Business Environment and Strategic Management

This assignment requires analyzing various sources related to business research methods, international business environments, internal audit effectiveness in Greek hotel businesses, corporate social responsibility, and strategic development of business models. Students are expected to provide a detailed analysis of these topics, including key concepts, case studies, and implications for business strategy and ethics.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT.......................................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between various functions of an enterprise and its link with objectives and
structure of firm......................................................................................................................1
TASK 3............................................................................................................................................3
P4 Negative and positive impact of macro environment upon business actions and operations 3
TASK 4............................................................................................................................................5
P5 External and internal analysis of firm to identify its strengths and weakness..................5
P6 Interrelation of strengths and weakness with macro environment elements.....................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is known as mixture of various external and internal component
that affect the decision and actions taken by entity. Change in technology, clients, suppliers,
government, market trends and regulations all come under this. Manager of enterprise remain
responsible to identify these factors and consider the same while formulate business policies and
strategies (Shigang, 2010). Both internal and external elements affect the business operations.
Organisation's structure, culture, policy, rules and norms all come under internal factor and these
are remain under the control of a business entity. Elements such as legal, technological and
political issues is all consider under external factor and firm has no control over these. Variation
in these factors affect the decision making process of an enterprise that's why it is very essential
for manager to consider these factors while formulate policies and plans for business. This
increase flexibility of business operations contribute in growth of entity. Nestle, the largest food
organisation in the world is taken under this report for study. Firm offer different type of food
and drink to its customers.
Different type of organisations with its legal structure and purpose is all detailed in this
report. Link of various organisation's functions with structure of company is also given. Further,
impact of external environment elements business operations in positive and negative way is
discussed in this. In addition to this scope of various type of enterprises and interrelationship of
strengths and weakness of entity with macro elements is mentioned in this report.
TASK 1
Covered in PPT
TASK 2
P3 Relationship between various functions of an enterprise and its link with objectives and
structure of firm
Nestle is largest food company in the world, it manufacture and offer various kind of
food products to its customers for fulfil their requirements. One of the main aim of entity is to
capture a large market share and earn more profits than its competitors exist in market. Nestle
work on a global level and various functions such as marketing, finance, operational and human
resource department work in company (Trevino and Nelson, 2016). Every department perform
various functions which support corporation in achieve its set goals and help in attract large
number of customers. However function of various department of entity are interlinked with each
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other and affect the performance. All this affect final outcomes of entity. Further, interrelation of
various function of department and its link structure and objective of firm is given below under
the following points: Human resource department: This department is known as one of the significant one
because this select and hire the candidates for fill vacancy in enterprise. Further,
performance appraisal of employees, formulation of compensation packages and job
rotation is all carry out by this department (Van Vuuren, Roberts-Lombard and Van
Tonder, 2012). Various efforts are done by manager of this department for hire right
candidate for right job. This increase effectiveness of business operations and provide
better results to entity. Finance department: Formulation of various budgets and allocation of funds to different
department of entity all are the functions that is execute by finance department of firm.
Adequate amount of funds to various department support them in execute their functions
in an effective manner (Werther and Chandler, 2010). Further, this support in wastage of
funds and guide manager to perform all activities as per the set standard so large number
of customers can be attracted to buy the product. Marketing department: Manager of marketing department carry out research in order to
get information about trends of market. Further, various mode of communication are use
by this department to interact with target audiences of firm and to inform about the
features of company's good. Efforts done by this department directly increase the sale of
company's products and increase its net income. Information collected through research
support firm in take decisions accordingly (Wirtz, Schilke and Ullrich, 2010). Activities
perform by this department remain link with the final objective of firm. For example, if
Nestle wants to increase its market share by 20% in coming one year then it will focus
more on marketing of its products to persuade individuals to buy the same. Production department: Manufacture of products and services to satisfy needs of
consumers is execute by this department. Activities of this department remain largely
linked with the objectives of entity. For example; if Nestle wants to increase the quality
of its products then it focus to adopt a production process to enhance the quality of
products.
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Organisational structure: This refer to the way that an enterprise follow to execute its
business activities and to manufacture products for final consumers. Mainly structure of
organisation is divided on the basis of following: Function based: In this segmentation of enterprise take place on the basis of various
function perform by company. Finance, marketing, HR and production department
remain the main basis of segmentation. Geography based: Segmentation of enterprise take place on basis various regions. In this
firm ascertain demand and requirements of consumers live in different regions. Consumer based: Behaviour of consumers remain the main basis behind segmentation of
organisation. This type of segmentation encourage innovation for fulfil the demand of
customers.
 Product based: Segmentation of firm take place in this on basis of various products offer
by firm to its customers (Osterwalder and Pigneur, 2010). Nestle manufacture and offer
various type of products to its customers such as food products, baby products, and many
more. Organisation structure is divided on basis of different products.
