Business Environment Report

This report analyzes the business environment of Nestle UK, a multinational food and drink company. It covers various aspects, including different types of organizations, the scope and size of Nestle, the relationship between different functions within the company, and the impact of macro-environmental factors. The report also includes an internal and external analysis of Nestle, identifying its strengths, weaknesses, opportunities, and threats. This comprehensive analysis provides valuable insights into the challenges and opportunities facing Nestle in the current business environment.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK1.............................................................................................................................................3
P1 Different types and purpose of organization .........................................................................3
P2 Scope and size of different organisations..............................................................................5
TASK2.............................................................................................................................................7
P3 Relationship between various functions of an enterprise and its link with objectives and
structure of firm...........................................................................................................................7
TASK 3............................................................................................................................................9
P4 Impact of macro-environmental factors.................................................................................9
TASK 4..........................................................................................................................................11
P5 Internal and external analysis of organisation for identification of strength and weaknesses
...................................................................................................................................................11
TASK 5..........................................................................................................................................13
P6 Interrelation of macro-environmental factors with organisational strength and weaknesses
...................................................................................................................................................13
CONCLUSION ............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Business environment plays an important role in conducting overall processing of
business. Further, there are different function and role performed by management under which
they have to consider all the changes coming in dynamic environment in relation to choice,
preferences and taste of customers. Therefore, it is essential for business to make modification in
their organisation structure which allow them to grab external opportunities which enhance their
sales and profitability (Aula ,2010). Under this assignment the company which is taken I.e.
Nestle UK based transnational food and drink company headquarter in Switzerland engaged in
FMCG sector and deals in more than 2000 brands ranging from global icons to local favourites.
Further it discuss about the different types and purpose of organization, Size and scope,
relationship between different organisational functions and its link to organisation objectives and
discuss about the internal external analysis of that particular organisation. Further it is important
for business to scan all the technological updation which are coming in the form of products and
services and include such alteration in their manufacturing process which help in satisfying the
needs and requirement of customers.
TASK1
P1 Different types and purpose of organization
Their are different type of organisation working in corporate world and they are mainly
divided their firm into three types I.e. public, private and voluntary. Every company work with
their own objectives, goals and legal structure which differentiate their working structure from
other. If company is planning to expand their business in different countries then they have to
adhere with the legal rules regulations enforced by government of that country in order to
execute their business operations and activities in better and effective manner. Generally the
legal structure and purpose of firm are described below:-
Private firm:-
These firm generally owned and controlled by private individuals only who make their
own policies, rules regulations and objectives on the basis of which other activities has been
carried out. These association does have an opportunity to subscribe their share on public and
apart from it government of nation has imposed various prohibitions on these kind of company.
The main objective for which it was formulated is to generate more profits and sales for
business. Different products in which they are currently dealing such as tea, coffee, dairy

products, snacks and ice-cream and in present scenario they are delivering their products services
in more than 190 countries with staff of 339000 members (Babatunde and Adebisi ,2012).
Purpose of nestle:-
 The main objective of Nestle is to generate more revenue profits and maintain standard
quality of goods and services. They also incurs expenditure on increasing living standard of people and for more
betterment of society.
Legal structure of private enterprise
Basically private enterprise are divided into different parts discuss below:- Partnership:- This type of organisation come into formation by the partnership of two or
more than two people with an objective of earning more profits and revenue. The terms
condition related to profit sharing ratio, capital contribution and working hours are
defined in partnership deed only. Sole proprietorship:- Under this case business has been established by one individual
only which invest capital, enjoy whole profits and liable for all the losses incurr to
business.
Advantage of private company
They manufacture innovative products in order to satisfy customer needs.
Under this there is no interference of government in the operations of business.
Disadvantages of private company:-
They cannot sustain their business for longer period only thinking regarding profit objectives.
Restricted for the purpose of subscription in public on stock exchange.
Public company:-
They are consider as largest type of business organisation whose control and supervision
are in the hands of government only and the main important feature of this type of organisation is
to enjoy separate legal entity from its owners and their main objective is to serve for the welfare
of society (Cantwell , Dunning and Lundan ,2010). NHS is biggest example of public enterprise
and main purpose are described below:-
 This organisation offer different medical facilities to large public. Contributing for the better health of patients.
Legal structure of public company

