Nestle's Maggi: Pricing and Repositioning a Recalled Product SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Nestle's Maggi: Pricing and Repositioning a Recalled Product
In June 2015, the Indian food regulatory body, the Food Safety and Standards Authority of India, declared NestlA?'s brand of noodles, Maggi, unsafe for human consumption. Tested samples showed excess levels of lead and added monosodium glutamate. To retain the trust of consumers, NestlA? recalled Maggi from all store shelves in the country. Management was then grappling with an improved re-positioning strategy to help NestlA? retain its considerable market share in India. The other issue that NestlA? needed to resolve was what role pricing would play in influencing consumer purchase decisions during the proposed product relaunch. Neeraj Pandey is affiliated with National Institute of Industrial Engineering. Gaganpreet Singh is affiliated with National Institute of Industrial Engineering.
Swot Analysis of "Nestle's Maggi: Pricing and Repositioning a Recalled Product" written by Neeraj Pandey, Gaganpreet Singh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nestla Maggi facing as an external strategic factors. Some of the topics covered in Nestle's Maggi: Pricing and Repositioning a Recalled Product case study are - Strategic Management Strategies, Crisis management, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Nestle's Maggi: Pricing and Repositioning a Recalled Product casestudy better are - – there is backlash against globalization, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, technology disruption,
banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Nestle's Maggi: Pricing and Repositioning a Recalled Product
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nestle's Maggi: Pricing and Repositioning a Recalled Product case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nestla Maggi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nestla Maggi operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Nestle's Maggi: Pricing and Repositioning a Recalled Product can be done for the following purposes –
1. Strategic planning using facts provided in Nestle's Maggi: Pricing and Repositioning a Recalled Product case study
2. Improving business portfolio management of Nestla Maggi
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nestla Maggi
Strengths Nestle's Maggi: Pricing and Repositioning a Recalled Product | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nestla Maggi in Nestle's Maggi: Pricing and Repositioning a Recalled Product Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Nestle's Maggi: Pricing and Repositioning a Recalled Product Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Analytics focus
– Nestla Maggi is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Neeraj Pandey, Gaganpreet Singh can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Nestla Maggi in the sector have low bargaining power. Nestle's Maggi: Pricing and Repositioning a Recalled Product has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nestla Maggi to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Nestla Maggi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nestla Maggi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Nestla Maggi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Nestle's Maggi: Pricing and Repositioning a Recalled Product Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Nestla Maggi has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Nestle's Maggi: Pricing and Repositioning a Recalled Product HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Nestla Maggi is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Nestla Maggi has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Nestla Maggi has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Nestle's Maggi: Pricing and Repositioning a Recalled Product - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Nestla Maggi is one of the leading recruiters in the industry. Managers in the Nestle's Maggi: Pricing and Repositioning a Recalled Product are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Nestla Maggi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nestla Maggi has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Nestla Maggi is present in almost all the verticals within the industry. This has provided firm in Nestle's Maggi: Pricing and Repositioning a Recalled Product case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Nestle's Maggi: Pricing and Repositioning a Recalled Product | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nestle's Maggi: Pricing and Repositioning a Recalled Product are -
Interest costs
– Compare to the competition, Nestla Maggi has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nestla Maggi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Nestle's Maggi: Pricing and Repositioning a Recalled Product can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Nestla Maggi has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Nestle's Maggi: Pricing and Repositioning a Recalled Product that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Nestle's Maggi: Pricing and Repositioning a Recalled Product can leverage the sales team experience to cultivate customer relationships as Nestla Maggi is planning to shift buying processes online.
Need for greater diversity
– Nestla Maggi has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Increasing silos among functional specialists
– The organizational structure of Nestla Maggi is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Nestla Maggi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nestla Maggi to focus more on services rather than just following the product oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Nestla Maggi supply chain. Even after few cautionary changes mentioned in the HBR case study - Nestle's Maggi: Pricing and Repositioning a Recalled Product, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nestla Maggi vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Nestla Maggi has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Nestla Maggi even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Workers concerns about automation
– As automation is fast increasing in the segment, Nestla Maggi needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Nestla Maggi has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Low market penetration in new markets
– Outside its home market of Nestla Maggi, firm in the HBR case study Nestle's Maggi: Pricing and Repositioning a Recalled Product needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Nestle's Maggi: Pricing and Repositioning a Recalled Product | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Nestle's Maggi: Pricing and Repositioning a Recalled Product are -
Developing new processes and practices
– Nestla Maggi can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Better consumer reach
– The expansion of the 5G network will help Nestla Maggi to increase its market reach. Nestla Maggi will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Manufacturing automation
– Nestla Maggi can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nestla Maggi to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Nestla Maggi to hire the very best people irrespective of their geographical location.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Nestla Maggi to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nestla Maggi can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Nestle's Maggi: Pricing and Repositioning a Recalled Product, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Nestla Maggi has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Creating value in data economy
– The success of analytics program of Nestla Maggi has opened avenues for new revenue streams for the organization in the industry. This can help Nestla Maggi to build a more holistic ecosystem as suggested in the Nestle's Maggi: Pricing and Repositioning a Recalled Product case study. Nestla Maggi can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nestla Maggi can use these opportunities to build new business models that can help the communities that Nestla Maggi operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nestla Maggi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Nestla Maggi to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Nestla Maggi can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Nestla Maggi can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Threats Nestle's Maggi: Pricing and Repositioning a Recalled Product External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nestle's Maggi: Pricing and Repositioning a Recalled Product are -
Regulatory challenges
– Nestla Maggi needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Environmental challenges
– Nestla Maggi needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Nestla Maggi can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Technology acceleration in Forth Industrial Revolution
– Nestla Maggi has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Nestla Maggi needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Nestla Maggi demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nestla Maggi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Nestla Maggi.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nestla Maggi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Nestla Maggi can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Nestla Maggi needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Nestle's Maggi: Pricing and Repositioning a Recalled Product, Nestla Maggi may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Nestla Maggi in the Sales & Marketing sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Nestla Maggi business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nestla Maggi in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of Nestle's Maggi: Pricing and Repositioning a Recalled Product Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Nestle's Maggi: Pricing and Repositioning a Recalled Product needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Nestle's Maggi: Pricing and Repositioning a Recalled Product is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Nestle's Maggi: Pricing and Repositioning a Recalled Product is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Nestle's Maggi: Pricing and Repositioning a Recalled Product is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Nestla Maggi needs to make to build a sustainable competitive advantage.