The New Economy Online Case Analysis

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The New Economy Case Study Solution and Analysis


The New Economy Case Study Help is currently among the greatest food chains worldwide. It was founded by Henri The New Economy in 1866, a German Pharmacist who initially launched "Farine Lactee"; a combination of flour and milk to reduce and feed babies death rate. At the same time, the Page bros from Switzerland also found The Anglo-Swiss Condensed Milk Company. The two ended up being competitors at first however later on combined in 1905, leading to the birth of The New Economy.

The New Economy is now a multinational business. Unlike other international business, it has senior executives from different countries and attempts to make choices thinking about the whole world. The New Economy Case Study Help presently has more than 500 factories worldwide and a network spread across 86 nations.


The function of The New Economy Corporation is to enhance the quality of life of people by playing its part and supplying healthy food. While making sure that the company is succeeding 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 consumers with food that is healthy, high in quality and safe to eat. It wants to be innovative and concurrently comprehend the needs and requirements of its clients. Its vision is to grow fast and provide products that would satisfy the needs of each age group. The New Economy pictures to establish a trained workforce which would assist the company to grow.


Nestlé's mission is that as presently, it is the leading company in the food industry, it believes in 'Excellent Food, Great Life". Its objective is to supply its customers with a range of options that are healthy and finest in taste too. It is concentrated on offering the best food to its clients throughout the day and night.

Executive Summary
The New Economy Case Study Solution has a wide range of items that it provides to its customers. Its products consist of food for babies, cereals, dairy items, treats, chocolates, food for animal and mineral water. It has around 4 hundred and fifty (450) factories worldwide and around 328,000 staff members. In 2011, The New Economy was noted as the most gainful company.

Goals and Goals.

• Bearing in mind the vision and objective of the corporation, the company has actually laid down its objectives and goals. These objectives and objectives are noted below.
• One goal of the business is to reach zero land fill status.
• Another objective of The New Economy is to lose minimum food during production. Most often, the food produced is squandered even prior to it reaches the clients.
• Another thing that The New Economy is dealing with is to improve its packaging in such a way that it would assist it to decrease those issues and would also ensure the shipment of high quality of its products to its consumers.
• Meet global standards of the environment.
• Develop a relationship based upon trust with its customers, organisation partners, staff members, and federal government.

Crucial Concerns.

Recently, The New Economy Case Study Analysis Business is focusing more towards the technique of NHW and investing more of its earnings on the R&D technology. The nation is investing more on acquisitions and mergers to support its NHW strategy. The target of the company is not attained as the sales were anticipated to grow higher at the rate of 10% per year and the operating margins to increase by 20%, given in Exhibition H.

Situational Analysis.
Porter's 5 Forces Analysis
Analysis of Current Method, Vision and Goals.

The existing The New Economy technique is based on the principle of Nutritious, Health and Wellness (NHW). This method deals with the concept to bringing modification in the customer choices about food and making the food things much healthier worrying about the health issues.

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

This technique was embraced to bring more healthy plus yummy foods and beverages in market than ever. In competition with other business, with an objective of retaining its trust over consumers as The New Economy Company has actually acquired more trusted by clients.

Microenvironment Analysis (PESTEL Analysis).

The analysis utilized to determine the position of company in the market is done by utilizing PESTLE analysis, given in Exhibit A. The New Economy works under the policies and guidelines directed by government and food authority. The company is more concentrated on its services and products to make certain about the product quality and security. This analysis will help in understanding environment of external market in the worldwide food and beverage markets. (Parera, 2017).

Swot Analysis
The New Economy is significantly supported by Federal government to meet all the criteria of standards like acts of health and security. In efforts to make excellent food, The New Economy Case Study Analysis is changing the requirements of food and beverage production.


Initiation of the business where the capital income of each private matters for the increased net sale as this differs country-to-country. The economy of the The New Economy Company in U.S. is growing year by year with variable products launch specifically focusing on the dietary food for babies.


The social environment keeps changing with regard to time like the mindset of the customer along with their lifestyles. Any product or service of any business can not succeed until the business is not worried about the living system of the customer. The New Economy is taking procedures to satisfy its goals as the world is in search of healthy and tasty food.


In the development of company, strategic measures are somewhat necessary. The New Economy is among the leading famous multinational firm and by time it invests in different departments to take its items to brand-new level. The New Economy is investing more on its R&D to make its items healthier and healthy supplying consumers with health advantages.


There is no such impact of legal factors of The New Economy as it is more concerned over its laws and policies.


