Impact of Leverage on Business Success

This assignment requires a literature review focusing on the interconnectedness of financial leverage, product quality, and business success, particularly within the context of Small and Medium-Sized Enterprises (SMEs). Students need to critically examine existing research papers from reputable sources, highlighting key findings and trends in this field. The analysis should delve into how financial leverage influences product development and ultimately impacts the overall performance of SMEs.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explain different types and purpose of an organisation with legal structure.........................1
P2 Size and scope of a range of different types of an organisation............................................3
P3 Relationship between different functions and their link with organisational objectives and
structure.......................................................................................................................................5
TASK 2............................................................................................................................................7
P4 Identification of various macro environment factors in context with positive and negative
influences....................................................................................................................................7
P5 Internal and external analysis for determine the strength and weakness as well...................9
P6 Interrelationship of macro environment with internal factors for managing strategies.......11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is not similar in nature and it get changed with every due course of
time. Situations are not getting stabilise for any business organisation in any consideration as
chances of harmful reflection are more in tenure. But sometimes, several positive reflection also
underpin with changes in environment like several policies become favourable for various
working organisations. This project is based on business environment which constitute various
types of business which are public, private and voluntary (Kew and Stredwick, 2017) Along with
this, it will also define about the size and scope of various ventures and their working. Moreover,
there is a link among various organisational functions which is important to understand by
managers. Such function coordination will enable to accomplish objectives and targets. Also, it
will reflect about the positive and negative attribute which suppose to gain through macro and
micro business environment. It is really essential to determine the relationship between strength
and weakness and macro environment factors as well. This project is based on Nestle which
simplify as one of a major confectionery firm in the world with appropriate customer base.
TASK 1
P1 Explain different types and purpose of an organisation with legal structure
Business environment is dynamical in nature which used to get changed with each and
every course of time. Thus, there are different types of organisations are operating in business
environment which need to understand by managers of a company so that suitable and
appropriate strategies lead to frame out. Business need to assess and determine the various types
and purpose of differ kind of associations so that management of work could be done properly.
Some business entities run and operated for a specific purpose of profit like private business
whose single motive define as sustainability (Bah and Fang, 2015) On the other hand, some are
not for profit business whom work for motivating and upraise the standard of society.
With such aspect, some more information regarding business ventures and clear
elaboration define as below so that Nestle become able to understand about the different types
and purpose of organisation as well as their legal structure so that better and systematic work
could be done in order to gain better outcome:
Types Overview Purpose Legal structure
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Public sector: These
are such associations
and companies whom
operated with a single
and appropriate motive
of upraise standard of
society by minimising
various kinds of
issues. Thus, public
sector companies have
better establishment
and good market
growth as well
because they are able
to issue shares at
market area or to
general public.
One of a major Public
Sector company of UK
is Crown Prosecution
Services whom deals
in providing legal
advises to all kind of
individual or bodies
working on diverse
issues. This was
formed in the year
1986 and currently
6000 employees are
working over there.
Headed by the director
of Public Prosecution
which enables and
support in providing
legal advises to many
bodies which work for
reducing criminal
offense of society.
Hence, their major
control is to maintain
good environment at
society.
Many public sector
companies not need to
follow any define legal
structure as they
already operated a
government official.
Hence, there is no
legal structure required
to followed down due
to operating by
government officials.
Private sector: Several
business firms whom
orientation is just to
generate profit and
revenue are define
under the private
sector companies.
These companies have
a right to issue their
share at market world
as well as enable to
generate profit with
accurate customer
satisfaction.
Nestle is one of a
private sector
company in UK and
founded in the year
1866 in Switzerland.
This is a second
largest Swiss company
in context of
generating more and
more revenue. They
have more than
3,00,000 employees in
their companies which
operated for a single
A major purpose of
Nestle is to generate
more income and
revenue through
delivering quality
products and made the
user satisfied in nature.
They also issue their
shares at market which
support in generating
more and more profit
as well as revenue.
They required to
follow all legislation
which imposed on
them. Although,
company need to
register under a
definite act. This legal
structure required to
followed down in
better and definite
manner.
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motive of profit.
