nestle 2

(PRE-MID ASSIGNMENT) (ECONOMICS) Submitted To: prof. Hina Submitted By: TAYYBA JAMEEL SAJID IMRAN M. AMIR M. ADNAN ZEESHAN ALI KHURRAM SHAHZAD

Company Selected: NESTLE FOODS LTD Product: MILK PACK

History in Pakistan 1985 - Mr. Khawaja Selah-ud-din established PND (Pak National Distributors) in Bahawalpur first company of PND Group _ 1985 - Unilever Retail Distribution in 40% geographies of Multan _ 1987 - Nestle as handling agent for entire Southern Punjab _ 1992 - Tariq Glass Industries (OMROC) _ 2000 - Nestle Pure Life (drinking water) distribution in Lahore _ 2005 - Retail Franchise of Shell Pakistan Ltd _ 2006 - Handling Agents of Shan Foods Pvt Ltd & Young’s Pvt Ltd _ 2007 - retail distribution of 40% Lahore through M/S Wali & Company (PND Group Company) for English Biscuit Manufacturers (EBM) Pvt Ltd. _ 2007 - 08 Nestle Pure Life (drinking water) operations in complete Lahore _ 2008 - Currently 40% Lahore is serviced through National Distributors (PND Group Company) for Nestle Liquid Products _ 2009 - Asian Foods Pvt Ltd (Mayfair) as handling agent and retail distribution for entire Southern Punjab _ 2009 - Unilever Retail Distribution in remaining 60% geographies of Multan _ 2010 - Asian Foods Pvt Ltd (Mayfair) as retail distribution for Bahawalpur --------------

Critical success factors: History:

Introduction

The Swiss flag flies on our Headquarter building. But, inside, around 80 nationalities are represented by our 1,600people working there

The world of Nestlé By now you’ll have realised that Nestlé is a world of its own. It spans the globe. But more importantly, Nestlé employees come from all walks of life. Once they join Nestlé, they continue to expand their horizons. In keeping with the world in which we all live, Nestlé too, is constantly changing. But its values remain the same. The Company will go on providing high quality safe and trusted food and beverages for millions of people, providing them with nutrition, health and

Nestlé. Good Food, Good Life. In 1988 the Nestle Pakistan, Switzerland based country acquired Milk Pak in Pakistan. The Milk pack company was in Kabirwala. At that time, the teams from Nestle Switzerland made frequent visits to Milk pack for inspection purpose. Whenever they visited Kabirwala, they also checked the Multan market. During those days, the milk pack market in Multan was very bad. At that time, one of Mr. Salahuddin’s relative had come from Saudi Arabia. Salahuddin went to meet his friend in Bahawalpur where he met the marketing .

Markets and Prices When you need a new pair of running shoes, want abagel and a latte, plan to upgrade your cell phone, or need to fly home for Thanksgiving, you must find a place where people sell those items or offer those services. The place in which you find them is a mark t learned in Chapter 2 (p. 42) that a market is any arrangement that enables buyers and sellers to get

Information

and to do business with each other.

A market has two sides: buyers and sellers. There are markets for goods such as apples and hiking boots, for services such as haircuts and tennis lessons, for factors of production such as computer programmers and earthmovers, and for other manufactured inputs such as memory chips and auto parts. There are also markets for money such as Japanese yen and for financial securities such as Yahoo! stock. Only our imagination limits what can be traded in markets. Some markets are physical places where buyers and sellers meet and where an auctioneer or a broker

Demand Wants are the unlimited desires or wishes that people have for goods and services. How many times have you thought that you would like something “if only you could afford it” or “if it weren’t so expensive” Scarcity guarantees that many—perhaps most—of our wants will never be satisfied. Demand reflects a decision about which wants to satisfy

The Law of Demand Other things remaining the same, the higher the price of a good, the smaller is the quantity demanded and the lower the price of a good, the greater is the quantity demanded Substitution Effect

When the price of a good rise other things remaining the same, its relative price— its opportunity cost—rises. Although each good is unique it has substitutes—other goods that can be used in its place. As the opportunity cost of a good rises the incentive to economize on its use and switch to a substitute becomes stronger. Income Effect

When a price rise,other things remaining the same, the price rises relative to income. Faced with a higher price and an unchanged income people cannot afford to buy all the things they previous bought. They must decrease the quantities demanded of at least some goods and services. Normally the good whose price has increased will beone of the goods that people buy less of.To see the substitution effect and the income effectat work, think about the effects of a change in the price of an energy bar. Several different goods aresubstitutes for an energy bar.

