Business Environment and SWOT Analysis of Nestle

The assignment involves analyzing the impact of business environmental factors on an organization, using the PESTEL model to identify key factors such as political, social, technological, economic, and legal factors. Additionally, it includes a SWOT analysis of Nestle to identify strengths, weaknesses, opportunities, and threats. The report provides a detailed summary of the analysis, highlighting the importance of understanding business environmental factors for effective decision-making.

Business and Business
Environment

INTRODUCTION
Business is known as an organisation in which individual comes up with unique and
innovative ideas to operate different functional and operational activities. Main objective of them
is to maximise profit and income of firm by using different strategies and plans. All business
firms in an economy are surrounded by different environmental factors that directly impacts on
its organisational procedure. Business environment is a combination of two different elements as
internal and external (Fernando, 2011). These factors are directly affects on decision making
process and profitability of firm. For this management and manger of organisation requires to
make impactful strategy to reduce negative impact of these factors. This report is based on Nestle
which is a largest food and drink company. This organisation was founded in the year of 1866 by
Henri Nestle, Charles page and George page. Nestle basically deals in dairy products, chocolate,
coffee, ice cream and pet food. This report represent types and purpose of different organisations
and its legal structure, size and scope of these firms and interrelationship between different
functions of firm. At last it is determine positive and negative impact of macro environmental
factors, internal and external analysis of firm and how strength and weaknesses are interrelated
with external factors.
TASK 1
(Covered in PPT)
M1 How the structure, size and scope of different organisations link to the business objectives
Each and every organisation has different structure and size which is based on their
objectives and goals. Owner of this firms are manage their business activities properly on the
bases of their resources and funds (Hamilton and Webster, 2015). Through this they can easily
structured firm's size. All these procedures are based on their future objectives and goals which
are require to identify properly. These activities include employees analysis and management,
resources allocation and funds management to getting higher profitability and growth. Structure,
size and scope of different organisations are properly link to the business objectives and goals.
1

TASK 2
P3 Relationship between different organisational functions
In a business organisation different departments and employees are works to provide their
effective and quality services to achieve their future goals and objectives in effective manner.
Management of organisation analyse business activities and approaches to classify
responsibilities to them properly (Klapper, Lewin and Delgado, 2011). These roles are based on
skills and working capacity of employees. Nestle is a largest organisation which is provide
quality services in food or drink. This is basically deals in dairy products, chocolate, coffee, ice
cream and pet food. They are implement their operational and functional by different
departmental approaches as -
Sales and Marketing division of Nestle is works to provide their quality services to
customers on the bases of their requirement and need. Marketing division helps to introduce new
products and services in target market to maximise product sales and organisational revenue
effectively. Main objective of this division is to provide quality products and services of
organisation in several countries to build strong connection with target customers. This
department has direct link with the activities of research and development and human resource
department. HR department helps to appoint qualified candidates within organisation and
research and development department provides the function regarding assessment current trends.
Research and development department of Nestle is works to analyse several marketing
procedure to provide appropriate services to them. This division analyse customers demand and
their requirement for specific products. After this analysis, Nestle make appropriate and desirable
modification in their products and services (Osterwalder and Pigneur, 2010). This department
functioning has direct link with marketing operations. Information provided by such department
helps to grab required knowledge as per needs.
Production and manufacturing division is works to produce quality products in firm on
the bases of customers demand and their requirement. Through this they provide quality services
to their customers. Main objective of this department is to provide higher satisfaction to
customers through their appropriate desirable products. This department has link with marketing.
Marketing functions helps in assessment of different needs of customers which is used by
production department in future to produce goods.
2

