STRENGTHS, WEAKNESSES, OPORTUNITIES, AND THREATS OF NESTLE COMPANY

· Strengths

1. They produced much quality products for and spread around the world

Nestle, as a big company has many products, such as: Nescafe, Pure Live, Carnation Milk, Milk Maid, Maggi, KitKat, Smarties, Nesquik, Pedigree, Nesvita, Haagen Dazs, Milk Bar, Milo, and many more. Nestle has brand and packaging fit to which country they want to sell their products. As a biggest food producer in the world, Nestle’s products had spread more than 509 countries in the world. That is making Nestle’s product more known rather than the other products. This matter causes Nestle has excellent reputation and Nestle was well known around the world. Almost all people in the world know Nestle and their products.

2. They have much employees around the world and in Indonesia itself

Nestle has 230.929 employees in all of their company in the world, but in Indonesia itself, Nestle has more than 1900 employees in more then 148 locations in Indonesia. Based on the survey in 2004, 16.9% respondents said that Nestle could give better salary than the other company and Nestle also concern about safety in work for their employees. Nestle also has a great research and development team who make Nestle can be a successful company. Those were Nestle’s strengths, because they can add job fields in Indonesia and increase the prosperity of Indonesian people.

3. They made very competitive price, so can be reach by all of Social Economic Strata in Indonesia

Nestle is one of the health food producer. Their products are contains of good nutrition. As a good food producer, Nestle has a competitive price, so not only high class social economic strata who can buy Nestle’s products but also medium or maybe lower class social economic strata can buy Nestle’s products. This matter is the one reason why Nestle has a good image in society and liked by them. With the good quality and resonable price, Nestle can have loyal customer whom always buy Nestle’s product.

4. They made delicious foods and contain of a lot of nutrition

Not just made a lot of products, Nestle, which produced daily food, has made delicious products, too and they concern about the nutrition. In Nestle’s products we can get a lot of nutrition. Suitable with their slogan, “Good Food, Good Life”, Nestle tends to increase the quality and taste of their products to fulfill consumer needs that always more complex day by day. Nestle tries to give the best quality in taste and nutrition for the consumer.

5. High quality of manufacturing

In a process of producing Nestle’s products, Nestle Company already used high technology, so they can produce good quality of daily products.

· Weaknesses

1. Profit margin is too low

We know that Nestle’s products are cheap enough that reachable for the consumer, meanwhile the process of producing the products and the cost to give salary to their employees is not cheap. From that, we can know that Nestle’s products are not have a lot of profit.

2. Focus maybe too narrow

Nestle Company focus is to makes daily products, that’s it. We know beside food and drink, Nestle did not produce another product. The focus is too narrow. If Nestle has more products beside food and drink, Nestle maybe can get more profit and has more products that can be bought by more consumer.

· Opportunities

1. Buying power of Indonesian people for Nestle’s products are high enough

As we know, Nestle has a reachable price and has a good nutrition. Society in Indonesia has variety social classes, but because of the reachable price, generally, society is able to consume Nestle’s products and Nestle always in every market, so it is easy to get. Nestle has many kind of products and has good reputation, such as: good quality and society trust their products, so the life style of society in Indonesia is match with the product of Nestle.

2. Raw materials are cheaper and easier to get than the other countries

Indonesia is a country that rich of raw materials. Many locations in Indonesia have a lot of raw materials. Raw materials are easy to get everywhere. Nestle used this condition to expand their business in Indonesia. In Indonesia, it is easy for them to produce their products and because of the easiness to get the raw materials, the price of the materials are not expensive if compared with other countries.

3. CSR (Corporate Social Responsibility)

Nestle has many participation in Corporate Social Responsibility (CSR) in Indonesia. Nestle have willingness to help Indonesian people to improve their condition. For example, Nestle gives technical counseling to increase live quality of thousand breeders in East Java and farmer of coffee in Lampung. The other example is Nestle indirectly sponsored Cerdas Cermat competition between elementary school student and junior high school student, also sponsored badminton competition for junior athlete so that they can be able to give good reputation of Indonesia soon. The latest of Nestle’s CSR is help tsunami’s victims in Aceh in 2004. With those activities, Nestle has an opportunity to get sympathy from society and can make them get good reputation.

4. Nestle will transfer their technology to Indonesia

Indonesia will get free technological transfer from Nestle, French to add cocoa seeds through technology "embryo somatic genesis", which by this technology will give a lot of plants material in a few time with similar quality and high productivity, as long as Nestle was not give it to the competitor of French. Two Indonesian staffs were trained in French and will be add two more people. In the end of 2007, Nestle will produce more plant materials, although for the beginning of 2007, Nestle can fulfilled from seeds garden that already exist and the technology of that is finished in French.

5. Co-operation between Nestle Indonesia Company and Indofood.

In 1998, Nestle Indonesia Company and Indofood Company decided to co-operate. Indofood Company experienced decline because of the monetary crisis. With this co-operation, Nestle get profit and can more expand their business. Nestle also can get more popularity with co-operate with Indofood Company. The deal between that two companies named PT Nestle Indofood Citarasa Indonesia. The founding of joint venture between Nestle Indonesia Company and Indofood Company will create good opportunity to develop the power of Nestle Indonesia Company and Indofood Company.

· Threats

1. Economic situation in Indonesia always change

Because of the economic situation in Indonesia always change, that was make Nestle has to match this condition to maintaining their business activity. As an example, in 2004 Nestle said that challenge in the market made them had to limit their buying of milk (quota). Market demand made Nestle’s product (Dancow) has to contain of high value ingredient. It makes Nestle had to decrease the milk content in Dancow to save their production cost. Half of production cost had to switch to process of adding high value ingredients, like: DHA, Omega3, and honey and they have to decrease milk content.

2. Much competitors

Nestle has much competitors as a producer of dairy product, such as: Kraft, Frisian Flag, Danone, Coca-Cola, Unilever, etc. With a lot of competitors, Nestle has to increase their quality of the products and they have to think how to make a strategy to win the competition. Beside made products with a lot of nutrition, Nestle has to make something different, maybe with make attractive packaging or make good advertisements to attract the people to know more about their products

3. Government Policy sometimes complicating

Political situation that always change makes Nestle has to follow the new rule if they want to maintain their business activity. For instance is in 2003 PT Nestle Indonesia asked the government to consider again about Halal Labeling, because it will add the production cost. Nestle more agree with Halal Certificate. Different with Halal Labeling, Halal Certificate that given by MUI (Indonesian Moeslem Theologian Council) hadn’t eat much cost, because only the surveillance by the Health Department and MUI (Indonesian Moeslem Theologian Council) from the raw materials until the process of production.

4. Demand decrease because the economic slowdown

Economic situation in Indonesia is unstable, changes often times and we cannot predicted it. One thing that Nestle’s company must be prepared is if one day economic got slowdown and made consumer reduce their demand. If the value of rupiahs fell down, the price of the product was become higher automatically, and society felt difficult situation in their economic life, so they have to limited their needs and maybe they will reduce their demand or the worst is they will stop to buy Nestle’s products, so that Nestle has to have contingency planning to solve this problem.

5. Expand to the larger location

Nestle has to expand their business in Indonesia to fulfill the consumer needs of daily products. Nestle had come to Indonesia in 19^th century with milk product, Tjap Nona which is as known as milkmaid. Now, more than 200 distributors supply to more than 400000 shops in around Indonesia include more than 2000 modern channels