Nestle UK - Internal and External Analysis - Report Example

2.0 INTERNAL ANALYSIS In this section, we are going to look at the various aspects of the company so as to better understand the operational structure of the company. This understanding is is key in finding out the gaps in the organizational processes and thus come up with ways in which efficiency in the organizational operations can be improved. The first area is the functional analysis: 2.1 Functional Analysis This function will mainly look at the operations of the organization, especially the marketing aspect. 2.1.1 Marketing The marketing mix of the organization is going to analyzed so as to get a better understanding of the organizational marketing function. Marketing mix refers to the aspects of the marketing function of the organization. For the marketing function to be successful, all the marketing aspects of the marketing function must be effectively executed and coordinated. The marketing mix elements include Product, Place, Price and Promotion. Product refers to the characteristics of the product and brands which is likely to give or deny the organization a competitive advantage. Price refers to the pricing regime and how it compares to the competition with regards to getting customers to purchase more. Place refers to the the distribution strategy. Channels of distribution must enable the organization to get its products to the target customers. Lastly, promotion refers to efforts by the organization to get customers to purchase more of its products. Such efforts include advertisements and other sales promotion efforts such as discounts and giving out coupons redeemable against company’s products among others efforts. The marketing mix elements of Nestle UK &Ireland will thus be discussed below. 2.1.1.1 Product Nestle brand portfolio is pread across almost every food and beverage portfolio, with consumers having a choice of different kinds of products and services. Some of the food and beverage categories coverd by Nestle includes baby foods, bottled water, cereals, chocolate and confectionery, dairy and frozen food . So wide and vast is Nestle UK & Ireland offering that it is estimated that about 97 per cent of UK households consime one or more of Nestle products such as Nescafe, Kit Kat, Buxton and Smarties, while about two billion of Nestle products are sold in the U.K every year (Nestle, 2014). This just shows how widesoread usage the product enjoys. It is thus easy to see why Nestle is the most dominant brand in the food and wellness industry. Its expansive product lines measn that it is almost possible that someone at any given time will be having a chioisce between buying a Nestle product and that of the competition. Besides, the sales of Nestle products has been impressive with good profits being posted. The challneg the firm faces now is to ensure that it is able to see of stiff competition from worthy competitors such as Kraft Foods, Unilever, Mars Food and Proctor and Gamble. It has to be noted that these are established multinationals and therefore have the necessary muscles to fight it out with Nestle U.K in the challenege for a bigger market share. 2.1.1.2 Place Nestle U. K and Ireland is one of the biggest producers of Nestle products in the world, producing both for consumption within this country and also for export. For instance, Nestle U. K produces over $ 300 million worth of products and exports to over 50 countries of the world, employing over 7000 employs across 19 sites in the process (Nestle, 2014). This basically is a lot of products which have to get into the market and into the hands of the customers who will be eagerly waiting for their supplies. The distribution within U. K and Ireland is through the wholesalers and retailers. What happens is that Nestle has a number of warehouses within the region. Therefore products are to be delivered in these warehouses from which retailers will come to pick them up for distributions (Nestle, 2014). What this means is that Nestle has no control over how far or in which stores and supermarkets its products are produced. Retailers will always target the areas they are likely to make good sell and take the product there. Therefore, distribution is largely a factor of the various decisions taken by the retailers. As for goods manufactured for external market, it is important to note that Nestle has various distribution agreements with local agents and it is the role of those agents to receive the goods exported into their regions and distribute it to various points where consumers can get them. A key factor is that due to marked differences in tastes, products for U. K and Ireland tends to be markedly different from those meant to be sold abroad. 2.1.1.3 Price All through, Nestle U. K and Ireland has adopted a competitive pricing strategy. This strategy ensures that the products are priced with the competition in mind. That way, the price charged is either equal to or slightly higher or lower than the competition. This strategy is advantageous because it ensures that price does not become a factor when the consumer is making a choice to buy. Therefore, focus is narrowed down to quality and available of the product. As a result of this pricing strategy, Nestle was not affected by the Euro meltdown even though profits dipped a little and it and to downgrade its sales forecast (Koltrowitz, 2013). 