Due to saturation and increased competition in the European and North American markets, it makes sense for Nestle to focus its growth on emerging markets.

These markets have a huge potential, as they were closed to foreign companies because of their political system (China, Russia,...). Thus, there are only a few consumer industries in these markets and Nestle can benefit from first-mover advantages.

Nestle can earn greater return from its distinctive competencies, i.e. unique strengths that allow a company to achieve superior efficiency, quality, innovation and customer responsiveness. By applying those competencies, and the products they produce, to foreign markets where indigenous competitors lack similar competencies and products, Nestle can realize enormous returns.

Furthermore, Nestle can take advantage of location economies. Location economies arise from performing a value creation activity in the optimal location for that activity, anywhere in the world. The optimal location for a value creating activity lowers the costs of value creation therefore helping the company achieve a low-cost position. Mor

Furthermore, Nestle's overall strategic postures makes sense because the company has developed a consistent strategic direction and vision. The company has determined its strategic direction in advance and then implemented it on a global scale. Knowing that innovation and quality were key determinants, Nestle transferred these distinctive competencies to foreign markets.

Nestle is a decentralized organization where responsibility for operating decisions is delegated to local units, which have a high degree of autonomy concerning pricing, distribution, marketing, etc.

In Nigeria, for example, Nestle had to rethink its traditional distribution methods (operating a central warehouse), because the road system was poorly developed and there was much violence. Consequently, Nestle built a network of small warehouses around the country. This example shows, that the company was able to respond quickly to different local conditions. Another point supporting this strategy, is that Nestle should employ local staff. Local employees better know and understand the local culture and business procedures. This can result in a more efficient way to respond adequately to local demand conditions, therefore increasing the company's market share and profitability.

Nestle is one of the world's largest food company and has successfully grown and increased its market share since its foundation in 1866. This already indicates that Nestle's overall strategic posture makes sense given the markets and countries Nestle participates in.

Nestle is organized into seven different worldwide strategic business units (SBUs). These have responsibility for high-level strategic decisions and engage in overall strategic business development, including acquisitions and market entry strategy. Parallel to this structure, there is a regional organization that divides the world into five major geographical zones, such as Europe, North America, etc. The regional organizations are responsible for developing regional strategies and assist in the overall strategy development process. However, SBU nor regional manager get involved in local operating decisions.

Furthermore, the Research and Development department is rather important for the company. Nestle spends around 1 percent of its annual sales revenue on R&D and has 3,100 employees dedicated to this function. The R&D function comprises eighteen different groups, which operate in eleven countries all over the world.

Nevertheless, Nestle must evaluate basic entry decisions before entering an emergent market. The company has to make a choice among different foreign markets on the basis of their long-run profit potential. Nestle has to balance the benefits, costs, an

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