The New Economy Online Case Solution

Home >> Accounting >> The New Economy

The New Economy Case Study Solution & Analysis


The New Economy is currently one of the greatest food chains worldwide. It was established by Henri The New Economy in 1866, a German Pharmacist who first introduced "Farine Lactee"; a mix of flour and milk to decrease and feed babies mortality rate.

The New Economy is now a global company. Unlike other international companies, it has senior executives from various nations and attempts to make choices considering the entire world. The New Economy Case Study Help presently has more than 500 factories worldwide and a network spread across 86 countries.


The function of The New Economy Corporation is to boost the quality of life of people 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 much better and healthy future


Nestlé's vision is to offer its clients with food that is healthy, high in quality and safe to consume. It wishes to be ingenious and concurrently comprehend the needs and requirements of its clients. Its vision is to grow fast and offer products that would please the requirements of each age. The New Economy pictures to establish a trained workforce which would help the business to grow.


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

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

Objectives and Goals.

• Bearing in mind the vision and mission of the corporation, the company has put down its goals and objectives. These objectives and goals are listed below.
• One objective of the company is to reach zero garbage dump status. It is working toward zero waste, where no waste of the factory is landfilled. It motivates its staff members to take the most out of the by-products. (The New Economy, aboutus, 2017).
• Another goal of The New Economy is to waste minimum food during production. Frequently, the food produced is wasted even before it reaches the clients.
• Another thing that The New Economy is working on is to enhance its packaging in such a method that it would assist it to lower the above-mentioned issues and would also ensure the delivery of high quality of its products to its customers.
• Meet global standards of the environment.
• Construct a relationship based upon trust with its customers, organisation partners, staff members, and federal government.

Vital Problems.

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

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

The present The New Economy strategy is based on the principle of Nutritious, Health and Health (NHW). This strategy handles the idea to bringing change in the consumer preferences about food and making the food things much healthier worrying about the health concerns.

The vision of this method is based on the key technique i.e. 60/40+ which merely implies 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 produced with additional nutritional worth in contrast to all other items in market getting it a plus on its dietary content.

This strategy was embraced to bring more tasty plus healthy foods and beverages in market than ever. In competition with other companies, with an objective of keeping its trust over customers as The New Economy Business has actually gotten more trusted 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. The New Economy works under the policies and guidelines directed by federal government and food authority. The business is more focused on its services and products to ensure about the item quality and security. This analysis will assist in understanding environment of external market in the global food and beverage markets. (Parera, 2017).

Swot Analysis
The New Economy is significantly supported by Government to meet all the requirements of requirements like acts of health and security. In efforts to manufacture great 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 specific matters for the increased net sale as this varies country-to-country. The economy of the The New Economy Business 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 services or product of any business can not be successful till the company is not concerned about the living system of the consumer. The New Economy is taking procedures to fulfill its objectives as the world remains in search of delicious and healthy food.


In the development of service, strategic steps are somewhat compulsory. The New Economy is one of the leading popular multinational firm and by time it purchases various departments to take its products to new level. The New Economy is investing more on its R&D to make its products healthier and healthy supplying consumers with health advantages.


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


The New Economy, in regards to ecological effect is devoted to operate in environmentally friendly environment with preservation of the natural resources and energy. As due to the production of bigger number of products there may be a risk if the resources utilized are recyclable or not.

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

The New Economy Case Study Analysis has obtained a number of business that assisted it in diversity and growth of its item's profile. This is the thorough explanation of the Porter's model of five forces of The New Economy Business, given in Exhibition B.


There is extreme competition in the industry of food and drinks. The New Economy is one of the top company in this competitive market with a number of strong rivals like Unilever, Kraft foods and Group DANONE. The New Economy is running well in this race for last 150 years. Each business has a definite share of market. This competition is not simply limited to the cost of the product but likewise for quality, innovation and variation. Every market is making every effort hard for the upkeep of their market share. Nevertheless, the competition of other business with The New Economy Case Study Help is quite high.
Vrio Analysis
Danger of New Entrants.

A number of barriers are there for the new entrants to occur in the customer food industry. Just a couple of entrants be successful in this industry as there is a requirement to understand the customer need which needs time while recent competitors are well aware and has progressed with the consumer loyalty over their items with time. There is low danger of new entrants to The New Economy as it has quite big network of distribution internationally dominating with well-reputed image.

Bargaining Power of Providers.

In the food and drink market, The New Economy Case Study Analysis owes the largest share of market requiring higher number of supply chains. In reaction, The New Economy has actually also been worried for its suppliers as it believes in long-term relations.

Bargaining Power of Purchasers.

There is high bargaining power of the buyers due to excellent competition. Changing cost is rather low for the customers as numerous business sale a number of comparable products. This seems to be a great risk for any company. Therefore, The New Economy Case Study Solution makes certain to keep its customers satisfied. This has actually led The New Economy to be one of the faithful business in eyes of its buyers.

Threat of Alternatives.

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

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 only a distinction of 0.3 points with The New Economy. The New Economy attracts regional customers by its low cost of the product with the local taste of the items preserving its very first location in the global market. The New Economy 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 brief comparison of The New Economy with its close competitors is given up Exhibit C.

