NESTLE

ACADEMIC PRESENTATION

COURSE : Strategic Management

GROUP MEMBERS :
Shiraz Ali (1646)
Mohammad Shahbaz (2742)
Muhammad Awais Siddiqui (2622)
Muhammad Saqib (2735)
Ayesha Sheikh
Syeda Maria Rizvi
 HISTORY
Our history begins back in 1866, when the first European condensed
milk factory was opened in Cham, Switzerland, by the Anglo-Swiss
Condensed Milk Company.
In 1905 the Anglo-Swiss Condensed Milk Company, founded by
Americans Charles and George Page, merged with Nestlé after a couple
of decades as fierce competitors to form the Nestlé and Anglo-Swiss
Milk Company.
Nestlé's Mission
Nestlé’s mission, in the words of their founder Henri Nestlé, 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 Nestle, 1857.
• Strategies:
• Nestle is implementing 5 distinct strategies to compete with the world globally to attain sustainability and
competitive advantage. They are:
• Nestlé is working on the phrase “creating shared values” and creating values by its behavior, strategies and
operations for the communities where they operate and conduct business and ultimately for their customers
in order to achieve long- term sustainable relationship for their shareholders.
• Nestlé is investing in technologies, in capabilities, in people, in brands, in R&D with the aim to meet the
need of today without compromising the ability of future generations to meet their needs.
• Company focuses too much towards unmatched R&D capability in order to come up with hard to copy
products and unique brand portfolio.
• Nestlé’s confectionaries are available in almost every part of the world. Company has unmatched geographic
presence in the business world.
• Nestlé aims toward innovation, consumer engagement and operational efficiency to achieve product
development, renewal and quality, operational performance, interactive relationships with consumers and
other stakeholders and differentiation from their competitors.
 SWOT
STRENGTHS WEAKNESSES
• Socially responsible company. • Lack of awareness among target market.
• Nestle's produtcs have a strong brand image in • Weak advertising campaign in Pakistan.
Pakistan. • Revenue from confectionary decrease by 14%.
• Strong sales force is a major resource for the
company.

OPPORTUNITIES THREATS
• Opportunity of large market share. • Intense competition from Engro Foods and Haleeb
• Disposable income of Pakistan increased by 3.6%. Foods, especially in the dairy milk industry.
• Increase in Paksitan FMGC consumption of 14%. • Market growth could attract new entrants.
• Heavy influence of seasonality on products.
Competitive Profile Matrix (CPM)

Nestle's
Engro Foods Haleeb Foods
Pakistan

Weig Ratin Scor Ratin Scor Scor

Critical Success Factors Rating
ht g e g e e

Market Share 0.12 3 0.36 2 0.24 1 0.12

Inventory System 0.05 3 0.15 2 0.10 2 0.10

Financial Position 0.20 4 0.80 2 0.40 3 0.60

Product Quality 0.15 4 0.60 3 0.45 3 0.45

Consumer Quality 0.07 3 0.21 2 0.14 1 0.07

Relationship with Suppliers 0.03 3 0.09 3 0.09 2 0.06

Globle Expansion 0.06 3 0.18 1 0.06 1 0.06

Organization Structure 0.02 3 0.06 2 0.04 1 0.02

Productive Capacity 0.05 3 0.15 2 0.10 2 0.10

Advertising 0.15 2 0.30 4 0.60 3 0.45

Efficient Cost Management 0.05 3 0.15 3 0.15 2 0.10

Product R&D 0.05 3 0.15 2 0.10 2 0.10

Totals 1.00 3.20 2.47 2.23

 Internal Factor Evaluation Matrix (IFE)

Strengths Weight Rating Weighted Score

1.
Socially responsible company. 0.07 3 0.21

2.
Nestle's produtcs have a strong brand image in Pakistan. 0.07 3 0.21

3.
Strong sales force is a major resource for the company. 0.05 3 0.15

4.
Quality product distribution networks in Pakistan. 0.07 3 0.21

5.
Net profits increased by 94%. 0.14 4 0.56

6.
Price to earning ratio decreased from 38.9 to 18.8 0.05 3 0.15

7.
Export sales increased by 485 to PKR 3.3 billion. 0.12 4 0.48

8.
Unmatched product and brand portfolio. 0.08 4 0.32

9.

