Nestle - Global Strategy Case

1650 Words Oct 23rd, 2012 7 Pages
1.What is the company’s strategy with regard to business development in emerging markets? Does this strategy make sense?
From the NESTLE : GLOBAL STRATEGY case, it can be seen that Nestle generally operates worldwide with the strategy of customization rather than globalization. It moves into consumer markets by using Niche market strategy to become the market leader in each of the niches. It mainly focuses on European markets, which make up 70 percent of its sales. As mentioned, these markets are in the mature state of the life cycle of that industry and also demographic changes such as the stagnation of population growth rate and slight decline in the food consumption have made it very challenging for companies like Nestle to generate
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This is due to the fact that Nestle’s strategy is based on a broad range of local brand names which are not entitled as “Nestle”. The company uses this approach in order to reach the consumers easily as they are accustomed to those local brand names and they think they know what they are buying. Consequently, marketing is easier and less costly because a brand image, a distribution channel and customer loyalty already exists for that locally acclaimed product. As a result Nestle can focus its distinctive competencies on product improvement and technological aspects such as process innovation.

Lastly, the key to Nestle’s success is customization rather than globalization. This has ensured its success so far. An example is Nestle’s success in the Chinese milk powder market. There was hardly any infrastructure, transportation system or product distribution channel in 1987 when the company entered the market. Nevertheless, Nestle increased the output of powdered milk from 316 tons in 1990 to 10,000 tons in 1994. These figures show the success of their flexible strategy by scanning the environment where they operate. Combining all these factors makes Nestle’s strategy a sensible and successful one.
2.How would you describe Nestlé’s strategic posture at the corporate level; is it pursuing a global strategy, a multidomestic strategy, an international strategy, or a transnational strategy?
A transnational strategy is an international business structure where