International management strategy: Nestle

Résumé du document

This paper critically evaluates the international strategy of the Nestle Waters. The paper deals with different theories such as Porter's five forces, SWOT analysis, Hofstede's four cultural dimensions, Hill's pressures for local responsiveness and cost reductions, the Integration-Responsiveness framework from Bartlett and Ghoshal, and various theories such as the psychic factor developed by Wiedersheim-Paul (reviewed by Johanson) and the Uppsala Model. It also provides some recommendation to improve Nestle Waters' strategy.

Extraits

[...] Nestle have low pressures for global integration because almost all bottled water sold in different countries have its origins in the same country. So Nestle Waters have strong pressures for local responsiveness but less for global integration. Perhaps the clearest explication of these pressures is the Prahalad-Doz [1987] model, where each pressure in the IR framework is represented as a separate axis comprising a 2x2 matrix, as illustrated in Figure 1. Within this model, Prahalad and Doz [1987] shows three subgroups or subclassifications of international business strategy that exist. (Roth, Kendall, Morrison, Allen, 1990). [...]

[...] But growing markets in developing countries provides good opportunity. - The cost of research and development is very important, in order to ensure quality of water and to innovate new products. With all these factors, the risk to have new competitors is low, recently Coca-Cola wanted to enter in the European market. But there were some barriers, for example, technological, which made the company to stop its implementation. The number 2 in the United States failed to enter in the European market. [...]

[...] (Harrison, Dalkiran, Esley, 2000). Nestle Waters had to adapt with this aspect, because Switzerland is a country with high masculinity and for example, Netherlands is a country with high feminity. This difference of culture can have a strong impact in advertising, managing, human resources, and employees' motivations. By adopting a local policy Nestle Waters can manage this easily. Nestle Waters have done a good job with culture, thanks to its entry mode, by acquiring companies since the beginning they tried to adapt successfully to new markets. [...]

[...] Third dimension, uncertainly avoidance. This refers to the extent to which individuals in a society avoid risks and ambiguous situations and seek security by creating institutions and common beliefs (Harrison, Dalkiran, Esley, 2000). For instance, in some countries customers prefer a brand that is familiar to them instead of a foreign brand; they won't take risks to test a new brand. In countries which do not like risks, Nestle give instructions to top managers to do not deal with ambiguity, however in low uncertainty-avoidance countries managers can take risks to launch new products like flavoured waters. [...]

[...] Indeed, at present, no action to develop customer loyalty exists in the water market. The customers are diversified and they often their brand of water. For that purpose, Nestle Waters should try to make the customers loyal to the brand by promoting benefits and advantages of its water. External growth Multiply the synergies, strengthen their positions and reach new markets: Nestle Waters base a wide part of its development on a policy of targeted purchases. Whatever is the market, the acquisition has to strengthen the positions of the group by allowing it to establish a base of development for one of both brands Nestle (Nestle Aquarel or PURE Nestle LIFE). [...]