Nestlé is a massive company that has been around since 1905. They have amassed over 2,000 brands during this time such as Stouffer’s and Kit Kat. They even have a stake in L’Oréal, as they make some of their hair coloring. However, lately they are starting to struggle. The times have changed, and people are starting to move away from Nestlé products in favor of upstart brands. The trend has shifted this way due to the mindset of healthy living, which is being adopted by more people each day. Nestlé’s reputation proceeds them, and in this case it will not be helping them gain more customers. The Nestlé crunch bar is a famous candy bar, and is one of the products Nestlé is known for. With a candy bar being what many people think of when they think of Nestlé, I don’t believe that will be very advantageous for them when trying to make a switch to healthy living options. These new upstarts that are beginning to encroach on the market share have little to no reputation, and this can be considered a good thing when pitted against Nestlé and similar companies. They have no previous products that are viewed as negative by the public, and therefore can attract people who are looking for an alternative to products they used to buy. The brick and mortar grocery stores will no longer play the massive roll they did in a brand being successful. This again works against long standing companies like Nestlé while it works in favor for the new upstart companies. While Nestlé has begun to make adjustments in how they market to people and changing some of the products they create, it still isn’t enough for investors.
Investors have been speaking up lately to Nestlé, and they are upset with the returns they are getting. One specific investor who has become very important in the last year is a man by the name of Daniel S. Loeb. He is known for founding the hedge fund Third Point, and being an activist investor. An activist investor is defined as an individual or group that purchases large numbers of a public company’s shares and/or tries to obtain seats on the company’s board with the goal of effecting a major change in the company. “His preferred strategy is to buy into troubled companies, replace inefficient management, and return the companies to profitability.” Mr. Loeb has amassed $3.5 billion in shares, and has begun putting pressure on Nestlé to make changes. Changes have already been made due to this pressure. Nestlé sold its US candy business to the Italian based company Ferrero. Some other suggestions that have been made include selling the L’Oréal stake, which he stated “it is simply unclear how owning a minority stake in a beauty business makes Nestlé a stronger nutrition, health, and wellness company.” Mr. Loeb wants Nestlé to “clarify its health strategy” and progress further on its 20 million Swiss franc buyback program.
How would you try to change Nestlé’s operations? What tools could they use to analyze their problem further? What categories do Mr. Loeb’s actions fall under in process reengineering and why?
https://en.wikipedia.org/wiki/Daniel_S._Loeb (for basic information)