Nestle SWOT Analysis and Policy Recommendations

This assignment requires a comprehensive analysis of Nestle's current business environment using SWOT (Strengths, Weaknesses, Opportunities, Threats) framework. Students must identify Nestle's key strengths and weaknesses, as well as external opportunities and threats. Based on this analysis, the assignment calls for developing new policies that will help Nestle capitalize on opportunities, mitigate threats, and leverage its strengths while addressing its weaknesses.

Business environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different types of organisations and their purposes with example........................................3
P2 size and scope of different type of organisation....................................................................5
P3 Organisational functions on the basis of organisational structures and link them with
organisational objectives of Nestle.............................................................................................8
TASK 2..........................................................................................................................................10
P4 PESEL analysis of Nestle....................................................................................................10
P5 SWOT analysis of Nestle.....................................................................................................13
P6 interrelate the SWOT and PESTEL analysis.......................................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business is regular profession of a person which help them to earn money. Business
environment is the environment of business which includes the external and internal factors that
affect companies’ operations, employees, management, customers, management and business
regulations. In this report, effect of macro environmental factors of business have been
discussed. Also, we discuss about different purposes and size and scope of private organisation,
public organisation and voluntary organisation. Nestle is a private organisation in which we
determined that the organisational functions and link these functions with organisational
objectives. PESTEL and SWOT analysis of Nestle company is done..
TASK 1
P1 Different types of organisations and their purposes with example
Organisation is a group of persons who join together to achieve the organisational goals.
The organisation includes the employees, management, customers etc.
Private sector organisation: The private sector organisations are those which are formed by
persons with a main objective to earn profits. These organisations owned and controlled by
private individual. Examples of private sector organisation in united kingdom is Nestle UK Ltd
which produces food products and beverages. Nestle aim to provide the good quality food with
good tastes. They provide wide varieties of choices to their customers.
Types of private organisations: Sole proprietorship firm: it is the simplest business organisation in which one person can
start business. It is not a legal entity and owned by an individual who is responsible to
pay off all the debts. Partnership firm: it is a firm which can be formed by 2 or more partners who are agreed
to share profits and losses of the firm which is carried by all or by any one of them who is
acting for all.
 Private companies: Private companies are those in which the government do not hold
more than 51 % share of companies. The legal requirement of these companies is very
less.

Purposes of private firms:
 Profit earnings.
 Increasing market share.
 Growth.
 Maximises sales.
Public sector organisation: The public companies are owned and operated by government and
government institutions. This organisation work with main motive to provide their services to
public. These organisations are funded by national and local government. Example of public
sector organisation in United Kingdom is Tate and Lyle which is a food processing company.
Tate and Lyle is very popular for their innovative techniques which converted the raw material
like corn, oats and tapioca into ingredients. Their ingredients have good taste, texture, are very
nutritious.
Types of public organisation:
 Regional development organisation: These are the organisations work for the
employment and wealth generation in the regions and also work to reduce the regional
disputes.
 Public corporations and companies: They invite public to purchase their share and 51%
of shares are hold by the government.
Purposes of public sector firms:
 To provide services to public.
 Optimum utilisation of environmental resources.
 Use the funds only for benefits of society.
Voluntary organisations: The voluntary business organisation do not work for earning profits.
They are funded mainly by the members of organisation, entrance fees, fund raising and
donations by government and individuals or companies. The main aim of these organisations is
to achieve that objective for which the organisation is prepared. These are prepared to promote
some cause like prepared for charities, or trusts. The staff of this organisation includes the paid