SWOT Analysis.

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


• The New Economy has an experience of about 140 years, allowing business to better perform, in various circumstances.
• Nestlé's has presence in about 86 countries, making it an international leader in Food and Drink Market.
• The New Economy has more than 2000 brands, which increase the circle of its target consumers. Famous brands of The New Economy consist of; Maggi, Kit-Kat, Nescafe, etc.
• The New Economy Case Study Analysis has large amount of spending costs R&D as compare to its competitorsRivals making the company to launch introduce nutritious ingenious innovative products.
• After embracing its NHW Method, 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 consumer's loyalty and brand recall. This brand commitment of consumers increases the possibilities of simple market adoption of different brand-new brand names of The New Economy.
Weak points.
• Acquisitions of those service, like; Kraft frozen Pizza service can give a negative signal to The New Economy 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 Method are quite various. It will take long to alter the understanding of people ab out The New Economy as a company offering healthy and healthy items.


• Presenting more health related items enables the business to capture the market in which customers are rather conscious about health.
• Developing nations like India and China has biggest markets in the world. For this reason expanding the marketplace towards establishing nations can boost the The New Economy business by increasing sales volume.
• Continue acquisitions and joint ventures increases the market share of the business.
• Increased relationships with schools, hotel chains, dining establishments etc. can likewise increase the number of The New Economy Case Study Solution customers. Instructors can recommend their students to acquire The New Economy items.


• Economic instability in nations, which are the possible markets for The New Economy, can create numerous concerns for The New Economy.
• Shifting of items from typical to much healthier, causes additional costs and can cause decrease business's profit margins.
• As The New Economy has an intricate supply chain, therefore failure of any of the level of supply chain can lead the company to face specific issues.

Segmentation Analysis

Market Division

The group division of The New Economy Case Study Solution is based upon 4 factors; age, gender, occupation and income. For example, The New Economy produces numerous items related to children i.e. Cerelac, Nido, and so on and associated to adults i.e. confectionary products. The New Economy products are rather budget friendly by practically all levels, however its significant targeted customers, in terms of income level are middle and upper middle level customers.

Geographical Segmentation

Geographical division of The New Economy Case Study Solution is made up of its existence in nearly 86 countries. Its geographical segmentation is based upon 2 main elements i.e. average earnings level of the consumer in addition to the environment of the area. For example, Singapore The New Economy Company's division is done on the basis of the weather condition of the area i.e. hot, warm or cold.

Psychographic Division

Psychographic segmentation of The New Economy is based upon the character and life style of the consumer. The New Economy 3 in 1 Coffee target those clients whose life design is quite hectic and don't have much time.

Behavioral Segmentation

The New Economy Case Analysis behavioral division is based upon the attitude knowledge and awareness of the consumer. For example its extremely healthy items target those consumers who have a health conscious mindset towards their usages.

VRIO Analysis

The VRIO analysis of The New Economy Business is a broad variety analysis providing the organization with an opportunity to obtain a viable competitive advantage against its rivals in the food and beverage market, summarized in Display I.


The resources used by the The New Economy company are important for the company or not. Such as the resources like financing, human resources, management of operations and specialists in marketing. This are some of the crucial important factors of for the identification of competitive benefit.


The important resources made use of by The New Economy are even unusual or pricey. , if these resources are typically found that it would be easier for the competitors and the brand-new rivals in the industry to effortlessly move in competitors.


The imitation procedure is costly for the rivals of The New Economy Case Help Business. It can be done only in 2 various strategies i.e. product duplication which is produced and made by The New Economy Company and launching of the replacement of the products with switching cost. This increases the hazard of interruption to the current structure of the market.


This component of VRIO analysis deals with the compatibility of the business to position in the market making efficient use of its important resources which are difficult to imitate. Regularly, the advancement of management is totally based on the firm's execution strategy and group. Therefore, this polishes the abilities of the firm by time based upon the choices made by firm for the progression of its tactical capitals.

Quantitative Analysis

R&D Spending as a percentage of sales are decreasing with increasing actual amount of spending shows that the sales are increasing at a higher rate than its R&D costs, and allow the company to more spend on R&D.

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

Financial obligation ratio of the company 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 financiers and might lead a declining share costs. In terms of increasing financial obligation ratio, the company should not invest much on R&D and must pay its existing debts to decrease the threat for investors.

The increasing danger of financiers with increasing debt ratio and decreasing share costs can be observed by huge decrease of EPS of The New Economy Case Analysis stocks.

The sales development of business is also low as compare to its mergers and acquisitions due to slow understanding structure of customers. This slow growth likewise prevent company to further spend on its mergers and acquisitions.( 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.

TWOS analysis can be utilized to obtain numerous techniques based upon the SWOT Analysis offered above. A brief summary of TWOS Analysis is given in Display H.

Strategies to exploit Opportunities utilizing Strengths.

The New Economy Case Analysis must introduce more innovative items by large quantity of R&D Spending and acquisitions and mergers. It could increase the market share of The New Economy and increase the earnings margins for the business. It could also provide The New Economy a long term competitive advantage over its rivals.

