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MGT812 Strategic Intelligence: Analyse the Issues of Nestle

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This report requires you to focus on critical analysis of a specific business issue, closely linked to various aspects of Strategic Intelligence.

Choose your own Organisation & Strategic Issues facing it (discuss with me first to ensure suitability).

Answer:

Introduction

The company makes strategies of achieving the organisational objectives but it faces many issues which are called strategic issues. In this report, Nestle has been taken into consideration to analyse the strategic issues faced by the company.  Nestle is a food and beverage company; it is the largest food and drinks Company in the world in terms of revenue and other metrics. Nestle operates in many products such as coffee, tea, Maggie, medical food, baby food and many others. The company has a high demand for its product that is why its annual sales are approximately $ 1.1 billion in the U.S (Nestle, 2018).

In this report, the strategic challenges faced by Nestle in India will be discussed. After that, the discussion will be made on the challenges handle by the senior management. Strategic tools have been taken into consideration to analyse the strategic issues of the company.  To resolve the issues the recommendations will be provided at the end of the report.

Strategic Issues face by Nestle in India

Nestle operates in India with the objective of earning profit by satisfying the customer demand and needs. Nestle sells many products in India such as Coffee, Maggie, Tea, Chocolates and many others. Maggi was the most popular noodles in India; the brand had a dominant position in the Indian market. There are many states in India who agreed with the statement that Maggi contained monosodium glutamate as well as lead above the limit. It is observed that Nestle failed to maintain its quality of product that is why the government banned the product in many parts of the country. The result of this issue was that the government gave orders to a ban the sale of Maggi. Bad quality of food is an ethical issue which is faced by the company after this case (Balasubramanian, Gopal, & Reefana, 2016). It is considered as an ethical issue because it is directly related to health of the consumers. It was found that the product contains chemicals above the required limits which was causing sever health issues. It is the ethical responsibility of the company to deliver good quality of food while following all the regulations of food and safety.

Government Ban


The company faced many issues due to the bad quality of the product in which the main problem the company faced was government ban. Government ordered to ban the product because it was not safe for the people. It was found that the share prices of Nestle gone down drastically after these issues of Maggie (Zhang, 2015). Maggi went zero in a month in the market from top which was a critical phase for the company after ban on Maggi.

Brand image

It has been seen that the brand image of Maggi went down after banning the product. Bad quality of product destroys the image of the company and the trust of people breaks down towards the Nestle safe product. Trust plays a major factor at the time when consumer buys a particular product. Harmful chemical lead and MSG was found in Maggi which has shaken the consumers’ confidence for consumption of Nestle products. Sale of Maggi was falling down with the rate of 60% (Anselmsson, Vestman Bondesson, & Johansson, 2014). It not only affected the brand image of the Maggie as a product but also the brand image of the company got affected and sales of other product also went down due to this.

Negative Publicity

After the lab testing, Lead and MSG was found in Maggi which is not safe for the consumption; this statement affected the brand image of the company. There are many rumours spread after banning the product that developed the negative image of the company. It can be measured in terms of profit; Nestle earned INR1185 crore in India in 2014 but after banning the product the company faced loss with the rate of 60.1% (Thomason, 2018). The negative marketing of the company can also be measured in the context of the share price of the company. The share prices fell down with the rate of 13.5% within the 15 days of ban of the product (Kleppinger, & Cain, 2015).

Handling the Challenges by senior management 

There are different ways that could have been used by the top management in order to handle the situation. Some of the techniques are discussed below:

Build relations

The senior management of the company could handle the situation by building a relationship with the government. Government raises the voice against the company after observing the bad quality of food delivered by the company. Thus, the senior management of the company could maintain the relationship with the government by assuring that the quality will be improved and it will be manufactured as per the government regulations only. This could help the government to help the company to allow the product again in the market (Adami, & Hållander, 2015).

Product Modification

It has been seen that the senior management has the responsibility to handle the situation faced by the company by taking a decision of change in the product’s nutritional values. The company could modify the product with the new qualities. It could modify the product with healthy nutrients. To improve the quality of the product the managers could measure the quality of the product and regular inspections the performance of the product (Mukhopadhyay, & Ye, 2016). A testing of the quality of the product should be cone before launching it into the market.

Positive Branding

It is necessary to maintain the positioning of the company after receiving the negative reviews of the product. The senior management could maintain the positioning by launching a healthy product in the market with the high quality. Health conscious consumers get attracted towards the product and high quality of product satisfies the consumers which results positive feedback from the consumers (Gensler, Völckner, Egger, Fischbach, & Schoder, 2015).

