Although Nestle is taking part in the global competitive market fiercely as well as the pressure of aptitude products, but companies need to examine the factors inside and outside as well as the current business situation with the aim of assessing the ability of these strategies through identifying the strengths and nakedness of the company.
From there, it can help Nestle understand more about how to put Nestleg’s products into new markets, especially Vietnam, and meet the elements of the economy. 3. 1 Analyze possible alternative strategies relating to substantive growth, limited growth or retrenchment. There are three types of alternative strategies can be applied to business are substantive growth, limited growth and retrenchment strategies. Nestle can learn and use appropriate strategies to maintain the best ranking in the nutritional food industry as well as support the development of Nestle in the future.
Thus, before making a eatable strategy for Nestle, I will analyze more clearly on three alternative strategies for Nestle plans in the future. Substantive growth strategies The understanding of the importance of business growth is a necessity for businesses. Businesses need have to identify development opportunities to become a famous brand and unique as well as to ensure the sustainable development of enterprises in the future. Substantive growth can be accomplished through the acquisition of operations, mergers, self- development with the available resources.
They depend on the market, technology, and financial capability. Substantive growth is implemented wrought the options following: Horizontal integration: It is a merger between two companies produce and compete in the same product line, in the same market. If companies adopt this strategy’, the growth rate can be achieved by extending the internal or external expansion through mergers and acquisitions of companies providing similar products, in collaboration with the link reasonable diversification. It will be a huge advantage to grow market share and reduce competition in the market by applying this strategy.
For Nestle, in 2002, Nestle merged with Dryer Company in manufacturing ice cream in the U. S. ND acquired the company Chef America, Inc. With $ 2. 6 billion. In January 2006, Nestle has completely owned company, Dryer, and since then the company became the largest ice cream producer in the world with 17. 5% market share. Source: website Nestle S. A Vertical integration: When businesses choose to expand by acquiring or taking multiple stages in the supply. Producer will own suppliers and its distributors. It helps companies improve efficiency and reduce costs.
For Nestle, to be able to bring a taste of the most delicious coffee, Nestle has provided a wide range of Grand Cru coffees, coffee machine, and personal revise through the coffee shop. Since then, Nestle has been operating in the premium segment portioned coffee worldwide, serving customers in nearly 60 countries. In addition, to ensure the Nestle food gives consumers adequate nutrition, Nestle has a scientific and the Health including medical nutrition business of the company, mainly supplying products six areas to support primary health care, including aging care, critical care, diabetes, obesity, cancer and pediatric.
Source: website Nestle S. A Unrelated diversification: The company expanded its business into a new area hat is not related to the brand, product or market current of company. For Nestle, Nestle began diversifying product when starting shareholding in L’Orealal in 1974. Nestle holds 26. 4% stake in the company L’Orealal, the leading cosmetics company in the world. Laboratories Novel is joint venture project about nutritional cosmetics between Nestle and L’Orealal. Caldera is a joint- venture project in the field of dermatology different between Nestle and L’Orealal.
Other projects include Cereal Partners Worldwide (with General Mills), Beverage Partners Worldwide (Coca-Cola), and Dairy Partners Americas (with Fomenter). Source: website Nestle S. A Therefore, the substantive growth strategy will have advantages and disadvantages. Advantages Nestle will achieve high growth rate, large-scale and better when faced with competition. Nestle improve and enhance product quality thanks to the application of modern technology production. Besides, from the buy and hold shares of other companies in the same industry, It helped Nestle to expand market share and increase market efficiency.
The use of diversification, Nestle can enhance brand, engage and try to produce brand new products. Disadvantages It can cause high risks and affect the current market share. It requires a lot of time and cost for machinery, equipment, materials and staff salaries for more. When inflation and the crisis is happening and growing, Nestle does not necessarily engage in new markets or new areas. Limited Growth Strategies emitted growth options: include market penetration, market development, and product development.
Market penetration: “is a strategy to grow the same product of the company in the same market” The only way to gain more market share with the same product in the same market is to attract competitors’ customers and get more loyal customers by marketing tragedies, advertising strategies, promotions, open more selling points to increase sales. (Source: objectifications. Com). Therefore, Nestle to invest in advertising through media such as newspapers, television, Internet…. It Often helps the company maintain or increase market share, dominance safety, increase the use of existing customers and market restructuring.
