Report on Nestle

Good Food, Good Life

International Business
A report submitted to the faculty of School of Business as a partial requirement of International Business (Mgt 372) course, fall 2010.

Prepared For:
Rezwanul Hasan Rana
Course Instructor (Mgt 372) School of Business North South University

NORTH SOUTH UNIVERSITY

December 22, 2010 Rezwanul Hasan Rana Faculty School of Business North South University Dhaka. Re: Submission of Report on Mgt 372. Sir, It is our great pleasure to submit the report that you assigned to us as a partial requirement of the course Mgt 372. We thank you for allowing us the opportunity to do the project on this topic. All of us put our best effort to follow your guidelines. Still there might be some errors due to our lack of experience. We appreciate all sort of criticism and welcome further queries. We will always be available for any supplementary interpretation or clarification that may require. This report definitely gives us an exceptional experience that will be used in the future. We hope that our report will live up to your expectations and will throw some light on the issue.

Sincerely,

ACKNOWLEDGEMENT
This project has been an eye-opener for us and we have been fortunate to have the support, assistance and encouragement of a number of individuals while preparing this report. Without their support it would have been hard to complete this study.

First of all, we would like to express our sincere gratitude to our respected course instructor Rezwanul Hasan Rana, Faculty, School of Business, North South University for guiding us and for his suggestions regarding our project which helped us a lot throughout preparing the project till the completion. Without his support this report would not have been possible.

A special thank goes to the team members whose unflagging capacity for creative work and long hours made the project successful under the pressure of deadlines.

A special recognition is extended to all of those who contributed to this report by taking part in preparing the report and thus presenting their valuable opinions to us.

All in all, it was a wonderful experience to work as a team in doing the project work and preparing this report.

TABLE OF CONTENT

Executive summary Introduction Product line of Nestle Background of Nestle Research & Development Controversy & Criticisms Profitability Ratios Nestls strategy Strategy that is useful for BD company Reference

07 08 09-10 11-17 18-22 23-25 26-32 33-37 38-39 41

Executive Summary:
This is a report about the Nestle Company. It starts with an introduction about Nestle followed by the history of nestle. This report discusses the R & D department of Nestle and the controversy that nestle is facing over time. This reports includes the strategy of doing business of nestle. All the international strategy, corporate strategy, marketing strategy has been discussed and explained to reveal the significance of adopting unique strategy in all the level of organization. The report shows last five years financial information. Based on this information, we have prepared the next five years Profitability ratios. Also it discusses how the Nestls strategy can be used for a Bangladeshi Multinational Company.

Introduction
Nestl S.A. is the largest food and beverage company in the world, with a manufacturing facility or office in nearly every country of the world. Nestl often is referred to as "the most multinational of the multinationals." Nestl markets approximately 7,500 brands organized into the following categories: baby foods, breakfast cereals, chocolate and confectionery, beverages, bottled water, dairy products, ice cream, prepared foods, foodservice, and pet care. Nestle is founded and headquartered in Vevey, Switzerland. Nestle originated in a 1905 merger of the Anglo-Swiss Milk Company, which was established in 1866 by brothers George Page and Charles Page, and the Farine Lactee Henri Nestle Company, which was founded in 1866 by Henry Nestle, whose name meant "Little Nest". Today, the company operates in 86 countries around the world and employs nearly 283,000 people.

