Business Project of Nestlé
In this report, “Business Project of Nestlé,” we discuss, Nestlé SA is based in the Swiss city of Vevey, where it is one of the world’s leading food and beverage processing companies. As far as revenue and other criteria are concerned, it has now eclipsed all of its competitors as the largest food company in the world. According to Forbes, it is the world’s 33rd largest publicly traded company in 2016 Forbes Global 2000.
A wide range of Nestlé’s products include infant and medical food, bottled water, breakfast cereals and beverages, confectionary, dairy products, ice cream, frozen food, pet food, and snacks. It’s not just chocolate and milk that Nestle produces and distributes. A billion Swiss franc (approximately 1.1 billion US dollars) in annual sales is attributed to Nestlé trademarks like Nespresso, Nescafé, and Kit Kat.
Nestle is a food and beverage conglomerate headquartered in Switzerland. Many of their items are available online, including baby food, bottled water, breakfast cereals, coffee and tea, confectionary, dairy products, ice cream, frozen meals, pet foods and snacks. Most of their brands have annual revenues in excess of $1 billion, and they provide over 8,000 different products.
They have 447 factories in 194 countries, employing 330,000 people around the globe. They are a true colossus in every sense of the word. Additionally, they are one of Europe’s leading employers and have six LEED certifications, which contribute to a wide range of environmental operations. How can a company that appears to be a “nice man” be so loathed by the people be so difficult to comprehend? To make it easier to digest, let’s break it down into smaller chunks.
Unhealthy food, supply chain issues, challenges faced by covid and supplier shortage are some of the recent problems that are faced by nestle.
Read more: Business Project of Coca-Cola
Challenges/ problems the client is facing
Following are the challenges faced by the client:
Nestlé document says majority of its food portfolio is unhealthy
Over 60% of items don’t fit the “accepted criteria of health,” according to an internal business presentation.
“Some of our categories and products will never be ‘healthy,’ no matter how much we renovate”, says Nestlé, the world’s largest food corporation, of the more than 60% of mainstream food and drinks that do not match a “recognized definition of health”. Only 37% of Nestlé’s food and beverage revenues, excluding pet food and specialized medical nutrition items, achieve a grade over 3.5 under Australia’s health star rating system, according to a presentation distributed among top executives this year and seen by the Financial Times.
The Access to Nutrition Foundation and other international organizations utilize this system to evaluate food quality. This “recognized notion of health” is what Nestlé refers to as the 3.5-star threshold. 70% of Nestlé’s foods failed to satisfy that criterion, according to the presentation, along with 96% of beverages (excluding pure coffee) and 99.9% Nestlé’s confectionery/ice cream portfolio, which included a wide range of goods. Water and dairy products fared better, with 82% of waterways and 60% of dairy products reaching the threshold for acceptable levels of contamination.
Foods made for people with certain medical issues are not included in this data set. Nestlé’s yearly SFr92.6 billion (£72.7 billion) revenue is half of what this statistic represents.
Nestle admits supply chain issues ahead of Christmas
The maker of Quality Street and Lion bars has reported supply chain issues ahead of Christmas
But Nestlé’s CEO, Mark Schneider, told the BBC that the company was working hard to get items on stores this winter.
A chronic scarcity of HGV drivers has hampered supply chains in several industries Global shipping bottlenecks have also played a role.
“Like other businesses, we are experiencing labor constraints and transportation challenges, but our UK team is focused on supplying merchants”, he said.
“We are working hard”, he said when asked if Quality Street would be in stores this Christmas.
Challenges posed by COVID-19
A meeting between the Irish Food Safety Authority and Nestlé has taken place to examine how they dealt with the coronavirus epidemic, including government legislation and supply restrictions.
During a seminar held this week by the International Association for Food Protection – Europe, participants discussed the experiences of regulators and food firms in managing food safety assurance, as well as the impact of the COVID-19 disruption.
According to Wayne Anderson, director of food science and standards at the Food Safety Authority of Ireland (FSAI), the agency was required to ensure continuity of official controls and consumer health.
