nestle junny

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History 1866-1905

In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who wereunable to breastfeed. His first success was a premature infant who could nottolerate his mother's milk or any of the usual substitutes. sold in much of Europe.

1905-1918

In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early1900s, the company was operating factories in the United States, Britain, Germanyand Spain.

1918-1938

After the war Government contracts dried up and consumers switched back to freshmilk. However, Nestlé's management responded quickly, streamlining operationsand reducing debt. The 1920s saw Nestlé's first expansion into new products, withchocolate the Company's second most important activity

1938-1944

Nestlé felt the effects of World War II immediately. Profits dropped from $20 millionin 1938 to $6 million in 1939. Factories were established in developing countries,particularly Latin America. Ironically, the war helped with the introduction of theCompany's newest product, Nescafé, which was a staple drink of the US military.Nestlé's production and sales rose in the wartime economy.



1944-1981

Nestlé's growth in the developing world partially offset a slowdown in the Company'straditional markets. Nestlé made its second venture outside the food industry by acquiringAlcon Laboratories Inc..

1981-1995

Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé's improved bottomline allowed the Company to launch a new round of acquisitions, the most importantbeing American food giant Carnation.

1996-2002

The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled andworld markets developed into more or less integrated trading areas. Since 1996 therehave been acquisitions including San Pellegrino (1997), Spillers Petfoods (1998) andRalston Purina (2002). There were two major acquisitions in North America, both in 2002:in July, Nestlé merged its U.S. ice cream business into Dreyer's, and in August, a USD 2.6bnacquisition was announced of Chef America, Inc.

2003 + The year 2003 started well with the acquisition of Mövenpick Ice Cream,

enhancing Nestlé's position as one of the world market leaders in this productcategory. In 2006, Jenny Craig and Uncle Toby's were added to the Nestlé portfolio and2007 saw Novartis Medical Nutrition, Gerber and Henniez join the Company.



Our Brands We believe that food plays a key role in achieving a well-balanced person. And so our

philosophy is Good Food for a Good Life!

At Nestlé, our products are developed keeping our consumers, their preferences andhealth in mind.

Millions of consumers the world over trust Nestlé products for good reason: whenthey choose a Nestlé product they have the satisfaction of choosing quality, taste,variety, convenience and the good nutrition.

Brand Names

Milk, Dairy and Chilled Dairy

Beverages

Bottled Water

Baby Food

Food

Breakfast Cereals

Chocolate and Confectionary



Vision

The Nestlé global vision is to be the leading health,wellness, and Nutrition Company in the world



Mission Statement

Good Food is the primary source of Good Health throughout life. We strive

to bring consumers foods that are safe, of high quality and provide

optimal nutrition to meet physiological needs. In addition to Nutrition,

Health and Wellness, Nestlé products bring consumers the vital

ingredients of taste and pleasure



M

anagement



IFE Internal Factor Evaluation MatrixKey Internal Factors Weight Rating Weighted Score

Strengths

Socially Responsible Company 0.03 3 0.09

Nestle products enjoy strong brand image 0.07 3 0.21

Sales force as a major physical resource strength 0.05 3 0.15

Quality product distribution networks in country 0.08 2 0.16

Net Profit increased by 94% in 2009. 0.20 4 0.80

Price earning ratio decreased from 38.9 to 18.8 0.05 3 0.15

Export Sales increased by 48% to PKR 3.3 billion 0.18 4 0.72

Weaknesses

Lack of awareness among target market 0.04 2 0.08

Nestle milk always stands at last because of lowadvertisement.

0.09 2 0.18

Revenue from confectionary decreased by 14% 0.08 2 0.16

Low credit sales and profit margin to retailers 0.05 2 0.10

Weak promotional activities through websites 0.05 3 0.15

Cant launch expensive brand due to low income groups 0.03 1 0.03

Total 1.00 2.99



EFE External Factor Evaluation MatrixKey External Factors Weight Rating Weighted Score

Opportunities

Few and weak competitors in the market 0.12 2 0.24

Disposable income increased by 3.6% 0.07 3 0.21

Consumer expenditure on food has increased by 3.6% 0.09 4 0.36

Population density increased by 2.18% (per sq.km) 0.05 3 0.15

Credit policy can be adopted to increase sales 0.03 3 0.09

Potential in cold dairy market 0.02 3 0.06

All companies contribute only 2% to processed milk market 0.12 4 0.48

Pakistan as 7th largest milk producing country with milk output of 200 billion liters 0.12 3 0.36

Increase in consumer food industry by 14% 0.05 4 0.20

Threats

Engro and Shakarganj as major competitors 0.14 3 0.42Market segment growth could attract new entrants 0.04 2 0.08