managers, workers and volunteers. The example of voluntary organisation in United Kingdom is
Oxfam which work to reduce poverty from world. The organisation of Oxfam is developed to
provide services to poor people and also to save them from injustice.
Types of voluntary organisations: Not for profit making organisations: These organisations are formed for the religious,
charitable, literary, artistic, scientific or educational purposes. These are organisation on
which tax are exempted. The trustees are not benefited financially.
 Charity organisations: these are non-profit organisations which main objectives is
provided finance for social well being and provide services for public interests. Non-
government organisations are called NGO which are established for helping public on
international level, national level or local level.
P2 size and scope of different type of organisation.
Nestle UK Ltd. : It is private limited company which is incorporated on 3rd March 1897.
 Mission statement: “Good Food, Good Life”. This can be explained as to provide
consumers with good quality food with best tastes.
 Vision statement: “To be the leading, competitive, nutrition, health and wellness
company”. It can be explained as their vision is to be the leading company which
provides improve quality products to them in better prices.
 Goals and objectives:
◦ To provide innovative food products to their customers.
◦ To provide the healthier or nourished food products to customers.
◦ To generate trust among customers by providing them trustworthy products
◦ Optimum utilisation of resources and reduce wastes.
◦ To use new technologies.
◦ To minimises cost and increase profits.
◦ To monitor the progress and growth of nestle.
 Products produced by Nestle:

◦ Butter and cheese products.
◦ Cocoa and chocolate confectionery.
◦ Other food products.
 Legal structure: As a private organisation, there are not so many legal restrictions on
nestle but for trading globally they have to follow all legal procedures of trade policies of
each nation.
Tate and Lyle: It is the public food processing company located in London, England. It is
founded by the amalgamation of Henry Tate and sons and Abram Lyle and sons.
 Mission of Tate and Lyle: “To help the customers in making healthy and tasty food”.
 Vision of Tate and Lyle: “To retain their customers locally and globally”.
 Goals and objectives of Tate and Lyle:
◦ To provide quality ingredients or products to customers.
◦ To produce the ingredients with technical and scientific skills.
◦ To fulfil the necessarily of custom-made.
◦ To measure the changing trends in customer.
◦ To produce innovative products.
 Products produced by Tate and Lyle:
◦ Food ingredients like Starches, Splenda, Citric acid, dietary fifers etc.
◦ Bulk ingredients like High fructose corn Syrup etc.
◦ Beverages.
◦ Dairy based products.
◦ Soups. Sauces and dressings.
 Legal structure: Public companies have to fulfil many formalities to get registered and
also to invite public for purchasing shares. The company can trade globally with the
permission of government.

Oxfam committee for famine relief: It is an international nongovernmental organisation which
focuses on disaster relief, advocacy, research of policies, poverty eradication etc. Oxfam is
founded at Oxford, England and provided their services to world.
 Missions of Oxfam: “To work with local partner organisation and with the people who
live in poverty prone areas”.
 Vision of Oxfam: “To exercise the human rights of poor peoples and also provide them
dignity and respect”.
 Goals and objectives of Oxfam:
◦ To benefits people who are facing injustice and poverty.
◦ To control the lives of poor peoples.
◦ To develop the poor areas.
◦ To provide education to the peoples.
◦ To provide relief services when there are crises in economies.
◦ To provide good quality health, education, water and sanitation with the help of
government.
 Services provided by Oxfam:
◦ Essential services.
◦ Economic justice services.
◦ Rights in crises.
◦ Gender justice services.
Legal structure: Voluntary organisation can be formed when there is need of that firm and there
is finance through donations. To open voluntary firm there are no many formalities.
P3 Organisational functions on the basis of organisational structures and link them with
organisational objectives of Nestle.
The organisational functions of Nestle is very helpful in achieving the organisational
objective which is to good quality food products with good taste as well to the customers. The
organisational functions in Nestle is takes on the basis of organisational structure (Khalifa,

2012). In nestle there is hierarchy used in which group, business, organisation, people are
collaborated with each other to achieve the common goal.
The functions according to their organisational structure are planning and coordinating
functions, departmental functions and operational functions. These functions help in achieving
the goals of Nestle.
 Upper steady administration functions : The top level administration see the committee of
directors, chief executive officer, and managing directors (Nestle good food, good life,
2017). This level spent more time in planning the policies and operations of other
department. They also make plans to create coordination among all the departments. The
functions of top level managers is as follows :
◦ They decide the objectives of Nestle and made policies which are followed in the
operations of company.
◦ They appoint the departmental managers of middle level managements.
◦ They control the activities and operations of different departments of Nestle.
◦ They provide direction to achieve the goals to organisation.
These all activities of top managers controls the activities of departments and provide them plans
which guide them to achieve the goals of Nestle.
 Intermediate level administration functions : this level is included the branch managers
and departmental managers who are appointed by top level managers so they have to
report to their top level managers. The important purpose of middle level administrator is
to perform the departmental functions. The functions of middle level managers :
◦ To penalise the programme of top level managers.
◦ To follow the instructions of top level managers.
◦ Make sub plans for their departments.
◦ To appoint the managers of lower level managers.
◦ To motivate the employees of lower level.
◦ Communicate the problems and suggestions of lower level to top level.

