FSCL-Company analysis/Industry analysis Report

Name of the company: Nestle.

SUBMITTED TO
INDIRA INSTITUTE OF MANAGEMENT, PUNE
POST GRADUATION DIPLOMA IN MANAGEMENT
BY
VISHAL KUMAR
(PGDM BATCH 2019-2021)

UNDER THE GUIDANCE OF

K.P MISHRA

INDIRA INSTITUTE OF MANAGEMENT PUNE

(TAPASYA, PUNE-411033)
 CERTIFICATE

Certified that the work contained in the report titled “The Title of Project”, by Vishal Kumar, has

been carried out under my supervision and that this report has not been submitted elsewhere for a

degree.

K.P Mishra
Designation

IIMP, PGDM.
 INDEX

PAGE
Sr. No PARTICULARS NO.
1
Introduction of the company

2 Board of the directors

3 Products/Services offered by the company

4 Business model of the company

5
Marketing mix

6 Major achievements

7
Corporate governance activities

8 Management outlook of the company

9
SWOT Analysis of company

10 CAGR growth rate for net sales & net profit of the company
for last 3 years
11 Financial statement analysis of the company using ratio for
last 3 years
12
Market capitalization of the company for last 3 years

13
Analysis of capital structure of the company
14
Market price analysis of the company for last 3 years

15
Introduction to the outlook of Industry

16 Contribution of Industry towards India’s GDP, Employment

etc
17
Major players in the Industry

18
PESTL Analysis of Industry
1.INTRODUCTION:-
Nestle was founded in1866 by Henri Nestle and is today the world’s
Biggest food and beverage company. It ranked No. 64 on the Fortune
Global 500 in 2017 and No. 33 on the 2016 edition of the Forbes Global
2000 list of largest public companies.
The history of nestle began in Switzerland in 1867 when Henri Nestle,
the pharmacist, launched his product Farine Lactee Nestle, a nutritious
gruel for children. Henri used his surname, which means ‘little nest’, in
both the company name and the logotype. The nest, which symbolizes
security, family and nourishment, still plays a central role in Nestle’s
profile.
Since it began over 130 years ago, Nestle’s success with product innovations and business
acquisitions has turned it into the largest Food company in the world. As the years have passed,
the Nestle family has grown to include chocolates, soups, coffee, cereals, frozen products,
yoghurts, mineral water and other food product.

VISION AND MISSION

Nestle’s vision is to provide a good and healthy food for its consumers, everywhere so that they
can have a healthy life. This implies gaining a deeper understanding in many areas of nutrition and
food research and transforming the scientific advances into applications for the company. Having
a broad vision, the company is doing its best for their consumers to show the great sense of
responsibility. Nestle believes that they should think about their organization globally but they
deal with people by interacting them locally.

“ Think globally – Acting locally”

Nestle mission of "Good Food, Good Life" is to provide consumers with the best tasting, most
nutritious choices in a wide range of food and beverage categories and eating occasions, from
morning to night.
SUBSIDIARIES
Nestle owns over 2000 brands in over 150 countries. Nestle's products include baby food, medical
food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream,
frozen food, pet foods, and snacks. Twenty-nine of Nestlé's brands have annual sales of over CHF1
billion (about US$1.1 billion),including Nespresso, Nescafé, Kit Kat, Smarties, Nesquik,
Stouffer's, Vittel, and Maggi. It is one of the main shareholders of L'Oreal, the world's largest
cosmetics company.

