Developing And Using Core Capabilities In Business Strategy: A Case Study Of Nestle

Background of Nestle

Research how organisations develop and use core capabilities into their broader business strategy. You should choose an organisation or business that has clearly identifiable core capabilities. You should also discuss how these activities and processes are essential in driving business strategy from a variety of perspectives (commercial).

The report focuses on the key products, services, and customers of Nestle Company which has been selected in the paper. Nestle is one of the leading companies which deals with various food and beverage products and services. The firm is rendering its products and services across the world to attain the competitive advantages in the market. In today’s era, the firm is expanding and flourishing its business across the world by offering innovative and tasty products to the customers. Further, the report depicts the business level strategy and core capabilities of the company. The key core capabilities are an essential part of the organization because it helps to make a strong position in the competitive market. It describes that how business level strategies are leading to core capabilities in the world. The firm also uses corporate-level strategies in order to overcome the competitors in the international market (Nestle, 2016).

Nestle is a Swiss international food and drink corporation with its headquartered is located in Vevey, Vaud Switzerland. It was incorporated in 1867 by Henry Nestle who was a trained pharmacist.  It is one of the biggest food companies in the world measured by the revenue and profit. The firm deal with various products such as medical food, baby food, breakfast cereals, bottled water, coffee and tea, frozen food, pet foods, ice cream and dairy products etc. Nestle brands include Nescafe, Smarties, Kit Kat, Maggi, and Nespresso. It is one of the biggest shareholders of L’Oreal which is the biggest cosmetics company. The company manages and operates 447 factories in more than 194 countries.There are approx 339,000 employees employed in the firm. In today’s era, the corporation is increasing its revenue and profit with maintaining sustainability in the organization. The firm introduced its chocolates in 1904 in the market (Nestle, 2016).

In 1930, Nestle introduced enormous new products such as Nescafe and Milo. Therefore, the company is increasing its revenue and profit day by day. Along with this, the firm uses marketing mix strategies, product growth strategies, and diversification strategies in order to beat the competitors in the market. Apart from this, the company uses personal selling, advertisement, and promotional strategies in order to promote and enhance the food products in the global market. In today’s competitive world, Nestle is number one food Group Company across the world. The main target market of the firm is kids, young girls and boys who buy food products on daily basis. The corporation uses several strategies to attract more people and to differentiate its products from the competitors in the market. Apart from this, marketing mix strategies are used by Nestle to stand out against the rivalries in the competitive market (Nestle, 2016).

Product and service description of Nestle

The company has approx 8,500 brands in over 80 countries in the world. Nestle provides a wide range of food products and services to the customers across the world. The products and services include coffee, chocolates, Nestle water, beverage products, frozen meals, ice-cream, baby food, tea, and pet foods. In this way, the firm has been able to maintain a dynamic position in the competitive market. Along with this, the organization uses innovative and new technologies to produce delicious food products to the customers across the world. In addition, home delivery is also provided by the firm to promote the products and services across the world (Nestle, 2016).

Nestle is one of the largest brands in the international market. The key core capabilities of Nestle have been discussed below.

• The firm maintains a unique team to understand the needs, expectations, and desires of the customers in the market. It helps to maximize and increase the revenue and profit of the firm.
• The firm has the capability to produce and launch more nutritional food and beverage products in the competitive market. Further, Nestle has been able to attract and retain more human resources in the international market. It is one of the biggest core capabilities of the firm.
• Along with this, the company is able to win and develop trust through quality among the customers in the world. This core capability provides a chance to increase the number of customers in the market.
• In addition, Nestle follows positioning strategy to make a strong financial position in front of customers in the competitive market (Varma & Ravi, 2017). Furthermore, the company wants to attract other well-known companies for joint ventures, strategic alliances, and partnership.
• Along with this, the firm is exporting its breakfast cereals to more than 130 countries.

A future roadmap has been created by Nestle with the help of effective and dynamic key core capabilities within the organization. The employees of the company are more capable to deliver the best products and services to the customers in the world. On the other hand, the company maintains unique core competencies which have been discussed below.

• Innovation and renovation are one of the significant core competencies of Nestle which help to introduce new products and services in the market. The firm has been able to make a separate portfolio by using and maintaining the core competency.
• Operation efficiency is another competency of the firm which helps to eliminate and reduce the wastage in the organization (Sethi, 2012). It also helps to increase and improve the performance and effectiveness of the workers.