For Nestle Vietnam, Nestle Vietnam implementing market entry strategies through specific marketing strategies as: Advertising: TV programs and newspapers advert of Unsafe, Nested, Bear milk, Mill – Sponsorship of television programs, music programs, sports tournaments. Organizing workshops about public health nutrition; nutrition advice for growing children. (Bear milk, cereal). Organizing activities to introduce product outdoors: product introductions trial to schools or supermarkets (sour milk, pastured milk, Mill, Magi, Unsafe… ).
Implementation of promotion program like gift Mill, Nested… Advantages: The great population of Asia (especially is Viet Name) somehow provides a huge amount of potential customers for Nestle. This strategy will help Nestle sustain and increase the market share of present products. Creating competitive advantages (different high technologies, etc. To challenge potential competitors. Disadvantages: Nestle faced with competitors like Cataracts and PepsiCo, Inc. In Vietnam market. It takes time to adapt Nestle, access to customers and find out consumer demand in new markets.
If the world economy is crisis, not boost sales or promotions not attract customers in new markets D lead to a loss for Nestle. In addition, Nestle may be obsolete by the use of promotional measures more is focused on production of new products. Market Development: is the name given to a growth strategy where the business sells existing products into new markets. Is the process by which the firm seeks new markets for its current products? ” There are many possible approaches: new geographical areas, different package sizes, new distribution channels, differential pricing policies, new market segments. Source: Business Environment course book, IPPP ) For Nestle Vietnam, The Company’s products have been launched two markets of Vietnam is two big cities such as Hanoi and Ho Chi Mini City. Through strategic market development, the company has gradually built distribution systems and retail systems on the entire Vietnam. In 1998, Nestle Vietnam only nine distributors including six strictures in Ho Chi Mini City and Hanoi, currently has 120 distributors across the provinces and cities in the country. Advantages: New geographical area, the Asian market is booming and this market brings enormous revenue for Nestle.
It requires Nestle to spend the finance resource which is not too large. Nestle has a larger market and more customers, increase sales, and promote the development of the company in the future. Disadvantages: When Nestle implement market development strategies, they takes time to have the strategy performed because Nestle need to have the permission of ACH government in their new market shares before investing. Moreover, they have to research new markets and a lot Of risk in the marker. Nestle have to understand and meet the needs of customers in new markets.
Spending more money on research and provide new products to compete with rivals in new markets. Nestleg’s profits may go down due to the negative change of currency exchange rates and political situation Product Development: offering new products to existing markets and increasing the product’s features such as improved design and packed to launch product to the market. Example: Ever since commercial operation in 1997, Nestle Vietnam racket constantly making new products like these Mill, Unsafe, Magi sauce, Magi Number powder, yogurt …
Most of the new products in recent years of the company. It is products manufactured according to Vietnam from the origin products of Nestle worldwide. Research Center and development of Nestle launched the new products to serve to affiliates of Nestle worldwide. And based on the results of this research and the information market, the product development department of Nestle Vietnam adjustments from the original recipe of products to suit the tastes, habits, preferences of consumers in Vietnam…. Frequent changes related to packaging, packaging, creating new flavors and ingredients.
It is suitable for the living conditions of the people of Vietnam Advantage Nestle always make new and improved products to create differentiate and attract customers in the current market. It helps Nestle gain much market share Nestle has many advantages with strong financial resources to support R&D department Nestle has many advantages over the competition. Disadvantage: Nestle would have cost a lot of money for advertising new products to attract the attention of customers. Nestle will face high risks, if Nestle does not succeed in producing a new product or not collected revenue from new products.
Nestle takes much cost analysis and market research before the implementation of strategies. Retrenchment This strategy can bring stability to the company. The company has cut employees, cut spending when companies realize that they are not strong enough to compete with other competitors. There are three types of cutting strategies that Nestle could make to their company: Cut-off labor: Nestle will cut unnecessary spending and labor when Nestle took profits and their share in the market. Divestment: Nestle may sell or liquidate part of the assets of he company or a large department.
Liquidation: this is considered to be the most difficult because Nestle could lose assets. It leads to serious consequences for the employees that they will lose their jobs. Moreover, it lost the opportunity that Nestle pursue in the future. Advantage: Reduction strategies can help save money over Nestle to focus on their core competencies. Nestle will stabilize the financial problems. Nestle faced with financial and resource distribution in the company when Nestle cut costs and resources. Lack of staff leads to a decrease in production efficiency 0 profits will decrease. Nestle caused high unemployment rates.
