Introduction

Henri Nestle, a pharmacist, established the Nestle firm in 1866 to provide quality food products to consumers and packaging innovations. The progress of the company since then has been a tremendous growth and constant market researches to help the company differentiate itself from other competitive firms by adapting the modern trends. The company is classified as a leading company in the world on matters concerning health, nutrition and the well-being of the people (Wright, 1).

Several companies in the world, today carry out the PESTLE analysis in order to determine the market trends before launching in a certain market as well as understand the systematic risks involved. Therefore, the PESTLE analysis is an essential tool that helps the managers to ascertain the strategies to elevate the organization in future and give them a rough overview of the present condition the business. The process involves analyzing the political, social, and economic factors in the region, as well as summing up all the technological aspects of the market to stay ahead of the competitors. The analysis also involves understanding the legal issues of that particular region and all the environmental factors that affect the nature of the trade that the business is undertaking (Henry, 23). Nestle is an international company that needs to exercise a certain level of adaptation where it can easily fit in any culture in the world as well as satisfy the diverse customer preferences.

Political

The firm considers the constantly altering regulations on the level of standard for food products, and the actions taken by various governments on the market structures of their countries. However, Nestle is an international company that ultimately supports the work of several governments that focus on ensuring healthy diets and lifestyles in their countries to eliminate illnesses like obesity.

Economic

The economic factors include the changing inflation and economic growth rates of various countries like in Pakistan where the inflation rate is almost 22.3%, which increases the prices of the commodities in such countries. The escalating prices of raw materials have fueled the rise in commodity prices despite the changing consumer budgets, who are cost conscious.

Social

In this contemporary world, people are quite concerned their health status, which makes Nestle produce health conscious products to satisfy the needs of the people by supporting, balanced diets. The social factors help the firm identify and conform to the different cultural settings in terms of the language they use on their products, the religious beliefs of the people as well as their family settings. The firm’s huge regional coverage gives the customers a perception of a firm with power, making the promotional issues easier for the firm.

Technological

Since it is impossible for a firm to exist for many years by depending on a single product line, Nestle Company ensures diversifying into other products in accordance with the demands of the consumers. The company has also adapted all forms of communication including the use of emails and social networks to facilitate its operations with the customers and suppliers.

Legal

The firm seek to adhere to all the changes that could take place in any nation. Consequently, this is done in terms of taxation laws, labor laws, laws that govern the processes of hiring personnel and the global environment protection laws (Dickmann, 34).

Environmental factors

These are issues involving the concerns of the consumers over packaging and ability to recycle some of the materials as a way of exercising corporate social responsibility in the society.

In the SMART analysis, Nestle is mostly concerned with the well-being of the consumers and as such, the objectives are mainly focused on the health of the people. Nestle advocates for a SMART strategy among the consumers where they become specific to what they exactly want to accomplish regarding their health status.

The SMART goal should also be measurable as it helps an individual to keep track of their progress and ensure that they achieve the set goal. Establishing a substantial technique for measuring the progress of ones’ health status like deciding to take a certain number of fruit servings every day, keeps them in their targeted track.

Setting an attainable goal that is within reach is essential, and it involves establishing the goals as per your abilities and in a time frame that enables you to attain them. As much as challenging goals are preferable as they yield great results, determining the number, which is realistic, is of great importance.

Being realistic does not mean setting low goals because they could lead to low motivation, making it difficult to accomplish them. Rather, being realistic means setting goals that one is willing and able to achieve regardless of their difficulty. These goals should be relevant and important to you in that they satisfy your needs like initiating a fruit eating habit that was lacking in your life.

A goal without a time frame has no sense of urgency and accomplishing it does not yield the ultimate outcome. In this last step, one is allowed to set a deadline for achieving their goals like targeting to consume a certain number of fruits every day within a specific period, for example, a month.

