Nestle Essay Example | Topics and Well Written Essays - 3500 words

clutch - Essay Examplemost appropriate growth strategy to pursue will be find out by arriving at decisions about whether to sell old or new products in old or new securities industrys. (Ansoff, 1957).Nestles growth strategy falls under the category of concentric diversification, wherein a social club produces new products that are closely related to its current products, but introduces them into a new market (Ansoff, 1957). This has been Nestles strategy in countries such as infant formula, tofu and noodles which are radical food stuffs but are tailored to meet the needs of the new market, for example in India, the Comp whatever also sells pickles to appeal to the housewife market.Nestles financial strength and ability to weather the ecological niche whitethorn be closely linked to its diversification strategy. Since it has such a broad based approach, any potential issues that it is likely to face are marginal. The efficacy of this strategy is also borne out through the lotio n of the Shareholder Value Analysis, developed by Rapoport (1986). Rapoport identified three specific value drivers, namely Finance, enthronisation and Business, all three of which if improved, could lead to a direct increase in lotholder value. In general, shareholders in a attach to are rewarded in two different ways (a) dividends paid and (b) capital appreciation, which depends upon the kinds of investments that the Company undertakes. The total shareholder return for a specific year can be calculated victimisation the formula TSR = Dividends + Capital Appreciation (Pike and Neals, 2006).From an examination of Nestles balance sheets for financial records in the European region, it may be noted that the net dividend yield percentages have increased as follows 2006 2.4%, 2007- 2.8% and 2008 3.1% (NestleSA, 2008). The last share price in 2006 was 42.85, in 2007 it was 48.05 and in 2008, it was 45.56.(www.nestle.com). The total shareholder value for each year may therefore be c alculated as followsThis result from the