Liberalization of economies and the emergence of new countries have led the multinationals to adopt a more holistic approach. Companies in the food market have faced many upheavals, leading them to develop different strategies in order to respond better to the new consumer habits of the population that attaches increasing importance to the product quality.
Nestle, a multinational specialized in agribusiness, has not escaped this trend, by pushing itself to consider this new environment. The firm Nestle is now the leading global food company and it is the second in France behind Danone. Founded in 1867 by Henri Nestle in Switzerland, Nestle, first specialized in new products, malted milk, has rapidly diversified into many food products and thus became the leader in this sector.
Today implanted worldwide, with nearly 500 factories in over 80 countries, Nestle has become a real global firm. In the context of increasing competition, thus we can ask what were the strategies implemented by the Swiss multinational to gain the dominant position.
In a context of increasing competition, we can ask what were the strategies implemented by the Swiss multinational to gain the dominant position. Thus, in the first part, we present the firm Nestle through a study of its activities and an analysis of its competitive environment. Then we will proceed with a thorough analysis of its strategies, which allowed access to this leading position in the food market.
This part seeks to examine the firm Nestle through an analysis of its operations and its competitive environment.
Nestle is currently considered the largest food company in the world and ranks second behind Danone on the French market. The firm Nestle, which is headquartered in Vevey, Switzerland, has a much diversified product portfolio. It markets, in fact, different categories of products such as chocolates and confectionery, culinary products, frozen foods, dairy products, infant nutrition, ice cream, mineral water, pet products companies.
These various products can be grouped into three main areas: food, feed and beverages. The Nestle Group is several thousands of local brands, some seventy brands internationally oriented and six global brands (Nestle, Nescafe, Nestea, Maggi, Buitoni and Friskies). These represent about 70% of group sales.
The geographical expansion of activities of the firm Nestle has been a necessity because of the small size of its home country, Switzerland, with its 7 million inhabitants, which represents less than 2% of the group's activities. This geographical extension offered Nestle the opportunity to enter new markets, but Nestle is facing new competition as more important.
Tags: Nestle Group, origin of Nestle Group, strategy adopted by the Nestle Group
[...] The company employs more than people worldwide. Its main global competitors are Unilever and Danone (turnover respectively: and million in 2005). Up to 42%of the activity of the Nestlé Group is located in Europe, the Americas account for 40% and Asia, Africa and Oceania of group sales are in emerging countries. Nestle, with its 500 factories in the world, is a truly global firm, as shown in the trans-nationality index of UNCTAD which is in 2003. B. The environment of the firm We will see the market analysis of the Nestlé Group with Porter's five forces. [...]
[...] Indeed, the firm has adopted a comprehensive strategy by unifying its product on the world market or on large geographical areas and having a general strategy defined by the parent, allowing it to achieve economies of scale. In this sense, Nestlé is a global firm. But although globalization has been accompanied by a standardization of consumption patterns the existence of patterns of consumption and local food is undeniable. Nestlé's markets cannot be homogeneous because there are cultural, political and economic differences between different countries. The Nestlé Group gives priority to a local approach, rather than an international approach. [...]
[...] The threat of new entrants is thus quite low. Nestle is a large group, which enjoys economies of scale and learning that new entrants cannot have. Moreover, it is difficult for new entrants to have access to distribution channels, as mass distribution has a substantial bargaining power. Thus the market for food is a market where competition is strong and where there is a price war. The Nestlé Group has tried to stand out in this market, not through cost leadership, but rather by differentiating its offering and its image, promoting more quality of its products, by developing a wide range of products and many marketing efforts. [...]
[...] The success of the firm relies on a combination of several strategies. Firstly, from a general point of view, the firm has implemented a comprehensive strategy in the face of globalization. Yet, the firm does not ignore national specificities. It seeks to adapt better to the consumption patterns of countries in which the firm operates. It adopted an organization called "glocalization" that allows it to achieve greater efficiency in the global economy. The group carried out a strategy of expansion through acquisitions and strategic equity investments, which allowed the firm to diversify its range of products, while focusing on sectors with high growth potential. [...]
[...] The success of the Nestlé Group is the result of a combination of several strategies. The firm has experienced tremendous growth. It has been built through innovation and acquisition, which has enabled it to build a diversified portfolio of businesses while refocusing on the most promising sectors, with an objective which is not short-term profit, but long-term profitability. Conclusion After this analysis, we observed that the Nestlé Group became one of the largest firms in the world, and holds the leading position in the food industry. [...]
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