Nestle' Case Study

Topics: Strategic management, Management, Marketing Pages: 13 (3690 words) Published: April 4, 2006
The dairy products at Nestlé are a big driving force for the growth of the company's sales. With the health kick of the many individuals around the world, it pushes the innovator and renovators of Nestlé to reach new height in finding better and healthier products for their consumers. More recent, dairy division became a big potion of the company's earnings, so it would be best for Nestlé to focus a big portion of their core competences and resources on the fast growing dairy division. Which leads us into the most recent yogurt produced by Nestlé's, which is the LC1. I. OPPORTUNITY AND THREAT ANALYSIS

Comparing Nestlé with the environment concerning which it would determine the opportunity and threats in the future of the company by Likert Ratings Scale Figure 1 Pest Analysis
I. Economic FactorRateWeightRxWComments
1.Economic Growth30.20.6Expected increasing in economic growth. However, it is not direct effect with the food product especially LC1yogurt. 2.Inflation20.20.4Increasing trend due to increasing in economic growth. It didn't apply asNestlé's major problem 3.Interest Rate20.10.2

4.Oil Price30.10.3Increasing in oil price would be related on the logistic cost. 5.Disposable Income30.41.2As economic grows, disposable income are expected to increase which is droved the expense on functional food products. Total 12.7

II. Political FactorRateWeightRxWComments
1.Government Regulation30.41.2Deregulation to create free market force to open for tense competition. 2.Gevernment / Political Stability30.20.6Political Stability in EU market would be support FDI confidence. 3.Attitude Toward Private Ownership50.42The feeling of acceptable goods is directly affected the distribution channel for product. Total 13.8

III. Social FactorRateWeightRxWComments
1.Consumer expectation30.41.2Increasing in Competitors, offerings map closely to customer expectations and interests. Company have to create and deliver value propositions that serve consumer needs 2.Lifestyle Changes50.31.5Trend of health conscious became the one of value in Nestlé LC1 product 3.Population Structure 40.31.2Changing in age structure, which is related to sized of potential customer, bring the develop on taste and value added Total 13.9

IV. Technology FactorRateWeightRxWComments
1.Technology in infrastructure40.41.6Higher technology infrastructure can help company to produce low cost products and ahead with low operating costs. 2.Technological Advancement50.63Fast technology is another opportunity of company to launch an innovative product Total 14.6

Figure 2 Environment Factor Analysis Summaries (EFAS)
I. Economic Factor2.70.30.81
II. Political Factor3.80.10.38
III. Social Factor3.90.31.17
IV. Technological Factor4.60.31.38
Total 13.74

Figure 3 Industry Attractiveness Analyses
I. Rivalry among IndustryRateWeightR x WComment
1. Industry Growth30.10.3Industry growth is expected in increasing because of health conscious. 2. Number of Competitors40.20.8Increasing in variety of functional food products, new ingredient added and innovated, forces Nestlé to launch product faster. 3. Product Differentiation 40.31.2Each of companies tries to differentiate its product. Nestlé has to put more effort to sustain its uniqueness. 4. Diversity of Competitor30.30.9There are variety of taste and value added in functional product which is one of company's innovation 5. Switching Cost30.10.3Instead of functional food, customer can eat fruits or other kinds of products. Total 13.5

II. New EntrantRateWeightR x WComment
1.Capital Requirement20.61.2Because of functional food depend upon R&D. Therefore, newcomers need a capital in assimilating of nutrients. Nestlé also have to invest in its...
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