NESTLE CASE STUDY
With reference to the Nestle case study, provide one example which clearly illustrates a link between topics or concepts drawn from at least two pre-requisite modules.
The Nestle case study provides a number of examples which illustrate links between Strategic management, Methods of Enquiry and Accounting for decision making concepts.
Nestle is one of the oldest of all multinational business. Nowadays, Nestle is one of the biggest food and nutrition companies in 86 countries in the world. (Hill, 2009 pp). Nestle was involved with a range of acquisitions in the last years in order to extend its line of products and try to expand on a geographical scale. Since its sales are reducing in developed markets, Nestle has the opportunity to expand business in up and coming countries, which is going to generate more profit for the company. Up and coming countries is one sector that Nestle is going to invest money in because it has the potential to be a strong and attractive market. Nestle feels confident in doing so because in such countries population economy and technology has experienced a rapid growth. (Datamonitor, 2006).
Nestles long-term strategy is to identify the quickly expanding countries first and get into the market as soon as possible in order to take advantage of other competitors. However, it first has to hold the leading position in the developed markets where it is currently placed. Also Nestle has to hire local managers and staff in the developing markets that understand the local market dynamic and culture.
As explained above there is a link between Nestlé’s strategy and the Strategic management, because companies employ managers from respective countries in the local companies due to the fact that they understand the local market dynamics. By hiring local manager they can take advantage of the local knowledge and own culture of the country.
Source: Own diagram
It is a huge advantage that Nestle works with local managers in fast rising emerging countries. As a result, Nestle will have quick results which lead to quick profits. As we can see in FIGURE 1 above, Nestle is closely related to the Strategic management module because companies will have a range of research(reports) on fast growing countries. Therefore, they will have the ability to balance the services they are able to provide (food, cereals, coffee, chocolate, drinks, ice cream, etc) (Nestle 2011), with the price that customers are willing to pay. For example, if people cannot afford the Nestle products then they will not expand in such countries but focus their attention and invest in countries where people are able to buy their products.
Also, Nestle is connected with methods of enquiry with Emerging markets. Companies will have less space to roam around and make decision considering that much of their movements are controlled by the market reaction. This means that emerging markets are countries with social or business activities in the process of rapid growth and industrialization.
The Nestle case study as clearly explained above illustrates a good link with the Strategic Management/Methods of Enquiry and the Market dynamic/Emerging markets respectively.
Does it make sense for Nestle to focus its growth efforts on emerging markets? Why?
The recent financial crisis that reverberated throughout the globe was a clear indicator of the interdependence and the codependence that globalization has created while simultaneously making it clear to everyone that the emerging economies, especially those that make up BRIC (Brazil, Russia, India and China) are more resilient than western economies, thus making them engines of growth that have helped the recovery effort in the last few years. Therefore from that point of view alone it can be stated that yes, Nestlé’s strategy to focus its growth efforts in developing or emerging markets is indeed a...
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