Sustainable Business Strategies and Practices
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This assignment requires a critical analysis of Nestlé's sustainable business strategies. Students will examine how Nestlé implements these strategies within the legal framework established by legislation like the Competition Act 1998 and the Enterprise Act 2002. The analysis should incorporate Porter's hypothesis, exploring the relationship between environmental regulation and innovation/competitiveness. Furthermore, students will consider institutional factors influencing Nestlé's sustainable practices and their impact on global integration within a multinational corporation.
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UNIT1. BUSINESS ENVIRONMENT
1
1
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Table of Contents
Introduction................................................................................................................................2
LO1: Understanding the organisational purposes of businesses of Nestle................................2
1.1 Identifying the purposes of different types of organisation.................................................2
1.2 Describing the extent to which an Nestle meets the objectives of different stakeholders...2
1.3 Explaining the responsibilities of Nestle and strategies employed to meet them................2
LO2: Understanding the behaviour of organisations in their market environment...................2
2.1 Explaining how economic systems attempt to allocate resources effectively.....................2
2.2 Assess the impact of fiscal and monetary policy on business organisations and their
activities.....................................................................................................................................2
The economy of a nation and tax rates are focused by the government in the fiscal policy. In a
country, the stability in prices and the general trust are ensured by the process of monetary
policy..........................................................................................................................................2
2.3 Evaluating the impact of competition policy and other regulatory mechanisms on the
activities of a selected organisation............................................................................................2
LO3: Understanding the behaviour of organisations in their market environment...................2
3.1 Explaining how market structures determine the pricing and output decisions of business2
3.2 Illustrating the way in which market forces shape organisational responses using a range
of examples................................................................................................................................2
3.3 Judging how the business and cultural environments shape the behaviour of a selected
organisation................................................................................................................................2
LO 4: Assessing the significance of the global factors that shape national business activities. 2
4.1 Discussing the significance of international trade to UK business organisations................2
4.2 Analysing the impact of global factors on UK business organisations................................2
4.3 Evaluating the impact of policies of the European Union on UK business organisations
agriculture..................................................................................................................................2
Conclusion..................................................................................................................................2
2
Introduction................................................................................................................................2
LO1: Understanding the organisational purposes of businesses of Nestle................................2
1.1 Identifying the purposes of different types of organisation.................................................2
1.2 Describing the extent to which an Nestle meets the objectives of different stakeholders...2
1.3 Explaining the responsibilities of Nestle and strategies employed to meet them................2
LO2: Understanding the behaviour of organisations in their market environment...................2
2.1 Explaining how economic systems attempt to allocate resources effectively.....................2
2.2 Assess the impact of fiscal and monetary policy on business organisations and their
activities.....................................................................................................................................2
The economy of a nation and tax rates are focused by the government in the fiscal policy. In a
country, the stability in prices and the general trust are ensured by the process of monetary
policy..........................................................................................................................................2
2.3 Evaluating the impact of competition policy and other regulatory mechanisms on the
activities of a selected organisation............................................................................................2
LO3: Understanding the behaviour of organisations in their market environment...................2
3.1 Explaining how market structures determine the pricing and output decisions of business2
3.2 Illustrating the way in which market forces shape organisational responses using a range
of examples................................................................................................................................2
3.3 Judging how the business and cultural environments shape the behaviour of a selected
organisation................................................................................................................................2
LO 4: Assessing the significance of the global factors that shape national business activities. 2
4.1 Discussing the significance of international trade to UK business organisations................2
4.2 Analysing the impact of global factors on UK business organisations................................2
4.3 Evaluating the impact of policies of the European Union on UK business organisations
agriculture..................................................................................................................................2
Conclusion..................................................................................................................................2
2
Introduction
The business environment means all the factors that may affect the functions of an
organisation that involve management, consumers, employees, supply, demand and other
business regulations. So, to run a business successfully, it is essential to comprehend the
business environment. As a newly appointed senior manager of Nestle Company Ltd, the
learner is responsible to execute to compete with the market and do a research the various
opportunities regarding business.
To succeed in the current environment, the learner will make some changes like
judging the implication of the global factors that configures the national activities through
understanding the business purpose of the organisation, the type of the national environment,
the company behaviour in the global market.
Figure 1: Logo of Nestle Inc.
(Source: nestle.co.uk, 2016)
3
The business environment means all the factors that may affect the functions of an
organisation that involve management, consumers, employees, supply, demand and other
business regulations. So, to run a business successfully, it is essential to comprehend the
business environment. As a newly appointed senior manager of Nestle Company Ltd, the
learner is responsible to execute to compete with the market and do a research the various
opportunities regarding business.
To succeed in the current environment, the learner will make some changes like
judging the implication of the global factors that configures the national activities through
understanding the business purpose of the organisation, the type of the national environment,
the company behaviour in the global market.
Figure 1: Logo of Nestle Inc.
(Source: nestle.co.uk, 2016)
3
LO1: Understanding the organisational purposes of businesses of Nestle
1.1 Identifying the purposes of different types of organisation
Mowday et al. (2013, p.25) stated that, based on the business purposes, organizations
can be classified into three different groups- Public Sector, Private Sector and voluntary
Organisations. The public-sector organisation provides non-payer services which benefits all
of society. The private sector organisations are run by the private individuals with the sole
motive of gaining profit against the products and the services provided by them. The
activities of the organisations directly impact the economy. The non-profit charitable
organisations enjoy certain privileges in exchange for abiding by some restricted laws; and
agree to organise and solely to fulfil certain missions. Business organisations can also be
divided by the Limited Liability, Sole Trade organisations and Partnership organisations. A
Sole Trade organisation is owned and controlled by one person though they employ workers
and provide specialist service.
Public sector organisation:
The government runs the public-sector organisations. These organisations are
financed by the government. The aims and objectives of this type of organisation are to work
for the welfare of the people. Some of the examples of public sector organisations are BBC
and National Health Service. The main objective of public sector organisation is generate
maximum profits and help to contributing in economy development.
