This paper is a proposal which will cover and represent, to the principals of Nestlé, an aggressive new initiative. A new product initiative which will show great potential in assisting Nestlé in achieving its strategic goals via substantial market share gains; increasing profits; and securing a very firm footprint into the health and nutrition markets (nutraceuticals market); as well as, becoming “the leader in this segment by 2015”( Nestlé, 2011). We will perform a GAP analysis; review stakeholders and feedback loops; lay out multiple scenario analysis; identify barriers and opportunities present and foreseeable; and discuss sustainable measures to ensure Nestlé continues to remain at the forefront in this market segment.
Capture fantastic growth in market-share! Overpower your competitors with a new bold initiative! Increase the competitive advantage Nestlé enjoys so much through a superior and untapped product line. Ultimately, by following our proposal, Nestlé will deepen its entrenchment into sustainability and brighten its core makeup by offering the new “Platinum Line”. This new initiative will highlight and transform public perceptions into acknowledging that Nestlé is not just a coffee and candy company; but also has transitioned into “the world’s leading nutrition, health and wellness company” – that is Nestlé.GAP AnalysisA GAP analysis was performed to help identify the area most vulnerable within Nestlé’s current product lines. The research and information was revealing which was noted by the gap in performance, product, and market penetration as presented by Nestlé to increase the 2005 increments substantially by 2015. Further investigative data revealed on Nestlé’s website shows (Nestlé, 2012):With soluble coffee at 10.6 billion and pet care at 12.9 billion, the weight management and performance nutrition segments are the two lowest segments at .6 billion and .2 billion respectively. In addition, their market capture of mass affluent in China is mandated to increase from 2005 levels of 3% to 17% by 2015.Further solidifying the innovation of the new product as the significant gap filler, where it addresses the elements of product, performance, and market penetration driven directly at the geographic and demographic targets globally – with China as the primary directive. But first, let us review where Nestlé is today; where the principals would like to be in the near future; and what it will take to get Nestlé to realize its new vision.Current Position The corporate culture at Nestle’, while re-indoctrinated in 1998, has deep seeded roots extending back over 140 years. The drive and commitment towards long-term success has been founded on fundamental principles that adhere to proper business conduct, longevity and contributing to the betterment of society; “Creating Shared Value” (Nestlé, 2010). This proposition is the dominant driving force, executed and demonstrated in the corporations’ products, conduct and culture. The creation of the Nutritional Strategic Business Division in 1997 (Nestlé, 2010) has led to a greater expansion of health focused products, an increasing health awareness and brand recognition globally. This includes the continuation and improvement of such brands as Lean Cuisine (1973), Carnation (1986), the introduction of the PowerBar (2000), the acquisition of Jenny Craig in 2006 and the affiliation with Novartis Medical Nutrition in 2007 (Nestlé , 2012). “Nutrition has been a cornerstone of Nestlé since the company was founded by Henri Nestlé in 1867” (Nestlé Nutrition, 2012). Nestle’ introduced Nescafe’ in 1938 and Nespresso in 1986 and has since established a significant market share in the coffee beverage sector amassing a significant market share and recognition of a quality product with flavor. “As the leading Nutrition, Health and Wellness Company we enhance lives by offering tastier and healthier food and beverage choices at all stages of life and at any time of the day, helping consumers care for themselves and their families. This is the foundation of our promise of ‘Good Food, Good Life’ and puts nutrition at the heart of everything we do” (Nestlé, 2010b). While Nestlé has appreciated the greatest growth rates in its Nutritional division in terms of sales and EBIT (Nestlé, 2010b), to continue this vision, Nestle’ stands with the opportunity of merging the nutritional attributes to their already established foundation in the coffee industry and continue to increase market share and revenue growth. With 5,000 R&D staff around the world (Nestlé, 2012b) and the Nestle’ Research Centre as one of the world’s leading research institute specializing on nutritional science. The natural merger of 2 industry leading mandates into 1; creating the new generation of coffee sold in the world, is possible with these resources. The merger of the significant health attributes associated with the PowerBar, Boost, and Carnation into the coffee creating a robust, healthy alternative to all other leading brands beyond the natural health component of anti-oxidants (from the coffee bean) and fat burning elements (from caffeine) currently being utilized equally by all competitors: The Nestlé Platinum. “We believe that we can make a real difference by launching the most innovative cutting edge products and services; by staying at the forefront of nutritional science and technology; by responding rapidly to the socio-economic challenges of today; and by anticipating those of tomorrow” (Nestlé Nutrition, 2012). The Platinum Line is a culmination of our 100 years of a leading coffee with the health attributes found in industry leading supplements today.Data indicates Nestlé holds market share as follows:1. 