Nestle

The study seeks to investigate cultural diversity of Nestle in China to learn the extent that Nestle is implementing this strategy, the cultural diversity problems and issues that the company is experiencing, and the solutions and alternatives available to address these problems and issues. The study should support the importance of cultural diversity in enhancing competitive strength of business firms as well as provide best practices on integrating cultural diversity in global business operations.

I. Introduction

Cultural diversity pertains to individual differences emanating from varying traits and experiences (Hampden-Turner & Trompenaars 1998, p. 8). As such, this has a multi-faceted expression including gender, age, ethnicity, disability, and even sexual orientation. Differences influence individual perceptions, attitudes and behavior. In the business setting, diversity means the existence of different opinions on issues and suggestions on the fitting solution to these problems.

Diversity cannot be declared outright as good or bad because differences involve advantages and disadvantages to all business organizations. An encompassing advantage includes the richness and variety of knowledge, skills, experiences and other competencies that enhances the quality of output of the business firm through creative inputs and innovations. A disadvantage could be the time and monetary cost involved in settling conflicts in opinion especially when opposing sides hold equally strong positions. (Hampden-Turner & Trompenaars 1998, p. 190) Diversity can become a source of business strength. International companies engaging in a multicultural market can diversify its workforce in order to gain the knowledge and skills necessary to understand the various needs of a culturally diverse market. (Moran 2006, p. 15) Global companies such as Nestle operating in China, with a market having distinct cultural characteristics and experiences, can position the company and achieve competitive advantage by diversifying its workforce in China.

To strategize on diversification activities businesses rely on best practices derived from the organizational learning achieved by business firms applying various diversification strategies in actual business contexts. However, based on available literature, there are no studies focusing on the actual experiences of business firms with diversification in actual business settings, particularly diversity in the food and beverage industry in China. You may also be interested in BCG matrix of NESTLE

On this note, the study seeks to fill this knowledge gap by investigating in-depth the concept of cultural diversity and corporate culture as well as the manner that these apply to the management, leadership and strategies of global businesses. Then this study will apply this concept to Nestle with respect to its recognition and integration of cultural diversity in its corporate culture as well as the application of this aspect of corporate culture in its operations in China.

This was selected as the locale for the study because this market has a distinct cultural characteristic from Nestle, a Swiss based firm operating in China. The study should derive insights and best practices on the value of applying cultural diversity by global businesses. To determine the effect of cultural diversity to business operations, the study will investigate Nestle’s presence in the Chinese market, whether or not it has been successful in entering this market and what can be done to improve the diversification of its workforce to meet the culture-based specific needs and demands of this market.

To derive data, the study will survey the workforce, managers and employees, of Nestle in China to determine the extent of cultural diversity of its business unit in China. After which, the extent of diversity will be considered in the context of the business objectives of Nestle in its China operation and the extent that it has achieved these objectives by including cultural diversity as a management strategy. Problems or issues faced by Nestle in China will be identified together with the implications and recommendations.

Results of the study should contribute to existing knowledge by testing the applicability of theories on cultural diversity and corporate culture through the actual experiences of global business firms such as Nestle to derive and contribute organizational learning and best practices that could help globalizing and global business firms optimize the advantage they can derive from diversifying their workforce and cultivating a culture with high regard for the value of diversity.

Thesis Questions: ? Does Nestle have a defined corporate culture? Does Nestle include cultural diversity in its corporate culture? To what extent does Nestle regard the importance of cultural diversity in its corporate culture? What needs or objectives does corporate culture and cultural diversity address in Nestle? Has Nestle implemented cultural diversity in its operations in China? Has Nestle diversified its management in China? Has Nestle diversified its employees in China? What needs or objectives is Nestle targeting in diversifying its workforce in China? To what extent has Nestle achieved these need or objectives? What cultural diversity problems or issues has Nestle experienced in relation to its workforce in China? How did Nestle deal with these problems or issues? What learning and best practices can be derived from Nestle’s cultural diversification experience in China?

II. Conceptual Framework/Literature Review A. Conceptual Framework The study finds guidance through the framework for diversity, introduced by Hofstede (2003; 2005), as comprised of individual, cultural and more universal uniqueness expressed in the figure below.

This implies that understanding diversity in business organizations should involve a multi-tiered approach of looking at individual uniqueness, culture-specific traits and more universal traits distinguishing one group from another. The multi-level of analysis provides a holistic underlying perspective of differences among the members of the business organization. An understanding of diversity provides the organization with the tool and basis of strategies that optimize all potential benefits from diversity and solutions in addressing problems emanating from the diversity of a firm’s workforce.

