Traces the development of the Nespresso System in a 100%-owned affiliate deliberately placed outside Nestle's main organizational structure. Highlights the team's successes and challenges in creating a new, small, niche segment in the mature coffee market and its prospects for growing the business from 150 million to 1 billion Swiss francs within the next decade. A radical departure from most Nestle lines of businesses targeted to the mass market, the Nespresso story offers provocative lessons about innovation in large, highly structured organizations.
1. Identify the macro- and micro-environmental factors that led Nestlé to pursue the productization of Nespresso. Which ones were most important, and why?
2. What role did Nestlé’s corporate culture play in the productization of Nespresso?
3. Who were the key players in the Nespresso productization, and which role did each one play?
4. Based on what you know from the case study, what role did Nestlé’s core competencies play in the productization of Nespresso?
5. What is meant by “innovation” and “renovation”, respectively, in the Nestlé context?
6. Which role did each of Nestlé’s corporate functions play in the Nespresso productization?
7. Identify the critical success factors in the productization of Nespresso.
8. Why do you think Nespresso was first launched in Italy?
9. Why did Nestlé management keep an “arm’s length” relationship with Nespresso and bring in Yannick Lang, an outsider, to manage it? What does this say about Nestlé’s ability to innovate?
10. Compare Nespresso’s initial “stealth marketing” (word-of-mouth) strategy with its current use of George Clooney as “poster boy” for the product.
11. Do you think that Nespresso would have been as successful without Nestlé as a corporate parent? Justify your answer.
12. What are the main strategic challenges currently facing Nespresso?
13. Do a “5 forces” analysis of Nespresso. Which opportunities do you see for potential competitors, and why?