ENHANCING STRATEGIC CAPABILITY BY INFLUENCING STRATEGY-IN-ACTION FOR ANY ORGANIZATION: THE CASE OF NESTLE YOGURT

ENHANCING STRATEGIC CAPABILITY BY INFLUENCING  STRATEGY-IN-ACTION FOR ANY ORGANIZATION:  THE CASE OF NESTLE YOGURT

 

How do we enhance strategic capability of an organization? First by writing a well-designed strategic plan and second by implementing the strategy or putting them into action also called the execution plan (Resnick, n.d.). A well-laid out strategic plan has the following components: “ SWOT, Vision, Mission, critical success factors, performance measures, core strategies, performance measures for each strategy, resource deployment decisions, assignments of responsibilities, implementation schedule, monitoring and control system, communications plan and tactical implementation plan.” (Resnick, n.d.) Strategic planning is a tool that helps to anticipate the future but the decision making is done in the present through leadership and judgement (Management FAQs, n.d.). Strategic implementation plan on the other hand is necessary to execute the plan in order to maintain competitive advantage. It is also the most valuable skill required of management at all levels to maintain competitive advantage (Boyce, 2007).

A timely and proper execution of the strategic plan requires six core drivers and four disciplines. The six core drivers are clarity, commitment, translation, enabling, synergy, and accountability. The four disciplines are focus, creating a scoreboard, specific actions, and accountability. (Resnick, n.d.) These will be used as indicators in our assessment of Nestlé’s LC1 product.

Nestlé’s dairy division accounts for 60% of the company’s profit. Lately Nestlé produced its yogurt product the LC1 that contains the Lactobacillus acidophilus, or La-1. La-1 is a pro-biotic product which helps in digestion and which is an attractive option for the growing market of health conscious individuals. La-1 is a product of Nestlé research and development division. Nestlé’s competitive strategy is its growing emphasis on health and wellness. In fact, they created a separate organization called Nestlé Nutrition to focus on this area alone. This new organization is relegated the focus of infant, health care and performance nutrition with its own  research and development scientists, consumer benefits, consumer concerns and anticipating changes in consumer trends.

Nestlé’s strategy in the international market is entering into partnerships with large companies such as Coca Cola. In the Asian market, Nestlé develops local-based products for local markets. In the Philippines, they have cereal, in Thailand, coffee creamer and in Malaysia, candy. Nestle however faces stiff competition within the industry of yogurt from companies who have already established their market share ahead of nestle. For example in France, a yogurt product by Danone, the first to arrive in the market has already established its share. Similarly, General Mills, an intense competitor in the US market, leads the yogurt business and is also constantly innovating its products. To capture a larger segment of the US market, Nestlé must focus on making the consumers understand the health benefits of its pro-biotic component of the LC1. This means that Nestlé should strengthen its advertising and marketing campaign across the six continents to make the health consumers understand that the Nestlé yogurt is not just a food, it is also a drug. With its pro-biotic component, the LC1 actually is Nestlé’s competitive edge over the other competitors. With its advanced research and development division which brings newer innovation for the captured and newer market, the Nestlé’s market can go a long way.

But what are the strengths of Nestlé strategic management? Nestlé has a long history that has established itself in the world and has made it a household brand. It has more than a hundred companies in all six continents and it operates on low cost and produces local products to cater to local tastes and needs. Its strengths lie on its research and development team. In fact they have 3,500 scientists working on innovations and product improvement alone and it means constant innovation to meet the demands of the changing market. Its other strength lies in its innovative product such as the LC1. Its other strength is its global imperative to be a “global food company.” It also has its five forces model in claiming its leadership in the food business. Its opportunities lie in the fact that nestle has cushioned itself from changing economic conditions, plus Nestlé has become a brand name familiar to everyone. (Hoang Ngoc  Minh, n.d). The threats come from a number of competitors willing to throw their money into innovating new products for the growing market demands. Nestlé’s weaknesses is that it has too many products some of which may not have captured a decent percentage in its targeted market. Better to have fewer products and to focus on the most profitable venture rather than diversify and acquire companies that may not be profitable in the future. (Minh, n.d. and Castelar, 2005). Nestlé is an established brand with a long history in the food business and it is in the food business that Nestlé establishes its niche even in the next century.

 

REFERENCES:

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Castelar Articles (2005). Nestle LC1. Company case analysis. [online] Available at: <http://articles.castelarhost.com/nestle_background.htm> [Accessed 28 April 2011].

Castelar Articles (2005). Nestle LC1. Nestlé’s Competitive Strategies. [online] Available at: <http://articles.castelarhost.com/nestle_competitive_strategy.htm> [Accessed 28 April 2011].

Castelar Articles (2005). Nestle LC1. Competitor Profile – General Mills. [online] Available at: <http://articles.castelarhost.com/nestle_competitor_profile.htm> [Accessed 28 April 2011].

Castelar Articles (2005). Nestle LC1. SWOT Analysis. [online] Available at: <http://articles.castelarhost.com/nestle_swot_analysis.htm> [Accessed 28 April 2011].

Castelar Articles (2005). Nestle LC1. Proposed Strategic Plan. [online] Available at: <http://articles.castelarhost.com/nestle_proposed_strategy.htm> [Accessed 28 April 2011].

Management FAQs, n.d. Strategic Management. [online] Available at: <http://www.pim.com.pk/faq.htm> [Accessed 28 April 2011]

Minh, HN., n.d. Nestle business presentation. [online] available at: http://www.scribd.com/doc/17495022/Nestle-Business-Presentation. [Accessed 29 April 2011].

Resnick, H.S., n.d. Organizational Strategic Planning Processes. [online] Available at: <http://www.worksystems.com/services/strategic_planning.html> [Accessed 28 April 2011].

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