Different department performs their functions like :
◦ Production department : The department perform production function in which they
take care about the availability of good quality raw material and to produce the
quality products. The main aim of this department is to reduce the production cost.
◦ Sales department : The department is responsible for sales of food products. Th3e
food products must be packed in good packagings. The packagings used to pack the
food must be hygienic and not of bad quality.
◦ Human resource department : This department is responsible for trainings and
development of their workers (Klapper, 2011). It is necessary to train the workers if
the new technologies are used to produce products so there is no wastage of
resources.
◦ Nutrition department : It is a very important department in Nestle. This department
check the level of nutrition in the food products so they can achieve their goal to
provide the nutritious products to customers.
◦ Finance department : This department provide finance to all the departments of
Nestle. The departments require finance to perform their functions and also to provide
salaries and incentives to their employees and workers.
◦ Research and development department : The department is responsible to conduct the
market research to understand the needs and requirements of customers and
communicate the information to the production department so they can make changes
in products as per needs.
 Lower level management functions : The level includes the employees, officers, workers,
supervisors etc. the functions and activities performed by them are :
◦ Daily activities of workers are instructed and guided by them.
◦ They appoint workers and give them tasks.
◦ To built good relations in company.
◦ The problems at the work place, suggestions and requests are communicated to
middle level managers.

◦ Provide solutions to workers problems.
◦ Analyse the performances of workers.
The functions of all the levels of management is very helpful in achieving the objectives.
The top level managers decide the goals and objectives for organisation and also provide plans
and policies to achieve these objectives. They communicate these objectives, plans and policies
to managers of different departments. Then the departmental managers make their sub plans and
communicate to the supervisors. The supervisors give tasks to workers and measure their
performances (Kourteli, 2000). They communicate the problems, suggestions to higher level to
motivate the workers. The motivated workers work efficiently which leads the quality of
products and services. The departments perform their functions efficiently so there is less
departmental costs.
The nutrition department check the quality and amount of nutrition in the products. The
research departments conduct the market research to understand the nature and needs of
customers. The Nestle company make changes in production and products as per the needs of
customers to increase their market share. This all the functions help Nestle in the expansion and
growth.
TASK 2
P4 PESEL analysis of Nestle
The PESTEL analysis of Nestle is done to evaluate the macro environment factors which
affects the operations of Nestle. This PESTEL analysis help the firm to make strategic plans for
future (Greenberg, 2003). There are many factors that affected the operations of firms but the
most important factor which affect the operations is the changing demands of consumers. The
taste of consumers changed very frequently.
 Political factors : These factors are those which affects the operations of organisation
because of changes in government policies, rules and regulations (Commander, 2011).
The operations of Nestle are affected because of :
◦ Changes in the rules and regulations of Food standards and marketing actions.
◦ The risk increases because of government stability in new economies.
◦ Changes in global regulations because of change in different political forces.

This changes in factors affect the Nestle as there are new regulations can be in favour of Nestle
and if the regulations are against Nestle then operations are negatively affected.
 Economic factors : These factors are affects the operations because of :
◦ Inflation in economy : The inflation affect the operations that the prices of raw
material rises due to inflation which increases the cost of production of Nestle. The
price of products are also increases which increases the profits of Nestle.
◦ Changes in economic growth rates.
◦ Changes in income level of economies.
◦ Changes in consumer budgets : the budgets of consumers increases if there is good
income flow in economy they purchase more products and if the there is low budgets
then they purchase the low price products.
◦ Rise in prices of raw materials : the suppliers increases the prices of raw material
affects the production of Nestle and also their prices.
 Social factors : the social factors includes the following factors which affects the
operations of nestle :
◦ Changes in customers attitude : the change in customers attitude now they become
more health conscious and demand for healthy products. They now support the
balanced diet and avoid sugar and sugar products.
◦ Changes in the lifestyle of customers : The customers now prefer to make food at
home and want to spent time with their families at home is affect the sales of food
products.
◦ Changes in culture, languages, religion, beliefs and families : this also affects the
operations the company has to make policies on the basis of the culture, languages,
religion, beliefs and families values of the customers in market.
◦ To understand the behaviour of customers is very difficult of the Nestle because it is
keep changing as per the trends.
These factors are essential to make plans for the production of products and to make innovations
in the products.

