Impact of Business Environment on Firms

The assignment examines the intricate relationship between a company's operating environment and its performance. It delves into how elements like government policies, market conditions, technological advancements, and social trends influence a firm's success. Students are expected to analyze scholarly literature and research findings to understand this complex interplay.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1.............................................................................................................................................1
1.1 Different types of the organisations that Nestle caters..........................................................1
1.2 Various extent to meet the requirements of the stakeholders of the company......................2
1.3 CSR followed by Nestle........................................................................................................3
LO2.............................................................................................................................................3
2.1 Effect of various economic system to allocate the resources in Nestle................................3
2.2 Impact of the fiscal and monetary policies on Nestle...........................................................4
2.3 Impact of the competition policy and other regulatory mechanisms on Nestle....................5
LO3.............................................................................................................................................5
3.1 Explain how market structures impect in the setting up of various prices............................5
3.2 Impact of the various market forces on Nestle......................................................................6
3.3 How business and cultural factors affect the business environment.....................................7
LO4.............................................................................................................................................8
4.1 Significance of international trade on Nestle........................................................................8
4.2 Impact of Global factors on Nestle.......................................................................................9
4.3 Impact of EU policies on Nestle...........................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment or the conditions in which an organisation runs a business is very
important for a company. The different macro and micro as well as internal and external business
factors lay a very deep impact on the various operations of company that can have an impact on
the productivity and profitability of business firm (Armstrong and et.al., 2015). For this research
report, Nestle Company Ltd. has been taken as the organisation of context. It is one of the
leading organisation, working in food processing sector. This report will take into consideration
various organisational factors that affect the operations of Nestle and the role played by the
stakeholders. In addition, various strategies and the responsibilities of the employees or the
management have been taken into consideration. The resource allocation and meeting the
competitive requirements have been taken into consideration by the company. Moreover, various
internal and external factors that can affect the operations of Nestle and impact of European
Union on the same have been discussed with various policies decided (Botha, Kourie and
Snyman, 2014).
LO1
1.1 Different types of the organisations that Nestle caters
Various organisations are been taken into the consideration that helps Nestle Company
Ltd. to improve its operations and get a better share of market. Nestle has effective and strong
business relations with many companies that helps it to cater the maximum number of customers
and meet the targeted goals of the company.
Some organisations that are been associated with the Nestle are as follows:
 Private: The private sector organisations are been owned by single individual or a group,
which look after the various operations of the company. For example, Nestle works with
various private firms to fulfil its vision and mission to cater the maximum number of
customers in the market and give a better productivity and profitability. Besides this, the
private firms like L'Oreal has a big market share, growth rate, sales and customer
satisfaction level which will help the cited firm to improve the quality of its services and
increase its productivity (Bah and Fang, 2015).
 Public: The Public sector companies are the organisation that are been owned in the
ownership of the shares with the involvement of the government or the local
administrative body. For instance, as Nestle works in the food processing and
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development sector, it will support the government to provide with various food products
that will help them or the firm to meet then requirement of people on wider scale. This
will help the company to achieve its vision and mission and meet the customer
satisfaction and better growth that will support the firm in better development.
 Voluntary: This organisation consists of the individual or groups, who voluntarily comes
together to increase the productivity of the company and meet the requirements or the
needs of the people in the society by resolving an issue or problem faced by the people.
For example, Nestle will provide its products to various voluntary groups to serve the
society. Other than this, the voluntary approach will help Nestle to meet the requirements
of the companies and the customers in effective way which will increase the customer
satisfaction level and the sales of the company (Cull and et.al., 2015).
1.2 Various extent to meet the requirements of the stakeholders of the company.
Nestle will take into knowledge various operations that will help the company to fulfil
requirements of stakeholders in a very significant manner. The various stakeholders include
shareholders, employee's, customers, institutions, social groups and agencies. Some major
operations are as follows:
 Shareholders: The cited firm will look after the effective management of various needs
and requirements of the shareholders of the company. They will see through it that the
shareholders, who have invested in the execution of various operations of the business,
get a better return of investment and revenue from the company.
 Employee's: The company will also look after the effective management of the needs of
the employee's. Fulfilment of needs and requirements of employee's of Nestle will help
cited firm to increase its productivity and meeting of various targets or goals that are
been set by company (Savrul, Incekara and Sener, 2014).