Voluntary: These are
such sort of substances
whom normally
working for society
not with a thought
process in producing
benefit but rather
obvious to determine
issues exhibit in social
condition. They had a
huge constructive
outcome on each
individual so better
related working should
be possible and
oversee.
British heart
foundation is one of
philanthropy business
in UK which was
shaped in 1961. it was
established with a
mean to decrease the
quantity of passings
which occurring
because of heart
issues. It begin with
help of some
restorative experts.
A noteworthy reason
or sole work which
could done by this
wilful substance is to
control the heart
infections in UK
however propelling
mindfulness occasions
with the goal that
better related working
should be possible.
Voluntary association
need support from
government in their
operations as they are
not working for profit
generation. Voluntary
business have to
follow legal statutory
in rare cases.
P2 Size and scope of a range of different types of an organisation
Every business firm have differ size and scope as well which need to understand by
managers of a company so that better and appropriate results could be drawn. Although, their
size and scope of working specified their nature properly so that better and effective working
assessment could be done which enables business to gain determine results properly. Although, a
major connectivity and operating criteria for a business are their stakeholders. For a business,
there is a need of stakeholders mapping which support these business to maintain and manage
their operations as per size and scope. The steps for stakeholders mapping for Nestle or any other
firm define as follow: Identifying: First step for Nestle and any other firm is to identify and list the relevant
groups, people which they are going to target. This is an initial stage where stakeholders
whom are going to target get determine for better and appropriate working.
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 Analysing: On the next stage of mapping, all stakeholders needs and wants have to
determine and underpin properly. Their interest required to understand properly so that
appropriate mapping get done by fulfil their needs and wants. Mapping: Another step is to mapping out where objectives required to align with the
stakeholders properly. For this, management have to maintain and manage relationship
and visualise the command with objectives and stakeholders properly so that they could
define in suitable groups.
 Prioritizing: Once all steps get fulfil and complete, then management have to determine
their prioritise stakeholders of a business as well as determine the major issues and
problems as well.
With such aspects and stakeholders mapping for Nestle, next stage is to craft the size and scope
of each and every business organisation. Although, their size and scope enables in better
understanding about their work which further assist in appropriate understanding.
Crown Prosecution Services
Background: Specialist co-ops whom prosecutes criminal cases that reviews by the police and
other exploring offices over in England and Wales. Autonomous association and basic leadership
is likewise not relies upon others.
Product and services: Administrations giving advises which prosecutes the instances of criminal
offense.
Mission and Vision: The mission and vision of crown prosecution services:
 Choose which case ought to be indicted
 Display cases to court Offer help to arraignment witness
Size and scope: The size of this entity isn't so large as they just worked in England and Wales.
Nestle
Background: This is a business firm whom operating in food industry and get establishment in
the year 1866. Determine as second largest Swizz food manufacturer in the world and got
founded by Henri Nestle. The covered almost the globe with providing employment to more than
3,00,000 employees.
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Product and services: Some major food products in which Nestle lead to deal out are Baby food,
coffee, dairy products, confectionery etc. All these enables them to gain competitive edge
because of high quality standard.
Mission and Vision: A mission statement of Nestle is “Good Food, Good Life”. This signify that
business highly focus on good quality standard products and service which facilitate each and
every individual to get satisfied.
Size and scope: Nestle operating at world wide area where they have good profit generating
capacity as well. Although, in future aspect, their size and scope tend to be high in frame which
enables in gain and create appropriate customer base.
British Heart Foundation
Background: Charity association in the UK which was founded in the year 1999.
Product and services: Innovative work for evacuating heart related infections. Administrations
to give cardiovascular treatment to each person.
Mission and Vision: Mission of a company is to fight against heart diseases and end it up.
Clearly conduct study for making appropriate cardiovascular study.
Size and scope: Only operated in UK and have smaller nature of functions. Clear objective
which is to end heart diseases.