IFE 10.
R&D capabilities. 0.05 3 0.15

Competency in mergers and acquisitions. 0.03 3 0.09

MATRIX
Weaknesses Weight Rating Weighted Score
1.
Lack of awareness among target market. 0.04 2 0.08

2.
Weak advertising campaign in Pakistan. 0.02 2 0.04

3.
Revenue from confectionary decrease by 14%. 0.03 2 0.06

4.
Low credit sales and profit margin to retailers. 0.04 2 0.08

5.
Weak e-promotion activities. 0.04 2 0.08

6.
Difficulty in launching expensive brands due to weak income of consumer base. 0.03 1 0.03

7.
Inability to provide consistent quality in food products. 0.02 1 0.02

8.
Weak implementation of CSR 0.03 1 0.03

9.
Slow response to changing conditions 0.01 2 0.02

10.
Compete in many markets 0.01 2 0.02

TOTALS 1.00 2.99

 External Factor Evaluation Matrix (EFE)

Opportunities Weight Rating Weighted Score

1. Opportunity of large market share. 0.11 2 0.22

2. Disposable income of Pakistan increased by 3.6%. 0.05 3 0.15

3. Consumer expenditure for food in Pakistan has increased by 3.6%. 0.06 4 0.24

4. Population destiny in pakistan has insreased by 2.18%(per square km). 0.05 3 0.15

5. Credit policy (for suppliers) can be adopted to incerase sales. 0.03 3 0.09

6. Potential of growth in Pakistan's cold dairy market. 0.02 3 0.06

7. Market leader in Pakistan's dairy sector (apporximately 40%). 0.10 4 0.40

8. Pakistan is the world's 4th largest milk producing country with output of over 200 billion liters. 0.09 3 0.27

9. Increase in Paksitan FMGC consumption of 14%. 0.05 4 0.20

10. Establishing new joint ventures. 0.05 3 0.15

EFE MATRIX: Threats Weight Rating Weighted Score

1.
Intense competition from Engro Foods and Haleeb Foods, especially in the dairy milk industry. 0.06 3 0.18

2.
Market growth could attract new entrants. 0.04 2 0.08

3.
Rising temperature pose a challenge for the transportation and storage of FMCG goods. 0.02 2 0.04

4.
Heavy influence of seasonality on products. 0.02 2 0.04

5.
Economic instability in Paksitan can adversely affect profits. 0.05 3 0.15

6.
Strong advertising campaigns by major competitors. 0.06 3 0.18

7.
Risisng raw food prices. 0.05 2 0.10

8.
Climate change effects 0.02 3 0.06

9.
Improve competitor's product. 0.02 2 0.04

10.

Strong Retailers power. 0.05 3 0.15

TOTALS 1.00 2.95

 TOWS MATRIX:

SO Strategies
1 Go for untapped rural markets since they have strong financial position (S5, O1).
2 Can extend the product line because of its strong brand name (S3, O6).
3
4

ST Strategies
1 Open own retail stores to distribute MilkPak and rely less on retailers. (S4, T10).

