EU's Crucial Role in Developing an Effectual Business Environment for Nestle

The EU plays a crucial role in developing an effectual business environment that offers opportunities for companies to achieve high rates of return. Furthermore, Nestle's ability to make transactions at the international level enables it to maximize its gross revenue.

Business Environment

Table of Contents
INTRODUCTION ..........................................................................................................................1
LO1 Understanding the organizational purpose of business ..........................................................1
1.1 Identifying the purpose of the different types of business organization ..............................1
1.2 Describing the extent to which Nestle meet the objectives of different stakeholders...........2
1.3 Explaining the corporate social responsibility of Nestle.......................................................3
LO2 Understanding the nature of the national environment in which business operates ...............3
2.1 Stating the ways in which economic system allocate resources more effectively and
efficiently....................................................................................................................................3
2.2 Assessing the impact of fiscal and monetary policies on the business activities of Nestle. .4
2.3 Evaluating the impact of competition policies and other regulatory mechanisms on the
functioning of Nestle ..................................................................................................................5
LO3 Understanding the behavior of organizations in their market environment ...........................6
3.1 Explaining the ways through which market structure helps in determining the pricing and
output decisions...........................................................................................................................6
3.2 Illustrating the ways through which market forces shapes Nestle........................................6
3.3 Ways through which business and cultural environment shapes the behavior of Nestle .....7
LO4 Assessing the significance of global factors that shapes national business activities ...........8
4.1 Discussing the significance of international trade to Nestle as one one the UK business
enterprise.....................................................................................................................................8
4.2 Analyzing the impact of several global factors upon the growth and success of Nestle .....8
4.3 Evaluating the impact of policies of the European union upon the activities and functions
of Nestle .....................................................................................................................................9
CONCLUSION ...............................................................................................................................9
REFERENCE.................................................................................................................................11

INTRODUCTION
Business environment includes all the internal and external factors which have high level
of influence on various activities and operations of the organization. Manager of the firm is
required to manage all the stakeholders such as employees, customers and suppliers more
effectively. In addition to this, business unit is also required to comply with all the laws and
legislation which are framed by the government (Baldwin and Scott, 2013). By managing all
these aspects, business entity is able to build and sustain competitive advantage. The present
report is based on Nestle which is a leading food and beverage manufacturing company. This
report will describe about the mission, vision and objectives which are undertaken by the firm.
Further, it will also shed light on the extent to which fiscal and monetary policies have impact
on strategic framework of Nestle. Besides this, it will also develop understanding about the laws
and legislation which Nestle needs to be followed while performing business operations as well
as various functions.
LO1 Understanding the organizational purpose of business
1.1 Identifying the purpose of the different types of business organization
The main purpose of every business organization is to meet the customer needs and
fulfill them which lead to increase their market share. To core mission, vision and values of
Nestle company are as follows: Mission: Mission provide framework or context within which the companies strategies
are formulated. Nestle make strategies that aims to provide consumers with tasty, healthy
food and drinks for every meal and snack. Mission of Nestle states that company require
caring and efficient organization whose primary focus is on providing consumers with
safe and convenient high quality food products. vision is to be the leading Food and
Beverage Company in providing the customers with high quality products and services at
competitive prices and ensuring long term profitability and feasibility of organization. Vision: A vision statement identifies what company would like to achieve and
accomplish. Vision of Nestle wants to be the leading Food and Beverage Company in
providing the customers with high quality products and services at competitive prices and
ensuring long term profitability and feasibility of organization (Mission, vision and
objectives of Nestle, 2016.).
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 Values and objectives: Values and objectives of Nestle is to manufacture and market
Company's products in such a way as to create values that can be sustained over the long-
term for owners, employees, consumer and business partners.
Different types of organization has varied goals and objectives for which they work are
enumerated below:
 Public organization: The main objective of this type of organization is to develop the
employment opportunities by starting the new venture. Thus, public business unit
perform their business activities in such a manner which makes contribution in the
growth and development of economy.
 Private business unit: It refers to those which are owned and regulated by the individual
business entity. Maximization of productivity and profitability is one of the main
objectives of private business organization.
