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 presently one of the greatest food chains worldwide. It was established by Henri The New Economy in 1866, a German Pharmacist who first launched "Farine Lactee"; a mix of flour and milk to feed infants and reduce mortality rate. At the exact same time, the Page brothers from Switzerland likewise discovered The Anglo-Swiss Condensed Milk Company. The two became rivals initially however later on combined in 1905, leading to the birth of The New Economy.

The New Economy is now a transnational company. Unlike other multinational companies, it has senior executives from different countries and tries to make choices thinking about the whole world. The New Economy Case Study Solution currently has more than 500 factories around the world and a network spread throughout 86 countries.


The purpose of The New Economy Corporation is to enhance the quality of life of people by playing its part and providing healthy food. While making sure that the business is prospering in the long run, that's how it plays its part for a better and healthy future


Nestlé's vision is to offer its consumers with food that is healthy, high in quality and safe to consume. The New Economy pictures to develop a well-trained workforce which would assist the business to grow.


Nestlé's mission is that as presently, it is the leading company in the food market, it believes in 'Great Food, Great Life". Its mission is to provide its customers with a variety of choices that are healthy and best in taste too. It is focused on offering the best food to its clients throughout the day and night.

Executive Summary
The New Economy has a broad variety of products that it uses to its clients. In 2011, The New Economy was listed as the most rewarding company.

Objectives and Objectives.

• Keeping in mind the vision and objective of the corporation, the company has actually set its objectives and objectives. These objectives and goals are noted below.
• One goal of the company is to reach absolutely no landfill status. It is pursuing no waste, where no waste of the factory is landfilled. It encourages its employees to take the most out of the spin-offs. (The New Economy, aboutus, 2017).
• Another goal of The New Economy is to waste minimum food during production. Most often, the food produced is lost even before it reaches the consumers.
• Another thing that The New Economy is working on is to improve its packaging in such a method that it would help it to lower the above-mentioned problems and would likewise ensure the shipment of high quality of its products to its customers.
• Meet international standards of the environment.
• Construct a relationship based upon trust with its consumers, organisation partners, workers, and federal government.

Crucial Problems.

Recently, The New Economy Case Study Solution Company is focusing more towards the technique 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 strategy. The target of the company is not attained as the sales were expected to grow higher at the rate of 10% per year and the operating margins to increase by 20%, provided in Exhibit H.

Situational Analysis.
Porter's 5 Forces Analysis
Analysis of Existing Strategy, Vision and Goals.

The current The New Economy technique is based upon the principle of Nutritious, Health and Wellness (NHW). This technique deals with the concept to bringing modification in the consumer preferences about food and making the food stuff much healthier worrying about the health issues.

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

This technique was adopted to bring more tasty plus nutritious foods and drinks in market than ever. In competitors with other business, with an intention of retaining its trust over customers as The New Economy Company has acquired more relied on by costumers.

Microenvironment Analysis (PESTEL Analysis).

The analysis utilized to measure the position of company in the market is done by utilizing PESTLE analysis, provided in Exhibition A. The New Economy works under the guidelines and guidelines directed by federal government and food authority. The business is more focused on its services and items to make sure about the product quality and safety.

Swot Analysis
The New Economy is greatly supported by Federal government to fulfill all the requirements of standards like acts of health and safety. In efforts to manufacture excellent food, The New Economy Case Study Help is changing the requirements of food and drink production.


Initiation of business where the capital income of each private matters for the increased net sale as this varies country-to-country. The economy of the The New Economy Company in U.S. is growing year by year with variable items launch particularly concentrating on the nutritional food for infants.


The social environment continues altering with respect to time like the mindset of the customer along with their lifestyles. Any product or service of any business can not be successful till the company is not worried about the living system of the consumer. The New Economy is taking steps to satisfy its objectives as the world remains in search of healthy and delicious food.


In the development of company, tactical measures are somewhat compulsory. The New Economy is one of the leading famous multinational company and by time it buys different departments to take its items to brand-new level. The New Economy is spending more on its R&D to make its products much healthier and healthy providing consumers with health benefits.


There is no such effect of legal aspects of The New Economy as it is more worried over its guidelines and laws.


The New Economy, in regards to ecological impact is dedicated to operate in eco-friendly environment with conservation of the natural resources and energy. If the resources utilized are recyclable or not, as due to the manufacturing of bigger number of products there might be a hazard.

