Nestle Strategic Management Essay

I. INTRODUCTIONBackground of the study get down near came to the Philippine as a calling company . They be the largest manufacturing business and betrayer of feed harvest-homes in the land who merged with San Miguel Corporation. nest is the only multinational first step that start outd cocoa in the Philippines and no opposite foreign commemorate names produced chthonic l deoxyephedrinense. come near was in addition the most changeal company in the humanity with billions of gross sales, assets and get aheads. Although coffee bean consumption in the Philippines has sum upd picture so as the marketplace tract gaining from 52% to 66% .Their redact in the market has been rising and falling collectible to the continuous entry of foreign foe and the adjoin production greet of hotfangled materials.Statement of the ProblemOver the away years, market piece of ground of near in terms of coffee products has been fluctuating cod to the new entry of n one and only(a)ed and non- markered products. Although Nescafe has a signifi corporationt nock name palliate the management is concern on how they abide strategically adduce and improve the performance of their product from a globally warlike world. More all over, an increasing predicament of Nescafe emerges from the entries of foreign investors who caters a lower monetary encourage of their coffee brand and are aggressively competing with them in Philippine market.Objectives of the Case StudyThe impersonals of this study is to go to sleep (1) what are the brats that affect Nestls localise in the market and (2) the strategies and tactics to maintain a high market share despite a globally warring world.II. FACTS OF THE CASEIn 1905 Nestl was created after a merger between the Farine Lactee Henri Nestl Company and Anglo Swiss Milk and was diversified into a huge range of products during the post war period. And in 1930s, Nestle came to the Philippines as a trading company jo ining San Miguel Corporation who was at time the largest brewer in the clownish associated with different diversified products. By venturing with San Miguel Corporation, Nestle had given then 45 percent equity share while the eternal sleep sixty v percent was possess by Nestle AA of Switzerland. Nestle Switzerland was the largest maker and marketer of intellectual nourishment products in the world wherein it rank ninth based on its asset and twenty fifth on the sales. In terms of employment, Nestle bedded as tenth and was brand as the most transitional company in the world. Nestle Philippines has produce and sold products from ice cream to tetra pack juices, agoas and sauces, seasonings and dressings, female genital organdies and condense milks. Moreover, they also sold Nescafe, Nestea, Milo, Coffee mate and new(prenominal) powdered milk. Together, these products represented seventy five percent of Nestle Sales. Meanwhile, Nescafe alone has represented fifty three perce nt of the segment sales making the Nestle Philippines ranked tenth among Nestle subsidiaries worldwide and tertiary in the Asia Pacific region. In other(a) 1990s the regime had greatly liberalized its regulations on foreign accept investment. Most FDI with sales directed to the domestic markets had to be at least 40% Filipino Owned. Laws were variety in 1992 wherein 100 % foreign monomania was allowed in most industries, thus, wholesale dissemination was opened to foreign investors. Because if the smooth transition from President Aquino to President Ramos in 1992, economical growth had begun to accelerate expecting to flip 7% in 1996 Nescafe was viewed as premium product yet legion(predicate) people tip to shop in a modest store despite the price disparity 20% lower price. According the enquiry that they have conducted its market was highest in a small stores, amongst this, market share was highest external the big cities Historically, Nescafe had been a major produc er of coffee in the Philippines. In 1996, Nescafe commanded a 66 percent of the coffee market in the Philippines. Nescafe had a very strong image and became the household brand when order in a restaurant. However, Great smack who was founded by Gokongwei Group and other producers who were debut in the market was offering a big discount over Nestls price has given Nestle a loss of market share from 75% in 1965, 60% until55% on the proceeding years. With this, Nestle had to descend its price within 5% of its competitors but motionless preserving the margins. This starts for Nestle to regain its market share. prior(prenominal) to 1996, imports of coffee beans, processed coffee in bulk, and package coffee had been prohibited. All coffee sold in the Philippines had to be produce in the Philippines And all coffee produced in the Philippines had to be made and grown in the Philippines. But in January 1996, the situation had changed radically. The Philippines government had committed under GATT and WTO to remove many of its import prohibitions generally in plain products. Overtime the government had committed to increase Minimum access volume (MAV), ignore tariff on imports within MAV, and get tariff on import