Nestle Global Strategy

Key learning’s from Nestle Case Is there anything like the “first mover advantage”? This phrase has been discussed zillion times across boardrooms all over the world, but nobody knows what the real answer is. There have been times when the person entering first was able to create sort of monopoly. Whereas, in other cases, companies entering second had a bigger advantage. I am not sure which one is better but one thing I am pretty confident about is that thorough knowledge and preparation can nullify the importance of this phrase.

As we saw in Nestle’s case that the same strategy paid well when the company had done thorough research and brainstorming before putting its foot forward.

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Following are the key learning’s from this case- 1). Value and strategy for Contadina pasta: For entering the pasta market, company acquired Lambert’s to make a quick fire entry. It provided it with a product, which has been tested and tried over the years.

And then the different strategies of changed name – to make it sound authentic, distribution network – use of brokers for quick entry, bundling – for better quality control and Bases 2 – for thorough market survey helped the company beat its competitors in every way. The thorough analysis helped the company give better results than even its own expectations. 2).

Move into new uncharted category – Pizza : After the overwhelming success of pastas, company moved into an entirely new domain.

This frozen pizza segment was not tried by anybody before, not even by the smaller companies. But riding on the success of Pasta, management made some quick decisions to make sure that they again enter the market before Kraft. However, while making quick decisions, management didn’t go at length to research everything, which cost Nestle heavily. 3).

Improper positioning : The pizza was improperly positioned between the fresh pizza and frozen pizza market. Although it was not a lot better than frozen pizza but still it was highly priced .

On the other hand it cost the same as fresh pizza but was nowhere close in quality. This improper positioning hurt the products sale in a big way. Moreover, company’s strategy of milking the pasta brand loyalty didn’t worked well as that segment was not growing as close to what the company had projected. 4).

Un-methodical analysis: The quick fire decisions taken by management cost the company dearly. The management would have done a better job by thoroughly testing the segment for a longer period of time, than it did for pasta, which was already being accepted by the market.

The management came to realize this thing after the subsequent failures even after repeatedly trying all sorts of incentive and schemes to promote the product. In the final survey, which was launched to reason the failure, management realized that the assumption it has made initially were nowhere close to the actual results shown by the survey. This is an interesting and thorough case study describing the process that managements go through while making big decisions. And it gives concrete lessons on the pitfalls involved with the quick fire decision making.