Nestles View on How to Maintain the Product Impression and Global Market - Case Study Example

Name) (Instructor) (Institution) (Course code) (Date) New trade theory The new trade theory came into being in the 1970s. This is when many economists advised that economies of scale will be very important in the global business. The theory proposes that; its influence on economies of scale, business can intensify the variety of products available to customers and lower average expenditures of the products. The theory also suggests that when the yield needed to accomplish economies of scale represents an important percentage of overall global demand, the international market may only be able to sustain a small number of businesses (Barrios, & Strobl, 2000) According to the new trade theory, companies that start a first-mover advantage regarding the manufacture of a certain new product may consequently dictate global market in that product. The theory also suggests that a firm may dictate a certain sector basically because it was the pioneer. If the company can realize economies of scale, it will prevent the entry and the emergence of other competing firms The theory also suggests that nations may profit from enterprises even when they do not differ in inputs endowments or technology. Through, a nation can concentrate in the manufacture of specific merchandises and realize scale economies and thus, minimize the cost of production and trade for other stuffs. Customers should profit from lower prices. According to the new trade theory, companies that start a first-mover advantage regarding the manufacture of a certain new product may consequently dictate global market in that product.  The theory also suggests that a firm may dictate a certain sector basically because it was the pioneer. If the company can realize economies of scale, it will prevent the entry and the emergence of other competing firms Nestle is a global food and drink firm based in Switzerland. It is the leading food firm in the globe based on its returns. Some of its products include breakfast cereals, dairy products, tea, coffee, baby food, pet food, bottled water, snacks and pet foods among others. Their yearly sale from its 29 products is approximately US$1.1 billion. The company operates in 194 counties with 447 factories worldwide. The company has human resource of over 330,000. Nestle are dedicated to offer with its customers merchandises that are of high quality and meet the utmost safety standards possible. This is applicable not only to food and beverages but also to its systems, services and portfolio. Nestle policy is to guarantee quality and food safety as per the firm’s policy which they are devoted to stick and maintain it. The company builds its reputation by delivering products and services that meets its customer’s choices and expectations. Nestle aims to meet both its internal and external food safety supervision and quality needs. It also works towards zero-defect policy by aim to eliminate waste in the company. Analysis of issues confronting Nestle Group In trying to be in line with the new trade theory, Nestle group has faced many challenges and setbacks along the way but it has emerged victories in many ways. This is because of it is still the leading company worldwide food company. Many of the issues that have affected them are as discussed below Nestle is one of the global most controversial companies. For more than twenty years its name was massively linked to controversy, including a long-lasting boycott, over the sale, promotion and marketing of infant formula in third world countries. Lately, the firm has been one of the main targets of the international pressure against its bottled water. The firm’s hard-line workforce relations in developing nations have made it a worst in the eyes of global union movement Infant Formula Controversy  In 1970s, while the company was growing gradually throughout the poor countries, was targeted by a campaign opposing the promotion of infant formula in third world countries. Advocates from institutions and organizations like INFACT and other faith and religious groups claimed that massive promotion and marketing of formula by firms like Nestle was triggering health burdens, in that poor mothers frequently had to mix the formula with dirty water and often diluted the expensive powder so much the infants remained malnourished. Nestle responded to the campaign and boycott of its merchandise with a counter-campaign, they donated money to study and research centers the financed Herman Nickel, a journalist of Fortune Magazine, to provide a crucial report on the boycott campaign. Instead of writing the report, Nickel wrote an article in the Magazine with the same function. He called the piece of article “the Corporation Hater” depicting the spiritual groups’ involvement in the campaign as Marxist parading under the umbrella of Christ. Nickel was sacked from the Fortune workforce, but he was named an ambassador to apartheid in South Africa by the Reagan Administration as a reward Nestle eventually changed its stand, assenting to obey the marketing code demanded by Who Health Organization. This led to suspension of boycott in 1984. This did not last long as protest campaign was resumed in 1988 with the reason that the company was found breaking the World Health Organization code by issuing large quantities of free sample primarily in hospitals. Interagency Group on Breastfeeding published a report giving more evidence that Nestle and other firms were acting against the WHO code Environment and Product Safety  Water Controversies   After venturing in bottled water business by purchasing upscale brands like Perrier and San Pellegrino, the company started selling cheap water in third world countries in the late 1990s. Right from the beginning, critics pointed out that the ready availability of bottled