Private sector organisation:
Private sector organisation is the organisations where they aim to generate high
revenue by provided services to the respected customers. This sector organisation is financed
by the individual investment, bank loans. Some of the examples of the various organisations
are Virgin Atlantic Airline Airways, ASDA, Aldi and Nestle. As Nestle provides services or
products to the people for money and their organisational objectives are to get profit, nestle is
being considered as private sector organisation. Private organisation is like sole
proprietorship, partnership businesses, etc. These all are private sector organisation. Nestle is
one of prove company where they communicate with sole traders where who govern own
4
1.1 Identifying the purposes of different types of organisation
Mowday et al. (2013, p.25) stated that, based on the business purposes, organizations
can be classified into three different groups- Public Sector, Private Sector and voluntary
Organisations. The public-sector organisation provides non-payer services which benefits all
of society. The private sector organisations are run by the private individuals with the sole
motive of gaining profit against the products and the services provided by them. The
activities of the organisations directly impact the economy. The non-profit charitable
organisations enjoy certain privileges in exchange for abiding by some restricted laws; and
agree to organise and solely to fulfil certain missions. Business organisations can also be
divided by the Limited Liability, Sole Trade organisations and Partnership organisations. A
Sole Trade organisation is owned and controlled by one person though they employ workers
and provide specialist service.
Public sector organisation:
The government runs the public-sector organisations. These organisations are
financed by the government. The aims and objectives of this type of organisation are to work
for the welfare of the people. Some of the examples of public sector organisations are BBC
and National Health Service. The main objective of public sector organisation is generate
maximum profits and help to contributing in economy development.
Private sector organisation:
Private sector organisation is the organisations where they aim to generate high
revenue by provided services to the respected customers. This sector organisation is financed
by the individual investment, bank loans. Some of the examples of the various organisations
are Virgin Atlantic Airline Airways, ASDA, Aldi and Nestle. As Nestle provides services or
products to the people for money and their organisational objectives are to get profit, nestle is
being considered as private sector organisation. Private organisation is like sole
proprietorship, partnership businesses, etc. These all are private sector organisation. Nestle is
one of prove company where they communicate with sole traders where who govern own
4
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individual business. Who help to making business effective. Now the main objective of
private sector is hire more skilled people and adopt new technology advancement. With the
help of all these technology advancement private companies generate high revenue.
Voluntary sector organisation:
The voluntary sector organisation works of the charity or the welfare of the people
free of cost. This type of organisations financed by the individual investments and donations
and governmental helps. Some of the examples of the Voluntary organisations are Oxfam and
British Red Cross.
5
private sector is hire more skilled people and adopt new technology advancement. With the
help of all these technology advancement private companies generate high revenue.
Voluntary sector organisation:
The voluntary sector organisation works of the charity or the welfare of the people
free of cost. This type of organisations financed by the individual investments and donations
and governmental helps. Some of the examples of the Voluntary organisations are Oxfam and
British Red Cross.
5
1.2 Describing the extent to which an Nestle meets the objectives of different
stakeholders
The organisational objective of Nestle is to acquire competitive advantage in the
competitive market. The objectives also include the profitability of the company, to build
trust among the customers of the concerned company. The important stakeholders of the
concerned company are employees, customers, suppliers, government shareholders, media,
trade creditors, lenders, government and their agencies, customers and public enterprises.
To acquire maximum profit for the organisation, the stakeholders of the same
contribute a lot. In business growth, the employees help the organisation most. The concerned
company can survive in the market if the customers, other important stakeholders prefer the
product of Nestle. With the help of stakeholders, the company can acquire the brand image
which can be done by providing value added services to the customers. They are also
concerned in information that makes Nestle to evaluate the company’s potentiality to pay the
bonus.
The members of the company are also interested that are related to the profit and
stability of the employers. The consumers are also interested in the information regarding the
duration of as they are involved with the enterprise. The lenders have an interest in the
information to find out whether their loans and the interest that are attached to them need to
be paid. The suppliers and the creditors have an interest in the information to find out
whether the amounts will be paid. In the opinion of Mason and O’Mahony (2015, p.74), the
Government and their agencies have an interest in the allotment of the resources to regulate
the activities and determine the taxation policies of the company. Nestle undertakes these
stakeholders’ engagements to improve and develop its relationships with the company. The
company undertakes various anti-corruption measures that are applicable for all the
organisations and suppliers who intend to engage in business relationship with Nestle.
Stakeholders Needs of the stakeholders Impact of Satisfaction of
the stakeholders
Customers The needs of the customers
are to get safe and healthy
By fulfilling the need of the
customers, the concerned
6
stakeholders
The organisational objective of Nestle is to acquire competitive advantage in the
competitive market. The objectives also include the profitability of the company, to build
trust among the customers of the concerned company. The important stakeholders of the
concerned company are employees, customers, suppliers, government shareholders, media,
trade creditors, lenders, government and their agencies, customers and public enterprises.
To acquire maximum profit for the organisation, the stakeholders of the same
contribute a lot. In business growth, the employees help the organisation most. The concerned
company can survive in the market if the customers, other important stakeholders prefer the
product of Nestle. With the help of stakeholders, the company can acquire the brand image
which can be done by providing value added services to the customers. They are also
concerned in information that makes Nestle to evaluate the company’s potentiality to pay the
bonus.
The members of the company are also interested that are related to the profit and
stability of the employers. The consumers are also interested in the information regarding the
duration of as they are involved with the enterprise. The lenders have an interest in the
information to find out whether their loans and the interest that are attached to them need to
be paid. The suppliers and the creditors have an interest in the information to find out
whether the amounts will be paid. In the opinion of Mason and O’Mahony (2015, p.74), the
Government and their agencies have an interest in the allotment of the resources to regulate
the activities and determine the taxation policies of the company. Nestle undertakes these
stakeholders’ engagements to improve and develop its relationships with the company. The
company undertakes various anti-corruption measures that are applicable for all the
organisations and suppliers who intend to engage in business relationship with Nestle.
Stakeholders Needs of the stakeholders Impact of Satisfaction of
the stakeholders
Customers The needs of the customers
are to get safe and healthy
By fulfilling the need of the
customers, the concerned
6
products. The customers of
Nestle required having the
products which have taste
with nutrition value.
company can acquire
customer’s satisfaction and
loyalty which will ultimately
help the same to acquire
competitive advantage.
Employees The needs of the employees
of Nestle are to get better
working atmosphere. The
employees need to have
wage per their performance.
