SWOT and PESTEL analysis of Nestle

nerd and PESTEL compend of NestleIntroduction This subject field presents a strategic summary of Nestl. Critically analysing the internal workings of the sign, this account presents a dweeb analysis to reveal an identification of the internal strengths, weaknesses, opportunities and threats opinen at bottom Nestl. Nestl is a company with a varied fault portfolio consisting of a unsubtle range of returns including a consequence of household filths Nescafe, Rowntrees Fruit Pa mumes and Nesquik. originally this year, Forbes (2014, p.1) referred to Nescafe, iodin of Nestls center field stigmatizes as the 27th most priceless brand in the world. Employing over 8000 employees, Nestl is present in a number of domestic and worldwide commercializes. With their headquarters in Switzerland, Nestl is a tight, which in score operates indoors 86 countries of which North America is their largest and most profit commensurate commercialise (Shotter, 2012, p.1). The degenerat es sloshed internationalisation dodge reflects the firms freight to resource and capability finishing in the external environs. This forget be explored further through with(predicate) the use of a cast analysis to determine the key out external forces present within the macro surround and, how importantly Nestl respond to such forces in a strategic manner. A look back at the history of the firm reveals a slopped commitment to convergence ripening. It all began back in the mid-1860s when Nestl created a unseasoned-sprung(prenominal) queer formula to offer to the trade. Seeing a falling out in the grocery underpinned by those mothers who could not breastfeed, Nestl take a formula to be offered to the European commercialise. This very early education within Nestl soon unquestionable to include an expansion of products within the firm with chocolate being added to course products to reach a larger target market. Since its first product offerings, Nestl has at peace(p) on to dumbfound a varied brand portfolio with annual gross sales of $100.64 billion (Nestl, 2014, p.1). Nestls mission Nestls mission statement is back up by the expression skinny food, good life (Nestl, 2014, p. 1). Meaning more than the nutritional honors of the food they fuck off, Nestl championship the need to show a commitment to quality, safety and ultimately convenience for the consumer to enhance enjoyment. The notion of the introduction of shargond judge is a main cogitate of the firm and is an champaign which is stick outed by the firms ability to go beyond compliance and sustainability and create refreshful and gravider value for our people, our sh atomic number 18holders and society as a whole (Nestl , 2014, p.1). This statement supports the integrated approach Nestl adopt through their commitment to recognising the responsibility the firm has to the wider external environment, which moves beyond a innocent aspiration of profit. SWOT analysis This section presents a SWOT analysis to review the micro environment of the firm reflecting specifically upon the strengths and weaknesses of Nestl and the opportunities and threats the firm must(prenominal) respond to through an alignment of firm strengths to such forces. A SWOT analysis is often utilize, as a strategic tool to render a presentation of the firms resources and capabilities, which tooshie be further, developed to avail competitive benefit. A SWOT analysis therefore underpins the development of time to come strategic elections. As seen within the work of Barney (1991, p. 99) and Teece (2009, p. 12) a plummy competitive advantage is one obtained through a minimisation of threats reorient with the seizing of opportunities. Table One SWOT analysis Table one be get-go reveals the internal dynamics of Nestl and the opportunities/threats facing the firm. Positive Factors Negative Factors intragroup Factors Strengths Strong cultural values stemming from th e firms integrated approach to business and commitment to their stakeholders (Schein, 2012, p.3). Current strategic position of Nestl supported by three key areas of business quality lead, customer bliss and sustainability ( railway line Green, 2013, p. 1). Nestl have a strong commitment to embodied hearty responsibility with reference being do to long term commitment never being sacrificed for short-term cognitive process (CSR cable, 2014, p. 1). Diversified and varied brand portfolio. Global recognition driven by the number of strong brands within the firms portfolio. The re tack togetheration of Nestls brand is estimated to be valued at $7billion (Nestl, 2014b, p.1). Nestl has a place in the heart of consumers due to its longstanding history. Development of trust and loyalty spotlight the capability development of the firm. Strong teamwork within the firm promoting good levels of stage business satisfaction and employee commitment. Weakness A number of Nestls pr oducts have confront criticism as a result of their nutritional value. Increased accent mark has been placed on healthy eating through government initiatives and Nestl would acquire from re display a number of their products to support their mission of good food and good life in a changing social environment i.e. wage extend levels of child