Introduction
Nestlé is the largest food and nutrition company in the world. it was originated in Switzerland.
Nestlé Company had started off from a single man's idea, and developed into a giant corporation.
In 1866 Henri Nestlé, a pharmacist, developed a milk food formula for infants who were unable
to tolerate their mother milk (Nestle.com). His product became a success, and it created a
demand throughout Europe. As Nestlé’s popularity grew more businesses wanted to merge and
become partners with Henri Nestlé's business and in 1905 through a merger of Anglo-Swiss
Milk Company, established in 1867 by brothers George Page and Charles Page, and Farine
Lactée Henri Nestlé, founded in 1866 by Henri nestlé. Today, the company operates in 86
countries around the world and employs nearly 283,000 people. (Nestlé LC1, 2005)
In Nestlé’s business strategy they encourage product growth through innovation and renovation.
This strategy has allowed Nestlé to develop many different products in the various fields: baby
foods, dairy products, breakfast cereals, ice creams, chocolates and confectionery, prepared
foods, beverages, food services, bottled water, and pet care. (Nestlé LC1, 2005). Nestlé's aim is
to meet the various needs of the consumer every day by marketing and selling food of a
consistently high quality. (Marketing mix strategies for Nestle, 2009)
PEST
Political Factors
Political factors refer to the degree of intervention of government in the economy. There are
certain formal and informal rules laid down by the government which every organization has to
abide by in order to sustain its operations in a particular country. the government of Malaysia
has never imposed any political pressure in fact they have always supported foreign investment
and foreign businesses to grow in Malaysia. As the company is into food and nutrition business
they have to just adhere to the laws of food and nutrition policies of government and constantly
provide good quality which is the vision and mission of the company thus Nestle never faces any
problems on political front.
SWOT
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 has over 300 brand divisions worldwide

Nestlé provides quality brands and products and line extensions that are well-known, top-selling
brands including:
o
Products like: Lean Cuisine, nestum oats, Yoplait, Maggi, Dryer's/Edy's, HaagenDazs, Stouffer's, Boost, Dibs, power bar and Hot Pockets.
o
Chocolate and Candy: Kit Kat, boost ,Toll House, Butterfinger, Baby Ruth,
Crunch Bar, the Willy Wonka Candy line.
o
Pet Products: Purina, Alpo, Cat Chow, Fancy Feast, Friskies, Tidy Cat.
o
Drinks: Milo, Carnation, Perrier, Nesquik, S. Pellegrino, Nescafe, Coffee Mate,
Taster's Choice, Juicy Juice.
o
Cereals such as Honey Nut Cheerios, Gold Flakes, golden nuggets, koko krunch,
corn flakes and trix.
o
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.
o
Gerber: baby formula, prepared baby foods, baby cereals, water, juice, bliss
yogurt, foods for infants, toddlers and preschoolers.
o
Professional brands such as nutren 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. (nestle, 2010)

Nestlé owns 30% of the world's largest cosmetics and beauty company L’Oreal and its brands
including Garnier, Maybelline, and Lancome as well as The Body Shop stores. (nestle, 2010)

The company has a big pool of loyal customers due to its long history in the food and nutrition
market (Marketing mix strategies for Nestle, 2009)

Its product are economical, natural and nutritious, hence captures customers of all the segments
(Marketing mix strategies for Nestle, 2009)

Strong network all over the world enable the company to provide its product to its customers
throughout the year. (Marketing mix strategies for Nestle, 2009)
Weaknesses

Their LC-1 division was not as successful as they thought it would be in France. In the late
1980s, Dannon entered the market with a health-based yogurt, and become the top selling brand
of yogurt; Nestlé's 1994 launch was behind the product life cycle curve in an already mature
market and could not compete against a strong, established brand.

Growth in their organic food sales division was flat in 2008, even though the industry grew
8.9%.

Since 2004 the breakfast cereal industry has been under fire from the FDA and the American
Medical Association, both of which say that false claims of "heart healthy" and "lower
cholesterol" need to be removed from packaging and advertising. They have also been forced to
reduce the amount of sugar in their products, as parent's advocates groups claimed they were
contributing to the diabetes epidemic among American children.

General Mills is an experienced, established brand and are the market leader in the USA,
however, they have been lacking in innovation, have not cashed in on the booming health food
craze and have been behind in creating new, niche products, especially in their yogurt division,
where Yoplait is the only brand making a profit.

In 2008, although their products did not carry the recalled pistachios, several of their ice cream
brands, Dryer's, Edy's and Haagen-Dazs, were still plagued with bad PR and loss of sales.
(nestle, 2010)

The company has increased the range of products, however it is lagging behind in innovation as
compared to other competitors. (Marketing mix strategies for Nestle, 2009)
Opportunities

In today's health conscious societies, they can introduce more health-based products, and
because they are a market leader, they would likely be more successful.

Provide allergen free food items, such as gluten free and peanut free.

They launched a new premium line of higher cacao content chocolates dubbed Nestlé Treasures
Gold, in order to cash in on the "recession economy" in which consumers cut back on luxury
goods, but regularly indulge in candy and chocolate. Americans want luxury chocolates, and
high-end chocolate is immune to the recession, because it is an inexpensive indulgence.

Opened Nestlé Café's in major cities to feature Nestlé products. (nestle, 2010)

There has been an increase in the preference of the people towards dairy products. In many of the
countries people are becoming vegetarian from non-vegetarian. This has opened up a new market
for Nestle. (Marketing mix strategies for Nestle, 2009)

Nestle can increase the product line in the yogurt market till the time it is their main source of
income (Marketing mix strategies for Nestle, 2009)
Threats

Any contamination of the food supply, especially e-coli. Their Toll House brand cookie dough
was recalled in March of 2009 because of e-coli. Outbreaks were linked to 28 states and the
product had to be recalled globally. Nestlé has yet to find out how this happened, and is still
investigating.

They were affected by the pet food recall in 2007, in which 95 different brands of dog and cat
food were recalled due to contamination with rat poison. Also in 2007, FDA learned that certain
pet foods were sickening and killing cats and dogs. FDA found contaminants in vegetable
proteins imported into the United States from China and used as ingredients in pet food.

Raw chocolate ingredient prices are soaring; dairy costs alone rose 50% in 2008, this cuts
heavily into their profit margins and often gets passed on to consumers, by shrinking the
packaging in a way that is almost unnoticeable-therefore the consumer is paying the same prices
for less product.

They have major competitors, like Hershey's, Cadbury-Schweppes (owned by Pepsi), Lindt and
Ghirardelli, Kellogg's, Post, Starbucks, Beech-Nut, Quaker, Kraft Foods, Dannon, Del-Monte,
Iams, Earth's Best, Heinz, Frito-Lay (owned by Pepsi).(nestle, 2010)

Many companies are diversifying and trying to gain the advantage of increasing yogurt market
which can eat up the market share of Nestle. (Marketing mix strategies for Nestle, 2009)

The decrease of cattle in many countries can impact the profit margin and the revenue for the
company. (Marketing mix strategies for Nestle, 2009)

Changing customer trend which is the lesser spending on FMCG products is a building threat for
the company. (Marketing mix strategies for Nestle, 2009)