Harvard Case - Going Plastic Neutral: The Nestle Philippines Experience (A)
"Going Plastic Neutral: The Nestle Philippines Experience (A)" Harvard business case study is written by Dominique Turpin, Sandeep Puri, Jikyeong Kang. It deals with the challenges in the field of Strategy. The case study is 14 page(s) long and it was first published on : Dec 20, 2021
At Fern Fort University, we recommend Nestl' Philippines continue its journey towards plastic neutrality, leveraging its existing strengths while embracing a comprehensive and strategic approach. This strategy should focus on a multi-pronged approach encompassing:
- Accelerating plastic reduction: Implementing innovative packaging solutions, optimizing existing packaging formats, and exploring alternative materials.
- Investing in recycling infrastructure: Partnering with local communities and organizations to build robust recycling systems, ensuring proper collection, sorting, and processing of plastic waste.
- Supporting plastic waste collection and management: Actively engaging in community outreach programs, educating consumers on waste management practices, and incentivizing responsible waste disposal.
- Developing a robust communication strategy: Transparently communicating its plastic neutrality commitment, highlighting progress made, and engaging stakeholders in the journey.
2. Background
Nestl' Philippines, a subsidiary of the global food and beverage giant Nestl', is facing the challenge of plastic waste in the Philippines. The company recognizes its responsibility towards environmental sustainability and aims to achieve 'plastic neutrality' by 2025. This involves collecting and recycling as much plastic as it uses in its packaging.
The case study highlights Nestl' Philippines' initial efforts, including its partnership with the Philippine government and local organizations to establish recycling programs. However, the company faces significant challenges, including limited recycling infrastructure, consumer awareness, and the complexity of managing plastic waste in a developing country.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Strong brand reputation and market leadership
- Existing distribution network and consumer reach
- Committed to sustainability and corporate social responsibility
- Access to resources and expertise within the Nestl' network
Weaknesses:
- Limited access to robust recycling infrastructure
- Lack of awareness and participation in waste management programs
- Dependence on external partners for recycling operations
- Potential for consumer backlash if sustainability efforts are perceived as insufficient
Opportunities:
- Growing demand for sustainable products and practices
- Increasing government support for waste management initiatives
- Potential for innovation in packaging and recycling technologies
- Collaboration with other companies and organizations to create a more sustainable ecosystem
Threats:
- Competition from other companies with similar sustainability initiatives
- Negative public perception and pressure from environmental groups
- Potential for regulatory changes impacting waste management practices
- Economic and political instability in the Philippines
Porter's Five Forces:
- Threat of new entrants: Moderate, as entry barriers are relatively high due to capital requirements and brand recognition.
- Bargaining power of buyers: Moderate, as consumers are increasingly demanding sustainable products but have limited options.
- Bargaining power of suppliers: Moderate, as Nestl' has significant purchasing power but relies on external partners for recycling services.
- Threat of substitute products: High, as consumers can choose alternative brands or products with less plastic packaging.
- Rivalry among existing competitors: High, as the food and beverage industry is highly competitive, with companies vying for market share and consumer loyalty.
Value Chain Analysis:
Nestl' Philippines' value chain is impacted by its plastic neutrality commitment at various stages:
- Inbound logistics: Sourcing sustainable materials and minimizing plastic use in packaging.
- Operations: Implementing efficient manufacturing processes and reducing waste generation.
- Outbound logistics: Ensuring responsible packaging disposal and promoting recycling initiatives.
- Marketing and sales: Communicating sustainability efforts and promoting responsible consumption.
- Customer service: Providing information and support to consumers on recycling and waste management.
Business Model Innovation:
Nestl' Philippines can explore business model innovation to achieve plastic neutrality:
- Circular economy model: Implementing closed-loop systems where plastic waste is collected, recycled, and reused.
- Subscription model: Offering products in reusable packaging with a subscription service for refills.
- Partnerships: Collaborating with local businesses and organizations to develop innovative waste management solutions.
4. Recommendations
1. Accelerate Plastic Reduction:
- Packaging Innovation: Invest in research and development to create innovative packaging solutions using alternative materials like bioplastics, paper-based packaging, and recycled plastics.
- Packaging Optimization: Optimize existing packaging formats to minimize plastic usage while maintaining product quality and shelf life.
- Product Reformulation: Explore product reformulation to reduce the need for plastic packaging, such as offering concentrated versions of products or introducing refillable options.
