Summary
Businesses expand their activities beyond their home country for profitability. International trade is crucial among businesses since it enhances a broader consumer base and innovative product development. Although trade is significant among corporations, the cultural differences between the home and foreign countries influence strategic changes for business survival. The foreign countries exhibit diverse political, economic, and cultural climates that the multinational firms must acclimatize to remain afloat in the business. Nestlé is a Swiss multinational food and drink company that has developed various business strategies to survive in foreign countries. While Switzerland is the company’s home country, China is one of Nestlé’s host countries that has proven profitable. Nestlé’s effective marketing strategies have been influenced by the cultural differences between Switzerland and China.
Company Background Information
Nature of the Business
Nestlé is one of the largest food companies in the world. The firm has diversified its food products and manufactures baby and medical food, bottled water, and breakfast cereals, among others (Pernazza, 2021). Currently, the corporation has over 2000 brands with a wide range of products serving various market segments. Nestlé has developed new products over time to serve humanity and its popular for its unique food. For instance, in 2019 it entered the plant-based food production business under the Garden Gourmet and Sweet Earth brands (Pernazza, 2021). Moreover, in 2020, the company developed additional plant-based products such as chorizo-like sausages (Nestlé, 2021). Nestlé has adopted a hybrid business model, and it distributes its products to consumers and other businesses. As a reputable corporation, Nestlé takes part in various social responsibility programs such as the World Cocoa Foundation, and Sustainable Agriculture Initiative, among others. Therefore, Nestlé’s business is beneficial to its owners and society at large.
Nestlé’s History and Mission/Vision
Nestlé’s historical background has significantly contributed to its success and shared objectives among its stakeholders. The firm’s history is four-phased: founding years, mergers, international growth, and recent developments. The corporation’s founding years date back to the 1860s when Charles Page and George Page established the Anglo-Swiss Condensed Milk Company in Cham, Switzerland (Pernazza, 2021). The merging phase occurred between the years 1901 and 1989. During the merging period various investors such as Daniel Peter, Charles-Amédée Kohler, and Alexandre Cailler, among others united to form the Nestlé and Anglo-Swiss Condensed Milk Company (Chrystal, 2021). The company was later renamed in 1977 Nestlé after subsequent acquisitions. The firm experienced significant developments in the late 20th century when it grew internationally. Furthermore, the recent developments have enabled Nestlé to transform itself into a health, wellness, and nutrition company.
Mission and vision statements are significant for strategic management among firms. The statements provide an ideal futuristic view of a company’s performance, encouraging employees and other stakeholders to think about how their actions impact business success and culture (Pfajfar et al., 2022). Nestlé’s mission is “good food, good life”, aiming at promoting a healthy lifestyle among its clients (Nestlé, 2019). Consequently, the company provides consumers with nutritious and healthy food types. Meanwhile, the firm’s vision is “to become a leading, competitive, Nutrition, Health and Wellness company delivering shareholder value by being preferred corporate citizen, employer, and supplier selling preferred products” (Nestlé, 2019). Nestlé’s strategic management aims toward the achievement of its mission and vision.
Competitive Information
The food and nutrition industry serves the greatest human population since everyone depends on it for survival. However, it is very competitive since many people are encouraged to consume health-conscious food and avoid those that exacerbate diseases and lifestyle conditions. Nestlé’s competitors include ConAgra, DPSG, Hansen Natural Corporation, Kraft Foods Group, Mondelez International, and Monster Beverage Corporation, among others. Like its competitors, Nestlé has integrated technology into its business activities to attract more consumers (Nestlé, 2021). Moreover, the company has invested considerable resources in food, nutrition, and wellness research to outdo its competitors. However, unlike its competitors, Nestlé has faced several lawsuits on child labor, ruining its brand image. Although Nestlé is competitive in the food and nutrition industry, it has a tarnished reputation.
Recent Company News
Nestlé has been featured on various news platforms for its strategic business moves. Recently, the company expanded its portfolio by acquiring The Better Health Company, a Swiss maker of Manuka honey (Nestlé Health Science, 2022). Meanwhile, the corporation’s health science unit was involved in snapping up Puravida, a Brazilian health foods firm (Food Business Africa, 2022). Furthermore, Nestlé was recently featured in the Financial Times as one of the companies that aim to develop an environmentally friendly supply chain (Schneider, 2022). According to Nestlé’s CEO, the company is working to ensure that its supplies and raw materials do not destroy forests (Schneider, 2022). The recent news about Nestlé focuses on its business expansion and social responsibilities.
