International business today is defined by the globalization of markets and corporations, the effects of a potential recession, the creation of some economic blocs, and the pressure on corporations to become more ecologically friendly. No business is safe from these environmental influences. International managers must be able to create and put into action effective strategies if they are to function effectively in this complicated global context. Among the notable multinational firms, Nestlé has emerged as one of the top organizations for nutrition, health, and wellness in the globe, exploring possible stimulants for international engagements. With a desire to gain profound insights into the international business strategy of Nestlé, our group has decided to choose the research topic: “International Business Strategy of Nestlé from 2014 to Present”. In the research paper, key aspects in the development of Nestlé’s international business strategy during its evolution from 2014 to the present are considered, particularly focusing on its company features and market analysis. In terms of research methods, we have implemented VRIO Framework, Porter’s Five Forces, and also expert assessment.
OVERVIEW OF NESTLÉ
History of Foundation and Development
Nestlé SA, headquartered in Vevey, Switzerland, is a leading nutrition, health, and wellness company that operates in over 80 countries With a diverse product range that includes prepared dishes, cooking aids, milk-based products, pharmaceuticals, baby foods, and cereals, Nestlé has established itself as the largest food and beverage firm globally, maintaining a strong presence in the industry for the past 150 years.
Founded in 1866, Nestlé originated from two Swiss enterprises, including the Anglo-Swiss Condensed Milk Company established by American brothers Charles A Page and George Page In 1877, Anglo-Swiss expanded its offerings to include milk-based baby foods, while Nestlé introduced condensed milk the following year, leading to intense competition between the two firms The merger of Nestlé with Fabrique de Produits Maggi SA and its holding company, Alimentana SA, further solidified its position in the market.
1905 to form the Nestlé and Anglo-Swiss Condensed Milk Company, which they kept using until 1947 Maggi was a well-known producer of soup bases and associated products.
At the start of the 20th century, Nestlé began to broaden its product range, acquiring chocolate rights in 1904 and allowing products to feature the Peter, Kohler, Nestlé, and Cailler brands By 1905, Nestlé & Anglo Swiss operated over 20 factories and expanded its sales to Africa, Asia, Latin America, and Australia, thriving during a prosperous era known as “The Beautiful Age.”
The outbreak of war in 1914 presented Nestlé with both challenges and opportunities, as the demand for condensed milk surged However, production was hindered by a shortage of raw materials and disruptions in cross-border trade In response to these challenges, the company strategically acquired processing facilities to enhance its production capabilities.
By the end of the war, Nestlé & Anglo Swiss operated over 40 factories in the US and Australia However, a significant decline in military demand for milk in 1921 led to a major crisis for the company Despite recovering from this setback, the Wall Street Crash further impacted consumer purchasing power Nevertheless, the management team became more professional, leading to the launch of innovative products such as Nescafé.
The onset of World War II in 1939 significantly impacted Nestlé's markets In 1947, the company expanded its offerings by introducing Maggi soups and seasonings The post-war era saw increased prosperity, leading consumers in the US and Europe to invest more in convenience foods, prompting Nestlé to launch Maggi ready meals.
From 1960, acquisitions enabled Nestlé to enter new areas such as frozen foods In 1970s, the company diversified into pharmaceuticals and cosmetics Nestlé later became one of the first
In 1981, Nestlé shifted its focus by divesting unprofitable brands and promoting those that cater to health-conscious consumers This strategic pivot towards "Nutrition, Healthcare, and Wellness" aimed to establish global leadership in the water, ice cream, and animal food sectors.
Since 2013, Nestlé has embraced its "Creating Shared Value" business strategy, launching the Nestlé Cocoa Plan to enhance sustainable supply chains The company has also prioritized medical nutrition and sought new growth avenues in health care Furthermore, Nestlé has intensified its sustainability efforts, pledging to recycle packaging and achieve net zero emissions.
Mission, Vision, and Core Values
Nestlé Corporation, a global leader in food and processing, boasts innovative mission and vision statements that reflect its commitment to excellence With a diverse product range, Nestlé has set new standards in the industry Celebrating its 150th anniversary, the company takes pride in its significant achievements and enduring legacy.
Nestlé aims to be "the world's premier nutrition, health, and wellbeing corporation," encapsulated in their philosophy of "Good Food, Good Life." This mission highlights the company's commitment to offering a diverse range of high-quality, nutrient-dense products across various food and beverage categories, catering to customer satisfaction from morning to night.
– Nestlé, established in Switzerland, is the 's top nutrition, health, and wellness firm.
Nestlé is the largest food corporation globally, offering a diverse range of products including baby food, breakfast cereals, coffee, confectionery, dairy items, frozen foods, pet food, yogurt, and snacks Its portfolio features well-known brands such as Stouffers, Nescafe, Kit-Kat, and Nestlé Water, among many others.
