Analyzing Nestlé's Business Environment

This assignment delves into the intricate business environment surrounding Nestlé. Students are tasked with analyzing a range of factors influencing Nestlé's operations, including competitive landscapes, legal and regulatory frameworks, socio-cultural trends, and environmental concerns. The analysis should encompass both internal and external forces shaping Nestlé's success and potential challenges.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Purposes of various types of organisations......................................................................1
1.2 Objectives of different stakeholders.................................................................................2
1.3 Responsibilities of Nestle.................................................................................................2
TASK 2............................................................................................................................................3
2.1 Various economic system.................................................................................................3
2.2 Impact of fiscal and monetary policy on organisations....................................................4
2.3 Impact of competition policy and other regulatory mechanisms.....................................5
TASK 3............................................................................................................................................6
3.1 Determination of pricing and output decisions by market structures...............................6
3.2 Organisational responses shaped by market forces..........................................................7
3.3 Impact of business and cultural environment on behaviour of Nestle SA.......................7
TASK 4 ...........................................................................................................................................8
4.1 Importance of international trade for Nestle SA in UK...................................................8
4.2 Impact of global factors on Nestle SA UK.......................................................................9
4.3 Impact of EU policies on Nestle SA UK........................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12
.......................................................................................................................................................13

INTRODUCTION
Business environment of any organisation plays a very essential role in creating
effectiveness in its functions and operation. Businesses that are established in UK or any other
location have many factors regarding the business environment that affects the organisations and
its operational activities. Companies have to be aware about several kind of happenings and
changes that occurs on various basis. There are two types of environment for a business
organisation, external and internal environment. Internal environment includes the factors that
affects activities from within the organisational structure. But external environment includes
many factors such as political, technological, social, economical and environmental aspects that
will be discussed within this research report. Nestle SA is a Swiss based transnational food and
drinks company, operates in UK too, to produce and provide customers with quality products.
This project will be dealing with organisational purposes of businesses. This report will also be
focusing on the national environment and its nature m for the operation of Nestle SA in UK.
TASK 1
1.1 Purposes of various types of organisations
There are various classifications of organisations on the basis of different aspects, and
these are the types of organisations that are classified on the ownership basis are: Sole Proprietorship: A business owned and operated by a single person is known as sole
partnership. They start their businesses by taking extra funds to establish them. They start
their business as to be productive to create profits (Agarwal and et. al., 2012). The owner
of sole proprietorships has their independent access to the data related to their business
activities and they are independent to take their decisions regarding their company. Such
firms include electricians, plumbers, small scale grocery stores, etc. Partnership: These are businesses where there are multiple partners who shares their
capital to invest in its establishment. They run their business to gain some monetary
benefits and to increase their contacts in order to find more resources in partnership as a
principle to fund claims. They also operate as to utilize the expertise they have in their
fields to come up with something innovative in the business and improve the
effectiveness of their operations (Halbert and Ingulli, 2011).
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 Companies: There are under the possession of shareholders who donates an amount as
stock for investment. A company is run by the management on behalf of shareholders and
remunerates themselves in form of dividends, which are a part of the shares. Companies
aim in development of performance of contract, safety of employees, to improve
customer services etc.
1.2 Objectives of different stakeholders
Stakeholders can be defined as anyone who is interested in an organisation, may they be
individuals, group or government. Interests of stakeholders may vary with their nature and
objective of investment (Fatoki and Smit, 2011). There are certain affects that the stake holders
can make such as the internal stakeholders may impact Nestle SA and external stakeholders can
impact indirectly. There are various objectives of different stakeholders depending on their
nature:
 Shareholders: These are people who have invested their money in the organisation.
They definitely consider their shares to bring them financial benefits. Company's growth
of profits and their annual dividend are major factors in which the shareholders are
interested in.
 Management Panel: ManagerFernando, A.C., 2011s and directors are employees within
the organisation and are interested in receiving their salaries. They are also keen for other
financial gains such as bonuses and appraisals. They also wish that operations of
company should improve and as a result their efforts shall be remunerated with
promotions.
 Customers: They are considered to be the most important stakeholder of any company.
They are the ones who create demand in market. Their interests are to be taken seriously
by organisations in order to succeed. Customers need to get the correct products at the
relevant price, that may fulfil their need with the quality of products (De Jonge, 2011).
1.3 Responsibilities of Nestle
Major responsibility of Nestle SA is to produce and provide quality products to
customers as to fulfil their needs with the affordable costs of the product. Nestle have to
guarantee that the quality of products fulfils the safety requirements for customers and won't lead
to any harm to them. The company has to keep in mind that the marketing strategies related to
promotion of the goods and services shall not involve any manipulation, such as the ads may
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have to be realistic (Fernando, 2011). It must necessarily have its base on the actual quality of
the product. They also have the responsibility to follow legal rules and regulations that are
formed by government.