HEADQUATER
 Nestle headquater -Vevey,Vaud, Switzerland
 Number of factories- 447
 Operates in- 189 countries
 Number of employees- 339,000
2.BOARD OF DIRECTORS:-
The list of board of directors for the Nestle India currently is as following :-

Board of directors Position

Mr. Suresh Narayanan Chairman and Managing Director

Mr. Martin Roemkens Executive Director – Technical

Ms. Rama Bijapurkar Independent Non-Executive Director

Mr. R. V. Kanoria Independent Non-Executive Director

Ms. Roopa Kudva Independent Non-Executive Director

Dr. Rakesh Mohan Independent Non-Executive Director

Dr. Swati A. Piramal Independent Non-Executive Director

3.PRODUCTS:-

Milk product and Nutrition

Chocolates and confectionery

Prepaid dishes and cooking aids

Beverages
Recent Launches

Nescafe sunrise insta-filter

Maggi Hotheads
4.BUSSINESS MODEL:-
5.MARKETING MIX:-

PRODUCT:
NIL is well known for its rendered services in food sector. Nestle has recognized the special
nutritional requirements which start from infants and covers the range to all age groups. They add
specific nutrients to milk and encourage children to consume nutritious products with different
flavors, colors and shapes. For small children, and families, Nestle offers smaller size and portion
able packs. Nestle milk and dairy products are recognized throughout the world.

PRICING:
Nestle has its own set of techniques for setting the prices of the product. It does not primarily
focus on the competitor’s pricing strategies. It emphasizes on the market demand of the product.
The prices of the product are also subjected to the type of consumer product. If the product is a
daily use then it can have a minimum price to attract the customer towards the product. Thus the
company cannot influence much on the prices.

PLACE:
Nestle products are available at every corner of the country regardless of rural or urban areas.

PROMOTION:
The following are some of the promotional strategies used by Nestle for market expansion,
 New consumption opportunities for chocolates and confectionery were identified and
developed in areas like railway platforms, college canteens and major events.
Nestle set up ‘Café Nescafe’ and ‘Coffee Corners’ across metros and mini-metros.
It also uses other below line activities to promote its product like by using the following
techniques:
 Free sampling
 Door to door selling
6. MAJOR ACHIVEMENTS:-
1. FTSE4Good Index :- Nestle was the first breast-milk substitute manufacturer to be
included in the FTSE4Good Index, and have retained our place for five years.

2. Access to Nutrition Index™ (ATNI) :- Nestle was ranked first out of 22 global
food and beverage manufacturers in the 2018 Access to Nutrition Index™ (ATNI). The
goal of the Access to Nutrition Indexes is to facilitate improved diets and a reduction of
the serious global problems of both obesity and under-nutrition.

3. Dow Jones Sustainability Indices :- Nestlé continues to be recognized as a

frontrunner in the ranking of the Food Products industry of the 2019 Dow Jones
Sustainability Index. The DJSI evaluates the sustainability performance of the largest
2,500 companies listed on the Dow Jones Global Stock Market Index. For example, Nestlé
scored 100 for Health and Nutrition Performance criteria and holds leadership scores in
the Environmental dimension.

4. Climate Disclosure Leadership Index :- In 2018, we retained our place in CDP’s

annual Climate A List in recognition of our actions to cut emissions, mitigate climate risks
and develop the low-carbon economy.

5. The Global 100 :- Nestlé was ranked among Corporate Knights’ 2018 Global 100
Most Sustainable Corporations in the World.