The FSAI developed a COVID-19 incident response plan, which included a list of the high-priority services that would need to be kept up and operating for the foreseeable future. Until recently, the FSAI did not have a policy on remote working. This was done to ensure that the European Rapid Alert System for Food and Feed could keep working and coordinate any response to immediate food safety hazards,” he explained.
As a result, our food safety inspectors had to be recognized as “essential workers” in order to maintain official controls over food operations, which meant that we had to relocate them throughout the country.
Initial shortage of supplies needed flexibility
It was claimed by Nestlé’s John Donaghy that the company’s top two priorities were the protection of its personnel and the continuity of its operations.
One challenge was a significant increase in consumer demand, particularly for certain types of products as a result of panic buying; on the other hand, many people were forced to stay at home as a result of COVID-19 infection or as a result of being a part of a contact tracing programs, which presented another challenge. “We were confronted with two fundamental obstacles”, the CEO explains. “On top of that, different countries used a range of strategies to deal with the pandemic”, he continued.
A major lack of medical supplies existed at the start of the pandemic, according to Donaghy, who summarized the situation.
“We were badly undersupplied in a range of key commodities that we needed to create our products”, says the company’s CEO. We were already printing packaging when some of the ingredients in those products became unavailable as a result of the scarcity, which had an impact on how we made our things. Therefore, we needed to be able to adjust to changing conditions, and in many cases, the regulatory environment provided us with an opportunity to do just that. However, there were no concessions made in terms of food safety.
Purpose of the report
Clients hire process consultants to help them grow and learn by guiding them through an authentic discovery process, not to provide pre-packaged answers. This report’s goal is to give Nestlé’s perspective on the company’s current issues. Nestle has previously confronted the difficulties discussed in this report.
Nestlé’s primary concerns and the influence they have on their many stakeholders are also included in the following study, as well as advice on how to address the issues Nestle faced. Additionally, the nestle company’s secondary data will be analyzed in this study, and this report will conclude with a final conclusion.
Impact of Research on Stakeholders
The theoretical framework around stakeholder
In recent years, the stakeholder theory, which was created by Freeman in the 1980s, has emerged as the most widely acknowledged theory of stakeholders. “Those organisations that, without their backing, the corporation would be unable to function.” Individuals who are affected by the operations, rules, and logic of conducting their business in order to achieve their organisational goals are considered stakeholders, according to Freeman.
According to M Friedman, who relied on the already-established stakeholder theory to argue that in a capitalist context, the company’s primary stakeholder should be its own shareholders, the stakeholder theory was rejected.
Nestle was able to identify all of its stakeholders thanks to PESTLE and Friedman’s stakeholder categorization, which is represented in this table by the company’s internal and external stakeholders .
| Internal stakeholders | External stakeholders |
| Employees are referred to as (Technical support and Financial auditors and other members). Management & Ownership Personnel. | Communities. NGOs and academia are two of the most important sources of information. The federal government. Reporting organisations or the news media. Organizations of intergovernmental cooperation. Members of the general public. Customers are the most important thing to us. Suppliers are a type of business entity that provides goods and services to others. Shareholders are individuals who own a piece of stock in a company. Representatives of labour unions and trade associations. |
Internal stakeholders
The individuals that work for a company are crucial to the success and growth of the organisation. Employees are the most essential stakeholders in the internal stakeholder sector since they are responsible for ensuring that the company’s objectives and goals are realized.
For example, in the case of technical assistance, information technology specialists are responsible for ensuring that work and other processes operate smoothly and that they have access to other international offices and business activities via remote access, among other responsibilities. Marketers must again ensure that the firm’s sales objectives are reached, that the company’s customer base continues to increase, and that the company maintains a competitive advantage over its competitors. Management and ownership of the company, as well as top decision-makers who assess market demand and ensure that feasible goals are set and achieved, comprise this group of individuals.
