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Comparative Advantage Case Study Solution & Analysis


Comparative Advantage is presently one of the biggest food chains worldwide. It was established by Henri Comparative Advantage in 1866, a German Pharmacist who initially introduced "Farine Lactee"; a mix of flour and milk to feed babies and decrease death rate.

Comparative Advantage is now a multinational business. Unlike other international companies, it has senior executives from different nations and tries to make choices considering the entire world. Comparative Advantage Case Study Solution currently has more than 500 factories around the world and a network spread across 86 countries.


The function of Comparative Advantage Corporation is to enhance the quality of life of people by playing its part and supplying healthy food. It wants to assist the world in shaping a healthy and better future for it. It also wants to motivate individuals to live a healthy life. While making sure that the company is being successful in the long run, that's how it plays its part for a much better and healthy future


Nestlé's vision is to offer its customers with food that is healthy, high in quality and safe to eat. It wants to be ingenious and concurrently comprehend the needs and requirements of its consumers. Its vision is to grow quickly and supply items that would please the needs of each age. Comparative Advantage visualizes to establish a trained labor force which would assist the business to grow.


Nestlé's objective is that as currently, it is the leading business in the food industry, it believes in 'Excellent Food, Good Life". Its mission is to provide its consumers with a variety of choices that are healthy and best in taste as well. It is concentrated on offering the very best food to its consumers throughout the day and night.


Comparative Advantage has a wide variety of products that it uses to its consumers. In 2011, Comparative Advantage was noted as the most rewarding organization.

Goals and Objectives.

• Remembering the vision and objective of the corporation, the business has actually set its goals and goals. These objectives and objectives are noted below.
• One objective of the business is to reach absolutely no land fill status. It is pursuing zero waste, where no waste of the factory is landfilled. It encourages its staff members to take the most out of the by-products. (Comparative Advantage, aboutus, 2017).
• Another goal of Comparative Advantage is to lose minimum food during production. Frequently, the food produced is squandered even prior to it reaches the customers.
• Another thing that Comparative Advantage is working on is to enhance its product packaging in such a method that it would help it to lower those issues and would also ensure the shipment of high quality of its items to its consumers.
• Meet global standards of the environment.
• Build a relationship based upon trust with its consumers, organisation partners, workers, and government.

Important Concerns.

Just Recently, Comparative Advantage Case Study Solution Business is focusing more towards the strategy of NHW and investing more of its profits on the R&D innovation. The nation is investing more on mergers and acquisitions to support its NHW method. The target of the company is not attained as the sales were anticipated to grow greater at the rate of 10% per year and the operating margins to increase by 20%, given in Display H.

Situational Analysis.

Analysis of Existing Strategy, Vision and Goals.

The present Comparative Advantage strategy is based upon the idea of Nutritious, Health and Health (NHW). This technique deals with the idea to bringing modification in the consumer choices about food and making the food stuff much healthier concerning about the health concerns.

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

This method was embraced to bring more healthy plus tasty foods and drinks in market than ever. In competitors with other business, with an intent of keeping its trust over consumers as Comparative Advantage Business has gained more relied on by costumers.

Microenvironment Analysis (PESTEL Analysis).

The analysis utilized to determine the position of business in the market is done by using PESTLE analysis, given in Display A. Comparative Advantage works under the guidelines and guidelines directed by federal government and food authority. The business is more focused on its products and services to make certain about the item quality and safety. This analysis will help in understanding environment of external market in the worldwide food and beverage industries. (Parera, 2017).


Comparative Advantage is greatly supported by Government to meet all the requirements of standards like acts of health and safety. In efforts to make great food, Comparative Advantage Case Study Help is altering the standards of food and beverage manufacturing.


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


The social environment keeps changing with respect to time like the mindset of the consumer in addition to their way of lives. Any services or product of any business can not achieve success up until the company is not concerned about the living system of the customer. Comparative Advantage is taking measures to meet its goals as the world is in search of healthy and tasty food.


In the development of company, tactical measures are somewhat compulsory. Comparative Advantage is one of the leading famous international firm and by time it invests in various departments to take its products to brand-new level. Comparative Advantage is investing more on its R&D to make its items much healthier and healthy providing customers with health benefits.


There is no such effect of legal aspects of Comparative Advantage as it is more concerned over its laws and policies.


