SWOT Analysis of Nestle India - Case Study Example

Marketing Plan Report: Nestle Name Institution Professor Course Date Executive Summary The goal of this report is to offer an analysis of the SWOT analysis of Nestle India and this will be done in form of a table followed by a discussion of findings to acts as a guide to the company. The report will derive the information from the reports of the company, credible websites and from books. In regard to the findings, since a major the threat that is facing the company is the changing trends of consumers and their needs for more healthier options the new product need to be aimed at addressing these threat. Introduction Nestle was established on the year 1866 by a pharmacist named Henri Nestle and it majored on the production of food for small children unable to breastfeed. The initial product of the company was Farine Lactee Henri Nestle. This product formed the backbone of the company expansion to other markets abroad in countries such as Germany, Spain, US and the UK in the early 1900s. In 1905, the company merged with an Anglo-Swiss condensed milk company, after two years the company began their manufacturing in Australia and the company also built warehouses in Hong Kong, Singapore as well as in India with the aim of serving the rapidly increasing market in Asia. The company grew in the First World War and also during the seconds war and this entailed an increase in their product offerings beyond the infant formula and the condensed milk. This was mainly as result of the need for frozen food for the soldiers in the war. Nestle is considered as being the globes largest food manufacturer since it has operations in about 197 countries and has more than 2000 brands (Dubois 2011). As of 31st December 2015, the revenues of Nestle amounted to $99.09 Billion while the estimated sales for fiscal year amounted to $92.62 Billion and a market capitalization of $245.71 Billion. The products of nestle include but are not limited to medical food, baby food, breakfast cereals, bottled water, tea and coffee, dairy products, confectionary, frozen foods, ice cream, pet foods as well as snacks. In addition to the products there also offer services such as food and beverage solutions and weight management services (Nestle Annual Report 2014). In this report, a marketing plan for the company is well presented mostly focusing on the SWOT analysis technique and market environment analysis. SWOT analysis can therefore be simply termed as a marketing tool which requires the company to assess and gauge their strength, weaknesses, opportunities and threats. Based on Kotler, & Keller, 2009, the main aim of a high-quality marketing plan will make customers make more purchases from a company. For that reason, this report focuses on examining Nestle marketing plan and a SWOT analysis so as to determine its success in the market. The report further explores internal and external environment factors that influence the company’s marketing strategies. SWOT Analysis A SWOT analysis which is also referred to as the SWOT matrix is an initialism for the weaknesses, strengths, threats and opportunities and it is a prearranged method that sets out to evaluate the above mentioned aspects in a business (Blake & Wijetilaka, 2015). This kind of analysis will be effective when used in building an organization in that all the necessary steps that relates to the execution of a strategy are followed. Additionally, it helps organizations in that they can utilize it ion converting and matching. In relation to matching the businesses can match the strengths with the available opportunities while in relation to converting conversion strategies can be used so as to convert the weaknesses and threats of the business into opportunities or strengths (Mehta 2000). The table below shows the SWOT analysis of Nestle Strengths Weaknesses Great level of competency in mergers as well as in acquisitions R& D capabilities Unmatched brand portfolio Excellent distribution Channels Unfair trade practices Great reliance on mature markets Poor implementation of CSR Inability to offer good foods in a consistent manner Opportunities Threats Building partnerships Acquisitions and mergers Introduction of healthier foods to tap the health conscious consumers Strong R&D Changing trend on healthy eating Competition Food contamination Rising raw food prices. Findings and discussion (SWOT Analysis Table) SWOT analysis can be applied by companies in all sectors so as to come up with a list of the favorable and unfavorable factors that may affect their business. SWOT analysis focuses on the opportunities, threats, strengths and weaknesses. When used in a business context, the SWOT enables the organizations to come up with both the external and internal influences. The internal influences of the company can be controlled while the external ones cannot be controlled. The core aim of the SWOT analysis is to help organizations in developing full awareness of all the possible factors that are involved in the decision making process (Taylor 2016). Opportunities & Threats Through the assessment of the threats and opportunities companies are offered with an effective way to improve their performance and this ultimately means that they will have a competitive advantage. Threats are termed as those elements in the environment that cause trouble to the company. In this regard, Nestle need to look for ways of addressing the threats such as the rising raw food prices, food contamination and competition. This will also be coupled with the opportunities outlined in the table above and Nestle needs to exploit the opportunities to its advantage (Ommani 2011). Strengths and Weaknesses The SWOT analysis also reveals the strengths as well as weaknesses of the business. These two aspects are categorized under the internal factors that have an effect on a business. The strengths of Nestle are those characteristics that will offer it an advantage over other operating in the same industry. Nestle needs to focus more on its strengths with the aim of operating more effectively as compared to their competitors in the same market (Ommani 2011). Alternatively, the weaknesses of Nestle place it at disadvantage comparative to others in the industry. In response to these, Nestle need to address the weaknesses they are facing and convert them into strengths for them to enhance their position in the market and to increase their sales and profits. Environment Evaluation When managing a business, there is a need to account for those elements that are likely to affects the goals and strategies of the company. This means that it is not possible for a business to exist and operate in isolation. Environmental evaluation offers a wider and broader picture to the management team on the situations in the market that surrounds the business (Hanson et al 2014). In Nestle environmental analysis is of great importance since it will assist the company indentifying the trends as well as measures that are likely to affect their marketing programs. Thus, in