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Comparative Advantage Case Study Solution & Analysis


Comparative Advantage Case Study Solution is presently one of the most significant food chains worldwide. It was founded by Henri Comparative Advantage in 1866, a German Pharmacist who initially introduced "Farine Lactee"; a mix of flour and milk to decrease and feed infants mortality rate. At the very same time, the Page brothers from Switzerland likewise found The Anglo-Swiss Condensed Milk Business. The two became rivals in the beginning however later on combined in 1905, leading to the birth of Comparative Advantage.

Comparative Advantage is now a global business. Unlike other multinational companies, it has senior executives from various nations and tries to make choices considering the whole world. Comparative Advantage Case Study Analysis currently has more than 500 factories worldwide and a network spread throughout 86 nations.


The purpose of Comparative Advantage Corporation is to improve the quality of life of individuals by playing its part and offering healthy food. While making sure that the company is being successful in the long run, that's how it plays its part for a better and healthy future


Nestlé's vision is to offer its clients with food that is healthy, high in quality and safe to eat. Comparative Advantage visualizes to establish a well-trained workforce which would help the company to grow.


Nestlé's mission is that as currently, it is the leading company in the food industry, it thinks in 'Good Food, Excellent Life". Its objective is to provide its consumers with a variety of options that are healthy and best in taste as well. It is focused on providing the best food to its customers throughout the day and night.

Executive Summary
Comparative Advantage has a wide variety of items that it provides to its consumers. In 2011, Comparative Advantage was noted as the most gainful company.

Goals and Goals.

• Keeping in mind the vision and objective of the corporation, the business has laid down its objectives and objectives. These goals and objectives are noted below.
• One goal of the business is to reach zero land fill status.
• Another goal of Comparative Advantage is to waste minimum food throughout production. Frequently, the food produced is squandered even prior to it reaches the clients.
• Another thing that Comparative Advantage is working on is to enhance its product packaging in such a way that it would help it to decrease those problems and would likewise guarantee the shipment of high quality of its items to its consumers.
• Meet worldwide standards of the environment.
• Develop a relationship based upon trust with its customers, service partners, staff members, and government.

Crucial Concerns.

Recently, Comparative Advantage Business is focusing more towards the technique of NHW and investing more of its revenues on the R&D technology. The country is investing more on mergers and acquisitions to support its NHW strategy. However, the target of the company is not achieved as the sales were expected to grow higher at the rate of 10% each year and the operating margins to increase by 20%, given in Display H. There is a need to focus more on the sales then the innovation technology. Otherwise, it might result in the declined earnings rate. (Henderson, 2012).

Situational Analysis.
Porter's 5 Forces Analysis
Analysis of Present Technique, Vision and Goals.

The current Comparative Advantage technique is based on the idea of Nutritious, Health and Health (NHW). This technique deals with the idea to bringing modification in the client preferences about food and making the food stuff healthier concerning about the health problems.

The vision of this technique is based on the secret technique i.e. 60/40+ which just implies that the items will have a rating of 60% on the basis of taste and 40% is based upon its dietary worth. The items will be produced with additional dietary worth in contrast to all other products in market getting it a plus on its nutritional content.

This method was adopted to bring more healthy plus delicious foods and beverages in market than ever. In competitors with other business, with an intention of maintaining its trust over customers as Comparative Advantage Company has acquired more trusted by costumers.

Microenvironment Analysis (PESTEL Analysis).

The analysis used to measure the position of company in the market is done by utilizing PESTLE analysis, given in Exhibit A. Comparative Advantage works under the regulations and rules directed by federal government and food authority. The business is more concentrated on its services and products to make certain about the item quality and security. This analysis will assist in understanding environment of external market in the international food and beverage industries. (Parera, 2017).

Swot Analysis
The political influence on the company is considerably affected by the public law and policies. The business needs to meet its requirements offered by government otherwise it needs to pay fine. Comparative Advantage is greatly supported by Federal government to satisfy all the requirements of standards like acts of health and wellness. In efforts to produce good food, Comparative Advantage is altering the requirements of food and beverage production. This may trigger the offense of governmental guidelines and guidelines.


