TABLE OF CONTENTS INTRODUCTION...........................................................................................................................1 TASK 1............................................................................................................................................1 P1 & P2........................................................................................................................................1 P3. Organizational chart to explain the functions for Nestle and the way it links to its objectives and structure................................................................................................................1 TASK 2............................................................................................................................................3 P4. Various macro environmental factors that impact on the business operations of Nestle through pestle analysis.................................................................................................................3 P5. Conducting internal and external analysis for organization to identify strengths and weaknesses with explaining how they influence the decision-making process...........................4 P6. Explaining the interrelationship of SWOT analysis with the external macro factors...........5 CONCLUSION................................................................................................................................6 REFERENCES................................................................................................................................7
LIST OF FIGURES Figure 1: Organizational chart of Nestle.........................................................................................2
INTRODUCTION Business environment refers to the combination of all internal as well as external factors thataffecttheoperationalsituationof any company. These are inclusiveofemployees, competitors, rival firms, governmental bodies, laws etc. They may have a positive or negative impact on working of company and must be thoroughly analyzed (Gornall, 2015). The present study has thus given emphasis on existing business environment of Nestle so as to assess the macro environmental factors that impact its operations followed by SWOT analysis. Focus will also be given on how SWOT affects decision making undertaken by firm. TASK 1 P1 & P2 Covered in PPT P3. Organizational chart to explain the functions for Nestle and the way it links to its objectives and structure 1
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Figure1: Organizational chart of Nestle (Source:Davis and et.al.,2018) As per the above organizational chart, there is an existence of many functions in company. These are inclusive of finance, production, research and development, marketing as well as human resource. Other than this, there is also a use of matrix organizational structure by Nestle so as to carry out its organizational activities. The structure has assisted a lot in development of functional departments within organization. For example, HR team of Nestle is there to appoint dedicated employees in various work areas such as operations, marketing, finance as well as sales (Davis and et.al., 2018). The matrix structure thus assists Hr. team in maintaining a good work related communication with other department who are in need of employees. The structure not only helps in top down communication but also one that occurs between various departments. The Hr. staff can communicate with senior members as well as managers about job requirement in various departments. As the structure favors occurrence of 2
communication on a daily basis hencefunctional and project goals such as recruiting staff, carrying out induction sessions, maintaining salary records etc. can be attained. Then there is also a presence ofresearch and development department which carries out R and D activities for the company so as to createtrustworthy products to be consumed by consumers. It further focuses on developing packaging and equipment for company. This is made possible by taking help of scientists, engineers, nutritionists, food technologist who work on various areas. Matrix structure within Nestle thus aids in boosting up overall team working in department (Wood, 2018). The structure helps to increase interaction between various members of R and D department thereby fostering a sense of team work as well as cooperation. There is a good sharing of information by employees followed by utilization of skill set so as to complete the project in hand. Then comes marketing department which focuses on area of brand management and enhancing overall brand value of company not just in UK but all around world. The employees of this department make sure that the company brand is promoted as a trust worthy one so as to lureconsumersinbestpossiblemanner.Matrixstructureinthisrespectdoesworkof empowering employees so that they can work with increased sense of autonomy. This is as marketing department can work well only when there is a generation of unique ideas for advertising and promotion (Ashurst, 2016). The structure further favors in maximum utilization of skill set that is possessed by employees. It does this by not only making employees come out of there comfort zone but also manage those projects that are in need of a specific skill set. They can thus focus on what can be done best by them. Overall it can be said that matrixstructure makes sure that the varied functions present in organizations are able to adapt themselves as per need of changing world. It is only on account of the matrix function that firm is able to retain above mentioned functions. TASK 2 P4. Various macro environmental factors that impact on the business operations of Nestle through pestle analysis There has been a usage of PESTLE analysis, so as to assess how macro environmental factors put an impact on overall business operationsofcompany. The impacts can however be in a positive or negative matter which has been discussed in detail in sections given below. With respect to political aspect, it has been found that UK has a presence of quite stable government 3
and policies which is most likely to be positive for overall working of company. But brexit crisis may put an impact on its strategies formulated for future (Nixon amd et.al., 2015). This is as Nestle sells product that are somewhat costly hence consumers may not prefer to use its services which may led to decrease in sales. In the same lines, company also imports coffee beans from Brazil hence UK must maintain good relations with nation. The present relations seem to be good enough but future is not known. Then comes theEconomic factor where unemployment is on a rise in UK hence an overall decrease has also been observed in wages given by companies. This may led to a negative impact on recruitment of the company if Nestle officials reduce wages of employees (Graham and Potter, 2015). On a positive front, social factors are favoring overall growth of Nestle in UK. A study by Statista has revealed that revenue that has been generated in Chocolate Confectionery segment for year 2018 amounts to $6,394m US dollars. The expected market growth may be of 1.5 percent on an annual basis. This is good news for