Nestle is Swiss multinational food and beverage company. It is one of the largest food companies in the world according to the revenues. The objective of the company is to become the nutrition health and wellness (Nestle.com, 2015). The financial performance of the company has been viable to secure a stable position for the organization. One of the major factors driving the growth of the company is the leadership followed in the organization. The share holders are able to develop trust for the organization (Solutions, 2013). One of the major factors driving the success of the organization is the innovation strategy of the company. It has been constantly reinventing itself to position itself as one of the reputed brands in the country (Hoovers.com, 2015). It is intended to create an alignment with the people. They have set strategic priorities that will accelerate the achievement of the objectives of the company (Nestle.com, 2015).
Nestle was always driven towards transforming themselves into a successful, technology driven food and beverage company. They have constantly innovated themselves by investment into the R&D and marketing. It has created an R&D and marketing driven nutrition, health and wellness group. In order to gain strategic excellence the R&D has reoriented them towards the development of life science. They have constantly delivered bolder, bigger and better innovations (Traitler, Watzke and Saguy, 2011). Nestle has employed more than 4500 people in the R&D of Nestle Food and Beverages. The organization believes that it cannot succeed by working internally. It can enhance the quality of R&D by tapping into the external resources. They have entered into partnership with business houses that has helped them to identify the new opportunities and integrated the strategies into the business (Giesen et al., 2010). The specialist knowledge gathered from the partners is applied in the form of development of best in class technology. Nestle has supported open innovation that has opened the door for greater innovation. Joint research by Nestle and L’Oreal has led the path of the company into a totally innovative nutrition, health and wellness products by providing beauty nutrition supplements. One of the major strength of Nestle is its R&D. It is the first pillar of the innovation strategy of the company. The R&D department has always searched for new ways to make subtle changes. The use of biochemical markers has been improved (Kuznetsov, 2008). The science of nutrition has been the prime mover in the maintenance of health and prevention of the diseases. This technique has been applied by Nestle to innovate itself which has provided new heights to the company (Nestle, 2015).
The innovation strategy by Nestle has been a learning experience for the organization. The innovative strategy of the company is based on continuous improvement in the insights of the consumers and translation to the innovative products (Kumar, Massie and Dumonceaux, 2006). Nestle has been communicating with the customers so that they understand the value of the innovation strategy of the company which is built on superior science and technology. The innovation strategy has made Nestle better equipped in harnessing vast expertise in the unmatchable research and development network. The innovation strategy of Nestle has been the development of the R&D. For this purpose they have closely worked with the leading universities and the outside partners so that a cutting edge is developed in science and technology (del Río, Carrillo-Hermosilla and Könnölä, 2010). They have been recruiting open minded and passionate innovators who will bridge between science, technology and the needs of the business. In order to reinvent, Nestle has been constantly pioneering in the field of innovation by using the best in class of science and technology. Nestle has learnt that it will not be able to prosper without the use of innovative science and technology tools. The factors that are responsible for the success of the company include its strategy to provide best in class products to the customers. For this purpose they have developed a unique set up and approach. They know the ways to protect the intellectual property and operate to optimize the quality and safety (Quéré, 2008).
The lesson learnt by the company has been the key driving factor for the success of the organization. The lessons of innovation learnt by the company have been applied for product development. The innovative science and technology has been used to build nutritional health benefits during the product development. The products of Nestle have been offering legendary sensory excellence. The innovative strategy has played a strategic role in realizing the vision of Nestle. It has helped the company to maintain the sustained growth. Nestle follows the principle of “think global”. The R&D is structured accordingly. The development of global products and processes is aligned in a vertical manner which is applied into the core business of Nestle and it is pushed out locally into the markets via the factories in more than 100 countries worldwide. The structure of R&D of Nestle is highly flexible. It attracts a source of local ideas. The ideas have been applied for global implementation. This offers the power to the company to gain broad based consumer insight through the power of innovation (Soosay, Fearne and Dent, 2012). The lessons of innovation learnt by Nestle have been applied across all the strategic business units. The SBU coordinate the strategies into the individual business categories of the company. The strategic decisions of the company include investment, analysis of the competitive market, key performance indicators, development of quality and strategic standards of the brand and management of portfolio (Quéré, 2008).
The major competitors of Nestle are Mars, Danone and Mondelez International. The competitors of Nestle in India are Britannia, Heritage Foods. The key factors that have provided competitive edge to Nestle with respect to its competitors are its unmatched portfolio of products and brand. The other company lags behind as the R&D segment is not well developed. The distribution channels of the competitors are not well developed and widespread. Nestle has established its competency by entering into several mergers and acquisitions. This has helped the company to attain strong competitive edge in several parts of the world. But the competitors of Nestle has nit applied the same strategy. Mergers and Acquisitions can serve as an effective tool for expanding the business. This has helped Nestle to enhance its brand value. Apart from investment in R&D, Nestle has maintained the quality of the food products. They have identified the increasing demand of the consumers for healthier food items. They offer food items to the consumers to meet their nutritional requirements. The organizations have not been successful in adopting the innovative tool as Nestle (Suhr and Nielsen, 2004). The innovative strategy of the other organizations were adopted by the used of marketing tools to raise awareness amongst the competitors. But the strategy applied by Nestle is distinctive as it has invested in product development by making investments in the R&D. The sustainability efforts have gained it with unmatched excellence than the others (Margetts, Little and Warm, 1999).
