Introduction
The purpose of this group report is to evaluate Nestle Company industry how the company develop strategy for their business organization following the analysis of external and internal business environments. And also analyze the strategic management process as firm used to achieve their goal.
The most important thing for most of business company is an understanding their successful performance among the other competitors in market place. For some parties, like shareholders, it is essential for company to make a profit and gain above average return. In the report we will identify the marketplace opportunities and threats of Nestle Company and decide how to use their resources and capabilities to pursue opportunities and overcome threats. In order to strengthen this report about the Nestle Company, there are several method to analysis the data that has been conducted, which is included such as PEST analysis, Porter’s 5 Forces model and SWOT analysis.
By the end of this assignment, future strategy will be mentioned as well as our recommendations about Nestle Company that will fit into strategy orientation in order to perform well. And also to develop and implement its learning approach as the chosen large company by using different strategy.

Corporate Profile and Summary:

Nestle (Malaysia) Berhad
Nestle (Malaysia) was established by Nestle Group (Nestle) began in Malaysia in 1912 as the Anglo-Swiss Condensed Milk Company in Penang and later, growth and expansion made a move to Kuala Lumpur necessary in 1939. Nestlé's commitment to providing quality products to Malaysians dates back almost 100 years ago.
Translated from German, Nestlé means little nest and the now-famous symbol is universally understood to represent nurturing and caring, security, nourishment and family bonding. These attributes are still the guiding legacy for the company Henri Nestlé founded as it fulfils its commitment to 'Good Food, Good Life.'.
Since 1962, with its first factory in Petaling Jaya, Nestlé Malaysia now manufactures its products in 7 factories and operates from its head office in Mutiara Damansara and the company's products sales are aided by its six sales offices located at Kuala Lumpur, Johor Bahru, Penang, Kuantan, Kota Kinabalu, Brunei, and Kuching. Besides, Nestle (Malaysia) also operates a national distribution center located in Selangor, Malaysia.
The Company was publicly listed on the KLSE now known as Bursa Malaysia Berhad on 13 December, 1989. Today, the Company employs more than 5000 people and manufactures as well as markets more than 300 Halal products in Malaysia.

The company’s key products and brands include the following:
Products: Coffee and beverages, prepared foods, milks liquid drinks, junior foods, breakfast cereals, chilled dairy, ice cream, chocolate and confectionary, healthcare nutrition and performance nutrition.
Brands: MILO, NESCAFE, MAGGI, NESPRAY, LACTOGEN and KIT KAT.

Figure 1: Sales by Product Breakdown- FYE 2011
Nestle (Malaysia) disposed of its equity stake in Food Ingredients Specialities (Malaysia), Beverage Partners Worldwide (Malaysia), Purina PetCare (Malaysia), and Cereal Partners (Malaysia), for a total of MYR 37 million (approximately $11.1 million) in 2002.
Nestlé vision is to meet the various need of consumer everyday by marketing and selling foods of a consistently high quality. Their objectives are to deliver the best quality in everything they do, from primary produce, choices of supplier and transport, to recipes and packaging materials. Nestlé purpose is to offer safe, tasty, convenient and nutritious foods to improve health and well-being of consumer of all ages all over the world. To meet the needs and desires of today’s and tomorrow’s consumers, Nestlé is strongly committed to Research and Development (R&D) to improve and develop new foods with specific health benefits.

Corporate Financial Highlight I. Annual Income Statement Data | 2009 | 2010 | 2011 | 2012 | 2013 | | RM'000 | RM'000 | RM'000 | RM'000 | RM'000 | Turnover | 3,744,233 | 4,026,319 | 4,700,994 | 4,556,423 | 4,787,925 | EBIT | 440,261 | 465,744 | 558,809 | 637,668 | 719,054 | EAT | 351,793 | 391,398 | 456,301 | 505,352 | 561,701 |

II. Growth | 2009 | 2010 | 2011 | 2012 | 2013 | Turnover | -3.4% | 7.5% | 5.5% | -3.0% | 5.1% | EBIT | -0.8% | 5.5% | 19.0% | 14.0% | 12.8% | Net Profit | 3.2% | 11.0% | 16.6% | 10.7% | 11.2% |

III. Finance | 2009 | 2010 | 2011 | 2012 | 2013 | | RM'000 | RM'000 | RM'000 | RM'000 | RM'000 | Share Capital | 234,500 | 234,500 | 234,500 | 234,500 | 234,500 | Borrowings | 328,039 | 326,298 | 337,711 | 95,167 | 92,343 |

IV. Per share | 2009 | 2010 | 2011 | 2012 | 2013 | | (RM) | (RM) | (RM) | (RM) | (RM) | Market price | 33.10 | 43.34 | 56.20 | 62.84 | 68.00 | Earnings | 1.50 | 1.67 | 1.94 | 2.15 | 2.40 | Price Earnings ratio | 22.06 | 25.97 | 28.88 | 29.16 | 28.39 | Dividend (Net) | 1.50 | 1.65 | 1.80 | 2.10 | 2.35 |

Environment Analysis & Framework I. External Environment - SLEPT Analysis II. Industry Environment - Porter’s 5 forces Analysis