Comparative Advantage, in regards to environmental effect is dedicated to operate in eco-friendly environment with conservation of the natural deposits and energy. If the resources utilized are recyclable or not, as due to the production of larger number of items there may be a hazard.

Competitive Forces Analysis (Porter's Five Forces Model).

Comparative Advantage Case Study Analysis has obtained a variety of business that assisted it in diversity and development of its product's profile. This is the extensive description of the Porter's model of five forces of Comparative Advantage Business, given in Exhibit B.


There is extreme competition in the market of food and drinks. Comparative Advantage is among the top company 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. Each business has a certain share of market. This competition is not just limited to the cost of the item however likewise for innovation, quality and variation. Every industry is aiming hard for the upkeep of their market share. Nevertheless, the competitors of other business with Comparative Advantage Case Study Analysis is rather high.

Risk of New Entrants.

A number of barriers are there for the brand-new entrants to happen in the consumer food industry. Only a few entrants be successful in this market as there is a need to understand the consumer need which needs time while current competitors are well aware and has actually advanced with the customer loyalty over their products with time. There is low hazard of brand-new entrants to Comparative Advantage as it has quite big network of distribution worldwide dominating with well-reputed image.

Bargaining Power of Suppliers.

In the food and drink industry, Comparative Advantage Case Study Analysis owes the biggest share of market requiring greater number of supply chains. In action, Comparative Advantage has actually also been concerned for its suppliers as it believes in long-lasting relations.

Bargaining Power of Purchasers.

Hence, Comparative Advantage makes sure to keep its clients pleased. This has actually led Comparative Advantage to be one of the devoted company in eyes of its purchasers.

Hazard of Alternatives.

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

Rival Analysis.

It has become 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 local customers by its low expense of the product with the local taste of the items maintaining its first location in the worldwide market. Comparative Advantage Case Study Solution company has about 280,000 employees and functions in more than 197 countries edging its competitors in lots of areas.

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

SWOT Analysis.

The internal analysis and external of the company also can be done through SWOT Analysis, summarized in the Exhibition F.


• Comparative Advantage has an experience of about 140 years, allowing company to better carry out, in different circumstances.
• Nestlé's has presence in about 86 nations, making it a global leader in Food and Beverage Industry.
• 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 Analysis has large big of spending on R&D as compare to its competitorsRivals making the company business launch introduce 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 customer's commitment and brand recall. This brand name loyalty of consumers increases the opportunities of simple market adoption of different brand-new brands of Comparative Advantage.
• Acquisitions of those organisation, like; Kraft frozen Pizza business can provide a negative signal to Comparative Advantage customers about their compromise over their core competency of healthier foods.
• The growth I sales as compare to the business's investment in NHW Technique are rather various. It will take long to change the understanding of individuals ab out Comparative Advantage as a business offering healthy and healthy items.


• Presenting more health related products enables the business to catch the marketplace in which customers are rather mindful about health.
• Developing countries like India and China has largest markets on the planet. Thus broadening the marketplace towards developing countries can increase the Comparative Advantage service by increasing sales volume.
• Continue acquisitions and joint endeavors increases the marketplace share of the business.
• Increased relationships with schools, hotel chains, dining establishments etc. can likewise increase the number of Comparative Advantage Case Study Help consumers. For instance, teachers can suggest their students to purchase Comparative Advantage products.


• Financial instability in nations, which are the potential markets for Comparative Advantage, can create several concerns for Comparative Advantage.
• Shifting of products from typical to healthier, results in extra expenses and can cause decline company's profit margins.
• As Comparative Advantage has an intricate supply chain, therefore failure of any of the level of supply chain can lead the business to face certain issues.

Division Analysis

Market Division

The demographic segmentation of Comparative Advantage Case Study Help is based upon four factors; age, gender, profession and earnings. Comparative Advantage produces numerous items related to children i.e. Cerelac, Nido, etc. and related to adults i.e. confectionary products. Comparative Advantage items are quite economical by almost all levels, but its significant targeted consumers, in terms of income level are middle and upper middle level consumers.

Geographical Segmentation

Geographical segmentation of Comparative Advantage Case Study Help is made up of its presence in practically 86 nations. Its geographical division is based upon 2 primary elements i.e. average earnings level of the consumer as well as the climate of the region. Singapore Comparative Advantage Business's segmentation is done on the basis of the weather condition of the area i.e. hot, warm or cold.

