ST4S38 Strategic Analysis: Tools & Techniques – Coursework 2 (50%)
Report
Consider the following questions:
Diversify or Focus on core business?
What matters most for long-term sustainability of the business?
In order to answer the question, follow the steps below.
• Select a company that can support your core argument (i.e. for sustainable growth, should a company focus on its core business only or should it try to diversify?)
• In the Introduction, you should state your core idea and a business example you are going to use.
• Identify the company’s offerings and conduct the Portfolio Analysis
• Based on the Portfolio Analysis you conducted, evaluate key future directions for strategic growth (you may want to use the Ansoff’s product/market matrix)
• Suggest what methods the SBU can adapt in order to grow (i.e. External growth or Internal development)
• Conclude the argument with the answer to the question and if necessary, with final suggestion of what the company should do in order to achieve long-term sustainability of the business
The aim of this assignment is to construct your argument in order to answer the question, not just to describe what the company does. You do not have to follow the structure strictly suggested as above, but it should be constructed logically with consistency. Introduction should clearly state the main theme and overall structure of the report. Conclusion should draw the analysis to a close and present your answer to the question. Remember you do not introduce new findings into the conclusion – this should have been all introduced and fully discussed in the main body.
The following topics may be useful for your analysis:
• Portfolio analysis
• Strategic change and directions
• Strategic options for growth (diversification, internal growth)
The coursework is an individual piece of work. It will be 3,000 words, NOT inclusive of appendices (+/- 10%). Please note that text in diagrams or tables will NOT count towards the word count.
It is important that attention be focused on a strategic appraisal of the company as opposed to providing lots of interesting facts over what interests you or what you find on the internet. Assessment will focus on students’ abilities in applying strategic models and frameworks in a coherent manner that enables them to develop a clear strategic view of the strategic position being studied.
Please remember that an assignment is not meant to describe what you have found. Analysis means commenting on your findings and explaining what the evidence suggests about the company.
Write in an appropriate academic style. Make sure your final work is all spell-checked and proof-read.
Marking Criteria (available separately on module Blackboard)
Introduction
In today’s fast-paced business world, companies face a dilemma of whether to focus on their core business or diversify to achieve long-term sustainability. This report aims to examine the strategic direction of Nestlé, a leading food and beverage company, and evaluate whether it should focus on its core business or diversify to achieve long-term sustainability. Nestlé’s portfolio analysis will be conducted using the Boston Consulting Group (BCG) matrix to evaluate its current product portfolio and identify potential growth opportunities. Additionally, the Ansoff matrix will be utilized to assess Nestlé’s strategic growth directions, followed by recommendations for the methods that Nestlé’s Strategic Business Units (SBUs) can use to grow. Finally, this report will provide a conclusion that answers the question of whether Nestlé should focus on its core business or diversify for long-term sustainability.
Nestlé’s Offerings and Portfolio Analysis
Nestlé is a Swiss multinational food and beverage company founded in 1866. The company operates in 191 countries and has over 2,000 brands, making it one of the largest food and beverage companies globally. Nestlé’s product portfolio includes confectionery, pet food, coffee, dairy, infant food, bottled water, and other food and beverage products.
To analyze Nestlé’s product portfolio, a BCG matrix will be utilized. The BCG matrix is a framework used to evaluate a company’s product portfolio based on its growth rate and market share. The matrix categorizes a company’s products into four categories: Stars, Cash Cows, Question Marks, and Dogs. Stars have a high market share in a high-growth market, Cash Cows have a high market share in a low-growth market, Question Marks have a low market share in a high-growth market, and Dogs have a low market share in a low-growth market.
Based on Nestlé’s product portfolio, the company’s Coffee and Beverages and Prepared Dishes and Cooking Aids are Stars. Its Water, Petcare, and Confectionery businesses are Cash Cows, and its Milk Products and Ice Cream business is a Question Mark. Finally, the Nestlé Nutrition and Health Science business is a Dog. This analysis indicates that Nestlé has a diversified product portfolio, with some SBUs showing significant growth potential while others are struggling.
Strategic Growth Directions
To evaluate potential strategic growth directions for Nestlé, the Ansoff matrix will be used. The Ansoff matrix is a tool used to identify potential growth opportunities based on the company’s existing and new products and markets. The matrix consists of four strategies: Market Penetration, Market Development, Product Development, and Diversification.
Nestlé’s current strategic growth direction is market penetration, as the company focuses on increasing sales of its existing products in its current markets. Additionally, Nestlé has engaged in product development by introducing new products such as plant-based meat alternatives and expanding into new markets such as pet food. Nestlé’s current focus on market penetration and product development reflects the company’s strategy to leverage its existing strengths and capabilities to grow.
Methods for Strategic Growth
To achieve long-term sustainability, Nestlé’s SBUs can use internal development or external growth methods. Internal development refers to investing in research and development, enhancing operations, and improving efficiency to grow the business. External growth methods include mergers and acquisitions, joint ventures, and strategic alliances.
Recommendations
Based on the analysis of Nestlé’s product portfolio and strategic growth directions, the company should focus on both core business and diversification for long-term sustainability. Nestlé should continue to focus on market penetration and product development while exploring new growth opportunities through diversification. For example, Nestlé can leverage its strengths in health and wellness by expanding its portfolio of plant-based meat alternatives or exploring opportunities in
