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According to the Nestlé official website, Nestlé, which was founded in 1866, is one of the biggest food companies in the world. It provides good quality food for people of all age. All of the products of Nestlé are tasty. Most people like them including me. The coffee made by Nestlé is my favorite. The products of Nestlé are sold globally. The subsidiaries of the company are located all over the world except in the Antarctic. And the CEO of Nestlé is Paul Bulcke.
The company’s slogan is “Good food, Good life.” What the company has been doing is absolutely matched with its slogan. It is the most famous brand in the world. According to Wikipedia, The revenue of Nestlé reached 90.9 billion dollar in 2010, and it is still increasing (Wikipedia, 2013). Moreover, it is reported by OneSource that the main reason for the success of Nestlé is that it has strong brand strategy, which makes it able to develop all over the world (OneSource, 2013).
But there are still some weaknesses and threats to the company. If Nestlé wants to be stronger in the future, it needs to deal with these challenges correctly. This essay will discuss the SWOT analysis for the Nestlé Company.
According to Nestlé’s SWOT report, the main strength of Nestlé is that it has strong brand management; the company’s country-centric strategy helps its product loved by the people in different countries (OneSource, 2013). Moreover, the OneSource (2013) also points out that the strong R&D arm, the broad products and brands and wide geographical presence are also important for the company to be powerful (OneSource, 2013).
There are some weaknesses of Nestle. First, because there are so many kinds of products of Nestlé, so it means that there would be more problems for the company. It is reported by OneSource (2013) that “ A major threat to the brand equity of the company, arise due to the product recalls of some of its leading brand.”(OneSource, 2013, P.3) In addition, the decreasing liquidity is also a weakness for Nestlé, which cause a decline in its current and cash ratios (OneSource).
There are three good opportunities for Nestle reported by OneSource (2013). First, the rising aging population gives the company more chance to SWOT Analysis Essay on Nestlé sell its nutrition products. Second, acquisition and R&D expansion initiatives could enhance its competitive position. Third, the growing demand of dairy products in coming years around the world gives Nestlé good chance to develop its dairy product (OneSource, 2013). Threats The main threat for Nestle is the rising cost of raw material.
Agricultural commodities such as corn, wheat, flour, sugar etc. are some raw material used by the company. And these materials’price is keeping increasing recently, which affects the company’s profit margins (OneSource, 2013). Moreover, the government regulations is also a threat to Nestlé (OneSource, 2013). In some countries, the food policies made by local governments are not good for the company. Every international corporation has to face it.
Why is Nestlé so successful? I think the main reason is that it has strong brand strategy. In order to develop in all over the world smoothly, it made a country-centric brand strategy, which makes its subsidiary suit local law and develop the food that is suited to local residents’ taste in different country. In this case that it generates different brand naturally in different countries. Lots of brands Nestlé have made become more famous and have helped it to be known by more people. We must say that this strategy has made Nestlé famous all over the world. I think every businessman who is ambitious should learn the Nestlé’s strategy and see it as a classic case.
According to the article“ Meat Test Cause Nestle to Remove 2 Product” (May 15, 2013) by Stephen Castle published in the New York Times, point out that the meat test in Europe has caused bad effects for Nestle. The author says that it has made Nestle remove two products form the stores in Italy and Spain. Then, Castle reports that Nestle response for this, and Nestle in U.S. promised that they did not import meat from Europe. Finally, the author says that the government should improve food security in the Europe.
This news may cause some bad influences for Nestle both in Europe and in the U.S. Although the Nestle state that their product in the U.S. is 100 ercent safe to eat, but there may still be some people who doubt about this. They might stop buying the Nestlé’s product. Same in Europe, people may think Nestle did not remove all the products which has problems completely. So they might boycott the products made by Nestlé. Because SWOT Analysis Essay on Nestlé 6 there are too many kinds of products made by Nestle, so the problems like this are unavoidable.
In conclusion, Nestlé has become so successful mainly due to its strong brand strategy. Too many kinds of products, which cause many problems, is a barrier that would prevent Nestlé from being stronger. But there are some good opportunities for the company, such as a rising aging population, acquisition and R&D expansion initiatives and the growing demand of dairy products. The rising costs of raw material is a major threat for Nestlé (OneSource, 2013). Because of various products, Nestlé’s competitors are countless. Kraft Foods is a major competitor of Nestlé, which also is a worldwide food company. I think Nestlé can improve its competitive power by making more nutrition products that are designed for elderly people.
The rising aging population is a good chance for the company. Moreover, according to the article “ Meat Test Cause Nestle to Remove 2 Product” (May 15,2013) by Stephen Castle published on the New York Times, Nestlé has some problems with its meat products, which might cause a bad reputation for the company. Finally, if Nestlé can keep its strength and hold the opportunities, it will be more successful in the future.
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