Case Study Description of Nestle Alimentana S.A. -- Infant Formula (Abridged)
The new vice president of infant and dietetic products of Nestle Alimentana S.A. has to make recommendations on the company's marketing programs for its infant formulas in developing countries. The U.S. subsidiary is currently the target of a consumer boycott because of the company's current and historical marketing programs. Introduces the question of using Western marketing techniques in the Third World, the problems of distributor control, and potential product misuse because of consumer poverty and ignorance. Provides a summary of the industry's evolution and a chronology of the controversy. Recommended: "Family Planning, Infant Mortality and Malnutrition," by E. Haubold, Swiss Review of World Affairs, March 1979.
Swot Analysis of "Nestle Alimentana S.A. -- Infant Formula (Abridged)" written by James E. Austin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Infant Alimentana facing as an external strategic factors. Some of the topics covered in Nestle Alimentana S.A. -- Infant Formula (Abridged) case study are - Strategic Management Strategies, Emerging markets, Marketing, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the Nestle Alimentana S.A. -- Infant Formula (Abridged) casestudy better are - – increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, supply chains are disrupted by pandemic ,
there is increasing trade war between United States & China, increasing energy prices, etc
Introduction to SWOT Analysis of Nestle Alimentana S.A. -- Infant Formula (Abridged)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nestle Alimentana S.A. -- Infant Formula (Abridged) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Infant Alimentana, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Infant Alimentana 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 Alimentana S.A. -- Infant Formula (Abridged) can be done for the following purposes –
1. Strategic planning using facts provided in Nestle Alimentana S.A. -- Infant Formula (Abridged) case study
2. Improving business portfolio management of Infant Alimentana
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Infant Alimentana
Strengths Nestle Alimentana S.A. -- Infant Formula (Abridged) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Infant Alimentana in Nestle Alimentana S.A. -- Infant Formula (Abridged) Harvard Business Review case study are -
Analytics focus
– Infant Alimentana 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 James E. Austin 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.
Learning organization
- Infant Alimentana is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Infant Alimentana is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nestle Alimentana S.A. -- Infant Formula (Abridged) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Global Business industry
– Nestle Alimentana S.A. -- Infant Formula (Abridged) firm has clearly differentiated products in the market place. This has enabled Infant Alimentana to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Infant Alimentana to invest into research and development (R&D) and innovation.
High brand equity
– Infant Alimentana has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Infant Alimentana to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Infant Alimentana 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 Alimentana S.A. -- Infant Formula (Abridged) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Infant Alimentana has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Infant Alimentana has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Infant Alimentana has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Nestle Alimentana S.A. -- Infant Formula (Abridged) 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.
Strong track record of project management
– Infant Alimentana is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Global Business field
– Infant Alimentana is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Infant Alimentana in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Infant Alimentana 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 Alimentana S.A. -- Infant Formula (Abridged) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Infant Alimentana 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.
Superior customer experience
– The customer experience strategy of Infant Alimentana in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Nestle Alimentana S.A. -- Infant Formula (Abridged) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nestle Alimentana S.A. -- Infant Formula (Abridged) are -
Workers concerns about automation
– As automation is fast increasing in the segment, Infant Alimentana 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.
Products dominated business model
– Even though Infant Alimentana has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Nestle Alimentana S.A. -- Infant Formula (Abridged) should strive to include more intangible value offerings along with its core products and services.
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 Infant Alimentana supply chain. Even after few cautionary changes mentioned in the HBR case study - Nestle Alimentana S.A. -- Infant Formula (Abridged), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Infant Alimentana vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Infant Alimentana 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.
High bargaining power of channel partners
– Because of the regulatory requirements, James E. Austin suggests that, Infant Alimentana is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High cash cycle compare to competitors
Infant Alimentana has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Infant Alimentana, firm in the HBR case study Nestle Alimentana S.A. -- Infant Formula (Abridged) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Nestle Alimentana S.A. -- Infant Formula (Abridged), is just above the industry average. Infant Alimentana needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Nestle Alimentana S.A. -- Infant Formula (Abridged), in the dynamic environment Infant Alimentana has struggled to respond to the nimble upstart competition. Infant Alimentana has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Infant Alimentana is dominated by functional specialists. It is not different from other players in the Global Business segment. Infant Alimentana needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Infant Alimentana to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Nestle Alimentana S.A. -- Infant Formula (Abridged), it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Nestle Alimentana S.A. -- Infant Formula (Abridged) | 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 Alimentana S.A. -- Infant Formula (Abridged) are -
Manufacturing automation
– Infant Alimentana can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Infant Alimentana is facing challenges because of the dominance of functional experts in the organization. Nestle Alimentana S.A. -- Infant Formula (Abridged) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Infant Alimentana can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nestle Alimentana S.A. -- Infant Formula (Abridged) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Infant Alimentana in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Infant Alimentana in the consumer business. Now Infant Alimentana can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Infant Alimentana can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Infant Alimentana 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 Infant Alimentana to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Infant Alimentana can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Infant Alimentana can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Infant Alimentana can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Loyalty marketing
– Infant Alimentana 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.
Developing new processes and practices
– Infant Alimentana can develop new processes and procedures in Global Business 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Infant Alimentana can use these opportunities to build new business models that can help the communities that Infant Alimentana operates in. Secondly it can use opportunities from government spending in Global Business sector.
Building a culture of innovation
– managers at Infant Alimentana 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 Global Business segment.
Threats Nestle Alimentana S.A. -- Infant Formula (Abridged) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nestle Alimentana S.A. -- Infant Formula (Abridged) are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth 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 Infant Alimentana business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Infant Alimentana can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Nestle Alimentana S.A. -- Infant Formula (Abridged) .
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Infant Alimentana can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Infant Alimentana in the Global Business sector and impact the bottomline of the organization.
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. Infant Alimentana needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Consumer confidence and its impact on Infant Alimentana 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 Infant Alimentana with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Infant Alimentana high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Infant Alimentana 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 Global Business industry regulations.
Increasing wage structure of Infant Alimentana
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Infant Alimentana.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Infant Alimentana will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Nestle Alimentana S.A. -- Infant Formula (Abridged) 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 Alimentana S.A. -- Infant Formula (Abridged) 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 Alimentana S.A. -- Infant Formula (Abridged) 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 Alimentana S.A. -- Infant Formula (Abridged) 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 Alimentana S.A. -- Infant Formula (Abridged) 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 Infant Alimentana needs to make to build a sustainable competitive advantage.