 Customers: The given company is deeply dependent on customers to accomplish its
various operations that will help it to carry out effective measures to improve the quality
of services and product. Nestle will try to provide the customers with good satisfaction
level, in order to maintain its goodwill and profitability.
 Institutions: Various institutions, that are associated with the Nestle will expect the
effective development of the various operations, to satisfy their needs and demands from
the company.
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 Environmental Groups and agencies: Nestle will undertake effective measures to
reduce the level of pollution by its firms and will provide effective environmental help,
in order to maintain their Corporate Social Responsibilities (CSR) (Kljucnikov and et.al.,
2016).
1.3 CSR followed by Nestle
CSR are the effective measures or the obligations that an industry or a company possess
towards the society. Nestle will see through various environmental and ethical measures that will
help the company to fulfil its CSR. It will have various obligations such as:
Environmental and ethical issues: Nestle will look after effective measures to safeguard the
environment and will help in better growth of various operations to fulfil its duties towards the
nature of the nation or locality. Besides this, the ethical issues will include the fair treatment with
local people or resource provider. It includes various strategies like waste management,
minimum use of plastics and other non-biodegradable products.
Consumer legislation: Nestle will look after various legal measures that are associated with
customer's benefit and well-being. Various laws such as Consumer Protection Act will help the
cited firm to look after the effective providing of the services to the customer's. This will help
Nestle to avoid any sort of exploitation of buyers or consumers and maintain their health and
well-being (Moroni, Arruda and Araujo, 2015).
Fair trade: Nestle will look after the efficient management of the fair trade practices that are
been undertaken by the company. To incorporate the CSR, Nestle will include the various
options and legal measures. This will not only help the cited firm to maintain a good relation
with customers, suppliers and other business partners and stakeholders of the company.
LO2
2.1 Effect of various economic system to allocate the resources in Nestle
The various economic systems such as mixed, free enterprise and transnational
population with the factors like growth, inflation, balance of payments and trade etc lay a very
deep impact on the allocation of the various resources by the cited firm. Nestle has to take into
consideration the various measures that lead to the affecting of the operations of the company. It
will help the company to meet the requirements and needs of the customers as well s the stake
holders in a very effective manner.
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 The factors like business behaviour, taxation, public finance and global exchange rates
will impact the various operations of the organisation including the effective and efficient
management of the various resources that are been provided to the different departments
of the company (Smith, 2017).
 Besides this, the factors like heavy taxation, limited investment, trade balance and capital
will also affect the growth and allocation of the resources in the cited firm as it will make
those resources vulnerable and meant to be used with caution.
 The assessment of the market conditions and the risk awareness will lead the company to
plan the resource management of the firm in a very effective manner and fulfil then
requirements of then clients and the employees in a better way. Besides this, it will also
help the Nestle to carry out the various operations in a very economic and efficient
manner, without any wastage.
 The labour force and conditions like low growth and inflation will lead the cited firm to
develop a strategic plan in order to meet the requirement of the company and its
customers in a very significant manner. This will lead to the better planning of the usage
of the resources and meet the consumers demands and requirements in a very effective
manner (Menychtas and et.al., 2014).
2.2 Impact of the fiscal and monetary policies on Nestle
Various fiscal and monetary policies will be taken into the consideration by the Nestle
that will help the company to improve the various operations of the company and meet the
requirements of the firms in a very effective manner. The fiscal policies will help the
organisation to meet the requirements of the company. The fiscal policies like control of the
aggregated demands or the spendings by the local government will lead to the effective and
significant manner of the execution of the business operations by the cited firm. But it will be
only taken into the consideration when the government get any sort of benefit from the
businesses. Thus, in this case, Nestle can opt for the tax cutting and simulation of the overall
economy. Besides this, the Public Sector Net burrowing (PNSB) and Public Sector Net Cash
Requirement (PSNCR) approach will help the company to gain the required fiscal or the
monetary help to run its business operations.
Other than this, the interest rates and euro convergence criteria will deeply help the
Nestle to face its monetary issues that helps the company to meet the requirements of the
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company in a very effective and efficient manner. The monetary policies like Fed policy, will
help the firm to carry out the expansionary operations in the firm and meet the requirements of
the company and the customers in a very effective manner. It will help te cited firm to tackle the
rise in the interest rates or drop down in the economy (Georgescu and Popescul, 2015).
