Global and International Business Activity - Research Proposal Example

Global and International Business Context Table of Contents Part A 3 Introduction 3 Nestle 4 Market Strategy 5 SWOT Analysis 7 Porter’s Five Forces Model 9 Ansoff Matrix 11 Part B 13 Reflection 13 Conclusion 14 References 16 Bibliography 17 Part A Introduction Global and international business is part and parcel of modern day business activity. In fact, global and international business is a technique used by present day global business organizations like Nestle, Coca Cola, and De Beers etc to carry out their business across borders. In this process, companies try to link transactions which primarily include import and export along with Foreign Direct Investments (FDI). International business is often conducted through various mediums like that of joint ventures, mergers and acquisitions and also through wholly owned subsidiaries. Other few procedure of conducting international business includes franchise oriented business or on a contract basis along with a local organisation, also sometimes the companies try to do business on the basis of licensing. Global and international business of any organisation is a venture that is undertake for the benefit of growth and expansion of business. The global brands like Nestle, Coca Cola find it as a satisfaction and reputation building technique to move abroad for doing business globally. Global and international business deals with various environmental factors like that of PEST analysis. These macro environmental factors lead to various complex business situations along with different application and situational changes for varying market. Although, there are certain varying situations for expanding globally but for ensuring growth, profit and also satisfying their needs many companies now try to grow globally which would have been limited for them as a local brand (University of Central Arkansas, n.d.). Nestle Nestle is a global brand which produces items related with food and drink. A market can be stated as a place where many buyers or customers meet together for transactional purpose. Nestle as a global brand, is established in the markets of food products and also drink related products. Among other, confectionery product category is one of the strengths of Nestle. They are in competition with Cadbury for the global confectionery market. Nestlé’s confectionery products include chocolates bars, sweets along with sugar confectioneries and boxed chocolates. Confectionery market is a tremendous competitive market. The demand for the products produced by Nestle in this market is huge and worldwide. The confectionery market in itself is a vast market with global players available. According to Porters five forces model competitive rivalry among players like Cadbury and Nestle is a big factor. The customers for Nestle are generally the youth segment of any country. Nestle was founded in Switzerland and is also headquartered in Switzerland. But Nestle has eradicated the global geographical boundary and has moved to more than 80 countries world wide with the employee strength of nearly 300,000 people. Nestlé’s first food product was developed by Henri Nestle in 1867. Market Strategy In recent times the market share of UK Nestle has risen to 15.6 percent with a 0.5 percent growth. The growth in market share is mainly contributed by the very successful Kit Kat brand. Nestle confectionery is still in 3rd position in the UK market behind the other two successful brands like Cadbury and Mars. In recent past, Nestle in UK has decided to concentrate on their seven most promising and successful brands. Market segmentation analysis of Nestle confectionery deals with segmenting the products according to the similar needs of the consumers. Nestle confectionery have divided their products into bars, sweets, sugar, confectioneries, etc according to consumers need. According to the PEST analysis, it can be observed that the political condition of a country can affect a product. For Nestle it had certain controversies in countries like Zimbabwe where there was firm related crisis. Nestle boycott crisis and Chinese milk scandal etc had affected the company. Economic situation also plays a vital role. Economic situation like inflation, interest rate fluctuation, taxes imposed by a government on imported products play a vital role for the decision making of a company. Social condition have due importance for an organisation. In some cases, Nestle had to face a boycott from the global environment. In a foreign land, a foreign product sometimes faces problem from local brands and their supporters. Technological condition is one of the differentiating factors for a brand to create difference from its competitor. Nestle has become one of the leading brands in the world through their superior technological prowess. They have invested in developing superior technological infrastructure which would give them extra benefit. For understanding the confectionery industry that is related to Nestle it can be analysed with strategic management models like Porters five forces model. Confectionery industry deals with production of chocolates, candies, sugar confectionaries, boxed chocolates etc. The industry is highly competitive industry. It consists of products from many different brands. Nestlé, which is a leading global brand has developed strong corporate objective to be the worlds largest brand along with it leading food manufacturing brand. In not so distance past, it has undertaken an expansion policy. It