Liquidation can cause serious consequences like bankruptcy. C] After analyzing the advantages and disadvantages of each strategy, I think Nestle should choose limited growth strategies. It fits with the current business situation and business development activities in the future of Nestle. Thus, Nestle needs to focus on improving product quality; diversifying business activities and increase efforts to attract customers using advertising tools to develop new products and services for customers know the new products easily. Select an appropriate future strategy for Nestle AS (Vietnam)
Based on the advantages and disadvantages analyzed alternative strategies for Nestle, Nestle should be carefully analyzed to select an appropriate strategy for the company. In particular, limited growth strategy is considered appropriate and at least pose a risk. This strategy promotes the available resources and capabilities of Nestle. In addition, product development and market development is feasible to Nestle have many opportunities to expand new markets, enhance brand and business development objectives, vision and mission that Nestle has put place.
Nestle can evaluate three strategies of emitted growth through Anions Matrix (not including the diversification strategy). Since then, the management of Nestle can make the right decision to become a Nestle brand leading food nutrition world, especially to overcome the competition in Vietnam market as Cataracts. There are three main factors to help Nestle evaluate strategic is: suitability, feasibility and acceptability to stakeholders (SFA). Evaluation on the penetration development strategy Us edibility This strategy is the brand development, new products and new services to penetrate the Vietnam market.
Thus, Nestle wants to develop a sustainable cuisines activity in Vietnam. Nestle to overcome the great competitor and also is expanding market share to Vietnam as Cataracts. To be able to successfully compete and do master Vietnam market, Nestle need to make a difference, market research and find out the basic needs Of the people Of Vietnam to be changed accordingly. Nestle must have technology development, brand and products closer to consumers through advertising promotions.
For example, Nestle has links with the National Nutrition Institute to open and operate health care services to the consumer, or consulting services, customer care. In addition, Nestle have promotions or discounts products in holiday to compete their rivals. (Source: Nestle) Feasibility Apply penetrating the market has highly feasible for Nestle. Nestle has resources such as capital, labor, modern technology and are in stable condition. Besides, Nestle has providers available and the long term in the market the Vietnam as coffee farms in the Central Highlands.
Nestle signed a contract with the supplier to ensure that materials are purchased in large numbers, high quality and reasonable price. Nestleg’s human resources are carefully selected. Employees have knowledge and experience, professional training suit each location. They are talented, energetic, creative, enthusiastic and responsible job. On the other hand, Nestle organize training programs for staff to develop their skills. Acceptability This is a strategic interest of the shareholders and the stakeholders because they can achieve more profit from this Strategy.
Or is this strategy can spend money on advertising, marketing to attract customers. Moreover, this strategy is less risky for Nestle. It focuses on the current market and the customer of Nestle desire many change to choose. Besides, Nestle will be lowed to expand market share in Vietnam if Nestle comply with laws and government regulations such as labor law, environmental policy, etc. Evaluation on the market development strategy The Asian market is a huge potential for Nestle, especially Vietnam. Nestle is trying to introduce existing products to new markets.
Although, it is more risky than the market penetration strategy, but it can be an opportunity for Nestle to make more profit because many Asian countries have a stable political situation and GAP figures such as Vietnam, Singapore, Manner, etc.. Vietnamese population is quite high, this is a great opportunity and potential or market growth and increased profitability at Nestle Vietnam. Feasibility Nestle has built a strong workforce of market research from many different countries come with different cultures . In addition, Nestle also has a chain of reputable providers, quality and long-term.
Nestle support for cultivation at coffee farms and dairy farms Besides, Nestle also open more branches or retail stores so that customers can easily find and buy Nestle products. Acceptability For investors and shareholders, they are always interested in the company’s profits, and they want to get higher returns from this market. If Nestle succeeded in developing markets, they will be more profitable. Moreover, customers also play an important role in this strategy, they will decide the success of this strategy and profitable for Nestle or not.
Shareholders and investors will continue to invest in building more branches worldwide. When expand business into new markets, Nestle must comply with the rules and regulations of the countries where they operate as the law of environmental protection policies, taxation and consumer protection. These rules do not cause difficulties for Nestle because they have a lot of experience in operations in many countries around the world. Evaluation on the product development strategy This strategy is an appropriate strategy for the current operations of Nestle.
Applying this strategy, Nestle need to update the market trends to improve and develop new products to meet market demand. During development, continuous innovation and Nestle launched the new product line to meet the needs and accordance with the consumer. In addition, Nestle has always focused on the application of technology, the most modern techniques to make products with the highest standards to bring satisfaction for consumer products. With strategic bring nutritious food sources and healthy consumers, Nestle provides nutritious foods such as milk, nutrition flour and confectionery for children.
