In this paper, the firm Nestle in Saudi Arabia will be analyzed from different directions. At first, the company will be introduced and moving on, the strategic management of the company will be discussed. After discussing it, the macro-environment of the company will be analyzed. There are several segments in it which will also be explained according to the company in question. Later on, in the paper, the industry analysis of the company will be carried out, and SWOT analysis will be performed. At last, conclusion and considerations will be given.

Nestle Saudi Arabia

Introduction of Strategic Management of Nestle Saudi Arabia

In Switzerland, Vevey, Nestle S.A is based. Nestle is a Swiss health-related and nutritional consumer goods multinational firm. In the whole world, it is the most prominent food organization and is analyzed by revenues. The products of Nestle include snacks, pet foods, ice cream, dairy products, confectionary, coffee, breakfast cereals, bottled water, and baby food. Approximately 330,000 people are employed by Nestle in more than 150 nations and have 461 operations and factories in 86 countries. The sales of Nestle Saudi Arabia for 2011 were reaching 83.7 billion CHF. Also, it is the principal shareholder of the largest company of cosmetics in the world, L’Oreal. The history of Nestle started in 1866 as the very first European factory of condensed milk was launched in Switzerland, by the Condensed Milk Company of Anglo-Swiss and a German pharmacist, Henri Nestle founded the Nestle. Both companies’ combined in 1905 after a fierce competition (Li, 2015).

This paper aims to assess the present strategic direction of Nestle in Saudi Arabia. In the later sections of the document, every element will be described thoroughly and the general environment will be explored in terms of a macro-environmental scan. At last, the targeted market of the company will be analyzed, and strategies will be suggested that the company should adopt.

Strategic Management of Nestle
Current Strategy

The objectives and aims of the Nestle Saudi Arabia are to be understood and recognized as the leader in Wellness, Health, and Nutrition trusted be every stakeholder that it has. Furthermore, it needs to be the reference for the performance in terms of finance in the whole industry. They believe that leadership is not about the only size, but it is also about how they are behaving. They recognize that trust is gotten only over time by delivering what they have promised. This type of consistent behavior is what earns the trust of consumers and stakeholders to them (Freeman, 2010).

Their phrase of “Good Food, Good Life” actually seems to emphasize every behavior and objective that they have. Also, it also summarizes their corporate goal. The roadmap of Nestle Saudi Arabia is intended to develop an alignment for their individuals behind a strong set of priorities concerning strategies that will increase the speed at which they are achieving their goals and objectives. These objectives and goals demand a mix of trust from their people which they consider very important for building short-term and future entrepreneurial actions, essential for delivering the critical standard of performance.

They wish to achieve leadership and get that high level of trust by satisfying the limitless expectations of their consumers whose daily choices boost their performances. Furthermore, they believe that it can be achieved only by creating sustainable value at long-term for the shareholder of their operations, strategies, and behavior are also playing an essential role in creating value for the number of communities where they are operating. At present, they are investing now for the future for ensuring sustainability in terms of environment and finance of their operations and actions in capabilities, technologies, and capacity. They aim to meet the need of today without compromising the ability of future generation for meeting their requirements.

Strategy Nestle Saudi Arabia

As a company that is all about wellness, health, nutrition, and food, Nestle Saudi Arabia describes its whole infrastructure. They believe that in this market, empowering their leadership is an essential element of their corporate plan or strategy. Also, the market is classified as the one in which the primary motivation of consumers for purchase is the claims which are made by the product by nutritional content. For reinforcing the current competitive advantage, Nutrition was created by Nestle as a global business autonomous unit in the company. They charge the group with the loss, profit, and operational responsibility for the business by the claim by offering science-based nutrition products and consumer trusted. The Unit of Corporate Wellness was made for integrating nutritional value in its beverage and food business.

A significant communication effort is encompassed by it both externally and internally and strives to align the R&D and scientific expertise with the benefits of consumers. This unit is accountable for the coordination of cross-business, a horizontal project that addresses the current concerns of consumers. It also deals with future trends. The business-level strategy of Nestle in Saudi Arabia is integrated low-cost operators and various products with differentiation. The strategic leadership of Nestle is to drive the business to be more useful for creating a regional network of manufacturing, integrating the business of company on a worldwide scale, and decrease the expenditures of marketing by exploring the synergies which exist among brands (Kumar, et al., 2011).