has also diversified by acquiring, by divestment for achieving structural balance in the business. The company has also ensured that the Nestlé brand is considered as a company that produces highest quality products (The Time’s 100, n.d.). Global brand can achieve economies of scale substantially in production and purchasing globally. As world comes closer to each other through globalisation, importance of products which are instantly recognizable increases. Nestlé’s product portfolio includes confectionery that is famous all over the world. It has eight most selling and popular brands in the world consisting of Quality Street, Smarties, Aero, Rowntrees Fruit Pastilles, Polo and Milky Bar. For Nestle, it is extremely important that their marketing objectives which they follow for each product line is followed keeping in mind the compatibility issue along with its overall objectives that company follows as a whole. Nestlé’s products character has strengths along with its weaknesses thus for customising the objectives for marketing each product is needed to be varied accordingly. Kit Kat is one of the leading products of Nestle. It is one of the most produced and sold products of the company worldwide except in USA. It is the Number 1 brand in UK. And is the world’s Number 2 chocolate product after snickers of Japan SWOT Analysis The SWOT Analysis for the products of Nestle can be as follows: Strengths Many products with wide variety It is largest in the world food and beverage company in terms of sales. Flexibility Labors working in Nestle are highly competent and skilled The staffs working are educated They provide with large number of extra offerings along with monetary benefits Recognized world wide Nestle products are easily available throughout the world Weaknesses- Present in many markets Weak in US as a leading brand Nestlé’s target market is small Opportunities- Healthy food market Asian Market Relatively few number of competitors Threats- Chocolate interest decrease Major players may enter the market of Nestle Few unwanted situations like ‘Nestle boycott’ may damage the image of the product. Porter’s Five Forces Model The model of Porter’s Five Forces can be used accordingly in the case of Nestle: Threat of New Entrants - Food Industry is a highly competitive industry. Entry of a new competitor is always high on agenda for any leading brand. In food industry, there are relatively small players in the market too. The more confectionery brands that enter the market, it becomes even more saturated. Recognizing brand name is always an advantage for existing players like Nestle. In food industry, consumers look for quality which the existing players are able to supply to the buyers though the threat of a new entrant is always there. Power of Suppliers - The food supply business is mainly dominated by Nestle, Cadbury and Mars in the confectionery sector. So, there is no cutthroat competition among suppliers. Also, the possibility of integration for supplier vertical is not there at present. Therefore suppliers are at an advantage in this respect as they are in quite a strong position. Power of Buyers - The bargaining power of buyers in the food industry is quite high as there is not much cost involved in switching of brands. But still consumers generally prefer brands like Nestle for its general image of quality and variety. Availability of Substitutes - Substitute products are also a threat to an established brand. There is availability of local brands which pose threat to Nestle. Though in Confectionery market there are less players but still substitute brands are available in every country. Therefore, Nestle as a global brand has to keep a track of it and decide tactics accordingly. Competitive Rivalry - The food industry is highly competitive. In general, there is heavy competition between Nestle, Cadbury and Mars in confectionery sector. Therefore, each brand always try to be one step ahead over another .The returns are low because there are high cost of competition. It can be tough for the companies to maintain this competitiveness when there is economic downturn like the ongoing recession. (Purdue University, n.d.) Ansoff Matrix The following table depicts the Ansoff Matrix for the global brand, Nestle. Existing products New products Existing markets (Market Penetration) Chocolates (Product Development) Cereals and infant nutrition’s New markets (Market Development) Trying to get fast foods by developing Maggi as a new product. (Diversification) Developing new meals, Medicated remedies and Pet care products. The “Nestlé way” of marketing is done in the following way: Thinking and planning for long term or period Decentralizing of their hierarchy Keeping to what they know Adapting to tastes and preference of local consumers. Nestle, as a global brand has diversified into various countries like New Zealand in the Oceania region. Nestle follows the tagline “Good food, good life”. Henri Nestlé developed the symbol deriving from his name. The Companys logo and its symbol are developed around on the basis of care and attitude to life-long nutrition as promised by the company. In 1905, the company amalgamated with the Anglo-Swiss Condensed Milk Company to form a dynamic new venture capable of developing the growing world markets for milk-based products. From then Nestle has developed the habit of product innovation and acquisitions. In 1999, Nestlé Australias head office became headquarters for the Oceania Region, which includes Nestlé operations in New Zealand, Australia and