Understanding the Business Environment

This assignment requires students to delve into the complexities of the modern business environment. It asks them to examine various internal and external factors that influence business operations, including legal frameworks, economic conditions, social trends, and technological advancements. Students are expected to demonstrate a comprehensive understanding of these factors and their impact on businesses at both local and global levels.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Identify the purposes of different types of organisation.......................................................1
1.2 Describe how an organisation is able to meets the objectives of different stakeholders......2
1.3 Explain the responsibilities of an organisation and their strategies......................................2
TASK 2............................................................................................................................................3
2.1 Explain how economic systems attempt to allocate resources effectively............................3
2.2 Impact of fiscal and monetary policy on business organisations..........................................4
2.3 Impact of competition policy and other regulatory mechanisms..........................................4
TASK3.............................................................................................................................................5
3.1 How market structure will determine the pricing and output decision of Nestle..................5
3.2 Way in which market forces can shape Nestle organisational responses.............................6
3.3 Business and cultural environments shape the behaviour of Nestle.....................................6
TASK 4............................................................................................................................................7
4.1 Significance of international trade........................................................................................7
4.2 Impact of global factors on business.....................................................................................7
4.3 Impact of policies on EU.......................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In the industry, every company have to perform their operations which helps in attaining
the targets. There are many factors which affect business activities of the firm. Some internal as
well as external factors which includes employees, owners, competitors etc. affect the functions
of the company. Business environment is dynamic in nature so employees of the enterprise will
not be able to predict the outcomes for future (Al-Debei and Avison, 2010). By continuous
interaction with environment staff members can attain the benefits in high competition. The
present assignment is based on Nestle Company Ltd which provide food to their customers. The
employees of Nestle focused on their business operations so that they can improve their growth.
The below mentioned study is based on the business environment which explain purpose and
nature of the companies. Further, it describe behaviour of the firm and their strategies that they
followed in market. Moreover, some of the global factors are explained in detail which may
affect the performance of the business enterprise (Aterido, Hallward-Driemeier and Pagés,
2011).
TASK 1
1.1 Identify the purposes of different types of organisation
There are different types of organisations which helps in performing their operations in
the environment so that they can fulfil the need of the customers and objectives of these are
different. Some of these organizations are:
Public sector: These kinds of organizations are performed by the government which
provide better services to the citizens of country (Aula, 2010). The main aim of these firms is to
increase the welfare of public and have to use resources for attain benefits of the public. Nestle is
a public company.
Private sector: These types of firms are run by individuals which helps in earning
maximum profits and enhance the growth in the market. Partnership, sole proprietorship and
franchises are some examples of the private sector. In sole proprietorship, an individual person
start business and manage their operations. In case of partnership, two or more people start
company and in that every person have equal rights over a asset of enterprise. The purpose of
these types of enterprises are to increase the profits, sales and market share (Bill Pasmore PhD
and CMC, 2010).
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Voluntary sector: This type of organization run by many people. The motive of these
firms are to increase the wealth of society. Some of the examples of voluntary sector
organizations are charity, social enterprises and trade union.
1.2 Describe how an organisation is able to meets the objectives of different stakeholders
There are different kinds of stakeholders who are associated with Nestle Company Ltd.
These stakeholders having a power so that they can influence performance of the firm and get
affected from operations of business (Blanchard, Tolbert and Mencken, 2011). All stakeholders
have different objectives and it is the responsibility of the firm to fulfil their needs. Some of the
stakeholders are:
 Employees are the one who help the firm in order to achieve the objectives of Nestle
Company Ltd. They are responsible for the profitability of the firm and their growth in
the market (Boons and Lüdeke-Freund, 2013).
 Customers are an important factor of the business organization. The manager of Nestle
Company Ltd has to make strategies and promotional activities so that they will be able
to create a strong base of the consumers.