Macro-Environmental Scan
General Environment Analysis Nestle Saudi Arabias

It can be said that the general environment is made up of dimensions in a vast region or society that impact the industry and also the firms in it in an indirect way. These dimensions are grouped into six segments of the environment by them such as global, technological, socio-cultural, political, economic, and demographics. To the company, these structure segments are external. The firm faces the challenge in scanning, assessing, forecasting, and monitoring those elements in every portion which are quite significant. These efforts must result in the understanding and recognition of threats, opportunities, trends, and changes in terms of environment (Babatunde & Adebisi, 2012).

Demographic segment

Products of Nestle are for every individual. People regardless of their income, age, culture, and age can eat chocolate. It is not a premium or luxury item that only some specific individuals can consume. People of any age can consume the products of Nestle Saudi Arabia. Furthermore, all six continents are their consumers. For example, the segments of Nestle are different according to age. For infants, there are baby foods while kids can consume milo along with other products like cookies, chocolate, and ice cream. Nestle owns the Maggi brand in Vietnam with different types of Asian sauces. However, it is not present in Britain due to the difference in geographical tastes (Jones & Reid, 2010).

Economic Segment Nestle Saudi Arabia

Even though Nestle is a leader in the food industry, its expertise and knowledge are shared by it with the medium, small, and local organizations. Entrepreneurs are helped by it in competing in the new environment of free trade which will benefit the economy and industry by making the market expand and grow. Other than that, Nestle also seems to collaborate with the local government to offer assistance which is technical to farmers in harvesting and planting crops. Farmers will get income while Nestle will be capable of purchasing fresh and good raw materials for producing their products. With resources as local productions, Nestle wouldn’t require fresh matters from other nations. It will help them a lot in saving money. Furthermore, it will also benefit the customers since they would be able to enjoy the productions at a local level at low prices. More customers will use this product, and therefore, more profit will be gained by Nestle from that.

Legal/Political Segment

In the food industry, political factors are significant. The policies of the organization are impacted along with its budget. Nestle Saudi Arabia provides food assurance for assuring every consumer that the products of Nestle are distributed, imported, and manufactured under the most stringent sanitary and hygienic condition. Other than that, for making sure that consumers are not purchasing fake products, the products of Nestle arrive with a guarantee seal. By using this seal, consumers are more confident and trust the products of Nestle. The strict control of quality also played an essential role in political factors. It means that the product quality of the Nestle will not be different in any other nation. Customers are guaranteed with complete satisfaction regarding every product.

Socio-cultural Segment

Proper food supply and a good diet, the central for well-being and promoting health is the aim of every other individual at present even though individuals tend to value the products which offer health benefits. For sure, such kinds of goods are more preferred than related products and junk foods. Additionally, the generation born in 1980-2000s seems to possess characteristics like acceptance to modifications are savvy in terms of technology. Such components must be coinciding to the aggressiveness of firms of using technology.

Technology Segment of Nestle Saudi Arabia

Mobile and Internet Technology is presently growing at a rapid pace in the market where almost every other individual will be connected with it. This could be used by Nestle Saudi Arabia to its advantage by using the technology for promoting their products over modern technology. Using their site, consumers could get valuable information. The employees of Nestle could use this service of the internet for connecting to its industry in countries like Saudi Arabia, UK, Singapore, Australia, and many others. They developed and researched by using the technology for finding more information to satiate the cultural flavors and local tastes in each country market. By understanding what the country is asking for, the product could be differentiated by Nestle according to the demand of consumers in a different country. It has already been proven that the factors of technology are significant for Nestle Saudi Arabia (Smith, 2012).

Global Segment of Nestle Saudi Arabia

The operational efficiency of Nestle Saudi Arabia is improved by the integration of the business of the company on a worldwide scale. Now, they are transitioning for becoming a real global food company. The company has a dynamic network as R&D centers work on product development and scientific research. Also, they have the largest nutrition research and food organization without almost 5000 involved in R&D. The global R&D of Nestle Saudi Arabia is implemented locally for meeting the preferences and needs of consumers through above 300 global Application groups.

