Business Organisations and Environments

This report examines Nestle's business operations in a global context, focusing on its potential expansion into the Netherlands. It utilizes PESTLE analysis to assess the external environment, Porter's Five Forces to evaluate competitive dynamics, and provides a background on Nestle and the Netherlands' economic landscape. The report also includes data and graphs illustrating Nestle's financial performance and market trends.

Business Organisations and
Environments in a Global
Context

Table of Contents
INTRODUCTION...........................................................................................................................1
Background of Nestle......................................................................................................................1
PESTLE Analysis............................................................................................................................2
FIVE FORCES ANALYSIS............................................................................................................4
Background of Netherlands ...........................................................................................................6
Graphs, Data and Tables ................................................................................................................7
Financial performance of Nestle Baby products.........................................................................7
Conclusion.....................................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
The results of business operations is the harvesting of value from asserts owned by
business. Asserts of business can be tangible or intangible. Operations is the managing of inner
work to make the work effectively as possible. In this report, Nestle company is chosen for
assessment. It is food processing industry. It was founded by Henri Nestle, Charles page and
George page in 1866 (Barak, 2016). Its revenue is about CHF89.791 billion in 2017. Its
operation is on worldwide. The products of Nestle are baby food, coffee, dairy products,
breakfast cereals, confectionery, bottles water, cream, pet foods and many others. Nestle is
going to expand its business in Netherlander. In this report, the report will analysis the PESTLE
analysis, Porter's five forces to track the external environment. SWOT analysis is also done in
this report to identify the internal strength and weakness of company. Furthermore, this
assignment will also include background of company.
Background of Nestle
Nestle was founded by Henri Nestle, Charles page and George page in 1866. It is the
biggest food company in the world. Its headquarters are located in Vevey, Vaud, Switzerland. It
was ranked 64 in 2017 on Fortune Global 500 and rank 33 in 2016 on Forbes. Nestle has 447
factories in the world and it has its current operations in 194 countries. About 339000 employees
are working in Nestle. In 1905, Nestle merge with Anglo-Swiss a condensed milk company. It
has wide range of products which are baby food, coffee, dairy products, breakfast cereals,
confectionery, bottles water, cream, pet foods and many others, it has overall 2000 brands in
over 191 countries. Its revenue in 2017 is CHF 89.791 billion. Nestle has present workforce is
about 339000 employees which are giving their services to make the products available. Paul
Bulcke is the chairman of and CEO is Ulf Mark Schneider. Nestle company. After first world
war company has tremendous growth following second world war. Nestle is listed on SIX Swiss
Exchange and is constituents of the Swiss Market Index. Nestle is facing competitions from
various companies like Unilever, Kraft Foods, Danone, Proctor & Gamble, Mars and Heinz,
ConAgra Foods, Hansen Natural Corporation, Monster Beverage Corporation, PespsiCo Inc,
Snder's- Lance, Coca- Cola Company, Kellogg Company and many other food and beverages
company. These all are the companies which are giving tough competitions to Nestle across the
world. Nestle is one of the most respected company in the world. The brand structure of is the
biggest weakness of nestle as because it creates conflicts in management of large number of
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brands. Nestle is world largest company in the world but still they face controversies over the
year like Nestle baby formula boycott. Price fixing of chocolate suppliers of child labour. This is
also become the weakness when any of the product of Nestle is band in countries. It affects the
name of brand like Maggi in India. This is the first strength of Nestle that it is recognized and
recall all over the brand. According to Fortune 500, it is the world largest food and beverage
company in the world. The most creative feature of Nestle is its individual branding of different
food brands which assist them in developing awareness about the various brands of food and
beverages which helps the m in creating awareness about different brands of food. For example,
if the brand of chocolate is affect it will do not affect the sale of coffee. More than 8000 brands
of nestle use its name which ranges from food and beverages to coffee and mineral water.
Cereals of breakfast, sauces and soups etc. (Clegg, Kornberger and Pitsis, 2015). Nestle has
opportunities to enter into the new market by expanding more. They can elaborate its chain of
supply, penetrating more and rural markets by its robust. Nestle can also increase its income by
stable political condition, developed rate of literary and control rates of inflation in Netherland.