10.6 billion in soluble coffee;2. 12.9 billion in pet care;3. 0.6 billion in weight management;4. 0.2 billion in the performance nutrition segment; and5. 3% total market share in China.6. Traditional 20-25% Gross MarginsThis data indicates Nestlé is in a good position with respect to coffee and pet care. However, Nestlé currently lags significantly in both the weight management and performance nutrition segments, two segments that speak directly to their mission; “Good Food, Good Life”. Even more disturbing is the negligible percentage of market share in China which Nestlé has recognized as a vibrant and emerging market.Desired Position Nestlé maintains its vision of being the coffee leader of the world and while continuing to penetrate and advance into new markets and product innovation, Nestlé purports to achieve this mandate through its determination to accomplish the following:1. Increase market share globally;2. Within the next 12 months, ensure the new initiative or product is on 75%-90% of retailer’s shelves and other outlets in China.3. A 30% increase in the performance segment market share in the first 12 months;4. A 14% increase in China’s mass affluent market segment by 2015.5. Increase gross and net marginsThe Gap But wait! How can Nestlé achieve these aggressive measures? How can Nestlé continue to develop its vision? This can easily be accomplished by filling the gap between its current market share standing and its desired market share standing. To continue to provide its customers healthy, “good for you” products that have shown they want. The “Platinum Line” fills this gap by coupling the demand for voluminous amounts of coffee and the incredible volume of demand for performance enhancing supplements. Nestle’ indicated that their strategic goals are to, increase substantially, penetration in nutraceuticals and become “the leader in this segment by 2015” and maintain a focus on emerging and global markets, in particular, China. Leading into 2011 Nestle’ presented that “emerging markets are enhancing to organic growth and are enhancing EBIT margins and are a focus of Capex and M&A” (Nestlé, 2010b). This directive is consistent with industry analysis in the following: Global trends in nutraceutical ingredients will see the developing regions achieving much faster growth in both consumption and production than the developed regions. Increasing economic prosperity will enable countries such as China, Brazil, India, Mexico, Poland, Russia and South Korea to expand and diversify their food, beverage, nutritional and pharmaceutical industries. Based on projected investment levels in these industries and rising consumer income, China will evolve into the largest global producer and consumer of nutraceutical ingredients by 2020, passing up the United States and Western Europe (WNI, 2012). The innovation of the new product is“GAP” filler as it addresses the element of product, performance and market penetration driven directly at the geographic and demographic GAP. According to market research, retail sales of coffee topped $37.9 billion in 2011 and world demand for nutraceutical ingredients will increase 7.2 percent annually to $23.7 billion in 2015. In addition, Freedonia’s research release of 2011 indicates: “World Nutraceutical Ingredients” provides global statistics and predicts world demand for nutraceutical ingredients to reach $21.8 billion in 2013, which will serve a $236 billion global nutritional product industry (WNI, 2012). Nutrients, including proteins, fibers and various specialized functional additives, will remain the top-selling group of nutraceutical ingredients. World demand for these substances will increase 6.7 percent annually to $10.4 billion in 2015. In addition, as represented by GNC, the global leader in supplements in their 2011 investment presentation, stipulated that their focus for 2012 is entering the market of China and that the supplements market maintains the highest concentration of above average, mass affluent market participants (GNC, 2012). Providing a coffee of nutraceutical health benefits fills these gaps for Nestle; to its articulated directive of capturing more market share in the targeted demographic (above average, mass affluent), in the highest projected growth geography (China) and in the most aggressively growing segment (nutraceuticals) and their specific subsets (protein, fiber) and increase margins. The GAP within Nestle’ as it pertains to the new product development process consists of bridging the GAP between the various profit and research centers associated with their present products; PowerBar, Boost and Nestcafe’ and their divisions of Nestle’, Nestle’ Health Sciences and Nestle’ Institute if Health Sciences (see image 3). The Health Sciences divisions are relatively new (less than 2 years), therefore, are agile and ready for initiatives that fulfill so many directives.