Comprehensive Report: Nestle's Business Environment in the UK

This report provides a comprehensive analysis of Nestle's business environment, focusing on its operations within the UK market. The report examines Nestle's organizational purposes, including its relationships with various stakeholders and subsidiary organizations, and analyzes how the company meets the objectives of these stakeholders. It delves into the national environment, assessing resource allocation within the UK's economic systems, the impact of fiscal and monetary policies, and the influence of competition and regulatory mechanisms. Furthermore, the report explores organizational behavior within the market, including pricing and output decisions, and the shaping influence of market forces and cultural environments. Finally, it assesses the significance of global factors shaping national business activities, including international trade and the impact of European Union policies, concluding with recommendations for Nestle's future strategies.

Business Environment

Table of contents
Introduction............................................................................................................................3
LO 1 Organizational purposes of business.............................................................................3
AC 1.1 Purposes of different organisation that Nestle have business relationships with......3
AC 1.2 Meeting the objectives of different stakeholders.......................................................4
AC 1.3 Responsibilities of Nestle in different issues.............................................................4
LO2 National environment nature of business operation......................................................5
AC 2.1 Resource allocation by Nestlé through various economic systems...........................5
AC 2.2 Impact of fiscal and monetary policy on Nestle business activities..........................6
AC 2.3 Impact of competition policy and other regulatory mechanisms on Nestle..............7
LO3 Organisational behaviour in the specific market environment......................................7
AC 3.1 Determination of pricing and output decisions of Nestle .........................................7
AC 3.2 Shaping of the market forces.....................................................................................8
AC 3.3 Influence of the business and cultural environments.................................................8
LO4 Significance of the global factors that shape national business activities......................9
AC 4.1 Significance of international trade.............................................................................9
AC 4.2 Analysis of the impact of global factors..................................................................10
AC 4.3 Evaluation of the impact of European Union EU policies and the other factors.....11
Conclusion and recommendation.........................................................................................11

Introduction
Environment is the basic factor that can put a major influence on the internal and
external business functions of a company. In order to maintain the success and improve
furthermore, a company has to operate active and professional business relationship with
their stakeholders and the subsidiary organizations on a regular basis. This paper will
critically analyze the issue based on the business operation of Nestlé specifically in UK.
LO 1 Organizational purposes of business
AC 1.1 Purposes of different organisation that Nestle have business relationships with
Organization is considered as the group of people works in order to accomplish
desired results. There are different types of organization such as public, private and non
governmental. As the largest food company of the world, Nestlé must conduct and maintain
its business function on an international basis. The subsidiary business organizations of this
company are- Nestlé UK and Ireland, Nestlé Nutrition, Nestlé Professional, Nestlé Purina
Petcare, Nestlé Waters, Cereal Partners UK, Lactalis Nestlé Chilled Dairy Company Ltd and
Nespresso (Nestlé UK & Ireland Sister Companies.2016) Following are the different
purposes of organizations such as-
 Public sector- Main purpose such businesses is to enhance the business in regard to
provide welfate of public and thus benefits them in several ways.
 Private sector- Such firms are working in regard to improve their sales and focused
upon raising profitability and sales in market.
 Voluntary organization- Such organizations works for the betterment of society and
main purpose is to service public and not to earn profits.
Nestle is a public company. Company's mission is “Good Food, Good Life”. While,
the vision of firm is to become leading, competitive nutrition, health and wellness company.
Objective of Nestle is to attain international voluntary standard and ensure continuous
improvement of business performance. Nestlé has several clear and definite purposes for
catering relationship with the subsidiary business organizations. Nestlé is the most favourite
food and nutrition brand in UK. The company has achieved the concrete success in the UK
market segment specifically in production of instant coffee and Kit Kat (Nestlé UK & Ireland
Sister Companies.2016). Nestlé is achieving huge success with their nutrition production. In
order to do that, Nestlé is maintaining their business relationship with Nestlé Nutrition. Not
only in the business of beverages, nutrition products or instant coffee, but the company is also