2.3 Impact of the competition policy and other regulatory mechanisms on Nestle
Various sort of the competition and other regulatory policies are been taken into the
consideration that will help the company to improve their productivity and other operational
activities. Some legal measures that are been taken into the consideration by the company are as
follows:
 Competition Act 1998: The competition act 1998 will look after the effective
management of the various business practices that will lead to the execution of the better
business policies. It restricts the bigger company's or the business firm like Nestle to use
their dominance in the market in the negative way such as unlawful execution, or
replacing of the products or the services of other competitors. Besides this, it will also
look after the effective following of an agreement between two firms, in the market.
 Enterprise Act 2002: This law will look after the effective following of the various
business practices that leads the firm to improve the quality of the services and provide
the better services and the operations to the customers. Besides this, it will prevent the
company to perform the bid rigging and unlawful pricing of the services or the operations
that are been taken into the consideration by the cited firm. Besides this, it includes the
offences like limiting the supply for price rise, providing of irrelevant and incorrect
information and non affective fixing of the prices (Khan and Quaddus, 2015).
Besides this, the competition commission, Office of fair trading, the Directorate General
for competition and the European commission will look after the effective management of the
various operations that are been taken in consideration by the cited firm to execute their business
operations or activities. They will see through it that the business firm is effectively following
and in biding the various laws or acts that will affect the business operations of the company and
well establishment of the trade policies and business relationship.
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LO3
3.1 Explain how market structures impect in the setting up of various prices.
Nestler is the major market leader in its respective sector. One of the major reason behind
it is the efficient management of the various operation and the pricing of the products and the
services. The pricing of the various goods or the services is deeply dependent on the various
market structures operational and the factors which affect them. The effect of the various factors
on the pricing areas follows:
 Perfect competition: The perfect competition, without any deceitful practices will lead
the company to effectively and lawfully place its pricing for the products or the services.
This will give the customers a fair chance to choose from the available services and
products of various price range in the market. It will lead the cited firm in a condition
where it can't influence the pricing in the market (Belás and et.al., 2014).
 Monopolistic competition: It is the effective management of the various market
conditions where a group of business firms like Nestle provides the similar product with
the slight extent of variation. It is deeply based on the brand seeking approach of the
consumer, thus placing the prices of the goods or the service accordingly to the brand
image, by the cited firm.
 Monopoly: It is the market condition, where the business firm has no nearby competitor
or rival, making it the sole manufacturer and seller of a particular product. It also makes
the product or the services to be unique and differentiated in the market. It helps the cited
firm to sell its products without and restriction in the market and avoid the entry of the
other competitor or the rival in the market, leading to a great rise in the profitability and
revenue generation of the cited firm.
 Oligopoly or duopoly: It is quite similar to the monopoly, but involves only two or the
few numbers of the traders in the market. It leads to the high level of competition
between the limited numbers of the service providers. The entry of the new competitor or
rival is very rare (Huang-Horowitz, 2015).
This approaches provide a competitive advantage to the firms but restrict the entry of the
new market entrant and thus affect the overall position of the company in the market. It gives
them a competitive advantage and helps them to met the requirements of the firm as well as the
customers along with the rise in the profitability.
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3.2 Impact of the various market forces on Nestle
The different type of the market forces will have a very deep impact on the various
operations of Nestle and look after the operations that are been carried out by the cited firm.
Some major market forces are as follows:
 Supply and demand: The supply and the demand that is been managed by the various
firms will lay a very deep impact on the various operations of the company and will
affect the profitability and development of the firm. The effective creation of the demand
and fulfilment of the supply will lead the cited firm to increase its profitability and meet
the operational requirements of the business firm and the customers. The effective
management of the supply and demand will help in the better rise of the customer's
satisfaction level towards the cited firm (Sodeyfi, 2016).
 Elasticity of demand and supply: The company must look after the effective and elastic
management of the various demands and the supply of the goods or the services of the
company. This will include the various measures that will affect the overall operations of
the company and meet the operational requirements of the organisation. For example,
The elasticity will help the Nestle to adopt the suitable measures to meet the requirements
of the customers as well as the various departments of the company to have a better
productivity and profitability.
 Customer perception and the action: the mindset or the brand perception of the
customer will also lay a deep impact on the various operations of the company and will
affect the operations of the company that will lead to the better rise in the profitability
and productivity of the cited firm. A good and positive perception about the cited firm in
the minds of the customers will help it to gain a better market share and achieve a better
profitability and sustainability.