2. Invest in Recycling Infrastructure:
- Partnership Development: Collaborate with local governments, NGOs, and waste management companies to build robust recycling infrastructure, including collection centers, sorting facilities, and recycling plants.
- Technology Adoption: Invest in advanced sorting and recycling technologies to improve efficiency and increase the quality of recycled materials.
- Financial Support: Provide financial assistance to local communities and organizations to support their recycling initiatives.
3. Support Plastic Waste Collection and Management:
- Community Outreach: Conduct extensive community outreach programs to educate consumers on proper waste management practices, including plastic segregation and disposal.
- Incentive Programs: Implement reward programs for consumers who participate in recycling initiatives, such as discounts on products or loyalty points.
- Waste Collection Infrastructure: Partner with local waste management companies to provide efficient and reliable waste collection services, particularly in areas with limited access to recycling facilities.
4. Develop a Robust Communication Strategy:
- Transparency and Communication: Transparent communication of Nestl' Philippines' plastic neutrality commitment, progress made, and future plans.
- Stakeholder Engagement: Engage with stakeholders, including consumers, NGOs, government agencies, and media, to build trust and transparency.
- Social Media Campaign: Utilize social media platforms to raise awareness about plastic waste, promote responsible consumption, and share success stories.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Nestl' Philippines' core competencies in manufacturing, distribution, and marketing are leveraged to drive sustainable practices. The recommendations align with the company's mission to provide nutritious and sustainable food products.
- External customers and internal clients: The recommendations address the concerns of external customers regarding environmental sustainability and engage internal stakeholders in the journey towards plastic neutrality.
- Competitors: By embracing a proactive and innovative approach, Nestl' Philippines can differentiate itself from competitors and gain a competitive advantage in the sustainable food and beverage market.
- Attractiveness: The recommendations are expected to contribute to Nestl' Philippines' long-term profitability by reducing costs associated with waste management, enhancing brand reputation, and attracting environmentally conscious consumers.
6. Conclusion
Nestl' Philippines' commitment to plastic neutrality presents a significant opportunity to create a positive impact on the environment and society. By implementing a comprehensive and strategic approach, the company can achieve its sustainability goals, enhance its brand reputation, and contribute to a more sustainable future.
7. Discussion
Alternatives:
- Outsourcing recycling operations: While outsourcing can be cost-effective, it may compromise control over the recycling process and potentially impact the quality of recycled materials.
- Focusing solely on product innovation: While innovation is crucial, it may not be sufficient to address the broader issue of plastic waste management in the Philippines.
Risks and Key Assumptions:
- Regulatory changes: Changes in government regulations related to waste management could impact the feasibility of the recommendations.
- Consumer acceptance: The success of the recommendations depends on consumer acceptance of sustainable practices and willingness to participate in recycling initiatives.
- Financial resources: Significant financial resources are required to implement the recommendations, including investments in recycling infrastructure and community outreach programs.
8. Next Steps
Timeline:
- Year 1: Implement packaging optimization initiatives, develop partnerships for recycling infrastructure, and launch community outreach programs.
- Year 2: Introduce innovative packaging solutions, expand recycling infrastructure, and track progress towards plastic neutrality goals.
- Year 3: Evaluate the effectiveness of implemented initiatives, adjust strategies as needed, and continue to engage stakeholders in the journey towards plastic neutrality.
Key Milestones:
- Reduce plastic usage by 20% within the first year.
- Establish a robust recycling infrastructure in key regions of the Philippines within two years.
- Achieve plastic neutrality by 2025.
By taking a proactive and strategic approach, Nestl' Philippines can become a leader in sustainable packaging and waste management, demonstrating its commitment to environmental responsibility and contributing to a cleaner and healthier future for the Philippines.
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Case Description
In March 2019, Kais Marzouki, Chairman and CEO of Nestlé Philippines Inc. (NPI), wanted his company to reach plastic neutrality at the earliest possible time. Globally, including in the Philippines, more and more consumers, governments, NGOs and media were concerned by plastic waste and pollution. Mark Schneider, Nestlé's global CEO, had recently stated his vision that none of Nestlé's packaging, including plastics, would end up in landfill or as litter. A few weeks earlier, Schneider had announced internally the group's ambition to have all of Nestlé packaging recyclable or reusable by 2025. How could NPI lead the way and mobilize all key stakeholders to achieve his objectives?
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