Nestle SWOT & PESTLE Analysis

Strength

1. World renowned brand: Nestlé has a large global presence across over 189 countries. It also has a different branding for every product in its 4 major categories. It is the largest food company in the world and one of the main shareholders of L'Oréal, largest cosmetic company. Nestlé also has a differentiated product distribution across the world depending on the target audience.

2. Deep product penetration: Nestlé has products in only 7 main categories- Powdered and Liquid Beverages, Nutrition and Health Science, Milk products and Ice cream, PetCare, Prepared dishes and cooking aids, Confectionery and Water but has a great product depth. In 2017 alone, over 1000 new nutritious products were launched that were aimed at addressing deficiencies highlighted by children intake studies. 174 billion servings of fortified foods and beverages were rolled out in 66 countries with higher vulnerability to micronutrient malnutrition. It highly focuses on R&D and attention-to-detail rather than just widening of horizon. The Swiss food giant capitalizes on recent consumer trends such as organic, whole grain, reduced calorie and natural foods. Nestlé is also working towards introducing more plant based alternatives. Nestle focuses on its core competencies of delivering healthiest and tastiest products in each category that differentiates itself from their competitors. They concentrate on offerings with nutrition, health and wellness benefits. For e.g. most food and beverages, especially those for children are fortified with micronutrients such as iron, iodine, vitamin A and zinc.

3. Strong Research & Development: Nestlé boasts of the largest research and development network in the food and beverages industry to address rapidly changing consumer demands. In 2017, over 60% of R&D spend was aimed at developing more nutritious products. Nestlé has a total of 40 product technology centers with about 5000 people working under them. Consistent innovation, driven by Nestlé’s industry leading research and development wing, teamed with deep consumer insights, lends it a competitive advantage and is pivotal factor that fuels growth from within the Company. They also partner with cutting edge partners across the globe, including startups, academic institutions and public organisations to remain at the forefront of consumer trends. The total R&D spending of Nestlé in 2017 was 1.724 billion Swiss francs. It keeps increasing its R&D spending every year, which is very high as compared to its close competitors, thereby giving it a competitive advantage.

4. Efficient distribution system: Nestlé, with its global presence in 189 countries, has a wide distribution channel consisting of 1600 warehouses which transport more than 145000 tons of good every day. Not just this, they have also reduced the greenhouse gas emissions over the years by making their transportation more sustainable. Nestlé is also working towards simplifying and standardizing their manufacturing footprint and optimizing factories to bring efficiency to utilization capacity. To leverage their size and scale in procurement activities, the food giant has established three global purchasing hubs. Nestlé aims to meet 60% of their requirements from these hubs by 2020.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

Political

1. Changes in regulations of countries: Being a diversified company with international presence, Nestlé faced a lot of political barriers to entry while internationalizing its products and entering into different countries. It had to follow different political changes occurring in developing nations.

2. Lobbying in United States: Nestlé has been into political spending to US Congress since many years to prevent increased regulations that might affect its bottom line. It has spent approximately $2.47 million on lobbying in the United States in 2016. The top issues include- food sector, labor, pet care, health and environment- unsurprisingly the areas where it has faced multiple controversies.

Economic

This section is available only in the 'Complete Report' on purchase.

Social

This section is available only in the 'Complete Report' on purchase.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

This section is available only in the 'Complete Report' on purchase.