Analyzing the Strategy and Sustainability of Nestle

The provided content includes various articles, books, and online resources related to corporate social responsibility, environmental economics, policy formulation, and stakeholder participation. The sources include Nestle's strategy and policies, academic journals such as Academy of Management Review and Entrepreneurship Theory and Practice, and research papers on topics like environmental restoration, business cycles, and company decision-making.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................1
1.1 Purposes of different types of organizations....................................................................1
1.2 The extent to which an organization meets the objectives of different shareholders.......2
1.3 Responsibilities of an organization and strategies employed to meet them.....................2
TASK 2......................................................................................................................................3
2.1 How economic systems attempt to allocate resources effectively...................................3
2.2 The impact of fiscal and monitory policy on business organizations and their activities 3
2.3 The impact of competition policies and other regulatory mechanism on the activities of
Nestle......................................................................................................................................4
TASK 3......................................................................................................................................5
3.1 How market structure determine the pricing and output decisions of business...............5
3.2 The ways in which market forces shapes organizational responses.................................5
3.3 How the business and cultural environment shapes the response of Nestle.....................6
TASK 4......................................................................................................................................6
4.1 Significance of international trade to Nestle UK.............................................................6
4.2 Global factors impact on Nestle UK................................................................................7
4.3 Impact of European Union policies on Nestle..................................................................7
CONCLUSION..........................................................................................................................8
REFERENCES...........................................................................................................................9

INTRODUCTION
Business environment is considered as the internal and external aspects that impact on
the business operations. It is a central part to manage the business effectively. Here, the report
is illustrating several conditions of environment impacting on the business undertakings and
different purpose for which a company exists in the market. Besides this, the organisation is
responsible to meet stakeholder’s requirements and gain their positive consent in the
undertakings. In this regards, the case of Nestle UK, is elaborated in the paper to comprehend
how the company deals with different stakeholders by employing adequate strategies. The
content is including discussion about the UK national environment that influence on firms
operating in EU regions. Moreover, the reader will find the way in which EU policies impact
on the Nestle and industry of food and health as a whole.
TASK 1
1.1 Purposes of different types of organizations
There are various kinds of business organizations the Nestle deals with. On the basis of their
structure these business organizations can be divided into the following categories:
Sole proprietor: As the name suggests, this type of business is owned by a single person. It is
the most common form of business in the UK. It may have more than one employee. The
primary reason for their success is that they carter the needs of their customers personally.
The basic purpose of sole proprietor business is that the owners have full rights over the
profits and earnings of the business (Avant, 2005).
Partnership: it is that form of business which is owned by more than one person. The
partnership is normally covered under the partnership deed which forms all rules and
regulations for the purpose of carrying out partnership business. The basic purpose of
partnership business is that it spreads out the risk between more than one partners.
Company: Company is that form of a business which is owned by shareholders and run by
directors. Every company has to register under the Companies House and is awarded a
Certificate of Incorporation by the Companies House. There are basically two types of
companies, private company and public company. The basic purpose of a private company is
to pool funds from shareholders and earn profits in return. Whereas, the basic purpose of the
public company is to work for public welfare. They are not supposed to make profits in
normal course of business (Besanko and et.al., 2009).
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1.2 The extent to which an organization meets the objectives of different shareholders.
Stakeholder refers to a person who affects or is affected by the organisation’s actions or
course of actions. There are many stakeholders associated with an organization such as
employees, shareholders, customers, suppliers, government agencies, society, etc. Different
stakeholders have different expectations from the organization they are associated with. For
instance, employees are concern about their salaries, wages and bonus. Their objective is to
receive their salaries and wages on time. Nestle usually pay the salaries to its employees on
time there by fulfilling their objectives. Shareholders are the investors who have invested
their money as capital in the company. They expect the company to not only pay them
dividend on time but also increase the value of their stock. Nestle not only pay a healthy
amount of dividend but also its shares are quoted at high prices in the share market
(CANTARELL, 2016).