conducting the environmental analysis of Nestle, there will be a division of the concept in various sections. These will entail an analysis of both the internal and external marketing environment of the company (Kaplan, R & Norton, D 2004). The internal environment marketing evaluation In internal analysis there is an assessment of the organizations capabilities, resources and key competencies. By analyzing these, they organizations make use of the aspects to become more competitive in the market (McEwen 2008). In these regard, they should make use of the technological and competitive analysis to make concise decisions on the way forward so as to outshine other offering similar products and services in the market. Technological analysis In relation to technological advances, Nestle in likely to be affected by new develoo0emnt in food and science technology. Based on these they need to have resources in place to be at par with other in the industry when new technology is introduced (Nestle Corporate Website 2016). Competitive analysis In relation to competitive analysis Nestle need to be aware of the major competitors in the industry such as Cadbury, Mars, Pearson’s and Hershey’s and their competitive advantage. Based on this information Nestle can come up with aspects that will acts a competitive advantage for them against their competitors (Kaplan & Norton 2004). For instances, Nestle can make use of their strong brand presence as a competitive advantage. Evaluation of the external environment When undertaking an external analysis in a marketing plan great emphasis is made on aspects such as the political, economic, social-cultural; and legal issues (McEwen 2008). Economic environmental analysis In relation to the economic environment, Nestle need to consider the rise in price of the raw material goods and in response to these they need to source their products from suppliers who are sustainable (Kumar 2013). Legal analysis Legal analysis includes factors related to laws such as the consumer laws, health and safety laws and antitrust laws just to mention a few of them. Nestle need to be on the lookout and always adhere to the global regulations and changes that are likely to occur in the various international markets (Schaffer et al 2014, p. 12). Social analysis Some of the social issues that are likely to affect Nestle is the lifestyle of the people, their preferred tastes and other cultural components such as believes that some products are not fit for human consumption. Nestle needs to acknowledge to the change in consumer preferences since they are becoming more health conscious (Newman, Hartman &Taber 2012). Political analysis Nestle is likely to be affected by political factors and these includes aspects such as trade restrictions, labor law and environmental laws. Nestle need to acknowledge the changing regulations in food standards and in marketing actions of food products (De Mooij 2013). Recommendations The target market Nestle company depicts a string history since it initiation in the year 1866 in offering foods products for young children and other associated products and services and they have matched the changing consumer preferences as well as demand over the years. The target market of a company will make use demographic segmentation when introducing the new product and it will mainly be marketed to the young people in the market and this will play an essential role in tailoring the messages to the target audience accordingly. New product description By introducing a new product in the market, Nestle will be placing the needs of the customers first. The new product will be introduced to the market will be mint chocolate. Pricing of the product will be moderate to ensure that the target group makes purchases. In relation to placement they will be available in a wide range of stores in the market to ensure that those wishing to make purchases have an ease to access. The product will also be promoted in various media outlets so as to entice consumers into making purchases. Customer value proposition The idea behind customer value proposition is the use of marketing statements aimed at offering the customers with justifiable reasons for purchasing the company’s new products in the market. In this regard, the customer value proposition of Nestle will focus more on serving and fulfilling the needs to the target market. This will ensure that success of the new product in the market thus the need of a well crafted customer value proposition. Justification of the new product The new product offering should align well with the SWOT analysis. Based on the analysis that have been carried out the new product to be marketed fits well with the SO strategy that is the matching of the internal strengths with the external opportunities that are available for the company to make use of or exploit them. By use of this strategy, Nestle protect and maintain it internal strengths for example the unmatched brand portfolio by ensuring that there is effective combinations of the firms resources. This will eventually lead to Nestle having a competitive advantage in the industry. References Blake, M & Wijetilaka, S 2015, 5 tips to grow your start-up using SWOT analysis, Sydney. De Mooij, M 2013, Global Marketing and Advertising: Understanding Cultural Paradoxes: Understanding Cultural Paradoxes, Sage Publications, UK. Dubois, S 2011, Nestlé's Brabeck: We have a "huge advantage" over big pharma in creating medical foods, viewed 11 April 2016, http://archive.fortune.com/2011/04/01/news/companies/nestle_brabeck_medical_foods.fortune/index.htm Hanson et al 2014, Strategic management: competitiveness and globalization, Cengage Learning, Australia. Kaplan, R & Norton, D 2004, Strategy maps: Converting intangible assets into tangible outcomes, Harvard Business School Press, Boston. Kumar, P 2013, ‘Does Stock Market Respond to Economic Fundamentals? Time-series Analysis from Indian Data’, Journal of Applied Economics and Business Research, vol. 3, no. 1, pp. 34-50. McEwen, T 2008, ‘Environmental Scanning and Organizational Learning in Entrepreneurial Ventures’, Entrepreneurial Executive, vol. 13, pp. 1-16. Mehta, S 2000, Marketing Strategy, Edward Elgar, London. Nestle Annual Report 2014, Annual Report 2014, viewed 11 April 2016, http://www.nestle.com/asset-library/documents/library/documents/annual_reports/2014-annual-report-en.pdf Nestle Corporate Website 2016, Food scince and Technology, viewed 11 April 2016, http://www.nestle.com/randd/technologies Newman, B, Hartman, T & Taber C 2012, ‘Foreign Language Exposure, Cultural Threat, and Opposition to Immigration’, Polit. Psychol.vol. 33, pp. 635-657. Ommani, A 2011, ‘SWOT analysis for business management’, African Journal of Business Management, vol. 5, no. 22, pp. 9448–9454. Schaffer et al 2014, International Business Law and Its Environment, South-Western Cengage Learning, Boston. Taylor, F 2016, SWOT Analysis: What it is and when to use it, viewed 11 April 2016, http://www.businessnewsdaily.com/4245-swot-analysis.html Read More