Swot analysis

1. SWOT Analysis of Nestle
Strength:-
BRAND IMAGE
Marketing strategies established by the company are innovative and lure
customers.
Financial, marketing and sales strategies are formulated by gauging the
Periodic research carried out to judge market trends.
It is a large scale organization, with abundant funds and has the capability of acquiring
weaker firms by throwing them out of competition.
example for this strength of the company.
Multinational.
Growing Sales and profits.
Major shareholder in the food industry of Pakistan.
Aggressive Marketing.
Efficient Distribution networks through out the country.
Quality Products.
Environment Friendly.
Skilled labor.
Educated staff.
Large number of offerings.
Pre purchase virtual display.
Good background of the company.
Easy to approach outlets.
Solid Financial position
Strong supply chain network
Focus on research and development Estimations of UHT Milk Production
Consumption up to 2008– 09
Year Annual Production
(million liters) Annual Consumption
(million liters)2008-09 => 648.43 353.71
2009-10 => 753.89 372.05

2. Weaknesses :-
The target market of Nestle MilkPak is upper middle and high class because lower middle and
poor class cannot afford to buy UHT milk due to its premium price.
It is a main weakness of MilkPak that there are different companies of milk but the name of
nestle MilkPak is always stand in the last because of low advertising and marketing.
Opportunities :-
There are substantial growth opportunities considering the average yield of Pakistani animals
at only 1,100 liters/annum as compared to 6,000 liters/annum for animals in Europe and USA.
There are nearly 20 million milk producing animals in the country, mostly in Punjab (80%).
The overall milk market in Pakistan is 20 billion liters, out of which processed milk
contributes only 3 million liters. Nestlé MilkPak along with other processed milk businesses
contribute only 2% to this large market. Nestlé MilkPak has expanded its product range by
entering the cold dairy market recently by launching Nestlé plain yogurt and now fruit yogurt is
also added to it.
To expand the cold dairy products range, Nestlé fruit yogurt is the latest addition to this
group.
The cold dairy market offers many opportunities for the company which can capitalize these
products by banking on its superior quality milk.
The coffee brand also offers many opportunities for the company to
expand by tuning the taste of the masses towards coffee.
Credit policy can be adopted to increase sales
Threats :-
Price fluctuations due to rupee devaluation as raw material are imported. The uncertainty of
economic conditions poses a great threat as the major funds invested in the country come from
outside Pakistan.
The present economic crisis in the world, led to the withdrawal of foreign management from
the company and the investment has come to a halt.
Competition with Nestlé’s owns smuggled brands.
Effect of Seasonality’s upon sales.
Imported raw material, in some of the company’s products.
Major player may enter target market Legal and ethical issues.

3. Market segment growth could attract new entrants.
Economic slow down can reduce demand.
Two main competitors Haleeb and Olpers are main threat for MilkPak especially the
Olpers is growing
very fast.
Inflation is getting higher and higher so the purchasing power of the
people is decreasing day by day.
There is no entry barrier for new entrants as the Olpers has come in the market.
Taste of consumer has already developed which is hard to change.
Current market situation
Strengths, Weaknesses, Opportunities and Threats (SWOT)
Location of Factor TYPE OF FACTOR
Favorable Unfavorable
Internal Strengths Weaknesses
Ability to leverage strong Increasing instances
brand name to generate of product recalls
sales hampering brand
Ability to customize equity
products to the local
market conditions
Strong global operations
with diversified revenue
base
Research and
development capabilities
External Opportunities Threats
Transition to a 'nutrition Compliance issue
and well-being' company resulting in penalty
Focus on developing payments
and emerging Macro economic
Economies factors
Booming out of home Allegations of
unethical business

4. eating market activities
Nestle’s LC1 division has many strengths. Their first is that they have a great CEO, Peter
Brabeck. Brabeck emphasizes internal growth, meaning he wants to achieve higher volumes by
renovating existing products, and innovating new products. His explanation of renovation is that
“to just keep pace in the industry, you need to change at least as fast as consumer
expectations.”(Hitt, 2005) And his explanation of innovation is “to maintain a leadership
position, you also need to leapfrog, to move faster and go beyond what consumers will tell you.”
Brabeck has led Nestle into a position to better achieve the internal growth targets with his.
Another strength that Nestle has is that they are low cost operators. This allows them to not only
beat the competition by producing low cost products, but by also edging ahead with low
operating costs.
The main weakness of the LC-1 division of Nestle is that they were not as successful as they
thought they would be in France. The launch in France was in 1994, but since the late 1980s,
Danone had already entered the market with a health-based yogurt. The second weakness is that
LC-1 was positioned as too scientific, and consumers didn’t quite understand that LC-1 was a
food and not a drug.
Nestle also has multiple critical resources. They
have a great research and development team.
James Gallagher and Andrea Pfeifer were the
masterminds behind the research on the La-1
cultures in the LC-1 yogurt. They were also the
two that decided on selling LC-1 as a functional
food. This enabled Nestle to position the
product in a way that differentiated it among the
other products in the market. They also have
four pillars that Brabeck, Nestle’s CEO has
identified he believes will help their internal
growth worldwide. These are operating
excellence, innovation and renovation, product
availability, and communication.
One opportunity that Nestle has is that health-
based products are becoming more popular in
the world, including in the United States.
Consumers are
becoming more health conscious, and realize that living longer isn’t only by luck and genetics.
LC1 has not been introduced in the United States yet. Nestle also has an opportunity of being
even a larger market leader in Germany with LC-1. Within two years of launching the product in
Germany, they had captured 60% of the market. This was due to the fact that they differentiated