Demand Curve and Demand Schedule

You are now about to study one of the two most used curves in economics: the demand curve. You are also going to encounter one of the most critical distinctions: the distinction between demand and quantity demanded .The term demand refers to the entire relationship between the price of a good and the quantity demanded of that good. Demand is illustrated by the demand curve and the demand schedule. The term quantity demanded refers to a point on a demand curve—the quantity demanded at a particular price. Figure 3.1 shows the demand curve for energy bars. A demand curve shows the relationship between he quantity demanded of a good and its price when all other influences on consumers’ planned purchases remain the same. The table in Fig. 3.1

is the demand schedule for energy bars. A demand schedule lists the quantities demanded at each price when all the other influences on consumers’ planned purchases remain the same For example, if the price of a bar is 50¢, the quantity demanded is 22 million a week. If the price is $2.50,the quantity demanded is 5 million a week. The other rows of the table show the quantities demanded at prices of $1.00, $1.50, and $2.00.We graph the demand schedule as a demand curve with the quantity demanded on the x-axis and the price on the y-axis. The points on the demand curve labeled A through E correspond to the rows of the demand schedule. For example, point A on the graph shows a quantity demanded of 22 million

demanded schedule PRICE 0.50 1.00 1.50 2.00 2.50

A B C D E

DEMAND 22 15 10 7

5

Demand curve

Price

Demand

Demand function

.nestle has increase the price of 1liter milk pack by Rs 10aaand the price became 110they do no change price of other product due to this the supply of the product should be reduce by the suppliers and the shortage of the milk pack When the supply is reduced the demand is increase people required more milk but the supply is short This position of market I always in summer season when the production of liquid milk is reduced and the demand of the packet milk should be increase Pakistan has the fifteen largest milk produced country The annual production of milk is 36 billion litter but the customer is facing the shortage problem Especially in summer season because the urban people required milk The liquid milk is not available the people is have no more substitute Therefore they demand the packet milk In this demand the nestle is no/1 choice of the people

Descriptives N

Minimum

Maximum

Mean

Std. Deviation

demand

10

40.00

60.00

49.4000

5.89161

price

10

12.00

19.00

15.3000

2.21359

incom

10

100.00

100.00 1.0000E2

.00000

Valid N (listwise)

Frequency Table

10

demand Cumulative Frequency Vali 40 d

Percent

Valid Percent

Percent

1

10.0

10.0

10.0

43

1

10.0

10.0

20.0

45

1

10.0

10.0

30.0

47

1

10.0

10.0

40.0

50

2

20.0

20.0

60.0

52

2

20.0

20.0

80.0

55

1

10.0

10.0

90.0

60

1

10.0

10.0

100.0

10

100.0

100.0

Total

price

demand Cumulative

Frequency Valid

Percent

Valid Percent

price

Percent

12

1

10.0

10.0

10.0

13

1

10.0

10.0

20.0

14

2

20.0

20.0

40.0

15

2

20.0

20.0

60.0

16

1

10.0

10.0

70.0

17

1

10.0

10.0

80.0

18

1

10.0

10.0

90.0

19

1

10.0

10.0

100.0

10

100.0

100.0

Total

demand with price

Cross Correlations

Series Pair: demand with price Cross Lag

Correlation

Std. Errora

-7

.103

.577

-6

.154

.500

-5

-.023

.447

-4

-.500

.408

-3

.184

.378

-2

.455

.354

-1

.192

.333

0

-.990

.316

1

.082

.333

2

.408

.354

3

.304

.378

4

-.505

.408

5

-.013

.447

6

.140

.500

7

.104

.577

a.

