In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother’s milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestlé’s new formula saved the child’s life, and soon, Farine Lactée Henri Nestlé was being sold in much of Europe.
In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestlé’s production had more than doubled.
After the war Government contracts dried up and consumers switched back to fresh milk. However, Nestlé’s management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestlé’s first expansion into new products, with chocolate the Company’s second most important activity
Nestlé felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the Company’s newest product, Nescafé, which was a staple drink of the US military. Nestlé’s production and sales rose in the wartime economy.
The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963), Libby’s (1971) and Stouffer’s (1973). Diversification came with a shareholding in L’Oréal in 1974.
Nestlé’s growth in the developing world partially offset a slowdown in the Company’s traditional markets. Nestlé made its second venture outside the food industry by acquiring Alcon Laboratories Inc..
Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé’s improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation.
The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Petfoods (1998) and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in July, Nestlé merged its U.S. ice cream business into Dreyer’s, and in August, a USD 2.6bn acquisition was announced of Chef America, Inc.
The year 2003 started well with the acquisition of Mövenpick Ice Cream, enhancing Nestlé’s position as one of the world market leaders in this product category. In 2006, Jenny Craig and Uncle Toby’s were added to the Nestlé portfolio and 2007 saw Novartis Medical Nutrition, Gerber and Henniez join the Company.
Nestlé is the world’s leading Nutrition, Health and Wellness company. We are committed to increasing the nutritional value of our products while improving the taste. We achieve this through our brands and with initiatives like the Nutritional Compass.
Since Henri Nestlé developed the first milk food for infants in 1867, and saved the life of a neighbour’s child, the Nestlé Company has aimed to build a business as the world’s leading nutrition, health and wellness company based on sound human values and principles.
The Nestlé Corporate Business Principles are at the basis of our company’s culture. We have built our business on the fundamental principle that to have long-term success for our shareholders, we not only have to comply with all applicable legal requirements and ensure that all our activities are sustainable, but additionally we have to create significant value for society.
At Nestlé we call this Creating Shared Value.
Our 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.
Nestlé is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices:
Nestlé’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.
Nestlé does not favour short-term profit at the expense of successful long-term business development.
Nestlé recognizes that its consumers have a sincere and legitimate interest in the behaviour, beliefs and actions of the Company behind brands in which they place their trust, and that without its consumers the Company would not exist.
Nestlé believes that, as a general rule, legislation is the most effective safeguard 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.
Nestlé is conscious of the fact that the success of a corporation is a reflection 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.
Nestlé continues to maintain its commitment to follow and respect all applicable local laws in each of its markets.
The Nestlé Corporate Business Principles
The ten principles of business operations Consumers;
1 Nutrition, Health and Wellness
2 Quality assurance and product safety
3 Consumer communication Human rights and labour practices
4 Human rights in our business activities Our people
5 Leadership and personal responsibility
6 Safety and health at work Suppliers and customers
7 Supplier and customer relations
8 Agriculture and rural development The environment
9 Environmental sustainability
10 Water Consumers
Nutrition, Health and Wellness
Our core aim is to enhance the quality of consumers lives every day, everywhere by offering tastier and healthier food and beverage choices and encouraging a healthy
lifestyle. We express this via our corporate proposition Good Food, Good Life.
Quality assurance and product safety
Everywhere in the world, the Nestlé name represents a promise to the consumer that
the product is safe and of high standard.
We are committed to responsible, reliable consumer communication that empowers
consumers to exercise their right to informed choice andpromotes healthier diets. We respect consumer privacy.
Human rights in our business activities
We fully support the United Nations Global Compact’s(UNGC) guiding principles on human rights and labour andaim to provide an example of good human rights’ and labourpractices throughout our business activities.
Leadership and personal responsibility
Our success is based on our people. We treat each other with respect and dignity
and expect everyone to promote a sense of personal responsibility. We recruit
competent and motivated people who respect our values, provide equal opportunities for their development and advancement, protect their privacy and do not tolerate any form of harassment or discrimination.
Safety and health at work
We are committed to preventing accidents, injuries and illness related to work,and to protect employees, contractors and others involved along the value chain.
Supplier and customer relations
We require our suppliers, agents, subcontractors and their employees to demonstrate honesty, integrity and fairness, and to adhere to our non-negotiable standards. In the same way, we are committed towards our own customers.
Agriculture and rural development
We contribute to improvements in agricultural production, the social and economic status of farmers, rural communities and in production systems to make them more environmentally sustainable.
We commit ourselves to environmentally sustainable business practices. At all stages of the product life cycle we strive to use natural resources efficiently, favour the use of sustainably-managed renewable resources, and target zero waste.
