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SWOT and PEST Analysis of Nestle

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Introduction

Nestle is one of the world biggest company that specializes in health and nutrition products. Nestle is the company that proposes a variety of different services and products related with chocolate. The main vision of Nestle is to remain the most competitive. The mission of the company is to provide such services that will satisfy customers' needs. The main mission of Nestle is to find an individual approach to every client. It means that the company should know everything about its clients. Nestle has been operating since 1860 at the European market. However, this company deals not only with success and high profits but difficulties that began after World War I. Another failure of this company is connected with mixing of milk with water. This baby milk issue influenced Nestlé’s reputation badly.

The high-quality services and a knowledgeable staff of Nestle are the indicators of good Human Resource Management. Different innovative products and technologies are the results of good performance and knowledge management. Nestle is characterized by such tangible resources as retail locations, and the well-fortified and global supply chain. Indeed, all its competitors also have such resources; thus, Nestle cannot consider all these tangible resources as its weapon against all its competitors. The main weapons of Nestle against its competitors are the intangible resources, such as the talented development team, providing the best foods and drinks to people, and relations with the original equipment manufacturers. These resources are difficult to obtain, but Nestle will cope with this task. Moreover, a strong brand image of Nestle serves as a good advertisement for its foods and drinks (The Economist, 2009).

In order to understand the peculiarities of Nestle, it is necessary to conduct SWOT and PEST analysis. One can also name them macro and micro environmental factors which influence business and marketing decision of Nestle that are beneficial or harmful to this company. Macro environment consists of external factors, and micro environment consists of internal factors.

SWOT Analysis of Nestle

Strengths

  1. 1.    Providing a Broad Range of Services. Nestle provides a wide variety of services necessary for the production of their foods and drinks. It is popular among the clients and meets their demands, as the organization employs an individual approach to every client. Nestle is a fusion of a kitchen and laboratory. This company does not only offer the most interesting receipts of chocolate but also conducts researches on chocolate production.
  2. 2.   A Good Policy. The main policy of Nestle is creating the talented development team, providing the best foods and drinks to people.
  3. 3.    A Big Brand Name. Nestle has a strong brand name that is its advertisement and proof about long history and good reputation. The trust of the people from all over the world and high level of market share create the basement of Nestle brand.
  4. 4.    Innovation. Nestle tries always to develop and innovate implementing new products. Innovation is a must for Nestle, and the strength of it is that it gives the possibility to implement new products.
  5. 5.    Perspectives of Transformation. Nestle is moving in the direction of transformation from the food company to leading, nutrition, health and wellness firm. 
  6. 6.   Growth of Functional Foods. Sales of functional foods are constantly growing, and this proves about additional profits for Nestle (Cohen, 1995).

Weaknesses

  1. 1.    Employer-Based Coverage. Nestle faces with the problem of employee turnover. Workers are not attached to their jobs; they always look for better places, with better salaries and insurance. A problem related to limited personnel is risky; that is why one should develop human resource management in order to avoid it.
  2. 2.    Expensiveness. The products of Nestle are not cheap. One may even say that they are expensive. As a result, the demand for the Nestle products may decrease. It means that the Nestle should change their pricing strategy in order to avoid losses.
  3. 3.    Product and Service Quality. The clients of Nestle complain about the quality of the products and services provided (mixing of milk with water). It means that Nestle should take care of its reputation and satisfy all needs of their clients. The quality of the core products always provokes debates and criticism. Nestle Baby Milk is the weakest point of Nestle as because it many babis became sick and even died. It means that Nestlé’s reputation is under a threat.
  4. 4.    Numerous Complaints of Clients. The clients constantly complain about the product quality. Thus, Nestle should find the ways in which such problems can be solved and provide their clients with improved products in order to avoid lawsuits.

Opportunities

  1. 1.    Development of New Products and Services. Nestle has a valuable opportunity todevelop new products and services that will be advantageous and innovative.
  2. 2.    The Additional Production of Functional Food. The demand on functional food is increasing that is why Nestle should provide its production in full measure. 
  3. 3.    Developing a Distribution Channel. Nestle should provide their products not only through shops, restaurants and cafes but via Internet.
  4. 4.    Providing a Healthy Food without Chemicals. Nestle should provide a healthy food without chemicals as this will attract more customers.
  5. 5.    Finding New Locations. Nestle should find new locations for their manufacturing as most their markets are concentrated in big cities.
  6. 6.    Development of Personalized Nutrition. Nestle wants to develop foods and drinks for people who follow diets and need a healthy nutrition.

Threats

  1. 1.    High Competition. Nestle competes with other companies (Danone, Mars, Inc., PepsiCo, Sara Lee) for being a leader as many new companies that produce foods and drinks appear.
  2. 2.    Compromised Reputation. Nestledeals with the threat of its reputation being compromised as its clients are constantly complaining about the quality of their products especially when it comes about Baby Milk.
  3. 3.    Lawsuits. Lawsuits may appear because of constant complaints of clients who can sue the company.

PEST Analysis

The general environment of Nestle is influenced by various political, economical, social and technological factors.

