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Nestle Strategy Recommendation

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Ben Howard

on 29 October 2014

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Transcript of Nestle Strategy Recommendation

High cost acquisition due to popularity
Risk (time, budget,product integration)

Overview of FiveStars
" Turning transactions into relationships"

SWOT Analysis
Alternative 1
Bolster the chocolate and confectionery sector by reducing portion sizes of candy bars while increasing supply of chocolate to subsidiaries and competitors

Alternative 2
Production of
and products infused with the ingredient
Internal Analysis
External Analysis
Alternative 3
Hampton Creek
, a start-up seeking to transform the food industry with plant-based technologies
Alternative Evaluation and Final Recommendation
Founded in 2011
Fastest growing loyalty platform
Raised nearly $45 million in funding
Work with over 5,000 merchants and 4 million consumers
Key People
Nestle Health Services
Lower Costs

Differentiated products within segments
Large distribution networks
Target health and environmental factors
Top 3 Segments:
Powdered and liquid beverages (18.2 billion CHF in sales)
Nestle Products & Ice Cream
billion CHF in sales)
Nestle Prepared Foods (13.9 billion CHF in sales)
billion CHF revenue in food processing industry
Nestle faced a
27% drop
in revenue
Gross profit has fallen
between 2009 and 2011
Industry Growth and Expectations
Nestle is a leader in the
food processing industry
5 year forecast industry growth
Global Ice Cream – 20.8%
Global Beverages – 19.7%
Global Confectionery – 14%
Broad Environment
1. Economic
2. Sociocultural
3. Technological
4. Political

Five Force Analysis
Largest Threats
: Substitutes
and Consumer Power
Strategic and organizational fit
Expected increase in profitability
Caters to social trends and customer demands
Costs are relatively low
Profitability is expected and not guaranteed
More aggressive strategy may be necessary to change brand image more quickly
Integration between operations could strain division relationships
Nutritional & Health Benefits
In line with values & principles
Extremely profitable
No heavy competitors
High initial production investments
Bad taste of Spirulina
Not in line with historic development practices
Future competition
In line with Nestle's health, nutrition and wellness principle
Cost-effective way to reformulate existing products
Environmentally friendly
Enhances brand image and reputation
Aligns with growth strategy
Payoff Matrix
Additional Opportunities
Based on Jim Harvey's speech structures
Research and Development
Paul Bulcke
Matt Doka
A close look at the Broad Environment
Strong leadership
Innovative R&D programs
Brand reputation & image
Chocolate and confectionery industry sales decline
Health conscience society
New product development
International expansion
Food contamination
Rising food input prices
Stricter legal regulations on nutrition
External Growth
Strong top management
Value Innovation
Focus on health initiatives
Full transcript