Does it make sense for nestle to focus its growth efforts on emerging markets why

Does it make sense for nestle to focus its growth efforts on emerging markets why

Although the company is known worldwide for several key brands, such as Nescafe, it uses local brands in many markets. This act violates the child labour law. Consequently the marketing becomes easier in such a situation as the local company has its own distribution channel, reputation and its own customer base. Such strategic acquisitions could also prevent future competitor threats. This narrow market focus allowed Nestle to be the brand leader in the markets of emerging economies. Firstly Nestle faced a growing challenge in maintaining its growth rate in the current markets that it was involved in. Once they had developed a strong position with these products in the market and the spending power of the locals increased, Nestle than introduced their more upscale products like mineral water and prepared foods. Just as Nestle decided that investment in emerging markets is critical for its growth, investment in its people is just as critical. Each SBU has its own product or products to focus on. Running in parallel to this structure is a regional organization that divides the world into five major geographical zones, such as Europe, North America, and Asia. This strategy allows for all the products under the Nestle umbrella to be equally developed.

This was a calculated risk as consumers could easily reject their product in favour of local ones. The company also has longer-term development projects that focus on developing new technological platforms, such as non-animal protein sources or agricultural biotechnology products.

They also decided to use local skills and ingredients to customize products for their local markets. The retail environment in many Western nations had become increasingly challenging, and the balance of power was shifting away from the large-scale manufacturers of branded foods and beverages and toward nationwide supermarket and discount chains.

The logic is simple and obvious—a combination of economic and population growth, when coupled with the widespread adoption of market-oriented economic policies by the governments of many developing nations, makes for attractive business opportunities.

Critically analyse nestle entry mode across the globe

Nestle also has 5 regional organisations representing five major geographical zones that assist with the overall development process. Business units in each country are independent of each other, Assumes markets differ by country or regions; Focus on competition in each market. Selected primarily on the basis of their ability, drive, and willingness to live a quasi-nomadic lifestyle, these individuals often work in half a dozen nations, during their careers. We can thus say Nestle is a decentralized organisation with the local, SBU and regional teams all having their own focus area to expand and develop but all integrating into the overall Nestle strategy. It identified three areas of priority: accessible and affordable nutrition, water management and resource protection and supporting rural development, recognising that their growth strategy became redundant without elevating these areas. Nestle uses this approach as it is easier to reach the consumers with local brand names because of their attachment to these local names. Although it may seem like a costly undertaking the long term benefits will be sustainable and substantial. This allows its subsidiaries to be able to act independently from the controls of headquarter in Switzerland. The current developed markets were becoming saturated and there was increased competition from rival companies. As a matter of fact the western economies are actually facing a downturn in output and growth, thus influencing the consumption patterns of customers, especially in the retail business. As a result of increasing non-brand cheap products offered by rivals, Nestle find itself in an even more embattled market and needs to develop a new strategy either away from branding or towards a higher degree of international market penetration. A Bavarian soup will not appeal to noodle lovers in Taiwan. This strategy allows for all the products under the Nestle umbrella to be equally developed. They also need to ensure that their productions of these products are both fast and efficient as well as of a high quality.

When there is long term investment in an economy, the local population tend to remember the investing company and thus product and brand loyalty is created. As the consumer income and brand confidence levels increased Nestle began introducing their more upscale products and thus cementing their brands in the markets.

Nestle global strategy case study

Nestle can also continue to train the local managers at their facility in Switzerland where the Nestle culture and strategy is shared with them. Although these countries are poor, their economies were growing rapidly. The amount of local content in their products, I believe made Nestle so successful in emerging markets. The top management for the Nestle India division comprises primarily of local executives reducing any resistance or hostility from the employees and customers. This army consists of managers who spend their time on foreign assignments. As a result, all of the subsidiaries have the freedom in terms of decision making regarding strategy issues. Just as Nestle decided that investment in emerging markets is critical for its growth, investment in its people is just as critical. This is referred to as Creating Share Value in-house. They also tend to propagate the Nestle culture and strategy. These units formulate the high level strategic decisions on a worldwide basis, while each of these SBUs focuses on a specific segment: chocolate, infant food, cereals, coffee etc.

Nevertheless, the introduction of non-brand own labelled products such as Food Lion offers only makes sense in a large scale in order to achieve economies of scale.

Firstly Nestle faced a growing challenge in maintaining its growth rate in the current markets that it was involved in. These markets are in the mature state of life cycle of that industry and additionally demographic changes such as the stagnation of population growth rates make it very hard companies like Nestle to generate higher profits through higher sales.

A Bavarian soup will not appeal to noodle lovers in Taiwan.

nestle strategic posture at the top level

They also tend to propagate the Nestle culture and strategy.

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Does It Make Sense For Nestle To Focus Its Growth Efforts On Emerging Essay