Different welfare policies for
the employees are required.
By considering the needs of
the employees, the concerned
organisation can increase the
productivity of the
employees as well as the
entire organisation. The
satisfaction of the employees
can also impact the business
objectives of Nestle.
governmental The government is one of
the important stakeholders,
which determines safety of
the customer. The
government also considers
that the company is running
their business in fair manner.
By maintaining the needs of
the governments needs the
concerned organisation can
build the brand image among
customers which helps the
same to get the customer’s
preference.
7
Nestle required having the
products which have taste
with nutrition value.
company can acquire
customer’s satisfaction and
loyalty which will ultimately
help the same to acquire
competitive advantage.
Employees The needs of the employees
of Nestle are to get better
working atmosphere. The
employees need to have
wage per their performance.
Different welfare policies for
the employees are required.
By considering the needs of
the employees, the concerned
organisation can increase the
productivity of the
employees as well as the
entire organisation. The
satisfaction of the employees
can also impact the business
objectives of Nestle.
governmental The government is one of
the important stakeholders,
which determines safety of
the customer. The
government also considers
that the company is running
their business in fair manner.
By maintaining the needs of
the governments needs the
concerned organisation can
build the brand image among
customers which helps the
same to get the customer’s
preference.
7
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1.3 Explaining the responsibilities of Nestle and strategies employed to meet them
The primary responsibility of any enterprise or business is to provide their specific
services. The organisations should abide by certain rules regarding their business
areas. In the opinion of Borrás and Edquist (2013, p.1518), the key responsibilities of
organisations include ethics and business, social responsibilities, environmental
responsibilities, legal responsibilities, management responsibilities to the employees and
customers and to the competitors.
The importance of the environmental legislations is to create the brand image. The
concerned company can follow environmental responsibilities by reducing the use of carbon
footprints. Thus, by considering the corporate social responsibility the concerned company
can create brand preference among the customers. Governmental policies ensure that the
companies in market compete in a fair manner. The customers expect that Nestle being one of
the leading brand, considers the safety and health factor of the customers. Nestle to follow the
governmental policies, set the competitive prices of the products. It also adds nutrition value
in their products.
Nestle has reduced the use of carbon foot prints to maintain environmental
legislations. Nestle has taken continuous excellence initiatives to maintain the governmental
policies regarding the health and safety of the customers. To maintain a balance between
economy and ecosystem, it is necessary to perform the social responsibilities. The companies
are answerable to the public for their environmental, social and financial performance. It is
about going above and beyond what is called for by the legal responsibilities.
Again, in the opinion of Borrás and Edquist (2013, p.1518), legal obligations cover all
the area i.e. health and safety, child protection, insurance and professional conduct. Policies
and procedures provide the framework within an organisation as Nestle operates. Nestle is
bound to provide safe work environment to its employees. The company also ensures that the
advertisement do not encourage any type harmful consumptions and do not mislead in
anyway.
8
The primary responsibility of any enterprise or business is to provide their specific
services. The organisations should abide by certain rules regarding their business
areas. In the opinion of Borrás and Edquist (2013, p.1518), the key responsibilities of
organisations include ethics and business, social responsibilities, environmental
responsibilities, legal responsibilities, management responsibilities to the employees and
customers and to the competitors.
The importance of the environmental legislations is to create the brand image. The
concerned company can follow environmental responsibilities by reducing the use of carbon
footprints. Thus, by considering the corporate social responsibility the concerned company
can create brand preference among the customers. Governmental policies ensure that the
companies in market compete in a fair manner. The customers expect that Nestle being one of
the leading brand, considers the safety and health factor of the customers. Nestle to follow the
governmental policies, set the competitive prices of the products. It also adds nutrition value
in their products.
Nestle has reduced the use of carbon foot prints to maintain environmental
legislations. Nestle has taken continuous excellence initiatives to maintain the governmental
policies regarding the health and safety of the customers. To maintain a balance between
economy and ecosystem, it is necessary to perform the social responsibilities. The companies
are answerable to the public for their environmental, social and financial performance. It is
about going above and beyond what is called for by the legal responsibilities.
Again, in the opinion of Borrás and Edquist (2013, p.1518), legal obligations cover all
the area i.e. health and safety, child protection, insurance and professional conduct. Policies
and procedures provide the framework within an organisation as Nestle operates. Nestle is
bound to provide safe work environment to its employees. The company also ensures that the
advertisement do not encourage any type harmful consumptions and do not mislead in
anyway.
8
LO2: Understanding the behaviour of organisations in their market environment
2.1 Explaining how economic systems attempt to allocate resources effectively
Economic system determines the system which includes the process of resource
collection, production of the products and the distribution of the products among the
customers of the target market. Different governmental policies ensure that the business
organisation needs to compete in the market in a fair manner and the products they are selling
need to consider the safety and health of the customers. Tietenberg and Lewis (2016, p.111)
opined that, the resource allocation is a plan to use available resources that includes
managing tangible assets. Some factors that aid this allocation of resources for Nestle are as
follows:
Mixed and Free Enterprise
The market price in a free economy allocates goods and services without any
intervention from the government, while the mixed economy includes ample sources to
achieve the final purpose and help in the allocation of resources. Nestle’s allocation of
resources is mainly based following the mixed economy, along with the consideration of the
governmental policies that rule the market conditions. The effective analysis of the business
behaviour acts as an efficient strategy for Nestle to prosper well in its ventures.
Transitional Economy
The transitional economy is a shifting economy that moves towards the market
economy from the planned economy. The allocation of the resources in Nestle is done per the
existing market prices that are dependent on the taxation policies of the country and the
availability of public finances. As the resource allocation in Nestle includes the governmental
policies, the cost of capital and the levying of taxes are becoming instrumental in the
operation of Nestle’s line of business actions.
