Osmosis Data Sheet

Using Space matrix identify and discuss strategies that Nestle can utilise based on Financial strength, environmental stability, competitive advantage and industry strength.

State why you selected these strategies and the benefits to the company.

ANSWER

One of the basic management tool to determine the strategies to be formulated by the company is space matrix. It involves internal as well as external analysis of company and on that basis deciding which kind of strategies to formulate.

It actually analysis 4 factors

1. financial strength - cash flow, liquidity, leverage, ROI etc
2. competitive advantage - market share,brand image, market niche,customers loyalty, product quality etc
3. environment - demand elasticity, GDP, inflation, government regulations, technological advances etc
4. industry strength - growth opportunities, entry barriers etc

Nestle space matrix value table

FACTORS	VARIABLES	AVERAGE RATING
Finance ( 1 to 6 best being 6 )	profit after tax ( increased by 2238.3 million compared to previous year) 6 Increased sales (including exports 7255.1 million ) 4 Increased earnings on share ( by 23.21 per share) 2	4
Competitive advantage (-1 to -6 best being -1)	High brand loyalty -1 Quality product distributor -2 Large market share (huge product line) -3	-2
Environment ( -1 to -6 best being -1)	Technological advances -2 Fluctuating economy -3 Elasticity of demand -4	-3
Industrial strength ( 1 to 6 bert being 6)	Increased demand for healthy products 5 Less entry barriers 2	3.5

We need to plot values on X and Y axis on space matrix in order to get which strategy to adopt we need to add points of financial strength and environmental factors to ge tvalue to be ploted on X axis and to plot value on Y we need to add value of competitive advantage and industrial strength.

Score of competitive advantage and industrial strength thst is 1.5

Add score of financial strength and environmental factors thst is 1

Here we came to know that NESTLE has to adopt AGGRESSIVE strategies which will help company to be on top and to stimulate new opportunities and to expand its market.