Nestle: Sustaining Growth in Mature Markets

Abstract

Over the last 20 years the Nestle has moved from a production based company to being a science driven, nutrition, health and Wellness Company. Through the use of improved technology and research and development Nestle has grouwn to a multi national company. The list of products has expanded to almost every realm focusing not only on the product itself but also on its packaging and ease of use. Its future is firmly set in nutrition, health and wellness since that is the direction the world is going. They currently have a global network of 28 Nestlé centers of excellence in research and product development. They have the large research organization staffed with scientists that focus on the global customers different needs and preferences.

In June of 1997 Nestle was a leader in the food industry in Europe and had a substantial hold on the pet food and water industry. Mr. Helmut Maucher had expanded the company from its smaller 1982 size to a truly global company. Nestlé operated in 77 countries and sold its products in all 6 continents. Mr. Maucher focused on acquiring companies that would help expand Nestlé's market and reach more customers. Through the acquisition of Carnation, Buitoni and Rowntree and Perrier he no longer had to solely depend on the profits from coffee sales. (http://www.nestle.com/NestleResearch/Innovations/Present/Present.htm

In order to keep up with modern technology, Nestle started a global initiative called Operation Excellence. The primary goal of this program was to correct several logistical deficiencies by optimizing productivity, improving supply chain, eliminating overhead & reducing product complexity. In an attempt to reduce redundant processes and the complications of running a global company, Nestle installed a common information system that allowed them to integrate all information from all business units into one centralized system.

In order to be successful in the current mark, the company invested in extensive research and development. Using a lean 6 sigma approach manufacturing processes were modified and improved. Existing products underwent vast changes in shape, packaging or even taste. Nestle looked for new innovative ways to reach its customers yet keep that customer based loyalty and value on their products.

The launching of Global Business Excellence initiative or GLOBE has transformed Nestle to what success it is enjoying at the moment. GLOBE covers a broad range of strategic objectives and also to improve operational efficiency by integrating the company's businesses on a global scale.

In order to attract new stakeholders and revitalize the existing ones Nestlé created the Corporate Wellness Unit. They focused efforts on developing nutritional products that increased the value of its traditional products by adding health benefits. In addition, Nestle devoted 1/5 of its research & development budget to nutrition research.

In order to diversify their market shares Nestlé's 127,000 products were divided into 6 strategic brands namely: Nestle', Buitoni, Maggi, Nescafe, Nestea and Purina.