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8/9/2019 International Business Nestle Breif Project Aarif Shah Finance) Aarif Shah
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Good Food, Good Life
Project of International Business
Submitted b y:Muhammad Arif Shah
ID No: 2882
Semester: 5th
Under the Guidance of:DR. SIR. AZMATULLAH KHAN
Lecturer in International Business (MKG)
City University of Information Technology
City University of Information Technology
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ACKNOWLEDGEMENT:
To Him belongs the dimensions of the Heavens and theEarth, it is HE, who give life and death and HE has the
Power over all things
(Al-Quran)
All acclamation to ALLAH, who has empowered and enabled me to
accomplish the perspectives of the project successfully. First of all, I would like to
thank my ALLAH Mighty, who really helps me in every problem during the
completion of this project. I would like to express my sincere and humble gratitude
to ALLAH Almighty, whose blessings; help guidance has been a real source of all
my achievements in my entire life.
I wish to express my appreciation to my honorable & respectable Lecturer
i.e. DR. SIR AZMATULLAH KHAN, Lecturer in International Business, City University
of Information Technology, Peshawar, who help me a lot and introduced me to
new dimensions of knowledge. I am sure that the same support would becontinued to help to achieve the entire Programme / MBA Degree Objectives
smoothly in near future as well.
I express my deepest affection for my parents; who prayed for my success
and encourage me. I appreciate their patience, cooperation and love for me. It is,
of courses, the reward of their good wishes and kin blessing.
The acknowledgment will be incomplete without special thanks to all my
University peers, office colleagues for their excellent cooperation and nice
companionship.
(Muham mad Aarif Shah)
MBA (Finance)
ID No: 2882
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EXECUTIVE SUMMARY:
Nestle is the world's leading Nutrition, Health and Wellness Company.
Nestl is committed to increasing the nutritional value of their food products while
improving the taste. Nutrition, Health and Wellness is Nestls strategic direction.
+ 140 countries, 449 factories globally with 220 in emerging market; 540,000
farmers receive assistance from 950 agronomists directly employed by Nestl,
3,400,000 people earn livelihoods form nestle supply chain in emerging market.
CHF: 16.8 billon sales of products that went through 60/40+; CHF: 10.00 billion
sales of Nestle Nutrition; CHF: 5.00 billion sales achieved by products with
Branded active benefits; Plus 10,000,000 children through Nestl programmes on
nutrition. 3.3 billion Increase expected in population in emerging markets (2000-
2050); CHF: 34.5 billion sales in emerging markets with organic growth of 8.6%
sale in 2009. 12.7 organic growth achieved by PPP initiatives.
Over 40% of foods spend in developed world is out of home; CHF: 5.8
billion sales of Nestl professional. Nestl's business objective is to manufacture
and market the Company's products in such a way as to create value that can be
sustained over the long term for shareholders, employees, consumers, and
business partners.
Global food producer, located in over 83 countries. It just because of Nestl
provides quality brands and products and line extensions that are well-known, top-
selling brands. Nestl does not favor short-term profit at the expense ofsuccessful long-term business development. Research and Development is a key
competitive advantage for Nestl. Without our R&D Nestl could not have becomethe food industry leader in nutrition, health and wellness. With 28 research,
development and technology facilities worldwide, Nestl has the largest R&D
network of any food company. Nestls research, development and technology
network, together with local market application groups, employs around 5,000
people.
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NESTLE:
Nestl S.A. is a multinational packaged foods company founded and
headquartered in Vevey, Switzerland, and listed on the SWX Swiss Exchange with
a market capitalization of over 87 billion Swiss francs. Nestle is the world's leading
Nutrition, Health and Wellness Company. Nestl is committed to increasing the
nutritional value of their food products while improving the taste. Nestl achieve
this through their brands and with initiatives like the Nutritional Compass and
60/40+.
