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Case 2, Nespresso 2016
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Case 2, Nespresso Grade 7/10
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Case assignment 2 – The Nespresso StoryAmsterdam Business School
University of Amsterdam
Monday the 16th of May 2016
, Introduction
In order to effectively analyze the case of the Nespresso story we are required to answer the following
prescribed questions:
A. What is Nespresso? What kind of innovation was it?
B. Review the history of Nespresso development and commercialization. What were the important turning
points? What were the barriers and gateways to innovation?
C. What was the senior management’s contribution to the innovation process? What was the top
management role in contribution to the innovation process?
D. What could explain Nestle decision to reach outside its large managerial cadre and hire Lang? How do
you assess him as a manager and innovator?
Company History
Nestlé acquired the rights to commercialize the technology behind the Nespresso system in 1974. The project
gained early support from Nestlé’s food service division, because they thought the product would be successful
in restaurants. In 1982 this strategy was abandoned in favor of the office coffee sector. In order to further
develop and commercialize the Nespresso system, a separate company was founded in 1986. This company was
a 100% affiliate of Nestlé. Nespresso was launched in Italy and Switzerland in 1986. The product was later
introduced in Japan due to its fast growing coffee markets. However, only half of the machines were sold by the
end of 1987. At that time, Nestlé decided to hire an external manager; Yannick Lang, to save Nespresso and
make it a success. Lang decided to shift to households instead of offices in the late 80s and to launch the
Nespresso club in order to better serve the customer. Under Lang’s management Nespresso broke even in 1995
and finally became one of the fastest growing business units under Nestlé’s control. The strategy changed
when Lang left the company and was replaced by Willem Pronk in 1997. Pronk built customer intimacy and
long term loyalty by segmenting the Nespresso Club database, personal contact from employees with heavy
users and improving customer services for broken coffee machines.
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