Strategy
Strategy, Management and Leadership
Individual Report 1
Business-level Strategy of Nestle
Nestle is an international brand with a portfolio in almost every food and beverage category. The brand is consumed daily by a majority of people, from its confectionary to it dairy brands and on to it’s beverages. With around 8000 brands it is hard to stay away from them. The company shows it’s size when figures such as 468 factories spread over 86 countries are some statistics, with the company employing over 330 000 employees2. Figures such as these are irrelevant if they cannot keep a competitive advantage and sell their products in this highly competitive market. This paper will explore how Nestle has implemented many business level strategies to stay the leading nutrition, health and wellness company in the world.
It is important to look at the history to understand the success of Nestle. Nestle roots start in 1866 with the foundation of the Anglo-Swiss Condensed Milk Co. Today we know that Nestle is much more then just condensed milk with many new products being invented and the company expanding. Nestle during it earlier years used a localization strategy to manage it’s business-level Strategy. This strategy is very good for the global expansion but the structure that the company was causing problems. Nestle was slow to act on the fast changing food market. The realisation of this problem came clear to Nestle in the 1990s with the actions of the CEO to commence a restructure of Nestle. The restructure included the formation of strategic business units (SBU) fro each country or world region. The restructure and the implementation of the SBUs resulted in major cost savings for the business, and increased sales. 3
The structure of a company is very important to the growth, sustainability and decision making of a company and can result in dramatic changes in profits as touched on before. The question is why can a change such as this help a company so
Individual Report 1
Business-level Strategy of Nestle
Nestle is an international brand with a portfolio in almost every food and beverage category. The brand is consumed daily by a majority of people, from its confectionary to it dairy brands and on to it’s beverages. With around 8000 brands it is hard to stay away from them. The company shows it’s size when figures such as 468 factories spread over 86 countries are some statistics, with the company employing over 330 000 employees2. Figures such as these are irrelevant if they cannot keep a competitive advantage and sell their products in this highly competitive market. This paper will explore how Nestle has implemented many business level strategies to stay the leading nutrition, health and wellness company in the world.
It is important to look at the history to understand the success of Nestle. Nestle roots start in 1866 with the foundation of the Anglo-Swiss Condensed Milk Co. Today we know that Nestle is much more then just condensed milk with many new products being invented and the company expanding. Nestle during it earlier years used a localization strategy to manage it’s business-level Strategy. This strategy is very good for the global expansion but the structure that the company was causing problems. Nestle was slow to act on the fast changing food market. The realisation of this problem came clear to Nestle in the 1990s with the actions of the CEO to commence a restructure of Nestle. The restructure included the formation of strategic business units (SBU) fro each country or world region. The restructure and the implementation of the SBUs resulted in major cost savings for the business, and increased sales. 3
The structure of a company is very important to the growth, sustainability and decision making of a company and can result in dramatic changes in profits as touched on before. The question is why can a change such as this help a company so
References: 1. RUGMAN, A. M. (2005). The regional multinationals: MNEs and "global" strategic management. Cambridge, UK, Cambridge University Press. 2. "Nestle." N.p., 2013. Web. 4 Apr. 2013. . 3. HILL, C. W. L., & JONES, G. R. (2004). Strategic management theory: an integrated approach. Boston, Mass, Houghton Mifflin. 4. PORTER, M. E. (2004). Competitive advantage: creating and sustaining superior performance. New York [etc.], Free Press.