Industry Environment Analysis of Nestle Saudi Arabia

In comparison with the general environment, the environment of the industry has a more direct impact on the strategic competitiveness of the organization to earn returns which are above the average. Industrial competition’s intensity and the profit potential of the industry are the functions of the competition’s five forces like the threat of new competitors, the strength of competition, risks of alternative products, power buyers’ bargaining, and supplier’s power bargaining. It can be said that the model of Porter’s Five Forces was designed for acting as a framework for the development of business strategy and industry analysis. This paper will also be using this model for evaluating Nestle.

The threat of New Entrants of Nestle Saudi Arabia

The industry of food processing is quite competitive and large. It is uncommon for organizations in the industry to perform very well. Due to it, various firms are entering the market every other to achieve a little part of the profitable market. In the case of Nestle Saudi Arabia, the firm has fortunately been functioning in the market for over a hundred years quite a historical period of consumer satisfaction and quality products. It has allowed the firm to achieve the market’s large share. Due to it, new competitors in the industry must try to gain a part of the market share of Nestle for surviving. Most importantly, Nestle is always a target, and this threat is not that high.

Bargaining Power of Supplier of Nestle Saudi Arabia

Nestle Saudi Arabia is very proud of maintaining and creating positive relationships with every supplier over the globe. Due to the large magnitude of purchasing power, and since the agricultural commodities’ suppliers offer a unique product, more bargaining power is held by Nestle compared to its suppliers. Other than this, it is preferred by Nestle to preserve and create relationships at long-term as it helps a lot in ensuring the caliber of raw materials which are being bought. Additionally, useful advice is offered by Nestle to every supplier regarding how they can perform more effectively for minimizing unnecessary costs.

Bargaining Power of Buyer of Nestle Saudi Arabia

Large amounts of bargaining power are owned by consumers concerning their consumption of products which are developed by Nestle. It can be said that there are close alternatives to the products of Nestle which allow for the customers’ preferences to be influential. Consumer power is understood by Nestle and has taken specific steps for meeting the requirements of consumers. Particularly, wellness and health are incorporated by Nestle into the development of its products as consumers have become more conscious in terms of health.

The threat of Substitute Products

Because of industry nature, Nestle Saudi Arabia faces the threat of alternatives. There are several arrays of products which are similar to the ones being produced by Nestle and compete with Nestle. It is quite essential for Nestle to consistently determine new ways for improving outcomes and growth’s new sources for future expansion of the company because the competition is quite intense. Recently, Nestle has concentrated on the wellness and health aspects of every product for maintaining the competitive edge.

The intensity of Rivalry among Competitors

It wouldn’t be wrong to say that Nestle is a powerhouse in the industry of food processing, but the same can also be said for Unilever, Masterfoods, and Kraft. Nestle also was facing robust competition at the regional and national level. Among others, these companies are in a continuous and constant batter for outperforming one another. Nestle was facing fierce competition as many other rivals had achieved critical improvements in their efficiency of operations. In the industry of food processing, the rivalry is intense, and it is quite good for customers. With the competition, customers will consistently enjoy the product lines which are ever-improving.

Competitive Environment

Nestle Saudi Arabia encounters very high levels of competition that it is currently experiencing. Any increment in the environment of the game might hurt the business, growth, and earnings of Nestle. Through efficient intelligence of race, insights are gained by the firm for creating an edge in the game and to increase the strategic decisions’ quality when deciding how it can beat the other competitors. The brand of Nestle Saudi Arabia is one of the most significant reasons why it has a competitive advantage. The capabilities of Research and Development permit the firm to lead the way into productivity while providing maximum flexibility in terms of portfolio. The extraordinary massive scope of the business of Nestle offers a significant edge in administration, marketing, and manufacturing. Nestle can achieve success due to the product quality it providers and is capable of satisfying consumers.