Human resource division of Nestle is works to build effectiveness in several
organisational approaches. For this Human resource manager of firm play a most important role
to analyse employee's skills and capacity to enhance them through different training and
development procedure. They also conduct recruitment and selection process to hire new
candidate in firm. This department has direct link with all divisions of organisation as it helps in
recruitment of qualified candidates as per requirements.
Finance division is works to manage all statement and accounts of firm in appropriate
manner. For them it is require to manage all funds, reserves, investment and expenses to getting
higher growth and income in proper manner. This department prepares the budget for marketing
and production which is required to adhere by the employees while functioning their tasks. This
will provides the opportunity is to complete the tasks in cost efficient manner.
Organisational Structure
Function based: This is works to manage organisation's structure and functional
activities to getting higher business approaches (Scheer, 2012). In it, Nestle manage their
business activities through different departmental approaches as - Human resource, finance,
marketing and Production.
Product based: This structure is based on customer's demand and requirement for
specific product that requires to produce in proper manner. For Ex., Nestle provides their
effective and quality services in several countries through food and drink products.
Consumer based: In this procedure organisation analyse customer's demand and
requirement to make appropriate modification in their services. For this Nestle requires to use
innovative ideas and creative thoughts.
M2 Advantages and disadvantages of interrelationships between organisational functions
For a business organisation, it is required to work through different functional approaches
that helps to achieve future targets and goals in effective manner. In this procedure management
and manager requires to analyse working capacity and approaches of different employees to
distribute them several responsibilities and tasks as well.
Advantage -
 Interrelationship between organisational functions helps to maximise productivity and
product valuation in target market.
Disadvantages -
3

 It create lots of dependency on each division of firm.
 It takes maximum time to complete a task.
D1 Critical analysis of complexities and interrelationships of different types of business
According to Shigang, (2010) different business organisations are work to provide their
effective business approaches through their own contribution. Lots of dependency on each
functional approach create complexity in firm. These approaches maximise issues and problems
in firm. All different business organisations create their own motive and objectives in firm which
is helps to analyse their own working procedure. Through this they implement working
approaches in firm for maximise productivity and profitability of organisation. In this process
manager of organisation requires to analyse issues to resolve them in appropriate manner.
TASK 3
P4 Positive and negative impact of macro environmental factors
For a business organisation, it is required to analyse impact of macro environmental
factors on their business procedure. In a economy number of companies are running to provide
their effective and quality services to target customers (Aterido, Hallward-Driemeier and Pagés,
2015). Nestle also a largest organisation that provide their effective services in several countries.
For the it is required to analyse Positive and negative impact of macro environmental factors on
their business process as -
Political and legal factors – For a business organisation, it is require to implement legality and
political views to getting effectiveness in their firm.
 Positive impact – These are helps to create legality in firm.
 Negative impacts- An organisation requires to implement them to getting higher business
advantages easily.
Economic and social factors - Main motive of an organisations is to provide quality services
and higher satisfaction to their target customers. For this they make proper analysis on each and
every aspect of market to grabbing several opportunities easily.
 Positive impact – These factors helps to maximise firm's sales and profitability as well.
 Negative impacts – Inappropriate implementation of market procedure reduce image and
goodwill (Carroll and Shabana, 2010.).
4

Technological factors - The advertising techniques which are used by the organisation is high in
cost which increase the budget of market department has impact on their cost of product and
reduces their profit margin. So for this firm needs to use advance technological factors and
innovative ideas in their firm.
 Positive impact – This is helps to maximise productivity and profitability of firm.
 Negative impacts - Obsolete techniques reduce the quality of firm's foods and services.
M3 PESTLE model to support a detailed analysis of the macro environment
A business organisation always surrounded by different environmental factors that
impacts on their operational activities. These environmental factors are classify in two different
elements as internal and external. Internal factors are controllable while as external factors are
beyond the control. For this management and manger of firm require to analyse these factors
through PESTEL model to make effective strategy for them. Through this they can easily reduce
negative impact of these factors. This model helps to analyse each and every factors of external
environment.
D2 Critically evaluate the impacts of environmental factors have upon business objectives and
decision-making
As per the words of Bryman and Bell, (2015) business environment has direct impact on
business objectives and decision making approaches of firm. For a firm it is required to analyse
affect of these elements to make appropriate strategy. An organisation need to analyse political,
economic, environment and legal factors of external environment that can directly impact on
business process. These type of external factors directly impacts on decision making process of
firm.
TASK 4
P5 Conduct internal and external analysis
SWOT analysis is effective tool which is internally used by the management of
organisation to ascertain the information about their strengths, weaknesses, opportunities and
threats (Charter, 2017.). This tool is used by NESTLE to use their strength situations to grab the
future opportunities to improve their profitability and achievement of the targets within
stipulated period of time. It helps the manager is to made different strategies which assist to
5