water, branded as Nestle Pure Life, would make the authorities of those countries sluggish on the investment of infrastructure required for consistent public water systems. In 2005 a report was published questioning the purity of Pure Life water sold by Nestle in Pakistan by the Swiss Coalition of Development of Development Organizations Nestle faced more hurdles on its activities in US, including Zephyrhills, Poland Springs and Arrowheads brands it acquired from Perrier deal of 1992 and Deer park of 1993 For instance, when Ozarka subsidiary required authorization to extract water from Rohr Springs in Eustace, Texas in 1995 the local inhabitants raised complaints. Finally they got approval from the state agencies to go on, but the proprietor Bart Sipriano, took the firm to court appealing that his well dried up after the subsidiary company started pumping. The case was eventually conclude in the State Supreme Court which was ruled for company in 1999 In 1998 Nestle firm faced demonstrations and legal encounter when it wanted to increase the quantity of it was permitted to extract each day from the Crystal Springs, Florida from 0.31 to 2.6 gallons. The company promptly reduced the amount of water but the local water authority disallowed the demand. The company lost the court case about it The same case occurred again in the year 2001 when the firm sought the authority to pump water to construct a huge bottling plant in Big Rapids, Michigan for its Ice Mountain brand. Nestle got the green light for the plant but the antagonist led by the Michigan Citizens for Water Conservation laid a supremacy battle in court over the water rights. In the year 2003 the case was rule against the company and ordered that the construction be stopped, citing that it was causing environmental damage. Nestle was not satisfied with ruling and appealed in Texas. The Supreme Court eventually rule in favor of Nestle Group Come the year 2003, the company secretly negotiated an agreement to extract water from three springs in Mount Shasta in Northern Carolina. Nestle also intended to construct largest ever water bottling industry in the same place. In 2008 the company decided to roll back its plans but that did not satisfy its opponents. In 2009 the company decided to abandon the project in the area. It tried to put the project in Sacrament, but also faced demonstrations and active resistance A similar scenario occurred in the town of Salida, where the said company planned to extract 65 million gallons annually to be wired to a plant in Denver. Nestle shocked the world following massive local demonstration by promising to replace the water extracted. They were going to replace with water that would be harvested from Denver suburb of Aurora. Commissioners from the Chaffee County permitted Nestle with the Salida idea in the year 2009 but enclosed it with 44 conditions to the permit. Critics declared to continue with the fight The company water hullabaloos have always not been at local level. In the year 2003 there was a successive of class-action legal battles file against Nestle, many of them charging it with fabricated advertising for naming its Poland Spring trademark natural spring water. The company, apparently not enthusiastic to defend the truth of its brand being questioned, settles the row out of court for a whopping $12 million The company has also been one of the key victims of the Think Outside, a bottle campaign flung in the year 2006 by Business Accountability International. Product Safety In June 2009 the was an epidemic of E.coli causing food poisoning in US which was associated Toll house frozen cookies made by the company’s plant in Danville, Virginia. Nestle recalled its all products from Toll Houses in the whole country. Nestle did not escape the hook as it was discovered that Toll House had earlier denied to give inspectors from state FDA access accounts and records linking to issues such as consumer complaints and the control of pests Palm Oil and Global Warming In the year 2010 Greenpeace International started an operation against the company’s use of palm oil. The linked it to the damage of rainforest in Indonesia which causes the worsening global warming. The Greenpeace attacked the company’s merchandise like Kit Kat bars. Two months later the Nestle Group cave in (Telofski, 2012) Labor Relations The company has always had good reputation with unions and organizations representing its small internal human capital, contrary to that are that the company’s foreign workforce record is discordant. Nestle has had misunderstandings with unions in many countries, mostly the South and US In the past decade, the company has been under condemnation for its workforce handling practices by the International Union of Food Workers, a worldwide group concerned with the food-sector unions. The year 2003 the International Union of Food Workers question Nestle for not adhering steadily high standards in its workforce practices globally and condemn it for taking advantage nations and countries having less rigorous regulations; these are countries with fragile legislations sanctions union busting. The company is usually to not averse to busting unions How Nestle maintain the product impression and global market Despite the above numerous challenges and legal battle affecting the Nestle company it is still the leading company in the basing on its annual profits. Some of the factors that have led to this success as discussed below Human Marketing Strategy Nestle has emphasized the significance of its products with the superior benefits it offers to its consumers. They emphasize this over competing products. Milk powder and coffee has the ingredient and quality that has direct Impact on health and nutrition benefit. Coffee brings comfort and ease to its consumers with similar effects of milk products on children and infants. The products