Nestle final

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International analysis of nestle

Nestlé is the leading nutrition, health and wellness company in the world. Their mission is „Good Food, Good Life” and they provide consumers with nutritious and tasty food and beverages. The history of Nestlé starts in 1866, when the Anglo-Swiss Condensed Milk Company opened the first European condensed milk factory in Switzerland. One year later, Henri Nestlé launched one of the world’s first prepared infant cereals-„Farine lactee”. The Anglo-Swiss Condensed Milk Company merged with Farine Lactee Henri Nestlé in 1905 and became the today’s Nestlé. From its Swiss beginnings, Nestlé grew to establish a presence in almost every country of the world. The company operates in 86 countries and employs more than 328,000 people. In 2011, it was chosen the world’s most profitable corporation by the Fortune Global 500. Because of its overwhelming dimension, Nestlé is currently divided into SBUs (Small Business Units) which are specialized in diverse categories, for example Coffee and Beverages, PetCare, or Chocolate and Confectionery. The multinational currently has over 6,000 brands with a wide range of products across more markets. Coffee, bottled water, milkshakes and other beverages, chocolate, ice cream, breakfast cereals, infant foods, performance and healthcare nutrition, seasonings , soups and sauces, frozen and refrigerated foods, confectionery and pet food are produced under the name of Nestlé. In 2009, the company’s net profit was CHF 10.43 billion, which means about EUR 8.68 billion. The most profitable products are the drinks (27%) and the most profitable geographic area is Europe.

Question 1a)
Hofstede model had demonstrated that there are national and cultural groupings that affect the behavior of societies and organizations. This model found five dimensions of culture values related to power distance, uncertainity avoidance, individualism/ collectivism, masculinity/ feminity, short term/ long term orientation.

If we explore the Swiss culture through the lens of the 5-D Model, we can get a good overview of the deep drivers of Swiss culture relative to other world cultures (Fig 1). As can be seen in the figure, individualism and masculinity have high scores (68 and 70), while uncertainty avoidance has a score of 58. The other Hofstede dimensions have lower scores: power distance 34 and long term orientation 40.

As stated in DHL GLOBAL CONNECTEDNESS INDEX ( Fig 2 and Fig 3) written by Pankaj Ghemawat with Steven Altman, global connectedness refers to the depth and breadth of a country’s integration with the rest of the world. Switzerland’s connectedness reached its peak in 2007 and steadily declined until 2010. In the top ten overall ranks in DHL Global Connectedness Index Switzerland occupies the fourth place (see appendix). Its depth score is 38 and its breadth score is 40.55.

Question 1b)

International competitiveness ultimately depends upon the linkages between a firm’s unique, idiosyncratic capabilities. According to Nestlé’s website, the geographic presence is one of the company’s competitive advantages and constituted an upstream firm specific advantage (FSA). This created very close relationships between Nestlé brands and consumers and a better understanding of local needs and trends wherever the company operates. The company’s downstream FSAs are the brand name, the market knowledge and the distribution network. Question 2a)

David Ricardo’s theory called „Comparative advantage theory” states the fact that countries should specialize in the production of those goods for which they have a comparative advantage and trade these goods for the goods for which other countries have a comparative advantage. He adds that productivity differences come from differences in factor endowments such as land, labor, capital (largely focuses on natural resources). Michael Porter proposed a theory of why countries specialize in certain economic activities...
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