2.1.1.4 Promotion Nestle has used a wide range of promotional tactics to boost its sales and consolidate its market share. The most common strategy is advertising mainly in the television and the posters. The adverts are aimed at informing customers of the benefits of the products and arousing their interests to buy the various products being advertised. In essence, the regularity and approaches in advertising is varied and monitored to ensure that results are achieved. Besides advertising, Nestle also his known for a number of promotional campaigns. For instance, in some family packs, free Kit Kat bars have been issued as a free offer. This entices consumers to buy the family packs and win the Kit Kat bars, and in the process they end up buying more of the company’s products. Nestle is also known to participate in a number of activities that have a relationship with its products, and through such activities,, the products get visibility. A good example is the World Breast Feeding Week, an event that Nestle has used to promote its baby formula. 2.1.2. Manufacturing Nestle has 19 sites across the U. K and Ireland where production of its products takes place. These sites include the beverage factory in Dalston which processes around 200,000 liters of milk daily into various products such as Nescafe Cappuccino, Coffee Mate and Nestle Hot Chocolate (Nestle, 2012). The Wisbech, Sudbury and Aintree plants produce pet foods such as Bakers, Bomio, Go-Cat and Winalot. The Buxton Mineral Water is produced at Derbyshire peaks while York is fully dedicated for the production of confectionery. All in all, is is important to note that Nestle sites across the U. K are more specialized to produced particular products which is an advantage as it enables the company to concentrate and achieve economies of production at those sites. 2.1.3 Customer Service Nestle takes the satisfaction of their customers seriously and will always endeavour to ensure that they deliver to the customers’ expectations. To this end, Nestle U. K has put in place a number of measures to ensure that they are able to interact with their customers and ensure that such customers are able to get help whenever they can. One such measure is the establishment of various relationship centers to interact with customers and exchange ideas on how such customers can get better results with Nestle products. A good example is the Nespresso Customer Relationship Centre in York. This centre is dedicated to those customers who have bought Nespresso coffee machine. It helps them know how to use the product well as well as attending to any issues they may have with the machines such as servicing. This This way, customers are able to use the machine in the appropriate way and therefore obtain value out of their investments, making them happy and satisfied in the process. Besides, Nestle do have a number of recipes that is publicly shared. Customers can use these recipes to try out new things and obtain new and exciting experience with Nestle products. This is important as it helps the customer explore new ways of enjoying the products and like them. On the other hand, Nestle has a well established research and development department which works in conjunction with the marketing department to ensure that the products are continually improved so as to not only beat the competition but also realize increase uptake due to higher levels of satisfaction by the customers. It has to be noted that Nestle products come in many variants partially because of continuous research and improvement of existing products. By producing high quality products, Nestle is able to achieve higher levels of satisfaction among the customer. Lastly, Nestle has a number of dedicated lines which customers can call in the event they have any problem or are just seeking information. These lines are manned by dedicated, knowledgeable and experience personnel who are in a position to give customers solutions that would work for them. Besides, the website www.nestle.co.uk is well established with important information. Customers can consult the website and get a lot of information regarding the product lines, availability and tips on how to use the products. 2.2 Value Chain 2.3 The 7-S Model The McKinsey 7s model is a tool that aims at describing how a firm can effectively organize a company through a holistic approach. It contains seven internal factors which have to be aligned with each other ans with the organsiational goals inoerder for the roganiatsion to run effectively. These factors include: Strategy The key strategy of Nestle UK and Ireland is to consolidate its huge market share in the U.k. This is to be achived through the continous commitment to promoting nutrition, health and wellness through a number of ways. First is through continous research so as to come with better products for their customers. Secondly is through proper monitoring of performance and withdrawal of products which are not performing as expected. This ensures that costs are minimized and shareholder value protected. Structure Nestle UK is headquarted at Gatwick, in the United Kingdom while the