America, Africa and Asia in the first

three decades of the 20th century. By the late 1990s, Nestle had 500 factories in 76 countries, sold products in 193 nations 3% of its employees are located in Switzerland

Emerging Markets
Does it make sense for Nestle to focus on emerging markets?

Nestl Emerging Markets Division imports products from more than 20 countries, and exporting products to more than

40 countries.

Emerging Markets
It currently already has a significant presence in most segments of the market in developed markets further growth requires either taking market share from competitors or entering new product segments. In contrast, if it gets a good foothold in emerging markets, it will be in a good position to grow with the market as the purchasing power of consumers increases. It can also progressively bring new products to these markets, accelerating its growth.

Profits of Adversity
Nestl's sales in emerging markets up 8.5% last year
Double the rate of the companys total revenue Sales from those regions totaled $33.15 Billion, more than any rival.

Strategy to work effectively

Flexibility is another distinctive competencies which Nestle company was able to achieve to react as quickly as possible to changing environments. As a consequence, company was able to respond to changes in local demand, cultural barriers and political fluctuation.

 The Nestle company uses that approach in order to the convenient fact that the consumer is easier to reached because he is accustomed to this brand name and they think they know what they are buying. The Nestle strategy was to be cultural awareness, which means a company should employ locals in order lower cultural barriers and resentments established by the foreigner. Nestle believes that, the key to their success is customization .

Nestl's strategy in emerging markets

The Key strategy: Customization rather than globalization.

Executing the strategy

Flexibility Local adaptation A long-term focus

Executing the strategy

In Nigeria: the company hired local singers to go to towns and villages offering a mix of entertainment and product demonstrations.

In China: Nestl established its own distribution network, known as milk roads.

Nestle management Structure

Moving from Localization strategy to Transnational strategy Includes first mover advantage, local economies, global web, economies of scale Strong local responsiveness, but production, training, and R&D becoming centralized Management practices spread knowledge, create learning effects, and transfer core competencies

Nestle Management Structure

Seven global strategic business units classified by food type (worldwide production divisional structure) Five regional units by geography (worldwide area structure) Has created a global matrix structure

Findings and Future

Strategy succeeding and applicable to markets and countries Need for tighter integration at matrix points Focus on healthier, more nutritious products Raise revenue from developing countries from 33% to 45% of total revenue within 10 years