Defination of strategic management

The on-going process of formulating, implementing and controlling broad

plans guide the organistion in acheving the strategic goodsgiven its internal
and external environment.

What is stratergic management?

It cab be defined as the artand the science of formulating, implementating
and evaluating cross- functional decisions that can enable an organistion to
achieve its objective

All About Nestlé

Nestlé is a multinational packaged food company founded and
headquartered in Vevey, Switzerland. It results from a merger in 1905
between the Anglo-Swiss Milk Company for milk products established by
the Page Brothers in Cham, Switzerland, in 1866 and the Farine Lactée
Henri Nestlé Company set up in 1867 by Henri Nestlé to provide an infant
food product. Several of Nestlé's brands are globally renowned, which made
the company a global market leader in many product lines, including milk,
chocolate, confectionery, bottled water, coffee, creamer, food seasoning and
pet foods. The company stock is listed on the SWX Swiss Exchange. Some
of Nestlé's business practices have been considered unethical, especially the
manner in which infant formula has been marketed in developing countries,
which led to the Nestlé boycott from 1977.
nestle HQ, Vevey, Switzerland.

Nestlé 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 favor 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 behavior, 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.

History

1866-1905

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.

1905-1918

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.

1918-1938

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

1938-1944
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.

1944-1975

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.

1975-1981

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..

1981-1995

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.

1996-2002

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.

2003

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.

Business Principles
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 based on sound
human values and principles.

While our Nestlé 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 Corporate Business Principles (Sept 2004)

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.
Shared Value:
For a business to be successful in the long term it has to create value, not
only for its shareholders but also for society. We call this Creating Shared
Value. It is not philanthropy or an add-on, but a fundamental part of our
business strategy. Simply stated, in order to create value for our shareholders
and our company, we need to create value for the people in the countries
where we are present - farmers who supply to us, our employees, our
consumers and the communities where we operate.

Mission:
Henri Nestlé developed the first milk food for infants in 1867, and saved the
life of a neighbor’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.

Brands:
Nestlé has a wide range of products across a number of markets including
coffee (Nescafé), water, other beverages, ice cream, infant foods,
performance and healthcare nutrition, seasonings, frozen and refrigerated
foods, confectionery and pet food. For a list of some of these brands, see List
of Nestlé brands.
Bottled Water
Today, Nestlé Waters is a thriving business with headquarters in Paris. In
2006, it sold its 72 brands of bottled water worldwide, making CHF 9.6 bn
in sales. The international brands of Nestlé Waters are familiar on tables
throughout the world: Acqua Panna, S. Pellegrino, Perrier, Vittel and
Contrex.

Nestlé began its entry into the water business in 1969 with a 30% stake in
the owners of the Société Générale des Eaux Minérales de Vittel. By the end
of 1997, the Group was present on every continent, and the purchase of S.
Pellegrino gave it the leadership in the Italian market.

In 1998, for the first time in its history, Nestlé associated its name with a
bottled water: Nestlé Pure Life. It is drinking water that has been treated
and remineralized using a standardized industrial process to ensure purity
and quality, and is marketed in emerging countries.

A second product with the Nestlé name was launched in May 2000, this time
in six European countries: Nestlé Aquarel. A natural spring water currently
from nine different springs in France, Germany, Belgium, Hungary, Italy
and Spain, Nestlé Aquarel also uses the multi-source concept to satisfy new
consumer expectations, especially for water with a low mineral content that
the whole family can drink.

Baby Foods
Breast milk is best for babies. Before you decide to use an infant
formula consult your doctor or clinic for advice.
The production of infant food goes right back to the origins of the Nestlé
Company. Henri Nestlé's 'Farine Lactée' was the first product to bear the
Nestlé name.

In 1867 a physician persuaded Henri Nestlé to give his product to an infant

who was very ill — he had been born prematurely and was refusing his
mother's milk and all other types of nourishment. Nestlé's new food worked,
and the boy survived. From the very beginning, Nestlé's product was never
intended as a competitor for mother's milk. In 1869, he wrote: "During the
first months, the mother's milk will always be the most natural nutrient, and
every mother able to do so should herself suckle her children."

