Nestle vs Kraft
6505403
Lu LU
Globalization has been popular since last century, which provided opportunities for multinational enterprises to obtain overseas development. In food and beverage industries, Nestlé and Kraft are first two largest manufactures. Nestlé is making large efforts on searching for growth opportunities in emerging markets, transferring from the subdued trading environment in many developed ones (BBC, 2012). Meantime, Kraft gets fully prepared for accelerating its global expansion, focusing more on fast growing markets than on primary grocery b usiness in North American markets (Mondelēz International, 2013). Figure 1 shows that Nestlé emphasizes on multinational mentality and high level of localization. However, Kraft applies international strategy and undergoes the mentality movement towards multinational strategy, aiming to localize its products and capabilities. According to Figure 2, Nestlé utilizes its national differences to achieve global efficiency, multinational flexibility and worldwide learning, yet Kraft aims to achieve higher flexibility to fit its strategy transfer intension. This essay compares how Nestlé and Kraft accomplish three goals through developing their international business strategies, and HR functions.
1
6505403
Lu LU
1.
Efficiency
Enhancing efficiency is essential for MNEs to achieve sustainable competitive advantage (Bartlett and Beamish, 2011). It is positively related to firms’ net profit margins and can be improved by lessening cost, enhancing revenue or both (ibid). From 2011 to 2012, Nestlé’s net profit margin was increased to 11.5%, while Kraft’s was eroded towards 8.95% (Figure 3) (Kraft, 2013a; Nestlé, 2013a).
2
6505403
Lu LU
The 2.56% difference in net profit margin indicates that Nestlé achieved better global-scale efficiency. The analysis of efficiency gap is conducted from two influential factors: cost-reduction and revenue-improvement. Cost reduction
1.1
Scale and scope
Lu LU
Globalization has been popular since last century, which provided opportunities for multinational enterprises to obtain overseas development. In food and beverage industries, Nestlé and Kraft are first two largest manufactures. Nestlé is making large efforts on searching for growth opportunities in emerging markets, transferring from the subdued trading environment in many developed ones (BBC, 2012). Meantime, Kraft gets fully prepared for accelerating its global expansion, focusing more on fast growing markets than on primary grocery b usiness in North American markets (Mondelēz International, 2013). Figure 1 shows that Nestlé emphasizes on multinational mentality and high level of localization. However, Kraft applies international strategy and undergoes the mentality movement towards multinational strategy, aiming to localize its products and capabilities. According to Figure 2, Nestlé utilizes its national differences to achieve global efficiency, multinational flexibility and worldwide learning, yet Kraft aims to achieve higher flexibility to fit its strategy transfer intension. This essay compares how Nestlé and Kraft accomplish three goals through developing their international business strategies, and HR functions.
1
6505403
Lu LU
1.
Efficiency
Enhancing efficiency is essential for MNEs to achieve sustainable competitive advantage (Bartlett and Beamish, 2011). It is positively related to firms’ net profit margins and can be improved by lessening cost, enhancing revenue or both (ibid). From 2011 to 2012, Nestlé’s net profit margin was increased to 11.5%, while Kraft’s was eroded towards 8.95% (Figure 3) (Kraft, 2013a; Nestlé, 2013a).
2
6505403
Lu LU
The 2.56% difference in net profit margin indicates that Nestlé achieved better global-scale efficiency. The analysis of efficiency gap is conducted from two influential factors: cost-reduction and revenue-improvement. Cost reduction
1.1
Scale and scope