Nestle Industry in the UK: A Comprehensive Analysis

This essay provides a comprehensive analysis of Nestle industry in the UK, including Porter's Five Forces, PESTEL analysis, globalization, ethics, and inflation. It examines the impact of these factors on the business environment and offers recommendations for Nestle.

Table of Contents
Introduction.......................................................................................1
Porter’s Five Forces............................................................................1
The threat of New Entrants..............................................................................1
Bargaining Power of Suppliers..........................................................................1
Bargaining Power of Buyers..............................................................................1
Competitive Rivalry..........................................................................................2
Threat of Substitutes........................................................................................2
PESTEL Analysis..................................................................................2
Political............................................................................................................2
Economic..........................................................................................................2
Social................................................................................................................3
Technological...................................................................................................3
Legal.................................................................................................................3
Environmental..................................................................................................3
Globalization......................................................................................4
Ethics and Corporate Social Responsibility..........................................4
Inflation.............................................................................................6
Conclusion..........................................................................................7
Recommendations.............................................................................7
References.........................................................................................7

Introduction
A worldwide corporation, Nestlé is based in Vevey, Switzerland, and was established in 1886 by
Henri Nestlé (StuDocu, 2018). Currently, Nestlé leads the globe in nutrition, health, and
wellness as well as being the largest food and beverage corporation in the world with more
than 9,000 brands and 12,000 products. Their aim is to provide wholesome, delicious foods that
include essential elements. These characteristics make Nestlé a distinctive company that makes
a profit by providing goods that satisfy every client (MisbahSyed, 2022). This essay will show
how Nestle industry in the United Kingdom has changed and affected the business
environment. The company's dedication to resource and capacity growth in the external
environment is shown in its strong internationalization plan through a PESTEL analysis. A
detailed Porter’s Five Force model, how globalization and inflation have affected the company,
the ethics, and corporate social responsibility followed by the company, and recommendations
are included in this essay.
Porter’s Five Forces
The threat of New Entrants
As a new entrant, it is hard to get into the food industry because of its diversity. Even though
there is a large number of new entrants every year, only a few manage to advance in getting a
local level price share (adamkasi, 2017). The already existing players act as barriers to the new
entrants since they are much more experienced in understanding consumer needs, contain
large market shares, large-scale economies, well-built distribution networks, and increased
customer loyalty. Therefore, the threat of new entrants for Nestle is low.
Bargaining Power of Suppliers
All suppliers that supply to Nestle cannot change the prices as Nestle is the world’s largest
market share holder so it needs an enormous amount of supplies (adamkasi, 2017). And in the
case where Nestle wants to change to a new supplier, new contracts will be followed and the
quality of the new supplier is tested, which in turn gives Nestle only an average switching price.
This makes it the perfect customer for the suppliers. As a result, Nestlé will need to take care of
its suppliers and maintain their esteem. To assure the quality of the raw materials, nestle aims
to have long-term relationships with its suppliers. Therefore, the bargaining power of suppliers
for Nestle is low (Henry, 2018).
Bargaining Power of Buyers
Buyers have a low switching cost, so if Nestle decides to increase the price levels, buyers can
always change to another brand as other brands sell the same products. By recognizing the
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consumers’ influence, nestle works to keep its customers happy. As a result, Nestlé has
maintained its brand loyalty from the very start. Therefore, the bargaining power of buyers for
Nestle is high (adamkasi, 2017).
Competitive Rivalry
The main competitors of Nestle include Kellogg’s, MARS, Kraft Foods, Hershey’s, and Heinz
(adamkasi, 2017). These brands hold a specific market share and face competition from Nestle,
even though it has been in the food industry for more than 130 years. All of these businesses
invest a lot of money in marketing and advertising, especially when new products are
introduced. The competition includes pricing, product diversity, originality, promotional offers,
and other factors. To keep their market share, all industry participants must work hard.
Therefore, the competitive rivalry between Nestle is high.
Threat of Substitutes
Several Nestle items may be substituted, like pasteurized milk and bottled water. There are
homemade alternatives for many of the goods, including infant food. Additionally, several
Nestle goods have been accused of being unfit for ingestion. Since more individuals are
becoming health concerned, replacements are selling more. According to (Henry, 2018), in
order to compete with the alternatives, nestle works to emphasize the health benefits of its
products. Therefore, the threat of substitutes for Nestle is high.
PESTEL Analysis
Political
As a multinational brand, Nestlé handles its business in over 200 countries and every county has
its own government regulations and political environment which have major impacts on Nestlé.
Therefore, Nestlé has to act in accordance with all the rules and regulations as serious issues
would arise if the brand failed to consider the local environment of all the different countries.
Keeping track of the numerous adjustments made to the different policies related to import,
export, tax, and environmental laws in these countries is a crucial responsibility for the
company to do (UKEssays, 2014). These adjustments may occasionally benefit the company, but
they could also significantly impede manufacturing in some countries. For instance, the
increasingly strict labor rules that forbid or discourage the use of child labor in cocoa
plantations are expected to indirectly impact the company's operations (Zigu, 2011).
Economic
