Employing Strategies in a Competitive Environment
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In today’s fast moving world, competition is considered to be the order of the day. The global business environment consists of the factors that operate at cross-cultural, transactional and beyond borders level, which has significant impact on the business.
The main objective of this study is to examine critically the impacts of strategic environmental scanning on the performance of an organization. Organizations can make use of environmental scanning to decide whether or not to enter the new market and to examine the present situation of its environment. The most appropriate and simple method to conduct an environmental scanning is to use the PEST Analysis. PEST is the abbreviation for Political, Economic, Social Cultural and technological factors that affect the organization.
As part of the strategic planning, a scan of the external and internal environment is accomplished which is supposed to be a rather important part of the planning process. The environmental factors which are internal to the following organization are termed as weaknesses (W) or strengths(S) and the external ones to the organization are characterized as threats (T) or opportunities (O). Such an analysis of the company is referred to as the SWOT analysis. (Peng, 2008)
PEST analysis is the Political, Economic, Social Cultural and Technology analysis. It defines the structure of the macro environmental factors that are used in the environmental scanning of strategic management of an organization. It is, however, a very important and useful tool to determine the company’s business position, the market growth, directions for operation and the potential market.
The methodology of this paper comprises of the research design, technique, procedure and validity, which are as follows:
Sampling Design and Procedure
The sample size for this paper is 50 management staff from Nestle Nigeria Plc from their head office in Lagos.
Appropriately structured questionnaires were used for this paper. The reason of choosing this research instrument was to minimize the risks of unreliable information. From the questionnaires, one will be able to get first-hand information from the staff members.
The environmental threats faced by Nestle Nigeria Plc are found as follows:
- New competitors’ entering the market is becoming a difficulty for Nestle Nigeria.
- When it comes to the raw material for food products, health issues are a major threat.
- Because of the international business, fluctuation in the currency of international markets is becoming a problem for which Nestle has to keep revising the prices in different regions of the world.
- Recession in any part of the world has an adverse effect on the entire world market.
- The cultures and traditions have to be taken care of, where they do business around the globe.
- The local food industries are a growing threat.
There have been various methodologies and strategies developed at Nestle to deal with environmental threats that they face. A few of such strategies are listed below:
- Due to recession, the prices of the products are continuously evaluated and revised to meet the needs of different kinds of customers in different regions of the globe.
- To meet the social-cultural expectations of the customers in different parts of the world; the products are tailored and the marketing strategies are developed to attract the foreign customers.
- It is preferred to purchase the raw material for the products from the local market to keep the price low; however, in case of the unavailability of premium quality raw material in the local market, it is imported.
According to the results of this research, the following strengths were determined of Nestle Nigeria Plc:
- It holds a strong brand name all around the globe.
- Due to their partnerships with other companies, their desired products are provided to them which increase in goodwill of the company.
- Socially responsible organizations earn a good name in no time. Nestle builds up strategies for their social responsibilities like helping the people in natural catastrophes.
- The nutritional facts provided by nestle for their products is a definite plus for its customers.
- The large employee and management base, which are loyal to the company, is one of their largest strengths.
- The legal and cultural barriers are understood and taken care of, while doing business internationally.
- Hygiene and cleanliness in handling and packaging the products is one of the top most priorities at Nestle, which is definitely one of the strengths of the company.
Making the careful use of these strengths, Nestle Nigeria can yield a competitive advantage easily in the market. Due to a well-reputed brand name, people tend to purchase products form Nestle more, as compared to any other food industries, hence, Nestle needs to build up the strong marketing strategies for the launch of new products. The existing products can also be tailored, according to the customer’s needs all around the globe. For example, when dealing in an Islamic state, making use of Halal Meat would be preferred in order to cater a larger customer base. In order to keep the employees and management loyal to them, Nestle should keep them motivated by providing them with incentives which the competitors do not offer, like bonuses and dinner vouchers. Health and travelling allowance would also be a great opportunity for the employees of Nestle to stay loyal to the company.
Due to a well-reputed name in the industry, Nestle should allow the customers to place their orders online and get them delivered easily at their homes or offices. Moreover, offering discounts on the food items will help in acquiring more customers.
As a part of the social responsibility act, the packaging material should be environmentally friendly and should be able to recycle and should not cause pollution. More benefits should be provided to the people irrespective of their nationality, in order to be more socially responsible, like helping the less fortunate children in their studies, granting scholarships for professional studies, holding sessions within the company to provide every employee of the company give his share in charity.
Unilever has been found to be the largest competitor of Nestle Nigeria Plc. Both companies have been operating worldwide since many years in the area of food and beverages. While Nestle also deals in pharmaceuticals, Unilever provides a wide range of personal care products. Following is the table of a brief competitive fact sheet between Nestle and Unilever:
Milk Products, beverages, nutrition and ice cream, cooking aids, ready-made food items, biscuits, pet care, chocolates, confectionary, Alcon pharmaceuticals and cosmetics joint ventures
Culinary products, household care, laundry, ice cream, frozen foods, tea-based beverages, hair care, deodorants, oral care, fragrances and personal wash.
The priority of Nestle is to bring the best quality and the most relevant food items to the people, wherever they live and whatever their needs are: Good Food – Good Life!
The mission of Unilever is to ad vitality to life. They tend to meet the everyday needs for hygiene; personal care and nutrition with brands that help people in looking good, feeling good and getting more out of life.
Table SEQ Table \* ARABIC 1: CompetitiveFact sheet of Nestle and Unilever (Porter, 1998)
Strategies in the Decline of Economy
In order to survive in a declining economy, Nestle has to revise some of its strategies, both locally and internationally (Williamson, 2003).
In a weak economy, diversification can be very useful for Nestle. The more services they start offering, the more clients will be attracted towards the business. Services should be expanded to newsletters, web content, press releases and others. Packaging can be diversified to sell the products to entirely new clientele.
- Offering exceptional customer service
In the recession times, customers expect more and the organizations tend to not only retain them, but also acquire the new ones. By offering to the exceptional customer care services, as additional features of the products, Nestle can retain their customer base even in the times of recession. The customers’ needs and demands should be met, and complaints should be dealt with, on high priority.
- Adopting cutting edge technologies
Making use of the cutting edge technologies for marketing is a definite way to be ahead of the competitors. Email marketing and online advertisements will definitely be helpful for Nestle to survive in the declining economy.
- Seeking ways to improve
Suggestions should be a welcomed form for the customers and the employees in order to seek new ways to continuously improve the business.
Strategies for Global Competition
The following strategies are recommended to be adopted in order to gain competitive advantage in the global market:
- Product Differentiation
As a part of the product differentiation strategies to gain competitive advantage in the global market, Nestle should take measures to make its products stand out in the market in terms of quality, price and packaging.
- Reducing Manufacturing costs
Globally, with increased competition, customers prefer products with higher quality at lower prices. The reduction in manufacturing cost can result in a reduction in the retail price of the product. Manufacturing costs can be decreased by purchasing the raw material from the local market.
- Creating Network Relationships
Creating relationships with the foreign customers through Internet is definitely a preferred strategy for the organizations doing business internationally. Promotion and discount schemes should be shared via emails and social networking sites.
- Information of the culture
Knowing about the traditions and culture of the country is very important when doing business internationally. Once the organization gathers enough information about the lifestyle, climate and moods of the target country’s population, it would be easier to customize the products, according to their requirements.
- Currency and Time differences
Time differences and currency should not be a barrier in the business. No matter what region the customer belongs to, he should be served promptly.