 Government is responsible for the taxation, policies, acts so that they can develop welfare
of the society (Cantwell, Dunning and Lundan, 2010). For example, Nestle Company Ltd
have to follow these rules and regulations that are made by state government which assist
in creating healthy and safe environment within enterprise.
 Investors are risk oriented who invest in Nestle so that they can gain high rate of return.
Along with this it helps in increasing the profitability and productivity (Carroll and
Shabana, 2010).
1.3 Explain the responsibilities of an organisation and their strategies
Nestle have to perform some strategies as well as responsibilities so that objectives can
be accomplished in an efficient manner. Some responsibilities are:
Health and safety of workers: Nestle Company Ltd. have to follow appropriate rules as
well as regulations so that they can ensure the health and safety of employees in the firm. Some
legislative laws are employment act, equity act, health and safety act. By using these manager
can provide satisfaction to employees (Chowand et. al., 2011).
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Environmental concern: It is a responsibility of manager that they have to follow some
laws related to environment so that they can save environment from harmful factors like carbon
footprints and air pollution.
Stakeholders interest: Different stakeholders have distinct needs so it is a duty of
manager to identify their demands by taking feedback so that proper satisfaction can be provided
to them (Commander and Svejnar, 2011).
Business responsibility: The manager of Nestle Company Ltd has to perform their roles
in the firm which assist in increasing their revenues and growth in market. When they are
attaining goals it will helps in building brand image in market.
Nestle Company Ltd can use franchising concept so that they can expand the business at
international level. In this concept, they can give franchisee to their owner so that they can offer
their services in another country (Czinkota and et. al., 2010).
TASK 2
2.1 Explain how economic systems attempt to allocate resources effectively
There are different economic system in the distinct countries and they are implemented
on the basis of their demand. The purpose of these economic activities is to produce goods and
services. Along with this it helps in fulfilling the needs of consumers through quality services.
Economic system are:
Free market economy – In this economy, role of government is low in doing the business
activities in organisation. In this consumers can determine the price of products and services.
Firm can export and import goods and services into other countries. Decision are made by the
company members so that satisfaction level can increased and by that they can attain maximum
revenue (De Jonge, 2011).
Centrally planned economy – In this government make correct decision s by distributing the
appropriate resources. Staff members of the company have to follow appropriate laws which
assist in allocating proper resources. For example, Cuba follow this kind of system in their
country
Mixed economy – This system is combination of free market as well as centrally planned
economy. This system helps in fulfilling the needs and wants of consumers. Public sector
organisation run by the regulatory bodies which helps in improving the welfare of society.
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Private sector organizations can make correct decisions by using the laws which are prepared by
ministry for the benefit of companies. Nestle is using mixed economy system (Fernando, 2011).
2.2 Impact of fiscal and monetary policy on business organisations
Fiscal Policy – It determine by regulatory bodies so they will be able to identify the
spending level as well as tax rates of the people. On the basis of this they can monitor and
analyse the economy of a particular country. When ministry of UK increase the level of tax rate
then price of goods as well as services also increased and vice-versa. For example, Product price
of Nestle increased then it helps in generating more revenues than its competitors (Halbert and
Ingulli, 2011).
Monetary Policy – This policy is controlled by central government and by using this
policy staff members of Nestle can make correct decisions which are related to money supply as
well as interest rates. This policy affect the business operations of the company. When interest
rate is low then income level of consumers increased and by that Nestle will able to increase
their profits. When income level increased then customers spend more on products which helps
in fulfilling the demands of consumer. When the interest rate is high then it affect the operations
of Nestle and by that sales as well as profits also decreased (Iskanius Page, and
Anbuudayasankar, 2010).
2.3 Impact of competition policy and other regulatory mechanisms
Every entity have to use appropriate competition policy which helps in sustaining the
competition advantage among the rivalries. By using these competition policies, Nestle can
reduce the cost of product and develop the quality of merchandise so that they can get valuable
services. Different competition policies are:
Competition Act 1998 – It is a current major source of competition law in UK. It provides the
updated framework for identifying and dealing with restrictive business practices and dominant
market position. This law helps in increasing market efficiencies (Klapper, Lewin and Delgado,
2011).