The factors that made baby foods success in the early days of the Nestlé
company — quality and superior nutritional value — are still as valid today
for the wide range of infant formula, cereals and baby food made by Nestlé.
The World Health Organization (WHO) recognizes that there is a legitimate
market for infant formula, when a mother cannot or chooses not to breast
feed her child. Nestlé markets infant formula according to the principles and
aims of the WHO International Code of Marketing Breast Milk Substitutes,
and seeks dialogue and cooperation with the international health community
and in particular with the WHO and UNICEF, to identify problems and their
solution. Nestlé's expertise as the world's leading infant food manufacturer,
gained over more than 125 years, is put at the disposal of health authorities,
the medical profession and mothers and children everywhere.

Dairy Products
Nestlé has long been a major player in the dairy industry, originally with
well known shelf stable, i.e., dried milk powder brands such as Nido,
Nespray, La Lechera and Carnation. We have been bringing life to milk
since the very beginnings of our company.

We look for continued success through innovation and renovation in the

development of milk based products. We introduce new products constantly:
in the USA liquid Coffee Mate in new flavors, and also in a soy variant for
those who want to enjoy a creamy taste without milk.

Another recent product introduction was Nesvita drinking yoghurt in Brazil

with bifidus and Actifibras to aid digestion. In the UK and Ireland, we have
brought enjoyment to good food with the introduction of Nestlé MUNCH
BUNCH Squashums, squeezable strawberry-shaped packs of strawberry
yoghurt for children's lunch boxes.

Breakfast Cereals
Although cereals have been with mankind in one form or another for
millennia, it was not until the mid 19th century that scientific research,
technological innovation, and the influence of a group of American health
reformers, gave rise to the crunchy foodstuff we know today as breakfast
cereal.

Nestlé has a joint venture with General Mills outside North America, Cereal
Partners Worldwide, which is active in more than 80 countries.

The joint venture began in 1990, and its rapid growth has been characterized
by strong branding and lately the launching of breakfast cereal brands into
the fast-growing cereal bar market.

Ice Cream
There are many myths and stories as to the invention of ice cream: was it
Marco Polo who brought it back from China (along with pasta)? Probably
not, considering he most likely never visited China.

The story of its popularity is however connected with the invention of

technology to make it on an industrial scale, and to keep it cold once made.
Before refrigeration techniques, food was frozen with the aid of ice, mixed
with salt, which was either stored in ice houses or shipped from cold
countries. But then at the end of the 19th century, both making and freezing
it became easier, and together with the invention of the ice cream cone,
made the product boom.

Today, the United States is the absolute leader in terms of volume

consumed, but the highest per head consumers are in New Zealand. Flavors
you'd never have thought of and yet they're commercially available:

• Sorbets - Smoked Salmon, Tomato, Cucumber

• Ice Creams - Garlic, Avocado, Sweet corn.

The ice cream cone is the most environmentally friendly form of packaging.
A Syrian from Damascus, Ernest E Hamwi is credited with its invention.
Apparently, during the 1904 St Louis World's Fair, his waffle booth was
next to an ice cream vendor who ran short of dishes. Hamwi rolled a waffle
to contain ice cream and the cone was born.

Nutrition
Nutrition has been a central theme for Nestlé ever since 1867, when Henri
Nestlé first invented infant food to help save the life of a neighbour's child.
Today, we have progressed beyond these beginnings to become a world
leader in key categories of Nutrition, Health and Wellness to offer our
consumers the food choices they need to achieve the healthy lifestyles they
want.

We are leaders in infant nutrition, medical nutrition, performance nutrition,

weight management, water, powdered beverages, dairy, culinary and cereals.
In all these categories we offer products that are preferred over those of our
competitors in terms of taste and in addition, offer a clear nutritional
advantage - 60/40+. This is our rigorous testing system that combines a taste
preference with a scientific nutritional assessment.

We review the nutritional content of our products and reduce sensitive

nutrients such as salt, sugar and trans fatty acids, and increase others that are
considered positive for health, such as calcium, whole grain and fiber. We
also add further health benefits in the shape of Branded Active Benefits such
as Prebio for digestive comfort, Actige-E to help release energy from food,
BL for immunity and protection and NutrriActive-B to help growrh of
children.