Initiation of the business where the capital income of each individual matters for the increased net sale as this differs country-to-country. The economy of the Comparative Advantage Business in U.S. is growing year by year with variable products launch particularly focusing on the dietary food for infants.


The social environment keeps on changing with respect to time like the attitude of the consumer as well as their lifestyles. Any product and services of any company can not succeed till the company is not worried about the living system of the consumer. Comparative Advantage is taking procedures to fulfill its objectives as the world remains in search of healthy and tasty food.


In the advancement of business, tactical procedures are somewhat necessary. Comparative Advantage is among the top famous international company and by time it purchases different departments to take its items to brand-new level. Comparative Advantage is investing more on its R&D to make its items much healthier and healthy supplying consumers with health benefits.


There is no such impact of legal elements of Comparative Advantage as it is more worried over its regulations and laws.


Comparative Advantage, in terms of environmental effect is devoted to operate in eco-friendly environment with preservation of the natural deposits and energy. As due to the manufacturing of larger number of products there may be a risk if the resources utilized are recyclable or not.

Competitive Forces Analysis (Porter's 5 Forces Design).

Comparative Advantage Case Study Help has obtained a number of business that assisted it in diversification and growth of its product's profile. This is the thorough explanation of the Porter's design of 5 forces of Comparative Advantage Business, given in Exhibition B.


Comparative Advantage is one of the leading business in this competitive market with a number of strong rivals like Unilever, Kraft foods and Group DANONE. Comparative Advantage is running well in this race for last 150 years. The competition of other companies with Comparative Advantage is rather high.
Vrio Analysis
Risk of New Entrants.

A variety of barriers are there for the brand-new entrants to take place in the customer food industry. Only a few entrants prosper in this industry as there is a requirement to comprehend the consumer requirement which needs time while current competitors are aware and has actually progressed with the customer commitment over their items with time. There is low threat of brand-new entrants to Comparative Advantage as it has rather big network of circulation globally dominating with well-reputed image.

Bargaining Power of Suppliers.

In the food and beverage industry, Comparative Advantage Case Study Analysis owes the largest share of market needing greater number of supply chains. In response, Comparative Advantage has likewise been worried for its providers as it thinks in long-lasting relations.

Bargaining Power of Purchasers.

Hence, Comparative Advantage makes sure to keep its customers satisfied. This has actually led Comparative Advantage to be one of the loyal company in eyes of its purchasers.

Hazard of Alternatives.

There has been an excellent danger of alternatives as there are substitutes of a few of the Nestlé's products such as boiled water and pasteurized milk. There has actually also been a claim that a few of its items are not safe to use resulting in the decreased sale. Therefore, Comparative Advantage started highlighting the health advantages of its items to cope up with the substitutes.

Competitor Analysis.

It has ended up being the second largest food and beverage market in the West Europe with a market share of about 8.6% with just a difference of 0.3 points with Comparative Advantage. Comparative Advantage draws in regional costumers by its low expense of the item with the regional taste of the products keeping its first place in the worldwide market. Comparative Advantage Case Study Solution business has about 280,000 workers and functions in more than 197 nations edging its rivals in many areas.

Keep in mind: A brief comparison of Comparative Advantage with its close rivals is given up Exhibition C.

SWOT Analysis.

The internal analysis and external of the business likewise can be done through SWOT Analysis, summed up in the Display F.