Taste of the consumer has already developed 0.02 2 0.04

Legal & ethical issues 0.01 2 0.02

Economic slow down can reduce demand 0.01 2 0.02

Effect of seasonality upon sales 0.05 3 0.15

Strong advertisement by major competitors 0.08 3 0.24

Total 1.00 3.02



CPM Competitive Profile MatrixNestle Pakistan Engro Foods Shakarkanj Foods

Critical Success factors Weights Rating Weighted Score Rating Weighted Score Rating Weighted Score

0.0 to 1.0 1 to 4 1 to 4 1 to 4

Market Share 0.12 3 0.36 2 0.24 1 0.12Inventory System 0.05 3 0.15 2 0.10 2 0.10

Financial Position 0.20 4 0.80 2 0.40 3 0.60

Product Quality 0.15 4 0.60 3 0.45 3 0.45

Consumer Loyalty 0.07 3 0.21 2 0.14 1 0.07

Relationship with Suppliers 0.03 3 0.09 3 0.09 2 0.06

Global Expansion 0.06 3 0.18 1 0.06 1 0.06

Organization Structure 0.02 3 0.06 2 0.04 1 0.02

Production Capacity 0.05 3 0.15 2 0.10 2 0.10

Advertising 0.15 2 0.30 4 0.60 3 0.45

Efficient cost Management 0.05 3 0.15 3 0.30 2 0.20

Product R&D .05 3 0.15 2 .04 2 .04

Totals 1 3.20 2.56 2.27



FINANCIAL STRENGTH

Nestles net sales increased by 20% in 2009 as compared to 2008 3

Net profit increased by 94% in 2009 as compared to 2008 5

Debt equity ratio changes from 63:37 to 66:34 3

Price earnings ratio in 2009 was 18.8 as compared to 2008 38.9 5

Return on capital employed increases by 40% 4

Average financial strength 4



INDUSTRY STRENGTH

Increase in consumer food industry by 14% 5

All companies contribute only 6% to processed milk market 4

Market segment growth has attracted new entrants to increase profit

potential

5

Due to ease of entry in market, Engro foods Shezand foods and

Shakarganj are properly utilizing their resources.

4

Average industrial strength 4.5



COMPETATIVE STRENGTH

Nestle enjoys strong customer loyalty -2

Quality product distribution networks in country -1

Nestle extended product life cycle is being ensured due to quality brandextension strategy.

-2

Nestle product are market leaders in many product categories. -2

Average competitive advantage. -1.75



ENVIRONMENTAL STABILITY

Economic slowdown can reduce the demand -2

Fluctuating rate of inflation in the country -2

Price range of competing products -1

Average Environmental Stability -1.75



BCG

Brands Sales % Sales Profit % Profit% Market

Share

% Growth

Rate

Milk and Dairy13993 34 1082 38 100 +15

Beverages 7820 19 661 20 85 +10

Bottled Water 9054 22 511 17 100 +3

Confectionary and

Chocolate 1646 4 150 5 31 -15

Baby Food 5350 13 331 11 60 -5

Foods and Cereals 3293 8 270 9 40 8

Total 41156 100 3005 100 100



GSMQUADRANT 1 QUADRANT 2

QUADRANT 3 QUADRANT 4



QSPM

AcquisitionsShangrilla &

Youngs food

No Aquisitions

Key factors Weights AS TAS AS TAS

OPPERTUNITIES

Few and weak competitors in the market 0.12 4 0.48 2 0.24

Disposable income increased by 3.6% 0.07 - -

Consumer expenditure on food has increased by 3.6% 0.09 3 0.27 1 0.09

Population density increased by 2.18% (per sq.km) 0.05 3 0.15 2 0.10

Credit policy can be adopted to increase sales 0.03 - -

Potential in cold dairy market 0.02 - -

All companies contribute only 2% to processed milk market 0.12 - -

Pakistan as 7th largest milk producing country with milk output of 200 billion l iters0.12 - -

Increase in consumer food industry by 14% 0.05 4 0.20 2 0.10

THREATS

Engro and Shakarganj as major competitors 0.14

Market segment growth could attract new entrants 0.04 3 0.12 4 0.48

Taste of the consumer has already developed 0.02 1 0.02 4 .08

Legal & ethical issues 0.01 - -

Economic slowdown can reduce demand 0.01 2 0.02 3 .03

Effect of seasonality upon sales 0.05 - -

Strong advertisement by major competitors 0.08

1.00



QSPM(Cont)

Acquisitions

Shangrilla &

Youngs food

No Aquisitions

Key factors Weights AS TAS AS TAS

STRENGHTS

Socially Responsible Company 0.03 - -

Nestle products enjoy strong brand image 0.07 2 0.14 1 0.07Sales force as a major physical resource strength 0.05 - -

