Company Analysis Essay on Nestle

Published: 2021-06-29
1280 words
5 pages
11 min to read
Boston College
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Recognition: telecommunication, entertainment, and Retail, Travel, Holiday services.

Organizational Structure: A parental developer because it consists of several strategic business units.

Focus: Innovation, creativity, value for money, Good quality, Brilliant Customer Service, fun and a sense of competitive challenge

Competitors: Keurig, Starbucks, Maggi Products, Unilever, Nigeria Breweries, Amul, Engro Foods, BakerHostetler, Walmart, Heinz, IBFAN, Euro Africa, Emeven Global, Groupe DANONE, Mars, Yuniu and other Dairy.

Substitute products: Coffee, Tea, Candy, Milk Powder, baby food.

Nestle products are high tech. the companys policies emphasize on quality and do not compromise.

Fully-fledged company with many subsidiaries and associated holding companies. Began as a condensed milk factory in 1866 ().

Value addition:

Relies on strategic business units.

Founders were thorough strategists and high risk takers.

Taking risks entry into markets difficult to penetrate.

Operates commercially under its brand name- strategic partnerships with other brands.

Global presence of strategic business units - offer knowledge, technology and resources for the supply of top quality products.

Invests in research and development- Operations are founded on in depth research and analysis.

Organization structure:

Decentralized management (Nestle, 2017).

Each company has its own management

Management style is not conventional

Managers are independent in their divisions

Companies are autonomous in decision making (Nestle, 2017).

Employees esteem and sense of belonging is encouraged to boost productivity.

Based on available data pertaining to the company, Nestle can be categorized on several basis with regards to its business structure.

What is the key part of the organization?

Strategic Apex, where the shareholders are at the apex of the leadership chain providing direction. The shareholders managed to build an empire based on strategic leadership.

What is the primary coordinating mechanism?

Flat Management Structure- managers enjoy a high level of autonomy. Minimal layers of management. Rigid lines of reporting.

What type of decentralization is used?


What does the organization gravitate to?

Having autonomy in management to allow talent to flourish

The organization can also be viewed as a professional organization with a complex structure and a non-regulating system.

What is the key part of the organization?

Operating Core the administrators with relevant training and experience in the market.

What is the primary coordinating mechanism?

Variety of operational skills-the management is qualified in the running of international operations and is familiar with the direction the business needs to head towards.

What type of decentralization is used?

Horizontal decentralization

What does the organization gravitate to?

Specialize- the management needs to obtain specific expertise in the particular industries Nestle operates.

Nestle can also be identified as an organization that prides itself in developing innovation.

What is the key part of the organization?

Support Staff- staff are encouraged to display innovation in the operations of the company in order to improve efficiency and delivery of services. Innovation enables the consistent production of quality and gives a competitive edge.

What is the primary coordinating mechanism?

Mutual Adjustment- the different departments of firms have to learn how to adjust to cope with changes that are brought by innovation from other departments.

What type of decentralization is used?


What does the organization gravitate to?

Collaborate (Learning) - the employees need to know the workings of the organization and its structures. The knowledge will enable them to cooperate in working towards maximizing the companys output and as a result, the performance of the whole group.

Due to: Reduced growth, loss making investments, unpopular management structure, stiffer competition, changing trends in management structures, change in legislation, the main concern of Nestle is how to stay competitive in the markets despite the hurdles and sustain growth internationally.

Key Issues or Problems

Diversification gone wrong- entry into new markets or new products led to widespread issues.

Management organization- Nestle is large and the companies have different interest. Without an orderly management system, the group can end up in trouble due to poor decision making in the rather unconventional management style for a big group

Linkages- despite the advantages of collaborations, linkages with some groups may lead to obstacles to growth, and hindered profitability. This is because bad decisions or poor investment strategy by a linked company can result in losses for the whole outfit.

Due to: Widening the scope of investment, diversifying at a speed to fast and laity in management, the Nestle is at risk of having its strategies as the cause for losses. Globalization and diversification in a bid to outdo the existing competition has led to decline in growth (Chopra & Meindl, 2007).

On July 7, 1977, a boycott against Swiss based Nestle Corporation was launched in the United States. The campaign spread through the United States and spilled into Europe in the early 1980s. The campaign was triggered by Nestles "aggressive marketing" of substitutes for breast milk. The campaign was intensive especially in less developed countries. The boycotts organizers promoted the nutrition of newborns via natural breast milk, arguing that the substitute products posed a health risk to babies health.

Nestles marketing strategy came to the limelight in 1973 when an article was printed in the New Internationalist magazine and in War On Wants booklet The Baby Killer in 1974. Nestle responded by suing the publisher of a German Third World Action Group for libel. After a two year trial, Nestle won the lawsuit and was judged not responsible for the death of infants with regard to criminal law. TIME magazine defined the judgment as a moral victory for the defendants (Kellner, 2003).

The boycott has been renewed and cancelled historically based on reviews on the business practices. As of the year 2013, the boycott is managed by the International Nestle Boycott Committee, whose secretariat is the UK group Baby Milk Action. To date, some institutions (universities, colleges, and schools) do not allow sale of Nestle products on shops and vending machines in their premises.


A plan (A deliberate course of action)

A ploy ( specific scheme planned to outdo a competition)

A pattern (chain of known actions)

A position (agreement between the organizations strategy and external environment).

A perspective (outlook that unites the organizations members, a way of picturing the world and their response to it).

The best strategic fit would be from out. The P.E.S.T.L.E analysis would affirm this.

Political Factors

Nestle operates in a wide-ranging political state of affairs,

The company has to cautiously select the countries it carries out business with to avoid negative repercussions on the business.

Operates an array sectors and at a global scale. Legislation and government policies differ.

Economic Factors

Operating in a variety of countries reduces the companys profitability due to fluctuation of currency

On the other hand, international expansion enables it to gain greater market share.

Nestle operates in almost 200 countries worldwide; countries with all different economic status, growth rates, employment rates, productivity, and populations.

Due to various economic policies in the countries of operation, Nestle must take into consideration their prices, what their consumers in each country can afford, and the local economy.

They must choose their suppliers carefully, and put a lot of money into research and development.

Nestle needs to be aware of the changes in inflation and economic growth of each country as this affects consumers in how sensitive and cost conscious they are to prices.

This could also change the cost of raw materials which could increase the price of their products.

Social Factors

The differing cultures across its target markets create a need to specialize in each location.

The Internet and social media have made customers more aware than ever about the companies they purchase from and their impact on the social environment.

The rising trend of organic and healthy lifestyles of the consumers has influenced many of their family-friendly products.

They also began to try to improve their public image and reduce their carbon footprint.

Nestle must do all it can to prot...

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