P3 Relationship between different functions and their link with organisational objectives and
structure
There are various business functions are operating in an organisation which have a direct
or indirect relationship between each other. Such functions relationship enables and support in
accomplishing objectives of a company properly. In a large or small firms, operating functions
are HR, finance, marketing whose major aim is to work properly and effectively so that targets
lead to get accomplish in better and effective manner. Nestle is one of a big firm where different
number of functions are operating (Kim, Suresh and Kocabasoglu-Hillmer, 2013) Thus,
management of a company have to determine their link with each other so that organisational
objectives could be accomplish which reflect positive reflection on profitability and productivity
of a company. Marketing – HR function: HR play an important role in a firm to select and recruit
eligible individual whom have ability to deal in any diversified situation. Human resource
manager needs to link up their working with each and every other function so that they
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suppose to fulfil all determine job vacancy. On the other hand, marketing support in made
availability of products and services to ultimate client and user. Marketing support in
providing information of environment so that better and effective production lead to
done. Thus, HR manager have to take appropriate data from marketing manager
regarding job position vacant over such division. This enables in achieving the overall
target with selection of suitable candidate. Finance – Marketing function: Several other functions to perform by a company are
finance and marketing functions. Finance function make appropriate records of each and
every monetary consideration which used to going at a firm. This enables them in create
income statement and determine outflow of a money as well (Eurich, Weiblen and
Breitenmoser, 2014) On the other hand, they used to coordinate with marketing division
which use aggressive technique of promotion. Finance and marketing functions have to
under line their operations and made suitable coordination so that they become able to
maximise their effectiveness and efficiency. Although, Nestle have to determine this
relationship where marketing team lead to launch some plan for future which attract more
and more number of users. This tend to made positive reflection on the finance as more
money lead to come with effective marketing strategies (Harrison, 2013)
 Research and development – HR function: Behind each and every innovation, R&D
department play an important role. They contribute their most to determine and underpin
something new from the market so that effective operations lead to take place. HR
manager required to understand their duty and responsibility properly where they should
have to recruit a candidate and motivate them towards work. Thus, at R&D division, such
kind of individual required who always try to identify and search something new and
innovative. Nestle have to made and always try to identify something new from market
area with more and more innovation which only get done by selecting suitable and
appropriate candidate.
All these functional relationship have to understand by each and every department managers.
Nestle success only derive with effective and appropriate coordination of all divisional standards.
This will assist them in enhancing their objectives like profitability, sales, revenue and better
customer relationship as well (Alqahtani and Saba, 2013)
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TASK 2
P4 Identification of various macro environment factors in context with positive and negative
influences
In order to work appropriately it is important to consider all the factors that can have an
effect on business operations whether in a positive or negative way. Macro environment is
considered as a factor that are not in the hands of an organisation and includes components like
legal, economical, cultural etc., but these can be changed in any course of time. Thus, it is
important to understand and analyse the factors which is required for managing the business
operations in order to increase the sales and productivity (Sodeyfi, 2016) Apart form this, the
outcomes are needed to be determine whether positive or negative so as to make appropriate plan
of action according to the circumstances. Therefore, it is important for Nestle to evaluate all the
factors and attributes in order to perform well and also to achieve the set targets and objectives
properly.
Basis Strength Weakness
Political: All the laws and
regulations formulated by
governmental bodies comes
under this. Mainly the norms
are regarding taxes, policies
related to fraudulent
activities, so that company
operate their business
effectively.
The biggest strength of Nestle is
that they are handling their
business in vast areas across the
globe and as the company is big,
they get political support which
enables them in performing
their task in a better level (Kolk,
2016)
It is gaining excellent results as
government has cut down
corporate tax form 30% to 28%
and as a result Nestle is gaining
profits by providing excellent
services to its customers.
Sudden changes in policies by
governmental bodies is
effecting the business and it is
considered as the biggest weak
point. With the decrease in
corporate taxes the other rival
companies are also giving
Nestle tough fight and because
of which achieving the targets
is becoming difficult for them.
Economical: This helps in
making strategies so it is
As United Kingdom have
suitable economic conditions
Rigid competition in market
area sometimes bind
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important to identify the
economic conditions of any
country before establishing
their business in that
particular area.
and in order to gain maximum
profit it is important that Nestle
follows all factors that will help
them in gaining profits. Apart
from this, they should ensure
that a good relationship is
maintained with Other European
countries (Hillary, 2017)
companies in implementing
appropriate prices according to
their policies due to which
they may not be able to gain
maximum benefits. Thus, most
of the organisation are
enforced to sell their products
at low prices because of which
a downfall in their growth can
be seen.