The Nestlé group has a responsibility to develop different economic strategies that are relevant
to the economic circumstances in each of the countries they operate in (Pratap, 2019). It is
difficult to provide wholesome food to everyone in the market since raw material costs are
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constantly changing as a result of several political and environmental variables, with
affordability playing a significant role. Nestlé 's raw material costs have been rising as a result of
the ongoing trade disputes between the UK and Japan, which are further causing discontent
among suppliers. Nestle has undertaken a number of efforts to encourage the manufacturing of
raw materials at the regional scale in order to boost the effectiveness of the different
agricultural sectors throughout its operating nations (Zigu, 2011). Its two biggest markets are
the UK and China, therefore more economic activity in this area will result in greater results as
well as increased sales and profits.
Social
Any business that operates on such a huge scale is impacted by even the smallest shift in
consumer-driven trends (UKEssays, 2014). Therefore, Nestlé 's team has chosen to focus on
foods that are low in sugar, salt, and saturated fats in order to follow trends that promote
better health. In order to assure high-quality goods and reduce health hazards associated with
handling and preservation across their value chain, the group has policies, methods, and
routine monitoring systems in place (Pratap, 2019). The capacity of Nestle to foresee consumer
wants and provide high-quality, affordable, appropriate, and innovative products is essential to
the company's success. Nestle is striving for a brighter, more prosperous, and inventive future
with consistent initiatives such as the above mentioned to keep everything and everyone
protected.
Technological
Nestle encourages the use of internal and external electronic models, services, and
applications. A backup strategy must be created in light of the growing number of cyberattacks
that threaten data security, privacy, and dependability to prevent catastrophic failures while
trying to enter the digital market (Pro, 2022). Nestle is eager to change the rules of the
process by conducting experiments to use Blockchain for more consumer and supply chain
visibility. Nestle has cooperated with several governments to implement a number of portals to
verify the nutritional information of all its products.
Legal
Analyzing and adhering to the legal standards in all the countries is necessary. A group of
specialists must constantly monitor compliance with the implemented adjustments (Zigu,
2011). It is necessary to abide by international labor regulations as well as national laws
governing the quality and hygienic standards of the company's goods and the health and safety
of its personnel. In addition to this, it's important to constantly monitor environmental
legislation as well as trademark and IPO regulations. These incidents make it an extremely
important area that Nestle needs to monitor as when a legal requirement is broken, everyone
in the organization must suffer the consequences (UKEssays, 2014).
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Environmental
Nestle strives for minimal environmental effect via its activities and believes in producing
mutual benefit. Nestle produces 5.5 million metric tons of plastic annually, the group's efforts
to limit the use of plastic in its goods and its goal to manufacture 100% recyclable plastic in all
of its packaging materials are a big achievement for environmental sustainability (Pro, 2022).
Furthermore, Nestlé plans to promote sustainable nutrition throughout the world and create
plant-based products. Promoting water sustainability and efficiency throughout all of their
activities, along with these policies and responsibilities, is also one of their primary objectives
(Baker et al., 2021).
Globalization
From the very beginning, nestle always looked to other countries for expansion plans and
launched its global operations by opening its first overseas offices in London. In 1903, Nestle
partnered up with Angelo-Swiss Milk Corporation, and then by the late 1980s, nestle had more
than six hundred factories in different countries. Nestle follows a certain set of business
standards that allows it to operate its activities while taking into consideration the culture,
religion, and laws according to each country (GlobalData Consumer, 2017). They include: by
providing tastier, healthier, and hygienic beverages and food options that support a healthy
lifestyle, businesses can improve the quality of their customers' everyday lives; the control of
quality, product safety, and high standards essentially serve as a guarantee to customers that
their purchases will be safe and of the highest caliber (Bose, 2021); promoting trustworthy and
accountable consumer communication that empowers customers to use their rights and
provide any form of feedback; guaranteeing effective use of natural resources and
environmental sustainability across the entire production process; and Nestle promotes the use
of water as a basic requirement by encouraging everyone to use it sustainably and to
continually improve water management as the world faces increasing water-related concerns
(CAROLLO, 2010).
Globalization has significantly altered how businesses operate all around the world. Nestle hires
specialists from all over the world, which results in employment changes and organizational
adjustments. Nestle thinks that growing a company worldwide encourages the free flow of
money, labor, commodities, and services, which leads to growth across the board. However,
many who oppose globalization contend that more could be done to raise the standard of life
for those who live in less developed countries (Saya, Haruka, and Lisa, 2016).
Ethics and Corporate Social Responsibility
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To comprehend and evaluate a global corporation's ethical standards, it is vital to investigate
its ethics. When Nestlé was accused of utilizing unethical marketing techniques that
endangered consumer health to sell their infant formula in impoverished countries, it sparked a
dispute. Since then, this business has frequently come under fire for acting unethically and
violating customers' rights. According to (E, 2019) many consumers would not find eating
genetically modified (GM) food to be advantageous, the corporation has inflated costs that are
inaccessible to the world's low-income population and for the Asian population, for whom
potable water is required, the price of the manufactured bottled water, is ridiculously
exorbitant.
Unfair labor practices were also seen to be used by Nestlé such as the purchase of coffee beans
and chocolate that have been arduously harvested on African estates and the use of child labor
to exploit individuals damaging the company's reputation and demonstrating its immoral
treatment of its employees. Every corporation in the world has ethical standards, and violating
them may harm a company's reputation (Baker et al., 2021). This practice used by Nestlé has
demonstrated that the firm does not respect human rights or local laws that can meet the bare
minimum requirements of consumers and employees.
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Table 1: A: Excellent, B: Good, C: Adequate, D: Needs significant improvement, F: Fail

