External-Environmental Analysis of Nestle

BUSINESS STRATEGY 1
External-Environmental Analysis of Nestle
PEST Analysis
Political – Nestle offers its services in many nations. The policies and rules framed by the
government are diverse in different areas, which enforce company to follow all of them. The
company has faced numerous challenges in terms of product contamination and poor quality
supplies that have resulted in product recalls and market issue. This severely affected the
image and sales of the company and challenging it with regard to quality control (S&P,
2018).
Economic – Different nations possess different development level. Therefore, nestle need to
frame different policies for diverse target segment. One of the key economic concerns for
global multinational companies like Nestle functioning in various nations is foreign exchange
swings. For example, in 2016, Foreign-exchange swings led in a foreign exchange influence
of around 1.6% on the revenue of the group even though there was an increase in the
comparative revenue as compared to 2015 by 0.8% (Haseeb, 2017).
Social – The social environment is comprised of altering lifestyle, labor composition, or
fashion that possesses the probability to become the opportunities or threats for the business.
One of the major changes in the lifestyle that has affected the global drinks and food industry
in US and UK markets and influenced the sales of the industry is the concentration of the
customer towards healthy food and beverages with specific concentration on sugar. As per
the analysis, around 62% of the adults in the UK are worried about sugar in non-alcoholic
drink and food products with 53% asserting they are dynamically taking steps to reduce sugar
in their diet.

BUSINESS STRATEGY 2
Technology – Technology offers numerous opportunities for new product development or
enhancement of existing products. The challenges it represents for the food and beverages
company like Nestle are numerous. However, one of the largest one is a digital disturbance
and the updated technologies it is releasing like the Internet of Things technology. This could
be utilized to measure the quality of food, or the was digital marketing is altering the method
brand owners market and communicate with the customers along with the use of big data in
building a competitive advantage.
Porter Five force
High Competitive Rivalry – Nestle Company works in the customer food industry that deals
with intense competition. The rivals of the company are P&G, Group Danone, and Kraft
Foods.
Low Threat of New Entrants – The industry of consumer food is varied which makes it
very tough for new businesses to enter the industry. There are different barriers to entry. The
existing businesses possess huge market share along with this they have a good
understanding and experience of the customer needs.
Low Suppliers Bargaining Power – Nestle Company possess the largest share in the
market. As an outcome, it needs supplies in huge quantities. This makes it a perfect consumer
for the suppliers. Hence, any supplier that starts offering services to Nestle not ever interferes
with it or tries to change the prices.
High Buyers Bargaining Power – Because of the huge competition in the industry, the
buyers bargaining power is high. They could simply shift from one product or brand to
another, Nestle or other companies try to influence the market and increase the prices.