The global expansion of The New Economy must be concentrated on market recording of establishing nations by growth, bring in more customers through customer's loyalty. As developing nations are more populated than industrialized countries, it might increase the client circle of The New Economy.

Techniques to Conquer Weak Points to Exploit Opportunities.

The New Economy Case Analysis must do careful acquisition and merger of organizations, as it might impact the customer's and society's understandings about The New Economy. It needs to merge and acquire with those business which have a market credibility of healthy and nutritious companies. It would enhance the perceptions of customers about The New Economy.

The New Economy ought to not just invest its R&D on development, instead of it ought to also focus on the R&D spending over evaluation of expense of various nutritious items. This would increase expense efficiency of its products, which will lead to increasing its sales, due to decreasing prices, and margins.

Techniques to use strengths to conquer hazards.

The New Economy ought to move to not just establishing however likewise to developed countries. It must expand its circle to various countries like Unilever which operates in about 170 plus nations.

Strategies to conquer weaknesses to prevent risks.

The New Economy Case Help ought to sensibly manage its acquisitions to avoid the risk of mistaken belief from the consumers about The New Economy. This would not just improve the perception of consumers about The New Economy but would likewise increase the sales, earnings 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 alternatives:.

Alternative: 1.

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


1. Acquisitions would increase overall possessions of the business, increasing the wealth of the company. Spending on R&D would be sunk cost.
2. The company can resell the gotten units in the market, if it fails to execute its technique. Amount invest on the R&D could not be restored, and it will be thought about entirely sunk cost, if it do not provide possible outcomes.
3. Investing in R&D supply sluggish growth in sales, as it takes long period of time to introduce an item. However, acquisitions provide quick outcomes, as it supply the company already developed product, which can be marketed soon after the acquisition.


1. Acquisition of company's which do not fit with the company's values like Kraftz foods can lead the business to deal with misunderstanding of consumers about The New Economy core worths of healthy and nutritious products.
2. Big spending on acquisitions than R&D would send a signal of business's inadequacy of establishing innovative items, and would lead to consumer's discontentment as well.
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 new ingenious items.

Option: 2

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


1. It would make it possible for 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 business to increase its targeted customers by introducing those items which can be provided to an entirely new market segment.
4. Ingenious products will offer long term advantages and high market share in long run.


1. It would reduce the earnings margins of the company.
2. In case of failure, the entire costs on R&D would be thought about as sunk expense, 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 might provide a negative signal to the financiers, and might result I decreasing stock rates.

Alternative 3:

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


1. It would enable the company to introduce new innovative items with less danger of transforming the spending on R&D into sunk cost.
2. It would provide a positive signal to the investors, as the general possessions of the company would increase with its substantial R&D spending.
3. It would not impact the revenue 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 general wealth in addition to in terms of innovative products.


1. Danger of conversion of R&D costs into sunk expense, higher than option 1 lower than alternative 2.
2. Risk of mistaken belief about the acquisitions, greater than alternative 2 and lower than alternative 1.
3. Intro 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 options, it is recommended 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 make it possible for the company to not only introduce brand-new and innovative items 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 company to increase its share rates too, as investors are willing to invest more in companies with significant R&D costs and boost in the total worth of the business.

Action and implementation Strategy

Technique can be carried out efficiently by establishing particular short term along with long term strategies. These plans could be as follows;

Short-term Strategy (0-1 year).

• Under the short term plan The New Economy Case Analysis ought to carry out various activities to execute its NHW method effectively. These activities are as follows;.
• Get the audit of its brand name portfolio done, to examine the core selling brand names, which generate most of its earnings.
• Evaluate the current target market along with the market sector which is not include in the business's circle.
• Examine the present monetary information to measure the quantity that ought to be spent on the R&D and acquisitions.
• Analyze the potential 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 know that how much amount must be spent on R&D.

Mid Term Plan (1-5 years).

• Acquire those companies in which the business has possible experience to deal with. Acquire most favorable companies with a strong commitment to health, to build the customer's understandings in the ideal direction.
• Focus more on acquisitions than R&D to develop the base in the customer's mind about The New Economy values and vision and to prevent prospective threat of sunk expense.

Long Term Plan (1-10 years).

• Get companies with health in addition to taste aspect, as the base for the The New Economy as a company producing healthy products has actually been built under midterm plan and now the business could move towards taste element as well 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 substantial time to construct brand-new items.

The New Economy has remained the top market gamer for more than a years. It has actually institutionalised its strategies and culture to align itself with the market changes and client behavior, which has ultimately enabled it to sustain its market share. Though, The New Economy has established considerable market share and brand identity in the metropolitan markets, it is recommended that the business should focus on the backwoods in terms of establishing brand commitment, awareness, and equity, such can be done by creating a specific brand allotment strategy through trade marketing tactics, that draw clear difference between The New Economy Case Analysis items and other rival products. The New Economy should take advantage of its brand name image of healthy and safe food in catering the rural markets and likewise to upscale the offerings in other classifications such as nutrition. This will allow the business to establish brand equity for freshly introduced and already produced items on a greater platform, making the reliable usage of resources and brand image in the market.