Product line of Nestle

cereals

Coffee

Water

Chilled

Ice Cream

Infant Foods

Performace nutrition

Healthcare nutrition

Seasonings

Frozen foods

Refrigerated products Chocolate,confectionary & baked goods Petcare

Nestle Products

Background of Nestle
1866-1905

The key factor which drove the early history of the enterprise that would become The Nestl Company was Henri Nestl's search for a healthy, economical alternative to breastfeeding for mothers who could not feed their infants at the breast. In the mid-1860s Nestl, a trained pharmacist, began experimenting with various combinations of cow's milk, wheat flour and sugar in an attempt to develop an alternative source of infant nutrition for mothers who were unable to breast feed. He called the new product Farine Lacte Henri Nestl. Nestls first customer was a premature infant who could tolerate neither his mother's milk nor any of the conventional substitutes, and had been given up for lost by local physicians. Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by Americans Charles and George Page, broadened its product line in the mid-1870s to include cheese and infant formulas. The Nestl Company, which had been purchased from Henri Nestl by Jules Monnerat in 1874, responded by launching a condensed milk product of its own. The two companies remained fierce competitors until their merger in 1905. Some other important firsts occurred during those years. In 1875 Vevey resident Daniel Peter figured out how to combine milk and cocoa powder to create milk chocolate. Peter, a friend and neighbor of Henri Nestl, started a company that quickly became the world's leading maker of chocolate and later merged with Nestl. In 1882 Swiss miller Julius Maggi created a food product utilizing legumes that was quick to prepare and easy to digest. His instant pea and bean

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soups helped launch Maggi & Company. By the turn of the century, his company was producing not only powdered soups, but bouillon cubes, and sauces and flavorings.

1905-1918

Fierce competition for the condensed milk market raged in the early twentieth century. The Company formed by the 1905 merger was called the Nestl and Anglo-Swiss Milk Company. By the early 1900s, the Company was operating factories in the United States, Britain, Germany and Spain. In 1904, Nestl added chocolate to its range of food products after reaching an agreement with the Swiss General Chocolate Company. Condensed-milk exports increased rapidly as the Company replaced sales agents with local subsidiary companies. In 1907, the Company began full-scale manufacturing in Australia, its second-largest export market. Warehouses were built in Singapore, Hong Kong, and Bombay to supply the rapidly growing Asian markets. Most production facilities remained in Europe, however, and the onset of World War I brought severe disruptions. Acquiring raw materials and distributing products became increasingly difficult. Fresh-milk shortages throughout Europe forced factories to sell almost all their supplies to meet the needs of local towns. However, by war's end, the Company had 40 factories, and its world production had more than doubled since 1914.

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1918-1938

The end of World War I brought with it a crisis for Nestl. Government contracts dried up following the cessation of hostilities, and civilian consumers who had grown accustomed to condensed and powdered milk during the war switched back to fresh milk when it became available again. In 1921, the Company recorded its first loss. Rising prices for raw materials, the worldwide postwar economic slowdown, and deteriorating exchange rates deepened the gloom. Nestl's management responded quickly, bringing in Swiss banking expert Louis Dapples to reorganize the Company. He streamlined operations to bring production in line with sales and reduced the Company's outstanding debt. The 1920s also saw Nestl's first expansion beyond its traditional product line. The manufacture of chocolate became the Company's second most important activity. New products appeared steadily: malted milk, a powdered beverage called Milo, a powdered buttermilk for infants, and, in 1938, Nescaf.

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1938-1944

The effects of the onset of World War II were felt immediately by Nestl. Profits dropped from $20 million in 1938 to $6 million in 1939. Neutral Switzerland became increasingly isolated in a Europe at war, and the Company transferred many of its executives to offices in Stamford, Connecticut.

Ironically, World War II helped speed the introduction of the Company's newest product, Nescaf. After the United States entered the war, Nescaf became a staple beverage of American servicemen serving in Europe and Asia. Annual production levels reached one million cases by 1943. As in World War I, production and sales rose in the wartime economy: Nestl's total sales jumped from $100 million in 1938 to $225 million in 1945. As the end of the war approached, Nestl executives found themselves unexpectedly heading up a worldwide coffee concern, as well a company built upon Nestl's more traditional businesses.

1944-1975

The close of World War II marked the beginning of the most dynamic phase of Nestl's history. Throughout this period, Nestl's growth was based on its policy of diversifying within the food sector to meet the needs of consumers. Dozens of new products were added as growth within the Company accelerated and outside companies were acquired. In 1947, Nestl merged with Alimentana S.A., the manufacturer of Maggi seasonings and soups, becoming Nestl Alimentana Company. The acquisition of Crosse & Blackwell, the British
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manufacturer of preserves and canned foods, followed in 1950, as did the purchase of Findus frozen foods (1963), Libby's fruit juices (1971) and Stouffer's frozen foods (1973). Meanwhile, Nescaf continued its astonishing rise. From 1950 to 1959, sales of instant coffee nearly tripled, and from 1960 to 1974, they quadrupled. The Company's total sales doubled twice in the 15 years after World War II. The development of freeze-drying led to the introduction, of Taster's Choice instant coffee, in 1966. Finally, Nestl management reached the decision to diversify for the first time outside the food industry. In 1974, the Company became a major shareholder in L'Oral, one of the world's leading makers of cosmetics.