Nestle is a company that is operating in food and beverage market. In the last decade nestle is a leading nutrition and health corporation that promise a safe and high quality product to its customers. The company illustrates a significant profit ratio and therefore nestle become a role model for those companies that want to be successful. As a result this report is illustrating why and how nestle have achieved a superior performance.

Value Chain Analysis Operation

First of all the company have a operation in all around the world which means that they achieve an economy of scale. Apart from this minor information in terms of product offering the company are currently developing a products that are requiring a similar tangible and intangible resources. As a result they are exchanging production equipment and workers between factories. So we can easily say that nestle are also achieving an economy of scope. In addition to this, capacity are being utilized by the department. Apart from those economic terms their labor are being highly trained and therefore they are highly specialized about what they are doing which also resulting in an another efficiency at the operational activities.

Moreover the department are frequently adapting its latest technologies that is reducing labor input and increasing its automation and mechanism of operations. However nestle brand express a quality and safety products to its customers. So its clear that the company company are not reducing its cost by buying a low quality raw materials and this means that they have integrated differentiation and low cost leadership strategy. We can easily conclude that this department are producing output much more efficiently than its competitors.

Marketing and Sales

The company is heavily investing on research and development. For instance according to resources they invest 1. 5 million on this department every year. For example they employ more than 3 500 people and those employees are highly motivated labors that is helping nestle to adapt its dynamic and fast changing environment. In other words labors have a huge contribution to nestle to provide a new products quickly to its market. For example the employees latest innovation is pleelable ice cream which is a product that has a rich creamy flavor of a regular ice cream.

However it also contains a low fat in comparison to other brands . In addition to this the department have also invented a interesting flavors to this ice cream. Apart from this their research team have also found a actobacillas that contains a oriobitic agent which is improving human body’s immune system. As a result they are trying to inject actobacillas to their yogurt brand . employees also reported that actobillac is not changing the texture of yogurt. As a result those examples clearly illustrates that how well the company is adapting to its socio cultural environment.

As tidd and bessant illustrates the importance of product innovation by stating that(2009 p6)”new product development is an important capability because the environment is constantly changing. Shift in the socioeconomic field create opportunities and constraints . Legislation may open up new pathways or close down others for example, increasing the requirements for environmentally friendly products. Competitors may introduce new product which represent a major threat to existing market positions. In all these ways firms need the capability to respond through product innovation”.

Apart from innovation capabilities the company employee are also illustrating an effective performance in the international market. For example they are spending three days with the people that are living in the country that the corporation are planning to make an investment for this reason they are understanding their purchasing habits and motivations and therefore they are developing a product that is appealing to its people. In addition to this employees are also monitoring how consumers consider their brands in other words they are investigating if consumers are recognizing the values that the corporation is trying to convey. So we can easily conclude that research department is one of the main factor that nestle is being successful in the market.

Inbound and Outbound Logistic

The most striking feature of inbound and outbound logistic are that the company does not use middle firm to its warehousing and distributing its products. partner have their own distribution centre’s and warehouses in other words they are kind of integrated forwardly. In that way they are ensuring that all frozen products are remaining quality to its retailers.

As a result of this the inbound and outbound chains are running efficiently and therefore its not increasing its cost. Apart from this nestle also provide a special equipment for some of its products to its retailers. For example all retailers have a special freezers for nestle ice creams the reason that they are providing this equipment cause nestle want to also ensure that products are remaining quality and undamaged to its customers. So we can easily concluded that the corporation are really effective to keep products quality while transiting to its retailers and also to its customers.

Procurement

The corporation promises high quality product to its customers and therefore supplying a quality materials are important. They don’t use vertical integration strategy instead they have a long term perfect relationships with its suppliers. In other words supplier power is not strong which means that they are all time providing a high quality materials at a reasonable price. In addition this farmers whom are supplying raw materials to the company are being supported by nestle research department.

The company researchers and scientists are working together with its suppliers. For example the department are helping farmers to implement their findings to the raw materials and as a result nestle is supplying all time quality products. Apart from increasing quality of raw materials nestle is also supporting sustainability in the supply of raw materials for example. The company has a more than 500 hundred agromist technical advisor and field technicians that are providing a assistance to its farmers.

Above all the company has a power to acquire its suppliers and clearly it requires a significant investment which also increases the exist barriers of industry. However by being a close and excellent relationship with its farmers they are ensuring the quality of raw materials.

Human Resource Department

HRM employees are frequently measures the employees performance and this measurement is resulting in an rewards. In addition to this they are providing an effective training programs to its employees. As a result human resource department are being unsure that they are attracting top employees in the industry. For this reason they are adapting to new environment conditions and the firm innovating new products faster than its competitors.

