Lecturer: Dang Huu Phuc
Value
Chain
Analysis of
NESTLÉ
GROUP 4 – Operation
Management
Members of group
Đinh Văn Hưng Anh
Hoàng Quỳnh Hương
Nguyễn Phan Khánh
Huyền
Thái Thị Thanh Lam
Trương Nữ Tài Linh
Lê Hải My
Nguyễn Thị Bích
Ngân
Table of
Contents
01 Overview of Nestlé
02 Value Chain Analysis
03 Lessons from Nestlé
01
Overview of
Nestlé
1. Overview of Nestlé
Largest food and beverage
company in the world.
275,000 employees, more than
2,000 brands and a presence in
188 countries.
In 1992, Nestlé penetrated the
Vietnamese market.
In 1995, establish Nestlé VietNam
limited liability company.
1. Overview of Nestlé
Opportunity
Threat
Market
Many substitute
leader products
overall market with different
and in prices and taste.
most sectors.
The enormous range of Nestlé's business.
Lead in innovation for maximum portfolio flexibility thanks
to the R&D capabilities.
Nescafe - Key product that contributes the most to revenue.
Purchase 20-25% of Vietnam's total coffee output and
contribute national economy 700mil$/year.
02
Value chain
analysis of
Nestlé
2. Value Chain Analysis – Portel Model
Firm Infrastructure
ACTIVITIES
SUPPORT
M
Human Resource Management
arg
in
Technology Development
Procurement
M
Inbound Operations Outbound Marketing and Service
arg
logistics logistics sales
in
PRIMARY ACTIVITIES
2.1 Primary activities
LOGISTICS LOGISTICS AFTERMARKE
(INBOUND) 2nd (OUTBOUND) 4th T SERVICES
Rurning raw
Promotion,
materials and
advertising, and
1st components into 3rd pricing strategy 5th
finished product
Receiving, Distribution: Installation,
warehousing, packaging, training, quality
and inventory sorting, and assurance, repair,
management OPERATIONS shipping SALES AND and customer
MARKETING service
2.1.1 Inbound logistics
Imports raw Deliver the finished
materials labels, goods to Nestle
and machinery warehouse
1 2 3
Deliver these
materials to Tri An
factory and Dong Nai
factory
2.1.2 Operations
1. Raw materials: Nestle's Quality Management system starts from the farms.
2. Nestle Factory Laboratory: each Nestle factory has a special Laboratory
3. Aseptic production environment: All materials are UHT sterilized
4. Nestle incubator: All products before being delivered to consumers meet strict
standards.
5. Quality management system: Apply Good Manufacturing Practices (HACCP
system), verified by external certification bodies according to ISO 22'000.
2.1.2 Operations
Take products from the warehouse to distribution centers in Hung
Yen.
Distribute to distributors, retail stores, intermediaries, Nestle
supermarkets system, and e-commerce stores.
However, Nescafe does not focus on e-commerce platform due
to the characteristics of the product.
2.1.3 Outbound logistics
Distribution channel: a total of 136 distributors; 4 factories located in Dong
Nai and Hung Yen, 2 Lavie factories and 2 distribution centers.
Products are both sold offline and on online stores (Shopee or Tiki).
Truck ships package from factory warehouse to the shipping warehouse →
local shippers will take and deliver to customers.
The customer can feedback to provider or report error within 30 days after
receiving. Freeship for customer to return or exchange the products.
Packaging management: Nestle has a suitable strategy - local packaging.
2.1.4 Marketing and Sale
What can we learn from logo and slogan of
Nestlé?
Before 1868: his family’s coat of
arms
1868: new image links his family
name to his infant cereal products
Changing but the iconic nest still
sits on Nestlé brands worldwide.
The company offers products evolving with consumer
demands and contribute to a sound environment.
2.1.4 Marketing and Sale
1.
Nestlé marketingProduct
strategy is “bring each
product to each household”. So product of
Nestlé meet the needs of every specific
family
• Milk: Nestle Slim, Nestle every day,…
• Chocolate: Kitkat, Polo, Munch, Eclairs,
Milky Bar.
• Drinks: Nescafe products
• Condiments: Maggi
2.1.4 Marketing and Sale
2. Price
• Be accessible to as many people
as possible
• Low pricing strategy
→ So everyone with low or high
income can access their products
2.1.4 Marketing and Sale
3. Place
• Penetrate many markets and create a
large coverage in the places
• Nestle’s products are distributed to
retailers around Vietnam
2.1.4 Marketing and Sale
4. Promotion
• Nestle has always come up with
some creative marketing concept to
identify the most effective
promotional medium.