Enterprise Act 2002 – This act is used by Nestle as it helps in attaining the targets. It assist in
doing the major changes by doing the merger and also changed law by governing insolvency.
The Act had five major competition policy objectives; Make all competition decisions through
independent bodies, root out forms of anti-competitive behaviour, create a strong deterrent
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effect, to redress injured parties in distortions of competition and raise the profile of competition
policy in the UK.
There are some other mechanisms which affect the activities of business. They are:
Office of fair trading: This is based on Consumer protection and competition in law. This law
prohibit all unfair practices that are conducted by the organization (Olawale and Garwe, 2010).
Standard Consumer services: Nestle have to provide qualitative services to consumers and all
should based on accuracy.
Environmental policies: This policy is related to issues of environment (Business environment,
2017). Employees have to follow all rules and regulations which are made by government.
TASK3
3.1 How market structure will determine the pricing and output decision of Nestle
Market structure affects each and every operation of firm and thus it is essential for firm
to maintain its operations so that and carry out effective operations in regard to determine the
pricing and output decisions within business (Chadee and Roxas, 2013). However, in regard to
carry out successful operations, firm requires to assess its market structure so that they can carry
out effective functioning. For instance, when the business carries out perfect competition it
means that there are several buyers and sellers in regard to carry out the functions effectively.
Also, the pricing decisions are made considering different outcomes related to business
operations. Therefore, companies operating in such market requires considering the competitors
before making any decisions.
Furthermore, it also provides assistance to customers as they possess effective product
and service information and options from which they can choose. Therefore, it is essential for
Nestle to identify the needs and wants of customers in relation to maintaining its pricing and
output decisions (Upward and Jones, 2016). While, in the monopoly market there is only one
seller and buyers are large in quantity. Therefore, here companies made the decision regarding
pricing and output and customers need to accept it. However, Nestle does not fall under such
market structure as there are various competitors present selling similar products therefore, they
need to maintain its pricing and output decision to give tough competition to rivals.
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3.2 Way in which market forces can shape Nestle organisational responses
It is essential for businesses to identify its market forces in regard to shape the business
responses and ascertain demand and supply factors. Nestle aims to focus upon their operations
and understand the factors related to elasticity of demand and supply so that market conditions
can be identified (DeFusco, McLeavey and Anson, 2015). However, business needs to undertake
certain strategies that would help them to identify the demand and supply of products in market
and then influence customers towards firm. It is essential for all the businesses to adopt demand
and supply factors in order to assess pricing decisions and make effective results. For instance,
there are various factors that influence Nestle such as demand and supply, elasticity of demand
and supply, customer perceptions and pricing decisions etc. Hence, it is essential for company to
focus upon the demand and supply factors and fulfil the needs of consumers so that market share
and profitability can be raised.
However, demand and supply forces shape Nestle organisational responses in such a
manner that it is essential for firm to identify the needs of customers and then produce the same
in order to fulfil the needs of customers (Qian, Cao and Takeuchi, 2013). Thus, fulfilling such
demand would result in maintaining equilibrium position and attain desired results. Nestle aims
to provide the best services and product to its customers so that they can carry out business
operations effectively and efficiently. While, customer perception is another factor that affects
the market and therefore, it is essential for Nestle to assess the requirements of customers and
deliver the same quality products to customers.
3.3 Business and cultural environments shape the behaviour of Nestle
Business and culture factors affect the behaviour of businesses and therefore, it is
essential for firm to carry out such responses in regard to assess the market conditions. Nestle
management aims to undertake proper actions so that they can judge the social, economic,
political, technological, environmental and legal factors in order to manage the operations
properly (Akhavan and Salehi, 2013). However, it is essential for business to undertake different
factors such as innovation, technology, research and development so that it would help in
carrying out the business activities. In order to shape Nestle's behaviour both business and
environment are considered as crucial factors so that productivity of firm could be improved.
