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The New Economy Case Study Solution & Analysis


The New Economy Case Study Help is currently one of the biggest food chains worldwide. It was established by Henri The New Economy in 1866, a German Pharmacist who initially launched "Farine Lactee"; a combination of flour and milk to decrease and feed babies mortality rate. At the very same time, the Page brothers from Switzerland also found The Anglo-Swiss Condensed Milk Business. The 2 became rivals at first but in the future 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 various countries and attempts to make decisions considering the whole world. The New Economy Case Study Analysis currently has more than 500 factories worldwide and a network spread throughout 86 nations.


The function of The New Economy Corporation is to improve the quality of life of individuals by playing its part and providing healthy food. It wishes to assist the world in shaping a healthy and better future for it. It also wants to encourage individuals to live a healthy life. While making certain that the business 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 provide its clients with food that is healthy, high in quality and safe to consume. The New Economy envisions to establish a well-trained workforce which would assist the company to grow.


Nestlé's objective is that as presently, it is the leading business in the food industry, it thinks in 'Good Food, Good Life". Its objective is to provide its customers with a variety of choices that are healthy and best in taste. It is focused on offering the best food to its clients throughout the day and night.


The New Economy Case Study Analysis has a large range of items that it uses to its consumers. Its items include food for infants, cereals, dairy items, treats, chocolates, food for family pet and bottled water. It has around 4 hundred and fifty (450) factories around the world and around 328,000 staff members. In 2011, The New Economy was listed as the most rewarding organization.

Objectives and objectives.

• Keeping in mind the vision and mission of the corporation, the company has laid down its goals and objectives. These objectives and objectives are noted below.
• One goal of the company is to reach zero garbage dump status.
• Another objective of The New Economy is to lose minimum food during production. Usually, the food produced is lost even prior to it reaches the customers.
• Another thing that The New Economy is working on is to enhance its product packaging in such a method that it would assist it to decrease those problems and would likewise guarantee the shipment of high quality of its products to its customers.
• Meet worldwide standards of the environment.
• Build a relationship based on trust with its customers, service partners, workers, and federal government.

Crucial Concerns.

Just Recently, The New Economy Case Study Analysis Business is focusing more towards the method of NHW and investing more of its earnings on the R&D innovation. The nation is investing more on acquisitions and mergers to support its NHW strategy. The target of the company is not accomplished as the sales were expected 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 Present Method, Vision and Goals.

The present The New Economy technique is based upon the idea of Nutritious, Health and Health (NHW). This strategy deals with the idea to bringing change in the consumer choices about food and making the food things much healthier worrying about the health problems.

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

This technique was adopted to bring more delicious plus healthy 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 Business has actually gained 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, offered in Display A. The New Economy works under the regulations and guidelines directed by government and food authority. The business is more focused on its services and products to make sure about the item quality and safety.


The New Economy is considerably supported by Government to fulfill all the requirements of requirements like acts of health and security. In efforts to make good food, The New Economy Case Study Help is altering the requirements of food and beverage manufacturing.


Initiation of the business where the capital earnings of each individual 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 specifically concentrating on the dietary food for infants.


The social environment continues altering with respect to time like the attitude of the customer as well as their way of lives. Any product or service of any company can not succeed till the company is not worried about the living system of the consumer. The New Economy is taking procedures to satisfy its goals as the world is in search of healthy and yummy food.


In the advancement of organisation, tactical steps are somewhat necessary. The New Economy is one of the leading popular international firm and by time it invests in various departments to take its items to brand-new level. The New Economy is investing more on its R&D to make its items much healthier and healthy supplying customers with health advantages.


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


The New Economy, in terms of environmental impact is dedicated to operate in environmentally friendly environment with preservation of the natural deposits and energy. As due to the manufacturing of larger number of items there might be a threat if the resources utilized are recyclable or not.

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

The New Economy Case Study Solution has gotten a number of companies that helped it in diversification and growth of its product's profile. This is the thorough description of the Porter's model of five forces of The New Economy Company, given up Display B.


There is extreme competitors in the market of food and beverages. The New Economy is one of the top company in this competitive market with a variety 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 certain share of market. This competition is not just limited to the cost of the product however likewise for innovation, quality and variation. Every industry is striving hard for the maintenance of their market share. However, the competitors of other business with The New Economy Case Study Analysis is rather high.

Hazard of New Entrants.