 Technological factors :
◦ The consumers now use social media and other advanced ways to interacts with
companies. Nestle have to adopt the new technologies to interact with customers.
◦ Innovation is the main motive of Nestle which can only be achieved by technological
development.
◦ E-commerce is modern way to do the operations.
 Environmental factors : this factors includes the followings :
◦ Nestle have to take initiative towards corporate social responsibility.
◦ Now customers are very conscious about environment and also for packaging and
recycling.
 Legal factors : this factors are related to change in laws or regulations.
◦ Changes in the law related to nature.
◦ Nestle have to take care about the laws and regulations in the international market.
The above is the PESTEL analysis of the Nestle this help Nestle in changing their
policies as per the changes in political factors. The company have to aware about the standards
related to food and nutritions. The company have to produce the products which are nutritious
for the customers (Edward Freeman, 2010). To take part in international trade they need to take
care about the policies of trade by the different nations. The economic factors are also affects the
operations if inflation increases it will increase the prices of products which can affect the sales.
Consumers budgets and the prices of raw material is also important to be considered. Social
factors are related to customers needs, demands, cultures and their preferences which has direct
impact on the operations of Nestle. New technologies are required to produced an innovative
product. The legal factors and the environment factors make changes in policies of operations.
P5 SWOT analysis of Nestle
Internal factors Strengths :
 Cultural values are
strong.
 Committed to
Weaknesses :
 Criticism of number of
products in Nestle.
 In past nestle has

customers.
 High Satisfaction level
of customers.
 Good leadership skills.
 Committed to
corporate social
responsibility.
 Wide ranges of
products.
 Well known brand
globally.
 Nestle brand reputation
is estimated at $7
billions.
 Favourite brand of
customers.
 Strong team work
negative public
relations.
 Need of stability and
consistency in
operations.
External factors Opportunities :
 Entering in new market
to attract new
customers.
 Internationalisation and
focuses on the highly
growing economies.
 Innovations in products
Threats :
 Changes in buyer
needs.
 Raw material prices
can be raised by the
suppliers.
 High competition.
 Changes in
technologies.
Strengths : SWOT analysis help in determining the strengths of Nestle. These strengths are to be
increases to make the company more strong. These strengths are including the cultural values of
nestle and their commitment towards their customers. The position of Nestle also improves

because of good leadership skills of their leaders who manages activities and operations. Their
main aim is customers satisfaction which help in building the trusts of customers. The nestle
takes many measures towards corporate social responsibility. They produced wide ranges of
products which provides choices to customers (Wetherly, 2014). The nestle is a well known
brand which is work for customers satisfaction from a very long time by which the customers
generate loyalty towards brand. The team or departments are always work in coordination to
achieve the common goals.
Weaknesses : the nestle in past face many criticisms because of nutrition issues in their products.
Nestle have to take decisions to increase the nutrition element in their products. The should have
to use the good quality and healthier raw material to produce their products so it fulfils the need
of customers. There is increasing problems of child obesity which make government aware about
the nutrition in the food products. The baby milk scandal destroy the public relations of Nestle.
The trust of customers on nestle is also affected because of this scandal. There is a need of
stability and consistency in the operations of Nestle.
Opportunities : the nestle has many opportunities in market which help in increasing the market
share of nestle. Nestle company produces various food products for small kids as well as for
adults. The various products which are produced by nestle are as follows: nestle produces
various chocolate, Nestle is one of the strongest companies in the world when it comes to the
FMCG market. Nestle coffee is almost a cash cow for Nestle and so is Maggi !! There are many
brands in Nestle which are super hit. Maggi oats or other such healthy breakfast alternatives have
a big time future as most breakfast alternatives are heavy and people are becoming more health
conscious. Nestle needs to do more market penetration with regards to its Cereals. By entering
into other markets & penetrating more & more in the rural markets through its robust supply
chain and transition of spots of unorganized business to organized one will lead to further
expansion of the company’s business (What is business environment, 2017). Due to stable
political scenario, improved literacy rate & controlled inflation, disposable income of the people
is increasing there by resulting into up flow in demand & changing their lifestyle (Prajogo,
2016). Nestle is already involved in relationship with a turn of major companionship, such as
Coca-Cola, and several others, opening doors of opportunities for the company. It is one of the
primary stockholder of ’O real, the world-wide sizeable enhance, So relative with other food

