Business synoptic - Nestle( case study& Questions) Essay

Business synoptic - Nestle( case study& Questions) - Essay Example Having recognized emerging markets and popularly positioned products as one the key growth drivers, the company’s management has developed a well-grounded strategy, focusing on absolutely new customer segments (Van Dijk and Cantarell, 2010). Obviously, while developing the company’s growth strategy, Nestle’s management team relied heavily on the global market trends and development tendencies. Developed markets were already saturated with the Nestle’s products, and did not present such great growth opportunities as the emerging markets did. Additionally, the large Western European and North American markets became mature; population growth in some countries had stagnated and in some countries there had been a small decline in food consumption (Case study, n.d.). It was evident that the declines in consumer spending and retail sales did not fit to the Nestle’s growth objectives. In response to these challenges, Nestle has made â€Å"a move of the kn ight† by focusing on emerging markets. As it has been already mentioned, developing markets represented great opportunities for multinational companies, such as Nestle. In order to receive evidence that the Nestle’s growth strategy to expand globally to emerging markets was rationally planned, let us take a brief look at the recent global trends and forecasts. According to the Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, the emerging markets comprise about 82% of global population (Van Dijk and Cantarell, 2010). Considering the forecasts of the Population Division, the amount of new emerging consumers will increase by 1 billion in the next 10 years (Van Dijk and Cantarell, 2010). Unlike most developed markets, GDP in emerging markets is expected to continue to grow, and populations in many emerging countries are younger, increasingly urban and showing a growing interest in modern retail formats (Food Industry of India, 2010). Urban growth rates are expected to be: moderate in Latin America, North America and Oceania; the most rapid in Southeast Asia and China; and the slowest in East Asia (Rajagopal, 2007, p.72). All these demographic changes will likely have more profound long-term implications for the food system of the country (Rajagopal, 2007, p.72). Thus, the Nestle’s growth strategy pursues long-term perspectives that promise unbelievable growth and sales. According to the World Bank forecasts, the economies in Indonesia, China, Malaysia, India and Thailand are expected to grow quickly in the next few years, the number of people with more than $3,000 in annual income is set to rise more than 40% between 2008 and 2018 (Mijuk, 2010). Consequently, higher incomes of emerging customers will allow them to buy the products, produced by the global food leader (here Nestle). For Nestle it means that the company will be able to sell its products to much larger amount of customers and t o satisfy their modern needs and wants. Therefore, the Nestle’s focus on its growth efforts on emerging markets really does make sense. However, this strategy would make little sense, if Nestle failed to develop appropriate entry strategy to maximize the opportunities and to ignore the threats each emerging market represents. In spite of various legal, economic, environmental restrictions in certain emerging