Nestle Leveraging the Hard Discounter Channel Case Solution

The Harvard Business Review published a case study that primarily focuses on Nestle Leveraging the Hard Discounter Channel. The following case solution has been designed to give the reader an overview about the business world along with a clear understanding of its growth dynamics. Recently, Nestle Leveraging the Hard Discounter Channel has been subjected to strategic as well as managerial problems that require immediate attention so that they can be resolved to allow future growth, expansion, and competitive edge within the marketplace. This case study solution is being written to provide a strategic solution to Nestle Leveraging the Hard Discounter Channel using various appropriate tools and frameworks. Harvard Business Review’s case studies involve a central problem that is faced by a particular company. The problem identified involves strategic and managerial implications for the company. Therefore, it is important for readers to critically identify the problem Nestle Leveraging the Hard Discounter Channel faces. Moreover, it is also essential to highlight the key stakeholders that are impacted and influenced by the problem identified.

External Environmental Analysis

The external environment holds significant importance for Nestle Leveraging the Hard Discounter Channel to ensure that the company is able to respond to all the changes in the macro-environment. This is because Nestle Leveraging the Hard Discounter Channel cannot control the factors and thus can directly influence the company's operations (Indris & Primiana, 2015). The external environment of Nestle Leveraging the Hard Discounter Channel will be assessed using PESTLE Analysis.

Political

• A stable political environment provides a favorable market growth trend for Nestle Leveraging the Hard Discounter Channel.

• It is important for Nestle Leveraging the Hard Discounter Channel to analyze the pressure groups, and social environment activists. The company can make close collaborations with these groups to achieve company goals (Wang, Wang, & Shi, 2022).

• High restrictions on trade and high levels of taxes can contribute to the complex business environment for Nestle Leveraging the Hard Discounter Channel by impacting imports and exports.

Economic

• Nestle Leveraging the Hard Discounter Channel can benefit from wide-range opportunities in business growth by operating in developing economies (Munro, 2017).

• High GDP can determine the long-term growth strategies of Nestle Leveraging the Hard Discounter Channel, signaling the ability of consumers to spend on more products.

• Higher rates of interests can provide Nestle Leveraging the Hard Discounter Channel with more investment opportunities.

• The flexibility in the labor market allows Nestle Leveraging the Hard Discounter Channel to take advantage of higher workforce productivity.

Social

• The selection of appropriate demographic segments has allowed Nestle Leveraging the Hard Discounter Channel to select the right segments of the market that have high growth potential.

• The research on gender roles has helped Nestle Leveraging the Hard Discounter Channel to develop and align communication as well as marketing strategies accordingly.

• Nestle Leveraging the Hard Discounter Channel has been successful in understanding the norms and cultures of different countries by developing local teams and partnerships (Hueske, Endrikat, & Guenther, 2015).

Technological

• The adoption of innovative marketing techniques that involves communication technologies has allowed Nestle Leveraging the Hard Discounter Channel to collaborate successfully with consumers.

• The company has stayed ahead in the market, and can significantly increase its market share by placing its major focus on emerging technologies (Akpoviroro & Owotutu, 2018).

• Nestle Leveraging the Hard Discounter Channel should maximize its profits by investing in disruptive technologies.

Environmental

• It is crucial for Nestle Leveraging the Hard Discounter Channel to adopt effective waste management practices to reduce environmental pollution (J. K, W. J, & D., 2016).

• Nestle Leveraging the Hard Discounter Channel should adopt eco-friendly products to establish better relationships with the stakeholders.

• Nestle Leveraging the Hard Discounter Channel can take advantage of subsidies offered in renewable technologies to achieve the long-term goal of sustainability.

Legal

• Nestle Leveraging the Hard Discounter Channel should follow proper laws concerning employee health and safety, and anti-discrimination laws to effectively develop HRM.

• Consumer protection laws are also important for Nestle Leveraging the Hard Discounter Channel as it involves the consumer protection from fraudulent marketing (S. Samusenko, S. Plaskova, & A. Prodanova, 2020).

• Nestle Leveraging the Hard Discounter Channel can gain a competitive advantage, and can position itself strongly in the market by protecting intellectual property laws.

Porter’s Five Forces Analysis

Threat of New Entrants

• It is difficult to achieve economies of scale in Nestle Leveraging the Hard Discounter Channel’s industry, making it a weaker force for new entrants.