The SWOT analysis is done on the company to determine the company’s ability to cope with escalate levels of competition in terms of resources and market coverage. The work of Barney (99) and Teece (12) argues that to gain a competitive advantage, a company should aim at understanding its strengths and weaknesses. The company should also focus on minimizing any imminent threat and seize the opportunities presented.

Internal factors

The strengths of Nestle Company include its competency in mergers and acquisitions as well as a good brand reputation that is valued billions as several people around the world enjoy its services. The company owns some of the most extensive portfolios in the food industry and adequate resources that help them to carry out advanced researches on new products, giving them a competitive advantage.

The second step of the SWOT analysis of Nestle involves looking at its weakness, where there were a number of criticisms concerning the nutritional value of their products. The Nestle Company failed to be consistent in providing quality food products due to contamination, which resulted in a negative reputation.

External factors

Today, people are health conscious and have all shifted to foods that are beneficial health wise. As such, Nestle has seized this opportunity of increasing demand for the healthy food products and overwhelmed the market with such products.

The final part of completing the SWOT analysis involves analyzing the threats that face the company including its inability to conduct a thorough quality assurance. Additionally, there is an increase in the emergence of private labels that raise the level of competition, and an increase in the cost of purchasing raw materials due to the increase in demand. Rapid technological changes in the contemporary world are a threat to the company, as it has to keep up with innovation and stay ahead of the competitors.

The BCG Chart of Nestle

The strategic business units (SBUs) of Nestle rated as stars tend to have a high market share as well as a high market growth (Blatchford, n.p). Some of the products produced by Nestle and classified in this bracket include Nescafe and Ceralac as they require huge investments to help facilitate brand awareness in emerging markets. In addition, these products require the huge investments in order to distinguish them from those of the competing firms already in the mature market.

The product categories in the question marks box have a low market share but a high market growth like the Magi 2-minute Noodles that require huge investments to keep up with growing market segment. Nonetheless, these products do not yield a similar high return as the amount invested in that brand portfolio.

The cash cows have a high market share, but a low market growth and they include products like the kit kat, which require little investments but generate huge revenues. These products make it possible for the funds saved from their investments as well as those generated to be reinvested into other products found in the stars or question marks sections.

Products like the Nestea and Nestle Munch are classified as dogs because of their low market share as well as a low market growth as they have failed to expand beyond certain markets (Blatchford, n.p). These products are affected by the poor sales in a concentrated market and only generate sufficient profits to facilitate their production, but are never a major source of revenue.

Functions of management

According to Lamond (330-356), managers serve their companies when they plan, organize, lead and control all the operations of the organization. Through planning, the Nestle managers determine the core objectives of the company and define the strategies to use in order to achieve those objectives. Through planning, the managers can encourage the rest of the personnel to work harder and request for extra working hours in order to meet the set targets.

The organizing function helps to ensure that there is no confusion in the running of the company, through deciding who performs certain tasks as well as determining the people to work under a certain supervisor. As such, the managers develop an organizational structure within which the efforts of the company are coordinated and specify the manner in which the personnel perform their duties.

Through controlling, the managers are bale to monitor the progress that is being made by setting up standards aimed at achieving the organizational goals. The managers compare the kind of performance brought about by these standards and make alterations where necessary by taking some corrective actions to ensure that the progress is being made.

After allocating jobs to the personnel, and giving them guidance on how to carry out their duties, the managers exercise the next function of commanding the managers at the firm caenergize their subordinates appropriately in order to put forth some productive efforts (Ivancevich et. al., 67).

Contracting is a managerial function that is undertaken by the Human Resource Management where they recruit the right people with the right skills and ability to fit into the organizational structure. As much as these people are skilled, they undergo training and are paid their salaries according to the terms of the contract they entered into with Nestle Company.

Theory X and Theory Y

It is a fact that several people are satisfied and proud of their jobs while there are those that demotivated and viewed their jobs as a burden, where they work only to get enough money for survival. The two theories show how the managers view the source of motivation for their teams, where Theory X assumes that the worker are naturally unmotivated and hate working. In theory X, the employees are lazy, and they perform poorly as most of the time they are focused on running away from their jobs whenever possible. Theory X suggests that these employees are reluctant to change, and only the use of pressure and an authoritative style of management could help bring them to track (Sahin, 160-165).