Nestle is facing high level of competition in the market. They are giving tough competitions in
local as well as global market. Increasing price of commodities will affect further increase in the
price. The sales of company are decreases by increasing price as well as it also reduces the brand
switching (Kirton and Trebilcock, 2017).
PESTLE Analysis
PESTLE is referred to marketing principles of the industries. This analysis used as a tool
by the companies to track the external environment. It gives a view of the total macro
environment for the organization. Pestle is a situational analysis tool for the companies. Pestle
analysis helps in to understand the factors which are affecting the organization or business. It is
also used in to analyse the whole business and industry (Murray, Skene and Haynes, 2017).
PESTLE used in to determining the various risks and situation in the industry or business
organization. Nestle used pestle as a long term tool for their business which helps in the
execution of their company. It is a structure for the marketplace and companies which helps in
monitoring the business. It analysis the performance of the business and verifying the
implications. PESTLE stands for -
P – POLITICAL
E- ECONOMIC
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S- SOCIAL
T- TECHNOLOGICAL
L- LEGAL
E- ENVIRONMENTAL
 POLITICAL FACTORS- This factor affect the political environment of the industry or
companies. This influence the economic growth of the certain organization or company.
In this factor it includes taxation policies, fiscal, tariffs, government policies, restrictions
on trade. These political barriers affect the Nestle and its economic growth. Nestle adapt
the political forces which helps in the growth of the business. Changing global
regulations affects the consumer demand in the global market.
 ECONOMIC FACTORS- These factors directly impacts on the industry or company
and its profitability. It determines the economic performance of the Nestle. The
economic environment tracks the interest rate, economic growth, employment and
unemployment rates and foreign exchange rates. Changing consumer budgets, rising
price of raw material affects the productivity of the Nestle (Crane and Matten, 2016).
 SOCIAL FACTORS – These factors identify the emerging market trends and it focuses
on the social environment of the industry or organization. It includes population analytics
and consumers demand. This analysis deals with the different factors that affect the entire
economy. Nestle helps their clients and consumer attitudes with the help of their
products and services. The company adapt to different language, beliefs and family
settings. Social factor helps in to understanding the costumer demands and beliefs.
 TECHNOLOGICAL FACTORS- Technology affects the operations and services of the
industry and organization. It includes development, automation and technological
awareness. It improves the innovations and digital technology. Technologies are affecting
the nature of the Nestle. In this factors good and negative impacts are rising due to new
innovations and technology. Rise of digital marketing and advertisement helps in increase
the sales of Nestle. Innovations helps consumer to interact with the new adaptation of the
company. Using social media helps Nestle to increase interaction with consumers and
clients. This is also one of the most powerful strength of Nestle as it is very important
that distribution channels of company should be very active. The distribution channel of
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Nestle is outstanding as it covers not only urban areas but it also covers rural areas. It has
fantastic chain of supply.
 LEGAL FACTORS – It includes internal and external sides of the business. Legal
factors includes the ethics and principles of the business and companies. It analysis the
legal value for the business which helps the or Nestle. The factors include the consumer
law, business ethics, discrimination law, trade restrictions, safety standards etc. Different
legal factors may affect the companies and industry (Trevino and Nelson, 2016). It
analysis the external forces that impact their operations and services. Legal factors of the
company identify the target market.
 ENVIRONMENTAL FACTORS – It includes the environment surroundings on the
business and organization. In this factor it includes waste disposal, climate, global
changes, weather etc. Environmental factor affects the global environment of the business
organization. It is crucial for the industries and businesses like farming, agriculture to
analysis the environmental factors. These are the issues that marketers are facing with the
factors. This factors especially impact the business and industries.
FIVE FORCES ANALYSIS
Five Forces Framework is a simple tool but powerful business tool it analyzing the
rivalry in the industry, power of customers and suppliers and understanding the strength of the
companies. Five forces refers to the level of the competition in the market. It helps in to
determine the corporate strategies. It identifies the areas of opportunities and strength. It also
helps industries and business organization to improve their weaknesses and avoid mistakes. This
helps organizations to understand the profitability in a industry. Five forces refers to the micro-
environment. This framework affect to serve the customers and clients and make a profit. The
model is widely used for the industries and business structure to measure the competition
intensity. Five forces used to measure quality and profitability of the business organization. It