Technological Development

Needless to say that nestle are using the latest technologies in all value chain activities. But most striking feature of the technological analysis is that nestle are using its latest technology in order to study and adapt to fast changing business environment. So we can easily conclude that they are investing and closely monitoring the technological and its wider environment frequently.

Nestle Business and Corporate Level Strategies

Clearly corporation’s general growth strategies are divided in to two categories which are concentrating on the existing industry and diversification. The company was being considered as a technology led corporation however changing social and cultural environment lead them to become a science driven nutrition health and wellness company. At the moment the market is dominated by extremely large companies so nestle can not drive out competition by using its aggressive promotional and pricing strategy.

Instead they are using other market penetration strategies suchas effective advertising methods and special promotions. However the most striking feature of the strategy in the existing market is that innovation. For example they are frequently working on scientific innovations to make their current products more healthier and contains low fat. As it mentioned in value chain analysis tasty low fat ice cream is an perfect example about how company is concentrating on the existing industry by innovating its existing products.

As a result of those kind of actions they are selling more things to same people but at the same time they also are targeting and attracting its new people. Apart from combining market development and product development strategy in the anosoff matrix tool European and American food industry are illustrates a strong threat of entry and there are a lot of substitute of products which is resulting in a strong buyer power. As a result nestle have perceived this market as a flat and highly competitive and therefore they are setting is sighs on new markets in order to enhance their profitability.

In other words they are investing highly on emerging markets for example eastern Europe asia and latin America that have a perfect potential to improve their profit ratios with their current products. However the most striking feature of the nestle international strategy is that Nestle are entering those markets through the takeovers and joint venture. This means that they are benefiting from local managers knowledge about culture language pestel and business systems and this clearly resulting in a faster adaptation to its environmental change.

Moreover they are also taking over the companies that they have a perfect background. According to resources the company is investigating the local companies carefully and they are picking the firm that have a perfect reputation in that way the company is ensuring that it is not damaging the nestle image. So its clear that they are using locally sourced raw materials and this means that they are facilitating their factories in those nations that they are selling its products to its customers As a result they are aiming of creating a share value to its all stakeholders.

The reason that they are creating a shared value for all shareholders that they are because The company found that creating a long term value for the countries in which they are marketing its products are helping them to making a more profit. So we can easily conclude that the company are highly concentrate on their existing products and in term of its international strategy nestle are using right way to be successful. Nestle have been increasing the variety in the distinctive products that they are offering.

In other words they are using its related and unrelated diversification strategies. However the company is mainly using its related diversification. For instance. The company has a well known existing brands such as kitkat lion nesquick and nestea and as a result of this the company are using this existed well positioned brands in the other sectors. for example kitkat is a chocolate but last year nestle create a kitkat ice cream(or nestle creal and crealbars) and in that way they are not creating new brands in order to extent their products and this clearly creates many benefits.

The most striking feature of the benefit is that nestle is achieving an incredible cost saving in terms of building a brand . In addition to this they are also operating within the existing operation capabilities which means that they are exploiting an economies of scope For example they are sharing technologies employees and even advertising campaigns between different businesses units. As bymike w. peng illustrates the benefits of related diversification by stated that(2009,p315)”firms benefit from declining unit costs by leveraging product relatedness.

The sources of operational synergy can be technologies(such as common platforms)marketing(such as common brands) and manufacturing(such as common logistics). As a result of this strategy clearly they are achieving a superior performance in the market because of the fact that related diversification strategy is considerably helping them to integrate its differentiation and low cost leadership strategy. Conclusion Above all nestle is operating in the highly competitive market.

In addition to this other environmental factors are also changing fastly. However nestle is a company that is using its highest technology as well as employing top employees in the environment. For this reason they have a perfect ability to adapt to its environmental change. For example the company have an outstanding research and development department. Apart from this success criteria the corporation is also significantly reducing its cost by using its effective operational strategies and its related diversification.

So we can easily conclude that nestle has achieved an superior performance because they have a perfect ability to innovate interms of its operation product service and its businesses processes as well as they have a right strategy in the international markets.

The financial accounting process at Nestle takes into account the companies accounting both at the office and at the factory. The various company balance sheets and its integration with the company’s financial reports are integrated. The various purposes for doing so are the integration of company’s financial base to fetch the status of the company. It is very crucial from the audit point of view and requires a strict control towards financial record maintenance and its archive it for 50 years.

This process not only serves a greater good but also defines its purpose for better confidence and corporate governance on the whole. The primary activity is the creation, maintenance and sharing of ledger accounts. The various sales orders, assets and transactions are managed quite efficiently at Nestle which ensures various cost techniques had it been managed using some other software where integration was not possible. SAP has integrated it as master and child processes at all its 80 countries for fetching the right degree of handling and processing.