Since Henri Nestl developed the first milk food for infants in 1867, and saved the
life of a neighbors child, the Nestl Company has aimed to build a business as theworld's leading nutrition, health and wellness company based on sound human
values and principles. While Nestl Corporate Business Principles will continue to
evolve and adapt to a changing world, our basic foundation is unchanged from the
time of the origins of our Company, and reflects the basic ideas of fairness,
honesty, and a general concern for people.
Nestls Objective:Our objective is to be the recognized leader in Nutrition, Health and Wellness and
the industry reference for financial performance
Strategic Direction:
Nutrition, Health and Wellness is Nestls strategic direction. We want you to beable to make healthy choices about your food and beverages. We also believe thatgood food sometimes means treating yourself.
People / Employee / Customer Come First:
Employees , people / Customers are more important at Nestle than system, while
necessary and valuable in running a complex organization should remain
managerial and operational aids but should not become ends in themselves it is a
questing of priorities.
Marketing & Distribution:
Marketing is based on the Principles of satisfying consumer needs. This is the
foundation for the environmental marketing approve of Nestle. Nestls aim is to
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minimize wastage in communication, publicity and promotional material, in
particular through more precise targeting of marketing activities. In distribution energy
efficient and pollution controlled methods are encourages where possible.
Principal risks and uncertainties:
The Nestles group enterprise Risk Management Framework (ERM) is designed to
identify, communicate, and mitigate risks in order to minimize their potential
impact on the group. A Top Down Assessment occurs annually and focuses on
the Groups Global Risk portfolio, it involves the aggregating of individual Top
Down assessment of Zones, Globally Managed Businesses, and selected markets,
it is intended to provide a high level mapping of Group risk and allow GroupManagement to make sound decision on the future operations of the company.
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THE NESTL ROADMAP TO GOOD FOOD, GOOD LIFE:
Nestls objectives are to be recognized as the worlds leader in Nutrition, Health &
Wellness, trusted by all its stakeholders, and to be the reference for financial
performance in its industry. Nestle believe that leadership is not just about size; it
is also about behavior, Trust, too, it about behavior, and we recognize that trust is
earned only over a long period of time by consistently delivering our promises.
These objectives and behaviors are encapsulated in the simple phrase, Good
Food, Good Life
Nestle is seeking to achieve that leadership and earn that trust by stratifying the
expectations of consumers, whose daily choices driver out performance. The
Nestle Roadmap is intended to create alignment for our people behind a cohesive
set of strategic priorities that will accelerate the achievement of our objective.
Nestl is investing for the future to ensure the financial and environmental
sustainability of our actions and operations: in people, in brands, in R &D.
FOUR COMPETITIVE ADVANTAGES OF NESTLE:
Unmatched Product and Brand Portfolio:
90% of sales are No. 1 or No. 2 in their market, 28 brands had sales over CHF: 1
bio and achieved 5.8% organic growth in 2009, focused on 9 categories, e.g:
Nescafe coffee comes in may variations, adapted to local tastes an preference.
Unmatched Geographic Presence:
+ 140 countries, 449 factories globally with 220 in emerging market; 540,000
farmers receive assistance from 950 agronomists directly employed by Nestl,
3,400,000 people earn livelihoods form nestle supply chain in emerging market.
People, Culture, Values and Attitude:
+100 nationalities working at Nestle, long term inspiration, short term action.
Devolved responsibilities and accountabilities, 42 % of local Management
Committee members native to country in developing countries.
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Unmatched Research and Development Capacity:
CHF: $ 2.0 billion spend in R & D; over 5, 200 employee in Food & Beverages R &
D, 300 external R & D relationship- open innovations.
FOUR GROWTH DRIVERS: (KEY FACTS IN 2009)
Nutrition, Health and Wellness:
CHF: 16.8 billon sales of products that went through 60/40+; CHF: 10.00 million
sales of Nestle Nutrition; CHF: 5.00 billion sales achieved by products with
Branded active benefits; Plus 10,000,000 children through Nestl programmes on
nutrition.