overcome from weaknesses. This will provides the opportunity is to build the organisation
structure more strong and profound. The SWOT analysis of NESTLE is defined below:
Strengths
 NESTLE is multinational organisation which provides diversified products in different
produce lines and also having different markets.
 Due to providence of the large number of products related to the different market
segments enable the organisation to become financially strong
 It is observed that NESTLE has good relationship with other big brands in market such as
Coca-cola, Colgate, General Mills etc. (Chesbrough, 2010).
 NESTLE is considered as the most recognised brand which have good customer base.
They have the good power regarding retention of the customers for longer period of time.
 They have strong relationships with retailers which prevail in market which contributes in
timely delivery of products to end customer's.
Weaknesses
 Most of sales and revenue is depends upon some of the popular brands. Some changes in
the consumer behaviour regarding such products effects their business badly.
 Some of the brands of NESTLE are recognised as the old fashioned which impacts their
attraction power to new potential customers
 The sales of the grocery products are in the hands of some some retailers like Walmart,
Kroger and Tesco which allows them to get the sharp reduction in the process of their
products which has direct negative impact upon the sales and brand image of NESTLE.
Opportunities
 There is huge growth opportunities are available in online retail market through use of
digital platform like Amazon and removes the role of traditional retailers
 It is observed that there is high growth of the middle class segment in China and India
which positive for the business of NESTLE (Commander and Svejnar, 2011).
 Through development of the interest of the individuals of society in healthy products
helps timely the demand of many products of NESTLE like energy drink
 High changes are happen in the lifestyle such as working hours, more women workforce
etc. which enables the organisation is to effectively expand their business operations.
Threats
6

 Huge amount of competition is present in market in the form of Walmart, ALDI etc.
which has direct impact upon their customer base and market share.
 High pressure regarding cut prices through the large retailers like Walmart.
 The growth of Amazon on the digital platform also threat to the business of NESTLE
which reduces their attractiveness among the mind of customers (Craig and Campbell,
2012.).
P6 How strength and weaknesses are interrelated with external factors
Nestle is a largest food and drink company that provide their effective services in several
countries. For them, it is required to analyse their own strength and weaknesses that are
interrelated with external factors can be -
Political factors – For a business organisation, it is require to analyse political and legal
values of different countries before expanding their business structure in different country.
Nestle always working through legal terms of a country that provide effectiveness in business
organisation. These factors are always create strength for organisation to work in several
countries with a positive image (Dahan and et. al., 2010).
 Strength – By implementing all the legal factors and policies in business process, Nestle
can easily expand their structure in several countries.
 Weaknesses – Illegal and inappropriate working practices can be negative approach for
business organisation.
Social factors – These factors are based on customers requirement, changes in different
marketing aspect and trends that can affect organisational procedure. In this process Nestle
requires to analyse each marketing aspect properly to getting exact information related to
customer's requirement.
 Strength – For Nestle, it is require to make positive changes in their business activities in
order to getting higher benefits and desirable outcomes.
 Weaknesses – These factors can impact negatively of firm not create effectiveness in
business process. Changes and modifications are required on the bases of customer's
demand.
Technological factors – Nestle require to implement advance technology in their
organisational approaches to maximise productivity and profitability of firm. In this process they
7

always uses innovative ideas and creative thoughts to represent their products attractively in
front of target customers (Drucker, 2017).
 Strength – Implementation of advance technology assist in maximising performance of
employees by enhancing their interpersonal skills and knowledge criteria.
 Weaknesses – Advance technology always required skilled staff, proper timing and
funds. Ineffective resources impact negatively on business procedures.
M4 SWOT analysis and justify how they influence decision-making for the chosen organisation
For a business organisation, it is require to analyse internal strength and weaknesses that
influence in decision making process of firm. For internal analysis of firm, Nestle can use SWOT
analysis that represent four different factors of business as strength, weakness, opportunity and
threat (Trkman, 2010). Through this manager easily understand effectiveness of this model to
making appropriate strategy for this. These are helps to analyse opportunities to grab marketing
advantages while as make impactful plans to improve organisational weaknesses.
CONCLUSION
As per the above report it has been summarised that an organisation requires to analyse
impact of business environmental factors to make appropriate strategy for this. Each and every
business in a economy is establish with a specific objective that they require to achieve through
different approaches. For this they need to analyse size and scope of different firms and its
business procedure. An organisation requires to analyse relationship between different functions
and operational activities. After this firm requires to analyse impact of environmental factors that
can be internal and external. For this firm can use SWOT and PESTEL model.
8

9

10