Based on the assumption hatt heeries are not cross correlatedand that one of

b.

t he serhite noise.

Correlations

Partial Correlations Correlations Control Variables incom

demand

price

demand Correlation

price

1.000

.

Significance (2-tailed)

.

.

df

0

7

Correlation

.

1.000

Significance (2-tailed)

.

.

df

7

0

Proximities Case Processing Summary Cases Valid

N

Missing

Percent 10

100.0%

Regression

N

Total

Percent 0

.0%

N

Percent 10

100.0%

Model Summary

Model

R .990a

1

Adjusted R

Std. Error of the

Square

Estimate

R Square .980

.978

.88192

a. Predictors: (Constant), price

ANOVAb Model 1

Sum of Squares Regression Residual Total

df

Mean Square

306.178

1

306.178

6.222

8

.778

312.400

9

F

Sig.

393.657

.000a

a. Predictors: (Constant), price b. Dependent Variable: demand

Coefficientsa Standardized Unstandardized Coefficients Model 1

B

Std. Error

(Constant)

89.714

2.051

price

-2.635

.133

a. Dependent Variable: demand

Coefficients Beta

t

-.990

Sig.

43.743

.000

-19.841

.000

Supply A supply is more than just having the resources and the technology to produce something. Resources an technology are the constraints that limit what is ossible Many useful things can be produced, but they are not produced unless it is profitable to do so. Supply reflects a decision about which technologically feasible items to produce The quantity supplied of a good or service is the amount that producers plan to sell during a given time period at a particular price. The quantity suppliedis not necessarily the same amount as thequantity actually sold. Sometimes the quantity suppliedis greater than the quantity demanded, so thequantity sold is less than the quantity supplied. Like the quantity demanded, the quantity suppliedis measured as an amount per unit of time. For example suppose that GM produces 1,000 cars a day. The quantity of cars supplied by GM can be expressed as 1,000 a day, 7,000 a week, or 365,000 a year. Without the time dimension, we cannot tell whether aparticular quantity is large or small.

The Law of Supply

Other things remaining the same, the higher the price of a good, the greater is the quantity supplied; and the lower the price of a good, the smaller is the quantity supplied

Price Quantity supplied Supply schedule

(dollars per bar)

A 0.50 B 1.00 C 1.50 D 2.00 E 2.50

(millions of bars per week)

0 6 10 13 15

Supply curve

Price Supply curve

Y axis X axis

supply

In this diagram we can se that when the price increase the supply also increase and when the price is decrease the supply is also decrease The supply curve is gone down to up word this show the positive relation with supply and price Supply is the function of price price

Supply

Frequency Table

price

supply

Price Cumulative Frequency Valid

Percent

Valid Percent

Percent

12

1

6.7

6.7

6.7

25

1

6.7

6.7

13.3

28

1

6.7

6.7

20.0

30

1

6.7

6.7

26.7

35

1

6.7

6.7

33.3

39

1

6.7

6.7

40.0

40

1

6.7

6.7

46.7

42

1

6.7

6.7

53.3

45

1

6.7

6.7

60.0

49

1

6.7

6.7

66.7

50

1

6.7

6.7

73.3

52

1

6.7

6.7

80.0

53

1

6.7

6.7

86.7

55

1

6.7

6.7

93.3

60

1

6.7

6.7

100.0

15

100.0

100.0

Total

Supply Cumulative Frequency Valid

Percent

Valid Percent

Percent

5

1

6.7

6.7

6.7

9

1

6.7

6.7

13.3

11

1

6.7

6.7

20.0

13

1

6.7

6.7

26.7

15

1

6.7

6.7

33.3

17

1

6.7

6.7

40.0

19

1

6.7

6.7

46.7

23

1

6.7

6.7

53.3

25

1

6.7

6.7

60.0

27

1

6.7

6.7

66.7

30

1

6.7

6.7

73.3

35

1

6.7

6.7

80.0

36

1

6.7

6.7

86.7

40

1

6.7

6.7

93.3

45

1

6.7

6.7

100.0

15

100.0

100.0

Total

Descriptive Statistics N

Minimum

Maximum

Mean

Std. Deviation

price

15

12.00

60.00

41.0000

13.12577

supply

15

5.00

45.00

23.3333

12.05148

Valid N (listwise)

