Process Improvement
Introduction
Nestle is a food processing company which enjoys a large market share globally since its initial formation. The company has employed various growth strategies including mergers with other companies to ensure it retains a competitive advantage. The organization has also acquired variously related firms in the recent past which enabled it to become the market leaders currently. Over time the organization has become a leading food company in the market in terms of market share and also the return on investment. The success of the organization can be attributed to various operation processes involved in the overall production.
These processes include; raw material sourcing processes, production processes, marketing processes, and the distribution processes. All these processes are equally important in the realization of the organizational strategic objectives (Richter,261). Failure in either of the processes may hinder the realization of the organization goals. the organization’s production processes, for instance, have enjoyed a series of improvement over time with many products added to the brand to ensure large market coverage. The production processes, therefore, need to be beefed up with successes from other sections of the firm to ensure overall operational strategies are met. Aligning all the organization departments with the firm’s goals will lead to ease in the realization of the set goals. the analysis below will focus on the marketing processes of Nestle has it has suffered some setbacks in the recent past affecting the organizations’ performance.
Marketing process analysis
The organizations marketing processes have proven to be sort of expectations in the past making the organization suffer financial loses. Among the shortcomings witnessed in the firms’ marketing processes include; unfair competition practices, unfair pricing, poor advertising, poor brand image management among other issues. Many of the marketing issues raised against Nestle end up in lawsuits which cost the organization. competition policy violation-the organization was accused of engaging in unethical competition practices. The organization, as a result, was exposed to reputation damage which affected the organization brand image (Richter,261).
The organization was accused of neglecting its responsibility by not engaging in proper labeling. Due to this, the organization suffered from product boycotting leading to financial losses on the lost sales. The organization was also accused of providing incentives to the doctors so as to promote the use of their infant formula. The approach placed the organization on the wrong side of the law as it violated Chinese law on the regulation of the medical staff. Due to this, the firm’s staff were found culpable and were given jail terms. The practice, therefore, led to damage to the organizations’ reputation which may have further implications on potential sales.
Another unfair competition practice was the firm’s contribution to the ethics and public policy center, this practice manipulated the report which was being produced placing the firm in a better position in the ranking. Due to this, the firm acquired favor from the ranking body giving which affected the competitors ranking. The praising of the company through better ranking may have given it a competitive advantage which was not fair.
The issue of brand image management is also a concern when analyzing marketing processes. In 2011, for instance, the organizations’ promotional materials were found to violate the set rules by going against the WHO standards(Nestlé, 2019). The firm was also caught up in the middle of controversy due to its packaging practices. The firm had given wrong information about its water packages being biodegradable which was not the case. Due to this, the firm suffered criticism for giving the wrong information which negatively impacted on its brand image. Many environmentally friendly groups came together and sued the firm due to the wrong information, this negatively affected the brand reputation. The issues of brand material sources have also impacted on the firm’s brand image. The organization has been seen to engage in unsustainable development practices when sourcing for its raw materials (Richter,261). In Ghana and Ivory Coast, for instance, the firm’s raw materials production has led to heavy deforestation in the two countries and thus affecting the ecosystem. Similar concerns have been raised concerning the sourcing of the water for its bottling operations as the firm exposes the local to future famine. The association with such unsustainable practices affects brand equity, especially to environmental cautious consumers.
Price fixing
The firm was accused of going against the pricing regulation of the Canadian government but instead colluded with the competition to inflate chocolate prices. The practice exposed its consumers to unfair exploitation by the supplier. The company was faced with a lawsuit which shows the company pays $9 million to settle the case of which it didn’t admit liability. The firms’ former leadership still faces similar charges in the USA with a risk of being convicted. Through its unfair pricing, the consumers were exploited which may have affected customers loyalty of the previously loyal customers.
The changes in investment over the past few years for the organization are presented in figures 1 and 2 below.
Fig 1.0. share price and volume graph for Nestle for a period of 3yrs source (Nestlé, 2019).
Figure 1 above shows changes in the share price over the past three years for the organization. the share price has increased gradually over time. As the share price increases, there is an increase in return on investment for the organization. the price share, however, is not constantly increasing but it also suffers some decline (Nestlé, 2019). 2018 for instance, shows a steady decline in the share price as compared to 2017. The price share then increases towards the end of the year and the price share has continued to increase to date with the price share recently recording a 0.05% increase (Nestlé, 2019).
Figure 2 below shows the cash flow change of the organization.
Fig 2.0 Nestle income statement growth for a period between 2010-2015 source (Agrawal,2016)
From the figure above the changes in net income increased gradually from 2010-2014 but declined in 2015. The changes could be attributed to challenges in the processes affecting the overall return on investment.
Conclusion
Marketing processes are vital processes if the brand is to fulfill its operational objectives. Organization brand entails various facets which cannot be ignored by the organization if its to maximize on profit realization. As noted from the analyses any slight omission or commission pertaining the brand has some financial implications attached. Nestle has enjoyed a strong financial growth which has increased its financial worthiness. However, slight failure within the marketing process has seen the firm lose on revenue through many lawsuits. Brand management failure has seen the organization focus on the production and selling principles of marketing ignoring the concept of the product and the relationship marketing principles. Due to this, the organization focuses on improving its products and getting them to the market ignoring the fact that the production process might be affecting the consumers negatively at the wrong run.
Recommendation.
The firm has to engage in changing its marketing policies to remain within acceptable ethical standards. Focusing so much on the selling concept show the organization engages in unethical practices to increase the sales which eventually led to reputation damage. Based on the analyses the organization suffers from a lack of alignment of all its processes with the organizations’ policy. All the processes from raw material sourcing to the distribution process up to the end user affect the brand image. the marketing processes require to be updated to incorporate all the other processes to ensure effective management of the brand image. the practice will increase return on investment through, reduced losses as a result of lawsuits and compensation. The initiative will, therefore, reduce the expenses leaving more money to an investment. The approach will also lead to improved growth of the organization reputation which in return will command a larger market share as well as improved sales volume. the approach might also promote customer loyalty which guarantees repeat sales thus improving sales volume. the improved sales volume will increase the price share and thus more dividend to the shareholders which means a better return on investment.
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Work cited
Harmon, P. (2003). Business process change: a manager’s guide to improving, redesigning, and automating processes. Morgan Kaufmann.
Milan Agrawal (2016) Nestle income statement growth. Retrieved from https://image.slidesharecdn.com/nestlereport-group5-161120180910/95/nestle-report-group-5-8-638.jpg?cb=1479665392 9th April 2019
Nestlé (2019) share price and volume graph for Nestle. Retrieved from https://www.nestle.com/investors/sharesadrsbonds/stockquotes/graphs 9th April 2019
Richter, U. H. (2011). Drivers of change: A multiple-case study on the process of institutionalization of corporate responsibility among three multinational companies. Journal of Business Ethics, 102(2), 261-279.