also helps in to understand the new products and services are potentially profitable. Five forces
framework is highly business strategy analysis tool. This help industries and business looking at
their opportunities and reducing the competitive pressure (Welford, 2016). The five forces help
where the power lies in the business organization. It also represents the suppliers and consumers
can influence the prices of their goods and services. Nestle strengthen their position in compared
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to the other competitors by using five forces model and generate competitive advantage. The
Five Forces structure are:
 Competition rivalry
 Potential of new entrants into the industry
 Power of costumers
 Power of suppliers
 Threat of new entry
 Competitive rivalry – It is the major determinant of the competitiveness of the industries
and companies. Nestle must be aware of its competitors and market strategy. Many
competitors offering undifferentiated services and products in the marketplace which
cause the market attractiveness. Competitive rivalry reduces both the consumers and
suppliers. Nestle attract clients with impact advertising and marketing and price cuts.
Competitive advantage is a unique feature of the Nestle.
 Potential of new entrants into the industry – The power of Nestle is also affected by
the new entrants into the market. The new entrants hardly enter the market due to strong
competitors and high price of the goods. Nestle focuses on their consumers demand
which helps in the increase in the sales of the company. Costumer are price responsive
and price helps the industries to maintain their goodwill in the global market.
 Power of customers – In the global market consumer decide the future of the company.
The number of buyer and consumer are the strength of the Nestle. Power of customer is
higher in the wholesale consumers. Nestle has a high customer loyalty. It is affected by
buyers or consumers a company has. Costumer retention shows that consumers are loyal
to their brand. Buyers are price sensitive and it controls many access points. Customers
are the strength of the Nestle.
 Power of suppliers – The quality of suppliers is also described as the market inputs.
Suppliers affected the number of suppliers on the basis of their goods and services.
Supplying of raw materials, labour and services to the company can be a source of power.
Uniqueness of their goods and services strength the supplier into the market (Sassen,
2016).
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 Threat of new entry – Profitable goods and markets attract new entry which affected by
people's ability and demand. Nestle can also face competitive pressure from their
competitors. Five forces help in the strategic thinking of the Nestle. The ideal competitive
environment for Nestle is when both suppliers and customers have weak bargaining
power. Low amount of capital is required to enter in the market. Nestle profits start to fall
because of the new market threat.
Background of Netherlands
The Netherlands' economic score is around 77 %, making it 17th freest country in 2017,
Its overall score is increased by 0.4 % with the development in judicial and health effectiveness
offsetting a significant decrease in freedom of labour. The Netherlands is on 10th rank among 44
nations in Europe, the Netherlands economy flourishes by openness to investment and global
trade as well as independent judicial system which is providing strong protection of rights and
fosters the rule of legislation. The country has been one of the most successfully country in the
world at the beginning of 21st century. The Netherlands is EU's seventh largest economy and a
well known transportation hub (Lin, 2014). There are various leading economic sectors in the
country including petroleum refining, chemicals and electrical machinery. A highly effective and
developed agriculture sector offers a large surplus that have helped the country to become second
largest agricultural exporter all around the world. Right to movable and real private property are
tightly protected and contracts are implied in an impressive legal framework or structure.
Independent of political hindrance, the judiciary is honoured and it also provides fair solution to
each and every dispute or conflicts. Although the country has several problems such as political
irruption, limited resources and environmental issues, it is successfully developing its industrial
structure. The personal income tax rate in the country is approximately around 52%, corporate
tax rate is 25% and there are other taxes including environmental taxes and value-added tax. The
current population of Netherlands is around 17,088,373 according to the latest estimates of
United Nations. The country's population is equals to 0.22% of the total population in the world.
The present GDP per capital income in the country is around $48900 which makes it one of the
richest country in the world. The GDP is constantly growing which shows positive signs of
development and growth in the country (Chiu, 2018). According to the latest research and
information the unemployment rate in Netherlands is 4.8% which proves that most of the
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individuals in the country are working. The most important sectors of the includes the following
-
 Agriculture and food sector
 Chemical industry
 Energy sector
 Creative industries
Graphs, Data and Tables
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Illustration 1: Evolution of Nestle in Netherlands