• There are high capital requirements in the industry. This makes it difficult for new businesses to set up their companies, and compete against Nestle Leveraging the Hard Discounter Channel.

• The industry has a strong product differentiation, and heavy investment is needed for customer acquisition. Thus, Nestle Leveraging the Hard Discounter Channel can focus on innovation to differentiate itself from its competitors (H. Th. Bruijl, 2018).

• There are strict legal requirements to join the industry in which Nestle Leveraging the Hard Discounter Channel operates, making it difficult for new entrants to enter the market.

Bargaining Power of Suppliers

• The bargaining power of suppliers in the industry is weak.

• Nestle Leveraging the Hard Discounter Channel operates in an industry with a higher number of suppliers. This means that suppliers do not have much control over their prices.

• Standardized products that have low switching costs are provided by suppliers allowing buyers like Nestle Leveraging the Hard Discounter Channel to easily switch their suppliers (Fabbri & F.Klapper, 2016).

• Raw materials can be purchased at lower prices by Nestle Leveraging the Hard Discounter Channel. The company can also switch suppliers for more reasonable pricing.

• Nestle Leveraging the Hard Discounter Channel can benefit from a variety of suppliers as it can have multiple suppliers for its various geographical areas (Cho, Ke, & Han, 2019).

Bargaining Power of Buyers

• The bargaining power of buyers in the Nestle Leveraging the Hard Discounter Channel industry is weak.

• There is a high product differentiation in the industry, making it difficult for buyers to switch to alternative firms.

• Nestle Leveraging the Hard Discounter Channel can come with differentiated and innovative products to attract more buyers of the industry (Zhao, Zuo, & Wu, 2016).

• Buyers of this industry has low incomes. This means they prefer to purchase items at lower prices, making them more price sensitive. Organizations like Nestle Leveraging the Hard Discounter Channel can offer lower prices to attract customers.

Threat of Substitute Products or Services

• There are few substitute products available in the industry in which Nestle Leveraging the Hard Discounter Channel operates.

• Expensive substitutes are available in the industry of Nestle Leveraging the Hard Discounter Channel, making it difficult for buyers to switch to those substitutes (Aithal, 2016).

Rivalry Among Existing Firms

• The rivalry among existing firms is moderate to weak.

• There are few competitors in the industry in which Nestle Leveraging the Hard Discounter Channel operates.

• A large market share is enjoyed by fewer firms in the industry. This means that more competitive actions will be made to become leaders in the market (Seema, 2016).

• The industry in which Nestle Leveraging the Hard Discounter Channel operates has highly differentiated products, making it difficult for companies to win each other customers.

• Nestle Leveraging the Hard Discounter Channel can focus on making more differentiated products to gain a strong competitive edge in the market (Zhao, Zuo, & Wu, 2016).

Internal Environmental Analysis

Nestle Leveraging the Hard Discounter Channel can use internal environmental analysis to identify and evaluate the competitive positioning of a company in the business environment. This involves conducting a SWOT Analysis that can help Nestle Leveraging the Hard Discounter Channel to identify the company’s internal strengths, weaknesses, opportunities, and threats (Halmaghi, Iancue, & Băcilă, 2017).

SWOT Analysis

Strengths

• Nestle Leveraging the Hard Discounter Channel has a strong distribution network that has allowed it to make its products available to large customers within the given timeframe.

• A strong presence on social media platforms has allowed Nestle Leveraging the Hard Discounter Channel to have a high level of customer engagement (Rizaldi, 2015).

• Nestle Leveraging the Hard Discounter Channel has been successful in building a large product portfolio, so unique and distinctive products can be offered to consumers.

• Nestle Leveraging the Hard Discounter Channel has a strong brand image in the market.

• A low-cost structure of Nestle Leveraging the Hard Discounter Channel has allowed it to manufacture products at lower costs, so they become affordable for consumers to purchase.

• The financial position of Nestle Leveraging the Hard Discounter Channel is strong as the company has generated higher profits over the past years (Phadermrod, M.Crowder, & B.Wills, 2019).

• Nestle Leveraging the Hard Discounter Channel has invested in the training and development of its employees to keep them motivates, leading to higher efficiency and productivity.

Weaknesses

• The expenditure of Nestle Leveraging the Hard Discounter Channel on its research and development is comparatively less to other competitors of the market.

• Nestle Leveraging the Hard Discounter Channel uses a centralized decision-making process that takes time and reduces operational efficiency (Ahmadi, Dileepan, & K. Wheatley, 2016).

