Business Strategy

Nestle

Nestl Pakistan today is the leading Food & Beverages Company in Pakistan with
key focus on Nutrition, Health and Wellness and reaching the remotest of locations
throughout Pakistan to serve the consumers. Nestl Pakistan also prides itself in
being the leaders in Nutrition, Health & Wellness. Ever since 1867, when Henri
Nestl invented the first infant food, nutrition has been in our DNA. Today more and
more consumers mirror our emphasis on nutrition, as they realize that food choices
affect their health and quality of life.

Explain strategic contexts and terminology-missions,

visions, objectives, goals and core competencies (1.1)
Nestle has set its practical measures under three aims. Those aims can be identified
as customer loyalty, best quality products and innovation. These practical measures
can be identified as the long-term directions of Nestle.
Mission statement:
Nestls mission, in the words of our founder Henri Nestl, is to: ...positively
influence the social environment in which we operate as responsible corporate
citizens, with due regard for those environmental standards and societal aspirations
which improve quality of life. -- Henri Nestl, 1857.
Vision:
To be a leading, competitive, Nutrition, Health and Wellness Company delivering
improved shareholder value by being a preferred corporate citizen preferred
employer preferred supplier selling preferred products.
Nestl Pakistan subscribes fully to this vision of being the number one Nutrition,
Health, and Wellness Company in Pakistan. Nestle Pak Ltd envisions the company to
develop an extremely motivated and professionally trained work force, which would
drive growth through innovation and renovation. It aspires, as a respected corporate
citizen, to continue playing a significant role in the social and environmental sectors
of the country. Improvements in profitability will be achieved while respecting
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quality and safety standards at all times and with the unique ability to meet the
needs of consumers of every age group.
Objectives:

Lead a dynamic, passionate and professional workforce proud of our

heritage and positive about the future.
Meet the nutrition needs of consumers of all ages from infancy to old age,
from nutrition to pleasure, through an innovative portfolio of branded food
and beverage products of the highest quality.

Deliver shareholder value through profitable long-term growth, while

continuing to play a significant and responsible role in the social, economic,
and environmental sectors of Pakistan.

Nestl Pakistan operates in many ways but people, products and brands is
the main flag bearers of the Companys image, and we will continue to
enhance the quality of life of Pakistanis.

Our priority is to bring the best and most relevant products to people,
wherever they are, whatever their needs are, and for all age groups.

We will always focus on environment friendly operations, to do ethical

business practices and our responsibility towards the communities.

Goal:
To be the reference for:

Nutrition, Health and Wellness

Sustainable Financial Performance
Trust by all stakeholders

Research and Development is a key competitive advantage for Nestl. With 29

research, development and technology facilities worldwide, Nestl has the largest
R&D network of any food company.
Core Competencies:
Nestle has created a future road-map, which has facilitated a very strong alignment
within the company itself and a scope for soul searching, which has further
presented it with a clear idea of the true identity its destination and the avenues
that should be chosen to achieve it.
Innovation and Renovation The Company has strategically planned to sharpen its
inherent capability of Innovation and Renovation even further. This indicates
innovation in terms of its products, processes and systems. Innovation signifies the
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introduction of new, path-breaking products to the Nestle portfolio, while renovation

signifies rejuvenation/revamping of already existing product/s. The heart of the idea
is to add up an element of excitement to the brands
Operational efficiency- This calls for a comprehensive elimination of wastage,
enhanced effectiveness, amplified efficiency and an improvement in all the
operational facets, which is an improvement upon the current core competency.
Ushering in innovative products via the innovative path is the aim.
However, whenever and wherever Ensuring that the products reaches the
customers whenever, however and wherever they might need these. This should
occur eve faster than they do now.
Increased Customer Communication Addition of more dynamicity in customer
communication, making them aware of all the new happenings at Nestle. Establish a
two-way communication channel, so that customer feedback and product
experience can be used to develop the new and innovative products.
It is imperative for Nestle to be a master at all the above mentioned core
competencies (a cut rise above the current competencies). These are the key
factors which would drive customer interaction, operational excellence and
development of products with simultaneous quality and renewal.