obesity. The past of Nestl is tainted in parts by prohibit public congresss as a result of what is referred to as the baby take out scandal. Noted in a recent article by Muller (2013, p.1) it was stated that the scandal had braggy up but not gone forward. Recognising the need for stability and consistency in the processes make within the companys global show train. international standards request a need for standardisation yet this has to be balanced with the firms strategic need for adaptation to assorted cultural environments. orthogonal Factors Opportunities Ability to reach unused consumer markets and in extra new inter national markets i.e. Nestls work in emerging economies. Further internationalisations with a limited concenter on the BRICS economies (Brazil, Russia, India, China and South Africa) these economies are noted as being current proceeds spots (Wilson and Purushothaman, 2003, p. 1). Development of intangible capabilities to aid competitive advantage. Barney (1991, p.100) argues that competitive advantage is achieved through inimitability and this should be a focus of the firm. Backwards integration to gain more control over the supply chain of the firm (Martin and Eisenhardt, 2010, p.1105 ). Innovative development of distribution channels. Threats Higher levels of buyer power within the industry fuelled by greater choice and dispirit loyalty (Porter, 2008, p.12 2011, p.5). Variability in raw material prices influencing the firms ability to sustain prices in light of a commitment to wider responsibilities parenthesis from profit i.e. CSR initiatives (Servaes and Tamayo, 201 3, p.1047). Increased dynamism in the external macro environment fuelling short-term decision making and heightened competition (Teece, 2009, p.15). Technological change operate both innovation and associated challenges. Ageing population shifting the demographics of the workforce (Kooij et al, 2014, p. 2192). The SWOT analysis above reveals that Nestl have a number of strengths, which translate into the development of core resources and capabilities, which aids their competitive position. Notably, one of the core strengths of Nestl is the strong brand image they have which inspires trust in consumers. Nestl are able to do on this reputation to extend their brand categories. Further, recent efforts to watch over merged social responsibility strategies have heightened the firms approach to sustainability, which is aligned to current expectations from the consumer market for firms to take a greater responsibility towards the wider macro environment. Moving on to a critical ana lysis of the weaknesses of the company, one of the core weaknesses of Nestl is the content of almost of their products, which marks a move away from healthy eating initiatives. For example, Nestl produce a number of confectionary goods including sweets and chocolate bars. Nestl will in the future have to work with the UK government to check over that a spend a penny trade contentedness is put crosswise for such treats to only be enjoyed alongside a balanced diet. Overall, however, Nestls strengths overshadow their weaknesses and many of the weaknesses are being tackled by strategic actions. Recognition of the firms opportunities and threats leads to a discussion of the value of internationalisation and in particular the opportunities present within emerging economies. Further, the development of capabilities and gum olibanum the translation of strengths into intangible and inimitable capabilities is an area, which could see the firm, further develop their sustainable competiti ve advantage. Developing from the opportunities of the firm, it is also necessary to consider the threats, which daring Nestl. The SWOT analysis revealed one of the core threats is the increasely competitive disposition of the industry and the challenges, which arise from this level of competition. As a result, a great threat facing the firm is the level of dynamism and turbulence to palisade with which influences the nature and direction of strategic choices. tender analysis A PESTLE analysis is used as a strategic tool to amount industry dynamics through recognition of the core political, economic, social, technological, legal and environmental forces/changes having influence on the industry (Henry, 2007, p.23). Table two below presents a PESTLE analysis for the industry Nestl are present within and this instruction is then used to form a critical discussion for the future strategic plectrons available to the firm. Table Two PESTLE analysis The PESTLE analysis below ident ifies a number of forces, which have an influence on industry dynamics. Of these forces, perhaps the most prominent are social forces, which fix to differences in consumer behaviour. As an international firm, Nestl have to be able to ensure a level of adaptation, which is appropriate to different markets driven by different cultures and consumer preferences. Political Changing regulation surrounding food standards and merchandise actions. politics stability in new emerging economies question of risk as part of the internationalisation process (Kumar et al, 2013, p.205). Changing global regulations standardised utilisation yet adaptation to different political