At the end of the day, they are responsible for making the best decisions feasible for the organisation as well as all of its other stakeholders and constituents. This is in contrast to other huge firms, such as Coca-Cola, which have owners and managers who simultaneously serve on the board of directors or as board members.
External stakeholders
Because customers are primarily responsible for the growth of the brand and the sales of its products, they are the most important stakeholder in this sector of the business. Purchasing things from a company helps the company make revenue while also boosting the brand through word of mouth, brand loyalty, and other methods of advertising.
A company’s performance is significantly affected if consumers are dissatisfied with its products or services, or if it fails to meet their requirements. Communities are made up of people who live in the area where the company’s production plant is located or who assist the company in obtaining raw materials for the facility. Individuals from the countryside or farmers are more likely to be found in this group. Nestle is able to hire low-level employees as a result of the efforts of these individuals.
When a company requires materials or resources for product development, suppliers are a group of enterprises, and sometimes even small-scale farmers or smallholders, who work with the company to provide the materials and resources the company requires. Vendors are included in the list of external stakeholders for the providers.
It is the obligation of intergovernmental organization’s and the government to ensure that the company is audited in line with applicable laws and regulations as well as other government policies.
Evaluation and Analysis of secondary data
PESTEL analysis
When it comes to the business strategy of Nestle, the PESTLE Analysis is used. Nestlé’s PESTLE Analysis examines the impact of several external factors on the company’s operations, including PEST, as well as legal and environmental issues. In the PESTLE Analysis, the numerous external factors that have an impact on a brand’s business are identified and classified.
Political Factors
Nestlé’s PESTLE Analysis includes the following political aspects, which can be summarised as follows:
Due to its global reach, Nestlé’s daily activities are influenced by a wide range of political issues. The company’s major purpose is to keep track of changes in import/export, taxation, and environmental regulations in these countries. Depending on the situation, some of these adjustments may be beneficial to the company, while others may be detrimental. Studies show that child labour laws are tightening, which may impact the company’s operations.
Nestle and other international corporations need a stable global economy to survive. Nestle faced many challenges during the Brexit process. Recent developments have forced businesses to reconsider staying in the country and possibly transferring to a different location like Poland. To make matters worse, many people will lose their employment as a result.
Organisations must do extensive brainstorming and testing to suit client demands while adhering to new food regulations. For example, the lead content concern in Maggi has resurfaced. Maggi has been around for a long time. Nestle’s corporation tax rate was reduced under the Indian budget. Allows for more high-quality items at lower costs to the broader public.
Economic Factors
Listed below are the economic components of Nestle’s PESTLE analysis, which are comprised of:
Nestle, as a multinational organisation with operations in a variety of nations, is in a unique position to develop economic strategies that are adapted to the specific needs of the countries in which it operates.
In a market where the prices of raw materials are constantly altering as a result of a variety of political and environmental factors, ensuring that everyone has access to nutritious food is a major challenge. Trade disputes between the United States and China have pushed up the price of Nestle’s raw materials, increasing the company’s operating expenses.
Manufacturing and distributing high-quality food at the same price while simultaneously increasing disposable income is a big impediment to progress. Because to the continuous deflationary climate, prices in Western Europe decreased by 0.7 percent. It is fairly uncommon for currency exchange rates to vary or for political unrest to erupt in a certain region.
To increase the efficiency of various agricultural sectors across Nestlé’s global operations, the company has undertaken a variety of initiatives to boost the production of raw materials at the local level. Because the company’s key markets are the United States and China, an increase in economic activity in this region will have a beneficial impact on the company’s performance, as well as on its sales and earnings figures.
Social Factors
Nestlé’s PESTLE Analysis is influenced by the social aspects listed below, among others:
A small shift in consumer preferences can have a big impact on a multinational’s bottom line. To promote better health, the organisation has picked foods low in sugar, salt, and saturated fats. The Group’s policies, processes, controls, and regular monitoring systems can assist prevent health risks. To be successful, Nestle must be able to anticipate customer wants and deliver them with high-quality, competitive, relevant, and innovative products.