A number of barriers are there for the brand-new entrants to occur in the consumer food market. Only a few entrants succeed in this market as there is a requirement to understand the customer need which needs time while current rivals are well aware and has advanced with the customer loyalty over their items with time. There is low danger of brand-new entrants to The New Economy as it has quite big network of distribution globally dominating with well-reputed image.

Bargaining Power of Providers.

In the food and drink market, The New Economy owes the biggest share of market requiring greater number of supply chains. This triggers it to be a picturesque buyer for the suppliers. Any of the supplier has never revealed any grumble about rate and the bargaining power is also low. In reaction, The New Economy has likewise been worried for its suppliers as it believes in long-term relations.

Bargaining Power of Purchasers.

Hence, The New Economy makes sure to keep its consumers satisfied. This has actually led The New Economy to be one of the loyal company in eyes of its purchasers.

Risk of Substitutes.

There has been a terrific risk of alternatives as there are alternatives of a few of the Nestlé's items such as boiled water and pasteurized milk. There has likewise been a claim that a few of its products are not safe to use resulting in the reduced sale. Hence, The New Economy began highlighting the health advantages of its products to cope up with the substitutes.

Rival Analysis.

The New Economy Case Study Analysis covers a number of the popular customer brand names like Set Kat and Nescafe and so on. About 29 brand names among all of its brand names, each brand earned an income of about $1billion in 2010. Its huge part of sale remains in North America making up about 42% of its all sales. In Europe and U.S. the leading significant brand names offered by The New Economy in these states have a terrific trustworthy share of market. Also The New Economy, Unilever and DANONE are 2 large industries of food and beverages in addition to its primary competitors. In the year 2010, The New Economy had earned its annual earnings by 26% increase because of its increased food and beverages sale specifically in cooking stuff, ice-cream, beverages based upon tea, and frozen food. On the other hand, DANONE, due to the increasing costs of shares resulting an increase of 38% in its profits. The New Economy Case Study Analysis decreased its sales expense by the adjustment of a new accounting treatment. Unilever has number of employees about 230,000 and functions in more than 160 countries and its London headquarter. It has ended up being the second biggest food and drink 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. Unilever shares a market share of about 7.7 with The New Economy ending up being ranking and first DANONE as 3rd. The New Economy draws in local clients by its low expense of the item with the local taste of the items preserving its first place in the global market. The New Economy business has about 280,000 staff members and functions in more than 197 countries edging its competitors in numerous regions. The New Economy has actually also decreased its cost of supply by presenting E-marketing in contrast to its competitors.

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

SWOT Analysis.

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


• The New Economy has an experience of about 140 years, enabling company to much better carry out, in various situations.
• Nestlé's has existence in about 86 countries, making it a global leader in Food and Beverage Market.
• The New Economy has more than 2000 brands, which increase the circle of its target customers. Famous brands of The New Economy include; Maggi, Kit-Kat, Nescafe, etc.
• The New Economy Case Study Analysis has large amount quantity spending costs R&D as compare to its competitors, making the company business launch release nutritious ingenious innovative healthyItems
• After embracing its NHW Method, the company has actually done big quantity of mergers and acquisitions which increase the sales growth and enhance market position of The New Economy.
• The New Economy is a widely known brand with high consumer's commitment and brand name recall. This brand loyalty of customers increases the possibilities of easy market adoption of various new brands of The New Economy.
Weak points.
• Acquisitions of those organisation, like; Kraft frozen Pizza business can provide an unfavorable signal to The New Economy consumers about their compromise over their core competency of much healthier foods.
• The development I sales as compare to the company's investment in NHW Technique are rather various. It will take long to change the perception of people ab out The New Economy as a company offering nutritious and healthy products.


• Presenting more health related products enables the company to catch the market in which customers are rather mindful about health.
• Developing nations like India and China has largest markets worldwide. Thus broadening the market towards establishing countries can increase the The New Economy service 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 Help customers. Instructors can suggest their trainees to acquire The New Economy items.


• Financial instability in nations, which are the possible markets for The New Economy, can create several problems for The New Economy.
• Shifting of items from normal to healthier, results in additional expenses and can lead to decrease business's profit margins.
• As The New Economy has an intricate supply chain, for that reason failure of any of the level of supply chain can lead the business to deal with particular issues.