• Comparative Advantage has an experience of about 140 years, allowing business to much better carry out, in different circumstances.
• Nestlé's has existence in about 86 countries, making it a worldwide leader in Food and Drink Market.
• Comparative Advantage has more than 2000 brands, which increase the circle of its target customers. Famous brand names of Comparative Advantage include; Maggi, Kit-Kat, Nescafe, and so on
• Comparative Advantage Case Study Help has large amount quantity spending on R&D as compare to its competitors, making the company to launch more nutritious ingenious innovative products.
• After embracing its NHW Technique, the business has done big quantity of mergers and acquisitions which increase the sales development and improve market position of Comparative Advantage.
• Comparative Advantage is a well-known brand name with high consumer's commitment and brand recall. This brand commitment of customers increases the chances of simple market adoption of different new brands of Comparative Advantage.
Weak points.
• Acquisitions of those organisation, like; Kraft frozen Pizza service can provide a negative signal to Comparative Advantage clients about their compromise over their core proficiency of much healthier foods.
• The development I sales as compare to the business's investment in NHW Technique are rather different. It will take long to alter the understanding of people ab out Comparative Advantage as a business offering healthy and nutritious products.


• Presenting more health associated products enables the business to capture the market in which consumers are rather conscious about health.
• Developing nations like India and China has largest markets on the planet. Thus broadening the market towards establishing nations can increase the Comparative Advantage organisation by increasing sales volume.
• Continue acquisitions and joint ventures increases the marketplace share of the company.
• Increased relationships with schools, hotel chains, dining establishments etc. can likewise increase the variety of Comparative Advantage Case Study Analysis consumers. Teachers can advise their students to purchase Comparative Advantage items.


• Financial instability in nations, which are the potential markets for Comparative Advantage, can develop several issues for Comparative Advantage.
• Shifting of products from normal to healthier, results in additional expenses and can lead to decrease business's revenue margins.
• As Comparative Advantage has a complex supply chain, for that reason failure of any of the level of supply chain can lead the company to deal with certain issues.

Division Analysis

Group Division

The demographic division of Comparative Advantage Case Study Help is based on four aspects; age, earnings, occupation and gender. For example, Comparative Advantage produces several items related to babies i.e. Cerelac, Nido, etc. and related to adults i.e. confectionary products. Comparative Advantage items are rather budget friendly by nearly all levels, but its significant targeted clients, in regards to earnings level are upper and middle middle level clients.

Geographical Segmentation

Geographical segmentation of Comparative Advantage Case Study Help is composed of its existence in practically 86 nations. Its geographical division is based upon two primary aspects i.e. typical income level of the consumer in addition to the climate of the area. Singapore Comparative Advantage Business's segmentation is done on the basis of the weather of the region i.e. hot, cold or warm.

Psychographic Segmentation

Psychographic segmentation of Comparative Advantage is based upon the personality and lifestyle of the client. For instance, Comparative Advantage 3 in 1 Coffee target those consumers whose life style is rather hectic and do not have much time.

Behavioral Division

Comparative Advantage Case Analysis behavioral division is based upon the attitude understanding and awareness of the consumer. For instance its highly healthy items target those customers who have a health mindful attitude towards their intakes.

VRIO Analysis

The VRIO analysis of Comparative Advantage Business is a broad variety analysis supplying the company with a possibility to get a practical competitive benefit against its rivals in the food and beverage industry, summed up in Exhibition I.


The resources utilized by the Comparative Advantage business are valuable for the business or not. Such as the resources like financing, personnels, management of operations and specialists in marketing. This are some of the key valuable elements of for the identification of competitive benefit.


The valuable resources made use of by Comparative Advantage are costly or even uncommon. , if these resources are typically found that it would be much easier for the rivals and the new rivals in the industry to effortlessly move in competitors.


The replica process is pricey for the competitors of Comparative Advantage Case Solution Business. It can be done only in 2 different methods i.e. item duplication which is produced and made by Comparative Advantage Business and introducing of the alternative of the items with changing expense. This increases the risk of interruption to the recent structure of the industry.


This element of VRIO analysis deals with the compatibility of the business to place in the market making efficient use of its valuable resources which are hard to mimic. Regularly, the development of management is absolutely depending on the company's execution method and group. Thus, this polishes the skills of the company by time based upon the decisions made by company for the progression of its strategic capitals.