Economic system determines that a business organisation will produce how much
products and from which it will collect the raw materials. The distribution of the final
products in the market determines the earning of profit by the company. This criterion makes
it imperative to understand the economic status of the country with specific reference to the
9
2.1 Explaining how economic systems attempt to allocate resources effectively
Economic system determines the system which includes the process of resource
collection, production of the products and the distribution of the products among the
customers of the target market. Different governmental policies ensure that the business
organisation needs to compete in the market in a fair manner and the products they are selling
need to consider the safety and health of the customers. Tietenberg and Lewis (2016, p.111)
opined that, the resource allocation is a plan to use available resources that includes
managing tangible assets. Some factors that aid this allocation of resources for Nestle are as
follows:
Mixed and Free Enterprise
The market price in a free economy allocates goods and services without any
intervention from the government, while the mixed economy includes ample sources to
achieve the final purpose and help in the allocation of resources. Nestle’s allocation of
resources is mainly based following the mixed economy, along with the consideration of the
governmental policies that rule the market conditions. The effective analysis of the business
behaviour acts as an efficient strategy for Nestle to prosper well in its ventures.
Transitional Economy
The transitional economy is a shifting economy that moves towards the market
economy from the planned economy. The allocation of the resources in Nestle is done per the
existing market prices that are dependent on the taxation policies of the country and the
availability of public finances. As the resource allocation in Nestle includes the governmental
policies, the cost of capital and the levying of taxes are becoming instrumental in the
operation of Nestle’s line of business actions.
Economic system determines that a business organisation will produce how much
products and from which it will collect the raw materials. The distribution of the final
products in the market determines the earning of profit by the company. This criterion makes
it imperative to understand the economic status of the country with specific reference to the
9
balance of payment and balance of trade that are the integral factors in regulating the entire
economic system of the country.
10
economic system of the country.
10
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2.2 Assess the impact of fiscal and monetary policy on business organisations and their
activities
The government in the fiscal policy focuses the economy of a nation and tax rates. In
a country, the process of monetary policy ensures the stability in prices and the general trust.
Public Sector Net Borrowing (PSNB)
To meet the spending requirements, the government and the local are in need to
borrow net. This may result to national debt occurrence and inflation.
Central and Local Government Spending
As Hansen (2013, p.335) stated, there are two types of the Central and Government
Spending i.e. capital spending and current spending. It stimulates the macro-economy by
incurring some changes taken together demand of the economy and affects the business
activities of Nestle.
Public Sector Net Cash Requirement (PSNCR)
In order to fulfil the financial commitment, the government needs to take over money
at the particular rate incurred by the Public-Sector Net Cash Requirements. It includes the
local government, the central government as well as the public corporations.
Control of Aggregate Demand
The aggregate demand is the sum of services and goods. The term is used to evaluate
the amount spent by the government, consumers and people. By impacting the GDP, the
prices and the employment rates, the aggregate demand of an economy takes in the
organisational behaviour of Nestle.
Fiscal policy:
Per this policy the government balance the rates of the taxes and expenditure which
directly influences and impacts the national economy. Fiscal policy determines the economic
condition of one country which impacts the purchasing power of the customers. The
government generates different policies which influences the business operation of the
11
activities
The government in the fiscal policy focuses the economy of a nation and tax rates. In
a country, the process of monetary policy ensures the stability in prices and the general trust.
Public Sector Net Borrowing (PSNB)
To meet the spending requirements, the government and the local are in need to
borrow net. This may result to national debt occurrence and inflation.
Central and Local Government Spending
As Hansen (2013, p.335) stated, there are two types of the Central and Government
Spending i.e. capital spending and current spending. It stimulates the macro-economy by
incurring some changes taken together demand of the economy and affects the business
activities of Nestle.
Public Sector Net Cash Requirement (PSNCR)
In order to fulfil the financial commitment, the government needs to take over money
at the particular rate incurred by the Public-Sector Net Cash Requirements. It includes the
local government, the central government as well as the public corporations.
Control of Aggregate Demand
The aggregate demand is the sum of services and goods. The term is used to evaluate
the amount spent by the government, consumers and people. By impacting the GDP, the
prices and the employment rates, the aggregate demand of an economy takes in the
organisational behaviour of Nestle.
Fiscal policy:
Per this policy the government balance the rates of the taxes and expenditure which
directly influences and impacts the national economy. Fiscal policy determines the economic
condition of one country which impacts the purchasing power of the customers. The
government generates different policies which influences the business operation of the
11
company. As Nestle has business over many countries it needs to follow and adhere the
policies and taxations of that certain countries based on their economic system.
Monetary policies:
Monetary policy is mainly controlled by the banks which provide the sources of
money. It determines the rate of taxations, inflation. It creates the trust in the currency
among the citizens of one country. Monetary policy ensures the continuous economic growth
which helps to get the stable employment opportunities. The exchange rate stability is also
being stable through monetary policies. Nestle as it operates its business in many countries,
through monetary policy it acquires knowledge regarding economic condition of the
company through which the concerned company can plan their business operations.
12
policies and taxations of that certain countries based on their economic system.
Monetary policies:
Monetary policy is mainly controlled by the banks which provide the sources of
money. It determines the rate of taxations, inflation. It creates the trust in the currency
among the citizens of one country. Monetary policy ensures the continuous economic growth
which helps to get the stable employment opportunities. The exchange rate stability is also
being stable through monetary policies. Nestle as it operates its business in many countries,
through monetary policy it acquires knowledge regarding economic condition of the
company through which the concerned company can plan their business operations.
12
2.3 Evaluating the impact of competition policy and other regulatory mechanisms on
the activities of a selected organisation
Office of Fair Trading
The act was formulated with the aim of ensuring fair practise among the organisations
engaging in business activities. The act restricts the organisations in engaging in any activity
that can hamper other organisation while ensuring their own success.
The Competition Act 1998
The Competition Act 1998 provides the scope to the organisation to deal with any
unfair practices that occurs when the organisations are involved with other organisations by
defining the scope and the areas of their responsibilities. (Legislation.gov.uk, 2016). The law
restricts any unethical use of the authority by the organisations while engaging in business
activities.
Carraro et al. (2013, p.64) noticed that, the purpose is being to increase prices by
removing or reducing competition and harmonise the UK with EU competition policy.
Improving the products and the services through research, innovation and development by the
manufacturers, goods and services at a fair market price, more choices available to the
consumers, the products of better qualities and goods and services at a fair market price that
consumers may get, are some of the direct benefits of this act.
