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The main issue of given article is whether Nestles Corporation growth will benefit this companys efficiency in the long run. Author analyses it from position of an observant and tries to predict whether were to expect Nettles further growth in near future or not Industry Analysis: Nestle Corporation is one of the largest food producers in the world. This company has factories on every continent in the world; there are 511 of them in 86 countries. Many economists say that Nestles continuous expansion will inevitably slow down soon and even turn into contraction. This is because company has grown too big already, which makes it harder for its managers to practice a flexible marketing strategy. The Nestles unique problem appears to be the sensitivity of its business operations on the reputation al factor.
There is a tough competition on the international food market. What makes every food producer competitive is its ability to adapt to rapidly changing customers demands. Nestles continuous growth will inevitably lead to the situation when its sales margins will drop even lower. Companys managers wont be able to efficiently keep factories operations under control over an increasing complexity, related to an expansion.
Company Profile: Nestles production lines consist of 511 factories in 86 countries. It also owns numerous other brand names, such as Perrier and Pellegrino that are being acquired since Mr. Brabeck took over the company in 1981. At present time Nestle continues with further international expansion in such countries as China and Russia. Companys industry position is best described as equal among equal. There are only two other competing companies that operate on the same scale - Unilever and Cadbury Schweppes.
Each of them has their own strengths and weaknesses. So far, Nestle has an upper hand in the competition, yet situation can change quickly. The financial position of Nestles corporation is very stable. Companys market capitalization in the last year consisted of 120 billion dollars, which is way above of its closest rivals. Nestle uses the latest technology to make operating of its factories as effective as possible. In the next few years its going to adopt a group-wide resource-planning system, called Globe.
It is meant to make companys management strategies more standardized. Nestles approach towards increasing the efficiency of its personnel can be defined as adequate. There is no popular discontent with companys employment policies among its workers. But it might become the case very soon, if Nestles follows the example of its competitors cutting the number of employees in order to increase operational efficiency. Nestles production capacity accounts for this company producing close to 2000 different food products in 48 countries. Nestles managers are encouraged to come up with executive decisions, which makes every branch to enjoy a substantial degree of independence.
This increases companys marketing flexibility, which is very important on todays dynamic food market. Brief SWOT: Strength: the cheer size. Weakness: non-proportional growth. Opportunity: adjusting more products to customers specific tastes. Threat economic stagnation. Nestles main goal is to increase its profits, just as it is a goal of every commercial enterprise.
The strategy it employs to reach this goal is continuous expansion and acquiring more brand names. In my opinion, this strategy is appropriate at present time. The Nestles rapid growth is the best proof of that. Yet, there is also a tendency towards such growth slowing down as this will inevitably lead to an increased complexity.
In its turn, this will undermine Nestles efficiency as whole. Recommendation: I would recommend that Nestles continue on with its present marketing strategy. If company is going to be persistent enough, itll cause its smaller rivals to become non competitive. Yet there is also a danger that continuous growth might lead to company becoming economically stagnant. Thats why Id say the Nestles needs to be ready to adopt a new strategy when circumstances arise. This can only happen if itll become obvious that Nestles competitors had sharply increased its profit margins whether through introduction of new products or making their operations more effective.
The flexibility is key to success.
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Research essay sample on Continuous Expansion Brand Names