The management of depreciation costs at all its centers also governs the right rule for maintaining the SAP system.

At the management costing side of SAP, Nestle has now identifies all its cost elements and have strategized accordingly to handle the cost elements, activity allocations and cost associated with it. The SAP also imbibes the overhead costs and personnel costs related to materials movements and cost of allocation of personnel for tasks. This might seem easy at one location, however when the company operations are mammoth, SAP provides just the right amount of integration for all its locations to reduce the cost of effort and time in finishing an activity.

The manufacturing execution process critically binds the entire organization to indicate the order levels which is directly associated with the demand forecast model and prediction analysis. The deep sense of collaboration would ensure better handling of the order request and ensuring the manufacturing process to flow smooth with the machine allocation for timely meeting up with the order. The machine allocation process is quite efficiently handled at Nestle as they maintain buffer machinery for handling any process at an appropriate pace.

The capacity requirements and capacity planning are taken care well. At this stage in production you still have the opportunity of having several parallel planned orders per period (for example, per shift), as the sequence of the planned orders has not yet been fixed. It is therefore possible for partial capacity overloads to arise within a period, even though on average no overloads are recognized. This process effectively places Nestle at a better position than other manufacturing companies with non SAP systems.

The available capacity, capacity requirement and capacity load are displayed as percentages per period in the planning table for each production line. The capacity dates are redefined for every change made. The work scheduler thereby has an overview of the capacity status of his production lines and can react quickly to capacity overloads and under loads in order to produce equal capacity load utilization per period.

Nestle hires the best and its process of acquisition, enhancing and retention is dealt very largely. The resource management group for Nestle is very strong and handles all the allocation process of the hires, both fresh and lateral to the various departments after the training department clears them. So the liaison among the human resources (HR), training and resource management group (RMG) is quite strong. The human capital management function within the SAP module identifies the requirement for a particular talent arising from the project requirements and customers demands. The specific demands are fed in the system and are passed to the RMG for their filling.

The RMG checks their system in place to work out the various specific needs of the organization and handles the resource allocation process. In case the human resource requirement is not met, RMG communicates with the HR department for hiring either a lateral or a fresh talent for the allocation. The primary advantage would be to ensure that the HR module of SAP system in place would ensure better availability of data and swift notification of the same to the aligned department for their entire business operation and fulfill the requirements.

The scope of the human resource planning module of SAP at Nestle is very large. It handles the compensation functions for laborers at their manufacturing concern and salaries for all other full time and contractual employees. The salary, benefits, facilities and other emoluments require observing the company policy, government policies regarding taxes and other facilities are incorporated within the system on the whole. Furthermore the payment benefits, employee insurances, health benefits, payroll processing and management, taxes and personnel management are all incorporated in the SAP HR module of Nestle.

They also have implemented country specific salary calculations in various currencies and ensure very efficient handling of the HR module. The training and the RMG module are also integrated along with the SAP HR system to train the recruits and finally their allocation and handling process.

Introduction

In this research work the company chosen is Nestle. We have tried to cover the brief history of the company, vision, mission and objectives of the company. This brief history and other sub heading under company background is compulsory to be understood and researched well as they form the basis for marketing plan of the company. We have also tried to cover the internal and external environments for the company and countries for its future rowth and further marketing planning strategy Analysis

Nestle Worldwide

Overview of Nestle

All over the planet, people know Nestle. Nestle is a Swiss multinational nutritional and health-related consumer goods company headquartered in Vevey, Switzerland. It is the largest food company in the world measured by revenues among the world’s 40 largest corporations. Nestle was founded in 1867 by Henri Nestle. Its international R;amp;D network supports the products made in more than 500 factories in 86 countries.

The Nestle factories are operating in the region of:

1. Africa
2. America
3. Asia
4. Europe
5. Oceania

Being a company dedicated to food from the beginning, Nestle remains sensitive to culinary and eating habits, and responds to specific nutritional problems, whilst also setting and matching new trends such as growing out-of-home consumption and caring about the well being of its consumers Nestle’s Philosophy: Good Food, Good Life is the very essence of Nestle and this philosophy can be traced back to our beginnings.

Nestle’s Vision

The Nestle global vision is to be the leading Company in health, wellness and nutrition in the world. In particular, they envision to:

• Meet the needs of consumers of every age group from infancy to old age, for nutrition and pleasure, through development of a large variety of food categories of the highest quality.
• Lead an extremely motivated and professionally trained workforce, which would drive growth through innovation and renovation.
• Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the ocial, economic and environmental sectors of the country.
• Nestle brands are the preferred choice in their categories. Consumer insight drives all aspects of Nestle’s marketing and communication efforts.