We back this with the largest private research organisation in the world
entirely dedicated to basic research in food and nutrition. In 2006, our total
research and development spend was CHF 1.7 billion. Around 3,800 people
from more than 50 countries work in our worldwide research, development
and prodict testing centers. The focus of our R&D is on products that
provide specific health and nutritional benefits.

Nestlé Nutrition was set up in 2005 as an independent entity within the

Nestlé Group with specific responsibility for the areas of infant nutrition,
healthcare nutrition and performance nutrition.

Beverages
In 1937, Nestlé scientists perfected a powdered coffee product that was
introduced in 1938 under the brand name Nescafé – the world's first
commercially successful soluble coffee.

It became so popular during World War II that for one full year the entire
output of the Nescafé plant in the United States (more than 1 million cases)
was reserved for military use only. Since then, Nescafé has become one of
the world's best-known brands. In addition, Nestlé is a major producer of
chocolate-based and malted drinks.

Its leading brands, Nesquik, Milo and Nescau are very popular with a
growing number of young people around the world. Nestlé's ready-to-drink
beverages Nestea and Nescafé are sold in various forms (cans, bottles).
These are distributed by Nestlé's joint-venture with the Coca-Cola Company,
Beverage Partners Worldwide. Nestlé is also present in fruit juices
(Libby's), as well as espresso coffee in capsules (Nespresso).

Read about Nescafé's Sustainable Agriculture Initiatives in Vietnam and

Nicaragua.

Visit our Creating Shared Value section to read Coffee FAQs and further
information about coffee growing initiatives worldwide.

Chocolate & Confectionery

The story of chocolate began in the New World with the Mayans, who drank
a dark brew called cacahuaquchtl. Later, the Aztecs consumed chacahoua
and used the cocoa bean for currency. In 1523, they offered cocoa beans to
Cortez, who introduced chocolate to the Old World, where it swiftly became
a favorite food among the rich and noble of Europe.

From the beginning, turning raw, bitter cocoa beans into what one 17th
century writer called "the only true food of the gods" has been a fine art, a
delicate mixture of alchemy and science. Centuries ago it was discovered
that by fermenting and roasting the beans, an almost otherworldly flavor
could be created.

In 1875, after years of trying, a 31-year-old candy maker in Vevey named

Daniel Peter figured out how to combine milk and cocoa powder. The result
— milk chocolate.
Peter, a friend and neighbor of Henri Nestlé, started a company that would
quickly become the world's leading maker of chocolate. For three decades
the company called Peter, Cailler, Kohler relied on Nestlé for milk and
marketing expertise. In 1929, the almost inevitable merger took place as
Nestlé acquired Peter, Cailler, Kohler.

Look in our Creating Shared Value section for information about responsible
cocoa growing.

Prepared Foods
Convenience foods — packaged soups, frozen meals, prepared sauces and
flavorings —date back more than a century. With the Industrial Revolution
came factory jobs for women and less time to prepare meals.

The problem was so widespread that it became the object of intense study in
1882 by the Swiss Public Welfare Society, which offered a series of
recommendations, including an increase in the consumption of vegetables.

The Society commissioned Julius Maggi, a miller with a reputation as an

inventive and capable businessman, to create a vegetable food product that
would be quick to prepare and easy to digest. The results — two instant pea
soups and an instant bean soup — helped launch one of the best known
brands in the history of the food industry. By the turn of the century, Maggi
& Company was producing not only powdered soups, but bouillon cubes,
sauces and flavorings.

Maggi merged with Nestlé in 1947. Buitoni, the authentic Italian brand,
which has been producing pasta and sauces in Italy since 1827, became part
of the Nestlé Group in 1988.

Petcare
Petcare has a shorter history in our company than other sectors but we bring
the same care – and research-based expertise – to this field as we do to any
other – for your pet's sake. We are also an industry leader in the sector.

Nestlé entered the petcare business with the purchase of Carnation in 1985,
and we consolidated our position in Europe with the acquisition of the
Spillers brand in 1998, and further with the acquisition of Ralston-Purina in
2001, creating Nestlé Purina PetCare.