The third element of the mission statement emphasizes the industry's role as a comprehensive supplier of food-related products and services This aspect builds upon the initial section of the mission statement, providing a more detailed exploration of their commitment to delivering quality offerings in the food sector.
"broad selection of food and beverage categories."
Nestlé aims to be a leading global company in Nutrition, Healthcare, and Wellness, focusing on delivering increased value for shareholders The company strives to be the preferred choice for employers, partners, and customers in its products and services.
The vision statement is significant for two main reasons: it emphasizes the organization's commitment to its shareholders, or investors, and highlights the company's positive reputation.
The vision statement highlights the link between market dominance and becoming the preferred provider and employer Nestlé assures that achieving market leadership will lead to financial gains for investors, suggesting that the company's primary goal may be to enhance profitability.
Nestlé's core values—full legal compliance, honesty, fair dealings, integrity, and respect—foster a culture of positive practices among its global workforce These guiding principles promote adherence to approved processes and encourage the development of strong interrelationships among all stakeholders.
INTERNATIONAL BUSINESS STRATEGY ANALYSIS
Value Chain Analysis
Nestlé's inventory network begins with National Demand Planning, which informs the Demand Supply Planning process The Procurement Department then acquires essential direct materials, including raw and packaging materials, from both national and international suppliers Inbound logistics is vital for the clearance of foreign materials at the port, ensuring compliance with customs regulations and accurate record-keeping After this, the raw materials are used in production, leading to the fulfillment of customer orders through effective customer service and distribution processes.
Nestlé, a leading multinational corporation, has manufacturing plants strategically located across Europe, Asia, Oceania, and Africa, with a notable presence in the USA The largest facilities for producing Nestlé's food and beverage products are situated in Switzerland, Germany, and India.
Nestlé offers a wide variety of product lines, such as baby nutrition, cosmetics, and pharmaceuticals, allowing the company to adapt to customer needs by producing specific products tailored to the demands of different countries.
Nestlé leverages its presence in domestic and international markets to strengthen its competitive advantage against global competitors By customizing strategies to meet local preferences and needs, the company ensures effective worldwide distribution A key aspect of this approach is Nestlé's commitment to product localization, resulting in a diverse range of offerings tailored to each country's unique market demands.
Nestlé's iconic products, like the diverse range of flavors in Japan, include unique options available exclusively for domestic markets In India, Maggi instant noodles have garnered positive feedback from customers worldwide, showcasing the brand's global appeal.
Nestlé's global presence is highlighted by its products available in numerous countries, as shown by United Nations data and intelligence reports Additionally, several of these nations are key producers of Nestlé goods The company aims to tailor its product offerings to meet the specific needs of each country, reducing the distribution of items with low demand in particular regions.
Nestlé efficiently transports a significant volume of products daily, relying on third-party logistics providers to enhance its distribution process These partners are crucial in monitoring environmental performance and optimizing the logistics network, focusing on reducing mileage, fuel consumption, greenhouse gas emissions, noise, and congestion, which ultimately benefits both the company and the environment.
To meet their goals, proactive measures are implemented, focusing on optimizing distribution networks and carefully planning routes to enhance productivity and reduce resource consumption Nestlé also investigates alternative transportation methods and tests different fuels to further refine their transportation processes.
Nestlé emphasizes the importance of driver training programs that focus on safety and environmental efficiency These thorough training sessions provide drivers with essential skills and knowledge, addressing key operational aspects.
Nestlé's Global Chief Marketing Officer, Aude Gandon, emphasizes the integral connection between marketing and sales, stating, “We never dissociate marketing from sales.” This synergy enables Nestlé to effectively meet accelerated demand, as both global sales and marketing operations are unified within a single team This collaboration fosters a holistic approach, allowing marketers and sales professionals to align their strategies and objectives seamlessly.
Nestlé emphasizes the significance of equipping marketers with effective processes and tools to navigate market changes The company prioritizes substantial investments in capability development and training, understanding the necessity for ongoing learning and adaptation in the marketing industry.
Gandon highlights the necessity of mastering fundamental marketing principles, even in today's digital landscape Key elements such as brand comprehension, a well-defined strategy, awareness of target consumers, and insights into market categories and competition are essential for achieving marketing success.
Nestlé boasts a robust portfolio of globally recognized brands, including KitKat, Nescafé, Maggi, and Nestea, which are trusted by consumers worldwide These brands are synonymous with quality and reliability, fostering a sense of familiarity across diverse markets.
Nestlé utilizes standardized marketing campaigns and advertising messages that connect with consumers worldwide Their marketing strategies, including television commercials, digital ads, and social media initiatives, feature a consistent brand voice that crosses national borders.
