Value investors search for companies that are bargains. In order to avoid purchasing a value trap one of the factors we search for is sustainable competitive advantages. Without one or more sustainable competitive advantages a company may not be able to recover from whatever caused the stock to become a bargain.
This highlights the fact that Nestle was seeking to establish its value chain activities, or Global business system, earlier on in its history See value chain above.
Adapting to a Global Role Nestle recognised that for it to sustain its competitive advantage it needed to establish a global technological platform to capture data, manage information and create knowledge Bell and Shelman, This was done to renovate old brands by finding multiple uses for its product.
How should it be rationalised and what new strategies ought to be developed in the future?
This in turn reduced the costs and made the value chain more efficient. In fact, in terms of strategic operations, Lasserre argues that making fundamental changes in the value chain can lead to developing new products and services which can help a company sustain its innovative advantage.
This helped the company cope with the volatility of the supply market and enhance its operations. He further explains that in order to achieve this, a minimum amount of resources needs to be mobilized for an activity to perform efficiently and effectively.
These benefits include proximity to markets which gives a firm the ability to create products that fit local customer specificities, gaining access to geographical clusters of knowledge creation and development access to good-quality scientists and the capability of a firm to learn from different market and cultures Lasserre, This led to the company standardizing its data to manage its vast information and create and share knowledge among its Strategic business units, manufacturers and retailers.
The main idea was to use shared knowledge to enhance the collaboration between all the different units of the company which can reduce costs and produce value all over the organisation.
Bauwens outlines this as a social innovation where knowledge is shared and can be used by others. A good example would be the fact that the Globe system allowed for a synchronization of data leading to an improvement in order fulfilment between manufacturers and retailers.
It could be argued also that better branding is linked to its vision of moving from a food and beverage company to a wellness, health and nutrition company. On the other hand, it wants to differentiate its whole portfolio of products and services by changing the product features or by diversifying their products.
Porter cited in Barney further explains that if a firm tries to implement both strategies then one of them will fail. As a result, a lot of their organizational requirements such as organizational structure and management control systems are stuck in the middle for example the fact that certain products need to be managed globally especially in the nutrition division while others are locally managed.
In exhibit 8 it can be seen that these products do not deliver growth to the company yet in exhibit 9 they seem to have a higher market share. This indicates that the company has the resources needed to deploy this repositioning strategy. With regards to future strategies what are the strategic implementation issues likely to be faced by the company and what actions should they take to overcome them?
Implementing this strategy could be catastrophic for the company as its growth has been largely relying on acquisitions and joint ventures.
It can also have a negative impact on the liquidity position of the company. A way in which this issue could be overcome is by applying both strategies.
By applying both strategies, the company would be able to spread its corporate risk and share its costs as its return on capital employed still continues to generate profits for the company. As seen on Exhibit 4, the acquisition of businesses has increased from million in to million in which has improved its cash flow.
However, using the McKinsey 7s framework, many issues can be foreseen as seen on the table below. Factor — Produce variety of quality products, wide variety of brands.
System — Comprehensive information system: Style — Democratic leadership style: More thanemployees. Bell and Shelman,p. Shared Values — Deliver long term value to shareholders. Although the change in the structure and the strategy was supported with a change in systems by adapting the GLOBE, other elements of the framework have not been adapted.
By changing to a more centralized and global management style some internal resistance from the people can emerge. To overcome this issue, other elements of the 7s framework have to be adapted. The main element that links everything together is shared values.
Implementing the GLOBE is not enough to implement the new strategy, a culture of sharing information and best practices should also be introduced and reinforced.Characteristics of the current competitive landscape of Nestle look at the fierce competitive environment on the local and regional level but limited on the global level.
Globally, Nestle competitors are Kraft, Masterfoods and Unilever. Marketing in Mature Markets Essay. INTAKE 14 DAY QUESTION(S): Your company is operating in a mature market. Identify and discuss the potential marketing strategies which your company can apply in order to remain competitive.
Competitive advantage in the sector requires continuous research and development leading to the frequent introduction of new products and redesign of products (Interbrand, ).
This is a significant strength of Nestlé and among the notable factors upon which its industry, sector or market leadership is based (Nestlé, ).
In the competitive landscape of the twenty-first century, knowledge is a critical organizational resource and an increasingly valuable source of competitive advantage.
Indeed, starting in the s, the basis of competition shifted from hard.
Nestlé’s Creating Shared Value Approach as Competitive Advantage. Marketing Strategies of Nestle. NESTLE MARKETING PLAN. Competitive Advantages of Nestle: Leading overall market position and number one or two brands in most areas/5(6). Characteristics of the current competitive landscape of Nestle look at the fierce competitive environment on the local and regional level but limited on the global level.
Globally, Nestle competitors are Kraft, Masterfoods and Unilever.