(1) Note: the number of ounces produced is the amount per product prepared not by powder or ground bean (as the powder and beans make more ounces of prepared product than per ounce of powder or ground beans). Based on Nestle’ breakdown of costs per 100 ounces (1) of coffee the roaster price per ounce to the retailer is $.0234. Muscle Milk, a high protein drink with rapidly growingmarket share in the liquid supplement market, currently retails for $.25 per ounce, a ten (10) times multiple (GNC, 2012). Evaluating premium coffee, like Gevalia, the price per ounce, retail, is $.04 a 30% increase in retail price. In addition, Boost, a Nestle’ product currently retails for $.13 per ounce, a seven (7) times multiple (Nestle Nutrition, 2012). The Platinum Line is the combination of a superior brand coffee with the nutritional content equivalent to a Muscle Milk and Boost. The first of its kind combination directed towards a significantly increasing demand market with substantially increased margins(2).Per 100 Ounces Instant CoffeeUSD ($)Margin %Per ounceRetailer Price$3.12$.0312Roaster Price to Retailer$2.34$.0234Retailer Margin$ .7825%Roaster Price$2.34$.0234Roaster Costs (Green Beans)*$ .23$.0023Mfg & Packaging$1.25$.0125Selling, Dist, Admin- direct$ .39$.0039Total Roaster Costs$1.87$.0187Roaster’s Margin$ .4720%2) The increased retail prices will increase margins substantially. The amount of beans and the increase in production costs associated with the additives of the nutraceuticals is unknown at this time, as well as the initial packaging costs. With all initiatives it is necessary to present “urgency” and the fact that the new product addresses so many directives, its urgency is apparent. It is directly in line with the Nestlé’s prime directive and mission, “our focus is on food and beverage, particularly in nutrition, health and wellness, in both emerging and developed markets,” says Jim Singh, Nestlé’s CFO, and as such, will encounter very little, if any, dissention within the organization. In addition to the already compelling information and as to the place that this new product line could stand within the organization and the excitement it will garner, within the context of initiatives, short-term wins are essential to facilitate continued commitment. Considering Nestlé’s interest in healthful products has translated into its position as one of the world‘s largest users of nutritional additives, and a global leader in the coffee market, the reception of such combination will no doubt receive positive acceptance and interest, further providing support and commitment towards the initiative. Yes, Nestlé will become the first brand to successfully market a coffee of nutraceutical health benefits – the “Platinum Line”.Stakeholders and FeedbackTo be successful, all stakeholders must be onboard with the new initiative. It is strongly suggested that Nestlé continue its commitment to open dialogue with all stakeholders including consumers, customers, employees, investors, and others by utilizing a wide variety of channels. To date, Nestlé has held several different forums to keep its primary stakeholders current on its operations and its initiative. Additionally, these forums have allowed Nestlé to solicit and obtain feedback from its stakeholders. Such forums will serve well in identifying expected acceptability of the new Platinum Line.Consequently, similar to the first CSV Forum on “Creating Shared Value”, at the April 2009 forum in New York; continue to maintain a collaboration with the United Nations Office for Partnerships and the Swiss Mission to the UN, where Nestlé has already launched three new initiatives aimed at creating new partnerships with governments, NGOs and small enterprises (Nestlé, 2011). Additional CVS can be set in motion to effectively launch the Platinum Line; thereby, catapulting the new product line into world-view instantaneously. All complimentary of the free advertisement gained by use of the news media around the world.However, prior to any media attention, we have identified the primary stakeholders or groups that would be impacted by the new Platinum Line and to what extent. Hence, the overview of Nestlé’s “systems zoo – a collection of some common and interesting types of systems” (Meadows, 2008, p.5) will follow. Introducing the competitive advantage backbone consisting of many diverse and massive specialists within teams of highly skilled persons to get the outcome desired (Gratton & Erickson, 2007, p.101). Yet, however massive the many teams within and outside of the organization are, to bring this new initiative into reality, several internal departments and external entities will be working together. Nestlé’s Principals Most important are the principals – the major decision makers that will determine the project’s viability; the project’s budgetary impact; and when the project will be implemented. As reflected in Figure 1, the owners, shareholders, and managers represent these principals. Further, the communicative interaction amongst this group depicts the workings of a double feedback loop in action. Whereby, each of the principals sends questions and comments to the other principals with the expectations of receiving some form of feedback to confirm or elaborate on concerns of the project. These actions show the principals are participating in a “reciprocal flow of influence” (Senge, 2006, p.74). Yet, even leaders of a major organization do not possess all the competencies to carry out such a major initiative, so they rely heavily on the other primary stakeholders (Anacona, Malone, Orlikowski, & Senge, 2007, p.94).Supply Chain Similarly, Figure 2 shows how the entities which make up the supply chain for the Platinum Line are also engaged in negative and positive feedback flows. Yet, because the entities in the supply chain do not interact with each other directly; and only communicate with Nestlé’s employees, theirs is a representation of a single feedback loop system. This is because most vendors are unaware and will be unaware that Nestlé may be getting quotes from competitor suppliers, vendors, and manufactures. Equally, because marketing will be fluid and not locked into any