Table of Contents

Mission and Vision Statement ........................................................................................................................

Objectives and Strategies ................................................................................................................................
Global Driven Perspective ..........................................................................................................................
Issue at Hand ..................................................................................................................................................
PORTOR'S FIVE FORCE MODEL…………………………………………………………………………………………………………………..

VALUE CHAIN ANALYSIS…………………………………………………………………………………………………………………………….

IFE MATRIX………………………………………………………………………………………………………………………………………………..

EFE MATRIX……………………………………………………………………………………………………………………………………………….

CPM………………………………………………………………………………………………………………………………………………………..

ANALYSIS OF NESTLE ...............................................................................................................................

STRENGHTS .............................................................................................................................................
WEAKNESSES ..........................................................................................................................................
OPPORTUNITIES ......................................................................................................................................
THREATS ..................................................................................................................................................
NESTLE SALES BY PRODUCTS ............................................................................................................
SWOT MATRIX ........................................................................................................................................
SPACE Matrix ............................................................................................................................................
QSPM Matrix ..............................................................................................................................................
PROBLEM IDENTIFICATION AND SOLUTIONS ....................................................................................
SWOT ANALYSIS FOR GHAZA .................................................................................................................
Strengths .....................................................................................................................................................
Weaknesses .................................................................................................................................................
Opportunities...............................................................................................................................................
Threats ........................................................................................................................................................
RECOMMENDATIONS ................................................................................................................................
APPENDIX .....................................................................................................................................................
SWOT MATRIX (APPENDIX 1) ..............................................................................................................
SPACE Matrix (APPENDIX 2) ..................................................................................................................
QSPM Matrix (APPENDIX 3) ...................................................................................................................
 Nestle
Introduction

Nestlé has been serving Pakistani consumers since 1988, when the parent company, the
Switzerland-based Nestlé SA, first acquired a share in Milkpack Ltd. Today Nestle Pakistan is
fully integrated in Pakistani life, and is recognized as producers of safe, nutritious and tasty food,
and leaders in developing and uplifting the communities in which we operate.

Nestlé Pakistan ensures that their products are made available to consumers wherever in the
country they might be. Convenience is at the heart of the Nestlé philosophy, and their aim is to
bring products to people’s doorsteps.

In line with the parent company’s global philosophy, Nestle Pakistan are proud of their
commitment to excellence in product safety, quality, and value. Their products cater to human
needs, and they are active in the communities they serve.

From spreading awareness about nutrition and wellness to digging wells in the Thar Desert and
succoring earthquake victims, they are committed to serving the country and its people.

Mission and Vision Statement

Any company, be it large or small, derives its objectives and policies from the mission and vision
statement in order to work in line with the purpose of the organization. So did nestle. Nestles
Vision statement is as follows:

“Nestlé’s vision is to be the globally recognized leading Nutrition, Health and Wellness
Company.”

Nestle Pakistan fully subscribes to the vision of being number one Nutrition, Health and
Wellness Company in Pakistan. In particular Nestle Pakistan envisions leading a self-motivated,
passionate and professional workforce who are proud of their culture and are positive about their
future. They envision to meet nutritional need of all their customers ranging from infants to
elderly through provision of food a beverages of a premium quality and to provide shareholders
value through profitable growth and development in social, economic and environmental sector
of Pakistan. Considering their existing vision statement and there actual envisioned pictures the
following vision statement is proposed to nestle:

“To be the number one Nutrition, health and Wellness Company in Pakistan”

Similarly Nestles existing Mission Statement is as follows:

“To positively enhance the quality of life of the people of Pakistan by all that we do through
our people, our brands, products and our CSV activities.”

Analyzing the mission statement of Nestle Pakistan according to the nine characteristics of
Customers, Products and services, Markets, Technology, Concern for Survival, Growth and
Profitability, Philosophy, Self-concept, concern for Public image and Concern for Employees we
analyze that Nestles mission statement lack three characteristics namely Self-concept, Concern
for Survival, growth and profitability and Technology. Nestle covers every other aspect in their
mission statement. Considering the lacks in their mission statement, the following mission
statement is proposed:

“To positively enhance the quality of life of the people of Pakistan by all that we do through
our World-renowned people, Brand, Technology, Product and Creating Shared Value (CSV)
activities; in a manner that is consistent with Long-term Growth”