The New Economy, in terms of ecological impact is committed to operate in environment-friendly environment with conservation of the natural resources and energy. As due to the manufacturing of larger number of items there may be a risk if the resources used are recyclable or not.

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

The New Economy Case Study Analysis has actually gotten a number of companies that assisted it in diversity and development of its product's profile. This is the thorough description of the Porter's design of five forces of The New Economy Business, given in Exhibit B.


There is severe competition in the industry of food and drinks. The New Economy is among the top business in this competitive industry with a number of strong competitors like Unilever, Kraft foods and Group DANONE. The New Economy is running well in this race for last 150 years. Each business has a guaranteed share of market. This competition is not simply restricted to the rate of the product however likewise for variation, innovation and quality. Every market is striving hard for the upkeep of their market share. Nevertheless, the competition of other business with The New Economy Case Study Analysis is rather high.
Vrio Analysis
Danger of New Entrants.

A number of barriers are there for the new entrants to occur in the consumer food industry. Just a couple of entrants be successful in this market as there is a requirement to comprehend the consumer requirement which requires time while current rivals are well aware and has actually progressed with the consumer commitment over their items with time. There is low hazard of new entrants to The New Economy as it has quite large network of distribution internationally controling with well-reputed image.

Bargaining Power of Providers.

In the food and beverage industry, The New Economy Case Study Solution owes the largest share of market requiring greater number of supply chains. In reaction, The New Economy has also been concerned for its suppliers as it believes in long-term relations.

Bargaining Power of Buyers.

Thus, The New Economy makes sure to keep its customers satisfied. This has led The New Economy to be one of the devoted company in eyes of its buyers.

Hazard of Substitutes.

There has actually been a fantastic hazard of alternatives as there are alternatives of a few of the Nestlé's items such as boiled water and pasteurized milk. There has also been a claim that a few of its items are not safe to use resulting in the reduced sale. Therefore, The New Economy started highlighting the health advantages of its products to cope up with the replacements.

Competitor Analysis.

It has ended up being the second biggest food and beverage market in the West Europe with a market share of about 8.6% with only a difference of 0.3 points with The New Economy. The New Economy attracts regional clients by its low expense of the item with the local taste of the products maintaining its first place in the global market. The New Economy Case Study Analysis business has about 280,000 workers and functions in more than 197 countries edging its competitors in numerous areas.

Note: A quick comparison of The New Economy with its close rivals is given in Exhibit C.

SWOT Analysis.

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


• The New Economy has an experience of about 140 years, making it possible for company to better perform, in various circumstances.
• Nestlé's has existence in about 86 nations, making it a worldwide leader in Food and Beverage Industry.
• The New Economy has more than 2000 brand names, which increase the circle of its target consumers. These brands consist of baby foods, animal food, confectionary items, drinks and so on. Famous brands of The New Economy include; Maggi, Kit-Kat, Nescafe, and so on
• The New Economy Case Study Analysis has big amount of spending on R&D as compare to its rivals, making the company to introduce more innovative and healthy items. This innovation offers the business a high competitive position in long run.
• After embracing its NHW Strategy, the company has actually done large quantity of mergers and acquisitions which increase the sales development and enhance market position of The New Economy.
• The New Economy is a well-known brand name with high customer's loyalty and brand name recall. This brand loyalty of consumers increases the possibilities of easy market adoption of numerous new brands of The New Economy.
Weak points.
• Acquisitions of those organisation, like; Kraft frozen Pizza business can give an unfavorable signal to The New Economy clients about their compromise over their core competency of healthier foods.
• The growth I sales as compare to the business's financial investment in NHW Method are quite different. It will take long to change the understanding of individuals ab out The New Economy as a business selling nutritious and healthy items.


• Introducing more health related items enables the business to capture the market in which consumers are quite conscious about health.
• Developing nations like India and China has largest markets in the world. For this reason expanding the market towards developing countries can improve the The New Economy business by increasing sales volume.
• Continue acquisitions and joint endeavors increases the marketplace share of the company.
• Increased relationships with schools, hotel chains, restaurants etc. can also increase the number of The New Economy Case Study Analysis customers. Teachers can advise their students to purchase The New Economy products.


• Financial instability in countries, which are the potential markets for The New Economy, can produce numerous concerns for The New Economy.
• Shifting of products from normal to healthier, causes extra costs and can lead to decline company's earnings margins.
• As The New Economy has a complicated supply chain, therefore failure of any of the level of supply chain can lead the business to face particular problems.