Enterprise Act 2002
The Enterprise Act regulates the activities of the organisations and maintains that the
stand and the activities of the organisations are designed to maintain the welfare of the
customers as well as the society (Legislation.gov.uk, 2016). This encourages productivity for
enterprises like Nestle.
Directorate general for competition
Per Ambec et al. (2013, P.20), the directorate ensures that the organisations are aware
of the regulatory measures that they need to take while engaging in business activities. It
provides a clear boundary as to how the activities of the organisations are regulated to ensure
a common wellbeing in the society.
13
the activities of a selected organisation
Office of Fair Trading
The act was formulated with the aim of ensuring fair practise among the organisations
engaging in business activities. The act restricts the organisations in engaging in any activity
that can hamper other organisation while ensuring their own success.
The Competition Act 1998
The Competition Act 1998 provides the scope to the organisation to deal with any
unfair practices that occurs when the organisations are involved with other organisations by
defining the scope and the areas of their responsibilities. (Legislation.gov.uk, 2016). The law
restricts any unethical use of the authority by the organisations while engaging in business
activities.
Carraro et al. (2013, p.64) noticed that, the purpose is being to increase prices by
removing or reducing competition and harmonise the UK with EU competition policy.
Improving the products and the services through research, innovation and development by the
manufacturers, goods and services at a fair market price, more choices available to the
consumers, the products of better qualities and goods and services at a fair market price that
consumers may get, are some of the direct benefits of this act.
Enterprise Act 2002
The Enterprise Act regulates the activities of the organisations and maintains that the
stand and the activities of the organisations are designed to maintain the welfare of the
customers as well as the society (Legislation.gov.uk, 2016). This encourages productivity for
enterprises like Nestle.
Directorate general for competition
Per Ambec et al. (2013, P.20), the directorate ensures that the organisations are aware
of the regulatory measures that they need to take while engaging in business activities. It
provides a clear boundary as to how the activities of the organisations are regulated to ensure
a common wellbeing in the society.
13
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Competition Commission
Competition Commission is designed to ensure that all the parties engaged in the
business activities are fairly treated and are benefitted from the transactions. The commission
regulates the organisations to display any undue authority on the partners as well as the
customers.
Minimum and maximum pricing legislations:
Per maximum price legislations, the government sets the maximum price of the
product, above which the companies cannot set the prices of the products. Per the minimum
pricing legislation, the companies cannot set the prices of the product less than a certain
amount which is set by the government of the country. These two legislations impact the
business operations of NESTLE. For these two legislations, the concerned company cannot
set the prices of their products to get the competitive advantage, but to set the competitive
price approved by the government. These two legislations determine that the companies,
which are competing in the same industry, must get equal opportunity in the market.
14
Competition Commission is designed to ensure that all the parties engaged in the
business activities are fairly treated and are benefitted from the transactions. The commission
regulates the organisations to display any undue authority on the partners as well as the
customers.
Minimum and maximum pricing legislations:
Per maximum price legislations, the government sets the maximum price of the
product, above which the companies cannot set the prices of the products. Per the minimum
pricing legislation, the companies cannot set the prices of the product less than a certain
amount which is set by the government of the country. These two legislations impact the
business operations of NESTLE. For these two legislations, the concerned company cannot
set the prices of their products to get the competitive advantage, but to set the competitive
price approved by the government. These two legislations determine that the companies,
which are competing in the same industry, must get equal opportunity in the market.
14
LO3: Understanding the behaviour of organisations in their market environment
3.1 Explaining how market structures determine the pricing and output decisions of
business
Oligopolies
In Oligopoly, market structure the organisation must design the prices of the products
based on the market demands and the pricing decisions that the other organisations take.
Nestle working in the oligopoly market must see realise the exact demands of the customers
and provide them quality products. Moreover, the products and the prices range of the other
organisations must be considered.
Pricing Decisions
The pricing decisions taken by Nestlé depend on several related factors. The
organisation must take all the related factors while designing the products and the prices of
the products. The competition with other organisations and the current scenario in the market
decides the stand the organisation must take to decide an effective pricing strategy.
Monopoly
Aspinwall and Greenwood, (2013, p.446) opined that, the Monopoly market structure
is a structure where there is only a single seller. The differentiation policy in the products
and its prices is not applicable in such a market structure. So, if Nestle Company works in a
monopoly structure it must provide an ample number of products to the customers. It must
take care of all the demands and provide the customers with the exact solutions thus reducing
the chances of the growth of any other competitive organisations.
Monopolistic Competition
As opined by Scott (2013, p.334), this structure is a structure where there are many
sellers who provide the customers products that cannot compete with the other. The
15
3.1 Explaining how market structures determine the pricing and output decisions of
business
Oligopolies
In Oligopoly, market structure the organisation must design the prices of the products
based on the market demands and the pricing decisions that the other organisations take.
Nestle working in the oligopoly market must see realise the exact demands of the customers
and provide them quality products. Moreover, the products and the prices range of the other
organisations must be considered.
Pricing Decisions
The pricing decisions taken by Nestlé depend on several related factors. The
organisation must take all the related factors while designing the products and the prices of
the products. The competition with other organisations and the current scenario in the market
decides the stand the organisation must take to decide an effective pricing strategy.
Monopoly
Aspinwall and Greenwood, (2013, p.446) opined that, the Monopoly market structure
is a structure where there is only a single seller. The differentiation policy in the products
and its prices is not applicable in such a market structure. So, if Nestle Company works in a
monopoly structure it must provide an ample number of products to the customers. It must
take care of all the demands and provide the customers with the exact solutions thus reducing
the chances of the growth of any other competitive organisations.
Monopolistic Competition
As opined by Scott (2013, p.334), this structure is a structure where there are many
sellers who provide the customers products that cannot compete with the other. The
15
customers in a monopolistic market structure must work on providing additional innovations
in the products and services.
16
in the products and services.
16
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3.2 Illustrating the way in which market forces shape organisational responses using a
range of examples
Economies of scale outsourcing
In the words of Baker (2015, p.69), the main use of the economic scale is to maintain
the correlation among the unit cost and the volume in the companies like Nestle.
Supply and Demand
The organisational decisions related to the production and the development of the
products as well as the pricing strategies is made after considering the demands of the
products in the market. The organisation must take additional steps in ensuring the supply of
the products is maintained in the market to enhance the preferences of the customers.
