Nestle's Business Environment and Social Responsibility

This assignment examines the impact of the business environment on Nestle, focusing on their environmental policies and social responsibility initiatives. It explores topics such as intellectual property rights, climate change mitigation, sustainable fisheries practices, taxation policies, and social inclusion efforts within the European Union framework. The analysis considers how Nestle's responsible practices contribute to its image as a socially conscious organization.

Business
Environment
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Table of content
Introduction...........................................................................................................................................2
TASK 1....................................................................................................................................................3
1.1 Identify the purpose of different types of organizations.......................................................3
1.2 Describe the extent to which an organization meets the objectives of different stakeholders.......5
1.3 Explain the responsibilities of an organization and strategies employed to meet them.................6
LO2Understand the nature of the national environment in which business operate ...........................7
2.1 Explain how economic systems attempt to allocate resources effectively......................................7
2.2 Assess the impact of fiscal and monetary policy on business organizations and their activities.....9
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a
selected organization...........................................................................................................................10
LO3 Understand the behaviour of organizations in their market environment ..................................11
3.1 Explain how market structures determine the pricing and output decisions of businesses..........11
3.2 Illustrate the way in which market forces shape organizational responses using a range of
examples..............................................................................................................................................12
3.3 Judge how the business and cultural environments shape the behavior of a selected organization
.............................................................................................................................................................13
LO4 Assessing the significance of the global factors that shape national business activities...............15
4.1 Discuss the significance of international trade to UK business organizations................................15
4.2 Analyze the impact of global factors on UK business organizations..............................................16
4.3 Evaluate the impact of policies of the European Union on UK business organizations.......17
Conclusion...........................................................................................................................................18
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Introduction
Proper use of the resources and the formation of the policies will depend on how
efficiently the managers of the organisation can utilise the environment in its favour. The
assignment aims to describe the purpose and aim of Nestle and the process in which it
designs its organisational activities keeping in mind various global factors that affect it. The
assignment aims to analyse ho then organisation can use the different factors in enhancing the
productivity and the satisfaction of the customers.
Figure 1: Company Logo
(Source: nestle.co.uk, 2016)
TASK 1
1.1 Identify the purpose of different types of organizations
Different organizations have different purposes that depend on the type of customers
they cater. The private sector organizations as opined by Schjoedt et al. (2013, p.10) are
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mostly profit oriented and owned by individuals. The purpose of the private organization is
profit maximization and enhancement of the sales.
The private sector organisations are privately owned and impact the growth of the
economy directly with its activities. On the other hand, the purpose of the voluntary
organizations is to provide services to the customers without claiming any financial benefits
in return.
Public sector organization:- The public organization has the purposes that are in
between the above mentioned two. The public-sector organization is aimed to provide the
services to the customers that may benefit the society but at the same time has some financial
responsibilities for the well-being of the organization.
In public sector organization, government interferes for business operations. For
example; by preparing and providing policies for production of goods and other activities.
Therefore, it is helpful for social welfare and contributing in country's growth. However,
public sector entities of UK such as Tesco, Sainsbury work for retail sector and provides
groceries to million customers.
Private sector entities:- Furthermore, Rosemann and vom Brocke (2015, p.112)
stated that the ownership of the organization determines the purposes of the organization. The
private sector organizations that are owned by single individuals are generally devoted only
in making profits. The owner is the only one responsible thus makes all the important
decisions for the organizations. Home Depot, and Johnson & Johnson are some of the
examples of private sector organisations.
The main purpose of private sector organization to increase profitability at maximum
level. For these entities, owner and individual of the company makes decisions related to
business operations. However, there is less government interference for operating business
activities. In addition to this, it has large scope and various branches for implementation of
entity. Iceland, River Iseland are private sector firms of UK that have different branches
worldwide.
Sole trader:- These are private individuals who run their business as per their own
mind. However, these are self employed employees who makes decisions by their own. In
this regard, there are some responsibilities of sole trader such as; to keeping records of
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entity's sales and expenses. It presents financial position of entity to create innovative ideas
for further business operations.