Technologies to develop and add value continually for pets and their owners
are engineered into our current product range. These include state-of-the-art
nutritional innovations, such as products which help maintain feline urinary
tract health, or innovations for the most discriminating of pets and their
owners.

Competitors:

In food:
Unilever ($28.1bn)

Food revenue.
Kellogg Co. ($9.6bn), Kraft Foods ($25.7bn), Dan one Group
($8.5bn), PepsiCo ($16bn est.), HJ Heinz ($8.4bn), ConAgra
($14.5bn), Sara Lee Corp ($7.6bn)

In Non-Alcoholic Beverages:

Coca-Cola (Juice, Soft Drinks, Water) ($21bn), Nestle (Coffee, Soft Drinks,
Water) ($19bn), Starbucks (Coffee) ($4.0bn), PepsiCo (Juice, Soft Drinks,
Sara Lee (Coffee) ($2.7bn), Kraft Foods (Coffee, Powdered Drinks)
($4.6bn), Tchibo (Coffee) ($2.7bn), Unilever (Tea ) ($4.5bn), Red Bull
(Energy Drinks) ($1.6bn)
Cadbury Schweppes (Soft Drinks) ($4.5bn) , Cott Corp (Soft Drinks)
($1.4bn)
Danone (Soft Drinks, Water) ($4.5bn), Ocean Spray (Juice) ($1.0bn)

In Pet care:
Nestle Purina (31%), Colgate-Palmolive (11%), Procter & Gamble (Iams)
(12%)

Research centre of godrej

:
They have their own research centre where they conduct market
research & develop healthy product.

Structure and Network

The global breadth of the research network both inside and outside of the
Nestlé Research Center provides our scientists with an extensive scientific
knowledge base and unique collaborative opportunities.

In addition to the eight scientific departments within NRC which span a

variety of scientific disciplines, NRC scientists share and utilize information
with the worldwide Nestlé R&D Network. Outside of the Nestlé Group,
NRC scientists work in collaboration with leading international universities
and research institutes for short-term projects and long-term partnerships.

Innovations and Publications

Achieving health and wellness through foods is a challenging adventure. It

extends the boundaries of consumer expectations and satisfaction beyond the
classical sensory experience. Today’s discoveries provide the knowledge for
tomorrow’s innovations.

Much groundbreaking scientific work has emerged from the Nestlé Research
Center in the form of significant product innovations and recognized
scientific publications.
FUTURE PLANNING:

Probiomics Ltd and Nestlé execute global license agreement for

probiotic use in infant nutrition

15 October 2007. Probiomics Ltd and Nestlé Nutrition, a unit of Nestlé

SA, have agreed to co-develop infant and child nutrition products
offering immune system benefits to infants and children.

Improving the immune systems of infants and children will help protect
the infants and children from infections and allergies; very common
ailments. Nestlé and Probiomics believe that probiotics, and in particular
Probiomics’ proprietary L. fermentum strain – a beneficial bacteria
which occurs naturally in the gastro-intestinal tract – offer an exciting
option for improving the immune systems of infants and children.
Probiomics currently markets the probiotic under the PCC brand.

The collaboration with Probiomics is part of the Nestlé Nutrition

commitment to invest in cutting-edge science that can enable it to launch
innovative products and services which provide consumers with clear and
tangible benefits.

Nestlé completes acquisition of Gerber

Vevey, 1 September 2007 - We are pleased to inform you that Nestlé has
completed the acquisition of the Gerber Products Company announced in
April 2007. We will now start the integration of Gerber into the Infant
Nutrition business unit of Nestlé Nutrition

Nestlé completes acquisition of Novartis Medical Nutrition

02 July 2007 - We are pleased to inform you that Nestlé has received the
regulatory approvals required to complete the acquisition of the Novartis
Medical Nutrition business. We will now start the process of integrating
the Novartis Medical Nutrition business into the HealthCare Nutrition
business unit of Nestlé Nutrition.
Nestlé to acquire GERBER, consolidating its Leadership in
Nutrition

Vevey, 12 April 2007 - As part of the continuing drive to reinforce its

leadership in nutrition, Nestlé has agreed to acquire Gerber, the iconic US
baby food brand, from Novartis for a total amount of USD 5.5 billion.
The moue gives Nestlé the number one position in the world's largest
single baby food market, the USA, and clearly establishes Nestlé
Nutrition as the global leader in this sector. With this acquisition, Nestlé
Nutrition will aise leverage its existing strong core business in North
America, giving the company significant scale in infant, healthcare and
performance nutrition with a dedicated and focused sales force.