Theory Y requires a participative style of management as it assumes that the employees enjoy working as they want to succeed and are positive to not only adhere to the set structures but also participate in making them better. Theory Y also assumes that the workers like their jobs, are self-motivated, and they take the responsibilities given, without being provided with many directions.

Human Resources Process in Nestle

Nestle is one of the biggest food firms that has over 500 factories located in 86 countries making it a massive source of employment for several people. Recruitment of the employees is done when some of the employees decide to resign, or there is an urgent need for additional employees. As such, the head of the department seeks consent from the managing director, and if the request is granted, the divisional head develops a recruitment form. The management determines any overseas competencies required, they recreate the job analysis and job description based on the competencies, and make a list of applicants who want to fill the job vacancies. They keenly assess the applicants through interviews, recruit the most suitable, and train them to fit perfectly in the vacancies.

Social Responsibility

At Nestle, the company’s culture and objectives indicate that for long-term success, it is essential that the company establish In Philippines, Nestle visits the farmers regularly to advise and educate the farmers more on the significance of adapting good plantation management methods for better yields in coffee. Nestle also offers technical skills scholarship programs, constructs classrooms and helps manage as well as preserve the environment (Matibag, 15).

Export/Import

The Nestle Company has also specialized in importing some quality goods from various parts of the world in order to produce quality products that satisfy the needs of the consumers. After production of these goods, they are then delivered to customers all over the world in a timely and the most efficient way.

Licensing/Franchising

Licensing involves the process of selling the patents, trademarks and the right to produce Nestle products for some fees called royalties. Through licensing, other companies can use the technical knowledge of Nestle to produce products in foreign markets without necessarily incurring any transportation or investment costs. However, licensing has a limitation, which makes it difficult for the company to maintain the required standards in the production process.

Playing the role of a franchiser, Nestle helps other firms to make sales, raise the initial investments and enter a foreign market without investing much in the foreign market, at a periodic fee. Examples of firms that have been involved in such partnerships with the Nestle Company include the Jamba Juice Company as well as the Nestle Toll House Café by Chip.

 

 

Works Cited

Matibag, Desiree. “Corporate Social Responsibility (CSR)of Nestle.” Upload, Share, and Discover Content on SlideShare. N.p., 2013. Web. 8 May 2015.

Wright, Clifford. An Introduction to Stocks, Trading Markets and Corporate Behavior: The Educator’s Guide. Wickford Bay Publishing and Media, 2015. Print.

 

Lamond, David. “A matter of style: reconciling Henri and Henry.” Management Decision 42.2 (2004): 330-356.

Sahin, Faruk. “The mediating effect of leader-member exchange on the relationship between Theory X and Y management styles and affective commitment: A multilevel analysis.” Journal of Management and Organization18.2 (2012): 159-174.

Dickmann, Michael, and Yehuda Baruch. Global careers. Routledge, 2011.

Ivancevich, John M., Michael T. Matteson, and Robert Konopaske.Organizational behavior and management. Vol. 9. New York, NY: McGraw-Hill, 2002.

Blatchford, Josh. “Nestle – BCG Matrix and Brand Divestment.” Manifested Marketing Blog. N.p., 2013. Web. 8 May 2015. <manifestedmarketing.com/2013/10/04/nestle-bcg-matrix-and-brand-divestment/>.

Henry, Anthony. Understanding strategic management. Oxford University Press, 2011.

Teece, David J. Dynamic Capabilities, and Strategic Management: Organizing for Innovation and Growth: Organizing for Innovation and Growth. Oxford University Press, 2009.

Barney, Jay. “Firm resources and sustained competitive advantage.” Journal of Management 17.1 (1991): 99-120.