A large ground-mounted solar facility in the UAE has been devoted to the growing millennial awareness of sustainability. Investing in R&D allows the company to dispel public misconceptions about canned and precooked foods and provide a scientific foundation for popular acceptance. In 2015, the business decided to produce a customised Nestle KitKat in the UK market to meet rising customer demand. Nestle will keep taking steps to create a better, more lucrative, and more inventive future. Nestle is devoted to caring for everyone and everything.
Technological factors
PESTLE analysis conducted by Nestle comprises the following technological factors:
The Nestle group integrates digital solutions, services, and models from both within and outside the organisation. In view of the increasing number of cyber-attacks that threaten the dependability, security, and privacy of data, it is necessary to develop a contingency plan in order to avoid major catastrophes when expanding into the digital market.
The corporation has made an investment in a start-up that will bring real-time data on water quality to the public’s attention. As a result, when they have access to real-time data, their operations will become more efficient in terms of water consumption. Using block chain technology, Nestle hopes to boost openness between consumers and the company’s supply chain, therefore altering the game’s rules in the process.
Because it collaborated with many governments, Nestle has developed a network that enables consumers to verify the nutritional information on the company’s extensive product line. Nestlé’s products in the United States are now available online, complete with nutritional information, ingredient lists, and allergen information, according to the company.
Legal Factors
Legal factors considered by Nestle as part of its PESTLE examination include the following:
Compliance necessitates a detailed grasp and application of many countries’ legal regulations. A complete team of specialists must be monitored on a regular basis to verify that the changes made are followed. Labor laws in each country, as well as employee health and safety, product quality and cleanliness, and product packaging, must all be observed.
It is also vital to stay current on environmental regulations, trademark laws, and Intellectual Property Office obligations. Keeping the company’s unique chocolate creations out of the hands of competitors has been a persistent issue since its inception. Nestlé’s KitKat wafer chocolate, for example, was refused legal protection in the European Union.
Despite the fact that the corporation does not operate in Europe, Nestle has trademarked the KitKat form in countries like as Australia, Canada, and France. Nestle has been under fire in India for supporting breast milk substitute research, which is said to be in breach of both local and international law. Nestle has vehemently refuted the allegations. Nestle will need to keep a close eye on this market as a result of these incidents. When a legal requirement is not met, the entire organisation suffer.
Environment Factors
The following are the environmental variables that have an impact on Nestlé’s business:
Nestlé’s activities are designed to have no negative impact on the environment and to generate shared benefits for all of its stakeholders. Given that the group is one of the four major corporations responsible for the production of 6 million metric tons of plastic per year, the group’s efforts to reduce the use of plastic in its products, as well as its goal of using 100 percent recyclable plastic in all of its packaging material, represent a significant step forward in terms of environmental sustainability.
As major countries strive to achieve long-term sustainability, it is imperative that they maintain track of all of these trends across their multiple commercial jurisdictions worldwide. If any of these policy changes are not adopted, there will be major ramifications for the entire organisation.
Nestle was suspended by the Roundtable on Sustainable Palm Oil (RSPO) for failing to submit palm oil sustainability reports, and it was obvious that this was the case. The Nestle group’s efforts, on the other hand, are taken into consideration as part of their annual evaluation.
SWOT analysis
| Strengths | Weaknesses |
| Unrivalled capabilities in the field of research and development.In the industry, this is one of the most regionally diversified revenue sources available.Product and brand portfolios that are unrivalled in the industry.Protection of the environment is a priority for the government.The ownership of some of the most well-known companies in the world. | Excessive water usage, the sale of contaminated food, anti-union sentiment, child labour, and other immoral practises are all criticised.Food recalls because of contaminated ingredients. |
| Opportunities | Threats |
| Product labelling that is accurate and clearly communicates the presence of any potentially hazardous substancesThe procurement of materials must be transparent and honest.In the Silicon Valley area, food firms are becoming increasingly common.The RTD tea and RTD coffee industries are growing rapidly. | A scarcity of water as well as a scarcity of good grade waterIn the food and beverage market, there is more competition than ever.It is possible that the price of coffee beans will rise considerably as a result of severe weather occurrences. |
VIRO analysis
Valuable
- Moreover, as a result of the Nestle VRIO Analysis, the financial resources of Nestle are particularly valuable because they can be used to invest in new external business opportunities that arise as a result of the analysis. Furthermore, Nestle can make use of this information to assist in the fight against external threats.