Quantitative Analysis

R&D Spending as a percentage of sales are declining with increasing actual amount of costs reveals that the sales are increasing at a higher rate than its R&D costs, and permit the company to more invest in R&D.

Net Earnings Margin is increasing while R&D as a portion of sales is decreasing. This indication likewise reveals a green light to the R&D spending, acquisitions and mergers.

Financial obligation ratio of the company is increasing due to its spending on mergers, acquisitions and R&D development instead of payment of financial obligations. This increasing financial obligation ratio posture a danger of default of Comparative Advantage to its financiers and might lead a declining share costs. For that reason, in regards to increasing debt ratio, the firm needs to not invest much on R&D and should pay its existing financial obligations to reduce the threat for financiers.

The increasing threat of financiers with increasing debt ratio and declining share prices can be observed by big decline of EPS of Comparative Advantage Case Analysis stocks.

The sales growth of business is also low as compare to its mergers and acquisitions due to slow understanding structure of consumers. This sluggish development likewise prevent business to more invest in its mergers and acquisitions.( Comparative Advantage, Comparative Advantage Financial Reports, 2006-2010).

Keep in mind: All the above analysis is done on the basis of calculations and Charts given in the Exhibits D and E.

TWOS Analysis.

2 analysis can be utilized to derive numerous techniques based upon the SWOT Analysis provided above. A short summary of TWOS Analysis is given in Exhibit H.

Techniques to make use of Opportunities using Strengths.

Comparative Advantage Case Help must present more ingenious items by large amount of R&D Costs and mergers and acquisitions. It might increase the marketplace share of Comparative Advantage and increase the revenue margins for the company. It might also offer Comparative Advantage a long term competitive advantage over its rivals.

The international growth of Comparative Advantage must be concentrated on market recording of establishing nations by expansion, drawing in more clients through customer's loyalty. As developing nations are more populated than developed nations, it might increase the customer circle of Comparative Advantage.

Methods to Conquer Weaknesses to Exploit Opportunities.

Comparative Advantage Case Analysis ought to do careful acquisition and merger of companies, as it might impact the customer's and society's perceptions about Comparative Advantage. It ought to obtain and merge with those companies which have a market track record of nutritious and healthy companies. It would improve the perceptions of consumers about Comparative Advantage.

Comparative Advantage ought to not only invest its R&D on innovation, instead of it should also focus on the R&D costs over examination of cost of different healthy items. This would increase expense effectiveness of its products, which will result in increasing its sales, due to declining prices, and margins.

Methods to utilize strengths to overcome hazards.

Comparative Advantage must move to not just establishing however also to industrialized countries. It ought to expand its circle to different countries like Unilever which runs in about 170 plus nations.

Techniques to overcome weaknesses to prevent threats.

Comparative Advantage needs to carefully manage its acquisitions to prevent the danger of mistaken belief from the consumers about Comparative Advantage. It ought to merge and acquire with those countries having a goodwill of being a healthy business in the market. This would not only enhance the perception of customers about Comparative Advantage however would also increase the sales, revenue margins and market share of Comparative Advantage. It would likewise allow the business to use its possible resources effectively on its other operations instead of acquisitions of those companies slowing the NHW technique growth.


In order to sustain the brand name in the market and keep the client undamaged with the brand, there are 2 choices:.

Alternative: 1.

The Company ought to spend more on acquisitions than on the R&D.


1. Acquisitions would increase total possessions of the company, increasing the wealth of the company. However, spending on R&D would be sunk cost.
2. The company can resell the obtained systems in the market, if it fails to implement its technique. Nevertheless, amount invest in the R&D might not be revived, and it will be thought about completely sunk cost, if it do not offer possible results.
3. Investing in R&D provide sluggish growth in sales, as it takes long time to introduce a product. Acquisitions provide fast outcomes, as it supply the business already established product, which can be marketed soon after the acquisition.