Review the issues involved in strategic planning (1.2)

Strategic planning is a process, an outcome, and, in its best form, a roadmap used
by stakeholders throughout an institution to move the institution toward higher
levels of achievement.
Strategic planning is about consensus building. Done correctly, the process
promotes communication, participation, and collaboration. It provides a structured
forum for airing conflicts, dealing with the inevitable political struggles, and
negotiating the purpose and meaning of an organization and ones place in it. While
a true consensus about all issues among all stakeholders is unrealistic, engaging
everyone through interviews, focus groups, surveys, open forums, and the like is
essential if leaders expect them to implement the plan. Such engagement of others
requires time. There are no formulas for the right amount of time. Too much and
people lose interest or become mired in details; too little, and they feel unheard. Yet
the results of this consensus-building process reflect the antithesis of the plan
developed by committee or the lone administrator behind closed doors.
Too ambitious, who can predict what will happen when bright, highly motivated,
visionary people are charged to participate in strategic planning? One likely
outcome is that from fertile minds will grow a garden of luscious ideas. After all,
germinating ideas is a core competency of an academician.
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Tending the garden, however, is an altogether different task. It involves additional

human and financial resources, more time and effort, and the willingness to get
ones hands dirty by actually doing something with the idea. Overly ambitious plans
tend to outstretch resources and become complicated in the implementation phase.
They often have too many goals, including some that are simply unfeasible for the
institution in a three-to-five-year window.
Lack of momentum in the short term:
The window of strategic plans continues to get smaller. When strategic planning first
emerged as an institutional expectation, a plan spanning 10 years or more was not
uncommon. Today, we typically advise our clients to consider a three-to-five-year
window.
Failures often occur because the strategic plan is divorced from the daily life of an
organization. Leaders must model the plan, and that includes talking about it
often. Every public venue and most closed venues are opportunities to stress the
vision, mission, and values of the organization.

Explain different planning techniques (1.3)

Planning is a critical business responsibility that is often overlooked, particularly by

larger companies like Nestle. However, the reason for this oversight is often the
result of management's lack of planning techniques. Learning useful planning
methods and factors eliminates this knowledge gap. Business planning is just as
critical as having a map when traveling to an unfamiliar location. Without it you may
never reach your destination.
Business planning types come in various flavors depending on the company size
and industry. However, there are three basic plans that apply to all businesses, large
or small. Business, strategic and marketing plans are important to every for-profit
and nonprofit organization. Understanding the goals and components of each offers
businesses the tools to create effective plans using the most basic or sophisticated
techniques.
Business Plans
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Typically used for starting up or financing a company, business plans are the
cornerstone of the planning function. Components of a business plan include an
executive summary, market analysis, product/service descriptions and
financial/operations projections for a minimum of three to five years. In start-up
situations that need initial financing, creators should paint a vivid, yet conservative,
picture of the founders and the rationale for believing the business will succeed.
When seeking growth-financing, management should highlight past company
performance and carefully project the impact of the new funding on improving net
income. Always include debt service, which is the amount needed to repay the new
loan, in income and expense projections.
Strategic Plan
Strategic plans should be created by business owners and/or senior management
only. Unlike business plans, which are based on historical data and future
projections, strategic plans are more conceptual. These plans should include
defining your organizational goals, identifying your available options to achieve your
objectives and considering new short-term opportunities you believe will exist to
improve your business's results. You may want to incorporate specific industry
trends into your planned strategy.
Marketing Plans
All the fabulous business and strategic plans ever devised will fail if you don't
market and sell your product or service. A solid marketing plan will help you achieve
gross income and sales goals. A SWOT (strengths, weaknesses, opportunities, and
threats) analysis is an effective technique for creating a winning marketing plan.
SWOT is also useful in strategic plan creation as a foundation technique. You can
also combine a SWOT analysis with the four P's--product, price, publicity, and
place--of effective marketing. Even if you have invented the "better mousetrap",
you need a superior marketing plan to get results. These techniques will give you
the ammunition you need.
Universal Techniques
To make business planning come alive and succeed there are three simple practices
that must be always be employed. First, set realistic, measurable goals. Second,
understand and communicate with your customer base. Third, attract and retain the
best employees your company can afford. Without these three components, your
business planning, however sophisticated, risks failure on a massive scale. Using
these three simple techniques, your business plans should deliver the results you
want.

