Feasibility Study Of Nestle

Chapter 1

Introduction

1.1 Introduction to Nestle

Nestle is a Swiss multinational company that produces consumer related goods with its focus on health, nutrition and wellness. The ideas and values of Nestle have been developed over a period of 140 years. It all began in 1866 when Henri Nestle, who was a pharmacist, developed a food for babies known as Farinelactee which was a combination of milk, sugar and flour and it helped to save the life of an infant. Henri belonged to Vevey Switzerland and the headquarters of Nestle are at the same place. During the 1900s, Nestle expanded into Britain, U.S, Germany and Spain and in 1905 Nestle merged with Anglo Swiss Condensed Milk Company. Around the period of 1918 due to the War, the people

All the machinery and formulas to produce have been imported by Nestle which gives them considerable cost and competitive advantage. The production of juice depends on the flavor type that is being made at a particular time. The processes involved include boiling, storage, mixing of ingredients, adding syrup, preparation of juice, storage, filling and packing and cooling. The mixing stage is crucial to bring in the right flavor and also because chemicals and preservatives are added in this stage to assure freshness and taste of the juices. Then the packaging takes place in sizes of 200ml or 1000ml and after the labelling has been done the products are kept in the

The main competitors of Nestle foods consist of Engro, Haleeb foods.Unilever present in Pakistan since 1948 has been able to gain a large and highly dedicated consumers base and well extensive product portfolios.

Threat of New Entry:

A dense and growing population and growing levels of income in Pakistan have opened a new horizon for firms who are indulged in the production of consumer goods with continuous growth and soaring profits. However the other side of the picture is that average entrepreneurs or businesses which are small cannot enter in to this industry because of huge entry and exit barriers.In order to start with and compete with such large organizations such as Unilever, Engro and Nestle, a lot of investment is required in human resource, marketing research and development and other areas of the business.

One other reason why the entry of potential competitors is limited is due to the fact that already established big giants reap profits and gain benefits out of economies of scale and therefore have cost advantage over the new entrants. Not only this but they also have the high bargaining power with their suppliers in terms of purchasing raw materials giving them further the edge of being a cost leader in the market.

Threat of Substitute