These are two effective and attractive core competencies of the firm which helps to attract more consumers in the competitive market. By using these core competencies, the company can maintain a unique communication and collaboration with customers across the world. On the other hand, the firm uses tangible and intangible resources to overcome the competitors in the marketplace. The key core capabilities are also important to develop and build the business strategy within the organization. Nestle cannot use a business level strategy without key core capabilities and competencies. Mainly, the business level strategy outlines and explains the key core competencies and capabilities of the firm. The capabilities demonstrate the strengths of Nestle which helps to create a market share in the competitive business environment. Nestle assimilate the core capabilities into a business-level strategy to gain the competitive benefits in the international market (Lawrence & Beamish, 2012). The core capabilities are integrated into business level strategy in order to reduce and eliminate the risks and challenges of the market. In addition, business and growth level strategies help to measure and analyze the plans, strategies, and procedures of competitors in the global market. Furthermore, porter five forces model is used by the company to initiate the business level strategies with maintaining core competencies within the organization. This strategy also helps to assess and measure the needs, wants desires, expectations, and requirements of the customers across the world. The suppliers, customers, substitute’s goods, new competitors, and rivalry are the main and significant five forces of business level strategy. The firm has been able to make effective decisions by using business level strategy in the organization. Now it is assumed that there is a unique connection between key core capabilities and business level strategy (Furrer, 2016).

Key core capabilities of Nestle

There are three business level strategies are used by Nestle to attain the long-term success and growth of the firm. These strategies include cost leadership, differentiation, and focus strategies. The business level strategies have been discussed below.

Low-cost leadership strategy: Nestle is a well-known brand in the world. It purchases high quality of raw material from the various suppliers in the market. In this way, the company reduces the cost of raw material in the global market. The company focuses on the quality in order to achieve the goals and objectives through cost. The firm controls and manages the unnecessary costs to beat the competitors in the international market. The main aim of the current strategy is to achieve the operational efficiency within the organisation.

Differentiation strategy: It is the second important strategy of Nestle to stand out against the competitors in the market. The main aim of this strategy is to differentiate the products from the competitors (De Wit & Meyer, 2010). The other purpose of using this strategy is to develop and build a unique brand image and positions in the minds of customers. Currently, Nestle manufactures and produces more than 10,000 products under 8,500 different brand names. Along with this, the company uses pricing strategy, packaging strategy, and labeling strategy.

Focus strategy: It is the third most significant strategy of Nestle which focuses on the low-cost leadership and differentiation strategy to accomplish the vision and mission. The company uses focused low-cost strategy in order to control and manage the marketing and manufacturing cost. Now it is assumed that competitiveness and success of Nestle depend on the business level strategy to make a good image in the market. Apart from this, the firm also uses corporate level strategies to manage and tackle the different market situations. The corporate level strategies include growth strategies, stability strategies, and retrenchment strategies to analyze and identify the needs, requirements, and choices of the customers (Wheelen & Hunger, 2011). Nestle is one of the leading beverage and food manufacturing company. The firm is expanding and flourishing its business by using corporate-level strategies in the organization. Furthermore, Nestle uses several motivational strategies to motivate and encourage the workers that have been discussed below.

Reward strategy: This strategy is used by the organization to improve the productivity and efficiency of the employees. The company provides enormous rewards to the customers in order to provide job satisfaction and job security to the workers. In addition, the firm also provides incentives, compensation, and other benefits to the workers. There are two types of rewards which include financial and non-financial rewards.

Business level strategies of Nestle

Motivation strategy: The motivation strategies are used by Nestle to increase the efficiency and effectiveness of the workers. There are two types of motivation which include extrinsic and intrinsic motivation.  These strategies help to provide pleasure and happiness to the employees for performing task and duties effectively and successfully (Armstrong and Taylor, 2014).

All these business strategies help to increase the sale of the company. Further, it also helps to maintain a strong goodwill in the global market. Further, Nestle can gain the competitive advantages in the international market. These strategies also help to maintain a good working environment in the workplace. Nestle still faces competition in the international and local market which influence the trading activities and operations adversely. Groupe DANONE, Yinlu foods, and Mars are the main competitors of the company. The company uses business-level strategies to overcome the competitors across the world. The business level strategies help to maintain core capabilities within the organization. It also helps to maintain customer’s relationship with customers in the competitive market.

Low-cost leadership strategy provides helps to the customers to provide happiness and satisfaction to them. The activities, strategies, and processes are leading to core capability from a variety of perspectives which have been discussed below (Enama, 2017).

Commercial perspective: The low-cost leadership strategy helps to maintain a good culture in the organization. In this way, it helps to attract and retain the employees within the organization. It also helps to maintain dynamic core capabilities in the organization. The core capabilities provide a framework to the Nestle where they can identify and measure their core strengths and strategize in the organization. Furthermore, the company measures and identifies the core competencies by using effective and unique business level strategy.