Produce an organizational audit for a given organization

(2.1)
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Strengths:
Unmatched product and brand portfolio: The business offers one of the widest
portfolios of food and brewery products in its sector. It also operates 29 brands that
earn more than $1 billion in annual revenues. With more than 8,000 products it is
hard for any other corporate to compete against Nestl.
R&D capabilities: Nestl invested more than $2 billion in R&D in 2011. Its
introducing new and redesigned products every year, strengthening firms
competitive advantage.
Distribution channels and geographic presence: Nestl runs in more than 100
countries and has extensive distribution channel all over the world, which supports
its operations globally.
Competency in mergers and acquisitions: Over the years Nestl has been forming
successful partnerships and acquiring other companies in order to grow and
maintain its leadership in the market.
Brand reputation valued at $7 billion: Nestl is known almost everywhere and has a
reputable brand for its products that are used by millions every day.
Weaknesses
Inability to provide consistent quality in food products: Nestl has been recalling
many products from trade due to food contamination or poor quality supplies. This
does not only hurt firms sales but its image as well as the business is unable to
control quality of the products.
Weak implementation of CSR: The company has announced and is involved in many
programs that aim to make company more eco-friendly and improving the working
conditions of its suppliers. Still, Nestl receives a lot criticism over the effectiveness
of its programs.
Opportunities
Increasing demand for healthier food products: The trend of buying and consuming
only healthy food products is a major shift in consumer tastes and opens up an
immense market for companies. Currently, Nestl tries to introduce more healthy
food products in response to the trend.
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Acquiring startups specializing in producing well-being products: Many new startups

are forming and introducing new products for well-being or revolutionizing the ways
those products are made. Startups are cheap and can easily be acquired. Nestl is
focusing on providing more well-being products and this is a great opportunity to
expand its portfolio.
Establishing new joint ventures: Nestle is already involved in many successful
partnerships with major world companies like The Coca-Cola Company and ColgatePalmolive.
Threats
Food contamination: Although it is Nestls responsibility to run thorough quality
checks of its products, the company had been reportedly providing contaminated
food or other products to the market. Such actions hurt companys reputation and
result in losses.
Trend towards healthy eating: Nestl is a major supplier of chocolate and chocolate
drinks that have high level of calories and due to changing customer habits, will
experience decline in demand.
Growth of private labels: The growing number of supermarkets and other retailers
are introducing their own label products that cost less and can easily compete with
Nestls product portfolio.
Rising raw food prices: With an overall growth of world economy and population, the
demand for raw food will rise. The result of that will be higher material costs and
squeezed margin for Nestl.

Carry out an environmental audit for a given organization

(2.2)

Demographic external factor:

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More the education more will be the awareness about brand and
quality food.
If the income level of people is high then purchasing power will be high
so they will purchase more.
Nestle products are made for people belonging from all age group
Both Male/Female are included equally in its target market

Economic environment:

If the inflation rate is high then there will be decrease in purchasing power.
So inflation indirectly affects the companys sale.
Nation varies greatly in its level and distribution of income.
Changes in major economic variables such as income, cost of living, interest
rate and savings have a large impact on the market place.

Political environment:

Government regulations to protect interest of society and from unfair

business practices.
Unstable political conditions.
Law order situation getting worse.

Social/cultural environment:

Consumption behavior of Pakistani people is high so they consume more

goods.
As Pakistan is Muslim country so we cannot add any ingredient which is
prohibited in Islam or which is not Halal.
As nestle water is the branded item so the people who are brand conscious
will prefer to use nestle water, so nestle is focusing more on the posh areas.

Technological environment:

Technological environment is changing rapidly.

Most dramatic force shaping companys offerings and the way product is
marketed.
Companies must keep up with technological changes to match up with its
environment.