Price Elasticity of Demand and Price Elasticity of Supply
In the words of Aspinwall and Greenwood, (2013, p.440), Price Elasticity of Demand
(PSD) is a measure the elasticity in the price of the products that changes based on the change
in the demands of the products. In the other hand, the Price Elasticity Supply (PES) is related
to the change in the supply of the products depending on the change on the price of the
products. Both PED and PES help Nestle in forecasting its sales and alter its pricing policy.
17
range of examples
Economies of scale outsourcing
In the words of Baker (2015, p.69), the main use of the economic scale is to maintain
the correlation among the unit cost and the volume in the companies like Nestle.
Supply and Demand
The organisational decisions related to the production and the development of the
products as well as the pricing strategies is made after considering the demands of the
products in the market. The organisation must take additional steps in ensuring the supply of
the products is maintained in the market to enhance the preferences of the customers.
Price Elasticity of Demand and Price Elasticity of Supply
In the words of Aspinwall and Greenwood, (2013, p.440), Price Elasticity of Demand
(PSD) is a measure the elasticity in the price of the products that changes based on the change
in the demands of the products. In the other hand, the Price Elasticity Supply (PES) is related
to the change in the supply of the products depending on the change on the price of the
products. Both PED and PES help Nestle in forecasting its sales and alter its pricing policy.
17
3.3 Judging how the business and cultural environments shape the behaviour of a
selected organisation
The changes like marketing actions, food standards in the political scenarios of
emerging counties are some of the problems crucifying Nestle.Economic factors such as
inflationary economic atmosphere, the rise in the prices, the changing economic levels of
people affect the business behaviour of Nestle. The social factors may include the trust of
people and the social trends that may convey the changes like policies of recruitment, pattern
of demand, and location of demand in Nestle.The technological changes may include the rise
in the popularity of the company and the marketing shift towards E-commerce through social
media marketing.The organisation has to work by keeping the laws and the regulations in
different societies in to considerations. The policies and the product lines must be in
accordance with the common law and the regulations set by the organisations. The
environmental includes the steps that the organisation takes in ensuring the sustainability
within the environment. The organisational practices will have to design to make sure that the
product does not hamper the long-term goals of the organisation and the society as a whole.
Technology advancement help to reduce the organisational cost of production and allows the
firm to produce the most advanced products. It significantly affects the working relationship
of groups within company like Nestle and individuals. With the help of technological
advancement enterprise productivity is enhanced in their organisation. Bamberger et al.
(2014, P.112)
Cultural Environment
The cultural environment decides the purchasing behaviour of the customers of the
organisations. The factors that decide the change in the behaviour of customers hampering
the organisational policies and the product range. The norms of the existing market influence
the business operations. The beliefs of the employees and the customers need to be focused
while planning the business operation of one company. Nestlé’s business operations also
influence for this cultural norms and beliefs of the place. As if the people of the country are
18
selected organisation
The changes like marketing actions, food standards in the political scenarios of
emerging counties are some of the problems crucifying Nestle.Economic factors such as
inflationary economic atmosphere, the rise in the prices, the changing economic levels of
people affect the business behaviour of Nestle. The social factors may include the trust of
people and the social trends that may convey the changes like policies of recruitment, pattern
of demand, and location of demand in Nestle.The technological changes may include the rise
in the popularity of the company and the marketing shift towards E-commerce through social
media marketing.The organisation has to work by keeping the laws and the regulations in
different societies in to considerations. The policies and the product lines must be in
accordance with the common law and the regulations set by the organisations. The
environmental includes the steps that the organisation takes in ensuring the sustainability
within the environment. The organisational practices will have to design to make sure that the
product does not hamper the long-term goals of the organisation and the society as a whole.
Technology advancement help to reduce the organisational cost of production and allows the
firm to produce the most advanced products. It significantly affects the working relationship
of groups within company like Nestle and individuals. With the help of technological
advancement enterprise productivity is enhanced in their organisation. Bamberger et al.
(2014, P.112)
Cultural Environment
The cultural environment decides the purchasing behaviour of the customers of the
organisations. The factors that decide the change in the behaviour of customers hampering
the organisational policies and the product range. The norms of the existing market influence
the business operations. The beliefs of the employees and the customers need to be focused
while planning the business operation of one company. Nestlé’s business operations also
influence for this cultural norms and beliefs of the place. As if the people of the country are
18
mainly vegetarian then the non-vegetarian product will not get profit that much. Thus, the
business plans need to strategies based on norms and beliefs of the place.
EPG policies:
European green party, this is the policy for food products. It provides norms for
healthy and tasty food and and also provide balancing food quality with energy security. It
also provide transparency in goods packaging. These policies the companies can get different
benefits, which are to create better communication. Polycentrism determines the better sales
as the company will get most of the information regarding the market through local people.
Based on this policy the companies can take initiatives to produce goods to meet local
people’s interests. Geocentrism helps to create better outlook for the global market. It also
determines value added products and services. The resources around worldwide market is
also being used for producing better products. Thus, these policies greatly affect the business
operations of Nestle based on this policy.
19
business plans need to strategies based on norms and beliefs of the place.
EPG policies:
European green party, this is the policy for food products. It provides norms for
healthy and tasty food and and also provide balancing food quality with energy security. It
also provide transparency in goods packaging. These policies the companies can get different
benefits, which are to create better communication. Polycentrism determines the better sales
as the company will get most of the information regarding the market through local people.
Based on this policy the companies can take initiatives to produce goods to meet local
people’s interests. Geocentrism helps to create better outlook for the global market. It also
determines value added products and services. The resources around worldwide market is
also being used for producing better products. Thus, these policies greatly affect the business
operations of Nestle based on this policy.
19
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LO 4: Assessing the significance of the global factors that shape national business
activities
4.1 Discussing the significance of international trade to UK business organisations
International trade
International trade deals with the cooperation among different organisations of the
world to organise trade business that can ensure the success of the organisations and all round
development of the economy. As opined by Dunning (2015, p.113) international trade deals
with the process of exchanging ideas, products and services among different organisations
working in various societies to enhance the productivity and the profit percentage.