5. the product, and Germans simply preferred the taste. Another opportunity of LC1 is that, because
they are a market leader, they can introduce more health-based products in Germany.
A threat to Nestle is the fact that some markets they are entering are already mature. Danone had
an established leadership position in the yogurt market in France. Since Danone was the first to
arrive in the market, they have always been the market leader there. Also consumers in France
liked the taste of LC-1, but researchers believe they did not repurchase the yogurt because they
preferred the taste of Danone products better. Another threat to Nestle is that there is intense
competition in the United States yogurt market. General Mills’ Yoplait division is the leader in
the yogurt market in the United States. Yoplait has been the leader for years and is constantly
innovating new health products.
General Mills has been a strong competitor of Nestle and they are not short of experience and
strength. One strength that they have is their brand recognition. One of their main goals has been
to deliver brands that consumers trust and value and they have succeeded. Another strength they
have is their distribution. Yoplait is distributed to more stores in the United States than any other
brand of yogurt. This is one of the reasons why they have been the market leader in yogurt for so
long. Another strength that General Mills has is the fact that consumers simply know Yoplait is
healthy. Yoplait is the only leading brand of yogurt to offer vitamin D and this vitamin is
especially important for adult women.(Yoplait.com) It is not just a coincidence that Yoplait has
vitamin D, but they have purposely added this vitamin to target female consumers.
General Mills also has some weaknesses. They fact that they are the market leader in the United
States may be hindering them from innovation. They have been producing Yoplait yogurt for
many years, and have offered a series of new products in the past few years in the nutrition
department. Most of these products however, are very common, and are widely offered in the
United States. The health food industry in the United States has been booming and General Mills
does not offer enough products in the smaller niche markets. They have not entered into many
unknown areas because of their success in the yogurt market.
An opportunity General Mills has is that its Yoplait division is so successful. Yoplait is the only
division of General Mills that is currently earning a profit. They have a large market share over
their main competitors in the yogurt market. Another opportunity that they share with Nestle is
that the health-based and nutritional food market is booming. They are continually releasing and
marketing new products in these markets and they will continue to do so while the market
continues to yield profits.
The main threat that challenges General Mills is that there is intense competition amongst the top
players in the yogurt and related markets. Nutrition and health is becoming more and more
important to consumers in the United States, and worldwide. Along with this comes increased
competition to gain market share. Simple supply and demand theories are prevalent in these
markets. Another threat General Mills has is that smaller companies are producing similar
products with the same or added nutritional benefits.

6. Strengths
Global food producer, located in over 100 countries. Consistently one of the world's largest
producers of food products, with sales in the USA in 2008 of $10 billion; sales and earnings in
2008 were better than expected, even in a downturned economy. Global sales in 2008 topped
$101 billion.
Repeatedly ranked as the world's largest bottled water company and have set up facilities to
operate water resources in a responsible manner.
In 2008, Nestlé was named one of "America's Most Admired Food Companies" in Fortune
magazine for the twelfth consecutive year.
Nestlé provides quality brands and products and line extensions that are well-known, top-selling
brands including:
Lean Cuisine, Yoplait, Maggi, Dryer's/Edy's, Haagen-Dazs, Stouffer's, Boost, Dibs, Hot Pockets.
Chocolate and Candy: Kit Kat, Toll House, Butterfinger, Baby Ruth, Crunch Bar, the Willy Wonka
Candy line.
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Pet Products: Purina, Alpo, Cat Chow, Fancy Feast, Friskies, Tidy Cat.
Drinks: Carnation, Perrier, Nesquik, S. Pellegrino, Nescafe, CoffeeMate, Taster's Choice, Juicy
Juice.
General Mills: subsidiary which makes Betty Crocker, Bisquick, Hamburger Helper, Pillsbury, Old
El Paso, cereals, fruit snacks, frozen pizza, canned soups, frozen vegetables, ready-made frozen
meals.
Gerber: baby formula, prepared baby foods, baby cereals, water, juice, yogurt, foods for infants,
toddlers and preschoolers.
Professional brands sold to restaurants, colleges, hotels, and food professionals including Jenny
Craig meals, Impact liquid meals for trauma patients, liquid meals for diabetics, and OptiFast
weight loss products.
Successful due in part to their unquestionable ability to keep major brands consistently in the
forefront of consumer's minds (and in their shopping carts) by renovating existing product lines,
keeping major brands from slipping into saturation/decline and having superior access to
distribution channels.