Innovation is one of the most significant competitive advantages for Nestle. They harness over 140 years of scientific, development, and research expertise. Even though there is a right amount of applied and pure research that occurs in the research and development centers worldwide, it is ensured by Nestle that consumer benefits remain at the core of every activity. For achieving success in the beverage and food sector today, the component of cost is necessary and economic scale are the main drivers of the expenses for the company. Competitors are posing the main threat to the company since there are many substitute foods in the market which can replace the products of Nestle.

SWOT Analysis of Nestle Saudi Arabia
Strengths

The biggest strength of the company is its development and research capability since it has research and development areas over the world. Nestle Saudi Arabia has a powerful geographic presence along with the fact that it has remarkable diversified resources of revenues. The brand and product portfolio of the company is unrivaled which gives it a competitive advantage. Nestle is recognized as it puts a lot of efforts in creating sustainability. Furthermore, it owns some of the best reputable brands over the globe (Varma & Ravi, n.d.).

Weaknesses of Nestle Saudi Arabia

A critical weakness is criticism over the selling of contaminated food and high-water usage along with child labor (Steel, 2010).

Opportunities of Nestle Saudi Arabia

The labeling can be more precise, pointing out every element used in the food or product. The company can be more transparent in material sourcing. Nestle Saudi Arabia can also consider the organic ready-to-drink coffee and tea markets.

Threats of Nestle Saudi Arabia

The Company should be looking out for the poor quality of water and increase competition in the food and beverage industries. Prices of coffee-products could rise due to the bad weather. The last threat is the high cost of Nestle products (Muller, 2013).

Conclusion and Considerations of Nestle Saudi Arabia

Nestle is a multinational company that produces health-related food and products. It has some objectives that it wishes to achieve such as being trusted by every stakeholder and consumer. To gain this trust, the company has produced only some of the most excellent quality products without any limitation in terms of consumers. It means that every person can purchase the product without having to worry about gender, age, or color. For earning the trust of customers, the company has focused on strict quality controls which makes sure that only the best products are delivered to the public. In the market, it is recognized due to the quality products that it develops and not many firms are capable of giving a tough time to Nestle Saudi Arabia. However, there is a risk of competition because there is a variety of products which are quite close to the original ones.

One of the most critical threats to the company is the high price of its products and competitors take advantage of this flaw by producing substitute products at low prices. To survive in the market, Nestle Saudi Arabia has to make sure that the cost of its good-quality products is low. Other than this, another issue is all about the low-quality controls in the sector of water. Nestle in Saudi Arabia can continue to thrive by controlling quality measures and decreasing the costs (Sojamo & Larson, 2012).

References of Nestle Saudi Arabia

Babatunde, B. O. & Adebisi, A. O., 2012. Strategic Environmental Scanning and Organization Performance in a Competitive Business Environment. Economic Insights-Trends & Challenges , 64(1).

Freeman, R. E., 2010. Strategic management: A stakeholder approach. s.l.:Cambridge university press.

Jones, S. C. & Reid, A., 2010. Marketing to children and teens on Australian food company web sites. Young Consumers , 11(1), pp. 57-66.

Kumar, A., NOIDA, G., GANGAL, D. V. K. & SINGH, K., 2011. Advertising and consumer buying behaviour: a study with special reference to Nestle Ltd. International Journal of Research in Commerce & Management , 2(10).

Li, T., 2015. Nestle Employee Recruitment Research. International Journal of Business and Social Science , 6(4).

Muller, M., 2013. Nestlé baby milk scandal has grown up but not gone away. The Guardian , Volume 13.

Smith, E., 2012. Corporate image and public health: an analysis of the Philip Morris, Kraft, and Nestle websites. Journal of health communication , 17(5), pp. 582-600.

Sojamo, S. & Larson, E. A., 2012. Investigating Food and Agribusiness Corporations as Global Water Security, Management and Governance Agents: The Case of Nestlé, Bunge and Cargill. Water Alternatives , 5(3).

Steel, E., 2010. Nestlé takes a beating on social-media sites. The Wall Street Journal , Volume 29.

Varma, G. R. & Ravi, J., n.d. Strategic Analysis on FMCG Goods: A Case Study on Nestle.