Financial performance of Nestle Baby products
The sales of Nestle baby products have been increasing constantly, the main products of
Nestle which are covering the Netherlands market are Baby skin care products. Due to the
increase in level of sales Nestle have been started investing in the same market so that it can get
a strong hold on Netherlands population or market share. In the Netherlands, Nestle has about
900 employees. Turnover of Nestle Netherlands in 2013 was around 426 million euro
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Illustration 2: Baby products' sales performance

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I
llustration 3: Retail sector Netherlands
(Source:Retail sector Netherlands, 2017)

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Illustration 4: Inflation rate
(Source:Inflation rate of Netherlands, 2017)
Ill
ustration 5: GDP rate
(Source: GDP rate, 2017)

Conclusion
The above report concluded that there are various external factors and forces which
influence an organization and its performance globally. Further the report will also done internal
analysis by using the tool SWOT analysis. Moreover, the report will also conclude the
background of Nestle as well as of Netherland. Graph are also concluded in this report
concluding inflation rates, GDP of country.
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Illustration 6:
The retreat of globalization threatens
(Source:The retreat of globalization threatens, 2017)

REFERENCES
Books and Journals
Kirton, J.J. and Trebilcock, M.J., 2017. Hard choices, soft law: Voluntary standards in global
trade, environment and social governance. Routledge.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Barak, M.E.M., 2016. Managing diversity: Toward a globally inclusive workplace. Sage
Publications.
Murray, A., Skene, K. and Haynes, K., 2017. The circular economy: An interdisciplinary
exploration of the concept and application in a global context. Journal of Business
Ethics, 140(3), pp.369-380.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Sassen, S., 2016. The Global City: Strategic Site, New Frontier. In Managing Urban
Futures (pp. 89-104). Routledge.
Clegg, S.R., Kornberger, M. and Pitsis, T., 2015. Managing and organizations: An introduction
to theory and practice. Sage.
Chiu, S.W.K., 2018. City states in the global economy: Industrial restructuring in Hong Kong
and Singapore. Routledge.
Lin, H.F., 2014. Understanding the determinants of electronic supply chain management system
adoption: Using the technology–organization–environment framework. Technological
Forecasting and Social Change, 86, pp.80-92.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.
Welford, R., 2016. Corporate environmental management 3: Towards sustainable development.
Routledge.
Online
SWOT Analysis of Nestle, 2017. [Online]. Accessed through:
<https://www.marketing91.com/swot-analysis-of-nestle/>.
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The retreat of globalisation threatens, 2017 [Online]. Available
through:<https://www.economist.com/finance-and-economics/2017/03/09/the-retreat-of-
globalisation-threatens-the-dutch-economy>
Retail sector Netherlands, 2017 [Online]. Available through:<
https://verkkolehdet.jamk.fi/finnish-business-review/2017/05/22/multiple-faces-of-
competitiveness-and-the-paradoxical-case-of-finland/>
Inflation rate of Netherlands, 2017 [Online]. Available
through:<https://www.inflation.eu/inflation-rates/the-netherlands/historic-inflation/cpi-
inflation-the-netherlands.aspx>
GDP rate, 2017. [online]. Available through:<https://countryeconomy.com/gdp/netherlands?
year=2017>
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