Voluntary sector organizations:- However, the voluntary organizations that can be
described as limited liability organization, where the shareholders and the owners take equal
responsibility of the profit and loss of the organization like the Oxfam and do-it are
organisations where the shareholders and the volunteers take equal part in organising the
organisational activities. The public-sector organisation works has the responsibility of
enhancing the quality of services provided to the society while gaining financial benefits. The
British Council and NHS are the example of public sector organisations.
Nestle:- It aims to sustain its good reputation in market through analysing business
environmental factors and preparing planning for further implementation. However, it is
useful for social welfare and awareness of society regarding products produced by
organization. In accordance to this, entity sets target to establishing good relations with
suppliers and other business entities. Including this, it is useful to create bright future as well
improving quality services for effectiveness of firm. Hence, increasing efficiency of entity
can be obtained through this process systematically.
Nestle Plc establishes good relations with suppliers and other business entities. It
leads to improve service qualities and increasing in demand for its products. In this regard,
for establishment of organization, it has to take approval from government that impacts on
legal legislations. Therefore, this entity has interactions with different sectors' organizations
for providing healthy and secured products. It affects productivity and profitability of entity.
1.2 Describe the extent to which an organization meets the objectives of different
stakeholders
The stakeholders of an organization are the one who are directly or indirectly
benefitted by the working of the organization. The stakeholders take part in the welfare of the
organisation and are Brickson (2013, p.230) described that the organization has to work
towards the maintenance of the welfare of the stakeholders to ensure their participation in the
organization. As far as Nestle is concerned the organization has several stakeholders who
have a varied number of interests in the organization.
Stake holders Needs of the stake holders
in the organisation
Effect of the satisfaction of
the stakeholders
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Customers The most important
stakeholder of the
organization is the customer
s who are to be
catered by providing higher
quality of level of services
and maintains t he
nutritional value.
The satisfaction of the
customer will decide the
future prosperity of the
organization. The more
satisfied customers will
enhance the brand image of
the organisation.
Thus, Nestle has taken
initiatives that will ensure a
proper evaluation of the
demands of the customers and
the increasing the sales.
Employees The most important need o
f the employees in the
organisation is to provide the
scope of growth and survival
within the organisation.
The employees of the
organization are directly
involved in meeting the
demands of the customers.
Thus an optimized
contribution of the
employees is essential to
meet the organizational
needs.
Nestle maintains an
environment of corporate
social responsibility that
creates a transparent and
honest environment of work
and increases the motivation
of the employees.
Suppliers Financial prosperity as
defined by Schnackenberg
and Tomlinson (2014, p.200)
is important for retention of
the suppliers who tend to
look out their financial gains
due to their association with
the organization.
Active participation of the
supplier will enhance the
profit percentage of the
organisation and allow the
organisation to be more
innovative in their product
line
Nestle has allowed its
shareholders to be a part of the
organisational process by
providing them a clear
knowledge of the working of
the organisation. The
suggestions of the suppliers
are taken in to account by the
organisation to develop a
more elaborate plan.
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1.3 Explain the responsibilities of an organization and strategies employed to meet them
Casalino (2014, p. 80) pointed out that an organization to gain the effective participation from
the employees as well as the stakeholders must follow certain responsibilities within the
organization.
Nestle has taken active step in maintaining the environmental and social
responsibility by ensuring that the raw materials used by them does not hamper the
environment. Furthermore, they practice a sustainable use of the raw materials in the
organization. Nestle manufactures a large number milk product items. These items are made
using process that are sustainable and does not harm the animals.
Moreover, the organization has also devised ways that will allow an effective and
proper packaging of the food items without using any harmful preservatives. The
organization is maintaining an environment report that describes the stand of the organization
in maintaining the environmental sustainability. Nestle has established a regulatory body
named Nestle environment management system that allows the organization to regularly
update the policies of the organization and maintain the sustainability. The organization has
strict policies to reduce the air pollution, waste water treatment flow in the farm and the clean
water bodies as well as excessive use of energies in the organisation.
Nestle being a multinational organisation has taken in to account various legal
regulations and rules that apply in case of the organisational process. The organisation has
taken additional measures in realising the pattern the organisation must follow while
collecting the raw materials, producing are well as marketing different products. Nestle has
used an extensive research policy that allows the organisation to point out the exact pattern
that the organisation must follow.