Central government:- It is consider as top authority who has control over working operation of
business.
Stare government:- They work under the control of central government and support activities of
various central government.
Local government:- Control and handle overall functions of public enterprises.
Advantages:-
They carry out their operations for the well being of society.
Government authority support them in the form of finance for the development of infrastructure.
Disadvantages
 Heavy penalty charged on them because of non compliances of legal laws and
regulations. Government involvement in overall business operations.
Voluntary organisation:-
These type of organisation carry out their working operations only for the purpose of welfare of
society and various decisions has been taken out in order to provide goods services to large
audiences at affordable prices which help in enhancing their living standard. For example Oxfam
is consider as voluntary organisation who put their whole efforts in order to remove poverty and
unemployment from particular society.
Advantages:-
Lower cost incurred in overall operation of business.
Compliances of legal laws are less as compare to other organisation.
Disadvantages
Lack of profitability and financial growth.
P2 Scope and size of different organisations
Every organisation work in corporate world fixed their size, scope and structure in order
to running their operations in proper and smooth manner. Further three type of organisation I.e.
Nestle, NHS and Oxfam has been taken that describe the overall purpose and presence of
organisation along with its purpose and objectives. Further size and scope of various enterprise
are describe below:-
Nestle

 Size of Nestle:- This association deals with different types of food products and drinks
and on the basis of revenue generation this is consider as largest firm in the organisation.
Presently there are more than 400 factories operate under this particular brand name.
Association offer various products and services in more than 190 countries and this
workforce has handle their business operations with minimum profit of 89.8 billion in
year 2017. Scope of Nestle:- Firm manufacture and produced different type of food products for
their customers such as Maggie, dairy milk, baby food and snacks and it offer their
services at global level in order to increase sales and profitability of company. Vision:- The main vision of Nestle is to offer food products to various customers which
must be of high quality and totally safe. Mission:- Nestle mission is to make better food products in order to improve the quality
life of individuals.
NHS Size of NHS:- This is that type of public enterprise which is UK based organisation offer
various medical approved and health related services to its customers. Further they
operate their business in various countries like Ireland, Wales and England and more than
one million of individuals are generally work in order to offer health services to
customers. Scope of NHS:- They generally engaged in providing medical services to those people
who are suffering from harmful diseases in order to serve to needy people and for the
better standard of society. Mission:- Company providing various quality services on regular basis. Vision:- Their main vision is to provide better services to customers in relation to health
care and medical services (Chavis , Klapper and Love ,2011).
Oxfam:- Size of Oxfam:- This association is consider as combination of almost 20 charitable
enterprises that main objective is to put efforts for better development of society and for
the removal of poverty around all over world.

 Scope of Oxfam:- This company is generally establish for the purpose of remove poverty
in order to uplift the living standard of people and also various services related to disaster
, natural calamities and also provide food services to customers. Vision:- Main focus is removal of poverty from all over the world. Mission:- Main mission of organisation is to execute different activities for overall
development of society and increasing living standard of people.
Stakeholder analysis:
This idea is used by various association in order to observe the major stakeholders and
their needs on the basis of which of which product and services are manufactured. Government,
investors, suppliers and customers are consider as major stakeholders of Nestle. Further, it is
essential for various companies to meet the needs and requirements of different stakeholders in
order to execute various operations of business. Basically stakeholders are divided into various
class which described below:-
 High power: Fascinated people
 People with low power:- less fascinated
 High power:- people which are less fascinated
 Low power:- Fascinated people
TASK2
P3 Relationship between various functions of an enterprise and its link with objectives and
structure of firm
A business become successful in frame when each and every single division start cooperating
with each other. Behind every successful business organisation, a whole unit start assessing their
work with each other so that better and beneficial attribute could be drawn. There are certain
number of objectives get crafted which need to accomplish by managers of a company and need
to made things understand (Chow and et. al. ,2012). These objectives work as blueprint under
which all employees used to perform their working in definite course of frame. Henceforth, it is
really essential to interpret this thing in better and supportive manner of frame of reference.
Multiple kind of sectors mainly works within company which are like human resource,
marketing, finance, operational and many more. All of them has the potential of giving high
level of contribution for the attainment of common aim within marketplace. There is interlinkage
within various kind of sectors which are being described below:

