Business Environment of Nestle

This report discusses the internal and external components of the business environment of Nestle, a famous food processing corporation. It also addresses Nestle's corporate social responsibility towards the environment. The report aims to understand the business policies and practices that help reduce the impact of the business environment.

Business environment
of Nestle
Table of Contents
INTRODUCTION.......................................................................................................................................3

TASK 1.......................................................................................................................................................3
1.1............................................................................................................................................................3
1.2............................................................................................................................................................4
1.3............................................................................................................................................................6
TASK 2...................................................................................................................................................6
2.1............................................................................................................................................................6
2.2............................................................................................................................................................7
2.3............................................................................................................................................................8
TASK 3.......................................................................................................................................................8
3.1............................................................................................................................................................8
3.2............................................................................................................................................................8
3.3............................................................................................................................................................9
TASK 4.......................................................................................................................................................9
4.1............................................................................................................................................................9
4.2............................................................................................................................................................9
4.3..........................................................................................................................................................10
CONCLUSION.........................................................................................................................................11
REFERENCES..........................................................................................................................................12
INTRODUCTION
In the business environment there are various internal and external factors which can
highly influence the business activities and function. In order to survive in the competitive

environment, corporation requires analyzing business environment in an effective manner so as it
can develop effective strategies and policies to compete with it. These environmental
components influence business internal and external. Further it can be encompasses a set of
conditions, economic, social, political or institutional in which industry operations and activities
are conducted. When any organization is going to operate its business in the new market then
there is required to analyze its entire internal and external components so as it can survive and
compete in the new market. In this report , various internal and external components of business
environment with respect of Nestle has been discussed. Further its corporate social responsibility
toward the environment is also addressed in this report. Nestle is one of famous food processing
corporation in the world which have more than 456 factories in 86 countries. The major objective
of this report is to understand the business policy and practices that assist in reduce the impact of
business environment.
Figure 1Nestle products
TASK 1
1.1
Every business organization wants to gain effective market share and profitability.
Therefore, it develops such policies and strategies which assist in competitive environment.
Every organization have their own criteria to attain its predetermined objective, goal and
mission. Following are some organization which has their own purpose of business survival in
the market-
Hershey purpose- It is a public company which produces large variety of products such as
chocolate, dairy products and baby food. It has more than 14800 numbers of workforce which
continuously giving their effects in order to attain its predetermined goal (Botha, Kourie and
Snyman, 2014). Hershey chocolates corporation have main objective is to change customers

mindset that chocolates are unhealthy. It have marketing strategies is to enter in the new market
such as Canada, United states, Mexico, Brazils and other international locations. Hershey using
effective promotional material in order to increase its chocolate sales. It main objective is to
increase maximum market share further its vision is to become the first larges chocolate
company in the world.
Nestlé’s purpose- Nestle is the world largest food dairy food product company which have high
quality product mix. It has been large numbers of differentiation in the market because its
product have effective and quality feature. It positioned as health and nutrition corporation while
targeting the health conscious customers throughout the world. Nestle have large numbers of
products varieties of products such as juices, chocolate, noodles, breakfast cereals and baby food
along with excellent quality and attractive packaging (Zhang and Huang, 2012). The major
vision of corporation is to become the world largest dairy company and gain the maximum
market share. It focuses on meet the different desires of customers every day by marketing and
selling products of a consistency in high quality. In addition to this according to the survey it has
been ascertained that nestle have major objective to produce and market food in such manner so
as it can create value that can be sustained over the long term for customers, share holders,
employees and investors. Nestle corporative objective is to be the best manufacture brand, whilst
ensuring that the nestle’ name is synonymous with the product of high quality.
1.2
As per the above discussion its has a been ascertained that nestle is dealing with large
numbers of quality products and it have effective and strong brand image in the market. The
cited venture is public company with over 250000 shareholders and only 1.5 % of its sales are
generated in its home country and all but 12 of its factories are situated abroad. Cited venture
stakeholders have largely influenced by the company decisions. These are that bodies of the
corporation which directly of indirectly affects by the company policies, structure, strategies,
growth and decline (TEbert and et.al., 2014). Company needs to considered these body at the
time of taking the business related decisions. All stakeholders have various objectives towards
the company which are as follows-

Figure 2 Types of stakeholders
(Sources: Cai, and Yang, 2014)
 Customers- Customers are the one of important stakeholders of the Nestle whose arte
always interested in the company products and its quality.. Company’s major decision
related to the manufacturing and product differentiation is largely affect the customers
satisfaction (Waithaka and Ngugi, 2013). Corporation always should consider this
stakeholders at the time of taking decision related to the product and services. Further this
body can be satisfied by effective quality products in the affordable and attractive prices.
 Employees- Employees have right to know the actual profit and loss of the corporation.
They are largely affect the company‘s policies, strategies, structure and practices..The
major responsibility of company is to disclose the all relevant information related to the
financial position, loss and growth in front of the personnel’s.
 Government-Nestle is the world largest dairy food company which have deal with
various countries therefore its operation is largely affected by the governmental
regulation. It has to consider all tax related rules and regulatory function at the time of
business operation (Grigor'ev and Suslova, 2014). It also expects the firm’s employments
as well as the legality of its actions. In this reference, Nestle are requisite to give fair and
accurate information about firm annual profits and pay tax time to time as per the norms
and instruction of government.

