This report is based on strategic management inputs of an agribusiness food related sector of Australia. The chosen company for this report is Nestle, Australia. Nestle is the world’s largest food and beverage industry. Choosing this company for the making of the report on strategic management inputs is very helpful because it is one of the top rated agribusiness food sectors of Australia. The report starts with the detailed company analysis including its business units, products and revenue. Later on the external environmental analysis shows how political, economical, social, technological, environmental and legal factors are influencing the business in achieving competitive advantage. The internal environment analysis explains the strengths, weaknesses, opportunities and threats of Nestle, Australia. The competitive analysis of Nestle Australia is also described here. The given recommendations highlight the future strategic direction of Nestle, Australia.
This report is about strategic management inputs of Nestle, the food-related sector of Australia. The report will provide a detailed company analysis of Nestle. The business units and products of Nestle will also be discussed in this paper. The revenue units of Nestle will be discussed here including the importance of the largest revenue units. The external environmental analysis of Nestle will show how the political, economic, social, technological, environmental and legal factors are influencing the industry. The report will describe the strengths, weaknesses, opportunities, and threats of Nestle, Australia. The resources of Nestle and their competitive advantages will also be presented in this report.
Nestle Australia was launched in 1867 in Australia. Nestle is the world’s largest food and beverage company. They have more than 200 brands of products from global icons to familiar local favorites. They are operating from 189 countries (Anon., n.d.). In 1906, Nestle ranked second in the food industry. In 1934, Nestle got the best achievement in the Australian market by launching MILO (Anon., 2009). Currently, this product is sold in more than 30 countries with half billion Australian dollar revenue. The head office of Nestle Australia had become them headquarter for Oceania region which includes Australia, New Zealand and Pacific island in 1999.
The strategic business units of Nestle, Australia include confectionery & snacks, beverages, foods, New Zealand and Nestle Pacific Islands. Nestle Australia provides varieties of dairy milk products, recipe bases and sauces, Museli bars, baking ingredients, baby and toddler nutrition, medicated lozenges, flavored noodles, frozen meals, flavored milk and yogurts, coffees, cold and hot drinks, light ice-creams, bakery items, snacks, and variety of confectionery items. Nestle Australia has introduced catering services to cafes, restaurants, hotels, and clubs (Anon., n.d.). The brands include Kit Kat, Nescafe, Nestea, Nespresso, Coffee-mate, Ortega, Crunch and many more. Nestle also introduced Purina. It is a pet’s food.
The coffee, chocolates & confectionery, noodles, and baby foods are revenue earning business units of Nestle, Australia. Nestle Australia is known as the market leader in the food and beverage sector in the Australian market. Their revenue-generating units are solely responsible for their huge revenue earning (Anon., 2009). Chocolates, yogurts, ice cream, milk, dairy desserts, coffee, confectionery, and frozen meals are the largest revenue-generating products. These business units are introducing new products which are helping the industry in getting more revenue.
The external environmental analysis includes PESTEL (political, economic, social, technological, environmental, and legal) analysis. The following analysis is the PESTEL analysis of Nestle, Australia.
The Australian political environment indirectly influences the performance of any organization. Nestle Australia also gets influences from the political environment of the country. But the organization is not affected by any political issues whenever they launch a new product because currently, Australia is experiencing a stable political situation. There is no war or revolution or election which would affect the Australian market. The country is a constitutional monarchy thus sometimes many organizations face pressure for regulatory reforms. Nestle, Australia faced a major issue when the Department of Agriculture of the Australian government had issued a holding order against Maggie as a precautionary measure on 2015 (Unsupported source type (Misc) for source Naw17.). Nestle Australia had temporarily suspended the import of Maggi noodles from India as that product had violated food safety measures. The new Australian government introduced many new policies for agribusiness food sector by reducing the cost of R & D and taxation policies.
Australia has experienced a sharp fall in inflation rate in the first quarter of the current financial year so the product selling rate is increased as the product prices are rising slowly. The disposable income of the consumers is also increasing thus the company is experiencing a positive growth rate. Different countries have different economic policies. Nestle uses different economic policies for different countries. Consumers’ budget is changing day by day. Many consumers are cost-conscious. Nestle Australia has many consumers from this segment. It is observed that the raw material prices are increasing about the need to source from sustainable suppliers of Nestle Australia.