one consumer type; neither will wholesalers nor retailers interact together. This will further leverage Nestlé position in negotiating and acquiring the best costs and prices associated with the project’s needs.Internal Departments Moreover, Figure 3 provides a visual of how a multiple feedback loop system looks with respect to the initial internal departments interacting. Because the principals of Nestlé have taken the necessary steps over the years in “identifying dominant beliefs and values” (Johnson-Cramer, Parise, & Cross, 2007, p.98) which has allowed them to “create a work environment that fosters an open communication climate where employees feel free to express opinions, voice complaints, and offer suggestions” (Saunders, 2007, p.26). Hence, the very meaning of multiple feedback loops in action promises for a very high potential of success for the Platinum Line initiative.Customers One of the most important groups, also representing multiple feedback loops, is Nestlé’s customers. Figure 4 shows how each branch of Nestlé is open and accessible to customer interaction and feedback. Ultimately, these customer feedbacks will allow closer connections, better understood needs, and faster responses to customer concerns or suggestions.Multiple Scenario AnalysisRelationship between SystemsThe systems involved in Platinum Line product include: Nestlé’s principles/decision makers that consist of the owners, stakeholders and managers, Nestlé’s supply chain, Nestlé’s internal departments and Nestlé’s customers are all closely related and need to maintain the close relationship and communication for the initiative to be successful. The initial relationships and communication begins with the principle members that are determining the project’s viability, budget impacts and the best time to implement the new Platinum Line product. Once these decisions have been made, the internal departments will begin tasks of researching and developing the product, marketing and selling it, working with the supply chain system to ensure that the manufacturer will be able to meet the supply demands, while staying within the financial budget that initially was established for the project.All systems have a relationship with the customer system. At any given time, the customer system may be dealing directly in talks with the principle system for such matters as long term contracts, they may be dealing directly with the supply chain system on matters that relate to the quality or supply of the product and most definitely will be doing business and communicating with Nestlé’s internal departments regarding accounts receivable, marketing matters and operations. We always need relationship to do business. The larger the businesses, the stronger level of relationships are needed. By understanding the power of these relationships, is the key to growing the business effectively (Walsh, 2010).Examination of different systems and loopsThere exists both direct and indirect relationship between various systems. On the overall, all the systems are complementary. Thus the overall effectiveness of the initiative is total sum of efficiencies within various systems. In order to achieve the objectives that are desired by the principles, the supply chain, and internal departments must be efficient in undertaking their responsibilities. In addition, the functions of the above mentioned systems must fulfill the needs and aspirations that arise from customer system in order to attain the principles’ objectives.The organizational objectives, both short-term such as 13 percent increase in market share within the next 12 months and long term such as the 14 percent increase in market share in China’s affluent market are only achievable if the principle system is able to align organizational resources in a manner that best serves the needs in customer system. It is the responsibility of the management, shareholders and owners to steer the company values, mission and vision towards delivery of best healthy foods for good life. The various production departments must understand the intrinsic values that consumers desire in products. This should be communicated to supply chain and internal department systems which analysis the needs in terms of financial resources and product research and development needs. This analysis is then used by the principles’ in strategizing on the way forward in business expansion. The principles’ system is charged with the responsibility of facilitating and supervising implementation of effective business strategies.The company principles desire to increase market share globally. This objective requires development of a strategic plan by the management for identifying potential market and providing the necessary resources to various departments such as the marketing and human resources for the rolling out of effective marketing campaign and acquiring the necessary manpower respectively. It also requires the input of the supply chain system in identifying and creating cost effective sources of raw materials to produce the extra volume of products as envisioned in the market share expansion plan. Thus, the supply chain system requires communication and feedback with both the customer system and the internal department system. This is critical in ensuring that the supply meet the necessary standard for producing the quality and taste of product as desired by the customer systems. It also ensures efficiency in acquisition and handling of supplies as well development and sustenance effective relationship between the suppliers and the company (Alan, 2008).
