SWOT analysis of Nestle
This is a NestleS.A. SWOT analysis for 2013. For more information on how to do SWOT analysis please refer to our article.
Company background
Name NestlS.A. Industries served Food processing Geographic areas served Worldwide Headquarters Switzerland Current CEO Paul Bulcke Revenue CHF 92.2 billion (2012) Profit CHF 10.6 billion (2012) Employees 328,000 (2012) Main Competitors Unilever NV, Hershey Foods, Kraft Foods, Cadbury Schweppes, and GROUPE DANONE Nestl is the world's leading nutrition, health and wellness company based in Switzerland.It is the largest food company in the world measured by revenues.Nestl's sells baby food, breakfast cereals, coffee, confectionery, dairy products, frozen food, pet foods, yoghurtand snacks. It owns several major consumer brands such as Stouffers, Nescafe, Kit-Kat, Carnation, Nestl Water, and many others. You can find more information about the company in its official website or Wikipedias article.
SWOT analysis of Nestle
NestleSWOT analysis 2013
Strengths Weaknesses
1. Unmatched product and brand portfolio 2. R&D capabilities 3. Distribution channels and geographic presence 4. Competency in mergers and acquisitions 5. Brand reputation valued at $7 billion 1. Inability to provide consistent quality in food products 2. Weak implementation of CSR
Opportunities Threats
1. Increasing demand for healthier food products 2. Acquiringstartups specializing in producing well-being products 3. Establishing new joint ventures 1. Food contamination 2. Trend towards healthy eating 3. Growth of private labels 4. Rising raw food prices
Strengths
1. Unmatched product and brand portfolio. The company offers one of the widest portfolio of food and brewery products in its sector. It also operates 29 brands that earn more than $1 billion in annual revenues. With more than 8,000 products it is hard for any other corporate to compete against Nestl. 2. R&D capabilities. Nestl invested more than $2 billion in R&D in 2011. Its introducing new and redesigned products every year, strengthening firms competitive advantage. 3. Distribution channels and geographic presence. Nestl runs in more than 100 countries and has extensive distribution channel all over the world, which supports its operations globally.
4. Competency in mergers and acquisitions. Over the years Nestl has been forming successful partnerships and acquiring other companies in order to grow and maintain its leadership in the market. 5. Brand reputation valued at $7 billion. Nestl is known almost everywhere and has a reputable brand for its products that are used by millions every day.
Weaknesses
1. Inability to provide consistent quality in food products. Nestl has been recalling many products from trade due to food contamination or poor quality supplies. This does not only hurt firms sales but its image as well as the company is unable to control quality of the products. 2. Weak implementation of CSR. The company has announced and is involved in many programs that aim to make company more eco-friendly and improving the working conditions of its suppliers. Still, Nestl receives a lot criticism over the effectiveness of its programs.
Opportunities
1. Increasing demand for healthier food products. The trend of buying and consuming only healthy food products is a major shift in consumer tastes and opens up an immense market for companies. Currently, Nestl tries to introduce more healthy food products in response to the trend. 2. Acquiring startups specializing in producing well-being products. Many new startups are forming and introducing new products for well-being or revolutionizing the ways those products are made. Startups are cheap and can easily be acquired. Nestl is focusing on providing more well-being products and this is a great opportunity to expand its portfolio. 3. Establishing new joint ventures. Nestl is already involved in many successful partnerships with major world companies like The Coca-Cola Company and ColgatePalmolive.
Threats
1. Food contamination. Although it is Nestls responsibility to run thorough quality checks of its products, the company had been reportedly providing contaminated food or other products to the market. Such actions hurt companys reputation and result in losses. 2. Trend towards healthy eating. Nestl is a major supplier of chocolate and chocolate drinks that have high level of calories and due to changing customer habits, will experience decline in demand. 3. Growth of private labels. The growing number of supermarkets and other retailers are introducing their own label products that cost less and can easily compete with Nestls product portfolio. 4. Risingraw food prices. With an overall growth of world economy and population, the demand for raw food will rise. The result of that will be higher material costs and squeezed margin for Nestl.
Sources:
1. Nestle (2011). 2011 Annual report English. Available at: http://www.nestle.com/assetlibrary/ Documents/Library/Documents/Annual_Reports/2011-Annual-Report-EN.pdf 2. Nestle (2013). About us. Available at: http://www.nestle.com/aboutus 3. Wikipedia (2013).Nestl. Available at: http://en.wikipedia.org/wiki/Nestl%C3%A9 4. Interbrand (2013). Best Global Brands 2012. Available at: http://www.interbrand.com/en/bestglobalbrands/2012/Best-Global-Brands-2012.aspx