Objectives and Strategies

Nestlé Pakistan is committed to enhancing its product base by diversifying into low cost high
quality products with good financial returns, that they call “Popularly Positioned Products
(PPP)”, which focuses on creating products that are both highly nutritious and affordable on a
daily basis for lower income consumers. Innovation & renovation remained an integral part of
the company’s operational strategies and there vision for growth

Nestlé Pakistan believes in a market driven approach and stands committed to invest to meet
there consumers’ needs. Total investments in expansion & development projects for the year as
part of their long term strategy, major investments of approximately PKR 8 billion were planned
in 2011 for milk collection field development, upgrading of existing production facilities and
increase in production capacity

The company’s strategic directions were reviewed at the meeting of Directors. A process was put
in place whereby long term Market Business Strategies and Annual Operational Plans
established by management were regularly reviewed by the Directors in line with the company’s
overall business objectives. Part of the process involves the setting of measurable Key
Performance Indicators (KPls).

The company’s strategy is guided by Nestlé’s Corporate Business Principles which are in line
with internationally accepted best practices and ethical performance culture. The Company’s
priority is to bring the best and most relevant products to people, wherever they are, whatever
their needs are, and for all age groups. Their products and communications strategy of keeping
the ‘Consumer at heart’ helped them in further strengthening consumer loyalty and trust that has
further improve profitability in 2010.

The Board’s policy at Nestle is to maintain an efficient capital base so as to maintain investor,
creditor and market confidence and to sustain the future development of its business. The Board
of Directors monitors the return on capital employed, which the Company defines as operating
income divided by total capital employed. The Board of Directors also monitors the level of
dividends to ordinary shareholders.

Nestle also identifies some of its objectives with respect to managing capital which are:

i) To safeguard the entity’s ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders, and ii) To provide an
adequate return to shareholders.

Nestle also outlines the following long-term objectives:

 To achieve compatibility with international voluntary standards on environmental management

systems.

• To build mutual trust with consumers, governmental authorities and business partners.

• To ensure continuous improvement of nestles environmental performance.

• Conservation of natural resources and minimization of waste.

• Total compliance with the laws.

• To establish the benchmark for good business practice.

• Employing new technologies and processing.

• By committing to resources, both human and financial.

• Measuring the cost and benefits to business of its activities

Global Driven Perspective

As far as Nestle’s product innovation strategy is concerned, they follow the global driven
perspective. They identify a gap in their current sales, or decline in their consumer retention rate,
figure out the reason and try to fill the gap in such a way which is beneficial to the end user. For
instance, in the case of Cerelac it was noted that people stop giving Cerelac to their babies after
their first birthday. Extensive research and focus group findings indicated that children in their
developing stage want to consume colorful things. Mothers start feeding their children with
Cerelac presumable when they are four-six months old. When the child is however one year old
he is more attracted to food items present on the table instead of just plain Cerelac. After
identifying this gap, Nestle made a new formula for Cerelac which included red and yellow fruits
and color respectively. They didn’t add artificial colors; they incorporated the fruits to provide a
different flavor to the children with additional nutritional benefits.

Issue at Hand
Nestle being one of the largest food and beverage producers of Pakistan caters to approximately
32 percent of Pakistan, providing products such as water, milk, Cerelac, Maggie etc. Most of the
products, for example the dairy products, of nestle are currently being provided to urban as well
as much of rural areas. As we know that Pakistan has its majority population under the lower
income bracket which is mostly confined to rural areas of Pakistan and amount to 68 percent of
the total Pakistani population, this bracket is not being targeted by nestle for specifically its
products known as nestle Cerelac. Upon questioning the nestle representative it was identified
that nestle aims to differentiate as well as innovate its products. Currently nestle Cerelac has
more than 5 different variations in its product ranging from flavors to nutrition’s but the problem
arises where nestle fails to innovate and provide for, when it comes to the provision of nestle
Cerelac to the rural areas of Pakistan. Upon questioning it was identified that the maximum
innovation currently being done to cater to the rural area population is the introduction of nestle
Cerelac sachets. Many questions arise from this such as; does nestle lacks the supply
chain/logistics to provide their product i.e. nestle Cerelac to far rural areas of Pakistan? Does
nestle aims to maximize their profits? Or does nestle aim to maximize market share? This
problem eventually leads to loss of major chunk of market share of Pakistan.
 Portor’s model of 5 forces:

Threat of New Entrants

For value added products barrier to entry are

higher because these products connect with the
customer on an emotional level. Gaining
confidence and trust of the customers is very
difficult. Brand loyalty is very which means a new
entrant will have difficulty in making a place for
itself. Furthermore even if a new entrant does
make some impact on its consumers it will have to
sell at least 750,000 tonnes of milk to create one
percent market share for itself.
Nestlé enjoys monopoly power over powdered tea
whitener market because no company has yet been
able to develop this technology. Threat of Substitutes
Suppliers

The un-processed milk is collected

from farmers and gowallas from rural COMPETITORS
The main substitute is the Farmer’s
areas. There are many collection
(Gowalla) milk U.H.T treated milk
centers across Punjab. With the entry
caters to only 9% of the population’s
of new milk firms who are willing to Haleeb(CBL Foods) milk needs. Nestle constitutes, 38%
pay higher prices and as well as
provide them with other attractive Olpers( Engro) Olpers19%, and
incentives, the price of this milk is GoodMilk( ShakarGanj Haleeb 28% of that 9% of the total
going up. An example of this is that of Foods) milk market.
Olpers of Engro food Company who
have had long standing relationship
with these farmers and are willing to
give them fertilizers at subsidized rates Customers
in exchange to their commitment to
sell their milk only to Olpers.  Dependent on products.
 Young health conscious
customers for Nesvita.
 House holds for milkpak and
yougurt.
 Offices, institutions and
households for Everyday
 Infants and kids for Nido
Porter’s Five Forces Model

Porter’s Five Forces Model was created to act as a framework for industry analysis and business
strategy development. Porter singled out five different forces that impact competitive intensity
which portrays an image of the overall attractiveness and profitability of a market. To aid in our
evaluation of Nestlé and its status in the industry, we will apply Porter’s Five Forces Model to
the company.

1-Threat of New Entrants

The food processing industry is very large and competitive; it is not uncommon for firms within
the industry to do quite well. As a result, many companies enter into the market every year in an
attempt to gain a portion of the profitable market. Luckily for Nestlé Pakistan, which is a part of
Nestle Global, the company has been around for over a century and boasts a long history of
quality products and consumer satisfaction, which has allowed the company to obtain a
considerable share of the market. As a result, new entrants into the industry must attempt to
seize a portion of Nestlé’s market share in order to survive. Essentially, Nestlé is constantly a
target, and so the threat of new entrants is moderate.

2-Threats from Substitutes

Due to the nature of the industry, Nestlé is beset with the threat of substitute goods. From
bottled water to lean pockets, there are arrays of similar products that compete directly with
Nestlé. It is vital for Nestlé to continuously find new ways to improve its products because
competition is so fierce. In recent years, Nestlé has focused on the health and wellness aspects
of its products to maintain its competitive edge in the market

3-Bargaining Power of Suppliers

Nestlé prides itself on creating and maintaining positive relationships with its suppliers. Due to
the large purchasing power of Nestlé, and because the suppliers of agricultural commodities offer
a product that is far from unique, Nestlé holds more bargaining power than its suppliers. Aside
from this, Nestlé prefers to create and preserve long-term relationships with its suppliers as this
helps to ensure the quality of the raw materials being purchased. In addition, Nestlé also offers
useful advice to its suppliers on how to perform more efficiently to minimize unnecessary costs.
4-Bargaining Power of Buyers

Customers have a large amount of bargaining power regarding their consumption of Nestlé
products. As stated previously, there are close substitutes for Nestlé products which allow for
the preferences of the customer to be very influential. Nestlé understands the power of the
customer and has taken specific steps to meet the needs of its products consumers. Specifically,
Nestlé is incorporating health and wellness into the creation of its products as society has started
becoming more health conscious.