Nestle’s Mission

Nestle’s mission, in the words of our founder Henri Nestle, is: “Nestle is dedicated to providing the best foods to people throughout their day, throughout their lives, throughout the world. With our unique experience of anticipating consumers’ needs and creating solutions, Nestle contributes to your well-being and enhances your quality of life.

Nestle’s Objectives

Nestle’s objectives are to be recognized as a leading, competitive, Nutrition, Health and Wellness Company trusted by all its stakeholders, and to be the reference for financial performance in its industry. Its chief objectives are:

• To achieve compatibility with international voluntary standards on environmental management systems.
• To build mutual trust with consumers, governmental authorities and business partners.
• To ensure continuous improvement of Nestles environmental performance. Conservation of natural resources and minimization of waste.
• Total compliance with the laws.
• To establish the benchmark for good business practice.
• Employing new technologies and processing. By committing to resources, both human and financial. Measuring the cost and benefits to business of its

Environment of Nestle

Internal business environment

Managers

Nestle Company is a decentralized organization that organized according to matrix structure. Nestle Company as a decentralized organization allows its subordinate organizations to enjoy a relatively high-level of autonomy. Although it still makes major strategy decisions at the headquarter level, daily operations are left up to subordinate organizations to derive and implement. The responsibility for operating decisions is pushed down to local units.

Nestle has a strong top management team which runs on strong values and principles of the company. The efficient top management of the company is able to run finance, operation, marketing, logistics, sales, and research and development departments with great success which ultimately leads to the fulfillment of the goal of the organization. Senior members are of diverse origins and backgrounds.

Board of Directors

The Board of Directors is the ultimate governing body of the Company. It is responsible for the ultimate supervision of the Group.

The Board attends to all matters which are not reserved for the Annual General Meeting or another governance body of the Company by law, the Articles of Association or specific regulations issued by the Board of Directors.

• Chairman The Chairman has the right to represent the organization to implement the company’s rights and obligations, take responsibility to the law and the owners of the organization about the rights and duties are assigned, strategizing development plans of the company and organization those through the decision of the Board. CEO The Board of Directors delegates to the CEO, with the authorization to sub delegate, the power to manage the Company’s and the Group are business, subject to law, the Articles of Association and the Regulations of the Board of Directors. The CEO chairs the Executive Board and delegates to its members individually the powers necessary for carrying out their responsibilities, within the limits fixed in the Executive Board’s Regulations

Employees

The Nestle team comprises around 328,000 employees, 29% are based in Europe, 33. 6% in the Americas and 37. 4% in Asia, Oceania and Africa. Their challenge is to combine strategic corporate leadership with strong, responsive local leadership to achieve consistent high levels of performance and corporate responsibility across their business Nestle has a rich working culture which motivates its employees to serve best to its customers with the help of the variety present in their product range.

Nestle has included the benefits of the employees in the goal statement of the organization as the management of the company strongly believe that the productivity, quality and the dependability will reflect on the product only if the employees take care of all these factors. Different departments of the company work to contribute in the growth of the organization and these departments not only keep the customer’s needs and demand in mind but also keep the same type of attention for the internal customers of Nestle.

The company believes if the internal market of the company is fully satisfied, the internal market will be able to serve to its customers and able to understand their needs and able to manufacture the products which can fulfill these needs

External environment

Customers

The immediate customers of Nestle are retail and grocery stores which provide the products of the company to the end customers at a reasonable price and a reasonable profit.

The end customers of Nestle are the consumers who consume its wide range of product. The company has a bright brand image in its big pool of end customers. Nestle has an extensive marketing network to figure out the target customers, it has marketing specialist to understand the market place and the customer needs, secondly to is spending a lot to figure out the customer’s preferences regarding the substitutes of its products in order to bring the customers on board and retain them.

Nestle has an extensive market share, due to the reason that its customers are brand loyal and do not compromise over quality and same is the case with the company’s quality assurance (QA) team. One of the principle strategies that Nestle utilizes is to produce differentiated products for each age group in order to get a high market share and preferences over others.

Suppliers

Suppliers provide the resources like labor and material resources to produce goods and services. They add to customer overall value delivery system.

Labor supplies include handling of

• Quantity of labor
• Quality of labor
• Labor strikes
• Labor relations Material supplies deals with the
• Quantity of material
• Quality of material
• Price of material
• Stability of material inputs
• Delivery delays Nestle efficiently handles the quality, quantity, price and stability of both material and labor supplies.

Management maps out the strategies for labor strikes, supply shortages and delays to avoid increasing the cost of production, which can badly affect sales in short run and customer satisfaction in long run.

