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Nestle-Sustaining Growth - Nestl Sustaining Growth in...

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Nestlé: Sustaining Growth in Mature Markets CASE ASSIGNMENT Preparing to hand over the CEO position to Mr. Paul Bulcke on April 10, 2008, you decide to summarize the lessons and successes of your tenure in that position. Your first step will be to outline the environmental forces that you faced in 1997 (Nestlé's internal strengths and weaknesses and the external opportunities and threats facing the company at that time). Bulcke will take over the reins of a company that has clearly outperformed its sector over the past years. Delivering the Nestlé model (with both top- as well as bottom-line growth over the past ten years) while at the same time completing the strategic transformation, new organizational structures, and implementation of GLOBE, has put Nestle in a very favorable position to consolidate and continue the progress achieved in the past. You have a meeting scheduled later this month to give Bulcke direction on taking the company forward. You've outlined the following agenda for the meeting. I. Characteristics of the Current Competitive Landscape: Globalization, Technology, Knowledge, Strategic Flexibility, Quality, Profit Pool II. Vision and Mission III. Stakeholders IV. Acquisition Strategy V. Organziational Structure VI. Strategic Leadership VII. Strategic Entrepreneurship Nestlé faces a period of strategic and operational consolidation and a continued transformation into the world's preeminent nutrition, health and wellness company. At the same time, Nestlé needs to maintain its strong growth momentum in the developing and emerging world. Your conversation with Bulcke should prepare him for leading the company in the years ahead. 25
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Nestlé: Sustaining Growth in Mature Markets STRATEGIC MANAGEMENT INPUTS Outline the environmental forces that you faced in 1997 (Nestlé's internal strengths and weaknesses and the external opportunities and threats facing the company at that time). Strengths Weaknesses Opportunities Threats Financial performance is strong and costs are well-managed The company’s largest sales region, Europe, had the weakest performance in terms of EBITA margin. This is a weakness and a drag on the company's performance. Asia is an opportunity for growth - only 13% of Nestle sales Increasingly fierce competition at the global, national, and local levels - competitors achieving significant improvements in operating efficiencies Traditionally holds the market leader or number 2 position in each product segment - a clear leader in the global food industry Similar conditions appear in product segments. Beverages is the largest sales segment by waters is the lowest EBITA. Milk and Nutrition are also a low-margin performer in a large sales segment. Need to identify new growth opportunities and activate 250,000 employees to realize goal of 4% internal growth Strong, rich history of growth and brand recognition Relatively weak profitability due to acquisitions Innovation through R&D and marketing initiatives 70% of sales were in mature markets where future growth was limited Profound global
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