5-Competitive Rivalry

Nestlé is a powerhouse in the food processing industry but so are Engro Foods and Haleeb Foods
etc. These companies, among others, are in a constant and continuous battle to outperform one
another. Regarding advertising alone, these companies spend hundreds of millions of dollars in
an attempt to appear more desirable than the competition. Rivalry is fierce in the food processing
industry, and this is a good thing for consumers. As long as these companies continue striving to
one up one another, consumers will continue to enjoy ever- improving product lines.
 When applied to Nestlé, Porter’s “Five Forces Model” depicts a competitive, but profitable
market for the food processing industry. Furthermore, the model places Nestlé in a somewhat
comfortable position within the food processing industry, while acknowledging the threats to its
market share. Specifically, the model notes a moderate threat of new entrants into the market
and a substantial threat of substitute goods. In addition, the model shows that Nestlé tends to
maintain the upper hand over its suppliers as commodities have exact substitutes in the market.
Also, customers have a considerable amount of bargaining power, as Nestlé must adhere to
consumer wants and needs because there are so many close substitutes. For the final force, the
model depicts a large amount of rivalry within the food processing industry.

ANALYSIS OF NESTLE

STRENGHTS
Nestle has a strong brand image as well as a strong socially corporate image. It has been named
one of the top ten most reputable companies in the world in the annual ‘Global RepTrak’ 100
study. The company achieved ninth place in the study, which is designed to understand how
organizations build trust and support with the general public worldwide.

Nestle has one of the most advanced research and design capabilities through which they
introduce new products every year giving the brand a huge advantage over its competitors. Also,
it is major advantage for Nestle that their sale is recognized as its strong physical resource. Also,
nestle has a consistent image of the provider of quality products. As a major shareholder of food
industry in Pakistan it does enjoy various benefits over the market.

WEAKNESSES
One of the major weaknesses for Nestle is its inability to forecast an accurate feasibility of new
products needs which needs to be analyzed, e.g. Nestea was launched some years back but it
failed because no customer demand for it existed. Therefore it turned out that not enough
research had been conducted otherwise a whole product would not have failed. Also, as Nestle is
a huge organizations and it goes from various distribution channels which reflects that every
distributor adds there costs/commission which increases the final price for the end consumer.
Also, as Nestle is a diverted organization it provides into various markets which open
competition entry for other firms and make it hard for Nestle to compete over all benefits. Also,
weak advertising is also considered to be a major drawback for Nestle in Pakistan which crates
barriers between Nestle and many potential customers.

On the contrary, the Internal Factor Matrix shows a final weighted score of 2.99 which shows
that Nestle is does utilizing its strengths and making it further strong and successfully fighting
against its weaknesses.

OPPORTUNITIES
As the population is growing on a faster rate so is their potential demand for FMCG’s in which
circumstances, Nestle is there to provide in and fill in the gap. This means that Nestle has a
potential in increasing its market share and growth in the further market.

Also, Nestle is engaged in a number of partnerships with a number of major companies like
Coca-Coca which would again mean a larger market share cut through different companies too.
On the other hands, as Nestle is a major food operating organization it can introduce more
health-based products and capturemore cut in the market? Opening of Nestle cafes would also
provide a permanent outlet for Nestle to provide its food products to its customers.

THREATS
Intense competition is a major threat for Nestle as the demand for FMCG’s is quiet high and new
entrants jump in to fill in the potential demand. Also, as the economic conditions in Pakistan
poses a great threat for organizations that have something to offer to both masses and
government. On the contrary, as Nestle is providing for various segments this could and is
attracting various new entrants which mean that Nestlé’s opportunities gap is taken by other
entrants too. There is no entry barrier for new entrants as the Olpers has come in the market and
capture a lot of segment too.

The external Factor Evaluation shows a total weighted score of 3.12 which is quiet above
average and shows that Nestle is utilizing fully its opportunities and defending itself effectively
from the threats which an internal or external factor poses.
 NESTLE SALES BY PRODUCTS
Nestle milk products and beverages controls a major portion of its pie by 26% each; whereas
18% of the share is taken by prepared foods by Nestle. 12% of the pie is taken by chocolate
products and a small piece of 8% is taken by pharmaceutical products.

 Value chain analysis:

The Value Chain is the food production process, starting from the very early stages of
understanding consumer culture, behaviour and needs, and then continuing the innovation
process from ideation to product conception, development and launch. Then, after the product
or service becomes available on the market, Nestlé must always test and validate that it satisfies
their needs and expectations.
Our scientists and research are present at every step of Nestlé’s value chain of innovation,
creation and development.
.