Segmentation Analysis

Group Division

The market division of The New Economy Case Study Solution is based upon 4 elements; age, profession, income and gender. The New Economy produces a number of items related to children i.e. Cerelac, Nido, and so on and related to adults i.e. confectionary items. The New Economy items are quite affordable by nearly all levels, however its significant targeted consumers, in terms of income level are middle and upper middle level clients.

Geographical Division

Geographical division of The New Economy Case Study Solution is made up of its presence in nearly 86 nations. Its geographical segmentation is based upon two primary aspects i.e. average income level of the consumer in addition to the climate of the area. For example, Singapore The New Economy Company's division is done on the basis of the weather of the area i.e. hot, warm or cold.

Psychographic Division

Psychographic segmentation of The New Economy is based upon the personality and lifestyle of the consumer. The New Economy 3 in 1 Coffee target those customers whose life style is quite hectic and do not have much time.

Behavioral Division

The New Economy Case Analysis behavioral segmentation is based upon the mindset understanding and awareness of the client. Its extremely healthy products target those customers who have a health conscious attitude towards their intakes.

VRIO Analysis

The VRIO analysis of The New Economy Company is a broad range analysis supplying the organization with an opportunity to acquire a viable competitive benefit versus its rivals in the food and drink industry, summed up in Exhibition I.


The resources used by the The New Economy company are valuable for the business or not. Such as the resources like finance, personnels, management of operations and experts in marketing. This are some of the key valuable aspects of for the identification of competitive advantage.


The important resources used by The New Economy are even rare or pricey. If these resources are frequently discovered that it would be simpler for the rivals and the new competitors in the industry to easily move in competitors.


The replica process is pricey for the rivals of The New Economy Case Solution Business. It can be done just in 2 various methods i.e. product duplication which is produced and made by The New Economy Business and launching of the alternative of the products with changing expense. This increases the hazard of disruption to the recent structure of the market.


This part of VRIO analysis deals with the compatibility of the business to place in the market making productive usage of its important resources which are difficult to mimic. Frequently, the advancement of management is completely dependent on the firm's execution technique and group. Therefore, this polishes the abilities of the firm by time based on the decisions made by company for the development of its strategic capitals.

Quantitative Analysis

R&D Costs as a percentage of sales are declining with increasing real quantity of costs shows that the sales are increasing at a greater rate than its R&D spending, and enable the company to more spend on R&D.

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

Financial obligation ratio of the business is increasing due to its spending on mergers, acquisitions and R&D development instead of payment of debts. This increasing financial obligation ratio position a danger of default of The New Economy to its financiers and could lead a declining share prices. For that reason, in terms of increasing debt ratio, the company must not spend much on R&D and must pay its existing financial obligations to reduce the risk for investors.

The increasing threat of investors with increasing debt ratio and declining share rates can be observed by substantial decrease of EPS of The New Economy Case Help stocks.

The sales growth of business is also low as compare to its mergers and acquisitions due to slow understanding building of consumers. This slow development likewise hinder company to further invest in its mergers and acquisitions.( The New Economy, The New Economy Financial Reports, 2006-2010).

Note: All the above analysis is done on the basis of charts and computations given up the Exhibits D and E.

TWOS Analysis.

TWOS analysis can be used to obtain numerous techniques based upon the SWOT Analysis given above. A short summary of TWOS Analysis is given up Exhibition H.

Techniques to make use of Opportunities using Strengths.

The New Economy Case Analysis should present more innovative items by large amount of R&D Spending and mergers and acquisitions. It might increase the marketplace share of The New Economy and increase the earnings margins for the company. It might likewise offer The New Economy a long term competitive advantage over its competitors.

The international growth of The New Economy must be focused on market catching of establishing nations by growth, bring in more clients through customer's loyalty. As developing nations are more populated than industrialized countries, it could increase the client circle of The New Economy.

Techniques to Overcome Weaknesses to Make Use Of Opportunities.

The New Economy Case Help needs to do mindful acquisition and merger of companies, as it might impact the consumer's and society's perceptions about The New Economy. It needs to combine and obtain with those companies which have a market reputation of nutritious and healthy companies. It would enhance the understandings of consumers about The New Economy.

The New Economy must not only invest its R&D on innovation, instead of it ought to likewise focus on the R&D costs over examination of expense of numerous healthy products. This would increase expense efficiency of its items, which will lead to increasing its sales, due to declining rates, and margins.

Techniques to utilize strengths to get rid of risks.

The New Economy needs to move to not just developing however also to industrialized nations. It needs to expand its circle to various countries like Unilever which runs in about 170 plus countries.