- According to Nestlé’s VRIO Analysis, the company’s locally sourced foods are a valuable asset due to the fact that they are extremely hard to come by. Because of this, customers place a high value on certain aspects of the product. In addition, customers pick these above their competitors because of their distinctiveness.
- Nestlé’s employees, according to VRIO, are a vital resource for the organisation. A substantial percentage of the company’s staff are well-trained, which contributes to the company’s enhanced output. The company’s high retention rates are a testament to the loyalty of its employees. Because it will result in a superior product, Nestlé’s customers will reap the benefits of all of these efforts.
Rare
- Nestlé’s financial resources are limited, according to the VRIO Analysis conducted by the company. Among the enterprises in the industry, only a handful have access to significant financial resources.
- According to Nestle VRIO Analysis, locally produced food products are not uncommon. Other companies can easily provide these on the market if there is a need. The competitive advantage that Nestle currently has will be reduced as a result of competitors that can employ these resources in the same way.
- Nestle is able to compete with locally produced food products as a result of this. Nestle may still reap the benefits of this resource because it is so significant to the company. In the VRIO Analysis of Nestle, it is determined that Nestlé’s employees are a scarce resource. These personnel, in contrast to their counterparts at other organisations, have received extensive training and are exceptionally knowledgeable. Because of the higher compensation and better working conditions, these employees are less likely to leave for a different organisation.
Imitable
- Nestle’s VRIO Analysis demonstrates that, because to the high cost of capital, it would be prohibitively expensive to recreate Nestle’s financial resources in the short term. Through its long-term revenues over a period of many years, the corporation has amassed great wealth for itself. If newcomers and rivals wished to compete, it would take a long time for them to accumulate the necessary funds to be on an even playing field.
- In the VRIO Analysis undertaken by Nestle, it was discovered that reproducing local food products is not unreasonably expensive. As in the past, competition might get these advantages by investing a significant amount of money in research and development. Furthermore, there is no requirement for years of practise with these. The use of locally sourced food items by Nestle gives it a short-term competitive edge that its competitors can leverage in the long term.
- In addition, Nestle’s VRIO Analysis indicates that its employees are not prohibitively expensive to recreate. A large part of this is due to the fact that other businesses have the option of training their personnel in-house. Nestle employees may be able to be lured away from their current company if they can give them greater income, perks, and growth prospects than they are now receiving from their current workplace. This gives Nestle’s employees a short-term competitive advantage over their competitors as a result of their work. This means that it is feasible that the competition will be able to acquire them in the future.
Organisation
Nestlé’s financial resources are organized in such a way that they capture the value provided by the VRIO Analysis of Nestle in order to capture the value offered by the VRIO Analysis of Nestle. They are strategically allocated to make investments in the most relevant industries, allowing them to capitalize on opportunities while avoiding dangers in the process. The successful utilization of these resources has enabled Nestle to maintain its competitive advantage over its competitors.
In accordance with the Nestle VRIO Analysis, Nestlé’s patent portfolio is disorganized and lacking in organisation. For lack of a better phrase, the organisation is not taking advantage of these patents to the full extent that they could otherwise be. Nestle has an untapped competitive advantage as a result of the company’s decision to sell patented items before the patents expire. This advantage can be transformed into a long-term competitive advantage.
Recommendations and conclusion: Business Project of Nestlé
To achieve its aim of becoming the world’s premier nutrition, health, and wellness organisation, Nestlé must make enormous investments in ensuring that the quality of its products is of the highest possible caliber. It will be required to do research and development on a wide range of various products and services in order to achieve this.
