1. From the published reports of the food products companies Nestlé and Kellogg’
ID: 347484 • Letter: 1
Question
1. From the published reports of the food products companies Nestlé and Kellogg’s, it appears that Vietnam is more significant for Nestlé’s international strategy than it is for Kellogg’s. Apply the environmental analysis framework of chapter 2 together with concepts in this chapter to explain why this may be so.
2. Reflect critically on the following statement: ‘progressive, innovative enterprises do not react or respond to trends, they establish them. So environmental scanning is of limited strategic value to such enterprises.
Answer these two questions. Reconcile them using the textbook readings, personal experience, and research to develop an answer to the questions posed?
Textbook(s)/ISBN:
1. Pitt, M., & Koufopoulos, D. N. (2012). Essentials of Strategic Management. London: Sage. ISBN: 9781849201872
2. Magretta, J. (2012). Understanding Michael Porter: The Essential Guide to competition and strategy. Boston, MA: Harvard Business Review Press. ISBN: 9781422160596
Explanation / Answer
In recent times Vietnam has emerged as a growing market and most of the companies operating worldwide has now eyes on Vietnamese economy as it has ample opportunities where these companies can establish and grow,
PEST Analysis of Nestle in Vietnam:
Political: Vietnam's current political situation is balanced and the country is open towards FDI.
Economic: The situation of Vietnam is becoming good day by day and the economy is taking an upward rise. People can afford to purchase the products which are being sold in Vietnam.
Socio-Cultural: The Vietnamese culture is moving towards being an open culture and foreign companies such as Nestle has better opportunities in it.
Technological: Nestle can use the state of the art technologies which it uses to manufacture its products in Vietnam as well.
PEST Analysis of Kellogg’s in Vietnam:
Political: The condition is good for FDI in Vietnam and Kellogg’s can see for an opportunity in that.
Economic: People can afford to purchase the products of Kellogg’s as the economy is on rise and total disposable income per capita is increasing.
Socio-Cultural: The Vietnamese people are not in the habit of eating western breakfast which are the major products sold by Kellogg’s, the company will have to create a market.
Technological: Kellogg’s if wishes to install its technologically advanced manufacturing system in Vietnam it will not face a lot of hindrance here.
As per the reports published by food product companies Nestle seems to have better opportunities because the presence of Nestle in Vietnam is since long whereas Kellogg’s is a new entrant which will have to create a market here for its products which is not very easy.
‘Progressive, innovative enterprises do not react or respond to trends, they establish them. So environmental scanning is of limited strategic value to such enterprises."
Environmental analysis is the process of collecting data about the business environment in an economy and critically examining it to see whether there is the presence of any opportunities or threats.
It is true that innovative and progressive companies do not react or follow the trends but rather they set them but saying that environmental scanning is of lesser use to such innovative companies is an extreme statement.
Any company needs to look for opportunities and prepare for threats and it can only be done by environmental scanning.
An innovative company such as Apple Inc. which is considered as trendsetter also keep a close eye on the environment and brings out products accordingly.
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