Socio cultural: This is the
factor that makes a country
different from one another
and unique in nature. Hence,
it is essential to identify the
cultural aspects before
launching any new product in
a particular area. Therefore,
it will help Nestle in making
suitable commodities for
respective places (Shenkar,
Luo and Chi, 2014)
By analysing the socio –
cultural aspect Nestle will be
able to identify which group of
people can be easily targeted so
as to increase their sales and
productivity. This will enable
them in having better command
over the market. As a result a
growth can be seen in the
performance of Nestle.
Some of main weaknesses that
can be faced by the company
at marketplace is rapid
increase in competition. Along
with this cultural also plays an
important role in providing
suitable environment in
operating the business in a
proper manner.
Technological: With the
change in course of time new
tools and machineries have
been discovered and this is
assisting organisation in
manufacturing products
according to the needs and
demands of customers. Thus,
Earlier the process was time
consuming but after introducing
of new technologies this has
reduced the process of cost and
time as well. As a result an
individual can place his/her
order from anywhere.
Fraud is the biggest risk which
a person can face while
making online payment thus, it
is essential that Nestle develop
such software which cannot be
easily hacked.
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it is important that company
implement appropriate
technologies for obtaining the
same.
Environmental: In order to
increase the productivity it is
essential that Nestle provides
a suitable environment where
they can sit and perform their
work peacefully. This will
enable them in giving their
best efforts.
Nestle is very much conscious
about the environment
therefore, they are utilising
various factors by which they
can use resources with out
wasting them. They are opting
carbon foot printing can it is
helping them in formulating
better results (Wild, Wild and
Han, 2014)
Excessive use of livestock can
take firms to create losses for
it. As if government get to
know about it might be
possible that they may charge
them. It is must to ensure that
limited resources are being
used in right amount only.
Legal: All rules and
regulations are included in
this which are formulated by
governmental bodies.
Information related to new
policies will assist the
organisation in gaining
maximum profits.
Frequent alterations in laws
and legislations can restrict
them in working effectively.
P5 Internal and external analysis for determine the strength and weakness as well
To operate business in a better manner it is essential to identify all the pros and cons that
are present in an organisation this will enable them in eliminating the factors which can hamper
the activities. So, it is important for a company to identify all the advantage and disadvantages in
order to attain better results and outcomes (Hair and et. al., 2015) For this, Nestle is framing
several strategies and plan of action and this is enabling them in making appropriate judgement
regarding business operations. Below some of the targets are given which corporate companies
can look out for making growth and development and they are as follows;
 To enhance the rate of sales by 6%.
 To increase the number of customers in global market by 20%.
 To maximise the number of stores by 150.
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Therefore all these objectives will assist them in maintaining and achieving better results.
Hence some of the strengths and weaknesses are mentioned below in order to make proper
decisions.
STRENGTHS WEAKNESSES
Nestle is achieving better market shares as
they are manufacturing products as per the
needs and wants of customers. This is
enabling them in delivering excellent goods
to their clients.
For motivating employees company is using
various policies like performance appraisal
and reward system as a result it is
encouraging them in giving their best efforts
so as to achieve better results (Boons and
Lüdeke-Freund, 2013)
Stakeholders plays an important role whether
they are used for external or internal factors.
For this, it is necessary that companies
present a report which they can assist in
making following contribution and future
proceedings.
A large number of rival companies effect the
work procedure of any company. As they have to
make changes according to the strategies
implemented by competitors. As a result growth
decreases. Company finds it difficult to mange
and operate their business effectively.
Thus, it is required that an appropriate strategies
are implemented through which achieving targets
can be easier.
For giving effective services to their customers it
is essential that companies give suitable training
to employees because they are facing lot of work
loads and the outcomes of this is workers are not
able to give their best efforts.
Minimum involvement of employees can effect
the business operations as providing new
environment may not be suitable for them.
OPPORTUNITIES THREATS
Entering into new environment can increase
the market share and values up to 10% this
will enable an organisation in grabbing
appropriate market opportunities.
