[FULL ACCESS] Strategic Analysis of Nestle

The assignment requires a detailed analysis of Nestle's market position, strengths, weaknesses, opportunities, and threats (SWOT) as well as an examination of the external macro factors using the PESTLE model. The student is asked to provide insights into how these factors interact with each other, and how they can impact the company's operations and sales.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ........................................................................................................................................1
P1. The types and purposes of organisations; public, private and voluntary sectors and legal
structures.................................................................................................................................1
P2. Size and scope of a range of different types of organisations .........................................3
TASK 2 ...........................................................................................................................................4
P3. Relationship between different organisational functions and their link to organisational
objectives and structure..........................................................................................................4
TASK 3............................................................................................................................................6
P4.Positive and negative impacts the macro environment on business operations................6
TASK 4............................................................................................................................................8
P5. Conduct internal and external analysis of specific organisations....................................8
P6. Strengths and weaknesses has interrelation with external macro factors .....................10
CONCLUSION .............................................................................................................................11
REFERENCES ...........................................................................................................................13
........................................................................................................................................................14

INTRODUCTION
Business environment refers to external and internal environment. In these days it is very
important to considered these factors because these factors are having great influence on
business operation. Company make policy and plans to control these factors. There are two types
of factors internal and external. Internal refers the elements which took place within organisation
such firm structure, employees behaviour, workers productivity etc. these elements can be
control by an organisation (Baraya, Budden and Escobar, 2011). On the other hand external
factors refers those factors which incurred due to external force. These are not under control by
organisation. These factors include political, social, economical, legal and technological. They
are having positive and negative impact on business operation. The proper strategy plan need to
design to face these challenges otherwise company can incurred big losses.
The company which is taken into consideration is Nestle. It is world largest food and
beverages company. They are having around thousand of brands. The company is having
business in many countries. The market share of Nestle is very high and they earning high
profits. The main purpose of enterprise is to provide quality of life by providing healthier
products. Motive of firm is to inspire people to live healthier lives. In this way they are
contributing to society and getting long term success.
In this report different types and purpose of organisation has been discuss. The
relationship between these different firms has been given. All those effects of macro
environment as in positive and negative manners also has been mention in this project.
TASK 1
P1. The types and purposes of organisations; public, private and voluntary sectors and legal
structures
Business environment is very import to concern because it has large impact on
operations. For which firm need to make policies.
In this presentation different types of enterprises are mention.
The scope, purpose, legal obligation of each kind of organisation has been discussed.
There are different kind of organisation and these firms are having their different nature,
objectives, size and others. All these are having their different rules and regulation to operate
their operation and business. Following are different kind of organisation.
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Public enterprise: Public sector is type of enterprise. Usual these enterprises are large in
size and operate by government of particular country. The main motive to these firm are to serve
public living in country. The focus on profits is less compare to private organisation. They have
large contribution in society and numbers of employees are also large in this kind of business
unit. Some of examples of public bank are royal bank of Scotland, Mc Donald, British business
bank and Nestle. These are owned by public entities.
Private enterprises: Private enterprises refers to the organisation which are owned by
private entity like sole traders, partnership, company etc. these organisation is running to earn
maximum profits. These firm design products and services only to satisfy customers and wants
to retain them for longer period. Private enterprises motivate their employees to earn high profits.
The example of private organisation are Virgin group etc. this company is owned by private
entity. There are lots of rules and regulation regarding business operation and numbers of
employees.
Voluntary Sector: This sector is also called non profit companies. The main purpose of
these enterprises are to serve society in better way. These are not govern by government. In this
group of people come together and start their business. the main motive is to do welfare of
people. Some of example of are world vision. This charity organisation who serve children. The
another firm is American red cross that provide emergency services for disaster relief.
Main purpose of business are as follow
 To create and bring new innovation
 To creation of customers
 To earn profits
 To provides good and services to their potential customers
 To get fair returns on their investments.
Legal form of organisation
Sole traders: This are the types of business in which an individual start their business. In this
kind of business both business and owner treated as same entity. An individual is having
unlimited liability. There are less formalities and paper work. The person need to prepare
financial report to analyse the position of his/her business.
Partnership: Partnership refers to agreement between two and more parties. The person those
who are involved in partnership are know as partners. Their is deed which is sign by each partner
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which create legal relation between them. There are various kind of formalities took place while
forming partnership.
Company: This enterprise is very large in size. In this the owner and company treated as
different entity. There are many document prepared while forming a company such as
memorandum and article of association.