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

The New Economy Case Study Solution has actually obtained a number of companies that helped it in diversification and growth of its item's profile. This is the extensive description of the Porter's model of five forces of The New Economy Business, given in Exhibit B.


The New Economy is one of the leading company 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. The competitors of other business with The New Economy is rather high.
Vrio Analysis
Danger of New Entrants.

A number of barriers are there for the new entrants to take place in the customer food industry. Only a few entrants succeed in this industry as there is a requirement to understand the consumer requirement which requires time while recent competitors are aware and has actually progressed with the consumer commitment over their items with time. There is low threat of brand-new entrants to The New Economy as it has quite big network of circulation internationally controling with well-reputed image.

Bargaining Power of Suppliers.

In the food and beverage industry, The New Economy owes the largest share of market needing higher number of supply chains. This triggers it to be an idyllic purchaser for the providers. Hence, any of the provider has never revealed any complain about price and the bargaining power is also low. In response, The New Economy has also been worried for its providers as it thinks in long-term relations.

Bargaining Power of Buyers.

There is high bargaining power of the purchasers due to terrific competitors. Changing cost is quite low for the consumers as many companies sale a number of comparable items. This seems to be an excellent risk for any business. Therefore, The New Economy Case Study Help makes sure to keep its clients pleased. This has actually led The New Economy to be among the loyal company in eyes of its purchasers.

Risk of Alternatives.

There has actually been a fantastic danger of replacements as there are replacements of a few of the Nestlé's items such as boiled water and pasteurized milk. There has likewise been a claim that some of its products are not safe to utilize leading to the reduced sale. Therefore, The New Economy began highlighting the health advantages of its items to cope up with the alternatives.

Rival Analysis.

It has actually 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 distinction of 0.3 points with The New Economy. The New Economy brings in regional customers by its low cost of the product with the regional taste of the items keeping its first location in the international market. The New Economy Case Study Help business has about 280,000 staff members and functions in more than 197 countries edging its rivals in numerous areas.

Keep in mind: A brief comparison of The New Economy with its close rivals is given in Exhibition C.

SWOT Analysis.

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


• The New Economy has an experience of about 140 years, allowing company to much better perform, in various scenarios.
• Nestlé's has existence in about 86 countries, making it a global leader in Food and Beverage Industry.
• The New Economy has more than 2000 brand names, which increase the circle of its target customers. Famous brands of The New Economy include; Maggi, Kit-Kat, Nescafe, and so on
• The New Economy Case Study Solution has large amount of spending costs R&D as compare to its competitors, making the company to launch release innovative ingenious nutritious productsItems
• After adopting its NHW Technique, the company has actually done big 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 recall. This brand loyalty of customers increases the possibilities of easy market adoption of numerous brand-new brands of The New Economy.
Weak points.
• Acquisitions of those business, like; Kraft frozen Pizza organisation can give an unfavorable signal to The New Economy clients about their compromise over their core proficiency of healthier foods.
• The growth I sales as compare to the business's investment in NHW Method are rather different. It will take long to change the perception of individuals ab out The New Economy as a business selling nutritious and healthy products.


• Presenting more health associated items enables the business to record the market in which consumers are rather conscious about health.
• Developing countries like India and China has largest markets worldwide. Hence broadening the market towards developing nations can enhance the The New Economy company by increasing sales volume.
• Continue acquisitions and joint endeavors increases the marketplace share of the business.
• Increased relationships with schools, hotel chains, restaurants and so on can also increase the variety of The New Economy Case Study Help customers. Instructors can suggest their trainees to acquire The New Economy items.


• Financial instability in countries, which are the potential markets for The New Economy, can produce numerous issues for The New Economy.
• Shifting of products from typical to healthier, results in extra costs and can result in decrease company's revenue 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 deal with particular issues.

Division Analysis

Market Segmentation

The group division of The New Economy Case Study Solution is based on 4 factors; age, income, gender and occupation. The New Economy produces a number of items related to babies i.e. Cerelac, Nido, and so on and related to grownups i.e. confectionary items. The New Economy products are quite affordable by almost all levels, but its significant targeted customers, in regards to earnings level are upper and middle middle level consumers.

