Strategic Management Case Study on Swiss-based Nestle
Executive Summary This paper provides a case analysis and case solution to a Harvard Business School strategic management case study on Swiss-based Nestle, the world’s largest food and beverage company with 2007 sales exceeding CHF100 billion or about US$112 billion(Bell & Shelman, 2009, p. 1). While extensive background information dating to Nestle’s 1867 founding is provided, the primary time setting for the case is April 2008, shortly after 29-year Nestle veteran Paul Bulcke advances to the position of CEO, replacing Brabeck, who retired after a highly successful 12 year reign as CEO. The case focuses on Bulcke’s efforts to formulate plans for advancing his strategic vision at Nestle. Nestle is a huge, highly successful, cash-rich global corporation with hundreds of “billionaire brands”, a strong culture, and a history of producing innovative products and customizing products and services to meet local tastes. Looking around at Nestle, scanning the environment, and appraising the future, new CEO Bulcke sees little room for alarm. Looking towards the future, Bulcke’s only worry is “that we become complacent” (Bell & Shelman, 2009, p. 1). Bulcke’s predecessor, Brabeck, had set Nestle on the path of achieving worldwide sustainable competitiveness through four strategic pillars: 1) low-cost, highly efficient operations; 2) renovation and innovation of the Nestle product line; 3) universal availability; and 4) improved communication with consumers through better branding (Bell & Shelman, 2009, p. 3). Brabeck believed – and indeed was proven – that adherence to these four strategic pillars would allow achievement of the “Nestle Model”, a term which referred to Nestle’s long term objectives of “organic growth between 4% and 6% each year; continued year-after-hear improvements in earnings before interest and tax – EBIT margin; and improved capital management” (Bell & Shelman, 2009, p. 3). Brabeck launched a number of important
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