Establish Porter’s five force model is to serve as the framework for industry analysis and strategy development. The model consists of five different forces that influence the intensity of competition depicting the image of an industry's overall attractiveness and profitability. To get a better understanding of the status of Nestlé in the industry, we can use the Porter’s five forces model.

a. Competitive rivalry within the industry
In the traditional economic models, competition among enterprises to promote profit Zero. But competition is not perfect; enterprises are not mere passive price candidates. Instead, companies strive to exceed their opponents a competitive advantage. That the intensity of competition between enterprises in different sectors varies, strategic analysts interested in these differences. In any industry, the degree of competition has a significant influence on the profitability of the respective industry where the relationship involved is of a negative correlation nature. The food and beverage industry is considered as one of the most highly competitive market place in the world.
For Nestle Malaysia, its major competitor is Multinational Corporation, so the competition is very fierce. Other than that, Nestle Malaysia also faces some local companies to compete with them. For example, in instant mee industry, Nestle Malaysia has to face a lot competitor. The competitor has Vit’s, Mi Sedap, A1 bak kut teh mee, My kuali Penang white curry , Indomee, Tiptop and so on. The intensity of rivalry is influenced by the following industry characteristic: * A large numbers of firms: The more the number of enterprises, increased competition because more companies must compete for the same users and resources. In the competition, if the company has similar market share, leading to market leadership struggle. * Slow market: Slow growth will cause companies to compete for market share. The growing market, companies are expanding, just because it can increase revenue market. * Scale high fixed costs: Resulting from increased competition in the economy. When the total costs are mostly fixed costs, companies must generate close to capacity. Achieve the lowest unit cost. * Diversify of rivals: Unlike competitor’s diversity of culture, history and philosophy to make an industry unstable. There is a greater likelihood for the mavericks and misjudgment opponents move. Competition is unstable, it may be very intense. * High exit barriers: Place a high cost to abandon the product. The company must compete. Cause the Company to maintain high exit barriers in an industry, even when the enterprise is not profitable. A common exit barrier is asset specificity. When company need to manufacture products of plant and equipment is highly specialized, these assets cannot easily be sold to other buyers in another industry. b. Threat of new entrance
In a competitive market, the new entrance want to entry in industrial level, the main participants, marking a fairly high threshold. Therefore, new entrants may find it difficult to earn high profits or last a long time, more often than not lead to business failure or targeted acquisitions in the industrial level, especially the major players in the leading position in the geographic. In this situation, the degree of threat of new entrance to Nestle Malaysia can consider low. There are some barriers to entry: * Economic of Scale: These are the decline in the product cycle by increasing the absolute amount of unit costs. These may come from forcing into large scale (risking a strong reaction from the serving staff), or small-scale (forcing cost disadvantage). * Product differentiation: Incumbents have brand identification and customer loyalties. This forces new entrants to spend heavily to overcome these loyalties. New entrance might come out a different product to market, but its benefits must be state clearly communicated to the target customer. New entrance must find an effective positioning, which often requires marketing resources beyond their means. * Capital requirements: These are the necessary infrastructure, machinery, research and development and advertising financial resources. New entrance funding needs may be addressed by outsourcing the operation part of the company that can take advantage of existing investments (Mars, 2013). * Cost disadvantage independent scales: Incumbent may have a potential entrant cannot be replicated by a cost advantage. Factors including learning or experience curve, patented product technology, access to raw materials, favorable locations and government subsidies. (MaRS, 2013) c. Threat of Substitutes
In Porter's model, substitute products refer to products in other industries. To economists, when the threats of substitutes exist, the demand for products subject to price changes in alternative products. Price elasticity of a product is subject to the alternative - as more and more alternatives are available, the change needs flexibility because customers have more choices.
In any industry, the biggest threat to any of the other companies have to face the threat of replacement, in open and free markets, which Nestle Malaysia sales, revenues or profit margins, which ultimately produce the degree of goods and services provided directly affected, either lead to short-term decline in demand (i.e. temporary) or long-term (i.e. permanent). These threats can come from existing competitors or new entrants. d. Bargain power of buyers
Powerful buyers represent a serious threat to the profitability of individual firms and all the firms in the industry. When the bargaining of buyers is big, it will affect the profitability for the Nestle Malaysia. Over the past where there are fewer companies in the same industry from Nestle Malaysia has a smaller customer bargaining power.
However, with more entrants and competitors in the industry today, so close substitute products from an array of different major manufacturers to provide bargaining power to the consumer is that there should be any adverse increase awareness of Nestle Malaysia product prices may will result in a significant impact on sales. Customers have a consumption of Nestle products on a very large bargaining power. As mentioned earlier, there are close substitutes Nestle products, making customer preferences is very powerful. e. Bargaining power of supplier
The power supply of raw materials suppliers also greatly affect the company's profitability and access to quality goods and services, by affecting the cost of production. If the supplier is a powerful, they are no negotiations, such as controlling the price of raw materials to better advantage. How powerful suppliers, depending on the concentration of the threat, the importance of industry suppliers, forward integration, and access to other suppliers. Nestle Malaysia is dominated by large-scale and high demand products locally and internationally, implies the need to have a bulk supply of raw materials from suppliers.
Nestle takes pride in creating and maintaining positive supplier relationships around the world. Because of the large purchasing power of Nestle, in fact, produce suppliers to provide a product that is far from unique, Nestle has more bargaining power than its suppliers.
In addition, Nestle does prefer to establish and maintain long-term relationships with suppliers, because it helps to ensure the quality of raw materials purchased. In addition, Nestle also provides practical advice on how their suppliers more effective implementation, minimizing unnecessary costs.