Strategic Tools to analyse the issues

It is necessary for the company to analyse the issues as soon as possible because it will help the company in addressing the issues faster. There are many tools to analyse the strategic issues of the company such as SWOT Analysis, PESTLE Analysis, Porter’s five forces framework and others. In order to analyse the strategic issues faced by Nestle below strategic tools would be better:

SWOT Analysis

SWOT Analysis is a tool which helps the company to identify the internal issues of the company. This tool is also used to evaluate the product, brand and outsource of a business function. The company can use this tool to evaluate the particular supply source, a business process, a product market or to evaluate the product quality. The company can use this tool to identify the strength and weakness which helps to modify the product and improve the brand image. The company identifies the opportunity to grab the market share in the market. This tool identifies the threat which helps the company to reduce this threat at the initial stage (Bull, et al., 2016). With the help of SWOT analysis NESTLE can analyse the Strength of Maggie on which it can focus to build a strong relationship with the consumers. SWOT analysis will also be helpful in knowing the threats such as strict rules related to food quality so that the company can further handle it effectively.

PESTLE Analysis

This model is used to analyse the external environment which helps the company to identify the external issues. NESTLE can analyse its political factor which affects the company’s growth. The company also uses this tool to evaluate the technology which is used to manufacture the product or to maintain the quality of the product. It helps the company to identify the position in the market to analyse the social factor of the company. The economic and environmental factor of PESTLE analysis helps the company to identify the issues which affect the product sales. If economic and environmental conditions in India are better, then this will be beneficial for NESTLE (Afonina, 2015).

Role of Analyst

The company has to reduce the issues to improve positioning in the market in order to maintain the marketing issues which are faced by Nestle. Strategies help to reduce the issues and help the product to come back to its position. Therefore, there are certain steps which the strategist takes to reduce the issues and that are described below:

Making Marketing strategies

Strategist takes the step to bring the positive image in the market and in the mind of the customer.  The analyst can suggest starting marketing campaigns in which the customers come to know about the changes which are done by the company to overcome the issues. Marketing Campaign helps the company to represent its motive and product in the front of the customer that helps to bring the positive image of the company. This strategy helps the company to take direct feedback from a customer which is beneficial for the company to know about the point of view of the customer for the company. Through the marketing campaigns, the company represents the changes to reduce the negative feedback from the customer (Wensley, 2016).

To bring the positive image in the market; the company has to promote the product through advertisement. The company can upload a short clip on its websites about the processing of its product manufacturing. The short clip should contain the whole detail about the company and the quality of its product; the short clip should be attractive which can attract the customer towards the product of the company. This strategy helps the company to boost the sale of its product. There are many other sources to advertise the product such as showing advertisement on television, radio and social media (Balaji, Londhe, & Shukla, 2016). Advertisement reveals the company’s social responsibilities towards the economy which builds the trust of the customer towards the product of the company. This step of strategist helps the company to promote the product which helps in boosting the sale or to build the customer trust towards the company services.

Improving the communication

It has been seen that effective communication is beneficial for the company to attain the business objectives. Effective communication in the company helps to improve the performance of the employees which directly affect the quality of the product. The strategist should effectively communicate with the employees about the reasons for its bad quality of product and the problems which are faced by the consumers. The main purpose of effective communication plan is to communicate for the quality of food. The employees can also present their problem in front of top management which is faced by them at the time of manufacturing such as lack of facilities or resources (Dhanesh, & Sriramesh, 2018).  

It has been seen that the company will improve the product when it identifies the issues which are faced by the consumers. The target audience of this strategy is customer, employees, government as well as food authority. Strategist uses the different channel to communicate with the customer or to identify the issues which are faced by the customer. It is observed that social media is the best way to communicate with the customer. It is observed that the company has to communicate with the government in an appropriate manner to handle the situation. Strategist could communicate the problem with the government in an appropriate manner also with the food corporation in the same manner (Sasmita, & Mohd Suki, 2015).

Quality management

It has been seen that the objective achieved is the result of activities done in an efficient manner. The strategist has to prepare and adopt the quality policy and implement the quality planning. Best quality is a key to achieve long-term success in the market. This policy helps to ensure the best quality of food; this policy includes the stakeholders to improve the product quality. All the activities that are involved in the quality policy will ensure the quality of the product is maintained which makes the customer happy. This strategy has to be adapted by the strategists to achieve the success as well as to bring the positive brand image in the market. Bad quality is the major issue which is faced by the company that is why it is the responsibility of the strategist to adopt the quality policy to ensure the quality of the product (Jeuring& Haartsen, 2017).

Recommendations

Product diversification

From the above analysis, it has been recommended that the company has to add some quality parameters to the product. Diversification may be achieved by entering into the additional market or by pricing strategy. NESTLE can add some additional healthy noodles in the same product range for diversification. The company has to improve or change by adding new qualities to the product. With the customer feedback, the company can easily change the product as per the demand of the customer towards the product. In this process, the company has to develop marketing activities to promote the product with a positive image (Greenstone, 2017).