Division Analysis

Demographic Segmentation

The group division of The New Economy Case Study Help is based upon 4 aspects; age, profession, gender and earnings. For instance, The New Economy produces numerous items associated with infants i.e. Cerelac, Nido, etc. and associated to grownups i.e. confectionary products. The New Economy items are quite economical by practically all levels, however its major targeted consumers, in terms of income level are middle and upper middle level customers.

Geographical Division

Geographical segmentation of The New Economy Case Study Help is composed of its existence in practically 86 countries. Its geographical segmentation is based upon 2 main aspects i.e. average earnings level of the customer as well as the environment of the area. Singapore The New Economy Company's segmentation is done on the basis of the weather condition of the region i.e. hot, cold or warm.

Psychographic Division

Psychographic segmentation of The New Economy is based upon the character and life style of the client. For example, The New Economy 3 in 1 Coffee target those customers whose lifestyle is rather hectic and don't have much time.

Behavioral Division

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

VRIO Analysis

The VRIO analysis of The New Economy Business is a broad range analysis providing the organization with an opportunity to get a feasible competitive benefit against its rivals in the food and drink market, summed up in Exhibit I.

Prized Possession

The resources utilized by the The New Economy business are important for the business or not. Such as the resources like finance, human resources, management of operations and professionals in marketing. This are a few of the key valuable elements of for the recognition of competitive benefit.


The valuable resources utilized by The New Economy are even unusual or costly. , if these resources are frequently discovered that it would be easier for the rivals and the new rivals in the market to easily move in competitors.


The replica process is pricey for the competitors of The New Economy Case Solution Business. However, it can be done just in two various techniques i.e. product duplication which is produced and manufactured by The New Economy Business and introducing of the substitute of the products with changing cost. This increases the threat of disturbance to the current structure of the industry.


This element of VRIO analysis deals with the compatibility of the business to place in the market making efficient use of its valuable resources which are tough to imitate. Frequently, the development of management is totally dependent on the company's execution method and group. Thus, this polishes the skills of the company by time based upon the decisions made by firm for the progression of its tactical capitals.

Quantitative Analysis

R&D Costs as a portion of sales are decreasing with increasing actual amount of spending shows that the sales are increasing at a higher rate than its R&D spending, and permit the business to more spend on R&D.

Net Revenue Margin is increasing while R&D as a portion of sales is declining. This indication also shows a green light to the R&D costs, mergers and acquisitions.

Debt ratio of the company is increasing due to its costs on mergers, acquisitions and R&D advancement instead of payment of debts. This increasing debt ratio present a hazard of default of The New Economy to its financiers and might lead a declining share rates. Therefore, in terms of increasing debt ratio, the company should not spend much on R&D and ought to pay its present financial obligations to reduce the risk for financiers.

The increasing danger of investors with increasing debt ratio and decreasing share rates can be observed by substantial decrease of EPS of The New Economy Case Analysis stocks.

The sales growth of business is also low as compare to its acquisitions and mergers due to slow perception structure of consumers. This slow growth likewise impede business to additional invest in its acquisitions and mergers.( The New Economy, The New Economy Financial Reports, 2006-2010).

Note: All the above analysis is done on the basis of graphs and estimations given in the Exhibitions D and E.

TWOS Analysis.

2 analysis can be utilized to derive various methods based upon the SWOT Analysis given above. A quick summary of TWOS Analysis is given up Display H.

Techniques to make use of Opportunities utilizing Strengths.

The New Economy Case Analysis ought to introduce more ingenious products by big quantity of R&D Spending and mergers and acquisitions. It could increase the market share of The New Economy and increase the earnings margins for the business. It might also provide The New Economy a long term competitive benefit over its rivals.

The international expansion of The New Economy ought to be focused on market catching of establishing countries by expansion, attracting more consumers through client's loyalty. As developing nations are more populated than industrialized nations, it could increase the client circle of The New Economy.

Methods to Conquer Weaknesses to Exploit Opportunities.

The New Economy Case Solution needs to do cautious acquisition and merger of organizations, as it could impact the customer's and society's understandings about The New Economy. It should merge and get with those companies which have a market reputation of healthy and healthy business. It would improve the perceptions of consumers about The New Economy.

The New Economy ought to not just spend its R&D on innovation, instead of it needs to likewise concentrate on the R&D spending over evaluation of expense of different healthy products. This would increase cost effectiveness of its items, which will result in increasing its sales, due to decreasing rates, and margins.

Techniques to utilize strengths to get rid of risks.