Host Country Background Information
Nestlé is a multinational company with its business operations spread across the world. The corporation operates in more than one hundred countries worldwide that provide an expansive market for its products. Moreover, the company has over four hundred factories located in its host countries (Nestlé, 2021). China is considered the second biggest market for Nestlé with thirty-one production sites (Nestlé, 2021). The external business environment in China has made it one of the most productive host countries for Nestlé.
Cultural Environment
China has a diverse population with distinct social systems and cultural values. The majority of the Chinese residents are educated, and technically innovative (Hanson, 2021). The country’s government aims at reducing the ever-growing population through effective family planning methods. Consequently, many families in China are small and want healthy food like the one sold by Nestlé. Meanwhile, as a diverse country various languages have been adopted the country, with the Mandarin being the popular communication language. Chinese language and controlled social structure are significant enablers of effective marketing in the country.
Admin/Political Environment
The government plays a significant role in determining business operations within a country. The Chinese administration is health-conscious and promotes businesses that contribute to the wellness of its people. Moreover, the government promotes employment in the country by allowing multinational companies to be established in China (Hanson, 2021). Although the country has developed policies that favor local companies, multinational firms such as Nestlé are prioritized during the decision-making processes.
Geographical Factors
The Chinese territory includes high mountains, plateaus, sandy deserts, and dense forests. The country experiences a temperate climate without frost in some regions. Moreover, the country’s geographical location favors ample sunshine and plenty of water (Li & Sakamoto, 2021). Therefore, coffee is grown in the Chinese temperate regions such as the Yunnan province, favoring food companies such as Nestlé (Li & Sakamoto, 2021). However, the ununiform temperate climatic distribution causes insufficient coffee production.
Economic Factors
China is one the of countries with significant economic growth, facilitating the survival of many businesses. The country has hugely invested in the manufacturing, services, and agricultural sectors. Consequently, China has a lower employment rate compared with other Asian countries such as India (Varkey et al., 2021). Moreover, the country has a GDP of 14.72 trillion U.S. dollars, boosting its infrastructural developments. Therefore, the Chinese economic climate is favorable for multinational companies such as Nestlé.
Risk/Ranking
China is one of the countries with low risks of conducting business. The country’s technological developments boost business activities. Moreover, the existing high and diverse population forms a ready market for manufactured products. However, China has been ranked as one of the countries with the highest risks of asset misappropriation, fraudulent activities, and a lack of management integrity (Roy & Basu, 2021). Multinational firms such as Nestlé need effective business strategies to remain afloat in the Chinese market.
Reasons Nestlé International Business
Why Enter the Chinese Market?
China’s business environment is favorable for Nestlé’s business activities. The company has been in China for thirty years, making it the second biggest Nestlé market (Cambaza, 2022). Nestlé has thirty-one production sites, a food safety institute, a dairy farming center, and a coffee center in China (Nestlé, 2021). The firm has employed about 43,000 Chinese residents, contributing to the country’s economic growth. Favorable business policies, ready market, highly educated population, and technological and infrastructural developments contributed to Nestlé’s entry into China. Multinational companies enjoy Chinese government protection through friendly taxes and operational policies. Therefore, investing in China is profitable for multinational companies due to the friendly political climate.
Nestlé is a big food manufacturing and supplying corporation that needs proactive employees. Moreover, educational qualifications in courses such as food engineering are crucial for the company. The Chinese highly educated population provides effective employment for the company. Meanwhile, high China’s population provided a ready market for Nestlé products. The technological advancements in China significantly influenced automation in the Nestlé manufacturing sector. Additionally, the technology boosted the corporation’s marketing activities, making it easy to reach the growing population. Meanwhile, the infrastructural developments such as good roads and airlines bolstered Nestlé’s business activities. Therefore, Nestlé entered the Chinese market due to its conducive business environment.
References
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Chrystal, P. (2021). Rowntree’s: The Early History. Rowntree’s, 1-216. Web.
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Hanson, G. H. (2021). Who Will Fill China’s Shoes? The Global Evolution of Labor-Intensive Manufacturing, w28313. National Bureau of Economic Research.
Li, N., & Sakamoto, Y. (2021). Trends in specialty coffee. In Quality determinants in coffee production, 407-443. Springer, Cham. Web.
Nestlé Health Science. (2022). Nestlé Health Science to acquire The Better Health Company. Web.
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Roy, N. C., & Basu, S. (2021). Bank’s battle against insider frauds ignitors and mitigators: an emerging nation experience. Journal of Facilities Management. Web.
Schneider, M. (2022). Nestlé and Unilever CEOs: we will make our supply chains deforestation-free. Financial Times. Web.
Varkey, R. S., Joy, J., Sarmah, G., & Panda, P. K. (2021). Socioeconomic determinants of COVID‐19 in Asian countries: An empirical analysis. Journal of Public Affairs, 21(4), e2532. Web.