Explain the significance of stakeholder analysis (2.3)

Stakeholder analysis is the review and consideration of the impact stakeholders
have on your business. This has becoming increasingly important in the early 21st
century, as non-shareholder entities, including customers, employees, communities
and business partners, have become more key to business success. Companies
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need to understand the interests of each stakeholder and strategize on how to

address them in business practices.
Marketing Strategies
When you develop your market strategies, you give careful consideration to the
critical customer stakeholder group. Being honest, transparent and fair in your
communication and interaction with customers is a basic expectation. Conducting
market research is an integral marketing technique you can use to learn about the
needs and motives of target customers.
Motivating Employees
Analyzing the role of employees in your company helps you optimize satisfaction
and production. Key long-term considerations in employee assessment are turnover
and morale. Understanding the needs and interests of your employees helps you set
up a work environment that motivates them.
Corporate Citizenship
Balancing basic social and community responsibilities with profit is commonly
expected in early 21st century companies. Community leaders expect that you
operate with honesty and integrity. If you really want to impress your community
and maintain a favorable image, philanthropy, including charitable giving to local
nonprofits or schools, is important.
More advantages of doing a stakeholder analysis can be shown as follows:

The organization can use the opinions of the most powerful stakeholders to
shape the organization and its initiatives at an early stage. This ensures
support as well as quality the organization.
Gaining support from powerful stakeholders can help the organization to win
more resources
One can anticipate what people's reaction to the organizations actions

This makes it clear that a stakeholder analysis is important for an organization to

operate successfully.
(Wilson and Gilligan, 2005)

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Analyze possible alternative strategies related to

substantive, growth, limited growth, or retrenchment
(3.1)

The substantive growth strategies are implemented through two main factors.
Those are merger and acquisition. Merger is the combination of two previously
separate organizations, typically as more or less equal partners. The Nestle has
more potential to implement merger as a substantive growth strategy because of its
market strength. The acquisition involves one firm taking over the ownership of
another. This substantive strategy also can be implemented by Nestle since it has
more market power in the industry.
Thompson (2010) introduces joint venture as limited growth. At the joint venture,
two or more organizations are shared the ownership. In the joint venture, usually
the competitive advantage is narrow. Since Nestle has more market share in the
industry, it is not advisable for limited growth strategy.
Retrenchment is always a remedial action. These remedial actions are taken at the
stage of the inefficiency, economic recession, or strong competition. In case of
inefficiency, the organization has to take three retrenchment strategies namely
assets reduction strategy, cost reduction strategy and revenue generation
strategy.

Select an appropriate future strategy for a given

organization (3.2)
The human resource of the Nestle is one of the critical resources, which pave the
way for achieving competitive advantage. However, Nestle has identified that there
is a need for further developing of needs of its employees to compete in the
turbulent market place. These skill developments of employees will lead for quality
service and finally it will hold to gain the competitive advantage thorough available
resources (Wilson and Gilligan, 2005). The aim of the Nestle is to make superior
profit and performance. Nestle has identified those areas as strategy gaps of the
organization.
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Considering the above strategic situation, interactive strategies for the Nestle is
recommended. These interactive strategies will be the future strategic directions of
the Nestle. The rationale behind the interactive strategies is gaining the competitive
advantage by looking at the competitors strategies. In this connection, the Nestle
will have to pay their attention to interactive price and quality strategies,
cooperative strategy, interactive strategies in hyper-competition, and game theory.
According to the interactive price and quality, strategies the Nestle will have to
provide best price and quality for their customers. The interactive strategies in
hyperactive- competition will say how Nestle can face to the hyper-completion and
gain competitive advantage. Collaboration between some organizations in the same
market will lead to achieve competitive advantage. Cooperative strategies will help
this collaboration for Nestle. Finally, game theory also involve with competitor
movements. Particularly game theory is responses for the competitor movements of
the market place.
Thus, Nestle should follow interactive strategies as it future strategies.
Implementing a chosen strategy
Whatever the strategy that is planned, implementation of it is the most critical
stage. Proper ways and methods should be exploited in order to match the plan and
also the successful implementation of the plan. Thus, roles and responsibilities for
strategy implementation is compared, resources requirements and also targets and
timescales for achieving them is done.

Compare the roles and responsibilities of for strategy

implementation (4.1)
The first role is envisioning future strategy. This role involve with clear
communicating the strategy to internal and external party. The internal party
includes the organization and the external party is includes all stakeholders. The
next role is aligning the organization to deliver the strategy. Under this role, it is
expected that all people in the organization be committed to the strategy. These
people should be motivated to follow the strategy and should be empowered to
deliver the change. The then is embodying change. The strategic implementation is
highly involved with the organizational change. Thus, strategic leader has a major
role of following strategic change process.
According to Sadler (2003) the responsibility of strategy implementation should be
taken by two main parties. Thos two parties can be identified as middle managers
and outsiders. Middle managers have been identified as the implementers of top
managements strategic plan. The responsibilities of the top-management have
three main areas. Those main areas can be identified as sense making of strategy,
reinterpretation and adjustment of strategic responses, and advisers to more senior
management.
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Monitoring: Strategic implementation within an organization is not an exact process.