1975-1981

After the agreement with L'Oral in 1974, Nestl's overall position changed rapidly. For the first time since the 1920s, the Company's economic situation deteriorated as the price of oil rose and growth in the industrialized countries slowed. In addition, foreign exchange rates deteriorated with the French franc, dollar, pound sterling, and mark all losing value relative to the Swiss franc. Finally, between 1975 and 1977, the price of coffee beans quadrupled, and the price of cocoa tripled. As in 1921, the Company was forced to respond quickly to a radically changed marketplace.

1981-1996

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Under a new Chief Executive Officer, Helmut Maucher, Nestl approached the 1980s with a renewed flexibility and determination to evolve. The Company's strategy for this period was twofold: improve its financial situation through internal adjustments and divestments, and continue its policy of strategic acquisitions.

In 1984, Nestl's improved bottom line allowed the Company to launch a new round of acquisitions, including a public offer of $3 billion for the American food giant Carnation. At the time, the takeover, sealed in 1985, was one of the largest in the history of the food industry.

1996-on

The first half of the 1990s proved to be a favorable time for Nestl: trade barriers crumbled and world economic markets developed into a series of more or less integrated trading areas. The opening of Central and Eastern Europe, as well as China, and a general trend towards liberalization of direct foreign investment was good news for a company with interests as far-flung and diverse as Nestl. While progress since then has not been as encouraging, the overall trends remain positive.

The Company's strategy will continue to be guided by several fundamental principles. Nestl's existing products will grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential will never be sacrificed for shortterm performance. The Company's priority will be to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives.

Key Dates:
1866: The Anglo-Swiss Condensed Milk Company is founded in Cham, Switzerland.
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1867: Henri Nestl begins selling cow's milk-food in Vevey, Switzerland. 1900: Nestl opens a factory in the United States. 1905: Nestl and the Anglo-Swiss Condensed Milk Company merge. 1938: Nestl introduces Nescafe. 1974: Nestl enters the nonfood business, becoming a major shareholder of the cosmetics company L'Oral. 1979: After numerous name changes, Nestl S.A. is adopted as the official corporate title of the company. 1985: Nestl acquires Carnation and Hills Brothers Inc. 1992: Nestl acquires Perrier. 1998: Nestl acquires the Spillers pet food business belonging to Dalgety PLC, making it the second largest pet food maker in Europe. 2002: Nestl acquires Ralston-Purina to become co-leader in the global pet food business. 2003: Nestl acquires Dreyer's Grand Ice Cream. 2005: Chief executive officer Peter Brabeck-Letmathe is named chairman of the board.

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Research & Development

Nestl Research provides solutions for good-tasting food beverages, as well as services that bring nutrition, health and wellness to consumers.

Nestle Research Vision

Without Nestls R&D, it could not have become the food industry leader in nutrition, health and wellness.

Nestle is probably unique in the food industry in having an integrated research and development program that engages in applied and basic research in the fields of human physiology, health, nutrition and raw materials. The research and development program gives them the capacity to create new types of products that they cannot even imagine today, especially in the critical area where preventive medicine and food products overlap. In addition, as concern for the environment grows, research will play an important role in overcoming environmental problems. For Nestle, this is particularly important in packaging. Concern for the effects of packaging on the environment is forcing them to look for new solutions and to consider their interaction with their biological product -- food.

Product Development
Behind every one of Nestls products is a team of scientists, product developers, designers, nutritionists, consumer service representatives and regulatory affairs specialists.

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The diagram above shows some of the steps, where these experts are involved, from identifying the initial consumer benefit to the product launch and on towards continuous improvement. Nestl R&D projects are the first step in a pipeline of innovative nutrition solutions for products of the future, across all our business categories.

Innovation
Svelty Gastro Protect
Key consumer benefits: Gastric comfort

Svelty Gastro Protect is a fermented milk drink that contains Nestls proprietary probiotic strain Lactobacillus johnsonii, La1. Nestl has done many scientific studies on La1, which include its application for naturally helping to control Helicobacter pylori infection and the stomach discomfort that is associated with it.