• Using two types of sales promotion
techniques – Trade promotion and
Consumer promotion
• Advertising campaigns that deeply
resonate with customers
2.1.4 Marketing and Sale
Some advertising campaigns
Maggi: messages to connect and Kitkat: “Have a Break, Have a KitKat.
minimize the gap among members in
Vietnamese families.
2.1.4 Marketing and Sale
Some advertising campaigns
Nescafe: a red coffee cup
in hand with a scent
Or campaign "Nescafe-
Café Việt" and the slogan
"Are you strong enough
to try?"
2.1.4 Marketing and Sale
Some advertising campaigns
Milo: Outdoor marketing campaign with typical events
such as sports across the countries where it is present.
SALES AND
MARKETING
Marketing and Sales strategies of
Nestlé is one of the major factors
contributing to the increase of the
company's margin and value.
Product’s quality
Nestlé is not yet fulfilled their commitment to
customers of good-for-health products.
Nestlé describes the 3.5 star threshold as a “recognised
definition of health”.
37% of Nestlé’s food and beverages achieve a rating above
3.5
70% of Nestlé’s food products; 96% of beverages —
excluding pure coffee — and 99% of Nestlé’s confectionery
and ice cream portfolio failed to meet threshold.
Water and dairy products scored better, with 82% of waters
and 60% of dairy meeting the threshold.
2.1.5 Services
The modern customers consider post-sale services as important
as marketing and promotional activities.
Negative e-WOM due to poor support service cannot be
undermined.
Enhace service quality to avoid damaging brand reputation.
2.2 Support activities
Infrastructure HRM Technology Procurement
How the firm is Recruitment, training, The use of Process of negotiating
organized and led by and compensation of computerization and for and purchasing raw
executives employees telecommunications materials
01 02 03 04
2.2.1 Infrastructure
• Nestlé implements decentralized management
+ Regional branches take self responsibility
• Nestlé Vietnam has 4 manufacturing facilities
and 2 representative offices
+ Tri An factory
+ Binh An factory
+ Dong Nai factory
+ Bong Sen factory
+ HCM representative office
+ Ha Noi representative office
2.2.1 Infrastructure
• Wide product portfolio
2000 different product selections in 7 main categories
+ Powdered beverages
+ Milk and ice cream products
+ Prepared dishes
+ Nutrition brands
+ Pet care
+ Confectionery
+ Water
2.2.2 Human Resource Management
HR business partnership
Engaging the best improve commercial
talent in the industry. performance through people.
2.2.3 Technology
Nestlé's R&D network is the largest in the food
industry with more than 40 R&D centers.
→ Basis for Nestlé to develop highly
breakthrough products and vary of products
2.2.3 Technology
At the forefront of all Nestlé’
research activities is the
commitment to utmost quality and
safety.
2.2.3 Technology
The Nestlé Research Center does not work
alone. It is part of the worldwide Nestlé R&D
Network.
2.2.4 Produrement
• Procurement done through variety of trusted
channels
Main Distibution
2.2.4 Produrement
• High grade quality check and standards followed
2.2.4 Produrement
• Direct sourcing from farmers which also helps drive
in rural development initiative.
2.3 Margin of Nestlé
• Mean: The value that's created and captured by a company is the profit
margin
= Value Created and Captured – Cost of Creating that Value
Firm Infrastructure
ACTIVITIES
SUPPORT
M
Human Resource Management
arg
in
Technology Development
Procurement
M
Inbound Operations Outbound Marketing and Service
arg
logistics logistics sales
in
PRIMARY ACTIVITIES
2.3 Margin of Nestlé
Operations: contribute directly by converting raw materials
into finished products at nestle's factories
Marketing&Sales: creative marketing campaigns has
contributed to the increase in products’ value of Nestle
HRM: Nestle's policies towards recruiting young talents in
all fields, supports M&S greatly in creating value for
businesses
R&D: wide product portfolio along with a good-for-health
commitment, supports the Operations, M&S to create more
value and launch the ‘localization’ strategies.
3. Learning from Nestlé
01 02
Product quality is Promote the recruitment
a key to success of young, dynamic and
creative talents.
03 04
Reputation Expand the
creates trust e-commerce market,
trade promotion
Thank you for
your listening!