 Non-profit making organization: It include institutions who work for the well being by
keeping aside the profit aspect.
1.2 Describing the extent to which Nestle meets the objectives of different stakeholders
Stakeholders refer to those who have interest in the working aspects of firm. It includes
shareholders, employees, institutions, environmental groups and agencies etc. Nestle has met the
objectives of different stakeholders to a large extent in the following manner: Shareholders: They are the one who invest money in the shares of firm with an aim to
get high level of return on investment. It is one of the main objectives of shareholders
behind making investment in the shares of Nestle. Thus, profitability aspect of Nestle is
sound and it offers high dividend to their shareholders. This aspect reflects that objectives
of the shareholders are met by the company to a great extent. Employees: Personnel of the firm have desire to earn high salary along with getting
bonuses and allowances (Biswas and et.al., 2013). Hence, Nestle offers salary to their
workers on the basis of their skills and abilities. Besides this, company also provides
additional benefits to their employees. This aspect evolves high level of satisfaction
among the workforce. Customers: In the present era, there is shift in the demand of customers in terms of
nutritional food. Now, customers give priority to the ingredients while purchasing the
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food products. Thus, by offering the quality and healthy food Nestle has satisfied the
goals and objectives to the great extent. Government: Tax is the major source of income for the government. Thus, by giving
appropriate tax to the government Nestle has meet the objectives of government to the
great extent. Institutions: Financial institution implies for those who give monetary assistance to its
business on credit basis. In this, by making repayment of loan within the suitable time
period, Nestle has performed his responsibility towards the institutions more effectually.
 Environmental groups and agencies: Such groups and agencies are highly concerned
with the safety and protection of environment. Nestle follows all the laws and legislations
which are highly associated with the quality and nutritional aspects of food products.
Along with it, Nestle does not perform any activity which is harmful for others.
On the basis of all the above mentioned aspects, it can be stated that Nestle is performing
its operations in the best possible way.
1.3 Explaining the corporate social responsibility of Nestle
In order to survive in a dynamic business environment, Nestle has to perform several
responsibilities towards their stakeholders which are enumerated below:
 Shareholders: Nestle has responsibility to consistently give dividend to their shareholders
on the increasing rate. For this, organization is required to assess the new ways through
which it can enhance its productivity and profitability. Moreover, dividend decision of
the firm is highly affected by the revenue generated by it. Through this, company is able
to build faith and trust in the mind of shareholders.
 Employees: Business enterprise needs to organize training and development session for
their personnel on a periodical basis. Through this, Nestle is able to upgrade the skills and
potentials of its workforce. However, training and development activity helps employees
in performing their activities without facing any difficulty (Brands, Demmelmair and
Koletzko, 2014). This activity also provides assistance to the firm in enhancing their sales
and gross margin.
 Financial institutions: In order to build good corporate image, organization needs to repay
the amount of loan with interest within the suitable time period. Therefore, Nestle needs
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to prepare competent strategies and policies which help them in getting more benefits
from the amount of loan. Further, by making control over the cash flow, business unit is
able to meet its obligation within the given time frame.
 Environmental agencies: Organization also has responsibility to perform their business
activities in a way which does not have any bad impact on the environment and society
(Carraro, Katsoulacos and Xepapadeas, 2013). Therefore, Nestle needs to undertake
research and development activity in order to assess the way of producing products which
must be safe for society and should reduce pollution.
 Customers: Taste and preferences of the customers are change with the very high pace. In
this, Nestle has responsibility to offer food products or services to their customers
according to their needs and expectations. For this purpose, Nestle undertakes research
and development activity which helps hem in identifying the needs of customers in an
effectual manner. Further, business unit adopts fair trade policy according to which firm
cannot charge high prices for the food products or services which are offered by them.
 Government: Nestle is also accountable to follow all the laws and legislation which are
framed by the government. In this, Nestle follows all the consumer laws while serving the
customers. Through this, business unit is able to perform the responsibilities toward their
stakeholder to the great extent.