Therefore, the company is concerned about its clients’ demands, and, according to the organisation, it will go to great lengths to ensure that they receive the maximum degree of pleasure possible at all times. The numerous obstacles it has faced, Nestlé has profited from its strong financial skills, amazing strategic marketing talents, good research and development capabilities, and remarkable leadership, all of which have helped it succeed.
According to the result, Nestlé has been able to successfully uphold its basic principles while making the difficult decisions required to run and build the company, thereby delivering its promise to customers of “Good Food, Good Life”.
It is possible for Nestlé to utilize both automated and human processes to handle a variety of components of its operations, including sales, service, and a variety of other components. This will depend on the nature of the company’s operations and how they are structured. In some cases, it may be difficult to place complete trust in a computer since the processes of the computer within its own processor are not usually documented.
When activities are unable to be fully automated, the operator must intervene to prevent the escapement processing phases from being carried out. However, even though modern technology can assist businesses in lowering labor costs, the presence of challenges will have a negative impact on the business, such as driving clients away from the firm as a result of their mistake. In order to increase the efficiency and dependability of the entire supply chain, Nestlé believes that it must update its system software on a regular basis.
Nestlé must make full use of all available technology and manual workers to the maximum extent possible in order to achieve this. Nestle may be able to gain entire control over the system, including the ability to change mode selection, routing, and a range of other operations, depending on the circumstances. It is feasible that combining multiple independent items into a single region may be beneficial to the overall operations of their company’s overall operations in some cases.
Take, for example, the expense of third-party logistics (3PL) providers. The pricing of third-party logistics is influenced by elements such as quantity and storage space, as well as additional value-added activities such as customized handling and other value-added operations, among other things (3PL). It is possible to save every cent that would have otherwise been spent on transportation expenditures in the preceding year by utilizing third-party logistics services (3PLs).
Although this strategy may be advantageous in the short term, Nestlé is committed to the long-term success of its business, as well as efficiency and effectiveness. Following the logic of the previous sentence, the eventual consequence will be that this strategy will not be profitable in the long run.
Other organizations, such as the ones listed below, have endorsed Nestle in addition to those listed below. Nestle has received a slew of positive feedback from customers in recent months.
The deliberate attempt to prevent from engaging in behaviors that may lead to dissatisfaction may help you to avoid feeling disappointed in your decisions in the future. Even if it is impossible to forecast the future, a great management team should be able to recognize when a plan they set in place has the potential to backfire, as was the case with their oil practices in the cosmetics company, which was previously mentioned. To avoid leaks occurring over the course of their work, workers were expected to anticipate the possibility of leaks occurring during their labor and to take precautionary measures prior to beginning the construction project.
Performing an in-depth analysis of its food category as well as raising its quality standards, both of which would be beneficial to Nestle, will enable the company to gain the public’s confidence in food safety and quality.
It is necessary for the Nestle Company to continue working with its suppliers in order to maintain its competitive advantage in the marketplace. However, despite the fact that this is a positive development, customers should exercise caution when placing their trust in businesses that are unable to withstand the rigors of the marketplace and whose values fluctuate when their products and services are compared to those of their competitors’ products and services, according to the Federal Trade Commission.
A high level of accountability on the part of the management team is required when introducing new products and services into a company’s line of business.
The ultimate goal is to see a significant increase in the number of new food and beverage businesses that are formed in the region in the coming years.
Attempts are being made to improve the quality of the company’s web-based services as part of its ongoing attempts to obtain a competitive advantage in the consumer packaged goods market. Making significant changes to the organization’s manufacturing and operating practices is a substantial job. Various other organizations, including as environmentalists and advocates for social justice, are concerned that employing original raw materials will not be adequate to address their issues.
The ability to preserve as favorable a public image as possible, to the extent that it is realistically practicable, is one of the most critical tasks when dealing with media concerns or difficulties that develop. Two examples of good corporate citizenship practise include the incorporation of corporate social responsibility programs into daily operations and the observance of environmental regulations and regulations.