Emerging Markets and Popularly Position Products:
3.3 billion Increase expected in population in emerging markets (2000-2050); CHF:
34.5 billion sales in emerging markets with organic growth of 8.6% sale in 2009.
12.7 organic growth achieved by PPP initiatives.
Out of Home Consumption:
Over 40% of foods spend in developed world is out of home; CHF: 5.8 billion sales
of Nestl professional.
Premonitions:
All products categories have specific Premonitions strategic; CHF: 2.8 billion sales
of Nespresso with 27.2% organic growth; 59% of coffee beans to be sourced
through Nespresso AAA sustainable quantity programme in 2010
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FOUR OPERATIONAL PILLARS:
Innovation and renovation to ensure products are new or remainrevenant to out consumers.
Operational efficiency to have the highest quality, the lowestcost, the best customer services,
Whenever, however, to have out products always in an armsreached of our consumers.
Consumers communication to excite consumer and to learnform our consumers.
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KEY FACTORS THAT LEAD NESTLE TO SUCCESS:
Nestl is committed to the following Business factors in all countries, taking into
account local legislation, cultural and religious practices:-
Nestl's business objective is to manufacture and market the Company'sproducts in such a way as to create value that can be sustained over the
long term for shareholders, employees, consumers, and business partners.
Global food producer, located in over 83 countries. Consistently one of theworld's largest producers of food products, with sales $107.6 billion in 2009;
sales and earnings in 2009 {organic growth: 4.1 % with RIG: 1.9%} were
better than expected, even in a down turned economy. It just because of
Nestl provides quality brands and products and line extensions that are
well-known, top-selling brands including:-
Lean Cuisine, Yoplait, Maggie, and Dryers/Edy's, Haagen-Dazs, Stouffer's, Boost, Dibs,Hot Pockets.
Chocolate and Candy: Kit Kat, Toll House, Butterfinger, Baby Ruth, Crunch Bar, the WillyWonka Candy line.
Pet Products: Purina, Alpo, Cat Chow, Fancy Feast, Friskies, Tidy Cat. Drinks: Carnation, Perrier, Nesquik, S. Pellegrino, Nescafe, Coffee Mate, Taster's Choice,
Juicy Juice.
General Mills: subsidiary which makes Betty Crocker, Bisquick, Hamburger Helper,Pillsbury, Old El Paso, cereals, fruit snacks, frozen pizza, canned soups, frozen vegetables,
ready-made frozen meals.
Gerber: baby formula, prepared baby foods, baby cereals, water, juice, yogurt, foods forinfants, toddlers and preschoolers.
Professional brands sold to restaurants, colleges, hotels, and food professionals includingJenny Craig meals, Impact liquid meals for trauma patients, liquid meals for diabetics, and
OptiFast weight loss products.
Nestl does not favor short-term profit at the expense of successful long-term business development.
Nestl recognizes that its consumers have a sincere and legitimate interestin the behavior, beliefs and actions of the Company behind brands in which
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they place their trust and that without its consumers the Company would
not exist.
Nestl believes that, as a general rule, legislation is the most effectivesafeguard of responsible conduct, although in certain areas, additional
guidance to staff in the form of voluntary business principles is beneficial in
order to ensure that the highest standards are met throughout the
organization.
Nestl is conscious of the fact that the success of a corporation is areflection of the professionalism, conduct and the responsible attitude of its
management and employees. Therefore recruitment of the right people and
ongoing training and development are crucial.
Nestl continues to maintain its commitment to follow and respect allapplicable local laws in each of its markets.
Research and Development is a key competitive advantage for Nestl.Without our R&D Nestl could not have become the food industry leader innutrition, health and wellness. With 28 research, development and
technology facilities worldwide, Nestl has the largest R&D network of any
food company. Nestls research, development and technology network,
together with local market application groups, employs around 5,000
people.
Nestl further strengthens its R&D capability through InnovationPartnerships at each stage of the product development process from early
stage collaborations with start up and biotech companies to late stage
partnerships with its key suppliers.