1. Acquisition of business's which do not fit with the business's values like Kraftz foods can lead the company to deal with mistaken belief of customers about Comparative Advantage core values of healthy and nutritious products.
2. Big costs on acquisitions than R&D would send out a signal of company's inadequacy of developing ingenious items, and would outcomes in customer's frustration.
3. Big acquisitions than R&D would extend the line of product of the business by the items which are currently present in the market, making company unable to introduce new ingenious items.

Option: 2

The Company ought to invest more on its R&D rather than acquisitions.


1. It would enable the business to produce more innovative products.
2. It would provide the company a strong competitive position in the market.
3. It would allow the company to increase its targeted clients by introducing those products which can be offered to an entirely new market section.
4. Ingenious products will offer long term benefits and high market share in long run.


1. It would decrease the earnings margins of the company.
2. In case of failure, the entire spending on R&D would be thought about as sunk cost, and would impact the company at big. The risk is not in the case of acquisitions.
3. It would not increase the wealth of business, which could offer a negative signal to the investors, and might result I declining stock costs.

Alternative 3:

Continue its acquisitions and mergers with considerable spending on in R&D Program.


1. It would permit the company to present brand-new ingenious items with less risk of converting the costs on R&D into sunk expense.
2. It would offer a favorable signal to the investors, as the total properties of the company would increase with its substantial R&D costs.
3. It would not affect the earnings margins of the business at a large rate as compare to alternative 2.
4. It would offer the company a strong long term market position in regards to the business's overall wealth in addition to in terms of ingenious products.


1. Risk of conversion of R&D costs into sunk expense, greater than option 1 lower than alternative 2.
2. Risk of misunderstanding about the acquisitions, higher than alternative 2 and lower than option 1.
3. Intro of less number of innovative products than alternative 2 and high number of innovative products than alternative 1.


With the deep analysis of the above options, it is suggested that the business ought to choose the alternative 3 in order to preserve a competitive position in the long run. As the alternative 3 would enable the business to not just present new and innovative products in the market it would also reduce the high expenses on R&D under alternative 2 and increase the revenue margins. It would allow the business to increase its share prices as well, as financiers want to invest more in business with considerable R&D costs and boost in the overall worth of the company.

Action and implementation Method

Method can be executed successfully by developing certain short-term in addition to long term strategies. These strategies could be as follows;

Short Term Plan (0-1 year).

• Under the short term plan Comparative Advantage Case Analysis ought to carry out numerous activities to implement its NHW method effectively. These activities are as follows;.
• Get the audit of its brand portfolio done, to take a look at the core selling brand names, which create most of its revenue.
• Analyze the current target market along with the market segment which is not consist of in the company's circle.
• Examine the present monetary information to determine the amount that needs to be spent on the R&D and acquisitions.
• Evaluate the prospective investors and their nature, i.e. do they want long term advantages (capital gain), or the desire early revenues (dividend). It would let the business to understand that how much amount needs to be spent on R&D.

Mid Term Plan (1-5 years).

• Obtain those companies in which the business has prospective experience to deal with. Acquire most favorable organizations with a strong commitment to health, to build the consumer's perceptions in the right direction.
• Focus more on acquisitions than R&D to build the base in the consumer's mind about Comparative Advantage worths and vision and to prevent possible risk of sunk expense.

Long Term Strategy (1-10 years).

• Acquire organizations with health in addition to taste element, as the base for the Comparative Advantage as a company producing healthy products has actually been developed under midterm plan and now the business could move towards taste element as well to understand the customers, which focus more on taste instead of health.
• Be more aggressive towards R&D than the acquisitions, as it is the considerable time to construct brand-new products.

Comparative Advantage Case Solution has developed significant market share and brand identity in the metropolitan markets, it is suggested that the business needs to focus on the rural locations in terms of developing brand commitment, awareness, and equity, such can be done by developing a specific brand allotment strategy through trade marketing methods, that draw clear distinction between Comparative Advantage items and other competitor products. This will permit the company to develop brand name equity for newly introduced and already produced products on a higher platform, making the efficient usage of resources and brand name image in the market.