Geographical Segmentation

Geographical segmentation of The New Economy Case Study Analysis is made up of its presence in practically 86 nations. Its geographical division is based upon two primary elements i.e. average earnings level of the customer as well as the climate of the area. Singapore The New Economy Company's division is done on the basis of the weather of the region i.e. hot, warm or cold.

Psychographic Division

Psychographic division of The New Economy is based upon the character and lifestyle of the customer. The New Economy 3 in 1 Coffee target those customers whose life design is rather hectic and do not have much time.

Behavioral Division

The New Economy Case Help behavioral segmentation is based upon the mindset knowledge and awareness of the consumer. For instance its extremely nutritious items target those clients who have a health mindful mindset towards their consumptions.

VRIO Analysis

The VRIO analysis of The New Economy Business is a broad range analysis offering the organization with a chance to get a feasible competitive benefit against its rivals in the food and drink industry, summarized in Exhibit I.

Prized Possession

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


The important resources made use of by The New Economy are costly or even uncommon. If these resources are typically found that it would be simpler for the rivals and the new competitors in the industry to easily relocate competition.


The imitation process is expensive for the rivals of The New Economy Case Help Business. It can be done just in two different strategies i.e. product duplication which is produced and produced by The New Economy Company and launching of the alternative of the products with switching expense. This increases the danger of interruption to the current structure of the market.


This part of VRIO analysis deals with the compatibility of the business to place in the market making efficient usage of its valuable resources which are difficult to mimic. Regularly, the advancement of management is absolutely depending on the company's execution strategy and group. Therefore, this polishes the abilities of the firm by time based upon the decisions made by firm for the development of its tactical capitals.

Quantitative Analysis

R&D Costs as a percentage of sales are decreasing with increasing real amount of costs reveals that the sales are increasing at a greater rate than its R&D costs, and allow the business to more spend on R&D.

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

Debt ratio of the business is increasing due to its spending on mergers, acquisitions and R&D advancement rather than payment of financial obligations. This increasing financial obligation ratio position a hazard of default of The New Economy to its investors and could lead a decreasing share prices. In terms of increasing financial obligation ratio, the firm needs to not spend much on R&D and must pay its existing debts to decrease the threat for investors.

The increasing risk of investors with increasing financial obligation ratio and decreasing share costs can be observed by huge decline of EPS of The New Economy Case Help stocks.

The sales growth of company is likewise low as compare to its acquisitions and mergers due to slow understanding building of consumers. This slow development also prevent company to additional spend on its acquisitions and mergers.( The New Economy, The New Economy Financial Reports, 2006-2010).

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

TWOS Analysis.

2 analysis can be used to derive numerous strategies based on the SWOT Analysis provided above. A brief summary of TWOS Analysis is given in Exhibition H.

Methods to make use of Opportunities using Strengths.

The New Economy Case Solution must present more ingenious items by large amount of R&D Costs and mergers and acquisitions. It might increase the market share of The New Economy and increase the profit margins for the business. It might likewise supply The New Economy a long term competitive advantage over its competitors.

The global growth of The New Economy ought to be concentrated on market catching of establishing countries by expansion, bring in more consumers through client's loyalty. As establishing countries are more populated than developed nations, it might increase the client circle of The New Economy.

Techniques to Conquer Weaknesses to Exploit Opportunities.

The New Economy Case Help needs to do mindful acquisition and merger of organizations, as it might affect the client's and society's understandings about The New Economy. It should combine and obtain with those business which have a market track record of nutritious and healthy business. It would improve the understandings of consumers about The New Economy.

The New Economy must not just invest its R&D on innovation, rather than it must also focus on the R&D spending over evaluation of cost of different nutritious items. This would increase expense effectiveness of its items, which will lead to increasing its sales, due to declining costs, and margins.

Methods to utilize strengths to get rid of risks.

The New Economy needs to move to not only establishing however likewise to developed nations. It should widen its circle to various countries like Unilever which operates in about 170 plus nations.

Techniques to get rid of weak points to prevent risks.

The New Economy ought to carefully manage its acquisitions to avoid the risk of mistaken belief from the consumers about The New Economy. It must combine and obtain with those countries having a goodwill of being a healthy business in the market. This would not just improve the understanding of consumers about The New Economy however would likewise increase the sales, profit margins and market share of The New Economy. It would likewise allow the company to use its prospective resources effectively on its other operations instead of acquisitions of those organizations slowing the NHW method growth.