Maximum utilisation of all the resources and
technologies will help a company in
achieving all the set targets and objectives
through which they can gain maximum
In current market area increase in number of rival
companies and competing with them is the
biggest risk which are faced by most of the
organisation (Belás, and et. al., 2014)
In context with European nations, Brexit has
became one of the major threat and because of
this most of the countries that comes under
European Union are facing major economical
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number of activities (Zsambok and Klein,
2014)
Comparison between the products
manufacturing by other organisation will
help them in evaluating the difference so that
changes can be done for getting effective
results.
crises. For Nestle, it is considered as a
weaknesses and the outcome is that they are
unable to work according to customer's
satisfaction.
Other than this, rival companies offering the
same commodities at lower price is creating a
problem for Nestle in delivering the commodities
because selling products at low cost is decreasing
their market shares and revenues as well.
Unethical hacking is also considered as one of
the issues which most of the organisation faces as
there is a chance of stealing authentic data.
P6 Interrelationship of macro environment with internal factors for managing strategies
Whenever any company wants to establish there business in an appropriate manner it is
essential that they go through all the internal and external factors that can have an effect on
business operations (Ratten, 2014) Therefore, internal factors includes all the strengths and
weaknesses that a company posses whereas external factors involves opportunities and threats.
All these factors help an organisation in gaining maximum profits and enhancing their market
sales and values as well. Threats will assist them in identifying their problems which they have
to pass in order to achieve their set goals and objectives.
Therefore, it is essential to consider all the factors that comes under macro environment
so that they can deliver better facilities and compete with the rival organisation as well. For this,
all the rules and regulations that are formulated by the government should be analyses by the
superiors of an organisation so that they can make strategies accordingly. Environmental factors
is also essential for Nestle to be considered in order to perform the task appropriately. Below the
relationship between macro and micro environment is explained in context with Nestle for
attaining better outcomes (Smallbone, Welter and Ateljevic, 2014)
Political: Stable government plays a crucial role in establishing a business in a proper
way because frequent alterations in policies can lead to make changes in strategies by the
company. Its effect can be seen in the growth and sales of company. In context with Nestle,
superiors support their employees and encourage them in resolving all the problems which they
11

are facing in business operations. Government have made some changes in their norms like
reduced the taxes because of which Nestle is finding difficulties in giving tough fight to their
rival companies. Thus, it is prime role of management of an organisation to make proper rules
and regulations for effective working.
Economical: Sudden change in economic conditions can hamper the performance of a
company. In current situation, the Nestle is facing problem because of the disputes that is
happening between United Kingdom and European Union. As a result most of the companies
including Nestle are facing losses due to which their market shares are decreasing in particular
area. Therefore, this factor is important for a company to be analysed for making appropriate
decisions (Charter, 2017)
Social: Under this, company needs to evaluate the circumstances and situations that are
present in a particular area so that they can make products as per the targeted audiences. For this,
organisation can use suitable tools and technologies in order to increase the sales and
productivity. Other than this, it enable them in manufacturing goods and products as per the
needs and wants of customers and as a result a increase in growth can be seen.
Technological: For maximising profit it is essential that they utilises appropriate tools
and technologies that are according to the current trends or market situations. Thus, Nestle is
using online platform for advertising and delivering their commodities. This is less time
consuming and effective as well. Along with the advantages it has some of the cons for example
transaction from this process is full of risk as private account details can be leaked and further
can be used for illegal proceedings (Saleem, 2017) Therefore, it is required for them to
implement this concept in a proper manner so that maximum benefits can be availed.
Thus, the factors which are mentioned above are to be considered by the superiors so that
they can get effective results.
CONCLUSION
It get concluded from the project that business environment need to understand by
managers of a company in an appropriate and suitable manner. With appropriate understand of
environment or situations management become able to deal with diverse aspects. Mainly, profit
and not for profit business are underpin in an environment whom size and scope also get vary.
Along with this, various functions of business need to coordinate their work with each other for
achieving the objectives as well. Macro environment analysis support in evaluating the positive
12

and negative attributes. With this consideration, micro analysis support in identifying strength
and weakness and their relationship support in evaluating the beneficial consideration.
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