P2. Size and scope of a range of different types of organisations
There are different types organisation such as large, medium and small. They have
different market share, sustainability and operations. The difference in these organisation are
given below.
There are different level of enterprise. These levels of enterprises are given below.
Internal organisation: This enterprises are refers to those which are not having their
offices and business in other countries. They are selling goods and services in other foreign
countries by exporting. The risk and cost which is incurred is not very high. As company is not
operating their business in foreign country.
Transnational organisation: The structure of these organisation is very complex. These
organisation is combination of both multinational and global enterprises. The nature of these
firms are very flexible.
Global growth: These kind of companies are having their business globally. The market
share of these enterprises are very large. The firms are having huge opportunities. The number of
customers are very high. They achieve their targets very effectively as the employees which are
hired are very talented. The structure of these business units are very large.
Multinational organisation: These organisation refers to enterprises which are serving
their services in limited numbers of countries. These firms are having their operation in two or
more countries. These are smaller than global companies. The profits margins are also very high.
Responsibility of company towards its stakeholders: Stake holders are very important
part of an organization. Every company need to satisfy their stakeholders to get successful in
market. Stake holders include customers, supplier, employees, government and others. Following
are things which company needs to give to their stake holders.
 They need authority, power and recognition with their job.
 Employees want job security, income and opportunities in future.
 Suppliers need to receive regular payment.
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 Customer needs to have good quality of products in reasonable prices
 Government want taxes and ensure that all practise are conducted in proper manner.
All organisation need to fulfil all requirements of stake holders and it need great efforts to
satisfy them. Nestle is a company who are successfully satisfying their stake holders and this is
one of the reason behind their success.
Conclusion:
There are different kind of organization like public, private and voluntary. These
enterprise have different operation which each other. The legal rules and regulation is also
different. Their purpose of running business is differ from each other. Every firm have their own
way to enter in new market. There are various ways by which firm can enter in new market such
as franchising, joint ventures and licensing. Business unit need to choose more appropriate way
to get success.
TASK 2
P3. Relationship between different organisational functions and their link to organisational
objectives and structure
There are various types of department in organisation every department is having their
own functions and roles. Which they need to perform very properly. These departments are very
important in very organisation. As when the size of company is large than firm need to assign
task to employees according to their skills and knowledge. So for this many business units divide
their organisation and work in different departments. As one department is dealing the particular
issue (Klapper, Lewin and Delgado, 2011). Following are some of departments in an
organisation.
Production department: Production department are dealing with production and
manufacturing issues. This department is responsible for manufacturing good quality of products
in low cost. Following are the functions of production department.
 Preparing schedule for completing particular task.
 Controlling production activities
 Inventory control
 Machine and equipment needs to be maintain
 Product quality need to be improved.
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Marketing department: Marketing department looks after the activities which help to
promote products and services in market. The main responsibility of this department is to create
awareness in market. They do research and try to understand consumers needs and wants and
according to that they design particular goods. Following are the function of marketing
department (Klapper, Lewin and Delgado, 2011).
 To understand consumer needs and wants
 Do promotion for company product and services.
 Analyse the demand and supply in market
 Generate communication with customer
 Sales support
Human resources management: HRM is department those who are responsible for
recruiting, training and development, design appraisals of employees in a firm. They mange
employees in effective manner and encourage them to work and complete task so that goals and
objectives can be achieved in proper manners. Following are function performed by this
department.
 Selection and recruiting potential candidates.
 Providing them proper training and development to enhance their skills
 To solve the issues regarding health and care of employees.
 To build and improve employees relations.
Finance department: This department is responsible to maintain records properly such as
accounts, balance sheet, profit and loss account and others. They record all business transaction
which take place day to day operation (Krishnan, 2013). Following are functions of this
department.
 Keeping records of business transaction
 Preparing the final accounts
 Give information regarding other department.
Each department is depend on each other and inter related. When marketing department
is doing research they need to communicate with operation department about product production.
Operation department communicate with finance department so that budget can prepared
accordingly. In this HRM department recruit more employees so that all activities can take place
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in proper manner. If one department is not performing well it can have negative impact on other
functions also (Love, 2011).
Organisation structure refers to relation and interaction between different parts of firm.
This tends to identify the chain of command which take place in different level of an enterprise.
If the functions do not perform well it reflects on organisational structure. Following are the
types of organisational structure.