LO2 Understanding the nature of the national environment in which business
operates
2.1 Stating the ways in which economic system allocates resources more effectively and
efficiently
Different economic systems have varied impacts on the allocation of resources in the
following manner: Mixed economy: This economy possesses the characteristics of both capitalism and
socialism. In mixed economic system, government has freedom in relation to use of
capital and other sources. Nevertheless, it also includes the interference of government in
the economic activities with an aim to achieve social objectives. Mixes economic system
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exists in the UK and due to this aspect, operations of the firm is heavily influenced. Due
to liberalization, there is little interference of government on the activities of Nestle.
 Free market economy: In this economic system, prices of the goods and services are
determined with the mutual consent of vendors and customers. Under this, supply and
demand forces have high level of impact on decision making aspect of the organization.
There is less or no intervention of government in such type of economic system. Thus,
Nestle makes use of resources in accordance with the market forces more freely. Under
this economic system business unit can use the resources in an effectual manner which
helps them in meeting the needs and expectations of customers. Thus, by making
optimum use of resources business organization can make balance between the demand
and supply.
 In addition to this, inflation is one of the most significant element of the economic
system. During the period of inflation there is huge production taker place in market due
to the rise in the purchasing power of customers (Hamilton and Webster, 2015). This
economic condition closely affects the resource availability and allocation.
2.2 Assessing the impact of fiscal and monetary policies on the business activities of Nestle
Fiscal policy: This policy of the firm is highly associated with the tax policy of the
government. This policy of the government closely affects the investment and other business
decisions. For instance: If government charges less tax on the manufacturing of the product or
services then companies are encouraged to make high investment in further productive activities
and functions. Moreover, tax amount decreases the profit which is generated by the firm. Due to
this, investment decision of the firm is highly affected (Hartmann and Uhlenbruck, 2015). Along
with it, when tax policies are liberal then companies like Nestle is encouraged to transact at
global level. This aspect also proves to be more beneficial for the economy of UK. On the
contrary to this, when government impose high taxes then Nestle is discouraged to make
investment in the economy. This is turn, also affects the living standard of the people of society.
Thus, fiscal or taxation policies have high significant upon the decision making aspect of Nestle.
Monetary policy: It refers to the framework which is prepared by the government to exert
control upon the money supply in the economy. In order to prevent unhappening economic
conditions monetary policies are prepared by the central bank of the respective country. Cash
reserve ratio, statutory liquidity ratio and open market operation closely influence the growth and
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success of the business organization. For instance: When CRR increases then bank is compelled
to keep money with the central bank. In this, there is less supply of money in the economy. In
addition to this, when bank is obliged to keep high level of liquid assets with itself (Hill, Jones
and Schilling, 2014). Both these aspects negatively affects the interest rates which are charged by
the financial institution. Due to the less supply of money financial institution charges high
interest rate. This aspect restricts Nestle to take financial assistance from the institution for the
further growth and expansion. On the contrary to this, when institution charges less interest rate
then Nestle is encouraged to conduct research and development activities for getting desired
outcome or success. Besides this, monetary policy also has impact on the exchange rate of the
currency. Lower exchange rate make the import more expensive which negatively affects the
profit margin and vice versa. Further, when business unit sThus, it can be said that fiscal and
monetary policies closely affects the strategies and policies of the firm.
2.3 Evaluating the impact of competition policies and other regulatory mechanisms on the
functioning of Nestle
In a today competitive scenario, every industry and business firms compete with their
rivals firms in order to gain success and increase their market share. Competition policy aims to
make market work for consumers through its core elements and support. This government
policies and regulatory framework protect the business firms to make their product superior in
market. Competition Act, 1998 entails that no firm can create monopoly in the market . Besides
this, firms are also restricted to charge the higher prices for product or services. According to
competition policies, nestle must provide fair prices of their products in the market. Nestle
should not create monopoly market in which there are single seller or producer for a product
(Ioannou and Serafeim, 2015). Monopoly market raises prices indefinitely is its most critical
determinant to consumers. Company should recognize that its customer's have sincere and
legitimate interest in the behavior, beliefs and actions of company brand in which they place
their trust among customers. Nestle is a consumer driven company and it commit to meet the
customer preferences and ensure that consumers will prefer company products to those of the
competition.