Emerging markets (BRIC economies)
The BRIC (Brazil, Russia, India, and China) offers several opportunities to Nestle in
expanding the business and provides them additional scope to cater the customers. The
opportunities that BRIC countries provide a scope for the growth and revenue for the country
play a significant role for Nestle.
World Trade Organisation (WTO)
The World Trade Organisation plays an important and significant role for the
companies like Nestle as it supervises the trade relationship among countries that take place
in a fair manner.
Per the comparative and cost theories, the company can get the competitive advantage
in the existing market by providing better quality product in competitive price. There certain
international legislations, determine the opportunities that the company can get through
international market.
Advantage and disadvantage of international trade:
Through international trade the companies can get international opportunity. The
companies will also acquire the maximum profit to fulfil the organisational objectives. The
disadvantages can the international law and legislation which is different from the domestic
20
activities
4.1 Discussing the significance of international trade to UK business organisations
International trade
International trade deals with the cooperation among different organisations of the
world to organise trade business that can ensure the success of the organisations and all round
development of the economy. As opined by Dunning (2015, p.113) international trade deals
with the process of exchanging ideas, products and services among different organisations
working in various societies to enhance the productivity and the profit percentage.
Emerging markets (BRIC economies)
The BRIC (Brazil, Russia, India, and China) offers several opportunities to Nestle in
expanding the business and provides them additional scope to cater the customers. The
opportunities that BRIC countries provide a scope for the growth and revenue for the country
play a significant role for Nestle.
World Trade Organisation (WTO)
The World Trade Organisation plays an important and significant role for the
companies like Nestle as it supervises the trade relationship among countries that take place
in a fair manner.
Per the comparative and cost theories, the company can get the competitive advantage
in the existing market by providing better quality product in competitive price. There certain
international legislations, determine the opportunities that the company can get through
international market.
Advantage and disadvantage of international trade:
Through international trade the companies can get international opportunity. The
companies will also acquire the maximum profit to fulfil the organisational objectives. The
disadvantages can the international law and legislation which is different from the domestic
20
trade laws. The companies can get relaxation in the domestic trade laws but in international
trade the companies need to follow the legislation to get the competitive advantage in
international market.
4.2 Analysing the impact of global factors on UK business organisations
In the words of Mason and O’Mahony (2015, p.74), Business activities of an
organisation get affected by the global environment as it gets affected by its competitors. The
impacts of global forces that may affect the UK Business organisation are as followed:
Social factors: It is vital for UK business to analyse the differences in the societal
factors to design the exact product that is demanded by the customers. the social factors like
the differences in the age, status, religion and most importantly the geographical locations
have to be taken in to consideration while forming the policies.
Political Factors: Operational business activities influence the political factors
greatly. Mason and O’Mahony (2015, P.74) stated that, these factors can influence the
purchasing power of the consumers. For this seek, Nestle have to take this in to account to
enhance the acceptance of the products.
Competition:
If the competition is high in global market, it will difficult for the company to get the
competitive opportunity and competitive advantage in the international market. While
planning for business expansion the business organisations needs to consider the competition
in the international market.
Market opportunity:
International market opportunity is another factor of globalization. While expanding
the business in international market, the companies needs to analysis the market opportunities
in the existing market.
The factors of globalisation affect the international business of Nestle. As the
concerned company operates their business in global market, it needs to focus on these
concerned factors while planning for business expansion. The economic condition, cultural
values, norms and governmental international trade policies also are need to consider while
doing same.
21
trade the companies need to follow the legislation to get the competitive advantage in
international market.
4.2 Analysing the impact of global factors on UK business organisations
In the words of Mason and O’Mahony (2015, p.74), Business activities of an
organisation get affected by the global environment as it gets affected by its competitors. The
impacts of global forces that may affect the UK Business organisation are as followed:
Social factors: It is vital for UK business to analyse the differences in the societal
factors to design the exact product that is demanded by the customers. the social factors like
the differences in the age, status, religion and most importantly the geographical locations
have to be taken in to consideration while forming the policies.
Political Factors: Operational business activities influence the political factors
greatly. Mason and O’Mahony (2015, P.74) stated that, these factors can influence the
purchasing power of the consumers. For this seek, Nestle have to take this in to account to
enhance the acceptance of the products.
Competition:
If the competition is high in global market, it will difficult for the company to get the
competitive opportunity and competitive advantage in the international market. While
planning for business expansion the business organisations needs to consider the competition
in the international market.
Market opportunity:
International market opportunity is another factor of globalization. While expanding
the business in international market, the companies needs to analysis the market opportunities
in the existing market.
The factors of globalisation affect the international business of Nestle. As the
concerned company operates their business in global market, it needs to focus on these
concerned factors while planning for business expansion. The economic condition, cultural
values, norms and governmental international trade policies also are need to consider while
doing same.
21
4.3 Evaluating the impact of policies of the European Union on UK business
organisations agriculture
Common agricultural policy (CAP)
The policy was designed to ensure that the organisational policies and the products
designed by them must be done considering the effect it has on the farmers the producers the
raw materials. The agricultural policies take care of the long-term goals of the farmers and
the enhancement of the quality of the products. CAP refers to the Common Agricultural
Policy of the EU. The CAP benefits the farmers, produce raw materials for Nestle.
Climate Change
Buckley (2014, p.12) noticed that, the Climate Change Act commits the UK to
emission the harmful gases that influence the environment. As a part of the uk the NESTLE
has taken steps in reducing the emission of the effect that the green house has on the
environment.
Intellectual Property
Buckley (2014, p.15) also said that the success of the organisation depends on the
success of the organisation in conserving the intellectual property of the organisation. The
internal skills and the talents of the organisations must be properly controlled. NESTLE has
took the measures in securing copyrights of the production process and the retaining the skills
of the employees.
22
organisations agriculture
Common agricultural policy (CAP)
The policy was designed to ensure that the organisational policies and the products
designed by them must be done considering the effect it has on the farmers the producers the
raw materials. The agricultural policies take care of the long-term goals of the farmers and
the enhancement of the quality of the products. CAP refers to the Common Agricultural
Policy of the EU. The CAP benefits the farmers, produce raw materials for Nestle.
