Free Essay On Strategic Management - Nestle

Introduction

Nestle is a Switzerland based multinational company dealing in food and beverages. It’s headquarter is in Vevey, Switzerland. Nestle is considered as one of the largest company of the world in terms of revenue earned which shows the magnitude of business of Nestle. The company is offering wide range of products including breakfast items, bottled water, dairy products, snacks, baby food and frozen products. Nestle was founded in 1905 by merging of Anglo Swiss Milk Company and Fraine lactee Henri Nestle. Both were founded in 1866 by George and Charles Page and Henri Nestle respectively. The company has been growing significantly during different times especially in First and Second World War. Nestle has more than 2000 brands offering a detailed and diversified range of products across the globe

Globalization and Technology

Nestle has been among the companies who assess global demands and trends successfully resulting in expansion of the company across borders. Jose Lopez, Operational Vice President, says, “The impact of globalization has been different than we thought it would be. For those of us in the west, globalization meant developing countries opening their markets for us to sell to. Yet that’s not how it turned outinstead of being globalized, we are learning to react to global markets
Through understanding of its management about the world has led Nestle to trade in more than 86 countries of the world including United Kingdom, China, Norway, Brazil, India, Australia, Saudi Arabia, Iraq, Sweden, Algeria and South Africa etc. Some of the factors that have helped Nestle to expand globally are as follows:

Nestle continues to respects laws and trends applicable in every single target market.

Technology play vital role in culture of Nestle. At Nestle, technology not only is used to convey ideas and to communicate but also used in refining, testing and making of each and every product. Nestle scientists ensure the development of safe, high quality and highly nutritious products. Moreover engineers working in R&D at Nestle work in variety of fields including food processing and packaging. Nestle has become one of the major companies of the world in terms of producing different kinds of technologies. Some of them are Healthier fats (Meggi), Malt extraction (Milo), Technology of foam booster (Nescafe- Cappuccino) and Systems of portion dispensing (Beverages) etc. Due to these reasons, Nestle has been home of new technologies and innovation for more than a quarter of century. Each machine has the nestle brand, but it has its own identity. Under the Nestle umbrella, we have kept characteristics of each (Hitt et. al, 2012)

Industrial Organizational Model

IOM is used by the bigger firms of the industry in order to limit the competition and create barriers for new firms (Pearce and Robinson, 2000)
As Nestle is one of the largest companies of the world, competitors of Nestle consist of Unilever, DANONE, Kraft Foods and Cadbury. In light of IOM, Nestle uses this strategy in order to limit the pool of the competition and create entry barriers for new and small firms enjoying major chunks of profit from all over the world. This model also helps Nestle to see the upcoming move of its competitors of the industry. Thus, we can say that Nestle is the dominant company foot holding on the industry which allows it to earn huge revenue from across the globe (Hitt et. al, 2012)

Resource Based Model

Resource based model explains that resources and capabilities of the company are major source of determining the extent of strategic actions which play key role in company’s success. In simplest words, Resource Based Model helps in identifying and achieving competitive advantage (Mahoney and Pandian, 1992)
On basis of Resource Based model, Nestle has already developed four major strategic actions which ensure high revenues for the company. These strategic pillars are as follows;

Low cost and efficient operations

Innovation of Nestlé’s product line and its renovation

Universal availability

Improved communication through branding with the customers
According to management of Nestle, this model has ensured major growth and increase in earnings of Nestle. In other words, Nestle has selected its best core competencies to exploit the profit margins.

Effect of Vision and Mission Statements on Success

Since 1866, Nestle is dedicated to enhance the lives of millions of people by giving them proper nutrition through its products. Nestlé’s mission Good Life, Good Health ensures that people all around the globe have best taste of food on every single occasion of people from day to night. Elaborating Nestlé’s mission, Nestle works on three major areas as follows;

Creation of Share Value

Sustainability- Compliance
Culture, principles and Values of Nestle
Food not only gives people satisfaction and nourishment but they also get happiness, health and peace of mind. Nestle understands this basis psychology of human being and builds its vision upon it. Nestle majorly focuses on enhancing and enriching all of its products with types of vitamins and minerals which ultimately have positive impact on lives of people all around the world. Thus the Mission and Vision statements of Nestle not only give a vague idea but a clear path by identifying all the major key areas which are to be worked and focused. This implementation plan has helped Nestle to succeed in the long run and more over to be one of the top multinational companies of the world.

Impact of Categories of stakeholders on Success

One of the major strategies of Nestle is to create Shared Value among its stakeholders. In this way, stakeholders at Nestle play a major role in determining the success of the company (Pearce and Robinson, 2000). Following are stakeholders groups which have influence on company’s success in any way;

Academia

Communities
General public and consumers
Employees
Government
Intergovernmental organizations
Nongovernmental organizations
Trade Associations
Reporting agencies
Shareholders
Financing Community including Banks etc
Suppliers (farmers etc)
Overall industry
Academia influence Nestle in a way that students are the ones who get job and they help grow the company. It is necessary for Nestle to have a positive image on this group in order to gain talented and efficient workers from this sector who can help in achieving high growth targets of the company.
Different types of communities across 86 countries use the products of Nestle which causes the company to earn profits. So, Nestle focuses on this section because of its target sectors and its sales.
As mentioned previously that consumers are from diversified backgrounds and nations. So, It is necessary for Nestle to focus on each and every nation separately in order to produce products according to their culture and trends.
Employees are the people who struggle for the growth of Nestle. So, company pays special attention to the needs and demands of this group to keep them motivated and happy. So, they could strive for the best.
Government plays a major role in deciding the future of company in any country. So, it is compulsory for Nestle to work on all those lines pointed by the government and follow the specific laws and rules made up by the government of the country.
Intergovernmental organizations perform same kind of duties as government of the specific country. So, if Nestle wants to increase its profits, it has to be in the books of intergovernmental organizations.
Nongovernmental organizations are interested in knowing that whether the company’s policies are against environment or basic human rights. Nestle pays special attention on concerns of NGOS in order to grow without having any obstacles.
Trade Associations keep an eye on company’s policies regarding sales, production and marketing etc in order to know if Nestle is involved in any mal practice or not. Nestle observes closely their concerns and maintains good relations with trade associations.
Reporting Agencies publish the final annual financial reports of Nestle. So, if Nestle is being caught in any type of mal practice, these agencies will make sure that Nestle is closed.
Shareholders are interested in knowing the financial position of Nestle in order to invest in the company. Nestle provides better picture for a shareholder to invest.
Financing community i.e. banks and insurance companies need to know about financial condition of Nestle because of the reason that their money is also involved with the company.
Suppliers including small farmers will need to know about Nestle sound production methods and prices so they could save their interest from the company as well.
Overall industry has an interest in Nestle generally whether they are accomplishing standards, following policies and offering reasonable prices or not etc.

References

Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.
Mahoney, J. T., & Pandian, J. R. (1992). The resource‐based view within the conversation of strategic management. Strategic management journal, 13(5), 363-380.
Pearce, J. A., & Robinson, R. B. (2000). Strategic management: Formulation, implementation, and control. Irwin/McGraw-Hill.