Business strategy assignment 2

Assignment Received By: Date:

BANKING ACADEMY OF VIETNAMBTEC HND IN BUSINESS (ACCOUNTING)

ASSIGNMENT COVER SHEET

NAME OF STUDENT Nguyễn Thị Kiều Anh - Snow - F05A

UNIT TITLE Unit 7 Business Strategy

ASSIGNMENT TITLE Nestle Strategic Evaluation and Implementation

NAME OF ASSESSOR PhD Pham Quoc Khanh

SUBMISSION DEADLINE 9th June 2014

I, _Nguyen Thi Kieu Anh hereby confirm that this assignment is my own work and not copied or plagiarized from any source I have referenced the sources from which information is obtained by me for this assignment.

Unit Outcomes

OutcomeEvidence for the

criteriaFeedbackAssessor’s decision

Merit grades awardedM1M2M3

Distinction grades awardedD1D2D3

( ) Well-structured; Reference is done properly / should be done (if any)

Overall, you’ve

Areas for improvement:

ASSESSOR SIGNATURE DATE / /

(Oral feedback was also provided)

STUDENT SIGNATURE DATE / /

NESTLÉ STRATEGIC EVALUATION AND IMPLEMENTATION

Prepared for:

Lecturer, PhD Pham Quoc Khanh Unit 7: Business Strategy Banking Academy, Hanoi BTEC HND in Business (Finance)

Prepared by:

Nguyễn Thị Kiều Anh – Snow - F05A Registration No: ITP F05-014 Submission date: 9th June 2014

TABLE OF CONTENTS

EXECUTIVE SUMMARY 6

4.1 Compare the roles and responsibilities for strategy implementation 8

4.1.1 Role and responsibility for strategy implementation of Nestlé 9

4.1.2 Role and responsibility for strategy implementation of Starbucks 11

4.1.3 Conclusion 13

4.2 Evaluate resource requirements to implement a new strategy for a given organisation 14

4.2.1 Resources for each activities 14

4.2.2 Summary of resource allocation for each stages 20

4.3 Discuss targets and timescales for achievement in a given organisation to monitor a given

EXECUTIVE SUMMARY

In the previous report, I prepared an outlines of business environment of Nestlé for the purpose of supporting future strategy formulation and planning in this report As an assistant research analyst working in a team for a research firm in Vietnam My task in this report is to provide to our team leaders on the following for the coming discussion with the client.

The presentation notes are addressed on the following matter:

 Analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment

 Select an appropriate future strategy for Nestle Vietnam

A report format on the situation between Nestlé and Starbucks demand in the consumer’s

market based on the following below for the coming discussion:

 Compare the roles and responsibilities for strategy implementation in two different organisations (Nestle against its nearest competitor)

 Identify and evaluate resource requirements to implement a new strategy for Nestle Vietnam

 Discuss targets and timescales for achievement in Nestle to monitor a given strategy

INTRODUCTION

Nestlé is a multinational corporation, headquarter in Switzerland, is one of the largest food company in the world Nestlé Vietnam which is established in 1992 is a member of Nestlé Global After more than 10 years operating, Nestlé Vietnam has become one of the successful company in the field of beverage drink and nourishing food in Vietnam market Nestlé Vietnam has gradually confirmed as a leading food company in Vietnam deserves to be a member of Nestlé Global One of the key factors contributing to Nestlé Vietnam success is due to building business strategy rightly, flexibly, and determining to pursue this strategy for a long time

In this report, I will compare the roles and responsibilities for strategy implementation between Nestlé and Starbucks, identify and evaluate resource requirements to implement a new strategy for Nestle Vietnam From that, discuss targets and timescales for achievement in Nestle to monitor a given strategy.