Customer perspective: The firm reduces the prices of products by using low-cost leadership strategy. In this way, it creates a positive working environment in the environment as well as the organization. It also helps to enhance and develop unique core capabilities of the company. The consumers can buy the products at reasonable prices from the market. It also helps to make a unique image in the mind of customers across the world (Peters, Hofstetter & Hoffmann, 2011). Apart from this, Nestle has been able to provide innovative and attractive food and beverage products to the consumers in the competitive market. The customers easily buy the products of the company due to its strong image in the international market.

Market perspective: The core capability is the key success factor for the company which helps to determine the long-term success and growth of the company. Nestle has been able to beat the competitors by maintaining and using dynamic core competencies and business level strategies within the organization. Apart from this, the firm is able to deliver the innovative food and beverage products to the market. In this way, optimum utilization of resources can be done by the firm. In addition, low-cost leadership strategy helps to maintain sustainability in the market. The firm uses this strategy to provide satisfaction to the marketers (D'heur, 2015).

Society perspective: The business level strategy also provides benefits to the society. Nestle can easily run the business successfully and effectively by using these strategies within the organization. It also helps to increase and enhance the operational efficiency and effectiveness of the workers as well organization. The core capabilities also generate sustainable competitive benefits for the company. It helps to evaluate and analyze needs, preferences, tastes, and choices of the people. Further, the business level strategy also helps to maintain teamwork and communication with customers across the world. In addition, people have become aware in the market to make the effective and unique decisions. Further, the company uses leadership styles to provide satisfaction to people. Now it is assumed that business level strategies help to build and develop core capabilities of Nestle in the competitive market. These strategies play a vital role to maintain sustainability and CSR practices effectively and efficiently (Williams, 2014). Further, the core capabilities provide benefits to the customers, society, and market. It also helps to make a good and strong image in the international market.

Conclusion

On the above aforesaid information, it has been evaluated that Nestle is one of the largest corporations in the world. The company offers tasty food and beverage products to the customers in the competitive market. Apart from this business level strategies are used by the company to gain the competitive advantages in the global market. Further, Nestle maintains unique key core capabilities within the organization to increase the number of customers in the international market. There is a close connection between business level strategy and core capabilities. The core capabilities help to achieve the long-term vision and mission of the company. Along with this, core capabilities provide various benefits to the market, customers, and society. Nestle cannot run the business successfully and effectively without using and maintaining core capabilities within the organization. Furthermore, key core capabilities help to encourage and promote innovation and renovation in the organization (Islam, 2016). These core capabilities also access and evaluate the opportunities and threats of the market.

References

Armstrong, M. and Taylor, S., (2014). Armstrong's handbook of human resource management practice. Kogan Page Publishers.

De Wit, B., & Meyer, R. (2010). Strategy: Process, content, context. Cengage Learning EMEA.

D'heur, M. (Ed.). (2015). Sustainable value chain management: Delivering sustainability through the core business. Springer.

Enama, A. (2017). Research on Market Development Strategy in Africa. A Case Study of Nestle Nigeria PLC.

Furrer, O. (2016). Corporate level strategy: Theory and applications. Routledge.

Islam, K. R. (2016). Corporate marketing–a study of corporate communications at Nestlé Bangladesh Limited.

Lawrence, J. T., & Beamish, P. W. (Eds.). (2012). Globally responsible leadership: Managing according to the UN global compact. Sage.

Nestle, M. (2013). Food politics: How the food industry influences nutrition and health (Vol. 3). Univ of California Press.

Nestle., (2016). About us., reviewed on 7 Dec 2017< https://www.nestle.com/csv>

Nestle., (2016). The Nestle company history., reviewed on 7 Dec 2017., < https://www.nestle.com/aboutus/history/nestle-company-history>

Nestle., (2016). What products does Nestle sell?., reviewed on 7 Dec 2017., < https://www.nestle.com/ask-nestle/products-brands/answers/what-products-does-nestle-sell>

Peters, N. J., Hofstetter, J. S., & Hoffmann, V. H. (2011). Institutional entrepreneurship capabilities for interorganizational sustainable supply chain strategies. The International Journal of Logistics Management, 22(1), 52-86.

Sethi, S. P. (2012). Multinational corporations and the impact of public advocacy on corporate strategy: Nestle and the infant formula controversy (Vol. 6). Springer Science & Business Media.

Varma, G. R., & Ravi, J. (2017).  Strategic Analysis on FMCG Goods: A Case Study on Nestle.

Verbeke, A. (2013). International business strategy. Cambridge University Press.

Wheelen, T. L., & Hunger, J. D. (2011). Concepts in strategic management and business policy. Pearson Education India.

Williams, O. F. (2014). Sustainable development: The un millennium development goals, the un global compact, and the common good. University of Notre Dame Press.