Although the supply chain plays critical role in complementing other systems achieve set objectives, the volatility of coffee supply and prices in the international market as well as conflicts within distribution channel may produce side effects in other systems. The sudden change in coffee bean prices may result in need to increase product prices to maintain desired revenue levels. Increase in prices may lead to consumer shifting to competing products, thus reducing sales volume and effectively decrease shareholder earnings on capital invested (ROI). Frederick and Thomas (2001) urge that, a small shift in customer loyalty can cascade through the business overtime. To cushion against such eventuality, the supply chain system may establish long-term supply contracts with coffee beans suppliers, which may be expensive under normal supply conditions. It is expected that the internal departments as well as owners may oppose such plans because it could be perceived as been not cost effective. Hence, management must complement the supply chain by convincing the owners and stakeholders to consent to this strategy.
Systems complements and conflicts
Within Nestlé, many departments will be working diligently to ensure that the new product introduction receives a smooth transition. Yet, these same departments will share and cross invisible boundaries in the process. Many of these crossings will be intentional where collaboration and communication between the departments are vital and required. Such as the finance department and the accounts payable departments working hand in hand to ensure the best and most accurate method of financing a product and depreciating that product are correctly transacted. Similarly, the accounts payable and accounts receivable departments will be working together extensively to ensure suppliers and vendors are being paid; as well as, credits, payments, and adjustments are collected to ensure necessary products, materials, and labor are not delayed or stopped.
However, as Meadows (2008) states “There are only boundaries of word, thought, perception, and social agreement—artificial, mental-model boundaries” (p.95). Therefore, these boundaries should be systemically linear where conflict should not arise since there are boundary perceptions clearly understood by each department. Yet, there are still conflicts when these boundaries are crossed by some departments or between systems. For example, wholesalers can provide Nestlé with many types of material, equipment, and tools needed to design and produce the new Platinum Line initiative. Equally, retailers can also provide the same materials, tools, and equipment at the same or lower prices. This causes a conflict between the two supply chains because Nestle’ can purchase from either entity. Even Nestlé principals and Nestlé’s customers conflict over social and mental boundaries. Such that the principals seek to gain market share and grow revenue substantially by selling the Platinum Line at a premium price. While the customers seek to pay for the new product at a lower price that may be undesirable to Nestlé’s principals. Eventually, after some trial and error, of several solution archetypes offering feedback, these two systemic models will find balance and begin to complement each other. Thus proving Meadows’ (2008) statement, “the greatest complexities arise exactly at boundaries” (p.95).
Balancing and Reinforcing Loops
Our commitment to providing a superior product and education on our products, health and wellness to our communities provides for a consistent environment of feedback loops and assessments towards reinforcement: (Image 1)
Image 1
Nestlé’s commitment and dedication to excellence model allows assessing, evaluating and planning for unforeseen risks as we loop assessments, audits, measurements and monitoring:
Image 2
33% of our sales come from products introduced or renovated in the last three years: (Nestlé 2012) allowing for continuance flow and product loops in generations coinciding with our product development generational cycles: Image 3
Image 3
Balancing and reinforcing loops, planning for unintended consequences, differentiating real needs from perceived needs, and shifting of responsibilities and burdens are just some of the considerations in our circular model that is Nestlé: (Nestlé 2012):
Image 4
Barriers and Opportunities
Potential Archetypes
In multiple loop archetypical systems, we can reduce the broad range of consideration as there are only “four generic” archetypes possible arising from the four ways of ordering the two basic types of feedback loops” reinforcement and balancing (Wolstenhome, 2003, p. 11). The reduction to four “generic archetypes” stems from the basis that there are only two actions for change; they either attempt to improve (reinforce) or attempt to control (balance) an organization (Wolstenhome, 2003). With a constant monitoring and assessment of these categorical archetypes will position leadership to take the appropriate actions or leverage. In addition, potential system changes could cause far reaching and unexpected challenges outside of the direct system if not considered during the planning stages of this initiative. Problematic archetypes (Wolstenholme, 2003, p.10) such as low harvest of coffee beans or all the supply chain drivers striking for labor or wage reason; subsequently, creates unintended consequences due to external systems beyond Nestlé’s’ control. Also, these unforeseen events could adversely affect the production, flow, and success of the new initiative.