Meaty soup granules

Key consumer benefit: Flavour

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Maggi Mysabaw is a granulated meaty soup bouillon with the delicious flavour of meat, umami, and the fresh taste of onion and garlic. This granulated meaty soup bouillon greatly enhances and enriches the flavour of home-made chicken, pork and beef soups and soup dishes. The product was developed at Nestl R&D Shanghai by applying Nestls know-how in Chinese granulation technology with fresh ingredients. This unique granulation technology provides the means for making seasoning granules for a wide range of food and beverage products with the benefits of excellent product appearance and better retention of fresh flavors and aroma.

Pet care
Size matters: How do you know if your pet is overweight? Key consumer benefits: Weight management

Studies show that over a 1/3 of pet owners think their pet is overweight. But many owners dont realise or know what actions to take to get them back in shape. Experts at Nestl Purina have developed a simple tool that asks people to get hands-on, to help identify their dog or cats true body condition. The tool is supported with other interactive applications and articles with lots of help and advice. There are also diaries following real life case studies which address the complicated issues around weight management to help motivate owners facing similar problems.

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Sensational pleasure from La Laitire

Key consumer benefits: Indulgence and pleasure

Feuillet de Mousse is an innovative new dessert under the La Laitire brand. It was launched in March 2009 in France and Belgium. This product provides a unique combination of textures and flavours, combining a light, aerated, creamy mousse with a thin, cracking chocolate marble. This sophisticated product is the culmination of several years of R&D at Nestls Product Technology Centre in Lisieux, which specialises in the technology and know-how for chilled dairy products world-wide. The patented technology* used in Feuillet de Mousse is already the third patent on providing the benefit of solid chocolate in a dairy matrix, building on the patented process used in La Laitire Craquant et Fondant chilled dessert, available in France and Belgium. Innovation in Feuillet de Mousse extends beyond the dessert to the pots.

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Reduction in environmental impact of packaging

Key consumer benefit: Lightweight packaging

Nestl is committed to reducing the environmental impact of packaging without jeopardizing the safety, quality or consumer acceptance of its products. Nestl is constantly reducing the weight and volume of packaging materials, and uses recycled materials wherever possible. Over the long term the company is also committed to research and development that will enable it to use materials from sustainably-managed renewable resources.

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Affordable fortified milks

Key consumer benefits: Affordable nutrition

Making good nutrition affordable is one of many challenges for Nestl R&D. World-wide, malnutrition in children includes micronutrient deficiencies in iron, iodine, vitamin A and zinc. This problem is especially common in developing countries, and therefore the problem affects large numbers of consumers who have low disposable incomes. Milk is a good source of nutrition. It is also a good carrier of micronutrients, and so Nestl scientists are developing recipes for fortified growing up milks that address local nutrition needs. Nestl has various approaches for making these milks affordable, such as sourcing milk from local farmers, manufacturing products locally, and using local distribution networks.

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Controversy and criticism

Marketing of formula
One of the most prominent controversies involving Nestl concerns the promotion of the use of infant formula to mothers across the world including developing countries an issue that attracted significant attention in 1977 as a result of the Nestl boycott which is still ongoing. Nestle continues to draw criticism that it is in violation of a 1981 World Health Organization code that regulates the advertising of breast milk formulas. Nestl's policy, however, states that breast milk is the best food for infants; however, women who cannot or choose not to breast feed for whatever reason do need an alternative to ensure that their babies are getting the nutrition they need.

Melamine in Chinese milk

In late September 2008, the Hong Kong government claimed to have found melamine in a Chinese-made Nestl milk product. The Dairy Farm milk was made by Nestl's division in the Chinese coastal city Qingdao. Nestl affirmed that all its products were safe and were not made from milk adulterated with melamine. On October 2, 2008 the Taiwan Health ministry announced that six types of milk powders produced in China by Nestl contained traces of melamine. Nestl has announced that it will begin a recall of milk products produced in China.