Total Quality Management

It is a system which is based on the principle that every employee of the company has to maintain the high standard of work in every stage of the company’s process.  It is the responsibility of the senior management of the company to evaluate the performance of an employee so that the senior management can improve the performance of an employee at the initial stages. Evaluation helps to identify the obstacles which come in the way of improving the quality of the product. To maintain the standard of work of an employee, the senior manager builds the atmosphere which improves the ability of an employee and motivates them towards the work.

Branding

After founding the lead and MGS; the company’s brand image went down in the market. To bring the positive brand image; the company has to improve the quality of the product which makes the customer happy. The company can launch new healthy products or take direct feedback with the customer. Negative feedback helps the company to make the changes in the product as per the demand of the customer. Consumer satisfaction is also a reasonable way to improve the brand image in the market. Positive feedback encourages the company to improve the quality of the product or it also improves the brand image in the market (Cheng, Green, Conradie, Konishi, & Romi, 2014).

Conclusion

From the above analysis, it has been concluded that the company has to improve the quality of food. Nestle faced the issues due to the bad quality of food such as government ban, negative marketing, and negative brand image. To handle these issues the company has to maintain the relations with the government which is possible by implementing the proper communication channel. Government banned the Maggi in the market; to resolve this issues it has to build a strong relationship with the government. The company has to launch the new healthy products to bring the positive brand image in the market. Negative marketing affects the profit of the company. To improve the image the company has to advertise the product with the different communication channels. Good quality improves the brand image of the company in the market which helps to earn the high profit and grab the high market share in the market. To improve the quality it is essential to maintain the quantity and quality of product with the effective management. Quality of food is the key to long-term success in the market, it is necessary for the company to change the product with the new quality nutrients and represent these qualities in front of the customer so that the trust of the customer builds towards the product of the company and the brand image improves.  

References

Adami, R., & Hållander, M. (2015). Testimony and narrative as a political relation: The question of ethical judgment in education. Journal of Philosophy of Education, 49(1), 1-13.

Afonina, A. (2015). Strategic management tools and techniques and organizational performance: findings from the Czech Republic. Journal of Competitiveness, 7(3).

Anselmsson, J., Vestman Bondesson, N., & Johansson, U. (2014). Brand image and customers' willingness to pay a price premium for food brands. Journal of Product & Brand Management, 23(2), 90-102.

Balaji, D., Londhe, B. R., & Shukla, R. P. (2016). Successful Emotional Branding Campaigns on Television in India: An Exploration. Indian Journal of Science and Technology, 9(15).

Balasubramanian, P., Gopal, A. V., & Reefana, S. (2016). A Case Study on Misleading Celebrity Endorsements and its Impact on Consumer Behavior. Bonfring International Journal of Industrial Engineering and Management Science, 6(3), 93-95.

Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C., & Carter-Silk, E. (2016). Strengths, Weaknesses, Opportunities and Threats: A SWOT analysis of the ecosystem services framework. Ecosystem Services, 17, 99-111.

Cheng, M., Green, W., Conradie, P., Konishi, N., & Romi, A. (2014). The international integrated reporting framework: key issues and future research opportunities. Journal of International Financial Management & Accounting, 25(1), 90-119.

Dhanesh, G. S., & Sriramesh, K. (2018). Culture and Crisis Communication: Nestle India's Maggi Noodles Case. Journal of International Management, 24(3), 204-214.

Gensler, S., Völckner, F., Egger, M., Fischbach, K., & Schoder, D. (2015). Listen to your customers: Insights into brand image using online consumer-generated product reviews. International Journal of Electronic Commerce, 20(1), 112-141.

Greenstone, M. (2017). The Continuing Impact of Sherwin Rosen’s “Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition”. Journal of Political Economy, 125(6), 1891-1902.

Jeuring, J. H. G., & Haartsen, T. (2017). Destination branding by residents: The role of perceived responsibility in positive and negative word-of-mouth. Tourism Planning & Development, 14(2), 240-259.

Kleppinger, C. A., & Cain, J. (2015). Personal digital branding as a professional asset in the digital age. American journal of pharmaceutical education, 79(6), 79.

Mukhopadhyay, S. K., & Ye, G. (2016). Effect of CSR on product differentiation in the presence of cost advantage. Economic and Social Development: Book of Proceedings, 289.

Nestle. (2018). About us.  Retrieved from: https://www.nestle.in/aboutus

Sasmita, J., & Mohd Suki, N. (2015). Young consumers’ insights on brand equity: Effects of brand association, brand loyalty, brand awareness, and brand image. International Journal of Retail & Distribution Management, 43(3), 276-292.

Thomason, R. (2018). Case Analysis I: Challenges MNCs Face in Emerging Markets: The Nestlé Experience. Vision, 22(2), 232-234.

Wensley, R. (2016). The basics of marketing strategy. In The marketing book (pp. 75-107). Routledge.

Zhang, Y. (2015). The impact of brand image on consumer behavior: a literature review. Open journal of business and management, 3(1).

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