Nestlé aims for global product consistency while accommodating local tastes and preferences They ensure a core product offering that remains uniform across various markets, allowing consumers to trust that Nestlé products, no matter where they are found, uphold the same high standards of quality and taste.
Reasons for Nestlé Adopting Transnational Strategy
2.2.1 Company Characteristics (VRIO Framework Analysis)
VRIO, which stands for Value, Rareness, Imitation Risk, and Organizational Competence, is a strategic analysis tool focused on resources For Nestlé to establish a sustainable competitive advantage, its resources must be valuable, rare, and challenging to imitate Additionally, Nestlé must possess the necessary organizational capabilities to leverage these resources effectively.
15 structure, and culture to optimize the available resources usage VRIO analysis can help organizations such as Nestlé to do better resource allocation and build a defensible value and supply chain.
For Nestlé, a resource or capability is deemed valuable if it enables the company to capitalize on opportunities or mitigate threats from both the micro and macro business environments Resources that fail to help Nestlé reduce risks or leverage opportunities do not play a significant role in establishing a sustainable competitive advantage.
The financial resources of Nestlé are highly valuable as these help in investing into external opportunities that arise These also help Nestlé in combating external threats.
Nestlé's cost structure is a disadvantage, as its production methods result in higher costs compared to competitors, ultimately impacting the company's overall profitability.
Local food products are a valuable resource due to their high differentiation, which significantly enhances their perceived value among customers This unique quality leads consumers to value these products more than those offered by competitors.
Nestlé's workforce is a crucial asset, with a large segment being highly trained, which enhances productivity The company's employees demonstrate strong loyalty, resulting in high retention rates This commitment ultimately contributes to increased value for consumers of Nestlé's products.
Nestlé's patents serve as a crucial asset, enabling the company to market its products without facing competition, which significantly boosts its revenue Additionally, these patents generate licensing income when Nestlé permits other manufacturers to use them.
Nestlé's extensive distribution network is a crucial asset that enables the company to connect with a larger customer base, ultimately driving increased revenue This efficient network ensures that promotional activities effectively convert into sales, as products are readily accessible to consumers.
Product portfolio and synergy among various product lines of Nestlé is valuable in the industry given the various segmentations & consumer preferences.
Position among retailers and wholesalers – Nestlé retail strategy is highly valuable because Nestlé has strong relationships with retailers and wholesalers.
Customer community of Nestlé helps is highly valuable as customers are co- creating products.
Global and local presence of Nestlé is highly valuable as it diversifies the revenue streams and isolates the company's balance sheet from economic cycles.
In the competitive landscape where Nestlé operates, possessing valuable resources alone is insufficient for achieving a sustainable competitive advantage To thrive in the industry, Nestlé must secure rare resources that are essential for success Without these unique resources, the company risks falling behind its competitors Additionally, having access to rare resources enables Nestlé to gain a competitive edge over rivals lacking such assets.
The financial resources of Nestlé are found to be rare Strong financial resources are only possessed by a few companies in the industry.
Local food products are widely available in the market, making them accessible to competitors This accessibility allows rivals to leverage these resources similarly to Nestlé, leading to competitive parity rather than a distinct advantage However, despite this parity, the value of local food products still enables Nestlé to effectively utilize these resources in its operations.
Nestlé's employees represent a unique asset, distinguished by their exceptional training and skills compared to those in other companies The attractive compensation packages and positive work environment play a crucial role in retaining this talent, preventing them from seeking opportunities elsewhere.
Nestlé's patents represent a unique asset that is not readily accessible to competitors, enabling the company to leverage these exclusive resources without facing competitive challenges.
Nestlé's distribution network is a unique asset, as competitors would need significant investment and time to develop a superior system This capability is held by only a select few companies within the industry, highlighting its rarity and strategic importance.
Product portfolio and synergy among various product lines of Nestlé is not rare as most of the competitors are trying to enter the lucrative segments.
Position among Retailers and Wholesalers – Nestlé retail strategy is a rare resource as Nestlé has dedicated channel partners
Customer community of Nestlé helps the company to build a special relationship with its customers.
Global and local presence of Nestlé is a rare resource This is because competitors have to require a lot of investment and time to gain the popularity
A unique and valuable resource can give Nestlé a temporary competitive edge, as competitors will attempt to replicate it A sustained competitive advantage arises when this resource is challenging to imitate Nestlé can achieve inimitability through product innovation, addressing service delivery pain points, and implementing an effective post-sales service strategy.
Nestlé's financial resources are difficult for competitors to replicate, as they have been built up through sustained profits over many years New entrants in the market would need to achieve similar long-term profitability to amass comparable financial resources.
Local food products are relatively inexpensive to replicate, allowing competitors to access them through substantial investment in research and development Additionally, these products do not necessitate extensive experience to produce Consequently, Nestlé's local food offerings grant the company a temporary competitive edge, which rivals can eventually attain over time.