forces (De Mooij, 2013, p.61). Economic Awareness and experience of changing inflation, economic crop rates and income levels. Changing consumer budgets, rise of the address conscious consumer. Rising price of raw material goods in relation to the need to source from sustainable suppliers (Kumar et al, 2013, p. 205). Social Changing consumer attitudes move towards better products in line with government initiatives ( refreshedman et al, 2014, p.15) supporting balanced diets and the dangers of sugar. Changing lifestyle return back to home cooking and the promotion of family time in a world of convenience. The need to adapt to different cultural settings i.e. language, spectral beliefs and family settings. Understanding of consumer behaviour is crucial to ensuring a personal approach to marketing. Consumers viewing the firm as an agency for power in the wider external environment (Eisenhardt et al, 2010 1263). Technological Rise of social media, consumers interacting with firms and being able to do so across a range of platforms. Innovation fuelled by technological developments. E-commerce as a platform for development (Lin et al, 2014, p.3). Legal 1.Changing nature of regulation. 2. Need to split to global regulations and changes across different international markets (Sc haffer et al, 2014, p. 12). Environmental Increased prudence directed towards incarnate social responsibility (Servaes and Tamayo, 2013, p. 1045). Environmental concerns from consumers including concerns over graphic symbol/recycling (Dubois, 2012, p. 36). integrated Objectives It is important that an alignment exists between corporate objectives, brand image and firm activities (Cornelissen, 2014, p.55). Commonly used as a strategic tool to support this analysis, Ansoffs matrix can be use to Nestl to review the different strategic options available to the firm (Ansoff, 1980, p. 133). The overall corporate objective of Nestl is to be one of the worlds best and largest brands in the food industry. To break this down further, there is a need to nurse individual firm level marketing objectives to a specific brand within their portfolio. This section focuses upon the presentation of marketing objectives and strategies for Nestls baby take out products. grocery storeing Objec tives Marketing objectives identify a target market and market need and apply this to the brands they are offering. With regards to the baby milk products Nestl offers, one of their core marketing objectives should relate to improving sales through the use of social media outlets. Aligned to the rise of relationship marketing and the need to develop a deeper, emotional connection with consumers it is argued that one of the marketing objectives for increasing sales of this product needs to be related to understanding the consumer base. The following marketing objectives are proposed in relation to the firms baby milk products To increase interaction with consumers using social media as a platform. To increase sales by 10% through a promotional campaign across an integrated set of marketing platforms. To follow a relationship marketing campaign to increase interactions with consumers to enhance understanding of the consumer base. Ansoffs matrix Ansoffs growth matrix is a marke ting tool often used to understand the different strategic options available to a firm (Ansoff, 1980, p. 131). flavor at the opportunities available in both new and active markets, fierceness within the matrix is placed on the benefits and challenges of each strategic option and the extent to which the options are aligned to the internal resources and capabilities of the firm. Market Penetration Market perspicacity is a dodge, which sees growth underpinned by pushing existing products to existing markets. finished a focus on market discernment the firm would be able to maintain current product lines and focus upon increasing sales in this area through promotional activities and advertising. Market penetration is a strategy, which would secure growth in the market and would allow the firm to draw on their knowledge of the market to expand sales in this area. Market Development The second strategic option refers to the use of sell existing products to new markets. A new marke t in this case could be a new consumer base or a new geographical base. Reflecting upon the nature of the product, it is unlikely Nestl would be able to target a new customer base and therefrom it is advised that if this strategic option were to be followed emphasis would be placed on opening up to new emerging markets with existing products. Product Development Moving away from a focus on the market, the third strategic option offered by Ansoff places emphasis on the splendour of product development. This strategic option would exact the firm to develop new competencies, which would appeal to existing markets. Under this strategic option, Nestl could focus on the development of a new extension of products in the baby market to offer to the consumer base. Diversification The final option draw is that of diversification. Diversification is a strategy, which refers to growth achieved by offering new products to new markets. This type of strategy would require a need for the firm to draw on