 Suppliers- They is those people who have rendered the raw material and semi finished
good s to the company. They are interested to know the financial condition of the
corporation further they more interested to take highest raw material order by Nestle.
Therefore cited venture required to provide regular order and payment as per the
requirement.
1.3
As per the above discussion it has been ascertained that nestle is the very famous and top
branded dairy food company in the market. It has extremely excellent quality of chocolate,
baby foods, dairy products. Nestle is among a cluster of just 10 leading firms who have
scored more than 90 out of the 100 in these criteria (Schneide and Schmidpeter, 2012).
Nestlé’s believes that for a company to be successful over the long term and create value for
shareholders it must create value for society. It calls this Creating Shared Value. Specifically,
Nestlé does business in ways that help address global and local issues in the areas of
nutrition, water and rural development. On the other hand cited venture has been very active
in corporate social responsibility practices and puts premium on programs on agriculture,
education and manpower development, community development, health and nutrition and
environmental protection and preservation (Asghar, 2013). Moreover, cited venture has
committed to supporting inn community and nation building through programs that assist the
underprivileged members of society. Further this company has been assisted to the Coffee
farmers indifferent parts of the country through imparting knowledge on how they can
improve their crops. Health and nutrition nestle is an advocate for good health and proper
nutrition. It conducts feeding programs and medical mission in the area where it operate.
Nestle has very active and effective CSR practices and programs on agriculture, manpower
development, community development, health and nutrition, environmental protection and
preservation.
TASK 2
2.1
Economic system refers to the factors through which government distributes resources and
trade goods and services. In other word it can be said that it consist of these institutions which
allocate resources in the corporation indirectly. Economic system are the means by which
countries and governments distributes resources and trade goods and services. They are used to
control the five major components such as labor, capital entrepreneurs, physical resources and
information resources. Following are various types of economic systems-
 Central planned economic system- In this economic system government takes all
decision related to the manufacturing and production resources in the corporation. The
demand and supply will generate by the government decision and it is responsible to
monitor the production resources that how it to be used in the company (Kitzmueller and
Shimshack, 2012).

 Mixed economic system-This is a mixed economic system under which government have
only few areas rights to take decision related to resources of corporation, Few decision
related to resources by organization. This system of economic has adopted by USA,
China, Russia to allocate resources to various aspects of the economy to assure proper
growth and development.
 Free market economic system- This is a free economic system under which government
have don’t right to interfere in to the business activities and functions related to the
corporation. Further more, in this economic system, people identify how economy runs
and how supply and demand will be generated in the future. The price mechanism is
decided by force of demand and supply within the market and hence the cost mechanism
is also indirectly decided by the market. However along with some of the positive point,
there are some shortcoming in this system as well.
2.2
Monetary policy is primarily concerned with the management of interest rates and the total
supply of money in circulation and is generally carried out by central banks. It involves changing
the interest rates and influencing the money supply. On the other hand fiscal policy is involve the
government tax rates and level of spending and involve changing the level of spending by them
and level of taxation. It can be said that fiscal policy relates to the government spending and
revenue collection (Popescu, 2013). Monetary policy relates to the supply of money. For
example when demand is low in the economy, the government can step in and increase its
spending to stimulate demand. Or its can lower taxes to increase disposable income for people as
well as corporation. And for the monetary policy if policy maker control high inflation then they
can raise interest rates thereby reducing money supply. This fiscal and monetary policy can
highly influenced the business environment and operation of nestle. Some of the reasons are as
follows-
 Monetary policy is about the decision of government related to money supply and interest
rates. This policy in the US is determined and implemented by the federal reserve which
serves as the central bank for the US. The primary policy tool used is increasing and
decreasing the supply of money in an economy (Gillanders and Whelan, 2014). The
national Reserve has the responsibility to increase the money supply while keeping
inflation in check. When fed pursues an expansionary policy, then supply of money will
increase and interest rates will down. This makes easier to borrow money for capital
investments. On the other hand, if fed tightens the money supply will decreased and
interest rate will be increased. Nestle has been successfully attempted the monetary
policy which assist in the interest rates of the goods and services.
 Fiscal policy is a governmental decision regarding spending and taxing. IF government
wants to encourage growth of the nation then it can increase the tax rates on the all good
and services of all business enterprises. If demand for goods and services goes up then
demand of the production also goes up. Once production goes up then corporation may