giants will assist the organisation in advance development. In this way the company is growing
at a very fast pace and leading to huge success.
Threats : The opportunities gives chances to grow whereas the threats can affects the firm
negatively. The changes in customers preferences is the real threats which make customers to
consume that products which satisfy them they do not think of brand at that time. They are not
loyal towards the company is a big problem (Trehan, 2014). The increase in pricers of raw
material because of will affect the prices and cost of production of nestle. The changes in
technologies is also big threat they should have to use that technology which help in production
of innovative products.
P6 interrelate the SWOT and PESTEL analysis
The SWOT analysis help in determining the posture weaknesses chance and warning
these related to the factors determined in PESTEL analysis. Political factors like the changes in
the food standards are can be threats in future and changes in policies of government related to
international trade is also can create threats in the future (Kubasek, 2016). The policies can be in
favour of the nestle may be free trade policy is adopted by the government. Economic factors
like changes in inflation is strengths that they produce high quality because ion inflation the cost
of raw material is rises. The increase in consumer budgets because of high income level is can be
opportunity for future. The change in consumer preferences and needs because of changes in
trends is the biggest threats for Nestle. The nestle has the biggest team of professional which is a
biggest strength by which they can produce innovative products with the help of advanced
technologies (Smith, 2007). The changes in laws related to food and nutrition can also be the
threats for Nestle. They nestle has the to produce the environmental friendly products and the
packaging is also done with the recycle material which increases the strengths. The factors in
macro environment must be used to increase the strengths and opportunities of Nestle.
CONCLUSION
The project concluded that the private organisation is work with main motive to earn
profits for example Nestle UK Ltd whereas the public organisation work to provide services to
public for example Tate and Lyle. Voluntary organisation is work to achieve their objectives for
which it actually established for example Oxfam. The scope and size of public, private and
voluntary organisation are also different from each other. The legal restriction in private and

voluntary organisation is less than the public organisation. The different functions of different
levels of managers help in achieving the objectives of Nestle. The department functions are also
helped in achieving the objectives of Nestle. The PESTEL analysis help in analysing the
environment of Nestle which affects the working and the policies of Nestle. SWOT analysis help
in analysing the strength, weaknesses, opportunities and threats which help organisation to make
new policies which help company in grabbing the opportunities with continuing the strengths.
The policies and decisions to be taken which help Nestle in facing the threats and reducing the
weaknesses.
REFERENCES
Books and journals
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Strategy and Management. 5(3). pp. 236 – 251.
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development.
Palgrave Macmillan UK. 9(4). pp. 108-123
Kourteli, L., 2000. Scanning the business environment: some conceptual issues. Benchmarking:
An International Journal.7(5). pp. 406 – 413.
Greenberg, J., 2003. Organizational Behavior: The State of the Science. 2nd ed. Routledge.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.

Edward Freeman, R., 2010. Managing for stakeholders: Trade-offs or value creation. Journal of
business ethics. 96(12). pp.7-9.
Wetherly, P. and Otter, D., 2014.The business environment: themes and issues in a globalizing
world. Oxford University Press.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance.International Journal of Production
Economics.171(15). pp.241-249.
Kubasek and et.al., 2016. The legal environment of business: A critical thinking approach.
Pearson.
Smith, M., Khadijah, Y and Marzuki, A., 2007. Environmental disclosure and performance
reporting in Malaysia. Asian Review of Accounting. 15(2). pp. 185-199.
Trehan, R. ,Trehan and M. Jain, T.R. 2014. Business environment.VK Global Publications.
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What is business environment, 2017. [Online]. Available
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