6. Ceres :- Nestle was ranked top scorer within the packaged food industry in Ceres’
Feeding Ourselves Thirsty, an analysis comparing the water risk management
performance of 42 global companies.
7.CORPORATE GOVERNANCE:-
Our Board of Directors is highly engaged and dedicated to creating long‑term, sustainable value
based on strong principles of governance and an appropriate tone from the top. Our corporate
governance framework is carefully constructed, and continually evaluated and updated, to ensure
that it promotes accountability and supports our strategy to foster long‑term value and sustainable
growth for the benefit of all shareholders.
In 2018, our Board of Directors and management continued to evolve our strategy and governance
to anticipate and reflect changing global consumer preferences and offer high‑quality, competitive,
relevant and innovative products. As part of this effort, we have been driving growth through
innovation with significant investments in R&D. In addition to our organic growth strategy, our
Board and management have taken an active role in streamlining Nestlé’s portfolio to focus on
high‑growth, high-margin businesses, and we will continue to rigorously review our business mix
for further opportunities to drive profitable growth and shareholder value. To ensure that our
incentive plans promote the execution of our strategy, we have updated our executive
compensation plan to introduce Return on Invested Capital (ROIC) as a performance measure.
Tying compensation to returns promotes the efficient use of capital and M&A discipline.
The Board also reconfirmed Nestlé’s value creation model delivering both top- and bottom-line
growth, as well as capital efficiency to drive continuous long‑term shareholder value creation. We
continue to deliver on our commitments to execute the proven Nutrition, Health and Wellness
(NHW) strategy and promoting a prudent approach toward capital allocation and M&A. We also
remain focused on executing on our CHF 20 billion repurchase program and sustainable dividend
policy. To date, our strategy has yielded strong, consistent results for our shareholders, as reflected
in our shorthand long‑term outperformance of the STOXX 1800 Food & Beverage index. CHF
104 billion cash was returned to shareholders since 2009 including CHF 40 billion in share
buybacks and CHF 64 billion in dividends.
7.MANAGEMENT OUTLOOK OF THE COMPANY :-
Nestlé has a Board of Directors, led by our Chairman Paul Bulcke, who was the former Nestlé
CEO. Full details of each member and the committees that they operate within can be found in our
Board of Directors section.
The day-to-day management of the Nestlé business is taken care of by our Executive Board. The
designated Board Members manage diverse parts of the global business. A full curriculum vitae
of each member can be found in the Executive Board section.
The Nestlé Group is managed by geographies - Zones EMENA (Europe, Middle East and North
Africa), Americas and Asia/Oceania/sub-Saharan Africa - for most of the food and beverage
business, with the exceptions of our globally managed businesses, which include Nespresso and
Nestlé Health Science. We also have joint ventures such as Cereal Partners Worldwide and Froneri

Nestlé – A people-inspired company

We put people at the centre of everything we do. Nestlé is more oriented towards people, products
and brands than systems. We show particular concern for the well-being of our employees and
consumers. The Company is committed to the following cultural values, which come from its
Swiss roots and uphold the dynamic nature of the Company:
• Focusing on long-term business development without losing sight of the necessity to
continuously deliver sound results for our shareholders.• Creating Shared Value as the basic way
we do business. In order to create long-term value for shareholders, we must create value for
society.
• Committing to environmentally sustainable business practices to protect future generations.•
Making a difference in everything we do by having passion to win and creating gaps with our
competition through discipline, speed and flawless execution.
• Understanding of what constitutes value for our consumers and a clear focus on delivering this
in everything we do.
• Serving our consumers by constantly challenging ourselves to achieve the highest levels of
quality for our products and never compromising on their safety standards changes.
• Respect for and openness to diversity of cultures and traditions. Nestlé endeavours to integrate
itself into the cultures and traditions where it is present, while staying true to the Company’s core
values and principles.
• Personal relations based on trust and mutual respect. This implies a commitment to align actions
with words, to listen to different opinions, and to communicate openly and frankly
8.SWOT ANALYSIS :-
Strengths

Large distribution • penetrating urban as well as rural markets

system • locally adapted distribution methods

Broad product • more than 8000 brands /products under its name
portfolio • coffee, mineral water, breakfast cereals etc.

Brand Equity • 37 highest rank brand in the world

Weakness

• many brands under the same umbrella

Brand structure • managing may create problem

Maggi • banning of Maggi due to harmful ingredients

controversy • affected the brand name

Legal & • controversies like Nestle baby formula

consumer issues boycott, chocolate price fixing, etc.
 Opportunities

Expanding • penetrating more in rural markets

Market • robust supply chain may lead to further expansion

• patnership with food giants will help in future

Alliances growth

Breakfast • healthy breakfast alternatives

Segment • market penetration with regards to cereals

Threats

• increasing local & national players

Competition • threat from counterfeit product

Price of • increase in price leads to decrease

Commodities in sales and brands switching

• diversified consumer goods market

Buyers Power • brand loyalty becomes difficult