Nestle SA not just have responsibilities towards their customers but they also have duty
to provide a workplace that is safe and secure for their employees to work. As per the UK
legislation, the Health and Safety at Work Act 1974, states that, “All the employers have the duty
to ensure, so far as is reasonably practicable, the health, safety and welfare of their employees.
They also have a duty to protect the non-employees from the risks arising out of their working
activities.”
Equal opportunities are to provide by employers in recruitment process for all the
candidates. These points are a part of Equality Act. As per the act, organisations doesn't possess
the right to discriminate individuals those are seeking job and discrimination on the basis of sex,
age, religion or caste, disability will be considered illegal and the ones who are responsible will
be punished according to the legislation.
TASK 2
2.1 Various economic system
Economic systems require to allocate the resources as for effective utilisation. The
system of economy is a combination of society and economy, and their relations with institutions
of producers and consumers of certain goods and services within a national boundary. There are
several systems that can be accessed by economic systems for the effective allocation of
resources and each of them have their own benefits and issues. Some majorly used systems are
free market, planned, mixed and traditional (Hall, 2011).
System of planned economy, the government's attempts towards bringing satisfaction
towards all demands that are present in economy. Each of the companies and industries have
their root of belongingness to the government. Major planned economies in the current era are
closed to the foreign. Government has the ability to supply for all demands in the nation.
Drawback of this system is that the environmental impacts are ignored by the planners of such
system and they least care about scarcity in economy, but just keep the production on to meet
cover the unimportant demands
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In the system of free market, the production of goods and services are done to meet the
personal needs, such as making profit from the sales because such companies are under private
owner ship of individuals or a group of them. Their main rule is to identify the demands of the
economy and supply products accordingly (Hamilton and Webster, 2015).
Economy of Cuba: It is situated as a nation of island and along with this they have to take after
standards as well as directions which is arranged by them as it were. They have organised
economy. Ventures are controlled by work and in addition regulatory body in this country.
Individuals for the most part need to do their work by and this might be known as independently
employed. In Cuba, cost which is associated with transportation is additionally low correlation
with different nations.
Economy of UK: GDP rate as well as acquiring power equality is high in this nation which will
give more development and improvement to the economy. They have blended framework in their
country. There benefit area is likewise extremely viable and proficient. As indicated by the
examination it has been established that UK was the main nation on the planet who industrialized
right off the bat and they additionally receive different strategies identified with it. There is a
viable choice taken by administration which drives BREXIT. It is estimation of pound fall and
breaks past records.
2.2 Impact of fiscal and monetary policy on organisations
Fiscal and monetary policies have certain potential of importance for any organisation.
These policies aim in developing a stable economy and they work to grow such economy to
create a stable price level and unemployment at a very low level. Fiscal policies act to stabilize
the economic cycles and their controls. They have been made applicable by the federal
government. Government can make attempts to control the economical factors by fluctuating the
state budget's incomes and outcomes. Purchases of goods and services made by government and
and net of taxes are used as tools by these policies. While the country faces recession, this policy
can help the government to make a rise in purchases and deduct taxes. On the other hand, in case
of overheating of the economy, purchases can be reduced and tax rates can be increased.
Monetary policies can be understood as mechanism for stabilizing the economy, by
controlling the supply of money by Central Banks within the state. Interests rates are changed by
market operations in order to control the reserve requirements by the central banks of United
Kingdom. This change in the interests rate affects the supply market enormously. Rates of
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interests are cut down while the economy is facing a crisis or recession. These low rates of
interests will support in making the people spend more money to increase demand and will help
in recovering the economy (Harrison, 2011). Example, Farming business: Ministry body utilize
this arrangement to advance business which is identified with cultivating. They cater expansive
sum in it so it will prompts ease of generation. Agriculturist can likewise get the credit at the
lower financing costs. It will likewise give development and advancement to the nation. By this
swelling rate of the country can likewise go down.
2.3 Impact of competition policy and other regulatory mechanisms
Competition policies are created to control the competition amongst
different companies in market. They are the controlling factors of market if
there is no existence of a monopoly, market structure is not damaged by
mergers of firms and supply is sufficient in market. These policies also
support in the promotion of competition between Nestle SA and its
competitors in market. Competition policy helps in controlling energy level
of organisations present in the market and sees whether they have ability
of covering demands in the economy. In absence of this policy, economy
may face heavy rise in prices of electricity and gas, and thus have a very
vital role in an economy.
