The existing company that has selected is Nestl\u00e9 (Malaysia) Berhad. This report starts with an introduction and a brief history about Nestl\u00e9 and Nestl\u00e9 Malaysia. This report includes the vision and mission of Nestl\u00e9 and how Nestl\u00e9 is going to achieve them. This report also includes a brief summary of Nestl\u00e9\u2019s market segmentation with examples provided. It discusses the strengths and problems of the company followed by the solutions to solve the issues. In the end, there are some suggestions recommended by our group and a conclusion of this whole report.<\/p>\n
Nestl\u00e9 is a multinational company and is of the world\u2019s largest in food and beverages industry. Heinrich Nestl\u00e9, whom also known as Henri Nestl\u00e9, was the founder of Nestl\u00e9 Company (Nestle. 2010, \u201cIntroduction\u201d, Nestl\u00e9 [Online] available at www.nestle.com), which headquarter is in Vevey, Switzerland in the year of 1866. Nestl\u00e9 Malaysia was established in the year of 1912 in Malaysia as Anglo-Swiss Condensed Milk Company. Nestl\u00e9 Malaysia head office is now located in Mutiara Damansara, Petaling Jaya, Selangor, and has 6 sales offices with more than 5000 employees nationwide. Besides, Nestl\u00e9 manufactures its own products in 7 factories and markets over 300 Halal products across the nation. (Nestl\u00e9. 2010, \u201cNestl\u00e9 in Malaysia\u201d, Nestl\u00e9 [Online] available at www.nestle.com.my) Nestl\u00e9 specialized in foods and beverages industry, a few of the many well known brands Nestl\u00e9 has in Malaysia includes Maggi, Nescaf\u00e9, Milo, Kit Kat, Nesvita (formerly known as Nestum), as well as pet care products such as Purina and Friskies.<\/p>\n
Nestl\u00e9\u2019s vision (Nestl\u00e9. 2010, \u201cCorporate Philosophy\u201d, Nestl\u00e9 [Online] available at www.nestle.com.my) is to be the leader in Nutrition, Health, and Wellness Company by delivering world-class products of the highest consistent quality, reliability, and convenience based on business excellence principles throughout the operation. Nestl\u00e9\u2019s mission (\u201cThe Nestl\u00e9 Corporate Essence \u2013 Our roots and wings\u201d 2007, p.4) is to enhance the quality of life with good food and beverages, everywhere, so people could live a healthier life. In order to achieve their vision and mission, Nestl\u00e9 Nutrition Research Centre (Nestl\u00e9. 2010, \u201cResearch & Development\u201d, Nestl\u00e9 [Online] available at www.nestle.co.jp) pays great attention to understand the consumers\u2019 nutritional and emotional needs and utilise today\u2019s world superior science and technology to produce high quality products to the world.<\/p>\n
Every consumer has different needs. Hence, it is not possible to satisfy every customer using a same marketing segmentation, which is also known as mass marketing by offering a single marketing mix to all consumers. Moreover, as a global market has become extremely competitive, and consumers are increasingly demanding which is very difficult to satisfy. Therefore, Nestl\u00e9 uses target marketing for every product to their customers.<\/p>\n
For example, in consumer product, Nestl\u00e9 baby milk product such as Nestl\u00e9 Neslac Excella Gold is segmented only to infants and toddlers. However, baby does not have the capacity or capability to buy the food they needed. Therefore, to market this baby milk product, Nestl\u00e9 does not fully focusing on baby\u2019s basic need which is hunger, but also to the baby\u2019s parents in terms of how the nutrition provided will give their children the best possible advantages in the children\u2019s life and development.<\/p>\n
Another example is Nestl\u00e9 Milo, the milk beverage with chocolate and malt. Don Howart, the executive director of Nestl\u00e9 and Singapore Coffee and Beverages claimed that Milo remains popular among the young and has a 90% (The Sun. 2010, \u201cMilo with ProtoMalt to get through the day\u201d, Sun2Surf [Online] available at www.sun2surf.com) market share among chocolate malt drinks in Malaysia. Besides the youngsters, old people and active people are also part of the target markets of Nestl\u00e9 Milo drinks.<\/p>\n
However, at first, Nestl\u00e9\u2019s business was launched internationally and realised the fact that food products have to be taken into account to the local eating and social behaviour due to the particular country\u2019s practices, cultures, and traditions. Therefore, (1) Nestl\u00e9 has always shown respect for diverse cultures and traditions and trying to integrate itself as much as possible into the cultures and traditions, adding also to the local environment its own set of values. Therefore, (2) Nestl\u00e9 embraces cultural and social diversity and does not discriminate on the basis of origin, nationality, religion, race, gender or age. (\u201cThe Nestl\u00e9 Management and Leadership Principles\u201d 2006, p.9)<\/p>\n
Nestl\u00e9 is a multinational company, not to mention Nestl\u00e9 is also the largest industry in foods and beverages, hence Nestl\u00e9 has every capability to attract more consumers compare to the local companies. On account of its high market share and high financial power, Nestl\u00e9 also has greater financial capability in altering existing products in terms of packaging, the formula of the particular product and others or creating new products, as well as to adapt or upgrade latest information system technology in manufacturing, order processing and other related fields in order to sustain their competitive advantage by delivering lower cost of goods and services than their competitors in this dynamic environment.<\/p>\n