The New Economy Case Analysis should transfer to not only developing however likewise to developed countries. It ought to broadens its geographical expansion. This large geographical growth towards establishing and developed countries would lower the threat of possible losses in times of instability in various countries. It needs to broaden its circle to various countries like Unilever which operates in about 170 plus nations.

Methods to overcome weak points to prevent hazards.

The New Economy Case Analysis must wisely manage its acquisitions to avoid the risk of mistaken belief from the customers about The New Economy. This would not just enhance the understanding of customers 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 customer intact with the brand, there are two options:.

Option: 1.

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


1. Acquisitions would increase overall possessions of the company, increasing the wealth of the business. Costs on R&D would be sunk cost.
2. The business can resell the gotten units in the market, if it stops working to execute its technique. However, quantity spend on the R&D could not be revived, and it will be considered completely sunk expense, if it do not provide potential results.
3. Spending on R&D offer slow growth in sales, as it takes very long time to present a product. Acquisitions provide fast outcomes, as it offer the company currently developed item, which can be marketed quickly after the acquisition.


1. Acquisition of business's which do not fit with the company's values like Kraftz foods can lead the business to deal with misconception of customers about The New Economy core values of nutritious and healthy products.
2. Big spending on acquisitions than R&D would send out a signal of business's inefficiency of establishing innovative items, and would lead to customer's dissatisfaction also.
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 business unable to present brand-new innovative products.

Option: 2

The Business ought to spend more on its R&D instead of acquisitions.


1. It would enable the company to produce more innovative products.
2. It would provide the company a strong competitive position in the market.
3. It would allow the company to increase its targeted consumers by introducing those products which can be provided to a totally brand-new market section.
4. Ingenious products will supply long term advantages and high market share in long run.


1. It would decrease the profit margins of the company.
2. In case of failure, the entire costs on R&D would be considered as sunk expense, and would impact the company at big. The danger is not in the case of acquisitions.
3. It would not increase the wealth of company, which might provide a negative signal to the investors, and could result I declining stock rates.

Alternative 3:

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


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


1. Threat of conversion of R&D costs into sunk cost, higher than option 1 lower than alternative 2.
2. Threat of misunderstanding about the acquisitions, greater than alternative 2 and lesser 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 options, it is recommended that the business ought to select the alternative 3 in order to preserve a competitive position in the long run. As the alternative 3 would enable the company to not just present innovative and brand-new items in the market it would likewise lower the high expenses on R&D under alternative 2 and increase the profit margins. It would make it possible for the business to increase its share costs too, as financiers are willing to invest more in business with substantial R&D spending and boost in the overall worth of the business.

Action and execution Strategy

Technique can be implemented successfully by developing particular short term as well as long term plans. These plans could be as follows;

Short-term Plan (0-1 year).

• Under the short term plan The New Economy Case Solution need to perform various activities to implement its NHW technique efficiently. These activities are as follows;.
• Get the audit of its brand name portfolio done, to analyze the core selling brand names, which generate the majority of its revenue.
• Analyze the present target audience along with the market sector which is not include in the business's circle.
• Analyze the current financial information to measure the quantity that needs to be spent on the R&D and acquisitions.
• Examine the prospective financiers and their nature, i.e. do they desire long term benefits (capital gain), or the want early revenues (dividend). It would let the company to know that just how much quantity needs to be invested in R&D.

Mid Term Plan (1-5 years).

• Get those companies in which the business has possible experience to deal with. Obtain most favorable companies with a strong commitment to health, to construct the consumer's understandings in the right instructions.
• Focus more on acquisitions than R&D to develop the base in the consumer'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 items has been developed under midterm strategy and now the business might move towards taste aspect too to understand the customers, 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 brand-new items.


The New Economy has remained the leading market player for more than a years. It has institutionalised its techniques and culture to align itself with the marketplace changes and customer habits, which has eventually allowed it to sustain its market share. The New Economy has developed considerable market share and brand name identity in the metropolitan markets, it is recommended that the company needs to focus on the rural areas in terms of establishing brand commitment, awareness, and equity, such can be done by creating a particular brand allowance method through trade marketing methods, that draw clear difference in between The New Economy products and other rival items. The New Economy should utilize its brand image of safe and healthy food in catering the rural markets and likewise to upscale the offerings in other classifications such as nutrition. This will permit the business to develop brand equity for newly introduced and currently produced items on a greater platform, making the efficient usage of resources and brand image in the market.