• There are high rental costs because Nestle Leveraging the Hard Discounter Channel operates on more of the rental properties rather than purchasing them.

• There is no workforce diversification in Nestle Leveraging the Hard Discounter Channel. This makes it difficult for the employees to adjust with the different workers who belong to different backgrounds.

Opportunities

• Since the online shopping has increased significantly, Nestle Leveraging the Hard Discounter Channel can take it as an opportunity to expand its online presence.

• Nestle Leveraging the Hard Discounter Channel can make use of social media platforms to market its products, with more customers interactions.

• Due to more technological developments, Nestle Leveraging the Hard Discounter Channel can make its operations more automated so that overall company costs can be reduced (Ahmadi, Dileepan, & K. Wheatley, 2016).

• Globalization provides an opportunity to Nestle Leveraging the Hard Discounter Channel to expand its operations in multiple countries.

• Nestle Leveraging the Hard Discounter Channel can enter in a niche market and sell distinctive products to gain a competitive advantage.

• The increase in the demand of environmentally friendly goods, Nestle Leveraging the Hard Discounter Channel, can place its major focus on making such products (E.Quezada, A.Reinao, & I.Palominos, 2019).

Threats

• In recent times, there has been an increase in the bargaining power of suppliers, making it difficult for Nestle Leveraging the Hard Discounter Channel to buy raw materials at lower costs.

• Numerous players are entering the industry, posing a major threat to Nestle Leveraging the Hard Discounter Channel.

• There has been constant pressure on Nestle Leveraging the Hard Discounter Channel to conduct frequent research to understand the changing customer tastes and preferences (Kolbina, 2015).

• Technological advancements require workforce training. This adds to the costs of Nestle Leveraging the Hard Discounter Channel.

VRIO Analysis

Nestle Leveraging the Hard Discounter Channel uses VRIO Analysis to assess and evaluate the company resources to determine the competitiveness, and strategic advantage.

Valuable

• Nestle Leveraging the Hard Discounter Channel has a strong brand image and engages in corporate social responsibility.

• Nestle Leveraging the Hard Discounter Channel has a high brand recognition because of the quality of products it offers to its customers (Ariyani & Daryanto, 2018).

• The distribution system of Nestle Leveraging the Hard Discounter Channel is valued all round the world. The company has been able to successfully establish strong relationships with its suppliers.

• Nestle Leveraging the Hard Discounter Channel focuses on continuous innovation in its business. The company has expanded this innovation in its multiple functional areas.

• There are potential growth opportunities in the market, and Nestle Leveraging the Hard Discounter Channel has been able to penetrate the market through its ability to raise large funds.

Rare

• Nestle Leveraging the Hard Discounter Channel operates globally. This global presence has allowed the company to increase its customer base (Miethlich & G. Oldenburg, 2019).

• Nestle Leveraging the Hard Discounter Channel has an organizational culture that promotes more teamwork, innovation, and creativity among its employees, that leads to a competitive advantage.

• Since Nestle Leveraging the Hard Discounter Channel has a global presence, it allows the company to easily adapt to different cultures, norms and values.

• The risk-taking ability of Nestle Leveraging the Hard Discounter Channel is strong. This provides more opportunities to the company to penetrate different markets.

Inimitable

• The inimitable resource for Nestle Leveraging the Hard Discounter Channel is its high-quality products. These products have allowed consumers to make repeat purchases.

• Nestle Leveraging the Hard Discounter Channel operates through multiple locations of stores in different companies, allowing easy access to products.

• Strong marketing communications have been used by Nestle Leveraging the Hard Discounter Channel to attract more customers.

• Nestle Leveraging the Hard Discounter Channel has been using integrated technology that has allowed it to offer competitive pricing to its customers (Ariwibowo, Saputro, & Haryanto, 2021).

• Nestle Leveraging the Hard Discounter Channel maintains an excellent customer service that has enabled it to have a high brand engagement.

Organization

• Strong financial position has allowed Nestle Leveraging the Hard Discounter Channel to explore more product development opportunities.

• Nestle Leveraging the Hard Discounter Channel is successfully maintaining the efficiency and effectiveness of its business operations with the help of more integrated and advanced technology.

• Employees are given both in-house and off-the-job training opportunities by Nestle Leveraging the Hard Discounter Channel that allow more skills development (Adnan, Abdulhamid, & Sohail, 2018).