Political Analysis

The main strength of political factors for Nestle is that they obliged them to pay taxes and, as a result, this creates a positive image of this company. The weakness of the political factors is that Nestle can suffer from laws that forbid fast food in restaurants and cafes. However, this gives a wonderful opportunity for Nestle to develop a healthy food without chemicals. The threat of the company is a high competition. For example, Danon that already proposes healthy food to their clients. Nestle has to operate in the framework of laws that is why this company depends on political factors.

Government can impose the regulations and laws on Nestle and increase taxes. Besides, violation of these regulations and laws can lead to fines. For example, Nestle violates Disability Act and Health and Safety Act very often that is why it breaks laws and has to pay fines. Moreover, Nestle business is highly influenced by new tax laws, and revised tax law interpretations and tax rate changes. Government stability is also a crucial factor for Nestle development. Nestle operates in many countries that is why this company always risks especially in underdeveloped countries. It is necessary to mention that Nestle should follow foreign environmental laws and regulations and state and local regulations.

Economical Analysis

Economic factors of Nestle are connected with unemployment and economic crisis that lead to the reduction of customers. However, there is a positive effect of economic crisis as an increase of prices in luxury restaurants will provoke people to go to cheaper places such as Nestle restaurants. The main strength of economic factors is connected with employment and high profits. The opportunity is finding the ways of increasing revenues and operating at the economically developed countries like the UK and the USA. Nestle should adapt to economic changes and be ready to crisis (Porter, 1985).

Nestle should get information about national per person capital income, economic growth rate, the country inflation rate of the country in which this company wants to operate. Economic conditions are different from country to country. Moreover, global economic turmoil influences on Nestle business. Nestle is completely dependent on high demand and technology. Varying needs of consumers make Nestle innovate and develop (The Economist, 22009).

Social Analysis

Social factors of Nestle include the health issue. People become more health-conscious and choose a healthy lifestyle; that is why they begin to refuse from food with chemicals. Nestle is an unhealthy choice for them; that is why they refuse from eating there. An optimal variant for Nestle is to propose vegetarian food and food without additives, chemicals and GMO. Propaganda of healthy lifestyle is the strength of social factors that will attract new customers. Changing of company's policy from fast eating to healthy eating is the opportunity developed from the social factors of Nestle. However, immediate changing of company's policy can provoke misunderstanding of customers. Nestle should follow propaganda of healthy lifestyle. Environmental factors are connected with creating an ecologically friendly image of this company that is currently not ecologically friendly at all (Rumelt, 1980).

Moreover, Nestle should take into consideration foreign cultures and peculiarities of cuisine. Nestle should develop their products and adapt it to the national cuisine. It is recommended to Nestle to make some innovations in menu, to add diversity of national peculiarities. It will be a good marketing strategy to adapt to the tastes of international consumers. Nestle, should take into consideration religious beliefs, language, family, food habits, clothing and lifestyle and develop a marketing strategy according to the peculiarities of the country. Nestle should meet different lifestyle consumer behaviors as the promotion of the products can not be successful without consumers.

Technological Analysis

Technological factors are connected with innovations in menu, and development of a strong supply chain in management system. Nestle can boast with this; that is why it works excellently and efficiently. Besides, Nestle develops their information technologies in order to attract more and more customers. The strength of technological factors is that they give a possibility to implement innovative technologies. The weakness concerns of spending additional costs. The opportunity of technological factors is that it makes the company innovative and up-to-date. However, Nestle can face with a threat of impossibility of being constantly innovative. Nestle should develop their human resources and make them knowledgeable in innovative technologies.

Innovation is a must for Nestle, and the strength of it is that it gives the possibility to implement new products. The weakness of innovation is that it demands of additional costs and human resources that could implement innovative changes. Innovation gives the opportunity to make the company differ from other product companies. However, innovation can provoke the threat of the negative attitude of customers to the company. Nestle should develop their products making its healthy and diverse.

Nestle should implement new marketing techniques like product distribution and promotion via Internet and e-commerce. Technological factors have more profound, persistent and rapid effects comparing with other factors. Technological factors open new opportunities for product improvements and implementation of new products. 

Conclusions

In conclusion, it is necessary to say that Nestle should collaborate with other companies in the introduction of new services and products and their distribution. Creating new products and services will benefit the company and increase the number of customers.  Nestle should reduce the prices on their services as high prices discourage the customers. Nestle should work on improving the quality of their products and services, as high quality products and services will be competitive in the market. 

This study has shown that Nestle, has many challenges connected with its marketing policy. However, it has all opportunities to become a leading and competitive one again. Its leadership, as well as strategic plan, goals and tactics are connected with the innovations and implementation of new technologies. The current strategic situation of Nestle is not the best one as profits are always alternating. However, there are many options available to Nestle.

Rapid changes at the global market have a serious effect on Nestle. It is suggested that development of strategic management, international marketing and successful leadership will help Nestle to move forward. The main processes of the company are to understand customers' tastes and then to reflect them in their product strategy. At the present time, marketing moves in the direction of globalization, which is the process of overcoming all obstacles and barriers between countries. It means that Nestle should focus on orienting on the global market and widening its possibilities and becomes international one. Moreover, Nestle should orient on the international competitors in order to move forward.

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