It is a dynamic procedure that needs to be monitored by management and altered
to meet implementation goals. It is the responsibility of leadership to put a
monitoring system in place, analyze the data that is being generated during the
implementation and make any necessary changes to make the implementation
more efficient.

Evaluate resource requirements to implement a new

strategy for a given organization (4.2)

At the implementation of the strategy, the resources allocation is vital. These

resources requirements can be differed from one organization to another and one
strategy to another. It is clear that the organizational environment and nature of
resources determines the resources requirements (Coulter, 2001).
As discussed above the Nestle should implement interactive strategies to face to
the future competition of the industry. Thus, nestle needs three main resources for
implementing these strategies. Those are physical resources, people resources, and
initial start-up cost.
The physical resources are consisted with production resources, finance resources
and marketing resources which need for implementing interactive strategies at
Nestle. Since, these interactive strategies mainly focus on the quality improvements
of the Nestle products; it is advisable to allocate more physical resource for the
quality improvement. People resources also a major requirement for strategy
implementation. Nestle should develop their human resources by implementing
more learning and development activities. Finally these all these strategy
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implementation processes are involved with initial start-up cost and Nestle should
allocate appropriate finance for these implementation activities.

Discuss targets and timescales for achievement in a given

organization to monitor a given strategy (4.3)
Johnson et al (2011) introduces three main criteria and techniques which can be
used to monitor a strategy namely suitability, acceptability and feasibility. Suitability
is that assess whether proposed strategies address the key issues. Acceptability
measures whether proposed strategies meet the expectations of stakeholders. Also
feasibility is measured whether strategy could work with in practice.
As discussed above Nestls future strategies will be interactive strategies. These
interactive strategies can be monitored by the suitability criteria. Under this
criterion it can be monitored that whether Nestls interactive strategies address
the key opportunities and constraints in the organization face. Acceptability criterion
can be used to monitor whether implemented strategy meet the expectations of
stakeholders. Under this criterion the risk and return is also monitored. Feasibility
measures whether strategy work is in practice. Further, feasibility can be used as to
check the targets of the implemented strategies. For an instance, it can be used to
measure the finical targets of Nestle by implementing interactive strategies.

References:
http://www.nestle.pk, (2015). Home | Nestl Pakistan. [online] Available at:
http://www.nestle.pk/ [Accessed 18 Jan. 2015].
Aalgroup.org, (2015). Five Common Challenges To Strategic Planning | AAL
Newsletter. [online] Available at: http://www.aalgroup.org/newsletter/?p=279
[Accessed 18 Jan. 2015].
http://smallbusiness.chron.com/planning-techniques-business-2545.html
Nestle (2011). 2011 Annual report English. Available at:
http://www.nestle.com/assetlibrary/Documents/Library/Documents/Annual_Reports/2011-Annual-Report-EN.pdf
Nestle (2013). About us. Available at: http://www.nestle.com/aboutus
Interbrand (2013). Best Global Brands 2012. Available at:
http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands2012.aspx
Small Business - Chron.com, (2015). Importance of Stakeholder Analysis in
Management Plans. [online] Available at:
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http://smallbusiness.chron.com/importance-stakeholder-analysis-managementplans-61850.html [Accessed 18 Jan. 2015].

Small Business - Chron.com, (2015). What Is the Role of Leadership in Strategic
Implementation?. [online] Available at: http://smallbusiness.chron.com/roleleadership-strategic-implementation-10808.html [Accessed 18 Jan. 2015].
Coulter, M. (2001) Strategic Management, Prentice Hall
Johnson, G., Whittington, R., and Scholes, K. (2011) Exploring Strategy, Ninth
Edition, Prentice Hall
Wilson, R.M.S., and Gilligan, C. (2005) Strategic Marketing Management: Planning,
Implementation, and Control, Elsevier Butterworth-Heinemann
Sadler, P. (2003) Strategic Management, Kogan Page Publishers
Thompson, J. L. (2001) Understanding Corporate Strategy, Thomson Learning

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