need to recruit more personnel’s in order to increase its production and marketing of
product. Nestle has been successfully attempted the fiscal policy which assisted in
deciding the tax related decision.
2.3
Competitive policy is the governmental policy to prevent and reduce the abuse of
monopoly power. Abuse of monopoly power can lead to market failure and be against the public
interest. This policy is developed by government in order to render the protection and security to
the consumer. Following are some of the competitive policies which largely affects the
operations of Nestle-
 Competition Commission- The major objective of this policy is to analyze the healthy
competition in the UK markets among various business enterprise. According to the
survey it has been founded that Nestle has protected its operation and business activities
from its competitor by assistance of this competitive policy (Yu and Ramanathan, 2012).
This policy is responsible for investing the mergers markets and other practices of
regulated industries under completion law in the UK.
 Office of fair trading- Nestle is highly benefitted by this competitive policy because its
major objective to protect consumers against the unfair practices such as cartels, scams
and rogue trading. This policy is make markets work effective for customers and ensuring
far competition among trading corporations.
TASK 3
3.1
Market structure can be defined as the characteristics of the market either organizational
or competitive, that describes the nature of competition and the pricing policy followed by the
market. Further it can be said that market structure is defined by the numbers of firms producing
the identified goods and services in the market and whose structure is determined on the basis of
the competition prevailing in the market. There are various kinds of market in the various
economies (Auerbach and Gorodnichenko, 2012). The pricing and output decision is
independent. As per the perfect competition market structure is where large numbers of buyers
and sellers are present and all are engaged in the buying and selling of the homogeneous
products at a single price prevailing in the market. Nestle has no choice to charge the market
prices. It is price takers in this market. On the other hand, in the monopolistic market both
monopolistic elements and the competitive elements are present. Under these producers has the
power of determining the price of the products and marketer has the sole right.As per this above
discussion it has been find that in all other market structure, Nestle have some control over their
pricing.

3.2
In economics or company in general market forces would refer to the forces of demand
and supply influencing the price and quantity of products and services. Nestle considered their
operations on trying to understand, predict and at times control the demand of their services or
products. As stated the market forces will influence the price and business enterprise will work to
ensure there is benefit in such an impact. For instance, if demand for a product is high then the
business would seek to enhance their price in line with the demand, eventually increasing the
equilibrium price.
3.3
Cultural environment of every business largely affects its operation and business
activities. If company’s culture is appropriate then its positively affects the practices and working
style of employees. Effective culture assist in minimize the issues and conflicts rate in the
company. Further, it shape the behavior of personnel’s towards their roles and responsibility at
workplace. The culture of Nestle defines the set of rules, management style, approaches,
principles, values which defines the entire nature of business enterprise. The operations and
administration of firm is influenced by an organizational culture, direction, and management
style of environment changes as human resource inspirations (Gillanders and Whelan, 2014).
Nestle needs to develop such effective an d suitable practices, policies, management style, rules
and structure so as it can able to develop an effective culture of the business. Every employee
can be more motivated and inspired for higher and effective performance at workplace if their
work environment and culture is more effective and suitable.
TASK 4
4.1
International trade is the process under which home country company deal with the foreign
market along with trading of goods and services. This is the best way to earn large numbers of
profitability and earn the effective brand image in the global market. The major advantage of
this activity is to earn the greater utilization of resources and importing products that cannot be
produced locally and increasing the variety of choice to customers. Following are benefits of
international trade-
 International trade increase the company’s competitive advantage because through this
trade corporation can able to gain large amount of market share and profitability.
 Company have opportunity to use the new advance technology I the foreign market
further it can able to increase its sales of existing products (Yu and Ramanathan, 2012)..
 The major advantage of international market is to earn the highest global market share
and reduce the dependence on existing market.

4.2
Nestle has largely influenced by the global components. These global factors are as follows-
Figure 3Global Factors
(Souces: Yu and Ramanathan, 2012)
 Political factor- Nestle successfully attempted this factors because it includes the level of
global political stability and bureaucracy in the international affairs. Further it includes
the governmental regulatory functions and norms which assist in operate the business in
foreign country.
 Economical factor-This factor includes the economic policies and pricing policy of
country. The company’s products prices decide on the basis of economic globalization.
 Social and cultural factors-Nestle has largely affected by this factor because in this
customer preferences, culture, taste, choice are included (Yu and Ramanathan,
2012).Cited venture has to developed the or product mix according to the customer
choice of particular nation.
 Technological factor- Nestlé required large numbers of effective technologies and
equipment in order to carry its production and marketing activities. Continuously changes
in technology can largely affect the nestle operation in the UK.
 Legal factor-In this factors various employments rights and customer protection acts are
included. Nestle has affected by the employability law and customers rights act.

4.3
European union policy major objective is to provide the protection to the customers as
well as the company in the global market where has large numbers of competitors are available.
Generally this European union policy has been developed to protect the employees by using their
employment rights and governmental acts. Nestle employees has largely beneficial to used this
European union policies in the UK market (Auerbach and Gorodnichenko, 2012).. This policy
ensures that the market competition remains free and corporations should render the effective
and best quality products to its customer in fair prices.
CONCLUSION
Business environment has largely influenced by the internal and external components of
organization. Company has to consider this factor at the time of taking business related decision.
From this project report it has been ascertained that Nestle has successful operated its business in
the various countries and t have large and effective quality of food, dairy products which create
effective consumers interest. Further company has considered fiscal and monetary policy of the
country through which it can largely benefitted and stable in the country. In addition to this it is
also concluded that International trade is very beneficial for nestle and policies of European
Union is largely affect cited venture.

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