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SWOT ANALYSIS

STRENGTH
o Nestlé operates in 103 countries in the world since more than 130 years ago. It came to Indonesia more than 27 years ago. It has built good credibility among its customers.
o It has good positioning for all of their products.
o Nestlé has built three factories in Indonesia. Milk factory in Pasuruan, coffee (Nescafé) factory in Bandar Lampung, and confectionery factory in Tangerang.
o Nestlé has large distribution network. The products are available everywhere, from large supermarkets in big cities to small kiosks in villages.
o Nestlé produces variety of brands suitable for its target market.
For example: there are many different types of milk for different types of target market, such as:
 Nesvita for grown up people
 Ideal for low-economic class kids
 Dancow for middle-economic class toddlers and kids
 Nan for high-economic class infants
 Excella Gold for high-economic class toddlers
 Milo for kids who need more energy to do sport activities
o Nestlé leads the market of low-class milk. From the total selling of the low-class milk for 3.5 billion Rupiah, Nestlé owns 50% of them. For now, Dancow takes the lead in Indonesia market.
o Nestlé (Milo) leads the market of chocolate milk in Indonesia (85% of market share).
o Nestlé always do more research and development for their product, as well as innovations and renovations.
 Dancow has so many different variants of flavors and for different target market ages.
 Nestlé added new nutrition in Dancow products, such as for Dancow !+ there is Lactobacillus Protectus added.
o Nestlé’s promotions through TV commercial have always been interesting and always catch audience attention and desire by some simple but easily remembered words and sentences, such as Kit-Kat.

WEAKNESS
o Few of Nestle’s products are still imported from Malaysia and Thailand since the factories of those products haven’t been established in Indonesia, and also there is no suitable raw material and technology for the product, such as:
 Milo (ready-to-drink milk and chocolate bar) and all other chocolate products (Kit-Kat, Crunch, Smarties, Milky Bar) are still imported from Malaysia.
 Bear Brand milk is imported from Thailand.
o Few of the products are not well promoted, such as:
 Nan milk (for infants)
 baby food
 Nestlé bottled water (Pure Life)
 Carnation (condensed milk for low-economic class people)

OPPORTUNITIES
o Nestlé and PT. Indofood Sukses Makmur made a joint venture named PT. Nestlé Indofood Citarasa Indonesia. This will create new opportunities to expand their business range. Especially for Nestlé to distribute their products such as their seasoning product, Maggi.
o Nestlé S.A. and The Coca Cola Company made a 50:50 joint venture in Indonesia named PT AdeS Waters Indonesia Tbk for Nestlé Pure Life.
o According to the census in 2000, there are more than 20 million toddlers in Indonesia. In average, every toddler needs to drink about 0.6- I liter of milk a day. In Indonesia, market growth for milk reaches 20%-35% a year. It is very beneficial for Nestlé, which has varieties of baby milk product.
o Nutrition level of infants, toddlers, and kids in Indonesia is still low; there is a need to increase the nutrition level. Therefore Nestlé can sell more products.
o Increasing the level of education and revenues of Indonesian people and the reality that most of families in Indonesia are young parents with two kids. With the parents busy working, the allocation of fund for their children is getting bigger.
o In Indonesia, there is a habit to consume more instant or ready-to-eat/drink products. By today technology to produce instant product with safe package, Nestlé is able to fulfill this need.
o There are still people who have low education level. These people have become cheap labors for Nestle factories in Indonesia.

THREATS
o There is a perception in the society that foreign brands are better than the local ones. Nestlé is considered to be a local brand.
o There are more foreign brands than the local ones which produce the same kind of products. Making it hard for Nestlé to compete.
o Mead Johnson, one of Nestlé’s competitors in milk selling, has opened its factory in Indonesia. Some of Mead Johnson products:
 Sustagen kid, junior, school
 Enfakid
 Enfagrow
o So as the other international milk companies such as Abbott (gain plus advance), Wyeth (Procal) and Nutricia (Bebelac, Nutrilon). These companies are Nestlé’s main competitors for super premium and premium class milk.
o For low-class milk, Nestlé also has few competitors, such as Frisian Flag, Indomilk, and Sari Husada (SGM).
o For baby food, the competitor is Indofood (promina, sun)
o There are many demands from costumers for additional nutrition in milk product. That makes Nestlé has to do many researches and add special nutrition to their products.
o The awareness to drink milk since early age is still low in Indonesia. Especially for grown up and elder people. There is a fact that milk consumed in Indonesia is still one third of which consumed in Thailand and a half from milk consumed in

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