Green washing
A coalition of environmental groups filed a complaint against Nestl to the Canadian Code of Advertising Standards after Nestl took out full page advertisements in October 2008 claiming that "Most water bottles avoid landfill sites and are recycled", "Nestl Pure Life is a healthy, ecofriendly choice" and that "Bottled water is the most environmentally responsible consumer product in the world. A spokesperson from one of the environmental groups stated: "For Nestl to claim that its bottled water product is environmentally superior to any other consumer product in the world is not supportable. In their 2008 Corporate Citizenship Report, Nestl themselves stated that many of their bottles end up in the solid waste-stream and that most of their bottles are not recycled. The advertising campaign has been called green washing.

Zimbabwe farms
In late September 2009, it was brought to light that Nestl was buying milk from illegally-seized farms currently operated by Robert Mugabe's wife, Grace Mugabe. Mugabe and his regime are currently subject to European Union sanctions. Nestl later stopped buying milk from the dairy farms in question.
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Palm oil use

Rapid deforestation in Borneo and other regions to harvest hardwood and make way for oil palm plantations sends massive amounts of carbon dioxide into the atmosphere. In particular, where peat swamp forests are cleared, destroying the habitat for many threatened species of animals such as the orangutan, much public attention has been given to the environmental impact of palm oil and the role of multi-nationals such as Nestl in this. There is ongoing concern by various NGOs including Greenpeace. Nestl were met with "a deluge of criticism from consumers, after a large number of Face book users posted negative comments about the company's business practices."Nestl's attempt to engage with the issue was met with criticism, including headlines stating: "Nestl fails at social media", and "Nestl Loses Face On Face book". Nestl Chairman, Peter Brabeck-Letmathe, in answer to a question from Greenpeace, told the Companys Annual General Meeting in Lausanne on April 15, 2010 that in 2009 Nestl used 320,000 tons of palm oil worldwide, comparing this with the 500,000 tons of palm oil used for biodiesel in Germany and Italy alone. In May 2010 Nestl said it was inviting The Forest Trust, a not-for-profit group, to audit its supply chain and promised to cancel contracts with any firm found to be chopping down rainforests to produce the palm oil which it uses in Kit Kat, Aero and Quality Street. Greenpeace welcomed the agreement promising to monitor it closely.

E. coli
In June 2009, an outbreak of E. Coli O157:H7 was linked to Nestl's refrigerated cookie dough originating in a plant in Danville, Virginia. In the USA, the caused sickness in at least 69 people in 29 states, half of whom required hospitalization. Following the outbreak, Nestl voluntarily recalled 30,000 cases of the cookie dough. How the dough became contaminated is unclear, because E. Coli is not known to live in any of its constituent ingredients.

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Financial part
Formula for Profitability Ratio
1) 2) 3) 4) 5)
Gross profit margin = Gross profit/Net sales Operating Profit Margin= Operating profit/Net sales Net Profit Margin= Net profit (after taxes)/ net sales Return on Asset=Net profit/ total asset Return on Equity= Net profit/shareholders equity

ITEMS
2009 Gross Profit Operating Profit Net Profit Net Sales Total Asset 73,699,000,000 17,934,000,000 22,428,000,000 2008 67,442,622,000 15,903,627,000 18,039,000,000 2007 62,515,000,000 14,434000,000 10,649,000,000 2006 57,745,000,000 12,786,000,000 9,849,000,000 2005 11,720,000,000 8,345,000,000 4,438,000,000 91,075,000,000

107,618,000,000 109,908,000,000 107,552,000,000 98,458,000,000

110,916,000,000 110,916,000,000 114,659,000,000 101,805,000,000 33,206,000,000 52,631,000,000 54,234,000,000 52,848,000,000 25,821,000,000

Shareholders 53,631,000,000 Equity

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Profitability Ratios

2009

2008

2007

2006

2005

Gross Profit Margin Operating Profit Margin

68.48%% 16.67%

61.36% 14.47%

58.13% 13.42%

58.65% 12.98%

12.87% 9.16%

Net Profit Margin Return on asset Return on Equity

20.84% 20.22% 41.82%

16.41% 16.26% 34.27%

9.90% 9.29%% 19.64%

10.00% 9.67% 18.64%

4.87% 13.37% 17.19%

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Net Profit
In millions of CHF
25,000 20,000 15,000 10,000 5,000 0 2005 2006 2007 2008 2009 Series 3 Series 2 Series 1