Psychographic Division

Psychographic segmentation of Comparative Advantage is based upon the character and life style of the customer. Comparative Advantage 3 in 1 Coffee target those customers whose life style is quite busy and don't have much time.

Behavioral Division

Comparative Advantage Case Solution behavioral division is based upon the attitude understanding and awareness of the consumer. Its extremely healthy items target those customers who have a health mindful mindset towards their intakes.

VRIO Analysis

The VRIO analysis of Comparative Advantage Business is a broad variety analysis providing the company with a chance to obtain a feasible competitive benefit versus its rivals in the food and drink market, summarized in Exhibition I.

Prized Possession

The resources utilized by the Comparative Advantage company are valuable for the business or not. Such as the resources like financing, personnels, management of operations and professionals in marketing. This are a few of the essential important aspects of for the identification of competitive benefit.


The important resources made use of by Comparative Advantage are even uncommon or expensive. , if these resources are commonly discovered that it would be easier for the competitors and the new rivals in the market to easily move in competition.


The replica process is expensive for the competitors of Comparative Advantage Case Solution Company. It can be done only in two various methods i.e. item duplication which is produced and manufactured by Comparative Advantage Business and launching of the alternative of the products with changing expense. This increases the threat of disturbance to the current structure of the industry.


This part of VRIO analysis deals with the compatibility of the company to place in the market making efficient usage of its important resources which are challenging to mimic. Often, the advancement of management is totally based on the company's execution strategy and team. Therefore, this polishes the skills of the company by time based on the choices made by company for the development of its tactical capitals.

Quantitative Analysis

R&D Spending as a percentage of sales are declining with increasing real amount of spending reveals that the sales are increasing at a greater rate than its R&D spending, and enable the business to more invest in R&D.

Net Revenue Margin is increasing while R&D as a portion of sales is declining. 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 rather than payment of financial obligations. This increasing financial obligation ratio present a risk of default of Comparative Advantage to its financiers and might lead a decreasing share costs. Therefore, in terms of increasing financial obligation ratio, the firm should not invest much on R&D and must pay its existing debts to decrease the risk for financiers.

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

The sales development of company is also low as compare to its acquisitions and mergers due to slow understanding structure of consumers. This slow development likewise hinder company to additional spend on 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 estimations and Graphs given in the Exhibits D and E.

TWOS Analysis.

TWOS analysis can be used to obtain various methods based on the SWOT Analysis given above. A quick summary of TWOS Analysis is given up Exhibit H.

Techniques to exploit Opportunities utilizing Strengths.

Comparative Advantage Case Solution needs to introduce more ingenious products by big amount of R&D Spending and acquisitions and mergers. It might increase the marketplace share of Comparative Advantage and increase the earnings margins for the business. It could likewise provide Comparative Advantage a long term competitive benefit over its competitors.

The global expansion of Comparative Advantage should be focused on market recording of developing countries by growth, attracting more customers through consumer's loyalty. As developing nations are more populous than industrialized countries, it might increase the consumer circle of Comparative Advantage.

Techniques to Conquer Weaknesses to Make Use Of Opportunities.

Comparative Advantage Case Solution must do careful acquisition and merger of organizations, as it could impact the customer's and society's understandings about Comparative Advantage. It must get and combine with those companies which have a market reputation of healthy and healthy business. It would improve the understandings of customers about Comparative Advantage.

Comparative Advantage needs to not just spend its R&D on innovation, instead of it needs to likewise focus on the R&D costs over examination of expense of numerous nutritious products. This would increase cost efficiency of its products, which will lead to increasing its sales, due to declining rates, and margins.

Techniques to utilize strengths to conquer hazards.

Comparative Advantage must move to not only developing however also to developed countries. It must broaden its circle to numerous countries like Unilever which operates in about 170 plus nations.

Techniques to conquer weak points to avoid dangers.

Comparative Advantage Case Help must sensibly control its acquisitions to avoid the danger of mistaken belief from the customers about Comparative Advantage. This would not just enhance the understanding of customers about Comparative Advantage however would also increase the sales, revenue margins and market share of Comparative Advantage.


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

Option: 1.

The Business must invest more on acquisitions than on the R&D.


