Case Analysis Of General Mills And Nestle

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How can General Mills and Nestle create international competitiveness by joining forces in CPW? An international joint venture is when two businesses in two or more countries comes into a partnership, to explore into international trade without taking the full responsibility of cross-border business transactions and its risk. In this case General Mills and Nestlé which came into formation in 1990 as a 50:50 joint venture. The breakfast cereal market is being describes as saturated with low or a no growth rate which is commonly in well developed nations. However in regions such as Eastern Europe, Africa and Middle East there is a slight market growth in the recent years due to urbanization and a growing trend in westernization. (Svend Hollensen,…show more content…
Since General Mill consists of competencies in product development, Nestle will be able to reduce the risk and share the cost of production as well as distribution of new product lines such as Greek Yoghurt. And also most of the rivals of Nestle are now producing Greek Yoghurt, so coming into a joint venture with General Mills will help Nestle to level the competition. This means through the Cereal Partners Worldwide joint venture Nestle will be able to achieve its prime objective of being the leader in nutrition. (Strategy, 2015) Both General Mills and Nestle consists of distinctive competencies, the global presence of Nestle as a global food supplier will support General Mills to highlight their existence globally outside the U.S. Therefore General Mills can rely on the global presence of Nestle in order to boost up their market…show more content…
But the strengths and weaknesses of both these parties must be reconsidered in order to derive the competencies of Cereal Partners Worldwide. In order to carry out the competitive analysis the theory of Porters 5 Forces is applied in practice- Figure 1.0 (Porter’s 5 Forces) Figure 1.0 depicts the Porter’s 5 Forces diagram. According to Michael Porter there are five forces which influences the industry, which includes power of supplier, power of buyer, threat of new entrants, industry rivalry and threat of substitutes. Power of supplier- The bargaining power of supplier can be considered high. This is a very important factor to be considered since it is the main strength of the company. It must be mentioned that Nestle is well known for their strong relationship with the suppliers. When compared to general Mills Nestle consists of a very strong buying power as they buy in extreme quantities and they consider product quality to be highly important. E.g. Nestle provides information to their suppliers with regard to how to increase proficiency and in return the suppliers provide a quality output to Nestle despite the fact that prices are controlled by extensive

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