Net Sales
In millions of CHF
120,000 100,000 80,000 Series 3 60,000 40,000 20,000 0 2005 2006 2007 2008 2009 Series 2 Series 1

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ROA In %
30 25 20 Series 3 15 10 5 0 2005 2006 2007 2008 2009 Series 2 Series 1

ROE In %
45 40 35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 Series 3 Series 2 Series 1

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Projection for next 5 years ITEMS

2011 Gross Profit Operating Profit Net Profit Net Sales Total Asset 77,715,000,000 20,120,000,000 27,550,000,000 2012 83,740,000,000 22,500,000,000 33,621,000,000 2013 87,785,000,000 26,662,000,000 39,668,000,000 2014 93,820,000,000 31,710,000,000 47,743,000,000 2015 99,866,000,000 37,887,000,000 54,820,000,000

112,212,000,000 116,314,000,000 121,450,000,000 127,666,000,000 133,770,000,000 113,320,000,000 115,398,000,000 118,456,000,000 121,660,000,000 124,780,000,000 57,345,000,000 57,500,000,000 61,661,000,000 63,760,000,000

Shareholders 55,234,000,000 Equity

Profitability Ratios
2011 Gross profit margin 69.26% 2012 71.99% 2013 72.28% 2014 73.49% 2015 74.66%

Operating profit margin Net profit margin

17.93%

19.34%

21.95%

24.84%

28.32%

24.55%

28.91%

32.66%

37.40%

40.98%

Return on asset Return on equity

24.31% 49.88%

29.13% 58.63%

33.49% 68.99%

39.24% 77.83%

43.93% 85.98%

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Net Profit
In millions CHF
60,000 50,000 40,000 Series 3 30,000 20,000 10,000 0 2011 2012 2013 2014 2015 Series 2 Series 1

Net Sales
In millions CHF

140,000 135,000 130,000 125,000 120,000 115,000 110,000 105,000 100,000 2011 2012 2013 2014 2015 Series 3 Series 2 Series 1

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ROA In %

50 40 30 20 10 0 2011 2012 2013 2014 2015 Series 3 Series 2 Series 1

ROE In %
100 90 80 70 60 50 40 30 20 10 0 2011 2012 2013 2014 2015

Series 3 Series 2 Series 1

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Strategies followed by Nestle to succeed in the global market:

The choice of their strategy depends on one single thought i.e. quality is the commitment. All of their strategies are built to maximize the quality they provide. However, it also believes that quality at a very high price is a wrong combination. Similarly, compromising quality to provide at a low price is even a greater mistake. They believe that Nestle could sustain and grow only because they are providing quality foods at a reachable price.

It chose distinct ways to operate in different markets:

The first rule to enter a market is to provide the market what it needs. Every market has different requirements and adoption capability. To determine the stage of consumers becomes very important to succeed. Nestle as a global company understands this very well.

Developed market:
So, when Nestle enters a developed market i.e. where the consumers has pretty good idea about the food items that it produces, it focuses more on providing variety of one particular product. For instance, it may provide different flavors for its cereal, milk to attract the customers of the developed stage. Here, nestle also keeps in mind that there are other players in the market as well so price of these products is a vital issue. To overcome this barrier, Nestle buys large firms that are engaged in producing the similar product to gain from economies of scale. They can have access to an established plant, labor and low cost. This gives nestle capability to compete in the new market.

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Developing markets:
To enter a developing market the strategy has to be different. Here, Nestle focuses more on determining the type of product that would best suit the country in consideration. Determining this is very important because different countries have different food habit. Since Nestle sells food products they have to be more careful as eating is a very sensitive issue. For instance, if Nestle wants to launch a chocolate brand in a Muslim country it has to ensure that it does not contain lard. This may not be an issue in a non-Muslim country but any Muslim would take it very seriously. They would have to adjust the technology as they would bring something new to the market. They cannot bring every technology they want i.e. the local conditions has to suit the technology. Business and final customers: the business customers and the final consumers have different requirements and to survive any firm would have to satisfy both the groups. For example, for business customers most important is to have the products on time, low price, correct information whereas the final consumers are most concerned about taste, packaging, safety and the price as well. Nestle has been very efficient in these aspects and it has been able to retain its customers in most of its operating countries.