CONCLUSION
1.1 History of Foundation and Development
Nestlé SA, headquartered in Vevey, Switzerland, is a leading nutrition, health, and wellness company that operates in over 80 countries With a diverse product range that includes prepared dishes, cooking aids, milk-based products, pharmaceuticals, baby foods, and cereals, Nestlé has established itself as the largest food and beverage firm globally, dominating the industry for the past 150 years.
Founded in 1866, Nestlé originated from two Swiss enterprises, including the Anglo-Swiss Condensed Milk Company established by American brothers Charles A Page and George Page In 1877, Anglo-Swiss expanded its offerings to include milk-based baby foods, while Nestlé introduced condensed milk the following year, leading to intense competition between the two firms The merger of Nestlé with Fabrique de Produits Maggi SA and its holding company, Alimentana SA, further solidified its position in the market.
1905 to form the Nestlé and Anglo-Swiss Condensed Milk Company, which they kept using until 1947 Maggi was a well-known producer of soup bases and associated products.
At the start of the 20th century, Nestlé began to broaden its product range, acquiring chocolate rights in 1904 and allowing products to feature the Peter, Kohler, Nestlé, and Cailler brands By 1905, Nestlé & Anglo Swiss operated over 20 factories and expanded its sales to Africa, Asia, Latin America, and Australia, experiencing a prosperous era known as “The Beautiful Age.”
The outbreak of war in 1914 presented Nestlé with both challenges and opportunities, as the demand for condensed milk surged However, production faced hurdles due to a shortage of raw materials and disruptions in cross-border trade In response, the company strategically acquired processing facilities to address these issues.
By the end of the war, Nestlé and Anglo Swiss operated over 40 factories in the US and Australia However, a significant decline in military demand for milk in 1921 led to a major crisis for the company Despite recovering, Nestlé faced challenges from the Wall Street Crash, which diminished consumer purchasing power Nevertheless, the management team became more professional, leading to the launch of innovative products such as Nescafé.
The onset of World War II in 1939 significantly impacted Nestlé's markets In 1947, the company expanded its offerings by introducing Maggi soups and seasonings The post-war era saw increased prosperity, leading consumers in the US and Europe to invest more in convenience foods, prompting Nestlé to launch Maggi ready meals.
From 1960, acquisitions enabled Nestlé to enter new areas such as frozen foods In 1970s, the company diversified into pharmaceuticals and cosmetics Nestlé later became one of the first
In 1981, Nestlé shifted its focus by divesting unprofitable brands and promoting those that cater to health-conscious consumers This strategic pivot towards "Nutrition, Healthcare, and Wellness" aimed to establish global leadership in the water, ice cream, and animal food sectors.
Since 2013, Nestlé has embraced its "Creating Shared Value" business strategy, launching the Nestlé Cocoa Plan to enhance sustainable supply chains The company has also prioritized medical nutrition and sought new growth avenues in health care Furthermore, Nestlé has intensified its sustainability efforts, pledging to recycle packaging and achieve net zero emissions.
1.2 Mission, Vision, and Core Values
Nestlé Corporation, a global leader in food and processing, boasts innovative mission and vision statements that reflect its commitment to excellence With a diverse product range, Nestlé has set new standards in the industry Celebrating its 150th anniversary, the company takes pride in its achievements and the significant position it holds in the market.
Nestlé aims to be "the world's premier nutrition, health, and wellbeing corporation," encapsulated in their philosophy of "Good Food, Good Life." This mission highlights the company's commitment to offering a diverse range of high-quality, nutrient-dense products across various food and beverage categories, catering to customer satisfaction from morning to night.
– Nestlé, established in Switzerland, is the 's top nutrition, health, and wellness firm.
Nestlé is the largest food corporation globally, offering a diverse range of products including baby food, breakfast cereals, coffee, confectionery, dairy goods, frozen food, pet meals, yogurt, and snacks The company owns several well-known brands such as Stouffer's, Nescafé, Kit Kat, and Nestlé Water, among many others.
The third element of the mission statement emphasizes the industry's role as a comprehensive supplier of food-related products and services This aspect builds upon the initial section of the mission statement, providing a more detailed exploration of their commitment to delivering quality offerings in the food sector.
"broad selection of food and beverage categories."
Nestlé aims to be a leading global company in Nutrition, Healthcare, and Wellness, focusing on delivering increased value for shareholders The company strives to be the preferred employer, partner, and seller of its products and services.
The vision statement is significant for two main reasons: it emphasizes the organization's commitment to its shareholders, or investors, and highlights the company's positive reputation among the public.
The vision statement highlights the link between market dominance and becoming the preferred provider and employer Nestlé assures that achieving market leadership will lead to financial gains for investors, suggesting that the company's primary goal may be to enhance profitability.