Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition
Nestle is the largest milk firm in the world. For over a century, it has developed a milk model procurement program that improved the well-being of the small-scale farmer and the ultimate consumer. Can it partner with other firms and institutions to make even greater use of this model and can it do so in a manner that is consistent with host country goals and equally useful to the long-term viability of Nestle?
Swot Analysis of "Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition" written by Ray A. Goldberg, Kerry Herman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Milk Nestle facing as an external strategic factors. Some of the topics covered in Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition case study are - Strategic Management Strategies, Economic development, Globalization, Growth strategy, Joint ventures, Social enterprise, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition casestudy better are - – increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, there is backlash against globalization, supply chains are disrupted by pandemic ,
increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Milk Nestle, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Milk Nestle 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition can be done for the following purposes –
1. Strategic planning using facts provided in Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition case study
2. Improving business portfolio management of Milk Nestle
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 Milk Nestle
Strengths Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Milk Nestle in Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Milk Nestle are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Global Business field
– Milk Nestle 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 Milk Nestle in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Milk Nestle 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 Ray A. Goldberg, Kerry Herman 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.
Training and development
– Milk Nestle has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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.
High brand equity
– Milk Nestle has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Milk Nestle to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Milk Nestle in the sector have low bargaining power. Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Milk Nestle to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Milk Nestle has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Milk Nestle 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.
Learning organization
- Milk Nestle 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 Milk Nestle is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Milk Nestle is present in almost all the verticals within the industry. This has provided firm in Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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.
Effective Research and Development (R&D)
– Milk Nestle 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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.
Superior customer experience
– The customer experience strategy of Milk Nestle in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition are -
Lack of clear differentiation of Milk Nestle products
– To increase the profitability and margins on the products, Milk Nestle needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Milk Nestle 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition, it seems that the employees of Milk Nestle 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.
Aligning sales with marketing
– It come across in the case study Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition can leverage the sales team experience to cultivate customer relationships as Milk Nestle is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Milk Nestle is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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 Milk Nestle 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ray A. Goldberg, Kerry Herman suggests that, Milk Nestle 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 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 Milk Nestle supply chain. Even after few cautionary changes mentioned in the HBR case study - Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Milk Nestle vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Milk Nestle 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition, is just above the industry average. Milk Nestle 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.
No frontier risks strategy
– After analyzing the HBR case study Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition, 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's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition | 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition are -
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. Milk Nestle can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Milk Nestle can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Milk Nestle can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Milk Nestle 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.
Better consumer reach
– The expansion of the 5G network will help Milk Nestle to increase its market reach. Milk Nestle 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Milk Nestle is facing challenges because of the dominance of functional experts in the organization. Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Milk Nestle 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 Milk Nestle to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Milk Nestle 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Milk Nestle 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Milk Nestle 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.
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. Milk Nestle 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. Milk Nestle 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.
Manufacturing automation
– Milk Nestle 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.
Developing new processes and practices
– Milk Nestle 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.
Threats Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition are -
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. Milk Nestle 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.
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 Milk Nestle.
Shortening product life cycle
– it is one of the major threat that Milk Nestle is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Milk Nestle 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. Milk Nestle can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Increasing wage structure of Milk Nestle
– 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 Milk Nestle.
Regulatory challenges
– Milk Nestle 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.
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.
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 Milk Nestle in the Global Business sector and impact the bottomline of the organization.
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. Milk Nestle 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 Milk Nestle business can come under increasing regulations regarding data privacy, data security, etc.
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. Milk Nestle needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Milk Nestle 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.
Technology acceleration in Forth Industrial Revolution
– Milk Nestle has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Milk Nestle 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.
Weighted SWOT Analysis of Nestle's Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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 Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition 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 Milk Nestle needs to make to build a sustainable competitive advantage.
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