Huge investment in Research & Development:

Nestle has grown with time and it also has improved with time because it was convinced that only continuous improvement can bring sustainability and growth. Improvement in quality included the improvement in taste and safety standard. To ensure quality it has 18 groups of people operating in 11 countries. Nestle is probably unique in the food industry that have such an integrated research and development program engaging in applied and basic research in the fields of human physiology, health, nutrition and raw materials. Its research and development program gives the capacity to create new types of products that has never been imagined in the past. The Nestle research and development centers have two main tasks: to create new products and manufacturing processes and to improve those that already exist.
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Improved taste and Safety standards:

In every market it entered, it provided the consumers with their already available product and also new products since it knew taste of the consumer changes. They have invested a large proportion of their profits to provide a variety to its taste. For example, it knows that people of different age wants different tastes i.e. chocolate and some other flavored food products for children and teenagers. Adult populations are most concerned about the safety of the food products and for them as well as for their children. Among the adults Nestle is a trustable name due to its product standard in every country. It has been able to maintain its standard in every country though it has plants in more than 117 countries.

Efficient production process:

According to Nestle, an efficient production process reduces the wastage of raw materials, time and other valuable resources. This reduction saves the company the huge amount of cost in the long run thus makes the business more profitable and sustainable. Efficiency certainly reduces the risk of getting wiped out from any market.

Regional:
Economies of Scale: The neighboring countries markets suit similar taste s it is possible to develop one standard product for the countries with similar taste. Nestle has encountered this opportunity and produces in one country of a particular region. This helps to produce a massive quantity that meets the demand in few countries thus the average cost falls achieving economies of scale.

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Location advantage: nestle can choose the best location available where the cost is lower. It can choose the country with the lowest labor cost or with the greatest availability of raw materials required to prepare its food products. Following this, Nestl has employed a wide-area strategy for Asia that involves producing different products in each country to supply the region with a given product from one country. For example, Nestl produces soy milk in Indonesia, coffee creamers in Thailand, soybean flour in Singapore, candy in Malaysia, and cereal in the Philippines, all for regional distribution.

Tries to minimize the risk of losing customers:

Nestle has grown quite big even when it operated in Switzerland only. However, it did not forget that there are always chances that customers may switch to some other brand. The world market is very competitive and customers have a lot of choices so if Nestle fails to satisfy their needs there are other brands where they can look up to. Realizing this has been the greatest strength for Nestle and they have utilized this truth through improving its products in every possible way. It also closely watches its competitors so that it always knows what the condition of the market is. In some countries where the customers are well aware of the product type, the competition is much fiercer e.g. Europe, America. In these countries Nestle has to more careful about its competitors. This was one of the reasons why Nestle expanded to the developing markets in other countries.

Decentralized management:
It has appointed the local people as managers. Nestle thinks that the local people would understand better the taste and requirement of the concerned people. For example, in Asia,
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Nestls strategy has been to acquire local companies in order to form a group of autonomous regional managers who know more about the culture of the local markets than Americans or Europeans. Nestls strong cash flow and comfortable debt-equity ratio leave it with ample muscle for takeovers. Recently, Nestl acquired Indofood, Indonesias largest noodle producer. Their focus will be primarily on expanding sales in the Indonesian market, and in time will look to export Indonesian food products to other countries.

Intensive distribution:
Products of Nestle are widely available and this creates awareness of the product and thus it is easy for any customer to have access to it. Nestle sells food products and it is a competitive market in most of the countries so it is very important to make it available in every retail outlet. This is why Nestle follows an intensive distribution process. This also reduces the risk of substitution. In other words, Nestle has continued to prove its commitment towards maintaining quality. It believes that quality cannot be improved only if the taste of the product is good. Quality is associated with how the product is produced, how it is marketed to the consumers, how easily its both the type of consumers can have access to it and the products ability to retain its customers to make repeated purchase.