We are committed to the sustainable use of water and continuous improvement in water management. We recognise that the world faces a growing water challenge and that responsible management of the world’s resources by all water users is an absolute necessity.
Commitment of the Chairman
and the Chief Executive Officer
Peter Brabeck-Letmathe Chairman of the Board
We believe in the importance of a strong compliance culture that is fully embedded in
our business. The Corporate Business Principles and the supporting documents reflect this commitment and thus protect the trust of our consumers and other stakeholders in the Nestlé brand. Our internal rules not only require strict compliance with the law, they guide our actions even if the law is more lenient or where there is no applicable law at all. For Nestlé, upholding compliance goes beyond keeping checklists. It requires steadfast principles that apply across the whole Company, providing clear guidance to our people. As the Chairman and the Chief Executive
Officer of Nestlé, we are committed to making sure that our entire Company is managed according to these principles and require adherence to them from all our employees around the world.
We are also committed to continuous improvement and are open to external engagement regarding any area of our Corporate Business Principles.
The Nestlé Corporate Business Principles are at the basis of our company’s culture, which has developed over the span of 140 years. Since Henri Nestlé first developed his successful infant cereal “Farine Lactée”, we have built our business on the fundamental principle that to have long-term success for our shareholders, we not only have to comply with all applicable legal requirements and ensure that all our activities are sustainable, but additionally we have to create significant value for society. At Nestlé we call this Creating Shared Value. Although our Nestlé Corporate Business Principles were first published as an integrated document in 1998, most had already been established in individual form many years before. While the Business Principles are firmly established, they also continue to evolve and adapt to a changing world. For instance, Nestlé incorporated all ten principles of the United Nations Global Compact soon after their creation and continues to implement them today. This latest revision differs from the previous two versions in that it establishes Creating Shared Value as Nestlé’s fundamental business principle.
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In addition, each principle is specifically linked to on-line copies of more detailed principles, policies, Standards and guidelines. This has allowed the statement of each principle to be more succinct, while providing more detailed implementing measures related to each one on the worldwide web. Also, for the first time, a map of the principles and an overview of related company measures is included at the start of the document. We believe in the importance of a strong compliance culture that is fully embedded in our business.
The Corporate Business Principles and the supporting documents reflect this commitment and thus protect the trust of our consumers and other stakeholders in the Nestlé brand. Our internal rules not only require strict compliance with the law, they guide our actions even if the law is more lenient or where there is no applicable law at all. For Nestlé, upholding compliance goes beyond keeping checklists. It requires steadfast principles that apply across the whole Company, providing clear guidance to our people. As the Chairman and the Chief Executive Officer of Nestlé, we are committed to making sure that our entire Company is managed according to these principles and require adherence to them from all our employees around the world. We are also committed to continuous improvement and are open to external engagement regarding any area of our Corporate Business Principles.
“At Nestle we believe that research can help us make better food so that people live a better life”
Marketing and sales
Nestle is one of the world’s largest global food companies. It has over 500 factories in 76 countries, and sells its products in 193 nations. Only 1% of sales and 3% of employees are located in its home country, Switzerland. Having reached the limits of growth and profitable penetration in most Western markets, Nestle turned its attention to emerging markets in Eastern Europe, Asia, and Latin America for growth. Many of these countries are relatively poor, but the economies are growing quickly. Thus a consumer base capable of buying many Nestle products will develop over the next couple of decades.
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Nestle tries to enter emerging markets ahead of competitors, and build a substantial position in basic foodstuffs. As income levels rise, the company progressively moves from these niches into more upscale items. It very much focuses on developing local goods for local markets, however, and places relatively less emphasis on its global brands in emerging markets. It also localizes its distribution and marketing strategy to the requirements of the local market. When good opportunities are available, Nestle acquires local firms. Nestle is a very decentralized organization, with operating decisions pushed down to local units. On top of this are both a SBU organization focused around food groups, and a regional organization that tries to help rationalize production and marketing among nearby countries. Helping hold the organization together is a group of managers who rotate around the world on various assignments. During the year under review the company achieved sustainable profitable growth by capitalizing on the opportunity presented by a positive business environment. This became possible through successful marketing and sales strategies and focus on key initiatives. Innovation and renovation remained the key to development of new products.
Because Nestle competes in a broad range of geographic areas as well as in a broad range of product categories, it faces competition from an equally broad range of companies. Some of its competitors are multinational organizations with similar product lines that cross regional bounds. These include Philip Morris, RJR Nabisco and Unilever. Other companies focus on a single product area in which Nestle competes. The result of this type of competition is that Nestle must compete vigorously across its international customer base. Since the product categories in which Nestle participates are no longer in the introductory or growth phase, there is increased price pressure, as well, which means that companies who do not focus on marketing and on competitive pricing can quickly lose large amounts of market share which can be difficult to recover. In some cases, smaller competitors have brought pressure on governments to help regulate the activities of Nestle; this is not different from companies in other countries. The acquisition of Source Perrier is a prime example of this. Although Nestle had acquired other companies in the past which had similar products to its own, the Source Perrier acquisition brought considerable critics.