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LO3 Understanding the behavior of organizations in their market
environment
3.1 Explaining the ways through which market structure helps in determining the pricing and
output decisions
Market structure refer to the nature and degree of competition in the market for goods
and services which have an impact on the pricing level and output decisions of business firms.
The following different market structures are available which affect pricing and output decision: Perfect Competition:Perfect competition is a market in which number of buyers and
sellers is large, all engaged in buying and selling activities which lead to produce
homogeneous product and possess perfect knowledge of market at a time (Jane Wilson,
Bengtsson and Curran, 2014). In this market structure, firms sell their product at cheaper
price. Monopoly Market: In monopoly market, there is only one seller of a product with
barriers to entry of others. The product has no close substitutes. In monopoly market
structure, firms attempt to charge high price for products because there one company sell
their product to numerous buyers. Oligopoly Market:Oligopoly is a market structure in which there are few firms who
selling both differentiated and homogeneous product in market (Jones and Sufrin, 2014).
With only few firms in the market, the action of one firm is likely to affect the others, so
firms sell their product at very high price.
 Monopolistic Competition:Monopolistic is a form of market structure in which large
number of independent firms are supplying a differentiated product (Market Structure
and Competition, 2014).
On this basis of market structure mentioned above, Perfect competition is suitable market
structure for Nestle company. Moreover, there are large number of retailers are available in the
UK market who offers quality food and beverages product to the customers. This aspect clearly
reflects that high level of competition take place in the market. In this, Nestle need to set
competitive prices for the food and beverages which are offered by them. Thus, by offering the
quality and nutritional food products to the customers business unit is able to attain success in the
strategic business arena.
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3.2 Illustrating the ways through which market forces shapes Nestle
There are several market forces which shapes the behavior of Nestle: Demand and elasticity of demand: It consists of the willingness of the customers in
relation to the purchasing of goods or services. When demand is high for the product is
high which is offered by Nestle then company is able charge high prices. On the contrary
to this, if demand for the food product decreases then company needs to offer discount to
their customers (Muff and et.al., 2013). By this, organization is able to the enhance sales
to the large extent. In the context of Nestle, customers demand is not highly elastic in
nature for the food products which are offered by it. Moreover, in the present era,
customers place more emphasis on the nutrition and quality of the food rather than its
price. Thus, company can raise demand and sales by offering the nutritious or quality
food to the customers.
 Supply and elasticity of supply: It indicates the extent to which products or services are
available in the market. When supply is high as compared to demand for the product
then organization is compelled to reduce the price of it. Moreover, in the food industry
taste and preferences of the customers are changed more frequently. It is one of the main
reason which closely hampers the growth and profitability aspect of the firm. Increasing
awareness of the customers towards the health and safety aspects changes their attitude
towards the food products and services. Thus, Nestle needs to manufacture products
according o the needs, wants and expectations of the customers. By this, business
corporation is able to achieve success in the dynamic business environment.
3.3 Ways through which business and cultural environment shapes the behavior of Nestle
Business and socio-cultural environment closely affects the strategic framework of
Nestle. Skills, competencies and potential of the personnel plays crucial in attaining desired
outcome or success. In the strategic business place company can attract customers only when it
offer unique or creative product to their customers. Thus, Nestle needs to hire skilled personnel
who are able to offer attractive and different products and services. In addition this, changes
which take place in the technology also affects the working aspects of the firm.
Further, with the aim to increase sales and gross margin company is required to make
changes in their operational strategy. Thus, by offering food products in attractive and reusable
packages Nestle is able to build loyalty among the customers. In addition to this, taste and
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preference of the target market also affects the business practices of the firm (Schaffartzik and
et.al., 2014). Moreover, purchasing decision making of the customers are highly influenced by
their beliefs, customs and practices. Thus, Nestle needs to undertake research and development
activity which helps it in assessing the mindset of customers. Through this, company is able to
develop satisfaction among the customers.