• The strong value chain and distribution network has enabled Nestle Leveraging the Hard Discounter Channel to increase its revenue through the sale of its products.

Marketing Mix

Marketing Mix is needed by Nestle Leveraging the Hard Discounter Channel to formulate effective strategies to achieve the company objectives.

Product

• Nestle Leveraging the Hard Discounter Channel has five product categories. Each of these categories has a product line that involves more variety of products (Išoraitė, 2016).

• Highly differentiated products are offered by Nestle Leveraging the Hard Discounter Channel to its customers. These distinctive products are not easily available at competitors.

• The products of Nestle Leveraging the Hard Discounter Channel are of higher quality, and thus, customers pay more prices for these products.

• Nestle Leveraging the Hard Discounter Channel designs products with traditional designs giving customers more product variety.

• Nestle Leveraging the Hard Discounter Channel offers multiple sizes for its every product to make it easy for its customers to select the right product.

• Warranty and same-day delivery option if also provided by Nestle Leveraging the Hard Discounter Channel to its customers.

Price

• Nestle Leveraging the Hard Discounter Channel follows a competitive pricing strategy.

• To attract more customers, bundle pricing has also been used by the company.

• Little higher prices are charged for products that are sold online because of the delivery costs (Thabit & Raewf, 2018).

• Optional product pricing strategy is also adopted by Nestle Leveraging the Hard Discounter Channel for some of its products, such as a base product is offered for a certain price, and there are separate prices for its accessories.

• Regular promotional prices are also offered by Nestle Leveraging the Hard Discounter Channel to its customers.

Place

• Nestle Leveraging the Hard Discounter Channel uses two channels for its product distribution. This includes online selling and through own stores.

• There are more than multiple stores owned by Nestle Leveraging the Hard Discounter Channel globally. This ensures easy product availability to customers (Pogorelova, Yakhneeva, & Agafonova, 2016).

• Nestle Leveraging the Hard Discounter Channel has partnered with delivery service companies to distribute its products effectively to consumers.

• Nestle Leveraging the Hard Discounter Channel has also adopted an omni-channel distribution system.

Promotion

• Nestle Leveraging the Hard Discounter Channel uses a traditional promotional strategy that involves TV advertisements (Fan, Y.K.Lau, & Zhao, 2015).

• Social media advertisements are also adopted by Nestle Leveraging the Hard Discounter Channel to increase brand awareness.

• Nestle Leveraging the Hard Discounter Channel takes part in various events and exhibitions as a way of promoting its products.

• Large sales force is used to provide the customers with a more personal experience.

• Nestle Leveraging the Hard Discounter Channel also makes use of influencer marketing to increase the demand for its products.

• Regular content and deals are posted on the social media pages of Nestle Leveraging the Hard Discounter Channel to attract and retain customers.

Value Chain Analysis

Nestle Leveraging the Hard Discounter Channel can use Value Chain Analysis to identify and assess inter-relationships as well as interdependencies.

Primary Activities

• Nestle Leveraging the Hard Discounter Channel’s primary activities involves the production and selling of products to the final consumers (Mintz, J.Gilbride, & Lenk, 2021).

• Nestle Leveraging the Hard Discounter Channel has a strong relationship with the suppliers. This ensures that the product is received, stored, and distributed in a timely manner.

• Operational activities of Nestle Leveraging the Hard Discounter Channel are effectively aligned.

• For inbound logistics, after the arrival of raw material, the company processes it to manufacture the final product (Hasan, Nekmahmud, & Yajuan, 2019).

• In terms of outbound logistics, Nestle Leveraging the Hard Discounter Channel has been able to set up optimal costs as well as efficient delivery processes to deliver the product on time.

• Nestle Leveraging the Hard Discounter Channel invests in its sales and marketing activities to build relationships with customers.

• Marketing funnel approach is used by Nestle Leveraging the Hard Discounter Channel to effectively devise and build sales and marketing activities.

• Nestle Leveraging the Hard Discounter Channel offers both pre-sale and post-sales services to its customers.

Secondary Activities

• Nestle Leveraging the Hard Discounter Channel has an effective infrastructure that has allowed the company to successfully optimize its value chain.

• The competitive pressure in terms of employee skill development, motivation, and commitment is reduced as Nestle Leveraging the Hard Discounter Channel has developed a strong HRM (Linkov, Carluccio, Pritchard, & Bhreasail, 2020).