15

Ratio Statistics

Case Processing Summary Count Overall

15

Excluded Total

0 15

Ratio Statistics for price / supply Price Related Differential

1.121

Coefficient of Dispersion

.212

Coefficient of Variation

price

supply

Median Centered

26.4%

Means Case Processing Summary Cases Included N supply * price

Excluded

Percent 15

N

100.0%

Total

Percent 0

.0%

N

Percent 15

T-Test Paired Samples Statistics Mean Pair 1

N

Std. Deviation

Std. Error Mean

price

41.0000

15

13.12577

3.38906

supply

23.3333

15

12.05148

3.11168

100.0%

Correlations Correlations price Price

Pearson Correlation

Supply 1

.959**

Sig. (2-tailed)

.000

N Supply

Pearson Correlation Sig. (2-tailed)

15

15

.959**

1

.000

N

15

15

**. Correlation is significant at the 0.01 level (2-tailed).

Proximities Case Processing Summary Cases Valid N

Missing

Percent 15

100.0%

N

Total

Percent 0

.0%

N

Percent 15

100.0%

Regression Variables Entered/Removedb

Model 1

Variables

Variables

Entered

Removed

pricea

Method . Enter

a. All requested variables entered.

Model Summary

Model

R .959a

1

R Square

Adjusted R

Std. Error of the

Square

Estimate

.919

.913

3.55945

a. Predictors: (Constant), price

ANOVAb Model 1

Sum of Squares Regression Residual Total

a. Predictors: (Constant), price b. Dependent Variable: supply

df

Mean Square

1868.627

1

1868.627

164.706

13

12.670

2033.333

14

F 147.488

Sig. .000a

Coefficientsa Standardized Unstandardized Coefficients Model 1

B (Constant) price

Std. Error

-12.754

3.110

.880

.072

Coefficients Beta

t

.959

Sig.

-4.100

.001

12.144

.000

a. Dependent Variable: supply

Sale function of nestle The year in review has seen significant changes in our business environment, both at home in Switzerland and in many other countries where your company is active. Switzerland has seen changes in corporate law t hat directly impact your company. Challenges in the Middle East, Asia, Africa and Latin America contributed to a general slowdown in the emerging markets’ growth rates. The developed markets mean while, have continued to experience an aemic growth, at best. The results that we have achieve dinthis environment, therefore, are a tribute toour 333 000 employees, many

of whom have experiencedthese difficult challenges first hand.Sales were CHF 92.2 billion, with organic growth of 4.6%, incorporating real internal growth of 3.1% and pricingof 1.5%. After some years of inflation, raw materialcostswere subdued in 2013, and our commitment to deliveringthe right value propositions to our consumers resultedin a low level of pricing: our relatively strong real internalgrowth, considering the environment, suggests that wesucceeded against market. The trading operating profiwas CHF 14.0 billion and the margin increased by 20 basispoints to 15.2%. This performance was achieved whilst atthe same time increasing our brand support. The net profitwas CHF 10.0 billion and earnings per share were CHF 3.14.Underlying earnings per share were up 11.0% in constantcurrencies. Operating cash flow was CHF 15.0 billion. Inview of this performance and the company’s strong financialposition, the board is recommending a dividend per share ofCHF 2.15, up 4.9% from CHF 2.05 last year.The results in 2013 showed our determination to growyour company profitably and sustainably, allowing us todeliver over time the Nestlé Model of organic growth of5–6% together with improvements in our trading operatingprofit margin and earnings per share in constant currenciesand in our capital efficiency. Indeed, our average organicgrowth has been 6.1% over the last ten years, during whichtime we also consistently improved our operating profitmargin. This performance reflects a focus both on ourshorter-term performance – seeking to grow faster thanour markets – and on the longer-term – making the rightdecisions to ensure sustainable profitable growth intothe future Each year is a challenge in its own way, and 2013 wasno different. A more difficult trading environment requiredan intense focus on ensuring we maintained our edge inthe market. In 2013, guided by our strategic roadmap, weconsidered how we could work smarter to deliver greatervalue for consumers and for you, our fellow shareholdersWe wanted to ensure we were agile enough to maximisethe opportunities presented by today’s fastchangingenvironment.