TASK 3
P4 Negative and positive impact of macro environment upon business actions and operations
As Nestle is a international enterprise so all its activities get affected by so many factors
exist in business environment. Variation in any element impact business operations either
positive or in negative way (Pikka, Iskanius and Page, 2011). Major factors that cover under the
macro environment are political, technical, legal, economic and many more. Every enterprise
formulate business plans and policies and during this, it is very significant for firm to consider all
these factors as these impact on profitability of entity. Changes in external elements impact
business activities in both negative and positive way as given in following points:
Political factors: This aspect contain the rules, regulation and policies formulate by
government of nation to control the business activities of enterprise for control economy of
nation. Major factors that impact commercial activities are excise duty, duty on import and
export of good and many more. Positive impact: When Nestle formulate business policies by consider these factors then
it help in create a better image in market and increase profitability.
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 Negative impact: When government strict the policies than it create obstacles in
expansion of business operations.
Legal factors: This aspect cover the legislations of country which are required to be
follow by a firm to operate in that specific area. Positive impact: When firm follow all the regulations then both government and society
support the enterprise. Negative impact: Ignorance of legal rules give rise top legal action and penalty and
hamper the image of firm.
Technological elements: This aspect cover the technology use by entity to undertake
production process. Positive impact: When company use updated technology technology then it support firm
in manufacture featured products and at the same time help in attract more consumers. Negative impact: Use of old technology increase cost of business operations.
Economic factor: This element indicate the interest rate, deflation rate, inflation rate
exist in country in which company operate. Positive economic condition increase profits of firm
and ensure its expansion. Positive impact: Developed countries have good economic condition and if firm analyse
this before starts its operations in new areas then it support firm in achieve its goals. Negative impact: High rate of inflation decrease purchasing power of individuals which
decrease the sale of company's products.
Environmental factor: Various type of enterprise create different products and services
and during that firm remain liable to adopt the principles of minimum wastage. Positive impact: When company use methods and raw material that are safe to
environment then it help in form a positive image and increase the sale of company's
product. Negative impact: When company ignore the aspects related with safety of environment
they it face so many criticism from the society and its members.
Social factors: This is known as one of the significant macro element, this cover the
attitude, beliefs, age, behaviour, culture and religion of individuals (Pulver, 2012). Various in
these factors affect the purchase decision of individuals that impact on sales of company's
product.
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 Positive impact: Consider the needs and requirements of consumers during
manufacturing process increase the sale of company's product and its profits.
 Negative impact: Variation in attitudes, behaviour of customers directly affect the sales
of company's product.
TASK 4
P5 External and internal analysis of firm to identify its strengths and weakness
External as well as external analysis helps in determining all those forces which put
negative impact on operations of firm. This will assist the administration of company in
identification of their strengths and weaknesses. It also facilitates in maintaining strong position
in market. Nestle is one of the largest firm which provides diversified products to their
customers. It is necessary for firm to conduct SWOT analysis that assist in grabbing
opportunities from market.
SWOT Analysis of Nestle:
Strengths
 Research and development capability: It is considered as one of the core strength of
NESTLE as the company's management is good in terms of operating research and
development activities (Kolk,2016). The budget assigned to Nestle's R&D department is
quite huge as the department aid in investigating about the diverse needs and expectation
of customers.
 Strong geographic presence: Currently, the company is operating their business
practices in more than 194 countries which means they are performing their business
operation in almost every part of the country. They are mainly operating into main
geographical areas that covers market of Asia, Europe and America. It assist the firm in
yielding high profitability and capturing vast market share.
Weaknesses
 High Criticism: Although the company possess strong market image in the all over
world, but still they faced high criticism because of selling contaminated food, excessive
use of water, child labour and illegal ethical practices etc. All these activities is going to
affect Nestle's operation adversely and moreover creates bad image in the mind of
customer which may impact its goodwill.
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 Contaminated food recalls: Nestle is dealing in offering large number of products to its
customers. Due to its low or poor quality products, consumers are switching to other
brands. Moreover they have to recall their products which they have purchased in bulk
quantities from suppliers (Nishitani and et. al., 2012). The impact of all these activities
negatively affect the overall profitability of the firm. For example: After the incident of
Maggi, Indian consumers have banned the products of NESTLE.
Opportunities
Clear labelling of harmful products: Use of proper labelling related to different products
is an opportunity for Nestle. This assists the company in attracting large group of customers as
they prefer to buy properly labelled goods. This will help in gaining loyalty of customers.
Producing ready to drink coffee & tea: Nestle have various opportunities related with
expansion of business operations. This will increase profitability of company.
Threats
Increased competition: There are many competitors of Nestle that are available in market
which is the biggest threat for company. Management of firm face many difficulties regarding
profitability and sale improvement.
High prices of coffee beans: Currently, it is observed that prices of coffee beans are
increased by 10% which declines the profit margin of Nestle. Major reason of increased rate is
disaster in Brazil.
