Nestle is a low cost operator.
This allows them to not only beat the competition by producing low cost products, but by also edging ahead with low operating costs.
NESTLE emphases on internal growth, that is, they achieve higher volumes by renovating existing products and innovating new ones.
They leapfrog by going beyond what consumers expect.
Nestle also has multiple critical resources. They have a great research and development team.
The main weakness of the LC-1 division of Nestle is that they were not as successful as they thought they would be in France. The launch in France was in 1994, but since the late 1980s, Danone had already entered the market with a health-based yogurt.
LC-1 was positioned too scientific, and the consumers quite did not understand that was a food and not a drug.
NESTLE has health based products which are gaining popularity in the world, including the US.
Within 2 years of launching the yogurt LC-1 in Germany, the product gained maximum popularity and captured 60% of the market. Further, in international markets the product will be launched according to the tastes of the consumers.
Also NESTLE can introduce more health based products in Germany.
NESTLE faces a severe threst in entering a mature market like that of France. Danone had an established leadership position in the yogurt market. Since Danone was the first to arrive in the market, they have always been the market leader there.
There is intense competition in the United States yogurt market. General Mills’ Yoplait division is the leader in the yogurt market in the United States. Yoplait is the leader for years and is constantly innovating new market products.
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