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Group Members

Project
M. Waleed Hafiz Faizan Mahmood

Presenters
Fareed Ud din Asad Adil Syed Zar Mehdi

Mission Statement
Nestl is dedicated to providing the best foods to people throughout their day, throughout their lives, throughout the world. With our unique experience of anticipating consumers needs and creating solutions, Nestl contributes to your well-being and enhances your quality of life.

Vision
The Nestl global vision is to be the leading health, wellness, and Nutrition Company in the world. Nestl Pakistan subscribes fully to this vision. In particular, we envision to: Lead a dynamic motivated and professional workforce proud of its heritage and bullish about the future. Deliver shareholder value through profitable longterm growth ,while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country.

Business Analysis
PESTEL Analysis SWOT Analysis

Porters five forces Analysis

Political
If government imposes heavy taxes on the industry then it ba dly effects the industry growth. The taxes impose is from government side and it varies from industry to industry. FMCGs have to pay heavy taxation, change sin any taxation system can badly effect Nestles productivity & sales(profits). Nestles some product has like butter and cream which has more taxes.

Political Cont..
Labor Laws
Labor is being privileged here having all the laws. Nestle company also follow these law like government announce minimum salaries of an employ Rs 6000. But if any labor laws changes it will affect the Nestls management all to gather because its difficult to get potential labor now a days. Nestles main aim to or key potential factor is to keep their employees happy &contended because as one said happy employees happy management & it leads to prosperity.

Political Cont..
Laws on hiring & promotions

Hiring & promotion is followed by law. People with better capabilities are privileged because they deserve it, for the betterme nt of the organization as well as a well educated & skilled experienced person is a precious asset for the company suit should be hired on better term & conditions and be promoted on the basis of it capabilities.

Political Cont..
Environmental Protection Laws
They do concern for environment and contribute more and more for the betterment of environment. Nestles considers a lot about CSR, Nestle is worldwide a environmental company so as Nestle Pakistan, Nestle care for poor & urban areas, in the start Nestle gave the concept about friendly environment & to care for your environment.

Political Cont..
Foreign trade Regulations

Foreign trade regulation does not affect the overall policy and the working of the Nestle because they operate nationally not internationally. However it affect when the condition get so worst. But as the last two years whole the world is suffering from great depression so any economy of the world

Political Cont..
Political instability

Foreign trade regulation does not affect the overall policy and the working of the Nestle because they operate nationally not internationally. However it affect when the condition get so worst. But as the last two years whole the world is suffering from great depression so any economy of the world

The government stability also plays a great role for any industry. In Pakistan government face lot of difficulty from the side of terrorism and also its activity that badly effect environment of the country which is totally very upset. Recently in Punjab instability of government creates lot of problem for the industry like shortage of electricity that badly affects the i ndustry operational process. Nestle have not much affect this condition but in futureit may be face some difficulty for operating

Economic Forces
Inflation Rate
Now in Pakistan inflation rate is almost 22.3%, so if any increase in inflation rate then increase in prices of Nestle products which eventually affects the Nestle Pakistan. So inflation rate affect mostly everyone in the industry so as nestle but nestle by the great decision making able to retain55% of market share in Milk & Nestle Pure life.

Economic Forces Cont..


Economic growth rate

Economy growth rate accelerate is 7% and plus which eventually affect the Nestle productivity & sales.

Social Forces
Social Forces & Cultural Health Consciousness
Today people are more health conscious so Nestle pro ducts by identifying this need of the people they are also producing health conscious products with more elements of pure & quality, which create the market for Nestle & trend of its products in the market. However when launches it Milk in 1988 back then it was not so much popular but now a days people are more health conscious.

Environmental concerns
About the environmental concerns of Nestle products are the symbol of good health & nutrition no matter which product is under consideration. Nestle also consider a lot about the environmental factors because they are very much socially responsible towards nature & humans.

Environmental concerns Cont...


Work life quality

Quality of work life is very safer & environment friendly company of the world as every MNC is maintaining the same standards abroad with a slight cultural changes maintain the efficient scale of production which normally called economies of scale

Technology
Total spending on R&D
Spending on R&D is long term investment for any organization. Nestle has R&D department and Nestle total spending on R&D 70 million because with true technological changes this research & development cannot takes place. So with the help of technological changes Nestle can enhance its products & diversify its portfolio of products.

Technology Cont..
New communication technology

All the modern as well as traditional ways of communication are being adopted by Nestle including own emails, letters, faxes and monthly visit indifferent offices of Nestle for better communication among customers. Nestle has also established own web site which can be visited any one for most recent news innovation and activities being taken in the organization with the technological change adoption the whole organization can be increased.

