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... de environment which will ultimately benefit the industry and the economy by making the market growth. Besides that, Nestle also collaborates with local government schemes to provide technical assistance to farmers in planting and harvesting crops. This collaboration benefits both parties, as the farmer will get income and Nestle will get to purchase good and fresh raw quality materials to produce their food. By having own local productions, Nestle should no longer needs to import any raw materials from other country where they will save much more money because usually local production will be far more cheaper then those imported (currency difference, taxes). It does not only beneficial Nestle, but also local economy because the money will flow within this country and there are more works for the unemployment.
It will also benefit the consumers whereby consumers could enjoy the local productions with low price. More consumers will use this product and therefore Nestle will gain more profit from that. Looking at Nestle'e's yearly and monthly net profit, it shows that they gain profit. (Refer to appendix 4). 2) Social Factors Social factors seem to have made an important factor here as the global need for food productions. The population growth rates are raising so do the food productions.
As the new generation people now are more educated, their lifestyle has changed from previous generation due to their high income. Because of their busy schedule, they do not care about the health and consume whatever without thinking whether the food they take are 100 % healthy and after consume the unhealthy food they did not have the time to work out. So people nowadays do not have a healthy lifestyle, due to this problem Nestle conduct free public health forums around the country and also organize annual Breakfast Campaigns to promote good eating habits to aware the consumers of the food they take everyday to lead them to a more healthy and safe lifestyle. By joining Nestle Company, employees will be shower with a lot of benefits such as accident insurance, excellent training opportunities, infant feeding scheme and many more. The salary they get is competitive. 3) Technological Factors Internet and Mobile Technology is currently growing so rapidly and "hot" in the market where almost all of the people nowadays will get contact with it. Nestle could use this advantage to benefit them by using it to promote their products over those advanced technology.
Besides that, the employees and customers can connect with each other to enable the customer to interact with the company. Customer could get more information about the company from their site. Other than that, Nestle'e's employees could use this service (internet) to connect to its industry in other country such as Australia, Singapore, U. K and more. In order to improve and stick to their goal (produce good quality food and stay as the world leader food producer) they are need to do more research and development whereby those research rely heavily on advance technology. Nestle company spends more than RM 2 billion to invent new products.
They will do research using the technology to find information to satisfy the local tastes and cultural flavors in each country market because they believe that no two country shares exactly the same preferences. By understanding what each country asks for, Nestle could market difference product according to the customer demand in difference country. It is already proven that the technology factors are important for Nestle Company. 4) Political Factors Political Factors are important especially in food industry. Nestle provide HALAL food assurance which it is certified by JAKIM (Department of Islamic Development Malaysia) to provides assurance to the consumers that Nestle products are manufactured, imported and distributed under the strictest hygienic and sanitary condition in accordance to the Islamic faith. Besides that, to ensure that consumers do not buy any fake products, Nestle'e's products are always come with the seal of guarantee. By having the seal of guarantees, consumers are now more confident and trust Nestle products.
Strict quality control played a role in political factors too. It means that Nestle'e product's quality will not be difference with other countries. Consumers are guarantees with full satisfaction of the products all over the globe. 5) Ecological Factors Ecological Factors is an important issue to talk about in any industry. As a responsible industry, Nestle Company should ensure that all the waste should be handling in the correct way such as throw those waste in the correct place so that they will not pollute the water. Industry should protect the environment to ensure that all the residents nearby lives healthy and safe.
Preserving natural resources and minimizing waste have become a part of day - to - day duty for the industry to handle. Most of the company optimizes the use of locally available raw materials, which must meet both legal and internal quality criteria. Those companies have performed activities such as minimizing the use of environmentally critical substances, recycle waste and dispose of non-recyclable waste in an environmentally friendly manner. For Nestle Company, they also reduce the environmental impact of packing without jeopardizing the safety, quality or consumer acceptance by using the most efficient and appropriate packaging solutions.
Industry Environment (Porter's Five Forces) We analyze the industry environment which is external analysis by scanning and evaluating various sectors outside the Company. The purpose of industry environment analysis is to identify positive and negative trends that may affect the Company performance. Positive trends would be opportunities that improve the Company performance while negative trends would be threats that hinder the Company performance. Michael Porter's Five Forces Model is tool that we use to analyze Nestle'e's industry environment. The five areas involved are as follow: 1. Entry Barriers & # 61607; One of the barriers may be the direct government restrictions on entry.
