Behind the Scenes: NestléCarola Trinkle • Andrea Restrepo • Christine Lee

Jason Schron • Jesse C. Vaughan

May 2, 2011

Strategic Analysis

SWOT Analysis

Internal Environment

Strengths: Strong reputation, largest global food company, brand equity, historical expertise

Weaknesses: labor condition controversy, coordination and communication problems

External Environment

Opportunities: health conscious consumers, organic markets, new technology

Threats: rising commodity prices, many strong competitors for each brand product, government regulation

General Strategy Product Differentiation Strategy

“Renovation and Innovation” of products and brands. Their portfolio ranges from baby foods, bottled water, coffee, chocolate, drinks, ice cream, and petcare

Mergers and Acquisitions with Peter, Cailler, Kohler Chocolats Suisses S.A and joint ventures with L’Oreal, Coca-Cola, and General Mills

Low Cost Strategy Majority of products are produced in-house

Operational Effectiveness

Nestlé Continuous Excellence (NCE) program addresses increasing efficiency in standard operating procedures, consistency and manufacturing management

Current Strategy

Premiumisation

Promoting premium products like high-end coffee and chocolate brands

Launched a new tea-brewing system called Tpresso

Emerging Markets

45% of sales by 2020, $7 billion over 2 years

Asia, Latin America and Africa

Growing population, rising disposable income

Current Strategy (Cont.)

Health Science & Nutrition

Concerned with health problems, obesity and aging

$500 million over 10 years

Nestlé Institute of Health and Science

Organizational Structure

Organizational Structure

Divisional Structure in senior management

Matrix Structure in levels below senior management

Senior members of Nestlé are of diverse origins and backgrounds

Corporate HQ in Vevey, Switzerland, offices around the world

Organizational Chart

Corporate Culture

Creating and Pursuing Shared Values

Sustainable Agriculture Initiative of Nestlé (SAIN)

Creating Shared Value key performance indicator 2009 2010

Rural Development:

Farmers trained through capacity-building programs 165 500 144 900

Markets covered by SAIN programs   35 45

Direct procurement markets covered by SAIN programs (%) 89 100

Educational and apprenticeship programs: In 2002, 65% of all Nestlé employees worldwide followed an educational program

“The opportunity for growth is not always presented. It is possible to stay in one job for a long period of time” Anonymous, Nestlé supply chain worker

“Creating Shared Value is a fundamental part of Nestlé's way of doing business that focuses on specific areas of the Company's core business activities – namely water, nutrition, and rural development – where value can best be created both for society and shareholders.”

Corporate Culture (cont.)

“To communicate is not only to inform; it is also to listen and to engage in dialogue.”

A requirement of all employees is to be open and willing to learn

Nestlé is willing to enter dialog with diverse stakeholders, not just shareholders (e.g. consumers, employees, suppliers, governments and residence of host countries)

The results of their cultural integration are products better targeted to segmented markets (e.g. Nestlé is largest halal food manufacturer, milo)

TRIVIA

TRIVIA!!!

Which of these chocolate brands does Nestlé own?

Butterfinger

Milky Way

Snicker’s

Reese’s Peanut Butter Cups

All of the above

None of the Above

TRIVIA!!!

Which of these brands does Nestlé NOT own?

Cookie Crisp

Poland Springs

Häagen-Dazs

Cat Chow

Jenny Craig

All of the above

None of the Above