Climate Change
Buckley (2014, p.12) noticed that, the Climate Change Act commits the UK to
emission the harmful gases that influence the environment. As a part of the uk the NESTLE
has taken steps in reducing the emission of the effect that the green house has on the
environment.
Intellectual Property
Buckley (2014, p.15) also said that the success of the organisation depends on the
success of the organisation in conserving the intellectual property of the organisation. The
internal skills and the talents of the organisations must be properly controlled. NESTLE has
took the measures in securing copyrights of the production process and the retaining the skills
of the employees.
22
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Conclusion
The success of the organisational policies depends on the ability of the organisation in
using the different organisational factors effectively. NESTLE being a multinational
organisation must make a consideration of the different factors that play in various different
societies. Moreover, to gain a n advantage against the other organisations NESTLE has to use
more innovations and research on the varying demands of the customers. Changes in the
demands of the customers also determine the policies that the organisation has to change or
improve to enhance the acceptance of the products that the organisation produces.
23
The success of the organisational policies depends on the ability of the organisation in
using the different organisational factors effectively. NESTLE being a multinational
organisation must make a consideration of the different factors that play in various different
societies. Moreover, to gain a n advantage against the other organisations NESTLE has to use
more innovations and research on the varying demands of the customers. Changes in the
demands of the customers also determine the policies that the organisation has to change or
improve to enhance the acceptance of the products that the organisation produces.
23
Reference
Books
Aspinwall, M. and Greenwood, J. (2013). Collective action in the European Union: interests
and the new politics of associability. Abingdon: Routledge.
Bamberger, P.A., Biron, M. and Meshoulam, I. (2014). Human resource strategy:
Formulation, implementation, and impact. Abingdon: Routledge
Carraro, C., Katsoulacos, Y. and Xepapadeas, A. eds. (2013). Environmental policy and
market structure (Vol. 4). Berlin: Springer Science & Business Media.
Hansen, A.H. (2013). Fiscal policy & business cycles. Abingdon: Routledge.
Mowday, R.T., Porter, L.W. and Steers, R.M., (2013). Employee—organization linkages:
The psychology of commitment, absenteeism, and turnover. Cambridge: Academic press.
Scott, W.R. (2013). Institutions and organizations: Ideas, interests, and identities. California:
Sage Publications.
Tietenberg, T.H. and Lewis, L. (2016). Environmental and natural resource economics.
Abingdon: Routledge.
Journals
Ambec, S., Cohen, M.A., Elgie, S. and Lanoie, P., (2013). The Porter hypothesis at 20: can
environmental regulation enhance innovation and competitiveness?. Review of
Environmental Economics and Policy, 7(1), pp.2-22.
Borrás, S. and Edquist, C., (2013). The choice of innovation policy instruments.
Technological forecasting and social change, 80(8), pp.1513-1522.
Buckley, P.J. (2014). International integration and coordination in the global factory. In The
Multinational Enterprise and the Emergence of the Global Factory (pp. 3-19). Palgrave
Macmillan UK.
Dunning, J.H. (2015). Reappraising the eclectic paradigm in an age of alliance capitalism. In
The Eclectic Paradigm (pp. 111-142). Palgrave Macmillan UK.
24
Books
Aspinwall, M. and Greenwood, J. (2013). Collective action in the European Union: interests
and the new politics of associability. Abingdon: Routledge.
Bamberger, P.A., Biron, M. and Meshoulam, I. (2014). Human resource strategy:
Formulation, implementation, and impact. Abingdon: Routledge
Carraro, C., Katsoulacos, Y. and Xepapadeas, A. eds. (2013). Environmental policy and
market structure (Vol. 4). Berlin: Springer Science & Business Media.
Hansen, A.H. (2013). Fiscal policy & business cycles. Abingdon: Routledge.
Mowday, R.T., Porter, L.W. and Steers, R.M., (2013). Employee—organization linkages:
The psychology of commitment, absenteeism, and turnover. Cambridge: Academic press.
Scott, W.R. (2013). Institutions and organizations: Ideas, interests, and identities. California:
Sage Publications.
Tietenberg, T.H. and Lewis, L. (2016). Environmental and natural resource economics.
Abingdon: Routledge.
Journals
Ambec, S., Cohen, M.A., Elgie, S. and Lanoie, P., (2013). The Porter hypothesis at 20: can
environmental regulation enhance innovation and competitiveness?. Review of
Environmental Economics and Policy, 7(1), pp.2-22.
Borrás, S. and Edquist, C., (2013). The choice of innovation policy instruments.
Technological forecasting and social change, 80(8), pp.1513-1522.
Buckley, P.J. (2014). International integration and coordination in the global factory. In The
Multinational Enterprise and the Emergence of the Global Factory (pp. 3-19). Palgrave
Macmillan UK.
Dunning, J.H. (2015). Reappraising the eclectic paradigm in an age of alliance capitalism. In
The Eclectic Paradigm (pp. 111-142). Palgrave Macmillan UK.
24
Mason, M. and O’Mahony, J. (2015). Post-traditional corporate governance. Globalization
and Corporate Citizenship: The Alternative Gaze: A Collection of Seminal Essays, p.74.
Websites
http://www.nestle.co.uk. (2016). Home. Available at: http://www.nestle.co.uk. [Last
Accessed on 15 Oct. 2016].
Legislation.gov.uk. (2016). Competition Act 1998. Available at:
http://www.legislation.gov.uk/ukpga/1998/41/contents [Last Accessed On 28 Nov. 2016].
Legislation.gov.uk. (2016). Enterprise Act 2002. Available at:
http://www.legislation.gov.uk/ukpga/2002/40/contents [Last Accessed On 28 Nov. 2016].
25
and Corporate Citizenship: The Alternative Gaze: A Collection of Seminal Essays, p.74.
Websites
http://www.nestle.co.uk. (2016). Home. Available at: http://www.nestle.co.uk. [Last
Accessed on 15 Oct. 2016].
Legislation.gov.uk. (2016). Competition Act 1998. Available at:
http://www.legislation.gov.uk/ukpga/1998/41/contents [Last Accessed On 28 Nov. 2016].
Legislation.gov.uk. (2016). Enterprise Act 2002. Available at:
http://www.legislation.gov.uk/ukpga/2002/40/contents [Last Accessed On 28 Nov. 2016].
25
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