As per Art. 102 of the EU treaty, the monopolies are regulated which
restricts competition in private sector. The contract within the article
states that, “Any abuse by which involvement of one or more position
dominating in domestic market are to be restricted”, because this can
impact the trade system between member states (Ishengoma and Kappel,
2011).
There are certain policies which are discussed as below:
De – regulation: This is received through firm thus they can easily
decrease imposing business model in market. It may incorporate merger as
well as obtaining on the grounds that with assistance of them syndication
can be wiped out from marketplace.
Privatization: This approach is by and large received by association hence
they can build up economy. It additionally for possession exchange.
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TASK 3
3.1 Determination of pricing and output decisions by market structures
The set of various factors which helps in determining the nature of interaction between
firms, is known as market structure. Market structure of Nestle SA can be determined by several
aspects, such as:
 Number of competitors and their size
 Types of goods produced by Nesle SA
 Opportunities for entry of new companies in market
 Numbers of customers for Nestle's product
 Nestle's ability of influencing demand via advertising
After consideration of all the above factors and prioritizing some of them, four major
types of market structures are formed:
 Perfect Competition
 Oligopoly
 Monopoly
 Monopolistic competition
Perfect competition is where there are presence of huge number of firms with regular
interaction and there is heavy competition amongst them, who produce homogeneous goods
with same standards. In such a condition, there is no control on the prices and any firm can freely
enter the market (Lee and et. al., 2011).
Oligopoly points to such a market structure that consists of less number of major
companies, and amongst them, some of them control a large share of market. New firms' entry in
the market is difficult, but still possible in such market conditions. The firms wont compete on
basis of price, here they will be competitive regarding the quality and reliability of the products.
Monopoly is where there is no competition at all. There will be a single seller and the
price they decide will be much high considered to other market structures. In monopolistic
competition, there is presence of many companies in market engaged in production of similar
products but with a different brand name.
Market structure of Nestle is Monopolistic competition and as per this, they are providing
variety of products to their customers. Any firm can take entry into market easily and along with
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this they have control over prices. Barrier of entry is very less and Nestle cater many items to
their buyers, such as coffee, chocolate, Maggie and so on.
3.2 Organisational responses shaped by market forces
Market forces can be referred as conditions that affects supply and demand in a free
market with the determination of prices, buyers' and sellers' behaviour, improvement in
production is also encouraged (Moutinho, 2011). Efficiency and quality of work can also be
increased in such conditions of market. Demand and supply are considered major factors that
affects the market force in the economy. Supply can be defined as quantity of goods and services
provided by Nestle SA in the market. Demand can be referred to as the number of buyers who
are interested in purchasing those goods in the market.
The interaction between these two factors, demand and supply, is a basic rule of any
perfect market. They are the aspects that could affect buying and selling procedure in a vast
manner. If the rate of supply exceeds the amount of demand, prices of the goods or service will
definitely face a fall. In the contrary, if demand seems to be more than the supply, there can be
an inflation in the market, that is prices of the goods and services will be rising. Price is also one
of the factors that could affect the competition in any market. As the number of competitors
increase, the prices will be seem falling. Less price of products will lead to rise in demand and
thus result in increase in profit.
Both demand as well as supply are biggest elements which can affect company and along
with this their working. Fundamentally, demand means needs and wants of buyers and for which
they can pay any amount. Rather than this, supply means item's quantity which can be purchase
from marketplace easily. Thus, it is essential for Nestle to understand both elements, as it assists
them to improve their revenues and they can easily enhance their reputation.
3.3 Impact of business and cultural environment on behaviour of Nestle SA
Nestle SA is a company that have a huge number of customers not just in local markets
but also in international market. And to create such effectiveness, there are certain factors of
business and cultural environment creating a positive affect on the behaviour of Nestle SA being
a buyer. Business environment is inclusive of political, economic, social and legal conditions.
And factors that are not in relation to political and economic system are considered to be
classified as socio cultural environment (Ratten, 2014). Culture of every country in which Nestle
SA operates plays a vital role in making the effective business activities. Some countries are so
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culture oriented that companies could only survive if they adopt culture based marketing
strategies. Nestle has to apply different marketing strategies for different countries, as culture
varies from country to country along with the political, social, economic and legal conditions.
The target customers are to be kept in mind after making decisions regarding the appropriate
location to make sales, that is, domestic or international. Companies usually face issues when
they try to establish in new markets.
Political surrounding is like an indirect element which can also affect culture of Nestle. If
politics of country is not stable then it can lead to various cultural problems. If firm is
accomplish wants of their clients in an appropriate manner, then it can affect their profits and
along with this, they can lose their customer base. Thus, it is must for manager of association to
examine it on regular basis, so that they can maintain their market share in an adequate way.
