Summary of Case• Nestlé with headquarters in Vevey, Switzerland was founded

in 1866 by Henri Nestlé and is today the world's biggest food and beverage company.

• Nestlé has around 468 factories, operates in 86 countries around the world, and employs around 330,000 people

• An overview is presented on the division of products of the

company which include the history of brand. It also talks about the Gene technology in food production, their business principles, the company’s commitment to Africa’s economy.

SWOT of Food IndustryStrengths• Abundant availability of raw material• Vast network of manufacturing facilities all over the country• Vast domestic market

Weaknesses• Low availability of adequate infrastructural facilities• Lack of adequate quality control & testing methods as per

international standards• Inefficient supply chain due to a large number of intermediaries• High requirement of working capital.• Seasonality of raw material

• Opportunities• Rising income levels and changing consumption patterns• Favorable demographic profile and changing lifestyles• Integration of development in contemporary technologies such as

electronics, bio-technology etc. offer vast scope for rapid improvement and progress

• Opening of global markets

• Threats• Affordability and cultural preferences of fresh food• High inventory carrying cost• High taxation• High packaging cost

SWOT of Food Industry

SWOT Analysis of NestleStrengths

1. Unmatched product and brand portfolio2. R&D capabilities3. Distribution channels and geographic presence4. Competency in mergers and acquisitions5. Brand reputation valued at $7 billion

Weaknesses1. Inability to provide consistent quality in food products2. Weak implementation of CSR

Opportunities1. Increasing demand for healthierfood products2. Acquiring startups specializing in producing well-being products3. Establishing new joint ventures

Threats1. Food contamination2. Trend towards healthy eating3.Growth of private labels4. Rising raw food prices

Porters Five Force Model

• Threat of New Entrants

• Threat of Substitute Goods

• Bargaining Power of Suppliers

• Bargaining Power of Customers

• Competitive Rivalry within the Industry

Why did nestle follow a variety of strategies of merger and expansion?

List of Mergers and expansions • 1905 – anglo swiss condensed milk • 1947 – maggi seasoning • 1960 - Crosse and blackwell • 1963 – findus • 1971 – libby’s • 1973 – stouffer’s • 1997 – san pallegrinos • 1998 – spillers petfoods• 2002 – ralston purina • 2002 – dreyers • 2002 – chef america

Reasons for merger and expansions

• To enter into global markets via brownfield strategy

• To grab the maximum market share within the industry

• Focuses on the culture and locality aspects

• To serve the world in number of products which had

nutritive value

Diversification:

Entering new markets with new products

Related diversification:

A process that takes place when a business expands

its activities into product lines that are similar to those it

currently offers

Unrelated diversification

It is a form of diversification when the business adds new or

unrelated product lines and penetrates new market

Benefits of Related Diversification

• Share assets, skills, or capabilities

• Combine operations to achieve lower cost

• Exploiting the well-known brand name

• Spread investor risks over a broader base

Related DiversificationBaby Milk Products

Condensed milk

Chocolates

Coffee

Ice - Cream

Unrelated Diversification

Prepared Food

Breakfast Cereal

Pharmacy

Frozen Food

Mineral water

Main driver of globalization• Cost Drivers, • Government Drivers, • Market Drivers, • Competitive Drivers• Technological Drivers

Government factors

• World War 1

• Demand for diary products

• Government contracts

• World War 2

• Introduction of Nescafé

• LPG MODEL in the 1st half of 1990

Market Drivers• Started with food for babies

• Operating in US Britain Germany and Spain 

• Merger with Anglo-Swiss condensed milk company I.e.

first merger

• Merger with Maggi seasonings and soup, crosse and

Blackwell, findus, Libby's, stouffers. 

• Acquisition of CARNATION, American food giant

Diversification• Introduction with baby milk products

• Condensed Milk

• chocolates

• Nescafé a coffee drink

• 29% stake in Loreal

• Acquiring Alcon laboratories

• Mineral Water

• Ice cream business

• Technological factors• Gene technology

Why did Nestle concentrate on responsibility to the community ?

• Nestle believes in fairness, honesty & general concern for people.

• Nestle aims to serve its customers with best quality food products with nutritive element.

Corporate Social Responsibility followed by Nestle

• Nutrition

• Water

• Rural development

• Responsible sourcing

• Environmental sustainability

• Human rights & compliance

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