Secondly, Nestl\u00e9 has quite an effective strategic marketing capability. For example, Nestl\u00e9 Maggi instant noodles has built a stable patent and is very well known in many countries especially in Australia and Malaysia. This is because Maggi instant noodles is easy to be differentiated from its competitors such as Cintan Instant Noodles. Moreover, Nestl\u00e9 has also developed a very strong brand name for Maggi instant noodles because of strong advertising, which has indoctrinated most of the people to name the other brands of instant noodles as Maggi instant noodle instead of the brand\u2019s original name.<\/p>\n
Furthermore, Nestl\u00e9 also has a strong Research and Development operations that helps the company to achieve cross-border synergy such as packaging its global products to local preferences. Nestl\u00e9 also emphasises on using today\u2019s information technology, which Nestl\u00e9 believe it will present a long-term opportunity for them to smoothen the company\u2019s operation or to increase efficiency in packaging, among any other company\u2019s operations. Besides, Nestl\u00e9 also has better technological capability, for instance, to renovate the existing products to be more innovative, higher quality, and much healthier product as Nestl\u00e9 realised that consumer-centred innovation and renovation is the most important pillar of Nestl\u00e9\u2019s worldwide strategy, which would accelerate Nestl\u00e9 to advance from \u201cgood\u201d to \u201cbetter\u201d. (\u201cThe Nestl\u00e9 Corporate Essence \u2013 Our roots and wings\u201d 2007, p.34) And because of Nestl\u00e9\u2019s commitments, more people trust on the products delivered by Nestl\u00e9 because of its proper health and safety measures.<\/p>\n
Besides, Nestl\u00e9 also has great leadership attributes. The leaders such as the top executives, branch managers, and others are responsible in building organisation capability. For example, the Chairman and Chief Executive Officer of Nestl\u00e9 S.A., Peter Brabeck, (Castelarhost. 2005, \u201cNestl\u00e9 LC1 \u2013 S.W.O.T Analysis\u201d, Castelar Articles [Online] available at www.articles.castelarhost.com) emphasises internal growth worldwide, which means to achieve higher volumes of sales by adding value to the products, renovate existing products, and innovate new products, to keep pace in the industry because of rapidly changing of consumer expectations.<\/p>\n
Nestl\u00e9 produces hundreds of products, has a global network of suppliers, and multiple distributions and selling channels. Hence, to anticipate and respond in this rapidly changing in market demand condition is very difficult. When forecasting a market demand, Nestl\u00e9 will need information to detect shifts in demand early so they could adjust for trends and send the right messages to the suppliers, shippers, and distribution centres before they are flood with unwanted or defective goods or shortages. (Manhattan Associates. 2010, \u201cPlanning and forecasting: Anticipate and Respond to Changes in Demand\u201d, Manhattan Associates [Online] at www.manh.com)<\/p>\n
However, every company has its weakest links, so is Nestl\u00e9. The weakest links are issues they are unable to control. (Labs. 2010, \u201cSupply Chain Efficiency Starts at the Top\u201d, Food Engineering [Online] available at www.foodengineeringmag.com) Firstly, the most common problem is the sources of supply of raw materials. This is due to a sudden and unexpected increased in demand, which will cause extreme supply shortages for commodities that will result in major price increases. For instance, bad weather and natural disasters have always been an issue affecting incoming raw materials. Secondly, the inaccuracy of orders received in inventory. No company can ever achieve the requirement of zero defects especially in foods and beverages industry. For example, when the purchasing department of Nestl\u00e9 ordered 10,000 of mixed berries yoghurt from its dealer, but what the retailer received was only 8,000 of mixed berries yoghurt, or on another occasion they might received defective inventories. Another example is, when Nestl\u00e9 tells its dealer that they needed extra orders of a particular product to be shipped right away because of unexpected increased in demand, but in fact, the supplier may already has orders from other customers. This usually happen during special occasion such as Chinese New Year, the demand of Nestl\u00e9 Cornflakes cereal will increase because many people will buy this product to make cookies. This will causes Nestl\u00e9 to encounter a great loss because of inaccurate order of magnitude because they could not produce the actual output needed.<\/p>\n
Therefore, in order to solve these problems, it is crucial for Nestl\u00e9 to engage with multiple suppliers or dealers in that particular region, so they could acquire inventories from multiple dealers, which will definitely decrease the risk of shortage due to incontrollable situation. Besides, Nestl\u00e9 should also base on their demand and purchase planning on last couple of years of sales to forecast current year of demand and supply. Other than that, mutual trust and strong relationship with all the dealers are needed in order to increase the flexibility of material supply management, as well as to enhance the bargaining power of Nestl\u00e9. However, if there is a surplus, Nestl\u00e9 may need to plan a promotion to clear their inventories, otherwise Nestl\u00e9 will encounter a great loss such as paying high material handling cost, waste of warehouse\u2019s space, or inventories that are not sold became defective and may need to be disposed which no profit will earn. Therefore, when there is a big event organized such as Jom Heboh Carnival. Nestl\u00e9 will set up a booth at the carnival to sell its products, which are close to the expiry date at lower price such as Maggi products, Nescaf\u00e9, Milo, yoghurt drinks, Nestl\u00e9 ice creams and so on. People often buy the products in big quantity because of the lower price than the market price. As a result, Nestl\u00e9 could clear their inventories rather fast and save some space in the warehouses. which is a win-win situation.<\/p>\n