Nestl scientists also play their part in communicating the health andwellness benefits of products to consumers. Nestl nutritionists world-wide
work to ensure that all nutrition communication, both on and off pack, is
locally relevant, as well as scientifically sound.
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Beyond sound nutrition, the future of foods will increasingly be driven byscience. Nestl scientists are looking ahead to the foods of the future.
Nestl R&D is translating nutrition and food science in two ways:-
1. From consumer needs into research priorities2. From emerging science into consumer benefits, and services.
Successful due in part to their unquestionable ability to keep major brandsconsistently in the forefront of consumer's minds (and in their shopping
carts) by renovating existing product lines, keeping major brands from
slipping into saturation/decline and having superior access to distributionchannels.
Table shows the sales; Organic Growth & EBIT Margin:
PRODUCTS DESCRIPTION: SALES: OG %: EBIT MARGIN:
Powered & Liquid Beverages: 19.30 9.50 21.70
Water: 9.00 -14 7.00
Milk Products and Ice Creams: 19.60 2.00 12.00
Nutrition: 10.00 2.80 17.40Prepared Dish & Cooking Aids: 17.20 0.80 12.9
Confectionery: 11.80 4.30 13.60
Pet Care: 12.80 7.90 16.3
Pharmaceutical Products: 7.80 6.70 33.50
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FACTOR THAT MIGHT BE AFFECTED THE EARNINGRESULT OF NESTLS
In today's health conscious societies, they can introduce more health-based products, andbecause they are a market leader, they would likely be more successful. Still no yet
introduced products which are free allergen such gluten free peanut free.
Nestls reputation is based on consumers trust. Any major event triggered by a seriousfood safety or other compliance issue could potentially impact upon Nestls reputation /
brand image
Still Nestls is not in position to open Nestl Caf's in major cities of developing countriesto feature Nestl products.
Nestls operate +100 countries, in developing countries they raised indirect employment,but there is no impact on direct employment. It is because; they posted their own mangers
on the key posts. That why in developing countries are unable to develop diverse force,
which is necessary for growth.
They launched a new premium line of higher cacao content chocolates dubbed NestlTreasures Gold, in order to cash in on the "recession economy" in which consumers cut
back on luxury goods, but regularly indulge in candy and chocolate. Americans want
luxury chocolates, and high-end chocolate is immune to the recession (so far), because it is
an inexpensive indulgence
Nestls reputation is based on consumers trust. Any major event triggered by a seriousfood safety or other compliance issue could potentially impact upon Nestls reputation /brand image
Nestle has factories in + 83 different countries and its products are sold in more than 140countries in the world. Security, political stability, legal and regulatory, macroeconomics,
foreign trade, labor, and / or infrastructure risk badly affect the Nestls ability to do
business in country or region i.e. Afghanistan, Iraq etc.
Raw chocolate ingredient prices are soaring; dairy costs alone rose 50% in 2008, this cutsheavily into their profit margins and often gets passed on to consumers, by shrinking the
packaging in a way that is almost unnoticeable-therefore the consumer is paying the same
prices for less product. They should ensure the consumers not to take more prices for less
product.
Nestle is dependent on sustainable supply of number of raw materials, packaging materialsand service/ utilities. Any major even triggered by natural hazard (drought, flood, etc)
shifted in production pattern. And may cause of dropping in raking.
Nestles is dependent on sustainable supply of finished goods for all products categories. Amajor even in one of Nestls key warehouse facility could poetically lead to supply
disruption and impact upon Nestls financial results.
They have major competitors, like Hershey's, Cadbury-Schweppes (owned by Pepsi), Lindtand Ghirardelli, Kellogg's, Post, Starbucks, Beech-Nut, Quaker, Kraft Foods, Dannon, Del-Monte, Iams, Earth's Best, Heinz, Frito-Lay (owned by Pepsi), PepsiCo has the capabilities
to avail the market share of Nestle. PepsiCo may affect the profitability of Nestle, because,
PepsiCo have strong distribution / communication channels like Nestle.
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