2 Differentiate themselves from competitors by selling MilkPak in packages which doesn't harm the environment. (S1,T1)
3
4

WO Strategies
1 Can segment to rural areas where the competitors haven‟t entered.(W1, O1).
2 Cater to untapped rural markets to reduce competition. (W9, O1).
3
4

WT Strategies
1 Respond quickly to external conditions so that they can compete with their competitors(W9,T1).
2 Create customer awareness about the benefits of the product through advertising. (W2,T6).
3
4
SPACE MATRIX
BCG Matrix
 product development market development

Opportunities Weight AS TAS AS TAS

1. Opportunity of large market share. 0.11 4 0.44 2 0.22
2. Disposable income of Pakistan increased by 3.6%. 0.05 2 0.10 1 0.05
3. Consumer expenditure for food in Pakistan has increased by 3.6%.
0.06 - - - -

4. Population destiny in pakistan has insreased by 2.18%(per square km).

0.05 1 0.05 3 0.15

5. Credit policy (for suppliers) can be adopted to incerase sales. 0.03 3 0.09 2 0.06
6. Potential of growth in Pakistan's cold dairy market.
0.02 2 0.04 4 0.08

7. Market leader in Pakistan's dairy sector (apporximately 40%). 0.10 0 0.00 0 0.00
8. Pakistan is the world's 4th largest milk producing country with output of over 200 billion liters.
0.09 1 0.09 2 0.18

9. Increase in Paksitan FMGC consumption of 14%. 0.05 3 0.15 1 0.05

QSPM 10. Establishing new joint ventures.

0.05 1 0.05 2 0.10

Matrix
Threats Weight AS TAS AS TAS
1. Intense competition from Engro Foods and Haleeb Foods, especially in the dairy milk industry.
0.06 2 0.12 1 0.06

2. Market growth could attract new entrants. 0.04 2 0.08 4 0.16

3. Rising temperature pose a challenge for the transportation and storage of FMCG goods.
0.02 2 0.04 1 0.02

4. Heavy influence of seasonality on products. 0.02 0 0.00 0 0.00

5. Economic instability in Paksitan can adversely affect profits. 0.05 1 0.05 2 0.10
6. Strong advertising campaigns by major competitors. 0.06 0 0.00 0 0.00
7. Risisng raw food prices. 0.05 0 0.00 0 0.00
8. Climate change effects 0.02 2 0.04 1 0.02
9. Improve competitor's product. 0.02 2 0.04 1 0.02
10. Strong Retailers power.
0.05 2 0.10 1 0.05
 product development market development

Strengths Weight AS TAS AS TAS

1. Socially responsible company. 0.07 0 0.00 0 0.00
2. Nestle's produtcs have a strong brand image in Pakistan. 0.07 4 0.28 2 0.14
3. Strong sales force is a major resource for the company. 0.05 2 0.10 1 0.05
4. Quality product distribution networks in Pakistan. 0.07 3 0.21 2 0.14
5. Net profits increased by 94%. 0.14 0 0.00 0 0.00
6. Price to earning ratio decreased from 38.9 to 18.8 0.05 0 0.00 0 0.00
7. Export sales increased by 485 to PKR 3.3 billion. 0.12 0 0.00 0 0.00
8. Unmatched product and brand portfolio. 0.08 4 0.32 3 0.24
9. R&D capabilities. 0.05 4 0.20 3 0.15
10. Competency in mergers and acquisitions.
0.03 2 0.06 4 0.12

Weaknesses Weight AS TAS AS TAS

1. Lack of awarness among target market. 0.04 1 0.04 4 0.16
2. Weak advertising campaign in Pakistan. 0.02 1 0.02 3 0.06
3. Revenue from confectionary decrease by 14%. 0.03 0 0.00 0 0.00
4. Low creadit sales and profit margin to retailers. 0.04 0 0.00 0 0.00
5. Weak e-promotion activities. 0.04 2 0.08 4 0.16
6. Difficulty in launching expensive brands due to weak income of consumer base.
0.03 0 0.00 0 0.00

7. Inabitity to provide consistent quality in food products. 0.02 3 0.06 2 0.04

8. Weak implementation of CSR 0.03 0 0.00 0 0.00
9. Slow response to changing conditions 0.01 0 0.00 0 0.00
10. Compete in many markets 0.01 0 0.00 0 0.00

TOTALS 2.85 2.58

Financial Ratios