Nestle
1. Does it make sense for Nestle to focus its growth efforts on emerging markets? Why?
Definitely yes, having reached the limits of growth and profitable penetration in most Western markets, Nestle has to turn its attention to emerging markets in Eastern Europe, Asia, and Latin America for growth. Many of the countries there are relatively poor, but the economies are growing quickly. Thus a consumer base capable of buying many Nestle products could develop over the next couple of decades. Relating this to Porter’s Competitive Forces, in emerging market supplier power is bad and as it was the first to enter the market the threat of substitutes would be low to Nestle, the environment is better and buyer power is stronger, therefore it really make sense to enter emerging market.
2. What is the company’s strategy with regard to business development in emerging markets? Does this strategy make sense?
Nestle adopt the first mover advantage strategy to enter the new markets that means the company enters into an early stage of emerging markets, in order to build a substantial position by selling basic food items and establish a network with vertical supply chain includes backward and forward stage in the emerging markets before competitors from Western countries. Nestle moves on into the more upscale segments such as mineral water, chocolate, cookies and prepared foodstuffs because of rising income level and therefore customers can afford to spend more on the food basis products. This strategy helps Nestle satisfy the basis and more niches segment as the demand rises on the food quality. Concluding, the key to their success is customization rather than exaggerated globalization. This strategy makes sense as the business success of the company proofs.
3. From an organizational perspective, what is required for this strategy to work effectively?
* Public Image - In a world that is becoming increasingly complex, consumer needs and wants continue to become
Definitely yes, having reached the limits of growth and profitable penetration in most Western markets, Nestle has to turn its attention to emerging markets in Eastern Europe, Asia, and Latin America for growth. Many of the countries there are relatively poor, but the economies are growing quickly. Thus a consumer base capable of buying many Nestle products could develop over the next couple of decades. Relating this to Porter’s Competitive Forces, in emerging market supplier power is bad and as it was the first to enter the market the threat of substitutes would be low to Nestle, the environment is better and buyer power is stronger, therefore it really make sense to enter emerging market.
2. What is the company’s strategy with regard to business development in emerging markets? Does this strategy make sense?
Nestle adopt the first mover advantage strategy to enter the new markets that means the company enters into an early stage of emerging markets, in order to build a substantial position by selling basic food items and establish a network with vertical supply chain includes backward and forward stage in the emerging markets before competitors from Western countries. Nestle moves on into the more upscale segments such as mineral water, chocolate, cookies and prepared foodstuffs because of rising income level and therefore customers can afford to spend more on the food basis products. This strategy helps Nestle satisfy the basis and more niches segment as the demand rises on the food quality. Concluding, the key to their success is customization rather than exaggerated globalization. This strategy makes sense as the business success of the company proofs.
3. From an organizational perspective, what is required for this strategy to work effectively?
* Public Image - In a world that is becoming increasingly complex, consumer needs and wants continue to become