Nestle Company Case Study

Executive Summary

Nestle company is the world's first company to make infant cereal. Henri Nestle is the chemist who starts to do research on baby food in year 1867. His product soon became known world wide after a baby drink his new product. Later in year 1905, Nestle Company merged with Angle-Swiss Condensed Milk Company and later in year 1904, Nestle Company produced milk chocolate. Because of its variety production, now Nestle is one of the largest food companies in the world, marketing over 8500 brands and 30000 products. It operates nearly 500 factories across 5 continents and employs over 200000 employees worldwide.

Nestle aims to meet the everyday needs of Malaysian people everywhere and also be the leading multinational company. They produce three key products which are the food products, beverages products and pet care products. Among these varieties of products, Nestle is more concern on milk and food production. Although Nestle is now the leader in the market, they still working hard to produce more and more new product and also to ensure the product's quality is at a standard by the Research and Development (R&D) department if not the title as market leader will not be long term. Currently Nestle operates in almost 100 countries worldwide and the brand is trusted and confident for user to consume.

From the analysis of the external and internal environment, I notice that Nestle has successfully directed certain issues to their advantage. From the economic factors view, they collaborate with local government to farmer own raw materials whereby Nestle no longer needs to import raw materials from other country and the consequences to it is Nestle can now cut down costs and increase the amount of production/sales where it is so benefit the company. This wise decision not only beneficial Nestle but also the country. This can be proved by there are more jobs available, people have money, and the money will flows within the country (buyer & seller) because now company needs not to import product from other country where it will help the country to build the economy. I also noticed that Nestle did not suffer any losses (Refer to appendix 4). Besides that, Nestle also share its expertise with local company where it will helps the market growth.

From social factors view, Nestle has given extra miles out of their ingenuity for the development of the society as a whole. From technological factors view, Nestle has set up its own research and development department to do more extensive research of the product and develop more new product using the advanced technology. It also uses IS/IT in wide scale to suit and to keep up with the more demanding environment. Indirectly it contributes to the development of technology. As for the internal environment, Nestle Company handles the 5 forces very well. The 5 forces are done according to the Porter's Industry and Competitive Analysis (ICA) Model. Looking at the company analysis Porter, knowing that Nestle manage the supplier and buyer power forces well balanced because of their wise market strategy. Look at substitute products and services, it does not affect them too much this is because it already has it own strong brand name in the market whereby there are many consumer loyalty out there. Besides that, it also has a strong connection with its partners so this factor is not a matter to worry about.

Looking at the SWOT analysis, Nestle knows how to utilize their strengths and opportunities to their advantages as well as minimizing their weaknesses and threats. If Nestle faced great strengths and opportunities, their weaknesses and threats could become a major problem if they do not managed properly. Therefore, it is essential for Nestle to maintain a management which is dynamic yet influential.

All the critical factors that might risk Nestle Company has all been identified by using the environmental analysis and it has already been taken it into account. Their competitive advantages have also been identified. Nestle Company will still be the leading food company if they continue to strive to be the best by introduce more new products and provide more quality food in the future.

Background and Assumptions

Background

Nestle was founded in 1866 by Henri Nestle, who is a chemist interested in baby food. Nestle is the largest food company in the world, marketing over 8,500 brands and 30,000 products. It operates nearly 500 factories across 5 continents and employs over 200,000 employees worldwide.

Nestlй's operations in Malaysia began in 1912, with a branch office known as Anglo-Swiss Condensed Milk Company in Penang, importing and distributing products under the Nestle brand in the region for its ultimate parent company, Nestle SA, Switzerland.

The original business of Nestle Company was based on milk and dietetic foods for children. The new Nestle grew and disparate its range of products through acquisitions and mergers with better known brands of the time. The other ranges of Nestle product include culinary products, wheat and cereal beverages, breakfast cereals, liquid milk/creamers, mineral water, ice cream, pet food, chilled products as well as confectionery.

Today, the Nestle Company still complies with its founder's beliefs and principles and is; therefore, very much people-oriented, and committed to understanding its consumers' needs throughout the world in order to provide the best products for their lives. As a World Food Company, Nestle provide the best food for whatever time of the day and for whatever time of everyone life. It is a Company that maximizes the use of good quality local raw materials to produce and sell world-class products of the highest consistent quality, reliability and convenience based on business excellence principles throughout its operations.

Assumptions

Nestle is the world leading food company with over 90 years of doing business in Malaysia. Nestle has contributed towards the well being of Malaysians through its high quality products. Nestle position as "a trusted food, nutrition and wellness company" and focused on nourishing Malaysians to achieve overall wellness and to bring "Good Food, Good Life" to all members of society (Source: http://www.nestle.com.my/Nestle+In+The+Community/).

As Nestle aims to produce and sell world class products of the highest consistent quality, reliability and convenience that satisfied the local tastes and cultural