The change in the market changes the preferences of the customers. The organisation
to gain optimised preferences from the customers the organisation must produce customised
products and services. Nestle has designed the product line by using the policy of new
product producing capability.
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LO2Understand the nature of the national environment in which business operate
2.1 Explain how economic systems attempt to allocate resources effectively
The economic systems can be defined as the process of exchanging resources among
the countries and the organisation to derive the most preferable system to enhance the
productivity satisfaction of the customers as well as the profit off the organisation.
Allocation of the resources as defined by Chiang and Hauge (2013, p.1145) is the optimized
use of resources in the organization to enhance the production and sales operation thus
ultimately influencing the future of the organization. Proper allocation of the resources will
allow the organization to produce the right products targeting the customers. Following
factors can be seen as responsible to effect the allocation of the resources in Nestle
Free Enterprise - The organization working in a fr ee enterprise works within a least
amount of governmental interference in their workings. Thus, the policies formulated by the
organizations are based on the demands of the markets and wellbeing of the organization
only. Nestle working in a free enterprise will allocate the resources in a manner that will
enhance the profit quotient of the organization.
Mixed enterprise - An economic system as pointed out by Clever (2012, p.536) where
the market forces as well as the governmental policies work simultaneously is known as
mixed enterprise. If Nestle has to formulate its policies in this scenario then the
organisation has to allocate the resources keeping in mind the demands of both the
social responsibility as well as profit maximisation.
Traditional economy – The traditional economic system includes the process of
designing organisational policies by taking into considerations traditional customs, beliefs
and preferences of the customers. The traditional economy gives utmost importance to the
preferences of the customers and designs the organisational products and services
accordingly. The traditional economy designs the distribution channel as well as the raw
materials per the specific needs of the customers. Nestle working in a traditional economy
considers the specific demands of the customers in designing the organisational policies.
Planned economic system – this form of economy gives utmost importance to the
governmental plan in deciding the economic policies. The allocation of resources and use of
the specific resources are decided by the government. It can further be pointed out that a
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planned economy reduces the role of the private enterprises. The government has the sole
power to decide the developmental policy. The policy further includes the pricing and
distribution of the final goods produced within the economy. Nestle working in a planned
economy has a limited access to the raw material. It must make the organisational policies
based on the governmental policies.
2.2 Assess the impact of fiscal and monetary policy on business organizations and their
activities
The fiscal policies of the organization include the policies that are under taken by the
organization to maintain a fair stand regarding the governmental policies of taxations. The
organization must pay the taxes and duties to ensure that the organizational policies are
formulated maintain the laws of the land. Higher imposition of the fiscal policies implies that
the organization must pay a higher amount of taxes. The government in many instances has
taken the additional measured to decrease the taxes to allow a more active involvement of the
customers by enhancing their purchasing power.
On the other hand, the decreased rate of taxes will lead to a situation where the
customers will be left with little money in their hands. The organizations like nestle has direct
effect of the fiscal policies used implied by the governments as the change in the purchasing
power of the customer will led to a change in the profit margins of the organizations.
Furthermore, the taxes that the organization has to pay enhance the cost incurred by the
organization. This leads to a situation where the organization intends to enhance the cost of
the products. Nestle working in various countries must consider different governmental
policies and the effect the policies will have on the success of the organization. The fiscal
policy of the organization also includes the exchange rate as well, as the additional duties the
foreign organizations must pay. These polices change the process of the products sold by the
organization
On the other hand, the monetary policies include the policies that affect the amount of
money that is present in the environment and the possible impact that will have of the public
borrowings. The monetary policies allow the organization gain additional of capital from the
market and allow undertaking developmental policies. The impact of monetary policy on case
of nestle will have on the stability and the growth of the organization.
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The more amount nestle can gain from the market the more are the chances of the
organization gaining the ability to use more advanced technologies and resources. The
monetary policies also affect the prices of the products by regulating the amount of money
the organization can spend on the development of the products.
The effect of the use of the fiscal and the monetary policy in the organization can be
both positive and negative. Higher restriction of the purchasing power will have led to loss to
the organization on the other hand more purchasing power will cause inflation.