Recent strategy:
Nestle is now more concerned about producing in a environmental friendly way. It followed this strategy from the beginning, however, in the recent years its importance has grown rapidly. People are more concerned about saving the environment and it true especially in developed countries thus a firm who are actively taking part in saving the environment and raw materials creates a superior brand image. This helps Nestle to build further trust among its customers. Nestle has shown its efficiency in every part of the world. So nestle can be a good example for Bangladeshi firms to follow while expanding its business overseas. Bangladeshi firms such as Pran, Ahmed Food Products, etc can grow successfully by adopting similar strategies. However, the strategies have to be adjusted depending on which country to expand.
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The strategies a Bangladeshi firm can use to globalize:

Study the market very closely:
Since markets have different needs any Bangladeshi firm has to have clear idea about the need and stage of the market. For example, if Pran wants to expand its operation in India, it has to understand that the Indian market has very good knowledge of the products they sell. There are already a large number of firms that produces mango bar, pickle, milk, etc. since they also have a similar taste competition would be much fiercer. So, here Pran has to have a cost- efficient advantage. It has to price its products either lower than or same price as the competitors otherwise it would face difficulties in terms of sales. However, if it expands to the European countries, the strategy has to be completely different. Consumers in those countries are not very well aware of all products made by Pran. So, they have to understand the taste of those consumers and customize according to the local needs. Cultures of these countries would be very different from the culture of Bangladesh thus Pran has to understand their culture and act according to that. For instance, in Bangladesh efficiency in time is not as important as it is in countries like U.S.A and England. So, to satisfy the business and final customers Pran has to act in the way it suits their culture

Investment in Research & Development:

In Bangladesh, the investment level in research and development is very low compared to any other country. So, if our firms want to compete in the global market it has to have extensive research to improve their product. Products should be continuously improved to retain the customers. The firms need to understand that the customers are more concerned about their need thus any product that satisfies their need they would switch to that. If Bangladeshi firms fail to provide with their solution they would switch to other brands. Some of the Bangladeshi products started off well; however, it failed to improve with time. So, Bangladeshi firms have to provide varieties and improved features that suit the product type.

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Bangladeshi firms should also consider improving the safety standard of its products. Many times it has been encountered that the firms are selling products which does not match the standard of BSTI. So these firms have to understand that in the long run they cannot survive if they continue to act this way. In addition, the firms cannot compete in the global market with products of this standard.

Regional:
Bangladeshi firms can also gain from Nestle regional strategy. For instance, in the event where a Bangladeshi firm decides to expand in France, it can produce in one country and sell all over the Europe. It can also set up plants in the countries where it would be cheaper to produce or closer to the raw materials needed to produce certain plants. It would be easy to export from France rather than from Bangladesh. This would help Bangladeshi firms to achieve economies of scale as it would be producing to satisfy the demand in more than one country.

Decentralized management:
While operating in other countries, the management should be decentralized so that they can understand the new market better. The local people know better about the market conditions so it is wiser to manage the operation by the local people. For example, if a Bangladeshi firm starts operating in United States, it would be better to appoint a qualified US manager who would be able to determine the need of the targeted customers at that point of time. The taste of the market changes with time and a local manager would be able to identify that better.

Producing in an efficient and environmental friendly way:

Any firm should follow this strategy to succeed in its field. By producing efficiently i.e. low wastage, low time, etc, not only the firm creates a better brand image but also produces at a much lower cost. For instance, if there is low wastage in using raw materials the firm produces more using the same amount of raw materials. An environmental friendly gesture would help the Bangladeshi firms to provide a sustainable world for the next generation when the business in concern is expected to continue. This is very important if the firm wants expands in developed countries. In developing countries like Bangladesh, where peoples income is low, consumers are
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less concerned about the environment issues so it is not as important to produce in environmental friendly way as it is in the developed countries of Europe and USA.

So far we have learned thatHow a successful multinational company works in domestic market and also in International market maintaining the quality of products. The main strategies that they follow can be used in Bangladeshi company especially in the food industries in our country that have the same product line.

Conclusion
Nestl S.A. is currently the leading food corporation in the world. For many years, it has the excellence in the food industry that have set Nestl apart from it competitor. Nestl has made known its efficacy in every part of the world. So nestle can be a good example for Bangladeshi firms to follow while intensifying its production in a foreign country.

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References
1) www.nestle.com 2) Annual Report of Nestle 3) http://en.wikipedia.org/wiki/Nestl%C3%A9 4) http://www.scribd.com/doc/18642056/

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