There are various ways in which the companies can undergo a restructuring of their business strategies. This will help them to overcome the difficulties and develop a brand value like Nestle. Some of the ways that can be adopted includes –
The innovation strategy can be applied in the development of the product and the brand. Nestle has applied its innovative strategy in the development of new brands. It has more than 29 brands which earns it lump sum of revenue. Thus it will be difficult for other organizations to be at par with Nestle if they do not increase their portfolio size and image.
One of the innovative strategies applied by Nestle is the development of the product via investment into R&D. This has led to the development of new products meeting the health requirements of the customers. Organizations have to apply this strategy of innovation to achieve the trust of the customers.
One of the major innovative strategies applied by Nestle is expanding its business via mergers and acquisitions (Garette and Dussauge, 2000). It has entered into successful partnership by acquiring other companies. This has helped the company to grow and maintain leadership position. The innovative strategy of Nestle can be applied by other organizations for attaining competitive advantage. This will be one of the key success factors for the organizations (Hendrickson et al., 2001).
The report has studied the innovation strategy of Nestle. It has identified the ways in which Nestle has been able to make a worldwide presence. The areas in which the competitors of Nestle are lagging have been identified. The key success factors of Nestle have been its unmatched efforts to meet the consumer needs. They have focused in the development of the product by making huge investments in the R&D. It has also entered into mergers and acquisitions to develop partnership with organizations. Nestle has learnt the innovative strategies to develop the business and applied the strategies for business development. This has been the major source of success for the organization. The needs of the customers have been met by its product development tools. They have developed a portfolio of brands which has been the key success factor of the organization.
del Río, P., Carrillo-Hermosilla, J. and Könnölä, T. (2010). Policy Strategies to Promote Eco-Innovation. Journal of Industrial Ecology, 14(4), pp.541-557.
Garette, B. and Dussauge, P. (2000). Alliances versus acquisitions: choosing the right option. European Management Journal, 18(1), pp.63-69.
Giesen, E., Riddleberger, E., Christner, R. and Bell, R. (2010). When and how to innovate your business model. Strategy & Leadership, 38(4), pp.17-26.
Hendrickson, M., Heffernan, W., Howard, P. and Heffernan, J. (2001). Consolidation in food retailing and dairy. British Food Journal, 103(10), pp.715-728.
Hoovers.com, (2015). Nestlé S.A. Names of Competitors. [online] Available at: https://www.hoovers.com/company-information/cs/competition.Nestl%C3%A9_SA.6a719827106be6ff.html [Accessed 19 Mar. 2015].
Kumar, S., Massie, C. and Dumonceaux, M. (2006). Comparative innovative business strategies of major players in cosmetic industry. Industr Mngmnt & Data Systems, 106(3), pp.285-306.
Kuznetsov, V. (2008). Opportunities, challenges and strategies for innovative SMRs. International Journal of Nuclear Energy Science and Technology, 4(1), p.32.
Margetts, B., Little, P. and Warm, D. (1999). Interaction between physical activity and diet: implications for blood pressure management in primary care. Public Health Nutrition, 2(3a).
Nestle, (2015). Innovating the future - Research & Development for Nutrition, Health and Wellness. 1st ed. pp.3-10.
Nestle.com, (2015). Strategy - Nestlé Roadmap to Good Food, Good Life. [online] Available at: https://www.nestle.com/aboutus/strategy [Accessed 19 Mar. 2015].
Nestle.com, (2015). The Nestlé company history. [online] Available at: https://www.nestle.com/aboutus/history/nestle-company-history [Accessed 19 Mar. 2015].
Quéré, M. (2008). KNOWLEDGE AND INNOVATION: PROMOTING A SYSTEM APPROACH OF INNOVATION PROCESSES. GEIN, 17(1), pp.137-152.
Solutions, E. (2013). Switzerland: Nestlé’s hunger for a more streamlined model. [online] Eiu.com. Available at: https://www.eiu.com/industry/article/1401088724/switzerland-nestles-hunger-for-a-more-streamlined-model/2013-10-21 [Accessed 19 Mar. 2015].
Soosay, C., Fearne, A. and Dent, B. (2012). Sustainable value chain analysis – a case study of Oxford Landing from “vine to dine”. Supply Chain Management: An International Journal, 17(1), pp.68-77.
Suhr, K. and Nielsen, P. (2004). Effect of weak acid preservatives on growth of bakery product spoilage fungi at different water activities and pH values. International Journal of Food Microbiology, 95(1), pp.67-78.
Traitler, H., Watzke, H. and Saguy, I. (2011). Reinventing R&D in an Open Innovation Ecosystem.Journal of Food Science, 76(2), pp.R62-R68.
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