Nestlé Developing a Digital Nutrition Platform for Japan
Numerous food processing corporations seek to invest in new projects that can provide them with the opportunity to find winning products and to create the consumption patterns that allow them to cut the costs. The most common scenario in the case of a mighty conglomerate is to establish a department or an institute meant to find the nutrition formulas that both the producer and the customer find efficient. Nestlé is one of such companies which are eager to go online in the regions where retailers have already performed the dramatic transition to selling goods and providing services online. They tend to do it with the help of their own apps and platforms. Nestlé is trying to create a platform that is capable of both providing millions of customers with proper information on nutrition and collecting the data needed for research and development (R&D) and marketing. The case is even more interesting due to the location the platform is set to operate in and the country which has been chosen as the best option for the platform’s pilot market. Although Japan is a vital for Nestlé, the company is to encounter certain serious issues there.
Applying PEST Analysis
Realizing the opportunities and threats of multiple external factors is crucial for any business activity. Setting up a new digital platform that is meant to collect data, promote goods, and expand the client base is a complicated task where a conceptual framework is needed. According to Perera (2017), the application of the PEST Analysis will highly depend on the industry or market the organization is based in, and factors to be taken into consideration may differ significantly. Thus, PEST Analysis is, arguably, the best option when performing such investigation. This paper provides an insight into the political, economic, social, and technological forces that will shape Nestlé’s activities.
Japan is different from all other Asian nations, as it no longer represents the booming and luring economy like those of its neighbors where people squander money. The nation as a whole has become price-conscious, as income growth has been sluggish since the 1990s. Furthermore, the age structure of Japan’s population is unique by all means. Vogt (2017) claims that people older than 65 represent more than a quarter of the whole population, and the population of 75 years and older is predicted to rise to 26,9% by 2060. All the above mentioned directly affects the economic indicators that should be taken into consideration prior to investments. Funabashi (2017) points out that currently in Japan, the aging of the population is taking place at a much faster pace than the economic growth rates. This fact should be considered by Nestlé when identifying people who are truly enthusiastic about healthy food.
What is more, the Japanese have not fully adopted Western cuisine and generally stay committed to local specialties that happen to be both healthy and nutritious. Nevertheless, what defines a cuisine depends not only on what it contains and how it is prepared, but also on where it is prepared and how it is marketed (Stalker, 2018). However, it also should be taken into consideration that the Japanese no longer accept new technologies quickly, since the nation does not use mobile phones and mobile apps as frequently as other nations in Asia. Therefore, Nestlé has to be cautious when analyzing the performance of the platform in that country.
There are several objectives when developing a digital nutrition platform. Nestlé seeks to find a fertile base for future R&D activities, which could theoretically trace all local trends with ease. Moreover, a new digital platform may become a popular source of information which the Japanese may enjoy using. It may even someday become an ecosystem for people concerned about their diet. Jelassi and Martínez-López (2020) consider that all the above mentioned can help the company create new patterns of consumption and, arguably more important, distribution. Selling directly to customers has already become a growing trend in several Western countries. Finally, Nestlé has a unique opportunity of being a pioneer when it comes to collaboration with Asian tech companies. Corporations such as Samsung may provide Nestlé with unique data on the trends and help the Swiss company better understand the future products destined to succeed in Asia. Moreover, tech companies can provide instant benefits such as integrating the promotion of Nestlé’s products in their smart-speaker systems and other devices that enjoy enormous popularity in Asian countries.
Despite the fact the Japanese market is different from other Asian markets, let alone American and European, setting up a digital nutrition platform may provide the company with numerous opportunities. For instance, Nestlé will enjoy the chance to experiment with its existing business lines. Moreover, the company will rapidly collect enough data to understand which products are worth the lengthy and costly registration as FHC (Food with Health Claims) or FOSDU (Food for Special Dietary Uses). Thus, the introduction of the Food Labelling Act by Japan is an important step to creating a health-promoting environment, by enabling all groups of people to make informed and healthy choices (The Organisation for Economic Co-operation and Development [OECD], 2019). The number of elderly people in Japan is enormous, and it is the group that will most likely enjoy the platform. Moreover, the situation in Japan is similar to those in the US and in Europe, as retirees in that country can afford to spend significant sums of money on drugs and health products. This fact should be concerned when creating future similar platforms for most other Asian countries, where millennials are much more affluent than older generations, as the latter even lack retirement plans.
