Group Project
Nestle
China & India
Introduction:
Factors that affect the viability and
competitiveness of the product in China & India (PESTEL)
Nestle environmental analysis (Legal
environment in china)
Environmental analysis is understood as
anything outside business firm affecting its functioning and working
methodology. There are several components of
environmental analysis like political, legal, economic, legal, and
technological. The strategic personnel of the Nestle need to follow legal
aspects of the China for functioning effectively and smoothly. In detailed
terms, legal environment of China strive towards establishing climate of higher
confidence, easiness of conducting business process and transparency. The
network of judicial institutions is quite strict in China for establishing
legal base promoting transparency and fairness in business establishment and
running (Fernando, 2011).
The most important legal framework of the
country is the company law of the PRC, which is considered as complex by
business firms for making an entry into China market. Nestle is required to
gain permission and confidence of personnel of standing committee of company
law for attracting higher levels of foreign investment. The business firm needs
to provide detailed description of content, business activities, and areas
needs high level of foreign investment. The concerns related to consumers’
health, environment protection, safety, sustainability, etc always hold prime concern
area by legal and regulatory framework of China (Whittington, 2012).
Nestle environmental analysis (legal
analysis in India)
Indian business environment is ruled and
governed on the principle of non-discriminatory treatment where all business
firms are considered under moral and ethical obligation of dealing in fair
business practices and trails. India is having quasi-federal structure where
are three tier structure-administrative district headed by district court, high
court and Supreme Court. Besides, there
are also specialized tribunals like company law board, restrictive trade
practices commission, consumer protection forum, tax tribunal and many more.
Corporate governance assumes greater significance in Indian legal environment
for minimizing and correcting cases of malpractices and ensuring transparency
and corporate growth. In this context, Nestle is under strict obligation of
complying with standard provisions regarding number of board meetings,
shareholders meetings, complying with Clause 49 of the SEBI (Securities
Exchange Board of India) and consumers’ concerns (Halbert and Ingulli, 2011).
Societal Factors – China:
China has evolved from a closed economy,
controlled by agriculture and heavy industry to an open economy driven by
knowledge, skills and modern technologies.
According to Dumon’s article (2014), China is trusted by FDI (Foreign
Direct Investment) because of different factors such as the competitiveness,
local Chinese market, and international trade.
The bottom line here is that what encourage development and drag the
economy toward a competitive spot in the global marketplace could mainly be the
FDI. This has helped Chinese societal to
become an open-minded society and gives them the willingness to spend money for
new, modern and needful products, which gives Nestlé Co. the opportunity to
introduce its products, and to be successful.
Technological Factors – China:
According to the United Nation’s report,
China is currently one of the largest high-tech exporting countries around the
world, where it also has the highest percentage of technology users. This includes the Internet and Mobile
Technology, where most people are using and getting contact with it. Nestlé has used this opportunity to reach
their customers to know their needs, and to promote their products. As well as they used it to do research and
development projects.
Societal Factors – India:
India’s population expansion provides a
variety of opportunities for marketers, like cheap labor for the
industries. Also, the interpersonal
relationships of organizational members and India’s traditions can largely
influence the structure, function, and decisions of an organization, which
helped Nestlé in providing the best products to its clients. For India, the first quality that they look
for in products is the product’s value.
Technological Factors – India:
The technology industry of India has been
also competitive due to a large number of techno savvy people. Nestlé has used the technology in developing
their products and manufacturing process.
They used some innovative machines to reduce the time and efforts
needed, with ensuring the high quality of its products. This eventually helped Nestlé to increase its
productivity and expand in the market.
Political – China
Generally, the central or municipal governments in China give the
multinational companies preferential policies and treatment that Nestle could
benefit from, for example lower corporate tax rates, which would be a great
opportunity to encourage Nestle to grow and expand very fast in the region of
greater China.
Economic – China
With operation experience in multiple regions and economies and Nestle’s
consideration of consumers’ income level and purchasing power, Nestle has the
ability to adjust its products and prices to meet consumer’s demand and price
sympathies.As the growing numbers of the middle class and the increase of
higher level of disposable income in the Asia communities, it is great
opportunity for Nestle to have a strategic shift for its business focus at this
region.