expanding their market into a huge varieties of home products with the help of their sister
organization Nestlé Professional.
Nestlé ha further flourished their market production by providing PetCare service
with Nestlé Purnia PetCare. They have expanded their business success into the water market
also. With the help of Nestlé Waters, the brand has gained the position of one of the best-
bottled water provider of the world. With the continuous success of Nestlé Professionals, the
brand has also conquered the market of creative beverage, which can provide a hard
competition to their contemporary companies. In this manner, Nestlé is maintaining their
business success by constantly maintaining a healthy and effective business relationship with
their subsidiary companies, which are helping the brand to earn a huge rate of profit from
different market segment of a singular area.
AC 1.2 Meeting the objectives of different stakeholders
To succeed in an internationally flourishing business, a company has to acknowledge
and meet the targets or objectives of their different stakeholders, which are the employees,
shareholders, and various related organizations. In case of Nestlé, the brand has to maintain
the environmental proper business relationship with the relatable environmental groups.
Nestlé has to satisfy the needs of their different stakeholders by reducing the risk
possibilities. As substantiated by Barbier (1999), to increase productivity, the company has to
prepare their employees to be productive enough.
The employees will need proper training and information, as well as a good physical
and mental working environment to reach the company’s productivity target. Main objective
of Nestle towards its employees is to provide them best workplace environment so that they
can enhance their market share. Therefore, Nestlé management team should disseminate
proper information, training and workshops to their employees about the targeted market
objectives. A company has to focus on the needs of their shareholders. As mentioned by
Branten and Purju (2015), a business can flourish properly if they can rightly serve the needs
of their shareholders for both short term and long-term profit.
On the other hand, Diaz-Roldan and Monteagudo-Cuerva (2013) opined, no business
can succeed if they fail to identify the demands of their consumers and serve accordingly.
Nestlé must critically segment their consumer markets in the demographic, geographic and
psychological aspects. Main objectives of customers is to satisfy their needs by consuming
company's products. Therefore, they have to stand up to the mark of their expectations.
Lastly, Nestlé management has to follow the needs of different environmental groups,

conduct meetings and other communications and be aware of the needful environmental laws
and ethics to avoid any kind of environmental hazards.
AC 1.3 Responsibilities of Nestle in different issues
To conduct a secure and successful business in food-beverage and nutrition business,
the management team of Nestlé must be tremendously careful about the environmental and
ethical issues of conducting business. As per Sections 21 and 22 of Environment and Safety
Information Act (1988), Nestlé should maintain the health and safety of the stakeholders
(Environment and Safety Information Act 1988, 2016). There are different responsibilities of
Nestle such as carrying out health and safety at workplace in regard to provide best
workplace environment so that satisfaction among customers could be attained. Another
responsibility of Nestle is that company needs to obtain the responsibility of maintaining the
environment so that it does not harm it any ways.
According to Section 10 of the same act, the management has to keep awareness
about the Safety of Sports Grounds Act (1975) following which the company cannot cause
any pollution of damage to the mentioned areas (Safety Of Sports Grounds Act, 2016). Along
with that, Nestlé management should specifically maintain the Food and Environment
Protection Act (1985), which is mentioned in Section 19 (5) and Section 19 (6) of the
Environment and Safety Information act (Food And Environment Protection Act 1985
(FEPA) - Notices - Enforcement Guide (England & Wales, 2016). The company should also
avoid violating the Regulatory Reform order mentioned in Article 29, 30 and 31; therefore
responsibly maintain proper fire safety operations inside and outside the workplace.
Management must be aware of the consumer legislations while maintaining their business
relationship and operations with the stakeholders.
Nestlé management should never violet the Consumer Protection Act (1987). As per
the mentioned act, the company should ensure safety of their consumers. As an
internationally acknowledged brand, Nestlé should maintain the quality of their products,
which will be decided per the satisfaction of their consumers (Consumer Rights - GOV.UK,
2016). As mentioned in the Unfair Contract Terms Act (1977), Nestlé business management
team should never make any illegal or unfair conditions of contract that might put a negative
impact on the consumers (Unfair Contract Terms Act 1977, 2016).

LO2 National environment nature of business operation
AC 2.1 Resource allocation by Nestlé through various economic systems
In case of every successful and profit earning business operation, the management
needs to conduct and operate their resource allocation with the help of proper strategic
planning. As in case of the resource allocation of Nestlé in the mostly free enterprise
economic structure of UK, the management should specifically operate in a market which is
in depended of any state control. As mentioned by (Brexit Britain: What Has Actually
Happened So Far? - BBC News, 2016), the situation has slightly altered after Brexit, i.e.
Britain’s exit from the European Union. There are different economic systems which
attempts to allocate resources effectively such as-
 Free market economy- Here, government plays a low role and thus consumers
determine the pricing of products.
 Centrally planned economy- Here, government plays a major role in decision making
and thus decides to undertake appropriate laws in regard to carry out the business
decisions. For instance, government plays a crucial role in Nestle pricing decisions
and thus they need to provide certain legislations and regulatory framework in regard
to make effective decisions within firm.
 Mixed economy- It is the mixture of free and centrally planned economy.
In this manner, the American company Nestlé must make the resource allocation very
carefully that will help earn more profitability. As opined by (Gehani, 2000), UK is one of
the most intellectually and educationally enriched countries of the world, which ensures a
huge amount of educated and trained force of human resources to the big companies.
Therefore, Nestlé will find a no obstacle in hiring as much trained employee, as they need to
increase productivity of the company.
In that case, the management must keep one thing in mind- according to the National
Minimum Wage act (1998), the government has fixed a minimum wage (according to the
age) for every employee. The company can only allocate labour force based on the amount of
investment they are able to provide. As mentioned by (National Minimum Wage Act 1998,
2016), the country’s economy has faced serious recession in the year of 2008. Until then, the
economic standard has massively improved. Still, the effects of recessions are still present
even in a slight and subtle manner.
This fact is also important while Nestlé is trying to allocate resource for further
growth. On the other hand argued by (Holzinger et al. 2008), after Brexit, inflation is