Quality product distribution networks in country 0.08 - -

Net Profit increased by 94% in 2009. 0.20 3 0.60 1 0.20

Price earnings ratio decreased from 38.9 to 18.8 0.05 2 0.10 1 0.05

Export Sales increased by 48% to PKR 3.3 billion 0.18 3 0.54 1 0.18

WEAKNESSES

Lack of awareness among target market 0.04 - -

Nestle milk always stands at last because of low Advertisement.0.09 - -

Revenue from confectionary decreased by 14% 0.08 - -

Low credit sales and profit margin to retailers 0.05 1 0.05 3 0.15

Weak promotional activities through websites 0.05 - -

Cant launch expensive brand due to low income groups 0.03 2 0.06 4 0.12

Total 1.00 2.75 1.89



Annual Objectives of Nestle

Marketing objectives are compatible with the overall corporate objectives of nestle.Companys objective is to be the worlds largest and best branded foodmanufacturer while insuring that nestle name is synonymous with the products of the highest quality.

Its chief objectives are:

To achieve compatibility with international voluntary standards onenvironmental management systems. To build mutual trust with consumers, governmental authorities and businesspartners. To ensure continuous improvement of nestles environmental performance. Conservation of natural resources and minimization of waste. Total compliance with the laws.

To establish the benchmark for good business practice. Employing new technologies and processing. By committing to resources, both human and financial. Measuring the cost and benefits to business of its activities



Nestle policies

Nestle basic foundation is unchanged.

The time of origin of our company, and reflects the basic ideas of fairness, honesty and general concern for people.

Nestlé is committed to the following business policies in all countries, taking into account local legislation, cultural and

religious practices.

Nestlé¶s business objective is to manufacture and market the company¶s product in such away as to create value that can

be sustained over the long term for shareholders, employees,consumers, and business partners.

Nestlé¶s does not favor short-term profit at the expense of successful long-term businessdevelopment.

Nestlé¶s recognize 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 itsconsumers of the company would not exist.

Nestlé¶s 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 policies is beneficial in order to ensure that the

highest standards are met throughout theorganization.

Nestlé¶s is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the

responsible attitude of its managements and employees.

Therefore recruitment of the right people and ongoing training and development are crucial nestlé¶s continues to maintain

its commitment to follow and respect all applicable local lawsin each of its markets. The policies formed by the Nestlé are for every employee of Nestlé around the world.

The Nestlé brands follow these above mentioned policies and does not make there own policies.

Members of Nestlé are strongly committed to the company, its development, its culture and its policies.

Apart from professional skills and insight, the capacity and willingness to apply these policiesare the main criteria for

progressing in the organization, regardless of origin, nationality, religion,race, gender or age.



Matrix Analysis

Alternative strategy space BCG Grand matrix count

Back ward integration Yes Yes 2

Forward integration Yes Yes 2

Horizontal integration Yes Yes Yes 3

Product Development Yes Yes Yes 3

Market Penetration Yes Yes 2

Market Development Yes yes 2

Related Diversification

Unrelated diversification

Retrenchment

Divestiture

Liquidation



Nestle organizational 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

Glocal philosophy and creating value

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

Example of a global matrix structure:



Functional structure



Advanatages and Disadvantages

Advantages :

Ability to react quickly to market structure;

Nestle quickly reintroduce old formula for maggi noodles.

Ability to tailor product;

Nestle product are certified halal in middleast countries.

Standardization of product&practices;Nestle management and leadership principles documents are issued by Head offices.

Disadvantages :

High administrative cost;

Nestle is tryind to cut off 250 job by 2009 in two of their french plants due to high administrative

cost.

Potential conflict of interest due to role ambiguity;

Nestle have mangers dealing with samething in zones,head quarters.



Divisional structure



Advanatages and Disadvantages

Advantages : Increased accountability and result oriented.

More flexible to market condition.

Easily analysis performance

Disadvantages: Lack of unity creates unhealthy interdivisional competition.

Product standardization is difficult to achieve.

Loss of resources & efficiency due to lack of coordination.



SBU



Matrix structure



Advantages and Disadvantages

Advantages:

Quality of decision making where interests conflict.

Increases managerial motivation.

Development of managers through increased involvement in decisions.

Disadvantages:

Unclear cost and profit responsibilities .

High degrees of conflict.

Dilution of priorities.

'Creeping bureaucracyµ.



Horizontal Matrix

Nestle SA expands globally either through its own brand or the acquisitions of

National brands, considering this fact it seems a critical time for Nestle SA to

expand through a National brand.

nestle junny

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