Nestle uses local brands in a wide range of local markets and focuses on trying to optimize ingredients and processing technology to local conditions. That is why, the company needs to be flexible and able to adapt rapidly to local demand and cultural differences. Doing business in different countries means different ethical standards, different business expectations, and different cultural norms. Nestle claims that it can reduce risks and concentrate its marketing resources by narrowing its initial market focus to just a few strategic brands. Its global strategy must be backed up with the necessary financial and human resources and knowledge management should be introduced to spread information throughout the company. Clearly, the entrance of a company into the global marketplace creates numerous challenges. Knowing that innovation and quality were key determinants, Nestle transferred these distinctive competencies to foreign markets. In Nigeria, for example, Nestle had to rethink its traditional distribution methods (operating a central warehouse), because the road system was poorly developed and there was much violence. This example shows, that the company was able to respond quickly to different local conditions.
You are required to relate all your findings to Nestle.
You are required to compare alternative definitions of marketing. In your opinion what would be the appropriate definition for Nestle, justify your answer.(outcome 1.1)
Definitions: alternative definitions including those of the Chartered Institute of Marketing and the American Marketing Association, satisfying customers’ needs and wants, value and satisfaction, exchange relationships, the changing emphasis of marketing.
Definition of marketing (4 is enough)
a) which definition is more appropriate for Nestle.
b) you can chooseyour own definition too.
Identify the main characteristics of a marketing oriented organization and how do u think Nestle fair in this. (outcome 1.2)
Marketing concept: evolution of marketing, business orientations, societal issues and emergent philosophies, customer and competitor orientation, efficiency and effectiveness, limitations of the marketing concept.
Main characteristic of a marketing oriented organization
Link it to Nestle
Explain the various elements of the marketing concept. Relate your findings to Nestle (outcome 1.3)
Marketing process overview: marketing audit, integrated marketing, environmental analysis, SWOT analysis, marketing objectives, constraints, options, plans to include target markets and marketing mix, scope of marketing.
Relate to Nestle
You need to Identify and assess the benefits and costs of a marketing approach. Do you think Nestle has achieve this? Justify your answer. (outcome 1.4)
Costs and benefits: benefits of building customer satisfaction, desired quality, service and customer care, relationship marketing, customer retention, customer profitability, costs of too narrow a marketing focus, total quality marketing.
How to build customer satisfaction
Desired quality are achieved
Service and customer care
Cost of 2 narrow and marketing focus
Total quality marketing
Relate this to Nestle
Identify and explain macro and micro environmental factors which influence marketing decisions. You need to do an analysis as to how Nestle is affected with micro and macro environment and how do they overcome the problems encountered. (outcome 1.5)
Macro-environment: environmental scanning, political, legal, economic, socio-cultural, ecological and technological factors.
What their news are?
How they solve it?
Propose segmentation criteria to be used for two products in different markets. You are required to choose any two products of nestle and propose the segmentation appropriately. (outcome 1.6)
Micro- environmental: stakeholders (organisation’s own employees, suppliers, customers, intermediaries, owners, financiers, local residents, pressure groups and competitors), direct and indirect competitors, Porter’s competitive forces.
Segmentation: (e.g baby product/ health product)
What is segmentation
Why is it important?
Relate it to Nestle
What kind of market they are going to propose
Outline the factors which influence the choice of targeting strategy. As Nestle has wide range of products in many different countries you can choose any products and compare how the strategy differs in one country to another. (outcome 1.7)
Buyer behaviour: dimensions of buyer behaviour, environmental influences, personal variables- demographics, sociological, physiological- motivation, perception and learning, social factors, physiological stimuli, attitudes, other lifestyle and lifecycle variables, consumer and organisational buying.
What is marketing strategy all about?
Why is it important?
What is the benefit?
Relate it to Nestle
You are required to explain how buyer behaviour affects marketing activities in two different buying situations. Relate your findings to Nestle. (outcome 1.8)
Segmentation: process of market selection, macro and micro segmentation, bases for segmenting markets is geographic, demographic, psychographic and behavioural; multivariable segmentation and typologies, benefits of segmentation, evaluation of segments and targeting strategies, positioning, segmentation, evaluation of segments and targeting strategies, positioning, segmenting industrial markets, size, value, standards, industrial classification.
What is buyer behaviour?
Why doing buyer behaviour analysis?
Relate it to Nestle
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