Irish brach is headquartered in Dublin. However, Nestle has a number of other headquarters sdedicated to different product lines such as confectionery, bottled water, cereals and nutrition. This ensures that operations are well aligned with the targets of the company. Besides, the company has a close to 20 factories where production of its products takes place. Systems Nestle has put in place a number of measures to reduce wastage of resources such as time, manpower and inventory. For instance, lean production technique introduced by the company ensures that waste is avoided. Under this program, areas affected include transport, inventory, waiting times, overproduction, over processing and defects avoidance (Nestle, n.d.). For instance, there is a transport operation system system in place that handles transport planning, vehicle scheduling and yard management. This way, Nestle is able to run a 24/7 operation, making 3500 deliveries to its 7 distribution centers , 12 factories and over 500 locations each week (IGD, 2014).By addressing these areas, value is added to products, waste is cut down and costs kept low. Shared Values Nestle U. K has inculcated a cultures of creativity among its staff. Staffs are encouraged to be open and seek to satisfy their curiosity through trying to solve or address some of the issues they come across. This way, staff has been the main drivers of new ideas at the factory. Besides, team working has also been encouraged to a great extend. Staff will always want to work on projects and through inputs of colleagues, better ideas and levels of competencies are achieved. Above all, Nestle U.K. will always work to satisfy the customers. This drives them to work towards seeking better ways of producing their products. Staff As noted earlier, the staff of Nestle U. K plays a big role in the success of the company. To begin with, the staffs have been the major drivers new product development through their own initiatives. A part from the product development, staff initiative can also be seen in other areas. I.G.D. (2014) notes that the transport system which has largely injected effectiveness in deliveries was developed internally by employees. To oin Nestle U.K one must have a minimum qualification of a degree from a recognized institution. Such gradueates who are lucky to join the company has an option of also enrolling into Nestle acdemy where they are trained on practical skills relating to their roles. This ensures that those joinging the workforce have the requisite skills to give their best in the different roles. Skills Nestle U.K always endeavours to have the best employees filling various positions. Meritocracy ensures that perfoamnce is not compromised. A parft from leaning within the various teams within the workplace, workers can alos upgrade their skills by joinging the Nestle Academy where they can get training in various aspects realting to teir jobs. Style Nestle style of leadership is largely based on the culture of Wester Europe where employees are valued ansd the maangemet does the best to make the empoloyees comfortable. This aoproach is anchored around the concept that employees are the most important assets of any business and if taken good care of, they will definitely take giood acred of the organization. This way, employees are given much freedom to realize their potential and there will always be a hand ready to help in the event employees need assistance with teir work or work environment. 3.0 EXTERNAL ANALYSIS In this section, the external business environment will be analyzed to identify any possible impacts the business environment might have on the company. In particular, the attractiveness of the market will be analyses to see if future prospects for the company are good, and what changes the company needs to put in place to take care of opportunities in the market as well as minimizing threats to the business. External business environment is important because it is beyond the control of the company. Therefore, the company cannot control changes in the environment but adjust to those changes. It is thus important that the organization understands its environment better. Analysis of the environment is thus critical for any business establishment. In this section we are going to analuysed the DEPESTL factors, Porters Five Factors and the consumers with regrd to Nestle U.K and Ireland’s market. 3.1 DEPESTL FACTORS This is an analysis tool for the external evriornmnet. It looks at Demography, Economic, Political, Ecological, Social, Technological and Legal environemnets of a given market. This section will look at the U.K. market. This is one of the markets in which Nestle U.K. and Ireland operates. It is one of the biggest markets of, with a bulk of operations taking place here. Many factories are located here, and it enjoys a huge sales turnover of the two markets. It is therefore follows that this market is of startegisc importantcce to the operations of the company. 3.1.1 Demography Demography refers to the characteristic of the population with regrds to the business under review. In essecnce, the goasl will be to look at how those characteristics, and the likely changes will possibly affcte the the operations of the business. The U.K. market Read More