Techniques to get rid of weak points to avoid threats.

The New Economy Case Analysis needs to carefully manage its acquisitions to prevent the risk of misunderstanding from the customers about The New Economy. This would not just enhance the understanding of customers about The New Economy however would also increase the sales, revenue margins and market share of The New Economy.


In order to sustain the brand name in the market and keep the consumer intact with the brand, there are two 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. Nevertheless, spending on R&D would be sunk cost.
2. The business can resell the obtained units in the market, if it fails to execute its strategy. However, amount invest in the R&D could not be restored, and it will be considered totally sunk cost, if it do not offer potential outcomes.
3. Investing in R&D offer slow growth in sales, as it takes very long time to present a product. Nevertheless, acquisitions provide fast results, as it offer the business already developed item, which can be marketed not long after the acquisition.


1. Acquisition of business's which do not fit with the company's worths like Kraftz foods can lead the business to deal with misunderstanding of customers about The New Economy core values of nutritious and healthy products.
2. Large spending on acquisitions than R&D would send a signal of company's inadequacy of establishing ingenious products, and would lead to consumer's discontentment also.
3. Large acquisitions than R&D would extend the product line of the company by the items which are currently present in the market, making company not able to present new innovative items.

Option: 2

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


1. It would allow the business to produce more innovative items.
2. It would supply the company a strong competitive position in the market.
3. It would enable the company to increase its targeted clients by introducing those products which can be offered to a totally new market sector.
4. Ingenious products will provide long term advantages and high market share in long term.


1. It would reduce 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 when it comes to acquisitions.
3. It would not increase the wealth of company, which could offer a negative signal to the investors, and could result I declining stock rates.

Alternative 3:

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


1. It would enable the business to introduce new ingenious items with less risk of converting the spending on R&D into sunk cost.
2. It would supply a favorable signal to the investors, as the general properties of the business would increase with its considerable R&D costs.
3. It would not impact the earnings margins of the company at a big rate as compare to alternative 2.
4. It would supply the company a strong long term market position in regards to the business's overall wealth along with in terms of ingenious products.


1. Danger of conversion of R&D costs into sunk expense, higher than option 1 lesser than alternative 2.
2. Threat of misunderstanding about the acquisitions, higher than alternative 2 and lesser than option 1.
3. Introduction of less variety of ingenious items than alternative 2 and high variety of innovative items than alternative 1.


With the deep analysis of the above alternatives, it is recommended that the business should select the alternative 3 in order to keep a competitive position in the long run. As the alternative 3 would enable the company to not only introduce brand-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 costs as well, as financiers want to invest more in business with significant R&D spending and increase in the total worth of the company.

Action and implementation Method

Technique can be executed efficiently by developing certain short term along with long term strategies. These plans could be as follows;

Short-term Plan (0-1 year).

• Under the short-term strategy The New Economy Case Solution ought to carry out numerous activities to implement its NHW technique effectively. These activities are as follows;.
• Get the audit of its brand portfolio done, to examine the core selling brands, which create the majority of its earnings.
• Evaluate the existing target audience along with the marketplace segment which is not include in the company's circle.
• Analyze the existing monetary data to determine the amount that needs to be invested in the R&D and acquisitions.
• Examine the possible investors and their nature, i.e. do they desire long term advantages (capital gain), or the want early earnings (dividend). It would let the business to understand that just how much amount must be spent on R&D.

Mid Term Strategy (1-5 years).

• Obtain those companies in which the company has potential experience to handle. Get most beneficial organizations with a strong dedication to health, to build the consumer's perceptions in the right instructions.
• Focus more on acquisitions than R&D to construct the base in the consumer's mind about The New Economy worths and vision and to avoid prospective risk of sunk expense.

Long Term Plan (1-10 years).

• Acquire organizations with health along with taste factor, as the base for the The New Economy as a business producing healthy items has actually been constructed under midterm strategy and now the company could move towards taste factor as well to grasp the consumers, which focus more on taste instead of health.
• Be more aggressive towards R&D than the acquisitions, as it is the considerable time to build new products.

The New Economy Case Solution has developed significant market share and brand identity in the urban markets, it is suggested that the company needs to focus on the rural areas in terms of establishing brand awareness, equity, and commitment, such can be done by creating a specific brand name allowance strategy through trade marketing tactics, that draw clear difference in between The New Economy products and other competitor products. This will enable the business to establish brand equity for recently introduced and already produced products on a greater platform, making the effective use of resources and brand image in the market.