continuously rising in the nation, which will directly affect on the business operation of
Nestlé. Therefore, the company should maintain their resource allocation in such way, where
they do not get any negative impact from the sudden economic crisis of the nation. As
mentioned by (Karami, 2007), a company should assess their balance of payments and
balance of trade- which can win over the present national- international market, even in
complex and risk producing globalizing economy.
The business and finance management teams of Nestlé should follow the government
public taxation policies very closely- as it directly or indirectly affects the economic
conditions and business practices of their stakeholders. As substantiated by (Knill and
Lehmkuhl, 2002), a well-established company should always be aware of the risk
possibilities and be prepared to avoid the upcoming crisis carefully. In case of the slightly and
subtly disturbed present and unpredictable future economic condition of UK, Nestlé has to be
well aware while allocating for their resources.
AC 2.2 Impact of fiscal and monetary policy on Nestle business activities
The fiscal and monetary economic policy highly affects the business activities of
Nestlé. As mentioned by (Madill and O'Reilly, 2010), Fiscal policy determines a system
where government expenditure or the taxation policy ensures the overall economic
development. The business of Nestlé can be highly influenced through this particular policy.
This process can be mostly motivated through the increase of VAT (Value Added Tax)
and/or the income tax. Fiscal policy is being determined by the regulatory bodies and thus
they are being able to assess the spending level as well as tax rates of people. Also, they need
to monitor and evaluate the economy of country. While, monetary policy is being controlled
by the central government so that Nestle aims to make crucial decisions in relation to money
supply and interest rates.
As opined by Moutinho et al, (2014), increase of VAT will deeply effect the
economic behaviours of the stakeholders through which it will also increase pressure on the
overall profitability of a particular company. Not only that, these particular fiscal surplus and
shortfalls can also influence the Public Sector Net Borrowing (PSNB) and Public Sector Net
Cash Requirement (PSNCR) of the UK government. Similarly, the monetary policy will also
shed its impact on the overall business operation of Nestlé.
As argued by Šehović (2015), as MPC (Monetary Policy Committee) of Central Bank
is independent of the government operation, it can function through lowering the inflation of
the overall economic situation. This is the policy, which can directly help Nestlé to gain more

profit from the US market. In this financial situation, the individual economic condition will
come to betterment; therefore, the company will get more consumers than the usual situation.
AC 2.3 Impact of competition policy and other regulatory mechanisms on Nestle
Competition policy considers that to promote competition and make markets work
better in regard to contribute towards improving efficiency in individuals market. While,
regulatory mechanisms are considered as common regulations that implements and impacts
upon business operations. The business operations of Nestlé will have a deep impact from the
business regulations of UK government. As mentioned by Rodger (2004), Competition act
(1998) and Enterprise act (2002) helps the business companies or brands to compete in an
environment that offers to exercise fair trade and a transparent marketplace maintaining
complete professional harmony with each other. Impact of competition policy and regulations
on Nestle's activities in an adverse manner so that Nestle need to reduce its price of products
and thus develops the quality so that competition could be given to rivals. However, being a
public limited company, it aims to carry out welfare of public and not focus upon earning
profits, therefore, Nestle has been impacted by regulatory, competitive policies and legal
changes so that business needs to carry out effective practices so that best results can be
attained.
In this manner, Nestlé will be able to smoothly step into the market competition with
their already established and overtly popular brand image and win over the consumers. The
biggest competitors of Nestlé in UK are Ferrero, Cadbury and most importantly Danone.
With the help of this act, the companies will be able to compete by maintaining an affordable
price for their consumers. As a result, they have to be more innovative and productive in the
area of their sellable products and business communication.
LO3 Organisational behaviour in the specific market environment
AC 3.1 Determination of pricing and output decisions of Nestle
Market structure consists of different activities that needs to be followed by business
and thus it affects business operations in regard to determine pricing and output decisions
within firm. Firm also faces tough competition from different businesses and thus it needs to
lower down its prices and raise quality of products so that best results could be attained. The
primary key of success for a business company is the identification, adaption and properly
application of a proper business structure- based on which the price of the products of a
company can be determined. The method of price determination can differ in accordance with