Milk is a complete diet and an important source of income for our farmers. In fact it is the top valued commodity in the entire agriculture. With annual milk production of over 35 million ton Pakistan ranks fourth in the world in milk production after India, United States and China. The dairy sector of the country is not fully developed. The herd average herd size is 2-5 animals per farmer that denies the producer the economies of scale. Unfortunately over 95 per cent of the dairy sector operates in informal sector but corporate sector in recent years has started penetrating the dairy market. Most of the milk produced is consumed without any processing in the villages or through the milkman (Gawallas) in the cities. Since the milk production centres are in remote areas it takes at least 6-8 hours for the milkman to deliver the milk at the door step of the consumers. The problem in this regard is that the shelf life of milk is only 4 hours. Milk being a very precious commodity is kept at low temperatures and then processed to prolong its shelf life. This facility in Pakistan is available to only 3-5 per cent of the farmers; the rest preserve it through unhygienic and unhealthy methods – details of which are given separately. There are more than 8 million dairy farmers in the country and the average herd size is 2-5 animals per farm. Baring a few none of these farming household are connected with the formal market. As far as value is concerned dairy sector has a huge annual turnover of over Rs1400 billion (35 billion litres x Rs40 per litre) which is equivalent to $14 billion. Dairy farmers still adhere to old and traditional dairy farming practices which is the reason that the productivity of its milking animals is very low compared with the developed

Explanation with diagram 5 4 3

tarang haleeb nestle

2 1

nestle

0 2008

haleeb 2009

2010

tarang 2011

economies.

14 12 10 8 6 4 2 0

growth2 normal 0 level

2009

2010

2011

2012

We must not undermine the efforts of resource less dairy farmers that have taken the milk production in the country from 5.895 billion liters in 1961 to 35.861 billion liters in2011. However the Chinese have outperformed our dairy sector during the same period. In 1961 they were producing only 1.529 billion liter of milk that increased by 2001 to 13.281 billion liters. In 2001 Pakistan was still way ahead of the Chinese with 25.646 billion liter of milk production. Dairy sector growth increased phenomenally in last decade in China reaching 40.028 billion liters in 2011. The Chinese government adopted most modern techniques in the dairy sector. It improved the quality of its milking animals through artificial insemination. Improved the supply chain and processing of the milk. Indian dairy industry developed at par with Pakistan until the start of this century. They have developed cool chains for milk and are currently the largest producer of milk in the world replacing United States.

Milk, whole, fresh (billion liter) Years Pakista China n 1961 5.895 1.529 1971 7.378 1.739 1981 8.715 2.755 1991 14.909 6.824 2001 25.646 13.281 2011 35.861 40.028 0

India 19.840 21.825 33.271 51.713 79.918 114.850

Summary Financial performance PKR Million Sales Gross Profit margin Operati ng Profit margin Net Profit after tax margin Net Profit after tax Earnings per share

2012

2011

Chang e +22.0 % +1.4%

79,08 8 27.2 %

64,82 4 25.8 %

13.9 %

13.0 %

+0.9%

7.4%

7.2%

+0.2%

5,865

4,668

+25.6 %

129.3 2

102.9 4

+25.6 %

SUBSITUTES When the shortage of the nestle accure. And when the price increase a larg number of substitute in the market is prevails

Haleeb Haleeb is a compitators of the nestle it is the old compitators of the nestle it is use in the place of the nestle milk pack