CONSUMER

NUTRITION QUALITY AND
DEVELOPMENT CONSUMPTION
RESEARCH
NEED CONSUMERNEEDS SAFTY

Input stage:
IFE MATRIX:

Strengths Weight Rate Weighted score

Socially Responsible Company 0.03 3 0.09

Nestle products enjoy strong brand image 0.07 3 0.21

Sales force as a major physical resource strength 0.05 3 0.15

Quality product distribution networks in country 0.08 2 0.16

Net Profit increased by 94% in 2009. 0.20 4 0.80

Price earning ratio decreased from 38.9 to 18.8 0.05 3 0.15

Export Sales increased by 48% to PKR 3.3 billion 0.18 4 0.72

Weaknesses
Lack of awareness among target market 0.04 2 0.08
Nestle milk always stands at last because of low advertisement. 0.09 2 0.18

Revenue fom confectionary decreased by 14% 0.08 2 0.16

Low credit sales and profit margin to retailers 0.05 2 0.10

Weak promotional activities through websites 0.05 3 0.15

Cant launch expensive brand due to low income groups 0.03 1 0.03
Total 1.00 2.99
The average score is 2.50,and the result we have concluded from IFI of nestle is 2.99 which
indicate its strong intenal position of the company.

EFE MATRIX:

Key External Factors Weight Rating Weighted Score

Opportunities

Few and weak competitors in the market 0.12 2 0.24

Disposable income increased by 3.6% 0.07 3 0.21

Consumer expenditure on food has increased by 3.6% 0.09 4 0.36

Population density increased by 2.18% (per sq.km) 0.05 3 0.15

Credit policy can be adopted to increase sales 0.03 3 0.09

Potential in cold dairy market 0.02 3 0.06

All companies contribute only 2% to processed milk market 0.12 4 0.48
th
Pakistan as 7 largest milk producing country with milk output of 0.12 3 0.36
200 billion liters

Increase in consumer food industry by 14% 0.05 4 0.20

Threats
Engro and Shakarganj as major competitors 0.14 3 0.42
Market segment growth could attract new entrants 0.04 2 0.08
Taste of the consumer has already developed 0.02 2 0.04
Legal & ethical issues 0.01 2 0.02
Economic slow down can reduce demand 0.01 2 0.02
Effect of seasonality upon sales 0.05 3 0.15

Strong advertisement by major competitors 0.08 3 0.24

Total 1.00 3.02

This matrix indicate that organization is responding in an outstanding way to external
opportunities and threats in the market.it can take advantage of external opportunities and handle
threats.

CPM

Nestle Pakistan Engro Foods Shakarkanj Foods

Critical Success Weights Rating Weighted Rating Weighted Rating Weighted
factors Score Score Score

0.0 to 1.0 1 to 4 1 to 4 1 to 4

Market Share 0.12 3 0.36 2 0.24 1 0.12

Inventory System 0.05 3 0.15 2 0.10 2 0.10
Financial Position 0.20 4 0.80 2 0.40 3 0.60
Product Quality 0.15 4 0.60 3 0.45 3 0.45
Consumer Loyalty 0.07 3 0.21 2 0.14 1 0.07
Relationship with 0.03 3 0.09 3 0.09 2 0.06
Suppliers
Global Expansion 0.06 3 0.18 1 0.06 1 0.06
Organization Structure 0.02 3 0.06 2 0.04 1 0.02

Production Capacity 0.05 3 0.15 2 0.10 2 0.10

Advertising 0.15 2 0.30 4 0.60 3 0.45
Efficient cost 0.05 3 0.15 3 0.30 2 0.20
Management

Product R&D .05 3 0.15 2 .04 2 .04

Totals 1 3.20 2.56 2.27

The total weighted score of nestle is 3.20,and is greater then 2.60 and 2.27,received
by its competitors.Nestle is the strongest among its rivals.and acting as a market
leader.bt still it have threat from engro food industry.and it have to make
supportive strategies.

NESTLE

SWOT MATRIX (APPENDIX 1)

Nestlé’s net profit increased by 94% and export sales increased by 48% generating huge revenue
streams. These can be effectively invested elsewhere. Market penetration can work as an
excellent strategy because 80% of Pakistan’s economy is run by 20,000 families. The remaining
20% is attributed to 200 million of the lower and middle class population residing in the country.
Nestle is also against manipulating children into buying their products and their marketing
principles do not allow them to use cartoons to attract children; instead they try to deliver the
nutritional content through their advertising. If people actively recognize this pattern, they will
perceive Nestle even better than they previously did. Competitors such as Unilever and P&G
make use of social media technology a lot more than Nestle. They even recruit people online and
Nestle lags far behind. They should also actively participate and focus on e-marketing because it
is inexpensive and has a far wider scope.