• Nestle Leveraging the Hard Discounter Channel uses a cost minimization approach to reduce its costs by analyzing the costs associated with training and hiring the employees.

• Nestle Leveraging the Hard Discounter Channel has been using integrated technology in its value chain activities. This includes technological customer support, research and data analytics concerning product design, and automated software.

• The procurement activities of Nestle Leveraging the Hard Discounter Channel are effectively optimized with its inbound, outbound, and operational activities (Maheswari, Yudoko, & Adhiutama, 2019).

Market Penetration Strategies

• Nestle Leveraging the Hard Discounter Channel can increase the capacity of its production so it can reach more of the customers in its existing market.

• Nestle Leveraging the Hard Discounter Channel can focus on controlling the overhead costs so that it can offer competitive pricing that can attract customers of the market (Dawes, 2018).

• Investments can be made by Nestle Leveraging the Hard Discounter Channel in marketing and sales activities to increase the chances of successful market penetration.

• Nestle Leveraging the Hard Discounter Channel can design and develop a content that increases customer engagement within a particular marketplace.

• Nestle Leveraging the Hard Discounter Channel can assess and identify more enhanced distribution networks (Radpour, Mondal, & Kumar, 2017).

• Improved distribution systems and supply chains can improve the product accessibility for the customers, making it easier for Nestle Leveraging the Hard Discounter Channel to penetrate the market.

• Nestle Leveraging the Hard Discounter Channel can adopt price cuts in its products to compete in the market. This will give a company a competitive edge over its competitors.

• Nestle Leveraging the Hard Discounter Channel can plan strategies where it can focus on acquiring the leading players of the market. Such acquisitions will give the company an opportunity to reach more customer segments.

• Strategic partnerships and joint ventures agreements can be signed by Nestle Leveraging the Hard Discounter Channel to mitigate the risk factors, and to gain customer groups of the market.

• Nestle Leveraging the Hard Discounter Channel can come up with new and innovative features in its already existing product for the market (Daouda, Barth, & T. M. Ingenbleek, 2019).

Market Development Strategies

• It is important for Nestle Leveraging the Hard Discounter Channel to invest in the research and development department so potential markets can be identified (Hilman, Bohari, & Abdullah, 2018).

• Regional expansion strategy can be used by Nestle Leveraging the Hard Discounter Channel for growth purposes. This will also take into consideration the cultural differences.

• Nestle Leveraging the Hard Discounter Channel should also consider to expand its business operations in the international market. This will allow access to a larger customer base.

• New customer groups and segments should be explored by Nestle Leveraging the Hard Discounter Channel.

• Nestle Leveraging the Hard Discounter Channel should also invest in brand-building activities as it will give an opportunity to reach more potential customers (C. Koks & M. Kilika, 2016).

• Nestle Leveraging the Hard Discounter Channel should consider the market education in terms of its product. The company can significantly increase its sales by giving product awareness to new segments.

Product Development Strategies

• Nestle Leveraging the Hard Discounter Channel can come up with new improvements and modifications in the existing products to attract the market.

• Nestle Leveraging the Hard Discounter Channel should undergo the NPD process, so the company is able to assess and identify new points for its customers.

• Regular investments in the research and development will help Nestle Leveraging the Hard Discounter Channel to develop something new and innovative that can give a competitive advantage (Kalogiannidis & Mavratzas, 2020).

• Nestle Leveraging the Hard Discounter Channel can develop new products by getting into more strategic partnerships.

Diversification Strategies

• Nestle Leveraging the Hard Discounter Channel can adopt vertical diversification to develop business. This can be done by adding more products to the existing portfolio (Kalogiannidis & Mavratzas, 2020).

• Horizontal integration can also be adopted by Nestle Leveraging the Hard Discounter Channel, where the company can enter into a completely new product development phase that does not exist in the current product line.

• Nestle Leveraging the Hard Discounter Channel can also consider to conglomerate by starting a different business.

Conclusion

Based on all the models and frameworks discussed above, it is concluded that Nestle Leveraging the Hard Discounter Channel should focus on widening the existing product portfolio. Moreover, the psychological pricing strategy can be adopted. Nestle Leveraging the Hard Discounter Channel should also maintain close relationships with its suppliers to benefit from lower prices. Similarly, Nestle Leveraging the Hard Discounter Channel should develop more integrated outbound logistics for its perishable items. It is also important to continue producing quality and innovative products, so Nestle Leveraging the Hard Discounter Channel is less affected by the new emerging competition in the industry.

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