Competitors

Competitors also play a vital role in effecting the way in which the organization operates, competitors are basically the rival firms in the same market which is providing the same product in the case of Nestle the are many competitors since there is a wide range of products offered by Nestle Nestle’s largest international competitors are Kraft Foods, Unilever and Mars Incorporated. It also faces competition in local markets or specific product ranges from numerous companies, including Sara Lee and Danone

Nescafe is one of the world-famous brands of Nestle with a long history of development and illustrious reputation. Therefore we choose this brand to go deeper analysis of its production as well as its distribution.

Input and output

Inputs

• Raw material

Coffee beans and water are the basic ingredients used to make coffee, but there are as many ways to make coffee as there are coffee drinkers. All Nescafe coffees are made of 100% pure coffee beans. The only exceptions are our ready-made coffee mixes and mixtures. They contain other ingredients such as whitener and sugar, which are commonly added to coffee.

Raw materials are selected from the freshest coffee beans through the production process with the highest quality standards, properly roasted to keep the aroma of coffee are naturally charming

• Labor

Teams of professional preparation and testing are well trained. The sensitive senses of coffee experts allow them to recognize the best qualities as grinding, roasting and tasting raw materials.

Technology

The company also has modern production technology and strictly quality control system in all stages of production.

Outputs

• Nescafe’s products

Nescafe products include: Nescafe Original, Nescafe Classic, Nescafe Clasico, Nescafe Gold Blend, Nescafe Black Gold, Nescafe Special Filtre (in France), Cafe Parisien (The Paris experience), Nescafe Allen, Nescafe Espresso, Nescafe Red Cup, Nescafe Blend… to name just a few.

• Distribution

Nescafe also be distributed under Nestle’s distribution system with the 2 major channels of distribution: Traditional distribution channels and Modern distribution channels.

Traditional distribution channels (grocery): Organize the sales staff to distribute products to individual households through market channels & shop. Modern distribution channels (key account): Deliver goods to consumers through supermarket, metro or distribution chain system. Furthermore Nestle is currently holding Out Of Home (OOH) distribution channel such as restaurants, hotels, at-work, factories, etc…

Research for production of Nescafe-Nestle in Vietnam

To ensure a large output power, the company must be combined with the Vietnamese government to build long-term plan for raw materials to ensure the production of the company. Build strategic Materials areas by combining with fertilizer companies and agricultural extension centers to sign a contract directly with farmers. Furthermore, collaborate with scientists and local authorities in the provinces of Dak Lak, Lam Dong and Dong Nai-the key coffee growing regions in Vietnam- to build the model farm, offering new varieties of high yield and send some Vietnamese scientists to some Center of research and development in developing countries.

Regarding technology, the big companies like Nestle will find advanced technology in the world to ensure that few workers record the highest results. Moreover, the company will provide technical assistance to coffee growers so that they can provide better quality and have higher income About labor at the factory the company will cooperate with Vietnamese Ministry of Labor to learn about the workforce in Vietnam or the company will cooperate with the local center for workers promotion or the surrounding areas to make sure human resources are available if the company needs.

The company will have a separate department to do this.

Manufacturing process

• Harvesting It all starts on the plantations, where farmers tend to the coffee plants and harvest the coffee cherries, usually by hand. The next thing they have to do is separate the bean from the outer shell of the cherry. This is done either by drying the beans in the sun or by washing them in a pulping machine before drying them.
• Drying To get at the coffee beans inside each cherry, the beans need to be separated from the skin, pulpa and parchment.
  This is achieved by drying the cherries under the sun or by soaking the cherries in hot water. The dry beans have a greenish tinge and are therefore known as ‘green beans’. They are usually exported for blending and roasting. By combining different types of beans you can give the resulting coffee a more rounded taste. Once you have the right blend of beans, the most important phase of coffee production begins: the roasting
• Roasting Once the green coffee beans have been selected, the beans need to be roasted to release the aroma and taste we know as coffee. In fact, this important rocess is one of the most fundamental parts in producing the flavorful taste and rich aroma of NESCAFE coffees. During roasting, the coffee beans expand and change in color. They turn to yellow once they absorb heat and then to brown as the beans lose their water content. The beans turn darker as they release their oils, giving the coffee its flavor. Depending on the roasting equipment and the desired flavor of the coffee, green beans are roasted at between 180°C and 240°C for between three and fifteen minutes.
• Grinding After roasting, the beans are ready for grinding.The particle size of the grind; whether coarse or medium, fine or very fine depends on the brewing method and equipment used. Grinding increases the surface area of the coffee, allowing the flavor to be extracted more easily.
• Processing To make NESCAFE® Pure Soluble Coffee, the ground coffee is put into an industrial percolator containing hot water under pressure to brew a highly concentrated liquid coffee, called coffee liquor. The coffee liquor is then spray dried by passing it through a continuous stream of hot air, changing it into fine particles.