SPACE Matrix (APPENDIX 2)

This particular SPACE matrix tells us that our company should pursue an aggressive strategy.
Our company has a strong competitive position in the market with rapid growth. It needs to use
its internal strengths to develop a market penetration and market development strategy. This can
include product development, integration with other companies, acquisition of competitors, and
so on.

QSPM Matrix (APPENDIX 3)

Keeping in mind all the strengths and weaknesses as well as the opportunities and threats of
Nestle, two possible strategies have been suggested in Quantitative Strategic Planning Matrix
(QSPM). Whether Nestle should diversify into snack foods or it should start leveraging
distribution channels to Boost Sales. Weights were assigned to the strengths, opportunities,
weaknesses and threats. And the grand total of the score favors leveraging distribution channels
to boost sales instead of diversifying into snack foods.

PROBLEM IDENTIFICATION AND SOLUTIONS

Pakistan is a country that has proven itself, to be a progressive emerging economy by utilizing its
agricultural potentials mostly. However the negligence of the rural area in terms of food and
health care has led to a hard lifestyle where the most common diseases in terms of food are
bacterial diarrhea, hepatitis A and E, and typhoid fever. These circumstances have led the
country to this point due to the lack of facilities, commodities and more importantly due to the
scarcity of utility and accessibility; concerning the currently prevailing goods and services
existing in the market.

Nestle with the given circumstances at hand can develop its product portfolio and approach in
order to avail the maximum market share and hence add to the company’s profitability. The
current market size being large, Nestle can position themselves to create a differentiation strategy
within the given market. The basis being that the competitors such as Unilever have not availed
this opportunity given the new product “Ghaza”, a probiotic drink that can be mixed in milk to
cater to the three most prevailing diseases in Pakistan. The market can be approached by two
distinct strategies. Firstly, this product can utilize Product Development in order to provide for
the rural populations food and nutritional needs in the form of a probiotics drink and gain a
competitive edge regarding the competitors’ offerings. This also allows Market Penetration to
take place as now Nestle has accessed a brand new market segment - A segment that creates
about 68% of Pakistan’s entire population.
Nestle ‘Ghaza’ would be an innovation of their current product Nestle Cerelac. Cerelac however
targets the metropolitan areas and might be a little expensive for people living in pastoral areas.
Therefore, introducing it as a sub brand of Cerelac would be a more suggestive strategy instead
of reducing the prices of Cerelac or introducing a lesser priced Cerelac since that could indicate a
lack of quality. Pro-biotics are microorganisms which mainly prevent diseases caused due to
unhygienic surroundings like diarrhea, cholera, hepatitis A and B and many other viral and
bacterial diseases. These diseases are more common in rural areas too. Ghaza can be supplied in
urban areas as well in limited quantity for people who cannot afford Cerelac. This would be
however spillover market for Nestle because the original target market primarily constitute the
people living in underdeveloped areas

Ghaza would introduce Nestle into a completely new target market and vice versa, the rural
consumers to a beneficial and economical product, hence a Company; the resultant being a
complete first mover advantage for Nestle to establish itself rather differently than the existing
competition. Given the market size, a focus strategy would establish the product through the
creation of a best value focus strategy. When a company like Nestle establishes an aggressive
advancement regarding their strategies, it is observably in an excellent position to take
advantages of new opportunities such as Ghaza, and also overcome internal weaknesses
alongside avoiding external threats.