P6 Interrelation of strengths and weakness with macro environment elements
Management conduct PEST analysis to acknowledge market conditions and environment
in which business is conducted. Thereby, they require to use appropriate devices to ascertain
strengths and weaknesses of system. So, it is necessary that superior uses strengths to utilise
market opportunities and overcome weaknesses and threats. This benefit firm to utilise resources
efficiently and deliver adequate products and services in according to needs and wants of people
(Reed, and et. al., 2013). Competitive advantage, high sales and enhanced profitability are
various benefits which are incorporated by firm. Nestle, external macro factors are examined by
administration to identify strengths and weaknesses of system in respect to market conditions is
stated beneath:
Political factors: It is necessary that management make organisation function in
according to regulatory body of country in which business is being operated. As, government
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frame laws regarding taxation and political stability (Reinhardt and Stavins, 2010). Nestle which
is operating business in different nations require to make policies and strategies in respect to
nation in which activities are executed. This help company to enhance sales and profitability.
Strengths: Nestle have established team which make alterations in system in according to
rules and regulations of government. This benefit administration to enhance market image and
goodwill.
Weakness: As Nestle is operating business in numerous countries, so management
require to make policies accordingly. They require to have information about all government
laws, which is difficult task.
Economic factors: Interest, inflation and exchange rate are various elements which
impact on business activities. So, it is necessary that executive have adequate funds available
through which they are able to make system function properly (Hair, 2015). Nestle which is
operating firm in various countries require to organise activities and conduct business in
according to economic situation of nation. Thereby, determine products and prices in according
to demands of people and on basis of their income.
Strengths: Administration of Nestle require to enlarge business activities in various
countries as per their conditions. As in Asia market situation is good which is benefit for
company. So, executive are able to generate adequate revenue from their business.
Weakness: Different nations have diverse interest and exchange rate; so administration
require to make system function accordingly. It is necessary that appropriate changes are made in
strategies in according to economic conditions.
Social factors: Organisation require to deliver products and services as per needs and
wants of people (Hamilton and Webster, 2015). Administration of Nestle prime focus is to
deliver quality food items to customers, through which they are able to attract buyers. So,
company help in enhancement of society. Besides this, as executive provide huge donations in
according to improve living standards of people.
Strengths: Nestle market reputation and goodwill enhanced, as firm is conducting
corporate social responsibilities.
Weakness: Administration require to take care that quality items are delivered, otherwise
this will affect on decline in market position of firm.
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Technological factors: It is necessary that superior uses adequate tools and techniques in
system through which quality items are delivered by firm. In Nestle, advanced technologies are
used for manufacturing process so adequate food products are offered by company.
Strengths: If company uses advanced techniques, so administration is able to utilise
resources effectively and deliver creative food items to people.
Weakness: Management require to make modification in tools and techniques in
according to market conditions (Karagiorgos, Drogalas and Giovanis, 2011). Thus, they require
to conduct sessions to make employees capable in respect to technologies.
CONCLUSION
From the given project report, it can be concluded that business environment is a mix of
various external and internal elements. Any change in these elements directly affect the business
activities and purchase decision of individuals. Scope of business operations of every enterprise
remain different form the other due to change in its size and purpose. Further, all functions
performed by a company are interrelated with each other so this must be consider by manager
before decide actions and strategy for business. Company remain a little or no control over the
elements exist outside the firm so these must be consider by manager as these affect the strengths
and weakness of company.
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REFERENCES
Books and journals
Avramenko, A., 2012. Enhancing students' employability through business
simulation. Education+ Training. 54(5). pp.355-367.
Bovee, C.L., Thill, J.V. and Raina, R.L., 2016. Business communication today. Pearson
Education India.
Cavalcante, S., Kesting, P. and Ulhøi, J., 2011. Business model dynamics and innovation:(re)
establishing the missing linkages. Management Decision. 49(8). pp.1327-1342.
for developing markets. Long range planning. 43(2). pp.326-342.
Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Karagiorgos, T., Drogalas, G. and Giovanis, N., 2011. Evaluation of the effectiveness of internal
audit in Greek Hotel Business.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Nishitani, K. and et. al., 2012. Are firms' voluntary environmental management activities
beneficial for the environment and business? An empirical study focusing on Japanese
manufacturing firms. Journal of environmental management. 105. pp.121-130.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Pikka, V., Iskanius, P. and Page, T., 2011. The business enabling network–a tool for regional
development.International Journal of Innovation and Regional Development. 3(3-4).
pp.324-344.
Pulver, S., 2012. Business and the Environment.
Reed, O.L. and et.al., 2013. The legal and regulatory environment of business (p. 328). McGraw-
Hill/Irwin.
Reinhardt, F.L. and Stavins, R.N., 2010. Corporate social responsibility, business strategy, and
the environment. Oxford Review of Economic Policy. 26(2). pp.164-181.
Shigang, Y., 2010. Competitive strategy and business environment: The case of small enterprises
in China. Asian Social Science. 6(11). p.64.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.
Van Vuuren, T., Roberts-Lombard, M. and Van Tonder, E., 2012. Customer satisfaction, trust
and commitment as predictors of customer loyalty within an optometric practice
environment. Southern African Business Review. 16(3). pp.81-96.
Werther Jr, W.B. and Chandler, D., 2010. Strategic corporate social responsibility: Stakeholders
in a global environment. Sage publications.
Wirtz, B.W., Schilke, O. and Ullrich, S., 2010. Strategic development of business models:
implications of the Web 2.0 for creating value on the internet. Long range
planning. 43(2). pp.272-290.
Online
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