(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 & Youngs 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 Nestl

By now youll have realised that Nestl is a world of its own. It spans the
globe. But more importantly, Nestl employees come from all walks of life.
Once they join Nestl, they continue to expand their horizons. In keeping
with the world in which we all live, Nestl 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

Nestl. 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. Salahuddins 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 werent so expensive Scarcity guarantees that manyperhaps
mostof 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 costrises. Although each good is unique it has substitutesother
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 curvethe 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

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

10.0

10.0

10.0

43

10.0

10.0

20.0

45

10.0

10.0

30.0

47

10.0

10.0

40.0

50

20.0

20.0

60.0

52

20.0

20.0

80.0

55

10.0

10.0

90.0

60

10.0

10.0

100.0

10

100.0

100.0

Total

price

demand
Cumulative

Frequency
Valid

Percent

Valid Percent

price

Percent

12

10.0

10.0

10.0

13

10.0

10.0

20.0

14

20.0

20.0

40.0

15

20.0

20.0

60.0

16

10.0

10.0

70.0

17

10.0

10.0

80.0

18

10.0

10.0

90.0

19

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

-.990

.316

.082

.333

.408

.354

.304

.378

-.505

.408

-.013

.447

.140

.500

.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

Correlation

1.000

Significance (2-tailed)

df

Proximities
Case Processing Summary
Cases
Valid

Missing

Percent
10

100.0%

Regression

Total

Percent
0

.0%

Percent
10

100.0%

Model Summary

Model

R
.990a

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

306.178

6.222

.778

312.400

Sig.

393.657

.000a

a. Predictors: (Constant), price

b. Dependent Variable: demand

Coefficientsa
Standardized
Unstandardized Coefficients
Model
1

Std. Error

(Constant)

89.714

2.051

price

-2.635

.133

a. Dependent Variable: demand

Coefficients
Beta

-.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

6.7

6.7

6.7

25

6.7

6.7

13.3

28

6.7

6.7

20.0

30

6.7

6.7

26.7

35

6.7

6.7

33.3

39

6.7

6.7

40.0

40

6.7

6.7

46.7

42

6.7

6.7

53.3

45

6.7

6.7

60.0

49

6.7

6.7

66.7

50

6.7

6.7

73.3

52

6.7

6.7

80.0

53

6.7

6.7

86.7

55

6.7

6.7

93.3

60

6.7

6.7

100.0

15

100.0

100.0

Total

Supply
Cumulative
Frequency
Valid

Percent

Valid Percent

Percent

6.7

6.7

6.7

6.7

6.7

13.3

11

6.7

6.7

20.0

13

6.7

6.7

26.7

15

6.7

6.7

33.3

17

6.7

6.7

40.0

19

6.7

6.7

46.7

23

6.7

6.7

53.3

25

6.7

6.7

60.0

27

6.7

6.7

66.7

30

6.7

6.7

73.3

35

6.7

6.7

80.0

36

6.7

6.7

86.7

40

6.7

6.7

93.3

45

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

100.0%

Total

Percent
0

.0%

Percent
15

T-Test
Paired Samples Statistics
Mean
Pair 1

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**

.000

15

15

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

Proximities
Case Processing Summary
Cases
Valid
N

Missing

Percent
15

100.0%

Total

Percent
0

.0%

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

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

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

.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 companys 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
Nestl Model of organic growth of56% 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 todays 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

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

Nestl MILKPAK

only strengthen thebrand further but will also aid in the growth of the bottled
water market. It makes Pakistans 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 Nestl
Pure Life customers. New customers were also attracted by
highlighting the improved and superior NESTL 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

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