As to complete this report, I based on information in the Business Strategy course book and some reference books, many sources from internet, newspapers Specifically, I would like to express my deep gratitude to my lecturer, PhD Pham Quoc Khanh who supports, motivates me during the process of completing this report

Summary of strategy (5-year objectives, strategy and main activities)

Objective 1

Belonging to top three leading food and

 Do market research and market segmentation to identify new groups of customers àDeveloping new distribution channels  Do research about Vietnamese’s tastes about

successful brand name (Nescafé, Nestea, Milo ) à Carrying on R&D activities for new flavours, added ingredients to meet more

 Do market research about customers’ demand à Develop new promotion and advertising plans to attract new customers (packaging size, different pricing policies…)

 Set up new production line for the best quality of product and supply enough amount of goods for customers demand

 Provide training farmer to supply enough the amount of materials Nestlé need in production process

4.1 Compare the roles and responsibilities for strategy implementation

Nestlé joins Vietnam market in 1992 while it was not until 2013 Starbucks joins officially into Vietnam market In Vietnam market, Nestlé launched many products with many brand name such as Nescafé, Nestea, Maggie, Milo ; while Starbucks penetrates Vietnam market mainly by Starbucks coffee along with handcrafted beverages, non-coffee beverages, fresh foods With difference about joining time and range of brand products, these two companies have large gaps In some research, it is said that Starbucks and Nestle aren’t exact competition in Vietnam With strategy I recommend for Nestlé in the first parts In this part, I will show differences in implementing strategies between two companies within Vietnam market in order to clarify better that matter.

4.1.1 Role and responsibility for strategy implementation of Nestlé

out each activities

- Do market research to find out new potential segments in Hanoi, HCM, Da Nang, Hai Phong

- Contact and arrange the meeting to discuss, negotiate and create relationship with new potential distribution channels (retailers, wholesale

- Conduct survey to know customer needs and wants in new areas

- Set suitable promotion campaigns (packaging size, different pricing policies ) for each kind of customers

- Carry out campaigns

Sale and Marketing

- Make a plan for buying new production (list of suppliers, cost of new

- Take agreement from mother company to invest to set up new production line (additional capital, budget)

- Choosing a good production line

Administration

Launching new product of Nescafé, Nestea with new flavor, added ingredients to meet Vietnamese preference

- Do research about Vietnamese’s tastes (coffee, tea) in different areas - Generate ideas and identify goods ones

- Develop and test the new product

R&D

- Control quality of new product sampling before launching into market Quality Control - Develop suitable and effective marketing strategy to launch new product Marketing

Double customer awareness to Nestlé product

- Provide advertising campaign such as posters, magazines, TV, internet, holding workshops to present new products and make it closer to customers, do charity to make beautiful image in customers’ eyes

- Customer consulting to help customers know deeply about features of Nestlé’s product so that they can exploit the its innovation in flavor, healthy safety

Sale and Marketing

Training 5,000 Vietnamese farmer to support for supplying material for Nestlé

- Research climate change (plants) and infectious diseases (animals) in Vietnam to give solutions for each situation, ensure smarter use natural resources by not wasting, not polluting, not destroying

- Take employees who were educated to support for Vietnamese farmers steps in producing raw material (train in techniques to adapt to climate change temperature increases and limited rainfall )

- Listen farmers’ questions and opinions to answer, assist them immediately

Human resources

4.1.2 Role and responsibility for strategy implementation of Starbucks

Selling the finest quality coffee and related products

At Starbucks, coffee is the heart and soul of our company - Ensure 100% of coffee is ethically

- Commit to buying and serving high-quality coffee that is responsibly grown and ethically traded by responsible coffee purchasing practices, farmer support, loan programs and forest conservation efforts à Starbucks believed that it will helps foster a better future for farmers and helps mitigate the impacts of climate change (more stable climate) for the planet (Starbucks, n.d.)

- All Starbucks coffee which is manufactured in America also ensure meet standards for high quality before being exported into Vietnam market selling

- Open fourth stores in Vietnam market in order to supply Vietnamese demands in different areas with slogan “We are brewing a new store and will be serving you soon” (all stores of Starbucks is opened at the most beautiful, expensive places in Vietnam)

- Besides selling its products through direct retail system in company-owned stores, Starbucks also sells its products in shopping centres, has distribution agreements with office coffee suppliers, hotels and airlines (focus on luxury

R&D, Business planning, Sale and Finance department

Provide each customer a unique Starbucks

- Starbucks created a coffee culture, educating its customers on the coffee types, origins and the roasting process This in turn helps Starbucks to build brand credibility and equity.

- Customers is enjoyed coffee with customer target middle class to upper class (priced slightly more expensive than expected based on brand identification - expressed ‘American dream’ toward Vietnamese) at unique and relaxing “experience” and “atmosphere” for people to go to between home and work with slogan “people come here for the coffee, but ambience is what makes them want to stay” (Dang, 2013).