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the
activities of a selected organization
Merger and monopoly commission - the commission was set up with an aim to
maintain a fair structure at the time of merger. The commission points out the areas of
responsibility the organisation must perform in case of mergers and the effect that the merger
will have of the market structure. The commission also points out the scenarios in which the
merger will lead to a monopoly.
Maximum and minimum price legislations – the organisation decides the prices of the
products taking the equilibrium of the market in to consideration. The maximum price
restricts the prices to rise beyond a certain level thus reducing the chances on inflation. On
the other hand, the minimum price restricts the organisations to reduce the prices beyond a
specified level, ensuring the success of the organisation.
Competition Act 1998 – Among the legislative policies the competition act 1998
forms the basic one. The act claims to provide fair environment in the market that will also
ensure a fair competition among the organisations and ultimate benefit of the customers
(Legislation.gov.uk, 2016). Dunning (2015, p.130) Opined that any unfair means adopted by
the organisation s during the working is restricted by the competition act
Enterprise Act 2002– The organisations must be aware of their competitors and
realise their exact stand in the market. The policies of the organisation must be based on
proper evaluation of the steps the competing organisation is taking. The enterprise act 2002
allows the organisation to have a more constructive stand regarding the policies in the
organisation as well as those policies that may affect the market scenario (Legislation.gov.uk,
2016).
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Competition Commission – For an economy success full and prosperous it is
important for the organisations in the market to be involved in a fair and healthy competition.
The commission is formed with the aim to regulate the intra organisational factors that affect
the economy. The competition among the organisations must be fair and directed towards the
development of the society rather than a single organisation.
Office of Fair Trading – The treading policies of an organisation is based on the fair
policies that ensure a well-maintained trading practice that ensures the development of all.
The trading policy maintained in UK allows a transparent and clear stand for the organisation
involving in the trading practices.
Directorate General for Competition- Organisations involved in the competition must
maintain specific regulations while engaging in the competitions. De Bakker et al. (2013,
p.580) stated that all the organisations must keep a fair pattern and must not harm the other
organisations through any unfair means. Any breach of the directorate will be regarded as a
punishable offence for the organisation.
LO3 Understand the behaviour of organizations in their market environment
3.1 Explain how market structures determine the pricing and output decisions of
businesses
A market structure can be defined as a situation where the interrelation among the
different factors involved result in the determination of the prices of the products. The level
of uniqueness maintained by the organizations and most importantly the number of buyers
and the sellers in a specific structure points out what type of structure is present in the market.
Perfect Competition– The perfect market competition as defined by Dill and
Beerkens (2013, p.355) is a situation that will allow the buyers of the organisation a clearer
understanding of the products. Since all the products are same in this kind of market it will
allow the buyer a huge range of options and the seller must set the prices per the buyer. If
Nestle is a part of a perfect competition economy, then it will have taken the pricing
decisions along with the other organisations.
Monopoly– in a monopoly an organisation has the power to take all the decisions
regarding the price of the products. In a monopoly, the organisation has no competitors and
can decide all the factors that influence the demands of the products. Nestle being a part of
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the monopoly has the right to take all the important decisions that are related to the products
and the services of the organisation, making it the determinant of the price structure of the
economy.
Oligopoly - Eberlein (2014, p.15) opined that the structure that stands on same pricing
policy of all the organisations in the market and does not have huge differences in the
products. If Nestle becomes a part of an oligopoly market, then it must set the prices based on
the demands as well as the pricing of the other organisations.
Competitive Advantage–The more an organisation can gain competitive advantage
against the other organisations the more are the chances of the organisation being a preferred
one. The competitive advantage gives the organisation a scope to determine the prices and the
supply in the market.
Strategies adopted by firms –The strategies of the firm must in accordance of the
demands of the organisation and the demands of the customers. The pricing and the policy
strategies that the organisation must take influences the said organisation as well as the
market relation in the economy.
3.2 Illustrate the way in which market forces shape organizational responses using a
range of examples
Law of demand and law of supply – the law of demand states that the prices of the
products and the demands are inversely related. The more the demands of the products the
less will be the prices of goods, and vice versa. On the other hand, the law of supply states
that prices of the products are directly related to the supply. The rise in the price increases the
supply and the fall in the prices decreases the same. Nestle must keep a record of the changes
in the market scenarios and decide the production and the supply of the products accordingly.