Nestle management need to identify its PESTEL factors which would help them to
analyse the environmental audit and then help firm to carry out effective performance so that
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customer satisfaction can be attained. However, if they are not able to innovate their products ti
would also impact upon the performance of firm and therefore, it is essential for management of
Nestle to use innovative technology so that product quality could be improved and thus raise the
performance of firm in market (Blodgett, Hoitash and Markelevich, 2014). There are several
competitors available in market therefore firm needs to identify their strategy and then formulate
specific technique so that products and services could be raised effectively and efficiently. Thus,
firm aims to maintain its business and cultural environment so that they can improve its
productivity in market.
TASK 4
4.1 Significance of international trade
International trade is considered as the exchange of products or services across national
boundaries. However, it plays a crucial role within business and therefore, it needs to be adopted
by organization for expanding their operations in foreign nationals. International trade provides
benefits to Nestle in several forms such as they can make trade relations with different BRIC
nations such as Brazil, Russia, India and China in order to import raw material or expert their
products (Forsgren and Johanson, 2014). Thus, it helps in expanding the business operations in
international market help firm to attain desired results. Nestle is a multinational company and
thus firm aims to operate its businesses efficiently.
Company is also supported by WTO (World Trade Organization) in which developed
nations are providing subsidies to international firms as Nestle operates at global level.
Therefore, it is beneficial for firm to bring innovation within business so that competitive
advantage can be attained (Fleisher and Bensoussan, 2015). Therefore, it is essential for
developing countries to provide benefit to organizations in the form that firm can enhance its
market share through entering worldwide market. Thus, it helps Nestle to identify market
competitiveness and thus produce several products in order to satisfy the needs of customers.
4.2 Impact of global factors on business
It involves several global factors that affects the operations of firm in market and
therefore, it is essential for business to improve its competition and raise the performance. Nestle
faces tough competition from global factors such as technology, innovation and thus influences
the operations of Nestle in worldwide market. Company also focuses upon establishing different
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branches so that profitability could be enhanced. Further, technology factor needs to be updated
from time to time so that it helps firm to compete in international market. Nestle produces
innovative products or services in market and maintains balance so that global factors does not
impact upon business operations (Kuratko, Hornsby and Covin, 2014). It also identifies that there
are certain imbalance in the global factor and thus situation occur in which Nestle does not make
profits and therefore, employees need to adopt effective strategies so that they can satisfy the
needs of customers so that they can enhance their operations in worldwide market.
4.3 Impact of policies on EU
European Union policies impact upon the business rules and regulations as it is essential
for firm to undertake such policies in regard to accomplish the operations. Therefore, it is
essential for firm to monitor and control the actions in regard to strictly regulate the workplace
functions. Thus, Nestle needs to monitor and control the rules and regulations so that it helps in
evaluating the negative impact upon firm. It is essential for businesses to monitor the
performance and thus maintain the standards of firm so that operations could be carried out
effectively (Pham, Segers and Gijselaers, 2013). Nestle needs to undertake EU policies in its
operations otherwise it would impact upon firm's performance. While, if it does not follow the
objectives then it would impact upon the business operations than business could affect its
outcomes. Business need to manage its approaches and thus carry out effective workplace
environment in order to carry out effective working environment.
CONCLUSION
It can be concluded from the report that business environment needs to be maintained in
order to carry out the operations of firm in an effective and efficient manner. Nestle needs to
ascertain several global factors so that it impacts upon the operations of firm in internally market.
Both business and cultural environments are required to be carried out so that it helps in shaping
the behaviour of Nestle. Further, identifying the significance of international trade assists in
carrying out operations of firm in international market and expand its services.
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Online
Business environment. 2017. [online]. Available through:
<http://www.icaew.com/en/technical/business-resources/business-environment>.
[Accessed on 8th March 2017].
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