- Stores is decorated with main color is green and white which similar to its logo in order to deliberately appeal to consumers who were upwardly mobile and environmentally aware (Giedt, 2012)

Sale, Marketing and Design department

Increasing efforts to sell ready-made drinks, coffee beans

- Making employees feel value in order to increase their performance

- Create a Starbuck community - The Starbucks marketing strategy has even expanded to create a community around their brand On their website, individuals are encourages to express their experiences with Starbucks history, and the company strives to personally join in the discussions

- Brand marketing: the Starbucks market strategy has always focus on “word-of-mouth” advertising and letting the high quality of their products and services speak for themselves

Sale, Marketing and Finance department

- Promotion: Internal advertisements within its retail stores such as posters, new product signage and other internal means, develop its promotion through media, electronic media and social network (official facebook of Starbucks and Twitter) (Moratin, 2011).

4.1.3 Conclusion

By analyzing about strategy implementation, I draw conclusion of differences between Nestlé and Starbucks as follows:

Focus on increasing productivity (has factories to manufacture foods and beverages in Vietnam)

Focus on increasing sales (do not have factories to manufacture, mainly selling its products through direct retail system in company-owned stores)

Manufacturing to distributing to retailers, wholesale dealer, large supermarkets in Vietnam (by developing distribution channels)

Delivery products directly to each customer (by its own stores with creating customer experiences )

Increasing sales by launching products with competitive prices, cheap product segments )

Increasing sales by brand identification with high prices, focus on middle and upper class

Export products which is manufactured in Vietnam factories into other countries

Import products which is manufacturing of mother company into Vietnam market

Developing products by enhancing variety of flavour by modifying famous brand

Developing products by ensuring that providing 100% of coffee is ethically and environmentally aware

Tapping into Vietnamese resources Build demand in Vietnamese consumer market From the table above, we can clarify statement that Starbucks and Nestle aren’t exact competition in Vietnam market.

4.2 Evaluate resource requirements to implement a new strategy for a given organisation4.2.1 Resources for each activities

StageSub-objectivesKey activities to achieve the

Do market research to find out new potential segments in Hanoi, HCM, Da Nang, Hai Phong

Contact and arrange the meeting to discuss negotiate and create

relationship with new potential distribution channels (retailers, wholesale dealers )

Prepare documents and legal procedure for signing contract

Administratio n

- Human resources: Need 20 people of administration department

- Finance: This is assigned work of staffs

- Information: time to meet new potential distribution channels, terms of contract and time to sign contract - Time: 1 month

Maintaining customer base and increasing number

Conduct survey to know customer needs and wants in new areas

Sale and Marketing

- Human resource: 3 teams (1 team to conduct market survey, 1 team to plan promotion campaigns, and 1 team to carry out campaigns)

of new customers by 15%.

Set suitable promotion campaigns (packaging size, different pricing policies ) for each kind of customers

Carry out campaigns

- Finance resource: about 400 million VDN for each campaign

- Information: lists of collected information from survey

to find out customer needs and wants

- Time: 1 month to conduct survey, 1 month to prepare plans, 4 months to carry out advertising and

Make a plan for buying new

production (list of suppliers, cost of new production line )

Administratio n

- Human resources: 5 people in business planning department

- Finance: This is assigned work of staffs

- Information: lists of supplier, cost of production line - Time: 2 months

- Human resources: Business planning department - Finance: This is assigned work of staffs

- Information: cost arising in purchase and installation process

- Time: 1 months Take agreement from mother

company to invest to set up new production line (additional capital,

Choosing a good production line

Carry out setting up new production

- Human resources: Information and technology - Finance: 200 million VND

- Information: technical data and operating situation of new production line after installation

Do research about Vietnamese’s tastes in different areas

Generate ideas and identify goods ones

Develop and test the new product

R&D

- Human resources: All people in this department - Finance: 3 billion VND (500 million for researching

Vietnamese tastes, 2.5 billion for developing and testing the new product)

- Information: detail of plan and arising problem in research customers’ demand and research and developing process of new product

- Time: 1 years

Produce sample of new product Production

- Human resources: Production department - Finance: 100 million VND

- Information: detail of ingredients of new product - Time: 2 months

Control quality of new product sampling during manufacturing new

- Finance: This is assigned work of staffs

- Information: the quality checklists after testing new products