Comparing International Strategies of Nestle and Kraft Foods in Emerging Countries

1930 Words Aug 29th, 2013 8 Pages
NESTLE’S GLOBAL STRATEGY FOR PENETRATING INTO EMERGING MARKETS
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.
In general the company’s strategy has been to enter emerging markets
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Nestlé brings its management level employees all around the world for 2-3 week training in its headquarters in Switzerland to familiarize them with their global culture, strategy and given them access to the company’s top management.
For this strategy to work it is important that local units be given a great deal of autonomy to make decisions that will best serve the interests of the local market. Excessive oversight or direction from headquarters will not only constrain the decisions of local managers, but may keep them from considering options that might seem offbeat or strange back at headquarters. Nestle’s strategy is essentially that of an international strategy, although there are some elements of a multidomestic approach as well. Clearly there is some attempt to coordinate strategies across countries (e.g., in the Middle East, Europe), and utilize centralized R&D facilities for product development. The coordination across local markets, presence of a number of global brands, and existence of the product focused SBU, tend to make a stronger case for an international strategy. The degree of global coordination inherent with global or transnational strategies is not present.
Also, looking at the available literature, it appears that Nestle’s structure and control systems are well aligned with its strategy. The controls it has in place are generally moderate, yet

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