Stakeholders Commitment Plan
“Stakeholder identification and management is a key skill for all project managers, program managers and executives” (Worthington, 2010). A stakeholder is an individual who represent specific interest groups served by the outcomes and performance of a project or initiative. There are several factors that are involved and need to be analyzed regarding the stakeholder’s position and authority both inside and outside of the organization regarding their commitment. Each stakeholder holds a different level of commitment to the project. They may be carrying the role to be committed (make it happen), Supportive (help it happen), Neutral (let it happen), or Disagrees (stop it from happening). The Nestlé Corporate guiding coalition will determine which role each of the stakeholders has and if it’s considered to be Critical, Desirable or Non-Essential. Identifying any obstacle to the full contribution and commitment of a stakeholder is the first step towards identifying any activities that may serve to remove the obstacles. Obstacles can include but not be limited to such matters as a lack of knowledge, the stakeholder may not be engaged in planning and decision making, has not been requested to participate, has too many other obligations, and may have doubts about the external supplier, consultant or manufacturer.
The main goal of the stakeholder commitment plan is to remove the obstacles and influence stakeholders towards the desired state, rather than necessarily all the way to the committed level. For example, it will be preferred to have the Director’s and CEOs of Nestlé to be supportive (actively promote the project) rather than ignore the project. An effort will be made by senior management to move executive management to the desired state and work at maintaining that state throughout the project. The increased contribution of stakeholders increases the likelihood of a successful initiative.
Special care must be taken when dealing with critical and desirable stakeholders. If it is not possible to obtain their commitment then it becomes necessary to reduce the project’s dependence on their contribution (move their role from critical or desirable to non-essential).
The following table illustrates the actions to be considered to increase stakeholders’ commitment to the project:
Stakeholder Management Plan
Stakeholder
Current Level
Target Level
Actions to be Considered
Hold Annual Forums
Weekly Meeting one-on-one.
Hold project briefings.
Hold steering committee meetings
Receive commitment to fill Acting Chair role
Hold informal discussions
Arrange Vendor Site Visits
Hold Project Status Meetings
Summary of Action the plan
Communicate with stakeholders and keep them informed of matters that are likely to be of interest to them
Obtain information from stakeholders that will be relevant to the project
Manage the expectations of stakeholders
Involve stakeholders in all key decisions about the project
Nestlé will periodically re-assess the position of each stakeholder to determine what further action (if any) is required to keep him or her committed and supportive of the project and determine if any variations to the stakeholder management plan is required. We will “formally review transformation projects” towards our milestones as “scheduling milestones and assessing their impact are the best way by which executives can review the execution of projects, identify gaps, and spot new risks” (Sirkin, 2005, p. 111). Leadership will be cognizant of the duration, integrity, commitment and effort of the initiative (Sirkin, 2005).
Improvement Initiatives
Barriers are obstacles that hinder a corporation from operating at its full potential. Corporations face a lot of barriers as they strive to achieve their goals. Opportunities on the other hand provide corporations with chances to undertake various operations to enhance their success (Pride, Hughes & Kapoor, 2011).
Nestlé company intends to increase its market share. Currently the company has a considerable share in the global market. The company has plans to improve its global market share. When planning on the market share initiative the company should guard the factors that provide competitive advantage for them. The company should also guard its current market by striving to satisfy its consumer’s needs. This enables the company to maintain its current market as it also seeks to expand to other markets (Bendoly & Jacobs, 2005).
The stakeholders inside the company consist of the employees while the outside stakeholders consist of the customers, the society and the shareholders. In order to generate commitment from all the stakeholders the company should establish a plan that involves the stakeholders in the improvement initiative so as to allow for creation of a variety of ideas. Involving the stakeholders also promotes the embracing of the initiative by the concerned stakeholders (Petkoski, Rangan & Laufer, 2008).