 Human resource department: There are mainly numerous functions which are mainly
performed by number of sectors which are like workforce planning, remuneration
determination and many more. Support is mainly being provided by functions of
workforce for recruitment of high level of workforce in various kind of sectors. Apart
from this, when there is rise in level of performance , it will help out in developing the
training programmes which in turn can give out motivation for employees in attaining
objectives.
 Marketing department: There is the direct linkage with this kind of sector to the
production sector of Nestle. It is the duty of marketing sector which in turn has the
responsibilities for conducting the research along with determination of the new
technologies and demand of customers. This kind of data will mainly help out the
production sector for fulfilling the various needs of customers.
 Finance department: This kind of sector mainly has the responsibility of mainly for
preparing out the finance budget for every kind of sector. This in turn provides help in
making the funds allotted in effectual manner. This kind of sector mainly helps out sector
of marketing which in turn can be utilised of modern tools of promotional tools and
production which will mainly use advanced equipments.
 Production department: This can be stated as one of the essential sector of company
which can formulate the various kind of food items according to the needs of customers.
This will mainly utilise the data which in turn will be gathered for bringing improvisation
for the sales figure. This kind of sector mainly has the linkage with numerous functions
for giving out products to clients.
Organisational Structure
There is the structure which is being divided on various kind of basis which are being
described below:
 Function based: This kind of factor helps out in deciding the structure of company
according to the functions which are mainly performed within company. Example can
be taken up of human resources, marketing, operations and finance.
 Geography based: Under this, company is mainly being divided as per the various
kind of regions according to the regions of countries which can provide products and
services.

 Product based: Structure can mainly be fixed on the basis of diversified products
which are being given out by company.
 Consumer based: Determination of the behaviour of consumers for structuring out the
company.
TASK 3
P4 Impact of macro-environmental factors
Each and every enterprise which gives their quality services and products in different
countries have face the effect of macro-environmental force. In case of Nestle, it is multinational
business entity which deals in food and beverages. There are some macro-environmental
elements such as political, social, economical, legal, technological and environmental factor have
both direct and indirect effects on business operations and activities. In order to analysis positive
and direct effects from these forces required to develop an effective policies and strategies which
give accurate guidelines to entire workforce who are working in the company (Colfax , Rivera
and Perez ,2010). It support in achievement of their long term objectives and goals within
specified time duration. External factors has positive and negative impacts on Nestle which are
explained as below:
Political Factor: Nestle provide their services and products in across the world. Beside this all
nations have various regulations, norms, condition, rules, policies and regulations. In this
management level of the firm need to emphasis on changes in political factor such as permission
of legal authority for entrance, taxation rate, export and import excise duties etc. Negative and
positive effects of political factor are determined as below:
Positive Impacts Negative Impacts
If entire rules and legislation are in bias of
business then it has Favourable effects. For
instance., Nestle obey health related policies
with motto to retain quality in their Nestle
products and services.
Political factor has negative effect on business
performance and profitability. Unfavourable
impact like tight important and export policies,
higher rate of taxation. These are highly effects
on business profitability and productivity ratio.