Price Elasticity of Demand and Price Elasticity of Supply – The organisation must
predict the change in the demand as well as the supply of the organisation to ensures proper
prices of the of the products. The elasticity of demand and supply defines the relation of
demand and supply with the price allowing determining the equilibrium position where the
both the seller and the buyer will be benefitted.
Customer perceptions and actions– The perceptions of the customers as pointed out
by Geels (2014, p.270) regarding the organisation and the products is the most important
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determining factor that affects the sale of an organisation. Nestle has to always remain a
preferred organisation among the customers to gain the competitive advantage.
Moreover, the actions of the customers like refusing a particular product or appreciating one
has to be taken in to account.
Economies of scale outsourcing –The organisation like Nestle has a huge
customer base and has to manufacture a large number of products at the same time.
Thus, the organisation uses the policy of economic scale that allows the organisation to
reduce the cost per product. This further increase the chance of the organisation to enhance
the profit margin by reducing the risk associated with the manufacture of the products.
3.3 Judge how the business and cultural environments shape the behavior of a selected
organization
Business Environment
The business environment of Nestle that acts a determining factor on the behaviour of
the organisation are mentioned as followed (nestle.co.uk, 2016)
Political – the political scenario of every society is different. Thus, nestle working in
different environments must keep in mind the dominating political behaviour of the society
that will influence the marketing and the production decisions within the organisation.
Economic –economic stability of the society has an influencing effect on the decisions
of the organisation. apart from the financial stability nestle must take care of the capital
structure and other factors like inflation, employment rate, purchasing power of people before
forming any policy.
Social - the cultural factors determine the acceptance of the product in the society.
Nestle has to take care of the cultural needs and the psychological values of the society to
ensure that the customers can relate to them.
Technological –the contemporary world scenario has led to an increasing demand of a
more advanced form of technology that will result in a more advanced form of working and
meeting the customer demands. Nestle has used the best form of technology available in the
market to reach to the customers and provide them with desired results.
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Cultural environment – The changes in the market conditions of the organisations
changes the norms and beliefs of the customers. This result in the situation where some of the
products of the organisation are widely accepted and some are not. Thus, nestle being a
multinational organisation has to assess the exact demands of the customers and be flexible
enough to change the procedures. The organisation must keep a record of the norms of the
customers that restricts the customers from consuming certain specific products.
Polycentrism – the geographical area with certain specific political view and
preferences that influences the preferences of the products is known as polycentrism. The
organisation working in the area needs to take care of the mentality and the choices that result
from the differences in the political.
Ethnocentrism – the preferences of the customers depends on the existing culture and
the norm of the society. The organisational products should be based on the cultural values of
the society.
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LO4 Assessing the significance of the global factors that shape national business
activities.
4.1 Discuss the significance of international trade to UK business organizations
International trade – It is an approach to operate business activities within countries.
In this regard, production and distribution of goods and services is activated from nation to
nation. It is useful for economic and other sectors' growth of country. For example; by
increasing in selling of products as export increases export of items. However, international
trade is beneficial for expansion of entity and enhancing profit earning capability. Including
this, it affects on employment and tourism sector of the nation related to establishing good
relations with other countries. Therefore, trade within countries is helpful proper allocation of
resources and fund efficiently.
The concept deals with the process of involving in trade relations with other
organisations and foreign countries. The organisation aim to enhances in the international
trade must take all the concerning factors in to consideration that includes different political,
Economic and social factors of the foreign countries. The concept can also be defined as the
process of exchanging resources and expertise beyond the boundaries of the countries.
Comparative cost theories:- It is basis of international trade under which two countries
operate business activities through barter system. In this process, similar commodities are get
exchanged for international trade.
Absolute cost theories:- It is one of the basic tool for competitive advantage related to
increasing efficiency and sustaining its position in market for long time period. Further, on
the basis of this tool, different ideas are created for exchange of goods and services within
countries worldwide.
World Trade Organization - The WTO is an organisation that regulates the trade
relations among different countries (Wto.org.2016). Nestle being a multinational organisation
must work in various countries and must maintain the regulations set by WTO.