Relationship of Internal & External environment I. SWOT Analysis

a. Strength * Strong brand name
During 1912, Nestle was established in Malaysia and leading Halal food manufacturer. Besides that, Nestle also produce over 300 Halal products to target the huge market. Nestle. Nestle doing business in Malaysia for over 100 years, as the world's leading food companies.
Moreover, Nestle Malaysia also earned the trust of consumers. Nestlé has contributed towards the well-being of Malaysians not only through its high quality products, but has also played a role in social development and environment conservation (Bauer, 2014).
In 2014, Nestle Malaysia received the Halal Excellence Award 2014. Nestle also receivethe awards Top 3 in Best CSR Initiatives Category which were presented by Prime Minister Malaysia Dato' Sri Haji Mohammad Najib. In 2012, Nestle also receive award by excellent in the quality of corporate.

* Strong Research & Development
Nestle has a key competitive advantage which is Research and Development (R&D). R&D pay important role to let Nestle become the food industry leader in wellness, nutrition and health. Nestle Malaysia annual investment in R&D over RM6 billion ringgit and commitment to continuous innovation and transformation in order to ensure that their products meet consumer demand.
Therefore, Nestle Malaysia also every year introducing new and redesigned products to strengthen companies competitive advantage (Unknown, 2014). Nestle Malaysia continues innovate new products to provide better quality, improved taste, and nutritional value to its consumers. For examples, Nestle innovation product by launching new creation to the Milo mixes such as Milo Hi-fibre and Milo less sweet to ensure consumers have more nutritional value (Dutamas, 2012). b. Weaknesses * Diverse product line creates unfamiliarity
Nestle offers wide variety of product which consider under different category amounted more than 300 products according to Nestle official website (2014). Large quantity of various product offers under Nestle generates issues on lack of attention towards certain unfamiliar products.
For examples, Nestle has launched a product which is Maggi sauce. In term on the lack of product recognition and effortless marketing strategy will cause losing competitive advantage against other sauce brand which offering product only in similar line such as Region Food Industries Sdn Bhd which only offers sauce product.

c. Opportunities * Health Conscious Societies
Nowadays, consumers are more likely consuming healthy food products. This trend is a major shift in consumer tastes and creates a huge market for companies. According to Nestle Official website, products manufactured by Nestle is aim to achieving high returns and good economic of scale by sustainable profit margin. Nestle also tries to introduce more healthy food products to target more consumers.
Moreover, based to Euromonitor.com in 2012, consumers have strong health conscious and the Malaysia government’s strong education campaigns on healthy living. It can create new market and also can target all sector of consumer because consumers are paying more attention to their diet. This is an opportunity to Nestle Malaysia as a Health, Nutrition & Wellness specialist. * Increase demand for Halal products
Nestle Malaysia has produces over 300 halal products in its food and beverage. However, Nestle Malaysia also exported to more than 50 countries global. According to Nestle Malaysia, halal food have a large market and it now serves an international market which wasvalue about RM1.83 trillion(Salama,2013). Besides that,there are an estimated 1.6 billion Muslims of the worlds(Desilver,2013).
Moreover, the Muslim population was estimated reach over 2.2 billion in 2030 (Hannamayj,2011). This is a great opportunity which Nestle Malaysia can easily enter the market by provide Halal products. Nestle Malaysia mainly products is Halal and it can meet the worlds demand and have great opportunity to increase the sales.

d. Threat * Trend towards healthy and shortage of food products
Nestle known for worldwide which is chocolate and confectionary. One of threat is Nestle confectionary is made up by the chocolate. Nestle is a major supplier with a high level of calorie chocolate and chocolate drinks.
However, due to the changing of customer habits and health conscious, Nestle will experience decline in demand. Besides that, the shortage of cocoa also will cause the chocolate supply less in order push up the price.
For example, during 2012, Nestle chocolates were declined by 1.5% but nutrition categories and milk products increase 2.5% and beverages increase 0.9%. (Bhushan & Bureau, 2012). * Rising costs of raw materials
The demand for raw materials will rise due to overall growth of world economy and population. The result of the Nestle reduce profits because of the material costs were higher. The cost of production would direct influence by increase price of raw materials such as aluminum, flour, cocoa and coffee beans.
Although Nestle is a largest food and beverage industry in Malaysia, rising price on raw materials is still a major issue towards Nestlé’s profit margin and pricing strategy where raw materials will cost 60 per cent of its operation cost (Business Times, 2009 & The Star, 2010).
The fluctuating price of raw materials will causes mispricing on product and profit margin which create issue such as lack of consumers and reduction in profit margin. II. BCG Matrix