Tetra Pack Tetra pack is a small compitators of the nestle it is also a substitute of the nestle milk pack

Tarang Tarang is a newly compitators of the nestle milk pack it is a substitute of the nestle milk pack

Olpers Olpers is a big and new commpitators of the nestle it is a substitute of the nestle milk pack

Tea max Tea max is a local compitators of the nestle milk pack is a substitute of nestle milk pack

Production of nestle milk pack In the past, the federal and provincial governments invested their own and/or donor = resources in targeted livestock development projects in specific areas of the country with specific objectives to develop the livestock sector. One such project was the Punjab Smallholder Dairy Development Project, which operated from 1991-98. The project was jointly funded by a loan from the International Fund for Agriculture Development (IFAD) and a grant from the United Nations Development Programm (UNDP) at a total cost USD 14 million. It targeted 27,000 poor rural households in 720 villages in six Tehsils (Wazirabad, Hafizabad, Phalia, Kharian, Norowal and Sialkot) in Gujranwala Division to raise milk production for home consumption and income generation. The project created village milk collectors to collect and deliver milk to public or private sector milk collection centres of existing processing plants in the project areas, built 72 kilometres of farm-to-market roads and helped to connect rural producers with organized marketing channels. The project also contributed toan improved cropping pattern with hybrid seed, improved grass varieties and fod erproduction Dairy Development in Pakistan

7

Public Sector Investment in Milk Processing and Marketing Assuming that there was demand for clean, good quality milk in urban areas, thegovernment considered that milk processing could bring development in the

dairysector by linking production and consumer demand. A policy was pursued to createdairy processing and marketing facilities under government ownership and management through dairy development projects, such as the Punjab Livestock Project. During the mid 1970s livestock development projects were conceived for increasing milk production: for example a Livestock Development Project was started in 1975 as an umbrella pilot project in some districts of all four provinces with an investment of PKR 78.4 million (USD 21.2 million) of which a World Bank loan covered PKR 36.9 million (USD 10 million) and PKR 41.4 million was generated from a Punjab government grant and equity fund. The project mainly invested in Sheikhupura District, Punjab, with the objective of increasing milk production by improving productivity of dairy animals through increased semen production for buffalo and cattle, improving marketing through establishment of milk plants with UHT technology and selling processed milk. The implementation of the project was delayed by four years due to a change in management and delay in installation of machinery. Once implemented, it helped in creating capacity to process nearly one million litres of milk per day but consumer preference was not yet geared to accept processed milk. Consequently, capacity utilization was very low and most enterprises ran at heavy losses: the Lahore milk plant ran at about one-third of its capacity and lost PKR 3.12 million in 1984. The government disinvested these enterprises in the 1990s after the adoption of macroeconomic structural adjustment policies and a different set of policies was pursued to encourage private sector investment in the dairy industry. Facilitating Private Sector Investment in Dairy Processing Since the mid 1970s, alongside establishing public sector dairy processing facilities, the government followed a policy to give soft loans (low interest, few collateral requirements) to private entrepreneurs in the dairy sector for dairy farming, milk collection and processing and also allowed duty-free import of dairy machinery that was not produced domestically. This policy increased private sector investment – both local and multinational - in the dairy sector. The Agricultural Development Bank of Pakistan (ADBP) financed a total of 32 milk-processing plants through this policy, in the process creating overcapacity for processed milk. Although there was no explicit policy to control informal trading, it was hoped that expansion of formal milk processing and marketing would automatically reduce the importance of the informal sector: this did not happened as rapidly as was anticipated and only a few of the processing plants are still operational; others closed down due to inadequate milk supply, lack of management skills and insufficient demand for their products. This failure also meant that there was little impact on dairy production through anticipated backward linkages. Dairy Development in Pakistan

