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 - – talent flight as more people leaving formal jobs, geopolitical disruptions, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , technology disruption, increasing transportation and logistics costs,
customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
Low bargaining power of suppliers
– Suppliers of Infant Alimentana in the sector have low bargaining power. Nestle Alimentana S.A. -- Infant Formula (Abridged) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Infant Alimentana to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
Operational resilience
– The operational resilience strategy in the Nestle Alimentana S.A. -- Infant Formula (Abridged) 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.
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.
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.
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.
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.
Innovation driven organization
– Infant Alimentana is one of the most innovative firm in sector. Manager in Nestle Alimentana S.A. -- Infant Formula (Abridged) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Infant Alimentana digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Infant Alimentana 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.
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.
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 -
Slow to strategic competitive environment developments
– As Nestle Alimentana S.A. -- Infant Formula (Abridged) HBR case study mentions - Infant Alimentana takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study Nestle Alimentana S.A. -- Infant Formula (Abridged) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Infant Alimentana 's lucrative customers.
Need for greater diversity
– Infant Alimentana 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 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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Nestle Alimentana S.A. -- Infant Formula (Abridged), it seems that the employees of Infant Alimentana don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Infant Alimentana 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.
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 -
Creating value in data economy
– The success of analytics program of Infant Alimentana has opened avenues for new revenue streams for the organization in the industry. This can help Infant Alimentana to build a more holistic ecosystem as suggested in the Nestle Alimentana S.A. -- Infant Formula (Abridged) case study. Infant Alimentana can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Infant Alimentana can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Infant Alimentana to increase its market reach. Infant Alimentana 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Infant Alimentana can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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.
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.
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.
Using analytics as competitive advantage
– Infant Alimentana has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Nestle Alimentana S.A. -- Infant Formula (Abridged) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Infant Alimentana to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Infant Alimentana 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 Alimentana S.A. -- Infant Formula (Abridged), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Infant Alimentana 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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Infant Alimentana has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Infant Alimentana needs to keep up with the evolution of technology in the Global Business 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Infant Alimentana in the Global Business industry. The Global Business 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.
Shortening product life cycle
– it is one of the major threat that Infant Alimentana is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Environmental challenges
– Infant Alimentana 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. Infant Alimentana can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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 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.
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.
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.
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.
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.