Feasibility Nestle has huge financial resources and human resources to implement the strategic plan of services and product development. Technology is an important part of the R & D of Nestle. Nestle has engineers working in R & D in many areas – from packaging equipment, food processing technology and production of new beverage systems such as Newspapers, Unsafe Dolce Gusto, especially. T&BabyNes. Together with the engineers, food scientists Nestle developed processes and technologies that enable the development of safe, nutritious food and beverages in order to bring the most delicious taste of Nestle food.
Acceptability This strategy is also affecting sales of the company as well as the interests of stakeholders. Nestle can expand the market share with new segments to serve the needs of our customers. It is not easy to anticipate customer’s needs, so Nestle should have more specific strategies for advertising promoting. If these products can meet the needs of customers, they will get more belief and the number of products sold increased as well as profit from Geiger sales. Consequently, stakeholders will have more profit and they will accept this strategy.
More importantly, Nestle need create strong relationships and long-term supplier. It ensures adequate supply of raw materials to manufacture new products…. Recommendation: Through the analysis and evaluation of three factors as Suitability, Feasibility and Acceptability to stakeholders. Nest can see that Market development, products development strategy are good choice. It can increase the reputation and competitive advantages of the company. Moreover, with this strategy, Nestle can use maximize resources of company.
Therefore, this is a good strategy for development of the company in the future. 4. 1 Compare the roles and responsibilities for strategy implementation in two different organizations (Nestle against its nearest competitor) Each company has different strategies for their business activities, including Nestle. Moreover, to achieve objectives and effectively manage a business, Nestle needs to define the role and clear responsibilities for each department of the company. Following are the roles and responsibilities in each department of Nestle to ensure success strategy selected.
Human Resources Department Role Human resources play a very important role for the development of a company. Therefore, Nestle needed to maintain stability human resource. Nestle need to recruit effective human resource for the company, from which provides and competency assessment of each employee, then company arrange human resources in the appropriate position for each plan in order to maximize profitability and ensure future for Nestle. Nestleg’s staffs have to meet the expectations of the customer to ensure the long-term goals for the company.
Responsibility All responsibility is to ensure that Nestle to achieve their business goals wrought: Recruitment and training of staff professional development more, Nestle to comply with labor laws, paid to employees based on labor law, to ensure that staff can develop through wages, health care, equal treatment, and morality with staff. Besides, creating a pleasant working environment, effective and providing training professional programs for staff. On the other hand, Nestle needs to build a specific work plan to create a balance between needs and resources to reduce stress among employees.
Taking advantage of available qualified human resources in the company to keep objectives cost Financial Department The finance department is an important department in a company. For Nestle, too, all the profits, cost, and debt will be finance department controlled and measured through financial statements. In addition, this department can be adjusted cash flow and raise capital for investment activities and business of Nestle. Besides, the finance department also created good working relationships with other departments within the company to run the company efficiently.
Responsibility The finance department is responsible for some certain of activities: The finance department should ensure that salaries and bonuses for staff, pay ills, pay dividends to shareholders must be paid on time. On the other hand, this department is responsible for monitoring the changes in business conditions and forecast performance indicators such as sales revenue or cost of Nestleg’s investment as well as analysis of credit risk and interest profits to invest in new markets.
Moreover, the finance department have to ensure the operational budget of the other parts, then, internal communications and make forecasts about future budgets for other departments Marketing Department To reach out to customers effectively, bring in revenue, and profit for the many, Nestle must have marketing departments. The marketing department will represents for company create a relationships and good image in consumers’ hearts. This department play a role search new market has the potential to expand the business.
Then, it has to research, analyze, and survey the needs of customers to produce new products. Moreover, this department needs to work with other departments to identify potential as well as the target market. Responsibility There are some marketing aspects that this department strongly takes responsibility for: Nestle needs to build a strong brand and reputation with customers by advertising products on television and newspapers and hired an advertising agency to do the project, to get the best professional results.
The marketing department shall have to research the market and considering the attitude of customers with products of Nestle, from which, change or create new ideas and unique products to attract more customers than competitors. It is responsible for supporting the efforts of the sales department. Furthermore, the marketing department needs to invest strongly in advertising campaigns or promotion program. Besides, it must build a clear striation system for customers to buy products more easily and provide consulting services for product and health care for consumers.
Manufacturing Department Ensure market demand by producing high quality products as well as ensuring input materials and the quality of the product in output. That is a process of product manufacturing and this department has role to control the production process without incident occurs or delayed. Responsibility Production department is responsible for research new or modifying existing products. Setting standards and goals for each department of the production recess and check each stage of production of products and raw materials for the manufacturing process.