8 0% 5%

6 5 4 Axis Title 3

pakistan china india

2 1 0

2009

2010

2011

2012

Axis Title %

government inter face milk is necessity for every one it is an important part of our food the people who use the milk in packet do not about the packing and other thing which use it is the responsibility of the government to check every things in the industry of the nestle the government check cleaness of milk and the place is clean the ingredient use in the milk is health to the people the packet is use saves the milk the milk has no germs and other harmful bacteria after checking all these things the government of Pakistan provide the licence to the compony Pakistan I a Islamic country the government see that the milk is provide to the people is halal and use the material in the milk is halal according to the Islamic rule The government also see that any other compony can make the milk in this name The government to see every because the people get healthy milk In these all cases the nestle has cover all the above condition and provide the people healthy milk nestle provide the people pure life

Nestle expenses

Transportation cost Nestle has facing the hgh transportation cost the nestle has get mik in the out of the city this the milk is rech in the factory and there furher process is taken and then is milk pack is send to the other area in these way a high cost of the transportation is facing by the compony which cause to increase the cost of the compony and the cost of the single units

Packing cost Nestle use the packet in which the milk is packed is beautiful and the hard The packet is made in this shape they protect the milk the packet is mad by three cover sheet that cover the milk . The packet is made by three cover that increase cost of the product And the milk is packed by a new technology that cover the milk

Advertisement cost Nestle has make a heavy advertisement to increase their sale level the nestle make a commmercial many outlet to show their product this process increase the sale level and also increase the cost of the compony it is an impotant part of business that increase the sale all the compony make the advertisement and increase their sale level

Material cost The nestle purchase the liquid milk by different dairy and then make them process to convert in milk pack and save them a number of day to purchase the milk is high cost increase the cost of nestle milk pack Because of all these cost the nestle has creat a value in the market and goodwill

Nestle product line

Ambient Dairy

Nestlé MILKPAK

only strengthen thebrand further but will also aid in the growth of the bottled water market. It makes “Pakistan’s Favorite Water” available in all major segments across the market. Home and Office Service was re-launched at the start of the year with the aim of providing better service to Nestlé Pure Life customers. New customers were also attracted by highlighting the improved and superior NESTLÉ PURE LIFE experience. management REPORT In order to delight customers, several promotions were offered throughout the season to provide them more value for money. Our product and communications strategy of keeping the ‘Consumer at heart’ helped us in further strengthening consumer loyalty and trust that has further improve profitability in 2010. .

Market equilibrium curve Demand and supply schedule Price

Quantity

Quantity

Shortage (–)

(dollars

demanded

supplied

or surplus (+)

per bar) (millions of bars per week)

0.50 1.00 1.50 2.00 2.50

22 15 10 7 5

price

0 6 10 13 15

–22 –9 0 +6 +10

Supply curve

e p demand curve

Q demanded

An Example The demand for milk is P = 800 - 2QD The supply of milk is P = 200 + 1QS. The price of a milk is expressed in cents, and the quantities are expressed in milk kg per day.To find the equilibrium price (P*) andequilibriumquantity (Q*), substitute Q* for QD and QS and P* for P. That is, P* = 800 - 2Q* P* = 200 + 1Q*. Now solve for Q*: 800 - 2Q* = 200 + 1Q* 600 = 3Q* Q* = 200.

And P* = 800 – 2[200] = 400. The equilibrium price is $4 a milk quantity is 200 milkkg per day.

kg,

and the equilibrium

Shortage and surplus

surplus .p3

Equilibrium point

p

p2

shortage

80

100

120

quantity demanded and supplied this diagrame show the three dimension

equilibrium in this point the demand of the milk pack is equal to the supplyof the milk pack in this point the buyer is agree to buy the nestle mik pack and seller is agree to sale the nestle milk pack and the market is equilibrium point no shortage no surplus

shortage in the above diagrame we can see that when the price fall the demand increase and the supply reduced and the shortage occure of the milk pack normally thus is done by in summer season when the production of liquid milk is reduced and the demand of the milk is high the people use the packet milk and the demand increase this is short period of time the nestle should not increase their production the cause of shortage

surplus in the above diagrame we can see that when the price rise the supply of the milk pack increase and the demand decrease this is done in the winter season when production is high and the demand is low in this situation the surplus production is in the market