This is the process for making NESCAFE CLASSIC® coffee. Alternatively, the coffee liquor is snap frozen and then ground into the required particle size. The particles are suspended in a vacuum tunnel with low heat, causing ice crystals to form and leaving particles of freeze-dried NESCAFE GOLD® coffee.

Marketing strategy for Nescafe in Vietnam

Price

Launch several product lines aimed at the large and diverse segment of the market. Each segment has different product lines with reasonable price and can be accepted but still ensure high quality. For classes of consumers with high incomes and interested in quality: the Nescafe Gold, Premium with higher prices and higher quality compared to other common products

• For classes of consumers with average incomes – a large segment: with Blend 43, Mild Roast, Espresso products … consumers receive economic benefits as well as product quality.
• For young people: new product such as Latte with the relative prices. Deploy promotions, discounts to attract customers and increase purchasing power

Place

Build strong distribution network with distributors and retailers to cover the market with high density. Develop the retail system to ensure the company’s products are available to serve customers: retail outlets at premier sites e. g. Bus stand, Railway station… Implement incentive policy about pricing and commission to agents to encourage them to introduce and offer products to customers at the reasonable price. Other than that, Nestle can put their vending machine in a place that always full of people such as shopping mall, airport, hospital, school and any other place.

Associate with supermarkets and shopping centers by opening sophisticated parlors with more value added services; improve the area, type and number of the company’s products here. Expand promoting trade into neighboring countries such as Laos, Cambodia, west Asia countries, where Nestle’s products are not available or do not meet the requirements.

Promotion

Take advantages of company such as brand reputation, quality products to increase market share Use mass media to advertise products to consumers:

• TV commercial
• Magazine and newspaper advertizing
• Public event
• Online advertizing Social networking Use other form of advertising such as non-media communication or advertising. Some of the ways are participating exhibitions, sponsorship activities, public relations and sales promotion such as giving freebies with good or reduced price Construct showrooms to introduce the company’s products and distribute sample products to the customers. Intensify customer care service by holding seminars about nutrition and healthiness, informing customer about Nestle’s products.

References

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NESTLE Micro Environment Analysis Example

Nestle operates in over 130 countries and in order to understand the business environment they operate in analysis on the external factors that lie outside the control of Nestle has to be conducted (Grant et al. 2011, 101). The tool tasked with conducting an external analysis of the macro environment is PEST while the external micro environment will be analysed with the help of Porter’s Five Forces. However it is worth mentioning that Nestle is not however exclusively influenced by the mentioned factors below (Shaw 2004).

Macro Environment Analysis: PEST Analysis:

Political: Nestle is a global company and in the food and beverage industry one of the most important factors to consider is globalization. According to Jose Lopez, Nestle’s Vice President of operations explained the impact of globalization on Nestle to has been very different from first expected initially we thought it meant developing countries opening up their markets but on hindsight it turned out that rather than being globalized we had to understand how to react to global markets (Bell 2009, 10). Another factor to consider is the impact regulations has had on Nestle.

The global food and beverage industry is one of the most highly regulated industries in the world. Nestle for example has had to face multiple tiers of regulations when have inevitably affected their products (Nestle 2008).

Economic: Food is a basic human need and is therefore a necessity for survival. In economic terms this means that the basic demand for food will always be high. Although food eating patterns might change and vary from place to place. Nestle has adjusted to these variations in preference and sensitivity to price in different places that it operated.

One of Nestle’s example is opening up factories in different places that caters to the local market from its packaging, to pricing, to taste. Majority of these new factories are located in developing countries because it is estimated that come 2010 around 90% of the world’s population will reside in these countries.

Socio-Cultural: Culture, religion and average age of population tends to dictate or are at the very least have an influence on food consumption patterns. Currently there is a growing interest from the public for addictive free products that are made from natural ingredients.

Nestle is aware of this and can be seen in a few of their products one example is Maggi soups in Germany, China and Indonesia have different flavours and textures to meet local taste (Nestle 2012).

Technological: The food industry in general has adapted more advance technologies in an attempt to deliver healthier, fresher and variety. However this requires improving the quality of raw material used which is rather challenging given the scope of operations that Nestle has. Furthermore technology has enabled better packaging of products which has boasted efficiency and reduced costs.