Nestle in terms of growth opportunities (Statista, 2018). With respect to technological front, the nation has been regarded as quite advanced. Nestle has also been using technology in its everyday working such as mobile ordering, phone charging mats among others. It is also using instagram as a marketing tool so as to spread brand awareness in consumers. These strategies are most likely to favor overall growth of the company in UK. In terms of environmental factor, company is required to focus on reducing is carbon footprint and bring substantial cuts on packaging through plastics. It can also showcase itself as a firm that adheres with concept of go green (Gornall, 2015). Along with this, it is also required to be in tune with regulations such as provision of fixed working hours to employees; data protection policies as well as competitive pay structure to the employees. P5.Conductinginternalandexternalanalysisfororganizationtoidentifystrengthsand weaknesses with explaining how they influence the decision-making process There has been a usage of SWOT analysis in order to assessstrengths and weakness of the company. As per strengths, Nestle is largest food brand in world and is far ahead of rival firms such asCoca Cola. It also offers diverse product offerings such as water, chocolates, and cereals among others. Hence it has been able to serve needs of all segments of the society. Studies further suggest towards the existence of good research and development capabilities 4
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which has led to creation of innovative foods by Nestle such as GMO-free Buitoni pasta as well as gluten-free Lean Cuisine (Eccles, 2017). The firm has also got its own share of weakness such as high sales dependence on just a few well-known brands of Nestle on account of their increased popularity in consumers. This usually leads to cannibalization of its own brands and firm may not be able to survive if there is a change on taste and preferences of customers. In the same lines, the company has been spending heavily on advertising and promotion activities which somewhere increase its cost factor. This cost is usually carried forward to consumers who then do not prefer buying high cost products. UK has also been suffering from post brexit issues that have brought a substantial decrease in overall sales revenue (Chapman, 2016). In terms of revealing opportunities for Nestle, there has been a huge demand for prepacked foods due to working mothers, fast lifestyle as well as increase in working hours. Other than this, with enhanced mobility as well as usage of car a surge in demand has also been seen in area of bottled water and snacks items. People of UK are quite health conscious in the present times hence demands for healthy products have increased greatly. There is also a new trend to consume comfort foods such as chocolates and coffee. As this is product niche of Nestle hence it can be advantageous for the company (Trott and Sims, 2017). In terms of threat, company is already facing immense competition from established firms likeUnilever; Kraft Foods etc. not only in UK but all over the world. Along with this, there is also a rise in prices of coffee beans on account of global warming. It can be analyzed by the above SWOT analysis that strengths of Nestle can aid it in becoming world leader with respect to health nutrition and consumer wellbeing. It has also got an advantage of a good trust factor through its clients which can assist in reaching objective. There is however a presence of weakness with respect to marketing and advertising cost spends by company which should be reduced for smooth working (Seyfettinoglu, 2016). This can help to lower down prices of products and generate good sales revenue. P6. Explaining the interrelationship of SWOT analysis with the external macro factors As per the above paragraph, strength of nestle lies in its recognition as the biggest and trusted food brand. Hence in area of political factor the company may not face any issue when it makes an attempt to expand itself in other nations, this is as government is most likely to provide needed support (Scott, Hawkins and Knai, 2017). This concept is also applicable in social front 5
where consumers on account of its brand image will be ready to accept the offerings. It is also known that company sellsdiversified product offerings hence it is in a better position to face economic shocks such as recession. The social factors in UK further depict a presence of fast paced life style in nation hence the need is that working mothers are offered prepackaged foods by the company(Alkayaand Demirer,2015). Thereisfurther atrend ofhealthy food consumption in masses which can be used as a source of opportunity by Nestle. CONCLUSION A conclusion can be derived from the above report that Nestle is required to take care of varied internal and external factors that may put an impact on its overall working. This is essential as company has presence in most of the nations around globe and every country has its own work environment. These factors may put a positive or negative impact on its functioning. The need here is to grab the opportunities and work on threats and weaknesses. 6
REFERENCES Journals and Books Alkaya, E. and Demirer, G.N., 2015. Water recycling and reuse in soft drink/beverage industry: a casestudyforsustainableindustrialwatermanagementinTurkey.Resources, Conservation and Recycling,104, pp.172-180. Ashurst, P.R., 2016.Chemistry and technology of soft drinks and fruit juices. John Wiley & Sons. Davis, B. and et.al., 2018.Food and beverage management. Routledge. Gornall, J., 2015. Sugar: spinning a web of influence.Bmj,350, p.h231. Graham, S. and Potter, A., 2015. Environmental operations management and its links with proactivity and performance: A study of the UK food industry.International Journal of Production Economics,170, pp.146-159. Nixon, L. and et.al., 2015. “We’re part of the solution”: evolution of the food and beverage industry’s framing of obesity concerns between 2000 and 2012.American journal of public health,105(11), pp.2228-2236. Scott, C., Hawkins, B. and Knai, C., 2017. Food and beverage product reformulation as a corporate political strategy.Social science & medicine,172, pp.37-45. Seyfettinoglu, Ü.K., 2016. Analysisof relationships between firm performance and open innovationstrategiesandstagesintheTurkishfoodandbeverageindustry.New Medit,15(1), pp.42-52. Trott, P. and Simms, C., 2017. An examination of product innovation in low-and medium- technology industries: Cases from the UK packaged food sector.Research Policy,46(3), pp.605-623. Wood, R.C., 2018.Strategic questions in food and beverage management. Routledge. Online Chapman, B., 2016.Brexit: Nestlé hints at price rises after pound value crash.[Online]. Available through: <https://www.independent.co.uk/news/brexit-nestl-price-rises-pound- crash-dollar-euro-currency-exchange-unilever-a7371131.html>.[Accessedon16th August 2018]. Eccles., 2017.5 Nutrition Innovations You Didn’t Expect to Come FromNestlé.[Online]. Availablethrough:<https://medium.com/nestle-usa/5-nutrition-innovations-you-didnt- expect-to-come-from-nestl%C3%A9-22f49f28f4f4>. [Accessed on 16thAugust 2018]. 7
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