Localization Strategy

Topics: Innovation, Technological innovation system, Innovation system Pages: 5 (1802 words) Published: May 29, 2012
The Industry/strategy

The industry Nestle will be in is the sector of Food and Beverages, the industry that specializes in the conceptualization, the making of, and delivery of foods. This is the sector in which the major part of the revenue of Nestle is earned. This field reflects the sector in which they have the most knowledge and experience; here lies their core competence. Products sold by Nestle in this industry range from bottled water such as ‘Nestle Pure Life’ to chocolate ‘KitKat’ to frozen pizza’s ‘DiGiorno’ to healthcare nutrition such as ‘Boost’ and many more.(NESTLE MAIN SITE) Nestle main competitors are Kraft foods and Unilever, they posses rather similar characteristics and knowledge Nestle has.

The food and beverage industry has a lot of characteristics. It includes Regulation, which are the local to international rules and regulations by which firms such as Nestle can produce and sell food, including food quality and food safety. These are the institutions of this industry. In Maastricht and in general in the Netherlands guidelines on food quality and safety are given by the ‘’Nederlandse Voedsel-en Warenautoriteit’’. More characteristics are Education, Research and Development, which will be discussed more extensively later in the paper and will be done in cooperation with Maastricht University and AZM. Other characteristics are Financial Services (in combination with Abn Amro Bank), Manufacturing, Food processing, Marketing and Wholesale and Distribution. Nestle does not do all this by it self thereby saying that this industry is a network between organizations in the same region. Elaboration in these issues will follow later.(WIKIPEDIA)

Knowledge in this industry is characterized mainly by generic knowledge due to the expansion of IT, which affects the knowledge build-up and value creation. The manufacturing knowledge of Nestle and other companies in this industry becomes increasingly embodied in expert systems. The majority of firms make use of these systems, therefor the term generic knowledge. However expert teams within the firm provide complementary services, such as combination of ingredients, marketing and logistic. Knowledge flows primarily within the firm. It can be therefor said that, Nestle and other firm in this industry create value from combining different sources of knowledge, such as the generalist knowledge of engineers with the tacit knowledge of internal services and the specific knowledge of local tastes to tailor the products to the needs of the customers.(REFERENCE)

In terms of the Malerba and 
Orsenigo Schumpeterian patterns the structure of innovative activities of Nestle is reflected to be a Mark II. This technological mark is characterized by ‘creative accumulation’, meaning that new knowledge is build upon the old. Meaning that in the technology no radical innovations will occur that changes the product or processes so that the environment has to adjust for that. This also reflects the egalitarian ecologies assumption that no new GPT will be in place. The innovations are adjustment or changes to the already existing ones. This is in line with Schumpeter discussion on the relevance of industrial R&D laboratories, which do the technological innovation. Of course innovation is not a stand-alone process done solely by Nestle. External parties, like Maastricht University and AZM will influence the innovation and research that will take place. However the main focus in the egalitarian ecologies is in in-house production and partly on in-house R&D. With this ‘creative accumulation’ and the prevalence of large established firms like Nestle it self, caused by the in-house R&D, production and more, makes it hard for small new entrants to enter the market in this scenario and industry. The entry of new innovators and small firms is small due to the accumulated stock of knowledge large firms such as Nestle entail, also in combination with their competences in...
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