Economical Factors: Nestle provide their health and better quality service and products at
different level with purpose to develop their strong image in market. Thus, need of the business
administrator is to follow various policies and strategy as per the rate of inflation and deflation.
This factor consists certain factor such as income level of the population, cash flow and many
other. Positive as well as negative impacts of economic factor are shown as below:
Positive impact Negative impact
In order to prepare effective report assist to
gather specific knowledge regarding level of
income and inflation rates. Thus, it support
them to get better outcomes.
Negative impact of the economic factor is low
income level of individual. It will direct and
negatively effects on product demand and
wants.
Social factor: This factor mainly emphasis on customer belief and thoughts which has directly
effects on business operations and its activities. Such factor includes various aspects like age,
belief, education, value and so on.
Positive impact Negative impact
To find out favourable effect required to
determine behaviour of clients which assist the
company to maximise their profitability.
Negative and unfavourable impact of social
factor is poor level of education. It will highly
effects on profitability and effectiveness of
company.
Technological factor: In the modern era, there are different innovative methods and technology
are available which renders the changes for new product development and achievement of strong
position at marketplace.
Positive Impact Negative impact
New technology support the Nestle to increase
their sales and save their time and cost.
Lack of knowledge about technology highly
effects on employees performance

Legal Factor: Under this, different rules and regulation which are formed by the legal authority
that have both positive and negative impacts on business performance. It is the responsibility of
administrator to adopt such kind of legal necessity with motto to meet the customer's demand.
Positive Impact Negative Impact
In this Nestle adopt health and safety
regulation that assist them to find out the
customer loyalty towards business activities
and operation.
If business entity not apply such kind of act
that they faced high level of penalties. Thus, it
will negatively effects on profitability and
effectiveness of Nestle.
Environmental factor: Under this factor role of the management is to safe their environment. In
this they have to adopt certain legislation which assist them in the manufacture of healthy
product as well as friendly atmospheres (Gebauer, Paiola and Edvardsson ,2010).
Positive Impacts Negative Impacts
This factor highly support the Nestle is to
attract the society by providing quality
products to the customers.
Not applying regulation regarding friendly
environment company face adverse impact in
their brand image.
TASK 4
P5 Internal and external analysis of organisation for identification of strength and weaknesses
In every organisation in order to take rational decision making it is important for whole
management to analyse both the strength and weaknesses of company in order to know the actual
position of company in market. Therefore Nestle conducting SWOT analysis in order to identify
the strength, weaknesses, opportunities and threats which described below:-
Strengths Brand image:- Nestle consider as one of the brand known sector engaged in food division
and earned huge amount of profits just because of renowned brand at global level and
company using single brand name for dealing in multiple products which helps in
creating more awareness among customers through different offerings. Strong logistics department:- Nestle having good distribution channel because company
already designed specified framework in order to transfer the goods from manufacturer to

end customers. Further company arrange warehouse for the safe storage and focus on
door to door selling also. Research development department:- Nestle incur expenditure on research development
department because of which they known as world largest food nutrition company
comprises of 500 employees who serve customers by providing innovative and healthy
products and services.
Weaknesses Brand structure:- Nestle deals with different type of products and services under same
umbrella therefore it is difficult or challenges for organisation to handle various brands at
one time which create lot of conflicts and mismanagement. Legal matters:- In recent time Nestle is indulging in different types of legal issues and
controversies that dilute the brand image and goodwill of organisation and they have to
suffer from heavy penalties and restrictions. Maggie issue:- It has been observed that due to quality issues found in Maggie it has been
banned in India from where company earn huge revenue and that stage will become the
lost stage that also create the feeling of distrust among customers.
Opportunities Market expansion:- Nestle is big organisation which were planning to expand or
diversified their business at global level and designed proper framework for regulating
proper supply chain in both organised and rural sector. Increasing living standards:- This company offers various multiple products and services
at both developed and underdeveloped areas at cheaper prices which help in increasing
the purchasing power of customers and enhance their living standards also. Strategic alliances:- This is generally done in order to enter into new market segment so
that they are able to expand their sales and profitability both. Further, company must plan
to come in contract with all those FMCG companies which capture large customer base
which allow Nestle to build better brand reputation at new areas (Gecevska and et.
al. ,2010).
Threats:-