With net proceeds of sales for 2007 estimated at USD 1.95 billion,
Gerber is among the most trusted US brands - recognized by virtually ail
mothers in the USA - and, furthermore, enjoys strong positions in
Mexico, Poland and Central America. Gerber is also a provider of baby
care products and juvenile lite insurance in the US. The company has
enjoyed good growth in recent years and, as a result of expected cost
synergies, further improvement of operational margins is expected.

The acquisition of Gerber, which cornes in the wake of the Jenny Craig
and Novartis Medical Nutrition purchases, will transform Nestlé
Nutrition into a business approaching CHF 10 billion in sales with an
enhanced critical mass and access to the Group's global R&D network to
drive innovation.

The transaction, which is expected to be completed during the second

half of 2007, is subject to regulatory approval.
Peter Brabeck-Letmathe, Chairman and CEC) of Nestlé, said: "The
acquisition of Gerber is the perfect complementary fit. It not only gives
Nestlé the leadership position in baby food, but it also constitutes a
decisive step ta establish Nestlé Nutrition as the undisputed global leader
in the nutrition field, with annual sales of around CHF 10 billion,
covering all important sectors: infant formula, baby food, medical
nutrition, weight management and performance nutrition. This is a major
step in the transformational journey of Nestlé toward a Nutrition, Health
and Wellness Company. It is my great pleasure to welcome the
employees of Gerber to the Nestlé Group."

BLIS Technologies Ltd and Nestlé Nutrition agree to work on

Probiotics for infant nutrition products

Dunedin (New Zealand) and Vevey (Switzerland), 28 March 2007 - New

Zealand biotechnology company BLIS Technologies and Nestlé
Nutrition, a unit of Nestlé SA, have agreed to carry out research and
development of BLIS probiotics for use in infant nutrition products and
targeting upper respiratory tract infections.

Upper respiratory tract infections are very common in infants and there
are no effective methods of preventing or reducing the risk of these
infections. Scientific evidence suggests that the BLIS Technologies'
probiotics - beneficial bacteria which occur naturally in the upper
respiratory tract and which have "built-in" defences against pathogenic or
disease causing bacteria - can boost infants' immune systems and may
prevent upper respiratory tract infections. Nestlé Nutrition and BLIS
Technologies will work exclusively together to incorporate these
probiotics into infant nutrition products and provide clinical evidence of
their effectiveness

Under the terms of the agreement, Nestlé Nutrition will fund BLIS
Technologies' research efforts in this area through a series of milestone
and R&D expense payments. BLIS Technologies will be responsible for
development of probiotics suitable for incorporation into infant nutrition
products and supplying the probiotics for clinical trial purposes. Nestlé
Nutrition will be responsible for clinical studies. Nestlé Nutrition will
commercialise the probiotics under licence as part of its range of infant
nutrition products.

For BLIS Technologies, this agreement is a major step. If the project

proceeds according to plan, the company will commit significant
resources to the development over the next three years. This will enable
the company to build a platform of probiotics with significant market
opportunities.

The collaboration with BLIS Technologies is part of the Nestlé Nutrition

commitment to invest in cutting-edge science that can enable it to launch
innovative products and services with clear consumer benefits.

They are also in welfare of farmers:

Farmers and Agriculture

Zhengjun Wang, who owns 9 cows and 6 calves, has been supplying milk to
the Nestlé plant in Shuangcheng, North-East China, since 1990. A Nestlé
project in the milk district now provides farmers with proper manure storage
facilities, which reduces impact on water sources and also creates a biogas
energy source for farmers’ homes.