the Pacific Islands. The trademark, NESTLÉ, is used in New Zealand since 1885. Earlier, Nestlé products were imported. With the increase of demand, manufacturing facilities were established at local level. At present there are two plants manufacturing products that operate in New Zealand .There are also regional sales offices along with it, quite a few distribution centres. The present employees of the company, nowadays, are committed towards fulfilling their motto of good food for good living and thus they try to continue the legacy which Henri Nestlé started around 130 years ago. Human capital is the main contributing factor for Nestle to succeed. Nestlé Good Life Program that supports and contributes to the welfare of New Zealanders, helping to improve their quality of life by considerable extent (Nestle, n.d.). Part B Reflection Globalization and diversity in the workplace have created a term called ‘cross cultural management’. It has become a very important element in organizational life. It has helped to developing high-quality multicultural research. Overall knowledge through cross cultural management has improved both the qualitative and quantitative aspects of work (Emerald Sight, n.d.). Cross cultural management has been able to bring together academics from around the world. It has provided a platform of discussion and for exchanging of ideas. Along with it, it also propagated development of knowledge through sharing. Culture has been analyzed from a country, religion, language, ethical value, and many other areas taking them as reference.  Cross cultural management has been implemented for the improvement of following cases: Management Theory Diversity Comparative Accounting Structures Work Values HRM Policies Entrepreneurial Business Teamwork     Cross Cultural Venturing and Alliances Organizational Life International teamwork also is a term developed due to increase in effects of globalisation in case of business sectors. It helps an organisation to learn from each other. The strength of one country might be the lagging point of another. But through knowledge sharing, motivation and also technological know-how sharing, the international teamwork has enabled much faster growth and development in almost all of the sectors. Presently many companies share their workforce by means of knowledge sharing. In this process a worker from a particular country visits the working environment of another country. Thus, through this sharing of workforce both the organisations are expected to be benefitted (Squire & Dietsch, 2001). Conclusion Global and international business has taken off in modern days with the advent of the cross cultural and international teamwork. The Nestle, as a brand, has been able to succeed globally through their proper market analysis. They have been a successful brand for a long time almost for 130 years. They have covered all political, social, economical and technological barriers for making a successful foray into confectionery industry. In their industry though they face though competition from brands like Cadbury and Mars, they have successfully been able to keep their place as a global leader in the confectionery market as their eight products are among the top thirty in the international industry. They have also diversified in to products like Maggi, Pet products etc successfully. Milo has been one of the most successful brand that nestle have been able to come up with. With varying range of possibility and relatively small number of competition Nestle’s future is looking to be more prosperous in the future. Nestle also have been able keep on their long standing culture successfully through their motto of good food and good life. References Emerald Sight, No Date. Cross Cultural Management. An International Journal. [Online] Available at: http://info.emeraldinsight.com/products/journals/journals.htm?PHPSESSID=1ncabdbt9v3vln3gqj7s18ij45&PHPSESSID=1ncabdbt9v3vln3gqj7s18ij45&id=ccm [Accessed May 07, 2010]. Nestle, No Date. About Us. Nestle Oceania. [Online] Available at: http://www.nestle.co.nz/AboutUs/Default.htm [Accessed May 07, 2010]. Purdue University, No Date. Industry Analysis: The Five Forces. AICC. [Online] Available at: http://www.ces.purdue.edu/extmedia/ec/ec-722.pdf [Accessed May 07, 2010]. Squire, D. & Dietsch, M., 2001. International Teamwork Pays Off As MIS Students Redesign Digital Library Program Web-site. Indiana University. [Online] Available at: http://www.slis.indiana.edu/news/story.php?story_id=279 [Accessed May 07, 2010]. The Times 100, No Date. Nestle’s Corporate Objectives. Case Studies. [Online] Available at: http://www.thetimes100.co.uk/case-study--long-term-maintenance-classic-brand-name--7-92-4.php [Accessed May 07, 2010]. University of Arkansas, No Date. What is Global Business? Publications. [Online] Available at: http://www.sbaer.uca.edu/publications/international_business/pdf/01.pdf [Accessed May 07, 2010]. Bibliography Nestle, No Date. Our Brand. Sweet Things. [Online] Available at: http://www.nestle.co.uk/OurBrands/ProductRange/Confectionery/ [Accessed May 07, 2010]. Nestle, No Date. About Us. Home. [Online] Available at: http://www.nestle.com/AllAbout/AllAboutNestle.htm [Accessed May 07, 2010]. Saddler, P. & Craig, J. Strategic Management. Kogan Page Publishers, 2003. Scott-Thomas, C., 2008. Nestle market share growing despite economic downturn. Food and Drink Europe. [Online] Available at: http://www.foodanddrinkeurope.com/Financial/Nestle-market-share-growing-despite-economic-downturn [Accessed May 07, 2010]. Read More