TASK 4
4.1 Importance of international trade for Nestle SA in UK
International trade can be defined as the global exchange of goods and services among
nations. Expansion of markets in United Kingdom is only possible with globalisation of trade.
International trade opens up opportunities for companies settled in UK to get established in
other countries as well. Nestle SA is a company which is situated in Switzerland and
international trade is only thing worth gratitude for bringing in Nestle into United Kingdom.
Now, Nestle SA is well established in UK, now and their operations are running properly to
generate a good amount of revenue. The customers now has access to the international goods and
they can purchase better products produced by companies from foreign countries. International
trade helps in bringing more effective competition involving the international brands and
companies in the market, and thus customers are offered more options to choose with variable
qualities and price ranges (Sena Ferreira and et. al., 2012).
The establishment of World Trade Organisation (WTO) was for regulation and
liberalization of international trade with participation in the year of 1995. WTO holds
responsibility to develop and implement new trade agreements. It also operates for ensuring that
the members of the organisation are observed for signing agreements by countries involved in
contract. International trade have been helping countries to participate in the global economy and
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have encouraged possibilities of foreign direct investments of various large companies with
heavy potential.
 With assistance of international trade company can do their business in various nations
and provide their items to people across the world, and it will aide them to gain foreign
currency. Along with this, it will improve their reputation and revenues also.
 Country is not able to produce every kind of goods, thus they have to export or import
products from other nations but it will consume high cost.
4.2 Impact of global factors on Nestle SA UK
Every national economy including economy of United Kingdom, are vulnerable to global
factors of changes. It is one of the factors included in external environment that affects the
business activities of an organisation. Nestle SA being a global brand of food and drinks,
established in almost every major countries in the world, is also impacted by global changes
affecting the economy (Ullah and Lai, 2011). UK is highly vulnerable in such a situation where
the global economic fluctuations are occurring, as it is one of the major importer and exporter in
international economy. The global factors can be classified in to various sections, such as,
economic, technological, political, legal and social aspects (Welford, 2013).
Political factors that affects organisations in United Kingdom includes:
 Enlargement of European Union,
 the Euro international trade decisions, policies related to taxation, etc.
Economic factors among global aspects that impacts the businesses established and
spread over UK are:
 Interest rates decided by the central banks
 Exchange rates that are decided by the EXIM factors of international trade
 National income of countries involved in international trade with UK
 Inflation in market caused by demand-supply chain
 Unemployment in country due to lack of profit for organisations, and
 Stock market.
Factors that affects organisations settled in UK technologically are innovations and new
technologies, latest development of products, increment and reduction in rates of technological
obsolescence, etc. Legal factors that impacts the UK based business firms are laws of
competition, rules and regulations regarding the health and safety of employees working in the
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organisation, equality in employment act, etc. The environmental factors like global warming
and other issue in environment are also important aspects that affect the operations of a business
firm running in UK.
Legal factors: It is essential for each and every type of company to follow all rules which are
formulated by government. No organisation has right to disobey these rules, if they do then their
image can be affected.
Social factors: Company can get influenced because of some components such as age, gender,
lifestyle and so on. These all can affect buying power of people either directly or indirectly.
Technological factors: If firm wants to improve their sales as well as productivity, then it is
must for them to use new tools and methods into their business operations. It will aide them to
increase their profits and in addition goodwill at marketplace.
4.3 Impact of EU policies on Nestle SA UK
Recently there was historic referendum, Britain voted to leave the European Union and
therefore businesses settled in UK have been facing several issues regarding the EU policies and
its abolishment within the nation (Yoon, 2012). UK is considered to be one of the major
countries to establish businesses, but there have been changes due to effects that are unknown
brought by Brexit. There were regulations placed by European Union on subjects like shipping,
regulations in Value Added Tax, funding, Trade and relationships, Red tape and its regulation,
workers' freedom of movement and extra costs. There are opinions that Brexit will result to be a
failure for the UK based business organisations and will impact in all the factors that are
mentioned above.
Today, United Kingdom has create their own process as well as policies, but they are
utilizing EU legislations. Surroundings of business can get affected due to this phase, but if it is
stabilise then Nestle can cater effective trade practices.
CONCLUSION
The project have dealt with purposes of organisations of various classifications. This
project has also focused on the objectives of the stakeholders and responsibilities of an
organisation. The systems used to allocate the economic resources by an organisations are also
mentioned within this report. The business related fiscal policies, monetary polices, competition
policies and their impacts on the organisations are also included in a major portion of this
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project. The decision making process of pricing and output for the determination of market
structures and organisational responses to the market forces are also a major part of this report.
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environment/>. [Accessed on 3rd June 2017].

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