C/E/147. Nestle and L'Oreal Joint Venture Case Study: Managerial Economics

The report has been aimed at producing economic analysis for two different cases of Nestle. The first case deals with the joint venture product with L'Oreal i.e. Innevo Firmness, which is aimed to improve skin tone of older people and has the competitive advantage based on new skin ingredient, Lycopene. The short term Total Cost (TC) function is given and a step by step calculation along with explanation for Fixed Cost (FC), Average Total Cost (ATC), Total Variable Cost (TVC), Average Variable Cost (AVC) and Marginal Cost (MC) has been provided. The dynamics of MC curve and AVC curve has also been explained in depth. The second case study deals with the purchasing decision of Prolan, a cat food brand by Nestle. The project appraisal techniques like After Tax Net Flow (NCF), Net Present Value (NPV) and Internal Rate of Return (IRR) have been used.