 Huge competition:- One of the major threats for Nestle is presence of huge number of
rivalry at both national and local level which effect on their profits and sales both. Further
it dilute the brand image and goodwill of business.
 Price of commodity:- Nestle has to face various types of difficulties at the time of fixing
the price of commodity because company fix high prices it affect their sales and if it fix
low price then it impact on goodwill and profitability both.
TASK 5
P6 Interrelation of macro-environmental factors with organisational strength and weaknesses
Management require to conduct PEST analysis of business in order to acknowledge both
the market conditions and environmental fact in which they are conducting their business.
Therefore, it is essential for organisation to use different appropriate measures in order to
understand both the strength and weaknesses of particular organisation. Further, different
advantages that firm get by utilising various resources in order to deliver services for the purpose
of satisfying needs wants of customers. Nestle external environment is affected by different
strength and weaknesses in external market conditions are described below:-
Political factors:- It is essential that whole management regulate their organisation functions on
the basis of their regulatory body at the country where they operate their business. Government
formulate different types of laws and regulations related to different political conditions and
stability of tax system and various policies and strategies are established in order to maintain
overall activities and for the purpose of increasing sales and profitability (Hamilton and
Webster ,2015). Strength:- Nestle management has establish their own team and they make modification
in different rules regulations according to government orders and major benefits is that
they are able to increase brand image and goodwill both. Weaknesses:- As Nestle is operating their business in various countries but they need to
make alterations in their laws and regulations according to external political changes.
Economics factors:- Nestle require to aware regarding all the changing coming through
inflation, income levels and growth of economy also. Apart from it changes in customer budgets
and increase in customer cost and rising in the price of raw material in respect to the source of
needs from sustainable suppliers.

Strength:- the whole administration system of Nestle plan for expanding or enlarging their
business activities in various countries according to market conditions and in asia market
condition is better because company cover large customer base.
Weaknesses:- Various nations have their own diverse interest and inflation rates which has been
fluctuating according to changing market conditions which create difficulties for organisations to
make strategies according to it.
Social factors:- Company has to consider different type of social factors like emotions,
sentiments and feelings in order to deliver all the goods and services to their target audiences.
Whole administration of Nestle main focus on delivering the products and services according to
the choices of customers and do not use such promotions which are detrimental to the interest of
customers.
Strength:-
Goodwill and market position of Nestle has been enhanced because of higher contribution in
social welfare in the form of CSR activities.
Weaknesses:-
Whole management team require to take care regarding the quality standards and put an efforts
to change the negative perception of customers regarding Nestle brand.
Technological factors:- Increase in the use of social media allow customers to have the
interactions with different firms and go through various range of platform. Apart from various
technological updation has been made through the development of E-commerce in which
customers get the product online only.
Strength:- Using digitalise and advanced technology allow them to create innovative and
digitalise products services in market.
Weaknesses:- Nestle require to make modification in their tools and mechanism through which
they produce their goods and services otherwise they are fail to beat all the challenges of rivalry.
Legal factors:- Modification in the nature of legal legislation and they require to comply with all
the global standards which were enforced in different countries across various international
markets. Strength:- One of the major advantage under this is the prevention from the dilution of
brand image and goodwill of company.

 Weaknesses:- Non compliances of legal policies leads to heavy penalty and punishment
(Hilton and Platt ,2013).
CONCLUSION
From the above mentioned report, it can be summarised that business environment is
divided into two parts such as internal and external. Both factors are highly effects on business
performance and profitability either negative or positive. There are different kind of organisation
such as private, public and voluntary. Those are play vital role in the success and development of
economy as well as society also. All these business has different size, scope, motive and nature
which impacts on organisation in a direct manner. There are different measure such as PESTLE
and SWOT analysis, these are important and essential factor in the enterprise because with the
help of these company can easily identify their strengths, weakness, threats and opportunities.
Another is PESTLE which includes political, economic, social, technological, legal and
environmental. These are also impacts on business effectiveness and performance. Sometimes,
both factors are interrelated with each other. Thus, these are significant for the all enterprise to
expand their business operation at different level.

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