In order to sustain the brand name in the market and keep the client intact with the brand name, there are two alternatives:.

Alternative: 1.

The Business needs to spend more on acquisitions than on the R&D.


1. Acquisitions would increase overall properties of the company, increasing the wealth of the business. Nevertheless, spending on R&D would be sunk expense.
2. The business can resell the obtained units in the market, if it stops working to implement its method. Nevertheless, quantity invest in the R&D might not be revived, and it will be thought about completely sunk expense, if it do not give potential outcomes.
3. Investing in R&D offer sluggish growth in sales, as it takes long time to present an item. Acquisitions supply quick results, as it offer the business already developed 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 consumers about The New Economy core worths of nutritious and healthy products.
2. Big costs on acquisitions than R&D would send a signal of company's inadequacy of developing ingenious items, and would outcomes in consumer's discontentment.
3. Large acquisitions than R&D would extend the product line of the business by the items which are already present in the market, making company unable to present brand-new innovative products.

Option: 2

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


1. It would allow the company to produce more ingenious items.
2. It would offer 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 used to a totally brand-new market sector.
4. Ingenious products will offer long term benefits and high market share in long run.


1. It would decrease the revenue margins of the business.
2. In case of failure, the whole spending on R&D would be considered as sunk cost, and would affect the business at large. The threat 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 might result I declining stock rates.

Alternative 3:

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


1. It would enable the company to introduce brand-new innovative items with less risk of converting the costs on R&D into sunk cost.
2. It would provide a favorable signal to the investors, as the general possessions of the business would increase with its significant R&D spending.
3. It would not affect the revenue margins of the business at a large rate as compare to alternative 2.
4. It would supply the business a strong long term market position in terms of the company's total wealth along with in terms of ingenious products.


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


With the deep analysis of the above alternatives, it is advised that the company ought to pick the alternative 3 in order to maintain a competitive position in the long run. As the alternative 3 would allow the business to not just introduce innovative and new products in the market it would also decrease the high expenses on R&D under alternative 2 and increase the revenue margins. It would enable the business to increase its share prices as well, as financiers are willing to invest more in companies with considerable R&D spending and boost in the overall worth of the business.

Action and execution Method

Technique can be executed effectively by establishing particular short-term as well as long term strategies. These plans could be as follows;

Short Term Plan (0-1 year).

• Under the short-term plan The New Economy Case Analysis need to perform various activities to implement its NHW method effectively. These activities are as follows;.
• Get the audit of its brand portfolio done, to examine the core selling brands, which produce most of its income.
• Analyze the existing target audience as well as the market segment which is not include in the business's circle.
• Analyze the existing monetary data to measure the amount that ought to be invested in the R&D and acquisitions.
• Examine the potential investors and their nature, i.e. do they want long term advantages (capital gain), or the want early profits (dividend). It would let the company to know 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 deal with. Acquire most beneficial companies with a strong commitment to health, to build the client's perceptions in the ideal direction.
• Focus more on acquisitions than R&D to build the base in the consumer's mind about The New Economy values and vision and to avoid potential risk of sunk cost.

Long Term Plan (1-10 years).

• Obtain companies with health along with taste aspect, as the base for the The New Economy as a business producing healthy items has been constructed under midterm strategy and now the business could move towards taste element too to comprehend the consumers, which focus more on taste rather than health.
• Be more aggressive towards R&D than the acquisitions, as it is the considerable time to build new items.

The New Economy has remained the leading market player for more than a decade. It has actually institutionalized its techniques and culture to align itself with the marketplace changes and client behavior, which has actually eventually enabled it to sustain its market share. Though, The New Economy has established significant market share and brand name identity in the metropolitan markets, it is suggested that the company needs to focus on the rural areas in terms of establishing brand equity, loyalty, and awareness, such can be done by producing a specific brand allocation strategy through trade marketing techniques, that draw clear difference between The New Economy Case Analysis products and other competitor items. Additionally, The New Economy ought to leverage its brand image of safe and healthy food in catering the rural markets and also to upscale the offerings in other classifications such as nutrition. This will permit the company to establish brand equity for recently introduced and currently produced items on a greater platform, making the reliable usage of resources and brand image in the market.