Case 27 - Nestle

 Reflecting on my personal encounter with Nestle Philippines:

In the year 2000, shortly after earning my engineering degree, I applied for a cadet engineer position at the Nestle Manufacturing Plant located in Cabuyao, Laguna, Philippines. Nestle held a prominent status in the Philippines, and the prospect of working for this company was highly regarded.

Conveniently, the Nestle Manufacturing Plant was just 15 kilometres away from my residence in Laguna, making it a practical choice for employment. However, during the initial interview stages, the HR representative requested that I visit their head office, which was situated approximately 35 kilometres away. Fortunately, I progressed successfully through the initial interview and received an invitation for the final interview at the manufacturing plant.

To my surprise, the process required me to first visit the head office, after which a shuttle van would transport me to the manufacturing plant. I adhered to the schedule, arriving at the head office at 7 AM, where I boarded a shuttle van with heavily tinted windows bound for the manufacturing plant. As we reached the entrance gate of the manufacturing plant, our van encountered striking Nestle workers, who surrounded our vehicle and attempted to peer through the tinted windows. I overheard one of the workers ominously say, "I know where you live!"

Naturally, fear gripped me at that moment, and I conveyed my concerns to the individual conducting the interview. Regrettably, my apprehensions were met with indifference, signalling a red flag for me.

During the interview, I was presented with a standard behavioural question. I was asked how I would handle a situation where a fellow employee was underperforming while I maintained a proactive and independent work style, despite both of us receiving the same salary. I replied by expressing that it was not my responsibility to scrutinize the performance of other employees. Instead, my focus was on my personal development and work ethic. If a colleague's performance issues were evident, it should be the duty of the supervisor to address and rectify them.

I received an offer following the interview, but ultimately, I decided not to pursue employment with Nestle.

 

Case 14: Go Pro in 2020: Have Its Turnaround Strategies Failed

 1.     What are the strategically relevant factors in GoPro’s macro-environment? What does a PESTEL analysis reveal about the action camera in 2020? Does the external environment of the drone industry present attractive opportunities to GoPro?

P = Political Factors = changes in regulations can affect product development, sales and market entry strategies

E = Economic = Economic fluctuations, exchange rates and consumer purchasing power can influence GoPro’s sales and profitability

S = Social = Trends in adventure sports, vlogging and outdoor activities can positively influence the demand for action cameras, aligning with GoPro’s target market

T = Technological = Advancements in camera technology, image stabilization, and connectivity capabilities significantly affect GoPro’s competitiveness

E = Environmental = Growing awareness of environmental issues may drive demand for sustainable and eco-friendly action cameras

L = Legal = Legal issues related to patent, copyrights and intellectual property can affect GoPro’s ability to innovate

The external environment of the drone industry presents an attractive opportunity to GoPro. GoPro can collaborate to integrate their cameras with drones, enhancing their value proposition for drone enthusiasts and professionals.

2.     What is your assessment of GoPro’s business model and competitive strategy? Does its approach to delivering customer value contribute to a sustainable competitive advantage?

Business Model. Built around providing high-quality, durable action cameras and related accessories to a target market of adventure enthusiasts.

Competitive Strategy. GoPro has focused on product innovation and differentiation by constantly improving camera features, image quality and durability. They aim to provide a superior product compared to its competitors.

Sustainable Competitive Advantage. Having a high-quality product, a strong brand and a vibrant user community, has historically contributed to a sustainable competitive advantage. The camera’s durability, advanced features and association with extreme sports and adventure have established a strong position in the action camera market.

However, to maintain a sustainable competitive advantage, GoPro needs to continuously innovate, adapt to changing consumer preferences and invest in technology to stay ahead of competitors.

3.     What are GoPro’s key resources and competitive capabilities? What is the competitive power of its most important competitive assets?

Key Resources:

Technology. GoPro’s technology in designing and manufacturing action cameras is a significant resource.

Brand. The GoPro brand is an asset, associated with adventure, high-quality video capture and durability.

Competitive Capabilities:

Product innovation. GoPro excels in innovation, improving their cameras with advanced features like image stabilization, high resolutions and waterproofing.

Brand Loyalty. GoPro has fostered strong brand loyalty and engagement through user-generated content, social media presence and a vibrant community.

Quality and Durability. GoPro is known for the quality and durability of its products. This reliability instils trust in customers, influencing purchasing decisions and repeat purchases.

4.     What is your assessment of GoPro’s financial performance the past three years? (Use the financial ratios in the Appendix of the text as a guide in doing your financial analysis.)

Operating Profit Margin	2017	2018	2019
Revenue	1,179,741	1,148,337	1,194,651
Operating Expenses	547,990	455,396	415,122
Operating Profit Margin = Sales revenue – operating expenses / Sales revenue	53.55%	60.36%	65.24%

 ·       GoPro have recorded a steady increase of Operating Profit (or Operating income) for the years 2017 / 2018 / 2019, suggesting a better cost management and higher profitability from core business activities.

5.     Based on the preceding analysis, and the first quarter 2020 statement of operations, what is your overall evaluation of GoPro’s business situation as the company moved into 2020? Does the company’s strategy have the potential to provide the company’s shareholders with an opportunity for above-average market returns in the next 3 – 5 years?

GoPro faced a range of challenges leading up to 2020, including increased in competition, pricing pressures, and a highly competitive market for action cameras. The company had been working to diversify its product offerings, focusing on software and services to complement its hardware. GoPro has also been emphasizing innovation in its camera products, aiming to differentiate itself through superior technology and features, solidifying its position as a leader in the action camera market.

GoPro has the potential to provide the company’s shareholders with an opportunity for above-average market returns in the next 3 – 5 years depending on the following:

Market dynamics. If GoPro can accurately predict and adapt to the market dynamics, it can capitalize on market demands.

Innovation. GoPro’s ability to innovate and introduce compelling products with enhanced features, image quality and usability will be key.

Cost management. Effective cost management and operational efficiency are critical to improving profitability and ensuring financial stability.

6.     What strategic actions should GoPro management take to reestablish GoPro’s financial and market performance? 

GoPro’s management should consider a multifaceted strategic approach that addresses product innovation, market expansion, cost management, and customer engagement. Adaptability to market trends and consumer preferences will contribute to the company’s long-term success.