“Depletion of natural resources and problems faced by rural communities

affect agricultural productivity. Ensuring sustainable agricultural practices is
in the interest of the entire food chain, from producers to consumers. And it
is of urgent concern as global caloric consumption is set to double in the
coming 25 years, which will require producing two to three times more
agricultural products on the same amount of cultivated land.” Marc Pfitzer,
Foundation Strategy Group

Nestlé’s practice of sustainable agriculture seeks to address the

environmental, social and economic dimensions of farming and sourcing. In
practice, this means, for example, helping to promote farming methods that
preserve soil, water, air, energy and genetic diversity; minimize the risk of
contaminants in raw materials; improve productivity and yields; boost farm
income through transparent pricing; improve labor conditions; and help
build traceability systems. Nestlé actively participates in international
initiatives, such as the Common Code for the Coffee Community and the
World Cocoa Foundation. These and other forums allow Nestlé experts to
contribute experience and ideas to promote sustainability.

Rural development
Nestlé has a long history of helping farmers to be better and more
prosperous suppliers. This has a positive long-term impact on economic and
environmental development and standards of living, sometimes helping
entire regions to increase agricultural productivity and economic
performance. This often begins by helping farmers through agricultural
programs that share good environmental and water management practices.

Our team of 675 agronomists and approximately 5,000 extension workers

and contractors currently offers support and training assistance to 111,800
farmers via 28 projects in 21 countries as well as maintaining ongoing dialog
with traders, governments and NGO partners. There are no conditions
attached to the assistance we give and farmers are not obliged to sell their
produce to Nestlé.

Such projects secure supplies of higher-grade raw materials, which ensure

we can maintain production of high-quality end products. For example,
Nestlé’s Doi Tung Experimental and Demonstration Farm helps hundreds of
farmers in northern Thailand to grow Arabica coffee. They receive practical
training on coffee fertilization, irrigation and harvesting techniques, which
helps their coffee get a higher price. We have taken a similar approach in
Yunnan Province, China, where Nestlé has set up a training center,
demonstration farm, nursery and buying station.

Managing supplier relationships

In 2007, Nestlé conducted 3,400 audits of suppliers’ facilities to help ensure
that they comply with Nestlé food safety standards. Our objective is a
global, supply-chain-wide system of quality, social and environmental
audits, which will not only reduce the total burden and any duplication of
work, but also help us to replicate best practice across all key sourcing areas,
continue building partnerships and deliver measurable results. Nestlé is also
a member of AIM-PROGRESS Task Force, an initiative of leading fast-
moving consumer goods (FMCG) companies that supports the use of
common evaluation methods to determine CSR supplier performance and
help promote responsible sourcing practices within the supply chain.

Nestlé insists on honesty, integrity and fairness in all business relationships,

and when instances of non-compliance are discovered, corrective measures
are needed for the supplier to be retained. It is Nestlé’s policy to apply
sanctions in the event of misconduct or abuse of ethical standards and
guidelines.

Furthermore, we make clear our expectations with regard to the social

conditions of the farmers we buy from, with child labor and employee health
and safety all high priorities.
Detailed policies and guidelines concerning our position on these and other
issues can be found in the Reporting section. All measures taken to support
environmentally sound business practices and improve environmental
performance are set out in Nestlé’s Policy on the Environment.

Direct Purchasing guidelines

Nestlé is aware of the strain agricultural processes can put on environmental
resources and ecological habitats. In order to maximize the performance of
our agricultural inputs and minimize potential negative impacts, Nestlé has
issued purchasing guidelines recommending, wherever possible, sustainable
farming practices in the case of direct procurement from farmers.

swot analysis:
Strengths

Parent support - Nestle India has a strong support from its parent company,
which is the world’s largest processed food and beverage company, with a
presence in almost every country. The company has access to the parent’s
hugely successful global folio of products and brands.

Brand strength - In India, Nestle has some very strong brands like Nescafe,
Maggi and Cerelac. These brands are almost generic to their product
categories.

Product innovation - The Company has been continuously introducing new

products for its Indian patrons on a frequent basis, thus expanding its
product offerings.

