Nestle Essay Example

In the food industry, there has been deteriorating quality of various raw materials such as coffee and cocoa. This is a result of changing the climate and increased demand. However, nestle still holds a competitive advantage in this sector. It has collaborated with farmers in the community where they obtain their raw materials to assist them to improve the quality and quantity of their produce as they adopt environmentally friendly practices. It has ensured that Nestle obtains high-quality raw materials and sustainable supply. Farmers are also given training on emerging trends as well as counseling from nestles veterinary officers (Khan, 2016). They are also taught on diversifying their income sources such as chicken rearing and growing of kales. This has ensured food security in the community and boosted the farmers' earnings. It has resulted in the rural development and improved livelihood of the surrounding community.

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Manufacturing

Nestle prides itself on establishing local manufacturing plants in the local markets they enter. It has a competitive edge as they can learn the local tastes of the community which enable them to manufacture products which tailor these new tastes (Pinto, 2015). For instance in India where they prefer various spices. Moreover, it reduces the cost of importing and distributing their product. Local communities also enjoy this benefit as they get employed in these factories. It makes it easier for the organization to be readily accepted. The packaging of their products is also done in these factories, and they are branded, Nestle.

Distribution

Nestle has one of the best distribution channels due to its vast geographical presence (Slack, 2015). It prefers the use of land transport in distributing its products over sea and air as these guarantees the products will reach the consumer in excellent condition (Pinto, 2015). Large tracks are preferred as they can carry large amounts of products saving on fuel and conserving the environment by reducing the emission of greenhouse gases.

Trading

Nestle is the most prominent food company in the world, and this gives it a strong global position. The value of its product is continually created through cost effectiveness, economies of scale, international rates, and its market share.

Marketing

It is about making the consumers purchase the products and services of an organization (Moura, 2015). For instance in Malaysia food products must be based on Halal material which the government has allowed for the Muslim community to consume them with ease. All ingredient must be labeled on the container. Nestle prides itself on already known brands. It also advertises its commodities in TVs, radios, and social media. In new markets, it merges with already established local brands decreasing the cost of marketing. It also tailors brands according to the trends which improve its sales.

Sales

Nestle boasts in over a billion sales a day, which generates around CHF 85 billion a year in over 113 countries. It has occurred as they sell fast-moving consumer goods. A customer and sales team which was set up is responsible for this success (Moura, 2015). It handles customer relations, field sales activities, customer-facing supply chain, and route to market strategies. These efforts are aimed at the satisfaction of customer needs and ensuring products are wherever they want when they want them and how they want them 'The Nestle way.'

Services

Nestle has a very welcoming official website which gives consumers a platform to review their various products. It states functions and purposes of each product and ingredients which is very delighting. Nestle continues to concentrate on nutrition of its customers, and through their products, people live healthy lives and are prevented from various life-threatening ailments (Wilson et al, 2016). To promote healthier lives, salt content in their products has been reduced to 75%, while sugar content has been reduced to 34%.

Supporting Activities

Firm Infrastructure

Nestle has an established infrastructure. It has capital in in Vevey, Vaud, Switzerland. It controls over 150 countries through regional coordinators (Freeman, 2010). They help the company to support its primary activities in these different countries as it enjoys a significant geographical presence.

Human Resource Management

Human resource deals with staff, and it ensures qualified people are in their stations. It provides continuous training of the team to the current international standards (Heathfield, 2017). It is responsible for recruitment of younger staff and to ensure the welfare of the employees is well taken care of (Chowdhury, 2015). Nestle also ensures in it head offices qualified personnel of all diversity is employed who guarantee creative ideas are continuously developed to improve primary activity efficiency.

Technology and Development

Nestle has a Product Technology Centre which has two roles. One to come up with new technologies that are the base of new product development. The second is to actualize this technology to the firm's operations. It ensures they are still the leading food company by setting new trends. Licensing of this technological advancement gives them a sustainable competitive advantage.

Procurement

Nestle purchases various raw materials which include coffee beans, cocoa, milk, fruits, vegetables, and cereals. Some of them are sourced from farmers. Oil, sugar, and species are obtained through trade (Ethiraj, 2016). Nestle has a lot of suppliers globally who ensure raw materials are always available. Procurement has to contribute directly to the sustainability and profit of the company by giving quality differentiation of the final product to the consumer expectation (Ewest, 2017). It requires the supply of the raw materials in the right quality, appropriate time and standard quality while lowering the system cost. It has ensured customers are assured of the quality of their products.

VRIN

Potential capability, competence, or resource Value Rarity Inimitability Non-substitutable Sustainable Competitive Advantage

Unrivaled brand and product portfolio Yes Yes Yes No Competitive advantage

Branding Yes Yes Yes no Competitive advantage

Innovative technology Yes Yes Yes Yes Sustainable competitive advantage

Strong geographical presence Yes Yes Yes No Competitive advantage

Innovative Technology

It helps both the consumer and Nestle. Nestle has been in the forefront in promoting nutrition, healthier lives, and wellness. It is through this campaign it continues to invest over CHF 2 billion every year to come up with safer food products (D'heur, 2016). For instance, in the 1990s most people wanted to avoid high fat ice cream due to the health risks it was posing. However, the other low-fat ice cream available never gave an incredible feeling. Nestle was among the first to make low-fat ice cream to have an ultimate satisfaction. It has improved its sales currently and has patents to this technology. It has given it a sustainable competitive advantage although more research should be done as competitors can imitate this technology.

Strong Geographical Presence

Nestle has operations and market shares in over 150 countries, making it the biggest global food company. It has three geographic areas which are zoned according to the world as stated earlier. According to statistics none of these three regions earns 50% of nestle total revenue (Dhanesh, 2017). USA market, the largest, makes an income of about 28.5%, China, second largest, receives about 8% of the revenue the rest is distributed in other countries. Coca-cola derives 56% of its revenue from the USA market alone. It is this diversification in the market that gives Nestle a competitive advantage over its rivals when the USA market is negatively affected.

Unrivaled Product and Brand Portfolio

Nestle has a much-diversified product portfolio. It offers over 1900 product choices in seven different categories such as milk products, liquid and powdered beverages, ice cream, confectionary, pet care, water, prepared dishes, and nestle nutrition. It allows the company to satisfy a wide range of customer needs and targets a bigger audience depending on the trend (Esha, 2016). It also ensures the company is slightly affected by the changing tastes of its consumers. Moreover, if one of its brands is affected by negative publicity, it is somewhat affected. It gives the firm a competitive advantage.

Branding

According to Forbes' and Interbrand's list Nestle brand ranked 49th and 56th globally. It owns some very renowned brands such as KitKat, Maggi, Nestle, Nan, and Nescafe. Nescafe brand alone is worth a staggering US$16.3 billion according to Forbes. Brand awareness is directly related to brand recognition (D'heur, 2016). It is vital as it gives companies a competitive advantage when joining new markets and while introducing new products.