Political – India
Since the independence of India, the economic policies of the country
focused on the need for local production. Nestle India existed in respond to
the government’s vision. Having a strategic business approach that aligned with
the social needs and the population requirements for food and nutrition would
provision government partnership and share the same values.
Economic – India
In the last few years a reduction was noticed inthe energy of the Indian
economy due to the Global Economy and the limitation of water resources in
India which directly impacts the food industry. Nevertheless, the company could
adjust some businesses to adopt the situation and provide initiatives that can
support the country’ economy.
Operational Strategies:
Nestlé Company needs to change and adopt
its products and operational procedures frequently, in order to address the
requirements and impacts of environmental factors of both countries.
¨
PLACE:
Since Nestlé products are spared widely
around the world. Nestlé products can
easily be found in most supermarkets and grocery stores. And since both countries are technologically
innovative and inclined, Nestlé needs to introduce its products online through
the different social media like Facebook, Twitter, Instagram and other media
channels.
¨
PHYSICAL EVIDENCE:
The company may focus on introducing its
products to convenience stores, super markets and small stores for all
consumers in categories based on ages and classes, since most people in both
countries are willing to try new things in the market, and few are willing to
opt new and foreign products to flaunt their wealth.
¨
PEOPLE:
People in both
countries, particularly in China, are mostly educated, and this can be proved
by the growth and development of both countries. This proves that it’s trouble-free to appoint
well-competent employees who will be running the business. And lastly, India’s populations show that
there are more people in all classes who will need a better job that the
company can definitely offer.
Product
India is well known about it’sSpices & Seasonings. Therefore,
introducing Nestle’s Noodles which comes under the Maggi umbrella in multiple
flavors with different indian spices would get a great acceptance in the market
and would be easilyabsorbed by theIndians people. For most religious beliefs in India;Maggi Noodles would have free animal’s ingredients, respecting culture
and religions and providing healthier products at the same time! Most of the
Indians are for the middle class and below, they won’t bother about the
packaging material, but having colorful prints with golden trappings in the
packaging would defiantly support people’s product acceptance, as this type of
style comes from Indian culture.
As the Chinese people tend to eat fruits very
much; the KitKat in Chinawould be released in different type of fruit flavors
specially the common fruits that are planted in China (Strawberry, Watermelon,
Sweet melon, Orange and figs). Unlike the Indians, Chinese people have mild
taste, so the Japanese Green Tea flavor could have another successful story in
China!
Process
Generally, in India & China, Nestle could hire a very capable and
qualified people for operation and delivery at very low cost rates comparing it
to other regions! The availability of ingredient’s resources in abundance in
the local market and exploiting it by Nestle enhances not only company’s
performance, but will support countries economy as well.
Price
As the majority of the people in the India & China are from the
middle and lower class; pricing these products is very critical step for
Nestle. As they have to consider the people income situation and also other
competing local products! Therefore setting reasonable prices is necessary at
the lowest possible margin. For Maggi Noodle, packaging material would save
some money for Nestle. As well as, consumption based pricing would do some
recovering lost due minimizing the margin, by offering many different packets
size options allowing customer to choose the packet size based on his
consumption. For KitKat chocolate, Nestle has to offer a competitive prices due
to the huge number of competitors in the chocolate segment, local &
international competitors.
Conclusion
Fernando, A.C. 2011. Business Environment. Pearson Education India.
Halbert, T. and Ingulli, E. 2011.Law and Ethics in the Business Environment.
Cengage Learning.
Whittington, O.R. 2012. Wiley CPA Exam Review 2013, Business Environment and Concepts. John
Wiley & Sons.
Cao, C. (2004). China Perspectives. Retrieved from
Challenges for Technological Development in China’s Industry:
http://chinaperspectives.revues.org/924#article-924
Chand, S. (2015).Your Article Library.Retrieved from
Industrial Products: 5 Factors Influencing Buying and Selling of Industrial
Products:
http://www.yourarticlelibrary.com/industries/industrial-products-5-factors-influencing-buying-and-selling-of-industrial-products/22543/
Dumon, M. (2014, August 29). Investopedia. Retrieved from Top 6
Factors that Drive Investment in China:
http://www.investopedia.com/articles/economics/09/factors-drive-investment-in-china.asp
Slideshare. (2015). Retrieved from
Executive Summary: http://www.slideshare.net/sitirizkymardhani/strategic-management-19302837