3.3 How business and cultural factors affect the business environment.
Various cultural and the business factors have a deep impact on the various operations of
Nestle. Various factors like core markets, employee skills, technology, innovation and various
business environmental factors (Cascio, 2018). That helps the firm to increase the productivity
and profitability. Other than this, the Nestle will see through it that the better management of the
various operations that helps in the effective gaining of the customer satisfaction and trust level.
Some major effects are as follows:
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 Innovation: The implementation of the innovative approaches will help the Nestle to
increase its operational ability and profitability by adopting the new and innovative
measures to carry out the various business processes.
 Research and development: The R&D helps the cited firm to work on the better
development of the various measures that will lead to the increase of the profitability and
productivity and having a better understanding of the various requirements and demands
of the customers.
 Market trends: The ongoing market trends or conditions helps the cited firm to have a
better understanding of the various requirements that the company has to fulfil to carry
out its operations in the market and meet the needs and demands of the consumer's. It will
help the cited firm to take in consideration, effective measures to sustain in the market.
 Employee's skills and Technology: The usage of the effective technologies and the
employees possessing the effective knowledge to use it to run the various business
operations will help the Nestle to fulfil the requirement of the customers and meet the
effective goals, set by the management (Reynolds and Rohlin, 2014).
 Business environment: The various factors like political, social, environmental, legal
measures are the factors that can affect the operations of cited firm in market. Besides
this, it will help the company to develop a strategic plan and meet the requirements of the
company and customers of Nestle.
LO4
4.1 Significance of international trade on Nestle
The practising of the international trade will have a deep impact on the various operations
of the Nestle and will help the company to increase its operations on the global level and attain a
better profitability. Various factors that are been taken into the consideration are as follows:
 Global growth: The chances of having a global growth will help the company to spread
it business on the international level and fulfil the requirements of the organisation as
well as the customers on the global level.
 Protectionism: The protectionism is the policy that is been implemented by the
government in order to protect the local trade from foreign competition. This will have to
look after by the Nestle in order to carry out business operations in better way in other
countries (Blahová, Haghirian and Pálka, 2015).
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 World trade organisation(WTO): This organisation will provide the essential support
to the cited firm to penetrate in a foreign market and meet the requirements of the
customers of other countries in an effective and significant manner. This organisation
will provide the essential base that is required by Nestle to expand its business on global
level.
 Emerging markets: The emergence of the better markets like the BRICS countries have
helped the Nestle to provide its services and the products in this developing economies
that have lead to the rise in the various operations to improve the productivity and profit
of the countries (Cai and Yang, 2014).
 European Union: The EU will look after the trade practices that are been followed by
the various constituent countries and will develop various laws to ensure the better flow
of business in these countries and on foreign level.
4.2 Impact of Global factors on Nestle
The different types of the global elements like business competition, education, finance
and region will lay a deep impact on the business operations of the Nestle. Other than this, the
change in the exchange rates will also affect the global trade and impact the company to meet the
requirements of the customers in a very significant manner. Other than this, the taxation imposed
by the local and international authority will impact the various operations of the company and
will lead to the organisation taking in consideration effective measures to meet these factors.
Besides this, the trade unions and custom duties on the global level will also affect the
execution of the business practices by Nestle. They will take in consideration various duties and
will look after the better running of the business.
4.3 Impact of EU policies on Nestle
The EU will regulate the trade practices in the Europe and will look after the effective
execution of business, on the local as well as the international level. Various policies of EU on
Agriculture, international business environment, investment of capital etc will lay a deep impact
on the expansion and growth of the business on international level. Various protocols and
agreements like Rio summit, Kyoto protocol etc will look after its business on the international
level, providing it an economic stability (Cai and Yang, 2014).
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Also, the poverty of other countries and G 20 will lay a very deep impact on the
operations of the business by Nestle and helps to sustain its intellectual property and financial
resources to get exploited or wasted on international level.
CONCLUSION
Thus, this report concludes that various business environmental factors lay a deep impact
on the operations of the Nestle. This report focused on various organisational factors that affect
the operations of the company and the role played by the stakeholders in the company. Various
strategies and the responsibilities of the employee's or the management is been taken into the
consideration. The resource allocation and meeting the competitive requirements are been taken
into the consideration by the company. Various internal and external factor that can affect the
operation of Nestle and impact of EU on its operation is been discussed with various policies
decided.
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