Partnering with Other Companies
One of the direct ways of capitalizing on the future platform is allowing small producers and farmers to place their goods alongside those of Nestlé, given that there is no competition between them. Thus, Nestlé can understand what products the company’s business lines currently lack in terms of several months. Then such products can be developed by the company’s R&D department. According to the experts, the goal of the management of a supply chain is to select companies which can add value to the final product (Folinas & Fotiadis, 2017). Thus, Nestlé can purchase the local producer and encourage the production of more winning goods, which are more likely to receive pleasant feedback nationwide.
The company should definitely cooperate with some of the smartphone producers in Japan. The ideal scenario would be to partner with Sony and to pre-install a digital nutrition platform app, which should be perfectly integrated into the ecosystem. Nevertheless, if Sony, Samsung, or any other major Asian smartphone producer simply promotes the platform’s use on their devices, Nestlé will already benefit enormously by rapidly expanding its client base. Moreover, manufacturers that produce fitness trackers and smartwatches will also provide the opportunity to synchronize fitness data with the platform. Whatever the outcome, the main objective is to stay focused on the mobile app, as currently it is the most efficient tool that can provide the customer with proper experience and simultaneously collect data.
Data Collection Issues
The information which can be gathered with the help of the platform may turn out to be a serious issue, just as the heated debates that followed the 2019 article about Google’s Project “Nightingale”. Convincing people that the data that is being collected is properly anonymized by a tech company too affluent to sell the information, is going to be hard. Nevertheless, Nestlé should pinpoint that the platform (and the mobile app) will work most efficiently if the data is being collected, anonymized, and analyzed by AI. Companies worldwide have already achieved a mutual understanding with their clients when suggesting new goods and services based on the long-time preferences.
Nestlé should be completely honest about its intentions when launching the platform. People will most likely trust the Swiss corporation’s policy and allow it to collect and synchronize the data by enabling these processes when first launching the platform. Nestlé was subject to the largest boycott in history in the late 1970s, and its ethical behavior was often questioned (Adhikari & Roy, 2017). Thus, the approach proposed in this paper is the only possible option, as Nestlé is currently too influential to spoil its reputation.
Disruption of Supply Chains and Other Risks
Nestlé’s operational strategies may be altered significantly due to the risks, time, and costs. According to Hutchins (2019), risk management is the process of identifying, categorizing, prioritizing and planning for risks before they become issues. Such problems should be addressed mainly by the introduction of new technologies, especially those that enhance communication. Nakano (2019) notes that firms can heighten the degree of supply chain process integration by utilizing information and communication technologies. To begin with, a large portion of Nestlé’s products has to be exported to Japan. If a company creates a digital platform, it should be ready for the rapid growth of orders, which can lead to shortages at warehouses and disruption of supply chains.
Moreover, relying on numerous producers may result in delays in shipment. Not delivering the goods in a timely manner can seriously undermine the quality of the service. Although Japan’s currency is known to be a unique safe haven for investors, even minor currency fluctuations in neighboring counties may completely change operational costs and disrupt the supply chain. Moreover, “enterprises in developed countries need to green their supply chains all over the world to avoid risks” (Sarkis, 2019, p. 27). Sustainability of all the innovative processes should now be considered equally important.
The technologies which Nestlé seeks to implement in its new digital nutrition platform can provide the company with the opportunity to enhance the existing supply chains and facilitate the creation of new distribution channels. The use of artificial intelligence in the app can both accelerate the process of placing the order and improve the logistics of the company. The technologies used in some modern apps allow for the automation of finding the best route for trucks when delivering large quantities of goods from various warehouses to multiple locations across the country.
Creating a new digital nutrition platform is not going to be an easy task, even for the Swiss conglomerate corporation. However, the experience of other tech companies, both in the US and Asia, can be used to facilitate the process. Partnering with Asian tech firms will allow for a better understanding of modern clients’ preferences and provide Nestlé with the opportunity to create a unique automated platform that will perform multiple tasks crucial for the company’s future success in the region simultaneously.
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