The objectives of shareholders are duly fulfilled by Nestle. The customers expect from
the company to provide them good quality of products at a reasonable price. Nestle provides
its customers quality products at reasonable prices thereby fulfilling the objectives of its
customers. Nestle also procure raw material from its suppliers on a regular basis and at a
reasonable and sustainable price and hence satisfies the expectations of its suppliers. The
government agencies expect the business to work according to the laws of the land and also
to deposit taxes well on time without any evasion. Nestle deposit taxes on time and hence
satisfies the objectives of government agencies. The society in which the business operates
expects the business to work for the betterment and of upliftment of the society in which it is
working. Nestle has very liberal CSR policies and works for the betterment of the society. In
this way, the organization fulfils the Expectations of nearly all the stakeholders who are
having interest in the business (CSR Profile of Nestle, 2017).
1.3 Responsibilities of an organization and strategies employed to meet them
Nestle decided six strategic priorities, first is to make choices and for which the
organisation put resources behind the products, categories and ideas that support the company
in its journey of recognising Health, Nutrition and Wellness leadership and to deliver
sustainable financial performance. Second is to grasp available opportunities and in this
regards, the organisation see the opportunity in trends and change as well as translate them in
concrete opportunities of business. Third is value the customers beliefs or values and all that
Nestle do to meet this responsibility is to create more value for the buyers by minimising
overall wastage (Cavusgil and et.al., 2014). Fourth, the company effectively engage with
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stakeholders, in order to remain trusted by its people and to be known as a responsible
member in the society. Fifth, the company stress to deepen its connection with clients by
increasingly utilising the channel of e-commerce and through real-time engagement, dialogue
and listening. Sixth, Nestle try to win in the global market by teams and people. This is done
with an aim to keep right candidates with right level of capabilities and adequate leadership
all each business levels to empower, enable and engage everyone to contribute best in the
organisation success (Hansen, 2013).
Since, the Nestle attempt to become high-performing and agile company and thus, it
ensure to embed by strong values and culture across all of its operating units. The firm also
take a long-term view that is framed in a robust set of values and principles that are based on
respect for future generations, people, and environment and also for the diverse globe in
which the organisation operates (Hillary, 2000).
TASK 2
2.1 How economic systems attempt to allocate resources effectively
The economic system comprises of various tangible elements such as producers,
suppliers, firms, companies, political parties, trade unions, etc. and intangible elements such
as fiscal policy, inflation, exchange rate, taxation, balance of payment, cost of capital, etc.
The government plays a vital role and act as a social entity for the economy. The basic
economic problem of scarcity is resolved by the factors and elements of the economic
system. Scarcity refers to the situation where the resources are rare and limited but the
demand is infinite and unlimited (Kleinman, 2014). The situation of scarcity creates
imbalance in the economy. To overcome this situation there are basically three questions
which need to be answered. What has to be produced, how it has to be produced and for
whom it has to be produced. There are basically three types of economic systems which are
found around the globe: The planned economy where the government has a reasonable
control over the various elements of the economy. For instance, the market rates, lending
rates, cost of capital, etc., are decided by the government policies. Free market economy,
where the government has only unlimited are very little control over the elements of the
economic system. The mixed economy, where the government has reasonable control over
the various elements of the economy (Perman, 2003).
2.2 The impact of fiscal and monitory policy on business organizations and their activities
The fiscal and monetary policy of government has a far reaching impact on business
organizations and their activities. According to the requirement of the situation and the
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economy the government tends to expand on contract these strategies on timely basis. Even
slightest of changes by government in these policies can affect the business and its activities.
In order to counter recession the government cutback the rate of taxes and increase its’
spending on infrastructure or public welfare, which is known as expansionary fiscal policy.
Government by declining the taxes, promotes consumerism amongst the individuals. When
consumerism is promoted, it improves the conditions of business organizations and the
economy as a whole. On the other hand, the government can also adopt a contracting fiscal
policy, in which the government aims at stabilizing the peak of economic Boom. The
government also increases the taxes, thereby increasing its income. With increased taxes,
people are left with less income to spend on consumer goods. Even the government spending
is reduced and as a result unemployment in the economy increases. All these factors have a
negative impact on the growth and working of a business organization (Shea and Chari,
2006).
The government can also boost the economy by lowering the interest rates and by
increasing the money supply. With a lower interest rate the business and the consumer both
can avail low cost loans and the business can expand its activities and the consumer can fulfil
his needs and requirements. On the contrary, the government can also counter the inflation by
increasing the rate of interest on loans. This will prevent the consumers to spend extra
amount on consumer goods and the decline in the sales will also prevent the business
organizations from producing extra units of finished goods (Zadek, Evans and Pruzan, 2013).
