Nespresso

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Summary

I. Nestlé

II. Presentation of Nespresso

III. Management strategies

IV. Conclusion

V. Source

1. Nestlé

Nestlé is founded in 1866. It’s a Swiss company, one of the leaders in the food-process. Nestlé sell food (Kit Kat, Maggi, Chocapic …), water (Perrier, Vittel…), professional staffs (Davigel, Alcon…) and cosmetic (Biotherm, Innéov…).Nestlé considers himself as one of the most powerful company in the world thanks to innovation and great marketing strategies. His turnover is around 55 billion CHF in 2000 even though the turnover was approximately 80 billion CHF (65 billion euro) in 2009. More than 280 000 peoples work for Nestlé around the world. Moreover, the slogan is still “good food, good life”. However, during all hisdevelopment Nestlé known some problems: the problem of deforestation (Greenpeace), labelling of product becoming outdate (Colombia)… Nowadays, Nestlé tries to be more ecological and celebrates his 150 years.

2. Presentation of Nespresso

Luigi Bezzera (Italian) created the first automatic espresso coffee machine in 1906.

Nespresso is subsidiary company from Nestlé. In 1986, Nespressois created and the same year it makes a deal with another company Turmix (to sell espresso coffee machine). His target is firstly the professional market (Hotel, bars…) but the concept didn’t work and Nestlé hesitated to give another chance to Nespresso. 1988 is the years where everything changes for Nespresso. First and all, J-P Gaillard became the new director and he remove the strategy’spolitic of Nespresso. Thus, the target became household and not any more the professional. Thanks to these changes, Nespresso takes a new departure and the sale grows up. In 2006, the turnover was 800 million CHF and in 2009 it’s around 2 billion CHF. 2005 is the mean reason why the sale of Nespresso coffee is now so important. In facts, thanks to George Clooney, Nespresso finds his first ambassador anda new publicity argument. Nespresso is planted in 50 countries around the world (US, France, Jupon, Italia…).In 1991, it attacks French market. During 1992-1996 it promotes Nespresso just for events (Rolland-Garros, trophé Lancôme …).2002, the turnover is grow up 50% in one year.

The success of Nespresso is understandable. Thanks to a high quality of product, a high price and the mysteryconcerning the fabrication of the product people enjoy to buy Nespresso coffee and recently coffee machine (with a particular design)

Thus, Nespresso knows that to be the leader it takes to always innovate and have efficient management strategies.

3. Management Strategies

Concept:

The Nespresso’s offer leans on 3 mains point: to produce an excellent coffee, to sell the bestautomatic coffee machine in the world and to have a personalize costumers. So, with more than 15 coffee and 7 aromas Nespresso tries to be diversified but always stay expensive to keep his luxury image.

Baumol’s Managerial Model:

During his development, Nespresso earn to specialise his sales for a kind of people. Thanks to this strategy Nespresso is nowadays considers as a luxury company.This is why, after many researches we saw that Baumol’s managerial model is apply. Thus, the managers have to make a huge profit but the most important things are to have large sales revenue. In this kind of company, manager and employees get a sort of prestige. Moreover, the salary is in the average and the financial potential and result of the company wave people to work at Nespresso. At last, asevery luxury company, Nespresso have a easily access from banks to develop himself and innovate.

Neo-institutional approaches:

There are two fundamentals theories: Neo-institutional approaches and cognitive approaches. Nespresso has a Neo-institutional approaches and more precisely transaction costs theory (vertical integration). So, Nespresso adopt the same theory organization than some...