 Functional structure: In this structure there are different levels. Every department
engaged in doing their task and then they need to report to manger. Manger further
communicate with other higher level authority. The main advantage of this structure that
every line authority have clear understanding about their roles and responsibility. The
disadvantage of this structure is that different department is busy with working in their
own work. Their is lack communication between each department.
 Divisional structure: This structure is apply on those companies which are having various
product lines. So every product having its different department. So that no confusion took
place (Macdonald, 2012). The advantage of this structure is each branch can perform its
own and all functions are carried out in proper manner. The disadvantage is all
employees are performing identical functions which can lead to have inefficiency.
 Matrix structure: It is gives more flexibility to organisation. In this structure the
employees are working on functional based. This can bring positive changes in an
enterprise. Firm needs can be effectively adopt changes by this structure. The main
drawback of this structure that chain of command may result in conflicts.
 Organisational charts: If all above structure unable to solve problem. This chart can help
organisation. This can help to improve efficiency. Chart represent the line of authority
and control between different departments. If charts are prepare in proper manner. It can
help to make right decision. By this every employees know to whom they need to report.
TASK 3
P4.Positive and negative impacts the macro environment on business operations
Macro environment have great impact on business operation. These factors are not under
control by firm. So they need to make different plans and policies so that company can face these
challenges in effective manner. These elements have positive and negative both on business
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operation (Madsen, 2016). PESTLE can be used to analyse the external environment. Every
enterprise need to look at these factors to know about their strengths and weakness. Strength can
be used to make effective strategies and weakness need to be over looked so that proper action
can be taken. Following are factors which affects external environment.
 Political factors: Political factors are those which influenced by government of
particular country. These factors include taxes, fiscal policies, penalties and other. Every
country government is having certain rules and regulation regarding business
operations. This can have positive and negative impact on Nestle products. If the taxes
rates increases the citizen of country consume less products. Which can leads to
decrease the sales of goods. On the other hand if taxes decrease the increase and
consumption of nestle product can be increases. Government changes in food standard
which also have great impact on firm. Change in global standard practices also forces
nestle to bring their change in their system.
 Economical factors: Economic factors are those which affect by economic condition of
country. This factor includes GDP, interest rates, exchange rates, inflation etc. this also
may have great impact on business operation. If their inflation in UK. The prices of
products can be increases by which people do not like to spend more. They have save
money instead of spending them. By this company sales can be decrease. If the interest
rates are low in that case people take loans from bank and this increases consumer
purchasing power (McDonald and Wilson, 2011). By this the demand of products can
be increases. This can have positive impact on business unit. Rising in prices of raw
material may affect functions and structure of firm.
 Social factors: This refers to value, brief, norms which is shared by common people in
an organisation. The buying behaviour of consumer are influence by different factors
such as their their taste, preferences, income, lifestyle, attitude etc. if attitude of
consumers are changing it may have negative and positive impact on business operation.
Changing in lifestyle is also having great influence for example in today's scenario
many people are having busy life schedule for then nestle is coming up with instant
cooking by this it take less time cook (Mojaveri and Fazlollahtabar, 2012). Different
cultural, languages, religious and family background can increase and decrease demand
of nestle products.
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 Technological factors: Technology is changing day by day and it affects every business
operation. As each enterprise wants to achieve and use high technology so that their
work can be complete in more easy manner. Nestle get internet platform by which they
can advertise their products and reach wide range of customers. e- commerce bring new
development scope for the company. Nestle is using highest technology in their
production. By this quality of products are properly maintained. Firm is using high
safety standard by which they produce more safest products which are healthier for
consumers.
 Legal factors: Legal factors are those factor which every company need to follow. This
rules and regulations are exercise by legal authorities or company. Changing in Act can
affect the business operation (Myers and Korsmo, 2014). The working hours, the
discrimination between sex can be eliminate by this factors. As legal authorities are
implying new laws company need to implement them.
 Environmental factors: These factors are related to environmental factors. Every firm
need to consider these factors. The product and services which are produce by enterprise
need to be eco friendly and do not harm surroundings of country. These factors include
air, noise, land and other waste. Nestle look after these factors and produce their
products accordingly. The positive impact is if the serve environment in good way the
brand name of company can be increase. The negative impact may be the cost of firm
operations can be increased when they are taking new measures and technologies to
save environs.