their inherent strengths and capabilities to offer something new to the market. Underpinned by high levels of innovation, this strategy would require both investment and an appreciation of risk. As such, before the betrothal of this strategy it would be necessary for the firm to have a clear vision of outcome. Which growth strategy to follow? Based on a discussion of the various growth options above, this report argues that Nestl should focus upon market penetration through the use of promotional activities and relationship marketing activities. This strategy would see Nestl focus upon an existing product and market yet achieve growth through marketing campaigns and a greater utilisation of social media. Through the use of social media and relationship marketing it would be hoped that Nestl would be able to develop a stronger connection with their consumers, which is fundamental when needing to gain the trust of new mothers (Iglesias et al, 2011, p. 632). Strength in t he baby market is underpinned by the potential for growth due to this being a growing market. Competitive Strategies In support of an identification of growth strategies, there is a need to recognise the importance of competitive strategies. Three core competitive strategies are identified within the literature constitute leading, differentiation and focus (Ortega, 2010, p. 1275). Despite a traditional view that different competitive strategies couldnt be mixed, recent literature has supported the use of a hybrid competitive strategy, which combines cost leadership and differentiation to support a competitive strategy, which balances the actions of each strategy (Baroto et al, 2012, p. 120). make up leadership is a strategy, which places emphasis on lowest cost and thus sees the firm trying to compete with their competition on the basis of price. Cost leadership strategies therefore require an efficient approach to the supply chain to ensure that raw material costs are kept to a minimum. Emphasis within this strategy is placed on the need to focus upon gaining economies of scale and thus low costs. Differentiation involves firms seeking to distinguish themselves from their competitors (Armstrong and Cunningham, 2012, p. 71). For this to be the case, emphasis is placed on the development of a competitive advantage through something others cannot imitate. The final competitive strategy is a focus strategy where a segmentation approach is followed (Weinstein, 2013, p. 51). A firm following a focus strategy would firm to choose a niche market and therefore have specific offerings to a specific target market. In light of the identification of the competitive strategies and the discussion above, it is advised that the firm should follow a hybrid strategy reflecting on both cost leadership and differentiation to ensure growth. A hybrid strategy would require Nestl to seek lowest cost where possible through economies of scale and efficiency in their supply cha in whilst also seeing the firm differentiating through the culture of the firm and the relationships developed with consumers. 7ps of marketing A final condition for Nestl is an identification of the 7ps of marketing and in particular an understanding of what their product offers to the market (Armstrong and Cunningham, 2012, p. 34). The 7ps of marketing is an important marketing tool outlining a focus on a clear understanding of each component part Product Baby formula, nutrients to enable a progression from breast milk to formula or formula for those mothers choosing not to breastfeed. Price Price comparatively low to competitors. It is important to balance the need here between low cost and the influence this has on trust. Place Supermarkets, place of convincing. Promotion kin marketing principles used to engage the consumer. Nestl will interact with consumers during a obtain mall road show to showcase their product offerings and the value of their products. spate Emp loyees within the firm used to support the growth strategy of particular products. Company objectives and marketing objective translates into performance goals for teams within the firm. Process node service is important and a key determinant of trust. As a result of this, emphasis should be placed on the role of employees in educating the consumer and therefore translating the core elements of the brand. Physical evidence Physical evidence in the form of packaging and promotional tools will be used to support the development of the growth strategy employed. Monitoring and controlling As a closing point, there is a need to consider the importance of the current monitoring of any marketing plan. Long after the implementation, emphasis should still be placed on monitoring to ensure that controls are put in place to review the success of a given marketing campaign (Simons, 2013, p. 14). For example, in relation to the use of social media, particular controls can be put in place t o monitor the success and thus levels of integration taking place. References Ansoff, H. I. (1980). Strategic issue management. Strategic Management daybook, 1(2), 131-148. Armstrong, G., Cunningham, M. H. (2012). Principles of marketing. Pearson Australia. 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