2.3 The impact of competition policies and other regulatory mechanism on the activities of
Nestle
Nestle is a Swiss transnational food and drink company. It is the world’s largest
company in its industry. Although Nestle is the world’s largest food company but it is facing
a tough competition from other companies in the industry. The challenges and competition in
food industry is relatively higher as all the companies are investing a lot of amount in
developing the services and are innovating their products and business processes to produce
best quality product at a very reasonable and competitive price (Nestlé Australia and U.K,
2017). These organizations are competing with each another in order to be cost effective and
to gain competitive advantage above one another. The efficiency of these organizations has
improved as a result of the bottleneck competition between them. The competition policy has
broken the monopolistic market and has allowed the new entrants to enter easily in those
markets. The regulatory mechanisms also allowed the government to forecast the results and
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working of Nestle and other similar organizations, which has helped the government to
formulate policies which are beneficial for the business organizations and Consumers by
large (Aguilera and et.al., 2007).
TASK 3
3.1 How market structure determine the pricing and output decisions of business
The structure of the market in which the business organization is operating plays a vital
and significant role in determining the prices of the products produced and supplied by the
organization. There are various types of market structures existing in the real world situation
such as monopoly, oligopoly, perfect competition, etc. The degree of competition is also
determined by the structure of the market in which the organization is operating. For instance,
in the Monopoly market there is only one business organization that exists in the whole
market. There is no other firm to compete with the firm which already exists in the market.
Furthermore, it is also very difficult for a new entrant to enter into a Monopoly market, and
hence there is zero competition that exists in the monopoly market. Thus, in a Monopoly
market in the firm in enjoys complete rights over the determination of prices of its goods and
services (Austin, Stevenson and Wei‐Skillern, 2006).
The case of the perfect competitive market is completely different from that of the
Monopoly market. There are many firms operating in such a market and are producing
similar goods and Services. The prices of the products are determined by the degree of
competition between these firms. The prices of the product of firms operating in perfect
market are usually very reasonable and competitive. Oligopoly is the third form of market
structure where there are a few forms which are operating simultaneously in a given market.
The prices and these kinds of markets are determined by the degree of competition and the
other elements of the market and market forces. Nestle operates in an oligopoly market and
hence its prices are determined by the degree of competition and other market forces (Nestle
Strategy, 2017).
3.2 The ways in which market forces shapes organizational responses
There are a variety of market forces existing in the market which place the significant
role in determining the responses of an organization. In this dynamic age the market forces
keeps on fluctuating and the business has to respond according to the changes in these market
forces. If the fluctuations in these market forces are left unattended by the business it may
adversely affect the working of the business organization (Berglund, Hallgren and Aradóttir,
2015). For instance, the supply and demand market force has a significant role in shipping the
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response of Nestle. The company has to forecast the demand of its products and then should
plan the production process accordingly. If the demand of a particular product is declining its
production should be simultaneously slowed down. Conversely, if the demand of a product is
inclining then its production should also be increased in order to meet the growing demand
(Nestle, 2010).
3.3 How the business and cultural environment shapes the response of Nestle
The business is largely affected by both, the internal and the external environment in
which it operates. Technological advancements, employee skills, core competency are a few
examples of the elements of internal environment of an organization. These elements of the
internal environment play a vital role in determining the response of the organization. It is the
assessment of these elements on which the organization gets to know what its strengths and
weaknesses are. Nestle can determine its strength and weakness on the basis of assessment of
these elements (Bowen, 2002). It allows the company to responds positively when it has the
strength in these environmental elements. On the other hand if these elements are against the
organization it proves to be its weakness and the organization has to response accordingly to
overcome its weaknesses. Similarly the forces of external environment such as political,
social, economic, technological and legal environment also play a vital role in shaping the
response of Nestle. The company on analysing the external environment can find the
opportunities and threats prevailing in this environment. The company then has to response
accordingly in order to Grab the opportunities and discard the threats off the market. Hence,
it can be noticed that these environmental factors plays a significant role in shaping the
response of Nestle (Buyya, 2002).