1. Acquisitions would increase overall properties of the business, increasing the wealth of the business. However, costs on R&D would be sunk expense.
2. The business can resell the acquired systems in the market, if it fails to execute its strategy. Amount spend on the R&D might not be revived, and it will be considered entirely sunk cost, if it do not give prospective outcomes.
3. Spending on R&D provide sluggish development in sales, as it takes long period of time to introduce a product. However, acquisitions provide fast results, as it provide the business already established item, which can be marketed not long after the acquisition.


1. Acquisition of company's which do not fit with the business's worths like Kraftz foods can lead the company to face mistaken belief of customers about Comparative Advantage core worths of nutritious and healthy products.
2. Large spending on acquisitions than R&D would send a signal of company's inadequacy of establishing ingenious items, and would outcomes in customer's discontentment.
3. Big acquisitions than R&D would extend the product line of the business by the items which are already present in the market, making business unable to present new innovative items.

Alternative: 2

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


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


1. It would decrease the earnings margins of the business.
2. In case of failure, the whole costs on R&D would be considered as sunk expense, and would affect the company at large. The threat is not in the case of acquisitions.
3. It would not increase the wealth of business, which could supply an unfavorable signal to the financiers, and might result I decreasing stock prices.

Alternative 3:

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


1. It would permit the business to present brand-new innovative products with less danger of transforming the costs on R&D into sunk expense.
2. It would supply a favorable signal to the financiers, as the overall properties of the business would increase with its substantial R&D costs.
3. It would not impact the profit margins of the company at a big rate as compare to alternative 2.
4. It would supply the business a strong long term market position in regards to the business's total wealth along with in regards to ingenious products.


1. Risk of conversion of R&D costs into sunk cost, greater than alternative 1 lower than alternative 2.
2. Danger of misconception about the acquisitions, greater than alternative 2 and lower than option 1.
3. Introduction of less variety of innovative items than alternative 2 and high variety of ingenious products than alternative 1.


With the deep analysis of the above alternatives, it is recommended that the business needs to pick the alternative 3 in order to keep a competitive position in the long run. As the alternative 3 would enable the company to not just present new and innovative products in the market it would likewise reduce the high expenditures on R&D under alternative 2 and increase the revenue margins. It would make it possible for the business to increase its share rates too, as financiers want to invest more in business with considerable R&D costs and boost in the total worth of the company.

Action and execution Strategy

Technique can be carried out efficiently by developing specific short term as well as long term plans. These strategies might be as follows;

Short Term Strategy (0-1 year).

• Under the short-term strategy Comparative Advantage Case Analysis must carry out numerous activities to execute its NHW strategy effectively. These activities are as follows;.
• Get the audit of its brand portfolio done, to examine the core selling brand names, which produce the majority of its profits.
• Examine the present target audience in addition to the market segment which is not include in the business's circle.
• Evaluate the present financial data to measure the amount that should 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 want early profits (dividend). It would let the business to understand that how much amount needs to be invested in R&D.

Mid Term Plan (1-5 years).

• Obtain those organizations in which the company has possible experience to deal with. Obtain most favorable organizations with a strong dedication to health, to construct the client's perceptions in the best instructions.
• Focus more on acquisitions than R&D to construct the base in the consumer's mind about Comparative Advantage worths and vision and to prevent potential threat of sunk expense.

Long Term Plan (1-10 years).

• Get companies with health along with taste factor, as the base for the Comparative Advantage as a business producing healthy items has actually been built under midterm plan and now the business might move towards taste aspect also to comprehend 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 develop brand-new products.


Comparative Advantage has actually stayed the leading market player for more than a decade. It has institutionalized its methods and culture to align itself with the marketplace modifications and customer behavior, which has actually eventually enabled it to sustain its market share. Though, Comparative Advantage has established substantial market share and brand identity in the urban markets, it is suggested that the business ought to focus on the backwoods in regards to developing brand loyalty, equity, and awareness, such can be done by developing a particular brand allocation method through trade marketing strategies, that draw clear distinction between Comparative Advantage Case Help items and other rival items. Comparative Advantage ought to take advantage of its brand name image of safe and healthy food in catering the rural markets and likewise to upscale the offerings in other categories such as nutrition. This will enable the company to develop brand name equity for recently introduced and currently produced items on a greater platform, making the efficient use of resources and brand image in the market.