The practices that should be embraced when undertaking the initiative are practices that consider the health of the consumers. The health of the consumers should be the major concern of the company. They should thus embrace the health practices for the sake of success of the improvement initiative (Petkoski, Rangan & Laufer, 2008).
Stakeholders are individuals that are affected by the operations of a corporation. The stakeholders include the shareholders, customers, employees, the government, suppliers and the society. The stakeholders are identified based on how they are affected by the operations of the corporation. The shareholders are the major stakeholders of the corporation since they are mostly affected by the decisions that are undertaken by the corporation. The employees, the customers, the society, suppliers and the government are also affected to a larger extent by the operations o f the corporation. The critical groups of any corporation consist of the shareholders, employees, suppliers, government, the society and the consumers. The presence of the major stakeholders is an assurance that there is no critical group that has not been taken into consideration (Fust & Walker, 2007).
Individuals are bound to benefit from the improvement initiative since they will have easier access to the nestle products. The availability of the products gives them an opportunity to easily acquire the products. The organization is bound to incur various costs from the improvement initiative. The operational costs will increase since the organizational is expanding and improving its operations. The company will enjoy increased returns from the increased market base of its customers (Consumer Goods Forum, 2011).
The environment provides the company with an opportunity to venture into new markets. However the risk of products rejection may create losses for the company. The customers may fail to embrace the product. This will adversely affect the business of the corporation. The company may undertake various strategies to ensure that they are not affected by the foreseen risks do not affect their returns and operations. The strategies that can be implemented include involving the customers in the initiative improvement by informing them of what the initiative entails and the impacts that the initiative will have on their operations. The company may also seek to undertake insurance covers to protect them from the unforeseen risks (Pfitzer & Krishnaswamy, 2007).
The company can overcome the barriers that may hinder them from successfully attaining their improvement initiative. The opportunities that prevail in the environment can also be exploited to attain economies of scale. When considering the prospect returns risk management is also very important when dealing with the improvement initiative.
Developing Collaborative Support
Collaborative support is vital between and within each system involved. If the principals do not fully agree amongst themselves that the new initiative can work and provide full support, the project will not get off the ground. Or, if the project begins with the owners and shareholders fully supporting but the management does not fully support the new project, the project will be stalled and eventually fail (Olson, Bever, & Verry, 2008, p.51). Further, if the accounts payable department do not pay the suppliers and the suppliers stop providing ingredients and materials, the R&D and production departments will experience significant delays in producing the new product; thereby, increasing the cost to produce the product via lost man hours, lost production time, lost time of product going to market, and potentially lost revenue. Subsequently, these risks, increases in costs, and unfortunate delays could open the door for a potentially lost opportunity of Nestle’ being first to market this new product initiative.
Marketing: Creating Interest
We plan on promoting the product through four strategies: press advertorials, public relations coverage, wet sampling, and a website named Platinum Coffee; beginning with the “World Cup” in Vienna, this March, 2012. We estimate a campaign budget commensurate with previous product launches in the £500,000 – £1,000,000 (the “spend”) and reserve for 5 to 6 months after the launch to reinforce the message. The team estimates 45 per cent coverage of the target audience with a 1.5 opportunity factor to experience, see, and sample the new product (Nestlé 2012). For wet sampling, the company estimates 45 sampling days and the distribution of 40,000 one-serving sachets. Locally, we will host the 2012 “Winter ‘warm-up’ Festival”; promoting health and wellness and Nestlé’s culture.
The ad plan is very specific and it attempts to tell a clear story. The “spend” will be directed to editorial, sampling and the website to give more information allowing consumers to engage in the experience to contact us with any questions. We always use the press where we can and in the Ultra Premium segment, we often appeal to the Connoisseur market that way, editorials work where you have more information to communicate and explain, as a brand, we have only 50% on TV. And we typically use billboards, both 48 sheet and 6 sheets, and they are used in integrated campaigns to reinforce the message (Nestlé 2012). The return on big booth exposure is worth the expense and a very effective way to get the samples out there. We also have an up-to-date database of one million Nescafé consumers through our loyalty scheme and plan to provide these consumers samples and communicate through quarterly magazines, and email notices. Internationally, we will create attention by means of subsidies to the farmers and applicable channels from our increased profit margin.
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24/7 Customer Support
We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.