The licensing fees and the entry duty in Malaysia may be high. In addition, the Malaysia's government always restricts that the food produced and marketed should be halal. & # 61607; An entrant would need to enter at a large size and with a consequent large addition to the size of output Milk and food industry has large economies of scale in relation to the size of the market. & # 61607; There are already few leading milk and food manufacturers in the Malaysia markets (includes Nestle) and are making large profits and the entry barrier is high, so a potential entrant might forego entry into the market because its entry would substantially drive prices down and cause losses for the entrant. & # 61607; Brand loyalty is established by continually advertising the brand and company name, patent protection, high product quality, and after sale service. Strong brand loyalty makes it hard for customers to change to new, competing products and therefore would be example of the entry barriers, too. 2. Supplier Power & # 61607; In my opinion, there are lot of supplier over the world that could supply the raw material to milk and food industry & # 61607; However, there are also a lot of organizations which manufactures and marketing milk and food. & # 61607; Suppliers may not be willing to offer very favorable terms and services to small businesses or new entrants if they have other potential customers. & # 61607; Suppliers may be more willing to offer an existing, large milk and food manufacturer better services. & # 61607; So the supplier power for milk and food industry is moderate. 3. Buyer Power & # 61607; The buyer power in this industry is high because there are a lot of such organizations providing similar products. & # 61607; For new entrants as well as the existing company, one of the approaches is to reduce the price of the products. & # 61607; However, due to the nature of business, Nestle has created consumer and quality loyalty as well as has a stable position in the market. & # 61607; So, Nestle only need to maintain its products quality or refine the quality, and try to control its production in order to increase revenue. 4. Substitutes & # 61607; Both direct and indirect substitutes are considered. & # 61607; The Company provides milk, breakfast cereal, culinary foods and chilled products. & # 61607; Bread, fresh milk, fast food, original spices as well as fresh or home cook foods could be the substitutes to the Nestle'e's products. & # 61607; Currently there are quite a number of substitute products or services in the milk and food industry.
These are offered by companies such as Campbell, Kellogg's and Dutch Milk. & # 61607; In order to counteract the threat, Nestle always differentiate its product from its competitors. The research department always gathers information and identifies current customers' needs to develop new products and expand their market. & # 61607; In addition, the Company constantly strives to keep abreast with changing consumer preferences. 5. Competitive Rivalry & # 61607; The competition rivalry of milk and food industry is high. & # 61607; There are a number of large sizes Company in this industry, for example, Kellogg's Co. , Campbell, Danone and Kraft Foods Inc. The high intensity of the rivalry among existing competitors declining the market, hence, the new entrants would give up entry to the industry. SWOT Analysis SWOT analysis is a framework for analyzing the company strengths, weaknesses, opportunities and threats faced by the company. Strengths and weaknesses are called the internal analysis where it is design to examine the capabilities of the company.
For opportunities and threats, it is usually called the external analysis whereby it looks at the main points in the environmental analysis by identify those points that pose opportunities for the company and those that pose threats or obstacles to performance. Basically strengths is use to overcome threats whereas opportunities is use to overcome weaknesses. SWOT analysis will be discussed in more details below: Strengths Market leader - To maintain as the long term market leader, Nestle outlook in expanding market share and nurturing brand loyalty. Nestle largest market share for most of its core brands, especially MILO and Nescafe which have consistently maintained very dominant market share for the past 3 years. Nestle'e's Maggi range of instant noodles is also a leader in its segment, market share for the past 3 years. Set standards - Setting standards are important.
By having the standard set, consumer is more relief to buy the product. Nestle food are all set in HALAL standard whereby the products are manufactured, imported and distributed under the strictest hygienic and sanitary condition in accordance to the Islamic faith. Besides that, all the product will come with seal guarantee to let the consumers identify that the product they buy is approve by the government and is save to consume and most importantly to let the consumer to differentiate the Nestle product with the fake one in case there are fake product in the market. Strong brand name - Strong brand name is made possible thr...
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Research essay sample on Porter Five Forces Islamic Faith