Weakness

Exports – The company’s exports stood at Rs 2,571 m at the end of 2003

(11% of revenues) and continue to grow at a decent pace. But a major
portion of this comprises of Coffee (around 67% of the exports were that of
Nescafe instant to Russia). This constitutes a big chunk of the total exports
to a single location. Historically, Russia has been a very volatile market for
Nestle, and its overall performance takes a hit often due to this factor.
Supply chain - The Company has a complex supply chain management and
the main issue for Nestle India is traceability. The food industry requires
high standards of hygiene, quality of edible inputs and personnel. The
fragmented nature of the Indian market place complicates things more.

Opportunities
Expansion - The Company has the potential to expand to smaller towns and
other geographies. Existing markets are not fully tapped and the company
can increase presence by penetrating further. With India's demographic
profile changing in favor of the consuming class, the per capita consumption
of most FMCG products is likely to grow. Nestle will have the inherent
advantage of this trend.

Product offerings - The Company has the option to expand its product folio
by introducing more brands which its parents are famed for like breakfast
cereals, Smartest Chocolates, Carnation, etc.

Global hub - Since manufacturing of some products is cheaper in India than

in other South East Asian countries, Nestle India could become an export
hub for the parent in certain product categories.

Threat

Competition - The Company faces immense competition from the

organized as well as the unorganized sectors. Off late, to liberalize its trade
and investment policies to enable the country to better function in the
globalize economy; the Indian Government has reduced the import duty of
food segments thus intensifying the battle.

Changing consumer trends - Trend of increased consumer spends on

consumer durables resulting in lower spending on FMCG products. In the
past 2-3 years, the performance of the FMCG sector has been lackluster,
despite the economy growing at a decent pace. Although, off late the
situation has been improving, the dependence on monsoon is very high.

Sect oral woes - Rising prices of raw materials and fuels, and in turn,
increasing packaging and manufacturing costs. But the companies’ may not
be able to pass on the full burden of these onto the customers.

Conclusion
The food processing business in India is at a nascent stage.
Currently, only about 10% of the output is processed and consumed
in packaged form thus highlighting huge potential for expansion and
growth. Traditionally, Indians believe in consuming fresh stuff rather
then packaged or frozen, but the trend is changing and the new fast
food generation is slowly changing.

At Rs 604, the Nestle stock trades at nearly 25 times annualized

9mCY04 earnings and market cap to sales of 2.4 xs. The stock
trades at a premium valuation over peers owing to its superior growth
and quality product profile. Nestle is a leader in food processing in
India and given the opportunity of growth along with the parent’s keen
interest in developing its Indian subsidiary, the company is likely to
continue being a dominant force in the Indian FMCG space.
 Nestle business break-up

Segments Brands CY01 CY02 CY03

sales sales sales
Milk Products & Everyday Dairy 8,159 8,847 9,880
nutrition Whitener,
milk powder,
Milkmaid, Milk,
Dahi, Butter,
Cerelac,
Nestogen
% of sales 42.5% 43.2% 43.4%
% growth 10.6% 8.4% 11.7%
Beverages Nescafe, Milo, 5,627 4,894 5,449
Nestea
% of sales 29.3% 23.9% 23.9%
% growth 14.7% -13.0% 11.3%
Prepared Maggi (noodles, 2,765 3,503 4,094
dishes/ pickles,
cooking aids soups, sauces)
(Culinary)
% of sales 14.4% 17.1% 18.0%
% growth 19.6% 26.7% 16.9%
Chocolates & Munch, Kit Kat, 2,646 3,227 3,366
confectionery Bar One,
Classic,
Choco Stick,
Milky Bar Choo,
Nestle Fruit &
Nut
% of sales 13.8% 15.8% 14.8%
% growth 21.4% 21.9% 4.3%
Total Sales 19,197 20,470 22,790
% growth 14.4% 6.6%
*(figures in Rs m)

STRATEGIC MANAGEMENT

PROJECT ON

NESTLE PRIVATE LIMITED

PROJECT:

SUBMITTED TO: PROF. INDIRA SINGH

SUBMITTED BY: SUSHMA MISHRA
ROLL NO: 29