Nestlé is a low-grade company that needs to enhance its ethics for the sake of its clients,
employees, pricing strategy, and the general public. The business should meet the demands of
its consumers (Bose, 2021). Do no harm and do more good should be taken into account here;
it should uphold human rights and reflect an ethical attitude toward the substances listed on
product labels (particular about GM ingredients), in-house working conditions, and reasonable
prices for necessities. If such global multinational corporations like Nestlé do not modify their
ethical reputation, public health may be impacted, and customer mistrust may grow around the
world (E, 2019).
Inflation
With severe inflation increasing the price of a number of the items it offers, nestle forced
through yet another round of price rises on customers. Nestlé now projects organic revenue
growth of between nine and ten percent in 2021, up from its earlier projection of growth of
about seven percent. And then in 2021, due to the COVID-19 pandemic, Nestlé’s profitability
declined with a margin of operating profits of roughly 30% to 15% (Koltrowitz, 2022). Early
trading saw a 1.5% decline in Nestle shares. Nestle then struck customers with its biggest first-
quarter price rise in almost a decade in April 2022, raising product prices by 4.5 percent. Prices
increased overall by 8 percent. While prices in Europe increased by roughly nine percent,
consumers in the United States were slammed with a four percent price increase. Nestle said
that despite higher prices, output stayed "flexible." Since food and drink are essentials, the food
industry is now handling inflation better than stores selling expensive products. However, there
is a chance that customers may start switching to less expensive brands because inflation has
not yet peaked in many countries (MisbahSyed, 2022).
Conclusion
According to the pestle study, the company's activities in
numerous nations are influenced by changes in government
stability, which raise prices that people cannot pay, negatively
affecting the company's income (StuDocu, 2018). The
supply of raw materials increases as a result of changes in
inflation rates and other economic variables, which has an
effect on the company's sales volume. Social media increases customer knowledge of healthy
products, which influences their taste and preferences. The organization has a solid
6Figure 1: China controlled inflation in the best way, Eurozone had a medium control
rate of inflation, and Developing economies (Sri Lanka, Maldives, etc.) have
controlled inflation in the worst possible way

internationalization plan that demonstrates its dedication to its resources and the growth of its
capabilities to the outside world (MisbahSyed, 2022).
Recommendations
 Review and restructuring of the origination's change management approach are
necessary.
 Different situations should be used to build the interaction between the management
and customers.
 New employment possibilities and product launches are necessary.
 Promotional plans should be established, and fresh advertising campaigns for the items
should be introduced.
References
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Lawrence, M., Wood, B., Moodie, R., Clark, D., Sievert, K., Boatwright, M. and McCoy, D.
(2021). Globalization, first-foods systems transformations and corporate power: a synthesis of
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