TASK 4
P5. Conduct internal and external analysis of specific organisations
As like external analysis the internal analysis is also very important for company. In
internal environment all those factors are included which take place inside the firm. These
elements can be employees, enterprise structure, size of firm. Shareholders and others. These
elements have great impact on business operations. So deal which these elements is very crucial
for firm (Rankin, Windsor and Wahyuni, 2011.).
To analyse internal environs the SWOT model is there by which company can know their
strengths, weakness, opportunities and threats. Firm take advantage of their strengths to make
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policies and plans. By this business unit can know about their competitors and their strategies. So
that enterprise take action and make their products and services more innovative. The future
opportunities can be determine by this model by which firm can expand their business and
update their technology accordingly. SWOT of nestle is as follow.
Strengths:
 Nestle is a brand which is diversified in many countries and sectors which are in other
countries.
 The economic stability of company is good because they are providing different products
to different market segment.
 Nestle is having strong relation which other powerful brands such as coca-cola,
Palmolive, Colgate etc.
 Nestle is well known brands which is used by people for generation. Nestle is most
trusted brand in baby food.
 The company is having strong command on their research and development to grow their
business (Reed and et.al, 2013).
 Nestle is having strong bond with other big retailers.
 It include all the brands which are having large market share in some of the big
economies.
Weakness
 The most of the sales of nestle is because of its few recognise products. By this it
increase the risk for the company to make sudden changes if happen.
 There are another competitor in grocery market which are selling products in more
cheaper prices such as walmart, Tesco, Asda and other. These firm has ability by which
they force to reduce prices. In this many companies are having another supplements
brand name which give them more profits.
 Some of nestle brands are perceived old lifestyle brands by their customers such as
carnation milk (Rossi, Vrontis and Thrassou, 2012). These products are not according to
modern lifestyle.
 The company is much more depend on their advertisement to bring change in customers
opinion. This can increase the cost of firm by which the returns are very less.
 The cost of launching new product is very high.
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Opportunities
 As their increase in growth in online retail the company have new distribution channel
to sell their products. Their many online companies like amazon by which firm can
reach to its maximum customers.
 Growing in middle class population in many countries like china. The demand of nestle
products is increasing.
 Increase in income of the people tends to increase in demand of luxury items provide
by nestle such as ice creams and pet foods.
 The interest of people in health and nutrition is increasing by this demand of nestle
products are also rising.
Threats:
 There are other competitor in market like walmart and Aldi. Which are regularly
promoting their house brands to earn more profits. House brands are usual sold out in
less prices and they have more visibility in shelves. This may tends to have threat for
nestle.
 The are other large retailers like walmart those who force to cut the prices.
 The traditional product provided by nestle do not have advantage from new retail
channels like Amazon (Shumate and Ketel, 2014).
 The old advertisement methods are out dating as modern way of advertisement are
taking place in market.
 Some of the people are consuming meals by which they reduce their weight in that case
demand of nestle products are decreasing.
 The pre-package food in some country do not consider as health food. This increase
demand of natural and fresh healthy products.
 If their any sudden change in government rules and regulation this may affect on
company operations and sales of products.
P6. Strengths and weaknesses has interrelation with external macro factors
It can be true that Strength and weakness are co related with each other. SWOT has been
done for internal evaluation while PESTLE has been done for external evaluation. By PESTLE
company comes to know those factors which they can handle in proper manner. By which their
strengths are identify and those factors which they are not able to handle are their weakness
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which they need to look after and make policies to come over those weakness. By PESTLE firm
can determine their future opportunities which are coming for them in upcoming period so that
they get ready to utilise it in proper manner (Welford, 2013). In PEST and SWOT T is common.
Internal factors are influence by external factors.
If there is any changes took place in an enterprise it can directly impact on business unit
strengths and weakness. If firm is able to meet the needs and demands of customers it is strength
for the company. This strength they can use in manufacturing the products and services so
enterprise gain competitive advantage. Each business operation need to make system more
flexible so that they can face external factors in proper way. Nestle is proving food products
which are healthier for body and the prices of food is also low so that every individual can buy
goods.
CONCLUSION
There are different kinds of organisation which take place. These difference can be in
terms of market share, size, numbers of employees, firm structure etc. the legality of each
business is different from each other. There are different goals and aims which every firm is
having according to that firm make their strategies to get success. In enterprise there are different
department having their own roles and responsibilities. Marco and micro environment is having
large impact on business operations. For external analysis firm adopt PESTLE model and for
internal analysis the firm adopt SWOT analysis. This models help to know about their strength
and weakness by which business take various actions.
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REFERENCES
Books and journals
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