Micro Environmental Analysis: Porter’s Five Forces Model: Industrial analysis can be performed using the five forces. These five forces will examine the food and beverage industry’s competitiveness and attractiveness (Recklies 2001). These five forces include the threat of new entrants, threat of substitutes, buyer and supplier power and rivalry among competitors. Threats of New Entrants (Low- Moderate): As lucrative as the food and beverage industry might be there are several barriers that make the treat of new entrants low-moderate.

These include the high start up capital required, supply-side economies of scale, unequal access to distribution channels and the demand-side benefits of scale. However it has to be noted that several firms still enter this industry and because of Nestle’s high market share, they have become a constant target.

Power of Buyers (High): The power of buyers in the food and beverage industry is high. This is because typical buyers are large retailers like Wal-Mart, Carrefour etc. these retailers are financially strong and prefer to have long term agreements with market players. Furthermore majority of buyers are integrated backwards, while several retailers offer their own branded food and beverages.

Power of Suppliers (Low): The power of supplies in this industry is low because of the sheer number of available suppliers and markets to purchase from. It is important to point out that the raw materials in question here are fruits, meat, fish, grains and cereals just to name a few which can easily be purchased in open markets as well. Read interesting comparison Unilever vs Nestle

Furthermore some firms have integrated backwards and produce their own raw material handicapping the suppliers further (Bradley et al. 2005).

Threat of Substitute (High): Given the lack of switching cost between alternative for the consumer and the availability of cheaper alternatives to packaged food this has caused the threat of substitutes to be high (Bradley et al. 2005; Hager n. d. ).. The industry has experienced a surge in private label products and organic food which has caused consumers to experiment with new products.

Rivalry amongst Existing Competitors (High): The food and beverage industry is vast creating more opportunities for market players. According to Porter (2008), the intensity of rivalry is highest when competitors are many, industry growth is slow and exit barriers are high causing the overall competitiveness of this industry to be high as well. Furthermore coupled by the variation in consumer preference and ability of competitors like Kraft, Groupe Danone and Unilever offering equally good if not better alternatives has lead to high competition among market players.

Summary of Porter’s Five Force Model: Nestle is a powerhouse in the food and beverage industry and according to Porters’ Five Force Model, they operate in a highly competitive and unstable industry environment. The model emphasises Nestle comfortable position within this industry even though there is a constant threat to its market share from new entrants. However, in order for Nestle to continue operating profitably they must adhere to customer needs as they are various other substitutes available for them, there is no switching cost for the consumer.

West university Subject: Submission of term paper on Nestle Company Dear Madam, The term paper at your hand is a report on Nestle Company. You assigned us to prepare this task as the part of this course requirement. While writing this term paper we have tried our best to follow your Instruction given in class. This term paper will fulfill the requirements of the course and help us to learn the practical experience of preparing a term paper.

We sincerely hope that this term paper will et your expectations and it’s explanation will demonstrate our ability to prepare a term paper. This term paper has been prepared by us tort the first time and also wealth a short time, for this reason there might be some errors. If you find any such errors In this term paper we apologize for that. We hope this term paper will be up to the level of your satisfaction and open to provide any clarification on this term paper.

Sincerely yours Acknowledgement We are very thankful to Almighty Allah who gave us the opportunity, courage and insight to explore more knowledge to complete this whole and for his blessings that have brightened in all parts of our lives and our parent’s whose prayers always supported us in every task. It is a great opportunity for us to write on a subject like “Marketing Strategy Of Nestle Company. At the time of writing this term paper we had gone through many books n websites which helped us to easily get acquainted with this new topic. We were actually focusing on the topics which were easy tort us to understand the subject. Acknowledge with great gratitude to the senior lecturer Shaft Named our respective teacher, who has always been helpful In making us understand deferent systems of how to create this term paper. We thank our team partners for their participation towards writing this term paper. We also thank all the people who directly and indirectly helped to finish this term paper. Table Of Content I OFF Introduction Company Profile Marketing Mix Segmentation Targeting Positioning Conclusion Page: O page: 03 Page: 04 page: 12 page: 17 age: 22 page: Nestle is undoubtedly one of the most proficient food company all over the world.

The employees at Nestle have finagled to retain their standards to the most high- pitched level possible in the market. They make sure of the fact that the products of Nestle are definitely the BEST TO USE. Nestle has an assortment of products to offer and they all are the best of their types. For this project our main concern was to study the strategies followed by Nestle in regard to the marketing strategy. We got mom information from internet about the overall history and background of the company.

We tried to cover all the main aspects of our course starting from some basic concepts to the complex ones. Now days for any company to progress in the market its marketing strategies are of supreme importance and that is the reason we opted for Nestle to try and recognize what exceptions they were doing to maintain their top position in the market. In Finding and Analysis we have described the marketing techniques observed at Nestle and then also did our analysis on these observed techniques.