Real-world companies Essay Example | Topics and Well Written Essays - 1500 words

Real-world companies - Essay Example Geographical barriers trade and tariff rules are great threat for it. Maintaining the brand image is also a big threat for Nestle (Nash, 2000). PEST Analysis Political: Political factors can mold the business in a great extent. Due to which Nestle may bear different taxes which increase the operational cost of Nestle. Economical: Economical factors like inflation have a great encroachment over the Nestle business. Socia-cultural: People have more awareness about brand due to cultural factors so it is costly to maintain the social symbol. Technology: Rapid change in technology is a great threat for Nestle to maintain its innovation and enhance the R&D operations (Peter and Olson, 2004). Porter’s 5 forces Model The threat of substitute: Substitute low price products are the biggest threat for the company while Nestle is providing its customers with quality products at a reasonable price. The threat of new entry: Low entry barriers are there. Entry of any new firm having same sta ndard products can be a great threat for Nestle. Competitive rivalry: There is high competitive rivalry because Nestle is competing with other organizations which offer the same products at low cost. The bargaining power of supplier: Due Supplier of Nestle have increased bargaining power. The bargaining power of buyers: New entrants and their offers have increased the bargaining power of buyers (Nash, 2000). Competitive advantages of Nestle: Nestle Company started off as the single idea from Henri Nestle who was a pharmacist. He formulated a mil formula for infants who had less tolerance for mother milk in 1866. This was the breakthrough for him as the entire Europe came up with the largest demand for this formula. Since then Nestle has been increasing the size the company and expanding in almost all countries. Not only business expansion but Nestle also has expanded the product line by introducing variety in every product they offer (Etzel, et. al., 2004). By using the innovation a nd renovation in the product line, Nestle has been able to gain competitive advantage in the global market. Nestle’s trademark has become a barrier to many other companies with people considering its products as a benchmark to follow. Here are some of the competitive advantages that Nestle is enjoying at the moment: Nestle is leading the overall global market position. It is either number one or two brands in most of the countries and regions globally. The larger scope of Nestle’s extraordinary business is providing significant and sustainable economies of scale in marketing, manufacturing and administration processes of the business. Nestle has developed a wide research and development department with capabilities and expertise that allow the company to lead in the innovative products which ultimately leads to flexibility in portfolio maximization and profitability (Etzel, et. al., 2004). Business strategies used by Nestle: Innovation: Innovation is one of the key bus iness strategies that is bringing a sustained competitive advantage to Nestle. A great deal of applied and pure science research is part of R&D centers of Nestle in order to bring innovation but consumer benefit remains at the core of the business. Whatever designed or produced is customer oriented. The Nestle’s innovative strategy focuses on providing: Health and nutrition Quality and safety of every Nestle products