Consumers are now becoming health conscious. They support a balanced diet and are well aware of the dangers of sugar. This affects some of the product lines of Nestle Australia like chocolates and snacks. Nestle, Australia is the producer of finished goods thus they are highly dependable on customers’ satisfaction and desire. The organization had introduced some specific steps like the acquisition of specialized start-ups and partnerships with other related companies to meet the needs of health-conscious consumers in Australia. Nestle Australia, is adjusted with the market segments and introduces well-positioned products to meet the needs of customers (Basil et al., 2019). Their thousands of brands make it possible to achieve strategic focus. Social factors are also based on some demographic factors of a country. These are age, gender, income, and social class of the consumers of the selected country. Nestle Australia has products for every consumer from baby to old people.
Every business industry in present days is using technology as a marketing tool. The Australian market is having a strong technological background. Nestle Australia had made huge investments in research and development to enhance its capability to produce varieties of products. After the innovation of new technologies, the R & D costs are also reduced (Sambell et al., 2019). Technology is also helping the company in product launch, promotion, and customer awareness. Consumers can interact with companies through social media platforms.
Environmental factors become the most important factors for every business. Every organization should follow environmental standards while producing, supplying and disposing of wastage. Nestle Australia uses various programs to make the organization more eco-friendly through its CSR initiatives (Unsupported source type (Misc) for source Naw17.). Nestle Australia uses sustainable packaging strategy and product stewardship. Nestle Australia reduces greenhouse gas emissions with improvised resource efficiency and cleaner fuels. They also use renewable energy in the business manufacturing process. In 2013, they revised their safety policy. They sent 3906 tons of waste to landfill as per their commitment of zero waste. They plan to reduce water consumption by 4% per ton of products.
The legal factors for any organization in Australia include health and safety measurements, employment laws, environmental laws and guides, business laws and legal protection. Nestle Australia is also abided by these legal factors. There are some legal protections in Australia which are also needed to be followed by the organization. These are IPR rights, copyrights, and property patents. Nestle Australia faced some legal charges for infant milk formula scandal, the accusation of child slavery, and food quality of Maggi which was banned in India.
Internal environmental analysis is based on SWOT (strengths, weaknesses, opportunities, and threats) analysis of an organization’s environment. Strength and weakness are considered as the internal organizational environmental factors whereas opportunity and threats are the external organizational environmental factors (Phadermrod et al., 2019). The SWOT analysis of Nestle is presented below.
· World renowned brand
· Huge distribution system
· Brand equity
· Broad product portfolio
· Maggi controversy
· Infant milk formula scandal
· Brand structure
· Legal issues
· Healthy breakfast
· Increasing income level of consumers
· Expanding market
· Business partnerships
· High competition
· Price hike of raw materials
· Buyer power
· Changing mind of customers
An organization’s capabilities are defined by its resources. Resources of an organization can be both tangible and intangible. Tangible resources are the assets which can be seen and counted (Porter & Kramer, 2019). Intangible resources cannot be quantified and competitors cannot analyze these.
Agribusiness related to food sector is highly competitive (Unsupported source type (Case) for source Akp19.). Nestle is the world’s largest food and beverage industry. They are the most renowned brand name for high-quality food and beverages. Nestle Australia’s competitive advantages include great product ranges with great quality. Its product portfolio helps to achieve competitive advantage. Strong and innovative research and development and wide geographic presence are other competitive advantages of Nestle Australia. The culture, values and strong customer support of Nestle Australia help them to connect with people all over the world. Nestle Australia has achieved competitive advantages after launching of Nespresso (Brem et al., 2016).
Nestle Australia find core competencies in combining nutritional and healthy products (Wolfert et al., 2017). The core competencies of Nestle Australia are innovation, unique product development, operational efficiency, customer engagement, and quality product. Operational efficiency is one of the important core competencies. They manufactured products which cannot be imitated by their rivals. They maintain a good relationship with customers, employees, investors, suppliers, and shareholders.
Nestle is a big brand in food sector but it has strong competitors in the market. The competitors are Kraft Foods UK Ltd., Wrigley Co. Ltd, Unilever, MasterFoods, Mars Australia Pty ltd, and Cadbury Schweppes Australia ltd (Brem et al., 2016).
This report was about strategic management inputs of Nestle, Australia. Nestle Australia includes a variety of products like dairy milk products, recipe bases and sauces, muesli bars, baking ingredients, baby and toddler nutrition and so on. The external environmental analysis showed how the macro environment influences the business of Nestle, Australia. The internal environmental analysis described the strengths, weaknesses, opportunities, and threats of Nestle, Australia. Besides that, the report also provided resources, competitive advantages and core competencies of Nestle, Australia. The report highlighted the competitors of Nestle Australia. The recommendation part included some important recommendations which can be beneficial for the future strategic direction.