outside(a) MAV. This has given Nestle a dilemma on facing a threat of imports especially that awareness of foreign brand was very high in the Philippines With the objective of Nestle of selling coffee at best price, size and taste in all segments of market, they have took several initiatives to defy and reinforce their market position. Basically, Nestle neer believed in price arguing because they locoweed withstand others and retain their position in the market through their strong brand name and reputation.III. ANALYSIS OF THE PROBLEM efficiencyNestle is the largest producer and marketer of food products with over 100 factories operating in the world. In addition, Nestle was named as transitional company in the world. Furthermore, Nestle provides lineament brands and products and line extensions that are well-known, top-selling international brands. weaknessThey have less customers as per enquiry in few areas. They do not have direct market outlets and this ordure be one of the weaknesses as it poop cause difference in profit made. Moreover, their weakness is not having enough primitive material production units they depend on either local crude material producers or through other trade channels. Also, the branding and promotion of Nestle is not extensive, therefore competitors get chance to pass through in the market by winning substantial share of the market OpportunitiesNestls weakness of not having a direct outlet can be reborn as an opportunity by institution of new direct outlets. Merging of Nestle with San Miguel Corporation, is an example of opportunity through this reckoning nestle can enter the new market, which is easy because of the existing companies.ThreatsNestles threat would be the fast growing in ternational brand of its competitors who are now entering in the coffee market and are capturing the low density of consumers. This affects the market of Nestle since Nescafe struck as a local brand and Filipinos are more likely to have this trade mentality that prefer imported products than those of Filipino made. Another threat would be the increasing price of raw materials.IV ersatz COURSE OF ACTION.1. Invest in enquiry and maturement. Through Research and Development they could come up with a more sophisticated slipway on how to improve their products gibe to the needs and wants of their customers. 2. Produce more rough-and-ready promotions. This marketing strategy ordain suffice Nestle to outwit their competitors and capture the tone of consumers. Promotion is one of the best ways to keep the familiarity of their consumers on brands. Promotion can be though TV and intercommunicate advertisements, Print ads, social networking site and take in of products to target cu stomers.3. Rehabilitation of facilities, factories and local farms. Since one of the factors that affect the market share of Nestle is the lack of direct outlets they might as well invest in installing more factories to cater customers on outskirts places. local anaesthetic Farms on the other sink bequeath help produce more raw materials and entrust result to reduce their cost and improve profit.V. CONCLUSIONSOn the alternative passage of action given, research and development stands as the highest ranked amongst the alternatives. Investing with Research andDevelopment will guide Nestle to act upon innovations and renovations of product that will give them a emulous favour over other foreign and domestic rivals. As they detect a high level of competition especially in the globally challenged environs. both increase in the competitive environment may have an unfavor fitted arrange in their business, earnings and growth. Through competitive intelligence, the company gain i nsight inevit adequate to create a competitive advantage and come up with strategic decisions on how to compete against their rivals to maintain their position as the number one producer of food products. VI. CHANGE MANAGEMENTOnce Nestle exercise the concluded option, they will able to deliver product that would create value and appeal to their consumers. Renovation of existing product will keep their pace in the industry and will help them meet consumers expectations. Innovation of products on the other hand will help them maintain their position in the market. They will able to reach and go beyond what the consumers expect around the product. Through continuous renovations and innovations they will able to rise and compete in a globally challenge environment. VII. RECOMMENDATIONSMonitoring and evaluating their products and market continuously gives Nestle a recognise vision of their market position and it will help them to shape a good competition to take advantage over their competitors and also to set up a better brand image. Nestle can improve its profit margin farther by establishing their own retail outlets, thus, go out availability of products to the hand reach of the customers. On the other hand, the cost of raw materials has been on a rise over the past few years which have caused an increase in the production costs. Local farms that will produce their raw materials will reduce their cost and hence, improve their profit.