TASK 4
4.1 Significance of international trade to Nestle UK
An efficient use and adequate allocation of rare resources within distinct nations are
dealt with the global trade. The free trade concepts benefits efficiency of production such as
best product quality with less prices that have to be sold in the market where free competition
prevails. Nestle is a global firm and has many significance over the worldwide trade, such as:
 The organisation has concentrated its balance of power towards the large scale stores of
retail, i.e. discounted chain stores and supermarkets;
 The commodities are exported by the Nestle to other nations that have more demand in
the customer market and import local vendor’s raw materials;
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 In spite of concentrating on the developed markets like Switzerland and North America,
it has been decided by the marketer at Nestle to put emphasis on some developing
nations, like China and India (Buyya and et.al., 2002).
The term globalisation is mainly refers to the international border opening to do free
trade, use technology and information and make foreign direct investments. This
globalisation has led to several changes into the organisation practices throughout the globe.
Nestle outsource their executives from distinct part of the world, causing job changes and
shifts in the structures of company. The firm also believe that expanding business globally
guides the voluntary exchange of employees, capital as well as services and goods that in turn
gives the opportunity to make the universal growth (Campello, 2003).
4.2 Global factors impact on Nestle UK
Nestle as a UK business company has been engaged in some significant and sticky
conditions when it comes to the legal, ethical and social environment aspects and the
organisation has taken it upon themselves for addressing such situations rather than avoiding
them. The organisation is very much concerned about the extremely current low prices of
coffee and its influence on the coffee farmers (Knill and Lehmkuhl, 2002). Due to this, the
company publish a brochure online to create the position of business on the situation. The
marketer at Nestle believe that customers have a right to lower the prices of coffee but
something must be done with an aim to improve the living conditions of coffee farmers
(Nestlé Australia and U.K, 2017).
At present, Nestle is also the victim of its products boycott by people who are in against
of its certain products. Many people believe that aggressive campaigns of Nestle for artificial
feeding of infant oppose the breastfeeding both developed and developing nations. Moreover,
when it comes to differences within Nestle and its customers, the organisation is right now
being tested. Customers are resistant towards some inherently engineered ingredients used by
the Nestle. According to the scientists who study on bioengineered foods, the ingredients
used by Nestle when consumed by rats, suffered from supressed immune systems and
shrinking of internal organs. The particular study and customer’s resistance have forced the
organisation to phase out its overall sales in UK (Carmeli, 2001).
4.3 Impact of European Union policies on Nestle
European Commission regulation n° 1924/2006 on health and nutrition claims is a part
of the European Union wide strategy to lessen ill health because of overweight, poor nutrition
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and obesity. In this regards, a significant issue in relation to whether the complete
information about foods along with their nutrition value appear on the packaging is accurate,
meaningful and clear to support the customers in choosing right diet for them (Kennerley and
Neely, 2003). The main aim of regulation was thus to harmonise the rules of community on
the utilisation of health and nutrition claims on the food products marketed in the EU regions,
for the purpose of safeguarding the buyers from misleading and false claims as well as to
allow free movements of goods in the society (Green and Hunton‐Clarke, 2003).
A Nutrition policy framework of EU also ensure that the overall food industry moves in
an equal direction. It create a field of level playing by allowing organisations to compete by
utilising the nutritional qualities of their offerings on the top of price or taste. Also, an EU
nutrition policy requires harsh regulations, particularly in the areas where there is scientific
consent about the negative impact on the health. It is the case for industrialised trans-fatty
acids. NGOs along with Nestle and others called for a legal ban on such fats (Hoskisson and
et.al., 2000). Due to this, Nestle has been reformulating from a long period and alone in 2015
it has removed 260 tons of salt, 2600 tons of sugar and 440 tons of saturated fats from its
recipes. Now there is more whole grain than other ingredients in the breakfast cereals
targeted to teenagers or children’s. Meanwhile, the nutrition boundaries are expanding and
Nestle with research partners are revealing more about the compound interaction in between
genes, lifestyle factors and diet (Hillman, Keim and Schuler, 2004).
CONCLUSION
The above report was aimed to analyse the Nestle business environment. The main
purpose of undertaking this study was to support the reader in comprehending the
environment in which the organisation operates and its influence on the business
undertakings. Furthermore, the several forces and factors that impact on the organisations
were discussed by elaborating the real world examples of Nestle. During such analysis, it has
been determined that the Nestle has to comply with regulations and laws, in order to operate
in an adequate way. Also, the company’s management has to make sure that their
stakeholders and associated parties remain happy and satisfied with the business functions
and activities.
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