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Space Matrix Nestle

Nestle's financial strength is high as evidenced by a 20% increase in net sales and 94% increase in net profit in 2009 compared to 2008. The industry strength for consumer food industry is also high, growing 14% with new entrants increasing competition. However, Nestle has a slightly negative competitive advantage position as they enjoy strong customer loyalty but face pressure from price and quality competition. Environmental stability poses some threats with economic slowdowns and inflation fluctuations that could lower demand. Based on the matrix, Nestle has a moderately strong position.

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Haris Amin
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405 views2 pages

Space Matrix Nestle

Nestle's financial strength is high as evidenced by a 20% increase in net sales and 94% increase in net profit in 2009 compared to 2008. The industry strength for consumer food industry is also high, growing 14% with new entrants increasing competition. However, Nestle has a slightly negative competitive advantage position as they enjoy strong customer loyalty but face pressure from price and quality competition. Environmental stability poses some threats with economic slowdowns and inflation fluctuations that could lower demand. Based on the matrix, Nestle has a moderately strong position.

Uploaded by

Haris Amin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Nestle Space Matrix

Financial Strength
1. Nestle’s net sales increased by 20% in 2009 as compared to 2008 3

2. Net profit increased by 94% in 2009 as compared to 2008 5

3. Debt equity ratio changes from 63:37 to 66:34 3

4. Price earnings ratio in 2009 was 18.8 as compared to 2008 38.9 5

5. Return on capital employed increases by 40% 4

20

Industry Strength
1. Increase in consumer food industry by 14% 5

2. All companies contribute only 6% to processed milk market 4

3. Market segment growth has attracted new entrants to increase profit potential 5
4. Due to ease of entry in market, Engro foods, Shezand foods and Shakarganj are 4
properly utilizing their resources
18

Competitive Advantage
1. Nestle enjoys strong customer loyalty -2

2. Quality product distribution networks in country -1


3. Nestle extended product life cycle is being ensured due to quality brand extension -2
strategy
4. Nestle product are market leaders in many product categories -2

-7

Environmental Stability
1. Economic slowdown can lower the demand -2

2. Fluctuating rate of inflation in the country -2


3. Price range of competing products -1

-5

1) Average FS= +20/5 = +4 3) Average IS= +18/4= +4.5


2) Average CA= -7/4 = -1.75 4) Average ES = -5/3 = -1.67
X= CA+IS= (-1.75)+(+4.5)= +2.75
Y= FS+ES = (+4)+(-1.67) = +2.33

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