1.3. Product markets

Nestle is involved in highly competitive market. As its competitors such companies as Danone Group, Kraft Foods, ConAgra Foods, H.J. Heinz Company, Sara Lee Corporation, Hershey Foods Corporation, The Coca-Cola Company, Kellogg Company, PepsiCo and Perfetti Van Melle and many others, including local food and beverages providers. Although none of these companies compete with Nestle in every segment, altogether they, other international companies, national and players creates a challenging situation for Nestle. Consumers can easily switch to other products, products of competitors are similar and it is very hard to differentiate.⁸ The industry is quite old and doesn’t require sophisticated technologies (but it doesn’t mean that it cannot been innovative), so there is no point in searching competitive advantage in markets and products – stable advantage can be gained only in marketing, system and operations. That’s why these companies invest so much in marketing, customer relations and development of systems. Also, products of the company directly touch human’s lives, so here the issue of product quality and customers’ trust is crucial.

1.4. Geographic markets

Nestle considers to be global necessary. Geographic presence is recognized as a competitive advantage. Since the beginning Nestle was looking forward to penetrating markets all over the world. By now the products of the company are sold in 5 continents, in 130 countries, in almost every country in the world. The company can be a paragon for others as it uses customer focus approach. It has created a close relationship between customer and brands. The management tries to match the local needs and trends as much as possible, even if it is a crucial market to operate in. Nestle has been doing a lot to create a long-term relationship with regional suppliers, to hire right people in every place to be sure that it reflects the mission and values of the company worldwide. In Nestle’s worldwide network of 17 R&D and testing centres around 3500 employees from 50 countries work. The major centre is situated in Switzerland from where the fundamental trends start. It includes hundreds professional areas: raw materials, ingredients, life science and nutritional science.

The unique approach is used by Nestle as its aim is to be local in every of 130 counties. In most o them the Nestles’ products appeared more than 100 years ago. It means that the markets of those countries are well known by the company. Local Nestle units work within a global framework based on the Nestlé principle: “centralise what you must, but decentralise what you can“. It means that the company tries to benefit from global and local approaches at the same time.

Actually the company consists of smaller local units all over the world. The sum of each local company sales is Nestle’s global sales. In average in one factory 270 employees work, in one country – 3000. “Investments have to be good for the country as well as good for the company.“ This has been a fundamental Nestlé belief since the start of the company. This principle is based on understanding the better long-term relationships with the country, the higher long term value for shareholders is. The company tries to influence local development. Nestle has around 400 community projects running in 90 countries. Many of these support the UN Millennium Development Goals aimed at addressing the most pressing needs of people, particularly in developing countries. They focus on poverty reduction, education, health for women and children, and the reduction of pandemics like HIV/AIDS and malaria. Donations are also directed at humanitarian relief, especially following natural disasters. The purposes of the projects are always different. It can be funding school or help with providing drinking water.⁹