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Emerging markets (BRICS economies) - BRICS countries provide a scope to Nestle to
extend their business. The countries that are part of BRICS are all developing countries and
are proving to be a great market for Nestle to develop and promote their products.
EU membership - As the member of EU, UK must follow several regulations that
influence the organizations that work within their territory. But due to the present stand of
Britain of exiting the union the regulations have changed vastly. At the present scenario
nestle must change its policies to meet the present challenges
Significance of international trade:- Operating business activities from country to
other nation is useful under different aspects. However, it is useful for increasing profit
earning capacity of firm. It is helpful for allocating resources and fund adequately. In addition
to this, international trade is beneficial for economic growth of country and creating balance
among all nations' development. In accordance to this, international trade is significant for
increasing efficiency of firm and nation as well in effective manner.
Limitations of international trade:- As per critical evaluation, it is analysed that trading
among countries is very expensive. Including this, it is required a lot of time for operating
business. In this regard, communication between two parties is obtained indirectly therefore
risk occurs for communication gap and damage of products. Thus, these are implications of
international trade that affects on business position to sustain its reputation for long term
period.
4.2 Analyze the impact of global factors on UK business organizations
Workforce skills
Workforce skills – different employees coming from different background have
different expertise. A multinational organisation like Nestle must use the skills of the
employees in the most effective manner to cater the right customers in the correct
manner.
Exchange Rates – organisations that work within various countries, has to ensure that
the prices of the products are set by keeping in mind the currency values of different
countries. The changing exchange rates are a determining factor that allows the Nestle to
gain or loss from the transactions. Thus, it is important for them to maintain the value
accordingly.
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Tariffs– all the multinational organisations has to pay tariffs on the products that are
imported by them. Thus pricing of the products of Nestle must done keeping the profit
percentage of the organisation as well as maintaining a price limit that is within the
range of the customers.
4.3 Evaluate the impact of policies of the European Union on UK business organizations
common agricultural policy (cap) – the cap policy was formed to ensure the well fare of the
farmers that provide raw materials to the big organisations (ec.europa.eu.2016). nestle sells
several products that are manufactured with the direct help from the farmers. thus, the
organisation has to provide some basic benefits to the farmers.
intellectual property rights – every organisation must be given a scope to enhance their
creativity while maintaining the intellectual rights. the organisations must be secured of any
illegal act regarding their products. nestle has maintained that their products are properly
copyrighted and trademarked.
climate change - nestle has always played a responsible position in the environment by
maintaining a sustainable environment in the world. as an organisation of uk it has actively
maintained the regulations that are set by the kyoto protocol or the rio earth summit.
the common fisheries policy (cpf) – the policy of cpf have been designed to ensure that
sustainability in the aqua marine life is maintained by the organisations. the policy is based
on the realisation of the organisation that the marine resources though are available in large
quantities are finite. the organisations thus in their approach has to ensure that the fishery
industry is able to provide healthy food to the citizens at the same time are able to ensure the
sustainability. the policy is also developed to ensure that all the fishing fleets are given equal
opportunity to access the waters of eu (fisheries - european commission, 2017).
taxation policies – eu plays an indirect role in the taxation policies. however, the policies of
eu are designed to ensure the achievement of the long-term goals of the society. the policy
oversee that the policies positively affects the employment a free flow of capital and goods
between various countries. the policies also ensure a fair and transparent organisational
process. the aim of the policy is to restrict a particular country to gain undue advantage over
other countries. the application of equal taxes on all the organisations and restriction on
discrimination based on customers, workers or business is also the responsibility of the
policies (european union website, the official eu website - european commission, 2017).
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eu social inclusion policy- the aim of the policy is to ensure proper employment policies and
enhancement of social welfare. the policy is an initiative on the part of eu to alleviate the
living condition of the citizen by reduction of poverty (welfare.ie, 2017).
however, it must pointed out here that in the light of present scenario of britain`s exit from
the european union the role of the policies set by the union may not be applicable to the
organisations of uk.
Conclusion
The aim of the assignment was to describe how the business environment of the
organisation affects the working of the organisation. The more the organisation is responsible
towards the environmental factors the more they can maintain the stand of a socially
responsible organisation. Nestle has tried to utilise the resources and the factors that influence
the resources in formulating their policies.
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