LO4 Assessing the significance of global factors that shapes national business
activities
4.1 Discussing the significance of international trade to Nestle as one one the UK business
enterprise
International trade may be defined as a exchange of good and services at international
level or market. With the emergence of liberalization and globalization companies are free to
make transaction at international level. Moreover, availability of the resources vary from country
to country. Thus, by trading at international level business unit is able to take benefits of the
cheap labor force and other resources (Urde, Baumgarth and Merrilees, 2013). It is one of the
most significant factor which compel business organization to maximize their sales and gross
profitability aspects. For instance: Nestle operates and sell their product and service over the 100
countries. This aspect clearly reflects that company is operating in the different parts of world.
Thus, by offering food and beverages to the large group of customers who resides ta different
parts of the world company enhance its sales revenue.
Further, international trade also offers opportunity to Nestle to build or strengthen its
goodwill on worldwide. Thus, by servings the quality food company is able to increase their
market share. Along with it, cross borders trade and transactions also provides assistance to get
benefits of the economies of scale. Moreover, when company produce goods and services on
large basis then the cost of the per unit of product or services are decreased. Thus, international
trade plays a vital contribution in the attainment of organizational goals and objectives.
4.2 Analyzing the impact of several global factors upon the growth and success of Nestle
There are several global factor such as GDP, living standard of people, per capita income
as well as other external factors have high level of impact upon the growth and development of
the firm. Thus, organization needs to make evaluation of all these factors while preparing
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strategic framework. Moreover, purchasing and spending decision of the customers are highly
based upon the income earned by them. In addition to this, Nestle also needs to make evaluation
of the extent to which customers of different countries have desire to raise their living standard.
By taking into consideration such fact business unit is able to make appropriate pricing
decisions.
Along with it, Nestle operates in more than 100 countries. In this, enterprise requires to
make changes in its existing strategies and policies according to the laws or legislation of the
concerned country. Further, business organization also requires to adopt latest technological
aspects according to the competitors (Wilden and et.al., 2013). Beside this, Nestle also needs to
follow all the health and safety as well as environmental aspects. Further, in the present time
technological aspects are getting change with the very high pace. Thus, if Nestle fails to employ
the effective and latest technology in production then it closely affects the growth and success
of firm. Besides this, business organization also has responsibility to perform their functions in
such a manner may result into less environmental pollution. Thus, in order to operate at global
level business unit requires to follow all these rules and regulations. If Nestle fails to comply
with such factors then it negatively affects the growth and success of firm. By following all
these aspects corporation is able to fulfill its corporate social responsibility to the large extent.
4.3 Evaluating the impact of policies of the European union upon the activities and functions of
Nestle
European union has made several policies, rules and regulations which each and every
organization needs to follow who operates in UK. Thus, Nestle also needs to follow all the
aspects which are framed by European Union because it is also operated in UK. This policies are
designed by the union in such a way which helps organization in increasing the demand for the
industry. This provides assistance to the firm in making improvement in their financial
performance and status. In addition to this, European union have framed highly liberal policies
which encourage firm to offer their product and services at international market. Further, policies
of the EU prevent unethical and illegal business practices of the firm. On the basis of this aspect
no one firm can create monopoly in the market. Thus, it plays a vital role in build or develop
healthy business environment. Further, according to the EU tax policy member states have
freedom in relation to choose their tax systems. Besides this, EU also makes co-ordination
between the national policies by simplifying the tax problems. Further, European Union also
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encourages business unit to make cross border transactions by eliminating the tax obstacles to the
large extent. It helps in making balance between the payment system in an effectual manner.
By this, all the companies which are operated in food industry are become able to attain success
in the competitive business area.
CONCLUSION
From the above report it has been concluded that Nestle needs to make assessment of all
the internal and external factors before making any decision. Besides this, it can be inferred that
Nestle have met the objectives of the different stakeholders of the business unit by performing
their responsibilities in an appropriate manner. Further, it can be concluded that monetary and
fiscal policies closely affects the investment and other business decision of the firm. It can be
seen in the report that Nestle is operated in the mixed economic system. Along with it, it can be
revealed from the report that EU plays a crucial role in developing the effectual business
environment which offers opportunity to the each firm to attain high rate of return. Further, it
can be stated that by making transactions at international level Nestle is able to maximize its
gross revenue.
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Online
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