SWOT Analysis

STRENGTHS

Parent support Company Image High Quality Products Well-developed strategy Market Share Good marketing skills and services Brand strength Research & Development Team Product innovation HR department

WEAKNESSES
Less Proactive

Nestle being a company is less proactive they create changes but usually unless competitor doesnt change they doesnt adopt a change.
Limited Distribution Channel

Nestles major & bad factor is the limited distribution channel because they distributes their products to whole seller in their own factory vehicles as compare to their major competitor they have limited distribution channel but they are maintaining to penetrate the market as far.

WEAKNESSES CONT..
No outlets in Pakistan They dont have direct outlets to whole sellers to create less burden on the factory distribution channels however their competitors give them a major threat by this.
More concerned about profit As being less proactive they are more concerned about profits, & their market share the main objective of every company is to gain profits but as compared to competitors its a drawback.

OPPORTUNITES
Support from Foreign Investors
Government support foreign investors to invest in Pakistan which eventually is the opportunity for Nestle.

Enhance Distribution Channel


Nestle should be working on the distribution network to enhance the companys network against its competitor.

Changing Social Trend


Consumers in urban areas now adopt Western lifestyles, especially the younger generation which is hugely influenced by the Western media. Yo unger consumers tend to follow Western life style. There was an increase in demand for Nestle products over the review period.

OPPORTUNITES CONT..
Health conscious
Increasing health and hygiene awareness among Pakistanis has greatly increased sales of nestle products. Both the government and the media have started health awareness campaigns to make Pakistanis realizes tha t consumption of Nestles hygienic products is as essential as eating food. Fruit/ juices & eatable products are doing very well in both urban and rural areas.

Market growth
Nestle market expands very fast. A new research proves that in future(2012) every person use 85.5 liters juices per years & uses more hygienic products because of the low hygienic conditions of the environment.

THREATS
Government Regulation They face problem if government employ taxes on them which force them to raise the price of their product. Increase in Competition among Competitor Competition among competitors is major threat to Nestle which can be controlled by the help to retaining more customers & making more loyal ones. No Entry Barrier There are no many entry barriers so a large numbers of local companies enter in various Nestles product market.

THREATS CONT..
Inflation rate
Increase inflation rate very fast .In 2008 expected inflation rate 23.3%so with the increasing inflation rate the prices will go down which creates the market slump, so inflation is very true bad factor which can affect Nestle.

Unfavorable Changes in Consumer Demand


With the increase in the competitors there will be a increase in the number of related products which eventually harm the Nestles market. Due to which the consumers demand pattern fluctuate.

Loss of Market Share


When the market saturates the loss of the market share of Nestles products is there major threat to Nestle.

Porters five forces Analysis

Threat of New Entrants


The threat of new entrance means when any other

company that is not operate in that product category but operate in the other product market or the company that start it new venture see a opportunity in this field like bargaining power if the company cannot produce its raw materials or other ingredients. Suppliers have weak bargaining powers, if in the market many suppliers and demand of raw material is low. The bargaining power is low because Nestle doesnt rely on any supplier they produce there on raw material or import it from parent company, even they have no reliance on the distributors they have their own factory trucks to supply the material.

some of the industry profits. Suppliers have great

Bargaining Power of Buyers


Buyer power is the most important factor of porters fiver

forces model, because buyer are the consumers of the product, for nestle its a major impact factor because the competition is intense & competitors have the same products may differs in quality but providing the same needs. For that particular reason we can say that Nestle have high bargaining power from buyers. They can lose the customer if the prices & quality form the competitor meet their products. So if Nestle can control the factor of their competitors may be they eliminate this buyer power all to gather. After all switching cost not as much high to engage in using another brand however nestle with the time &quality became a Generic brand in Pakistan

Threats from Substitutes


Substitute products refer to products in other industries.

To the economist ,a threat of substitutes exists when a product demand is affected by the price change of a substitute product. A products price elasticity is effected by substitute product as more substitute become available, demand becomes more elastic since customer have more alternative . A close substitute products constrains the ability of firms in an industry to raise prices. Nestle have a major threat from it substitute products from other competitor due to which there product can lost the market share, there are many competitors so the threat from substitutes product are high.

Competitive Rivalry
The big factors determining the strength of rivalry is

how actively and aggressively are rivals employing the various weapons of competition i n jockeying for a stronger market position and seeking bigger sales. In the market rival create a great threat. Many companies introduce same products such as milk, water, cereals & many more items to hamper the nestles impact in market and increase threat. Many local company enter in market there is also great threat for establish company. Nestle also face lot of HIGH competitor rivalry.

Conclusion
In conclusion we can say that whether the company is international or local both of the organizations have strengths & weaknesses which lead them to avail opportunities & remove threats. So for nestle it important or recommended that they should pay more attention to their weaknesses &threats in order to compete for a long time & maintain the sustainable competitive advantage. Nestle is doing so far in a good way they compete with their competitor with full & strong response. They are proactive but less reactive which is not good for the firms or organizations that are reactive.