SWOT ANALYSIS FOR GHAZA

Strengths

 Strength will reside in the formula providing a pro-biotic mixture which can be consumed
with milk for children from 6months to 3 years. Children in rural areas have a high
mortality rate in the selected age spectrum due to many different diseases which can be
prevented through this formula.
 The taste will be good and children would want to consume it by choice
 Nestle would be able to provide Ghaza for a price as low as PKR 20/- because the
formula will be slightly different than Cerelac therefore they would not need to set up
from the scratch.
Weaknesses
  Due to the low literacy rate prevailing in the target market segment, people will not be
able to understand the benefits of Ghaza
 Nestle will initially have to spend on increasing awareness among the people
Opportunities

 Rural areas in Pakistan comprise over 60% of the total population

 80% of Pakistani economy is run by 20,000 families. The remaining 200 million people
only contribute 20% due to poverty; Ghaza will target the lower and lower-middle class
because this market has not been catered yet.
 Can gain first mover advantage by expanding to the villages and less civilized areas
Threats

 Competitors can follow suit if Ghaza is successful

 Setting up in these areas to reduce logistic costs can increase probability of theft and
unprecedented accidents since law and order is not properly implemented in such areas

For every progressive organization, it is important to plan ahead in order to stay ahead. In terms
of Nestlé’s approach; it is essential that they have clear set of long term objectives.

OBJECTIVES W.R.T GHAZA

For “Ghaza”, Nestle can incorporate the following long term objectives:

1) Target Market Utilization: To increase the company’s sale of Ghaza on the basis of
convenience and utility for each and every individual, be it an individual from rural or urban
areas along with providing them with a tangible solution to the hardships faced due to
negligence when it comes to rural consumers.
2) Collaborative Initiation: To initiate further collaborative production or Distribution,
through the assistance of governmental or non-profitable organizations in order to provide
more products at a far lesser price.
3) Utility Maximization: For rural users, the issue isn’t that there is a lack of variety
regarding any given product however the problem is that the users do not have utility for such
high end products and this is overlooked by many organizations. For Nestle, this incentive
should be one of their main driving forces regarding products such as Ghaza.
 RECOMMENDATIONS
 Access based positioning: To understand this we need to understand that Access can be a
function of customer geography or customer scale or of anything that requires a different set
of activities to reach customers in the best way and for Nestle, this can help them achieve
maximum potential from this segment, maximizing their profitability and for these consumers,
convenience and deteriorate the prevailing negligence.
 Incorporate governmental or non-profitable organizations, on contractual bases, in order
to decrease costs and improve on their existing functionality such as distribution and
production.
 Pricing strategies can also help Nestle improve their infrastructural functioning, by
firstly using price volatility as a tool in order to gain funds, which can be used to be generate
amounts that will be injected into this project.
For nestle we recommend that nestle looks forward to increasing its annual sales, as a whole
to about at least 10-15% for the upcoming year and here by increasing its Net Profits. They
can increase sale by allowing the advertising deals for the cause, promoting an increase in
advertisements and can lead to future collaborations for future deals on logistics etc. This will
help nestle increase or maintain its share value and also help in gathering a sum for further
investments, like profits from before can be used to produce and supply Gaza to rural areas as
this will require Nestle to go beyond the local territories of urban areas to rural territories.
Nestle should also maintain its customer pool in the city as well because its operations in the
city are the major cash cows for the product diversification for rural areas. This can be
measured by calculating the retention rate for the customer along with measuring how many
new customers are acquired.
As far as policies are concerned, Nestle should maintain the code of ethics in its organization
and product distribution and production. Not allowing inside trading of information and
upholding the privacy policy act. This will create a safer atmosphere and infrastructure for
future local and international collaborations to take place.
Strategy review for nestle regarding this issue can be the Rumelts criteria which focuses upon
four main factors which are:

Consistency – strategies should be consistent with goals and policies.

Consonance – strategies should be responsive to existing and expected changes in the
external environment (trends), and should match the firm’s internal strengths and weaknesses
to the external opportunities and threats.
Feasibility – strategies should be practical and achievable with the given physical, human,
and financial resources of the company.
Advantage – strategies should lead to the development and/or sustenance of a competitive
advantage for the company by helping it achieve superiority in resources, skills, and/or
position.
 APPENDIX

SWOT MATRIX (APPENDIX 1)

SPACE Matrix (APPENDIX 2)
QSPM Matrix (APPENDIX 3)
 REFRENCES

http://www.nestle.pk/brands/babyfood

https://www.atiatihanfestival.com

http://www.nestle.pk/aboutus

http://en.wikipedia.org/wiki/Nestl%C3%A9

http://www.slideshare.net/hammadrasheed7/nestle-strategic-model

https://www.academia.edu/5598621/Nestle_international_business_strategy