and merchandise passionate positioning brings trust, love and sympathy to the consumers. Nestle adjusts to the changes in its customers mentality. The name and trademarks adds imagery, passion and creates a reputable brand name. The company triumph is a natural consequence of many factors. The chief aspect is the marketing strategy. This results from the production process, quality control and quality assurance, good brand name in addition the key raw materials employed. The administrative rights are essentially in control of the country’s companies. They have the power to decide on each product’s ultimate shape in accord with national regulations. This means that it is essential to keep a completely devolved operations but consistency is required To accomplish this purpose, delicate balance is vital to maintain it. This is the stability between global operations and the local operations at the national level. Global and local communication also needed to be incorporated. Constant and proper flow of information is needed to execute new polices amply. The company therefore has three aspects that safeguard involvement in the implementation of the firm’s strategy, product details together with brand marketing approaches 1. Package design manual This offers direction that allows a more flexible use of their files. This gives a variety of means of handling the prevailing standards. An example is the form of wrapping material and options 2. Labeling standards This is a guiding document comprising of numerous features that clarifies rules and principle. A good case is the description of the Nescafe logo, its color, fonts together with other particulars the measure proportions. Labeling standards also list other product label; it is required that every branch or office employ these label early enough. 3. Branding strategy These involve the product marketing values. They comprise of the brand, image expectations, company contacts, brand personality, elaborated features of the above two files with the brand development Corporate Culture and Solidarity The company decision-makers appreciate the economic globalization has directed the business promotion activities and organization mechanisms to alter the emphasis of their work. The company marketing unit is separated into direct operation and smaller and numerous process department. Every process/operation unit has the freedom and flexibility to operate and make prompt contingency decisions which are in line to the general policy and strategy of the enterprise. The company’s portfolio strategy permits each brand to operate autonomously in the market. The give them authority to take distinctive strategy, but to appropriate harmonization with the Nestle headquarters The Nestle workforce has continuously been the main reason in bringing the company spirit to life. This has therefore led the company growth from a rural workshop to the current global leader food companies. This human resource is the firm’s most valued asset. The outstanding performance of Nestle Group today originates from the exemplary input and the loyalty of the workforce globally. As Nestle Group is dedicated to producing high quality products, promoting a better life, it is also concerned about its employees. The company has become employer of choice due to the mutual respect created between the managers and the workforce of Nestle. This is because it is non-discriminating based on one’s race, gender, ethnicity with the respect for social and cultural diversity Target Market The company products are aligned to more on healthier drinks and beverages. The company produces drinks that meet the needs and demands of everybody ranging from infants all the way to the adults. Case examples include the Yoco Cultured drinks meant for the children population, RTD milo and Nescafe for the youths, RTD milo UHT for teenagers among others. The company also target customers who buy these products and merchandise who prefer convenience as the products are ready to taken readily Market Attractiveness Market uncertainties have had an impact to the company. Despite the harsh economic environment that the company faces, the management of the company has taken action the make sure Nestle delivers a resilient performance leading to double growth of above 13.5% 9 (Nestle Corporate Report, 2008). The company has also expanded Popular Positioned Product which provides its customers with nutritionally balanced products at reasonable prices (Nestlé Creating Shared Value Report, 2008). Positioning In rejoinder to the present customers’ need for health, nutrition, suitability and well-being, the company had positioned its merchandises by offering a full range of fortified nutritionally balanced foodstuffs that are trusted among its customers globally. References "Nestlé: Corporate Rap Sheet." Home Page. http://www.corp-research.org/nestle (accessed July 18, 2014). BARRIOS COBOS, S., GÖRG, H., & STROBL, E. (2000). Multinational enterprises and new trade theory: evidence for the convergence hypothesis. Boyd, Colin. "The Nestlé Infant Formula Controversy and a Strange Web of Subsequent Business Scandals." Journal of Business Ethics 106, no. 3 (2012): 283-293. Earth Island Journal. Global Marketplace. March 22, 2000, 22. http://www.rediff.com/business/slide-show/slide-show-1-worlds-biggest-food-and-beverage-companies/20120416.htm Nestle Toll House Cookie Dough E. coli Outbreak Lawsuits - Nationwide (2009). (n.d.). Marler Clark News Events. Retrieved July 18, 2014, from http://www.marlerclark.com/case_news/view/multi-state-e-coli-o157h7-outbreak-linked-to-uncooked-nestle-toll-house-coo TELOFSKI, R. (2012). Living on a meme: how anti-corporate activists bend the truth, and you, to get what they want. Luniverse Inc. VALLS, J.-F. (2013). Beyond the low cost business rethinking the business model. New York, Palgrave Macmillan Read More