difference market structures. As mentioned by Singer (2015), in perfect competition market
structure the consumers have an immense number of options in the market.
Therefore, the company must be more effectively and consciously competitive
keeping the needs of the consumers in mind. Nestlé is practicing their business in a highly
competitive market place in UK. Therefore, the management has to be aware of the demands
of the consumers. However, Nestle do not fall under carrying out such market structure as
there are various competitors present in market selling similar products, hence, firm needs to
maintain its pricing and output decisions so that tough competition could be given to rivals.
As the brand image of Nestlé is already well established, the company can therefore
make a monopolistic structure. The problem is, even if the brand is well known and popular,
there are some other strong successful brand originated from the country like Cadbury and
other international brand like Danone and Ferraro. In this manner, the company has to
compete against a strong competition against the other mentioned brands. The demand for
Nestlé products is high in UK. Still, in order to win over the competitors, they management
team has to take their pricing and output decisions according to the affordability, credibility
and demand of the targeted consumers. Pricing decision is considered to be the most
important decision in respect of any organization. Pricing decision means that the company
has to make decision of its pricing of products reasonably and appropriately. In aspect of
Nestle company, the management has assigned that prices which are affordable by customers
because if the prices are not affordable, then the customers will not be attracted. Also, brand
image of the company will also be affected. As the structure of company is of monopolistic
nature the cited company decides the prices and also their competitors fix the prices
accordingly.
AC 3.2 Shaping of the market forces
Nestle needs to identify its market forces so that they can shape the business
responses and ascertain demand and supply factors. Business also focuses upon carrying out
different operations so that elasticity of demand and supply could be carried out to assess
market conditions. Business also aims to identify different strategies so that demand and
supply of products could be identified and make effective decisions. Nestle aims to identify
the demand and supply and pricing decision etc. so that needs and wants of customers could
be identified and thus market share of firm could be raised. The contemporary market forces
directly and indirectly influence on the organizational responses of a company. In this
manner, different market forces can put a different affect on the business decision making of

a company. In case of a food, beverage and nutrition brand like Nestlé, supply and demand
plays a major role to sustain the business effectively and success. To introduce any new
product into market or represent an already established one, the company has to
systematically monitor the present range of supply and assess the demand of their targeted
consumers.
However, demand and supply forces helps in sharing organizational responses so that
it helps in identifying the needs and wants of customers and then produces the same in regard
to fulfill the needs of clients. As the market competition is high, Nestlé management team
must be well aware of the elasticity of supply and demand. As mentioned by Todeva (2006),
a brand can definitely provide special offers or sale in order to reshape the responsiveness of
the consumers. Management should assess the economy of scale, which means the cost
advantage by reducing the output costs of company’s productivity.
AC 3.3 Influence of the business and cultural environments
To make a business more profitable in a particular market segment, the business
management team of a company has to make systematic assessment of the key factors of the
business and cultural environment in a specific market segment. As mentioned by
Vasiliauskienė (2011), the socio-cultural environment can influence a business performance
through two different aspects, which are internal and external.
As Nestlé is conducting and further expanding their business in UK, the business
management team must be completely aware and updated about these aspects regarding this
market segment. An overall business environment depends on the political, social, cultural,
economical, legal, technical and environmental factors of a market area. As a developed and
technologically well-established country, UK is a perfect marketplace for expanding the
market of Nestlé.
Per the market condition, Nestlé has to carefully assess and invest on the 4Ps of the
marketing mix, which are Production, Promotion, Price and Place. As mentioned by
(Williams and Martinez (2014), the literacy rate of UK is higher than various countries of the
world. Therefore, the country can provide more educated employees than various other
countries of the world. Brexit is an important factor to influence the financial situation of the
country. The overall economy has slowed down than its previous state. Therefore, Nestlé has
to think over about employing new people in their company. Especially, a specific minimum
wage is also fixed, below which the management cannot offer a new employee. Business and
cultural factors influences the behaviour of firms and thus Nestle need to identify the

responses and therefore, it is essential for firm to carry out the responses in order to identify
the market conditions. Nestle aims to adopt effective actions so that PESTEL analysis could
be carried out. Also, it is significant for business to manage the operations and thus identify
the behaviour of business and environment so that productivity of business could be raised.
Still, because of the higher literacy rate, they can have new employees with needed
skills about specific tools and technologies and have enough potential to learn fast. Nestlé
should have an active and professional research and development team, which will help to
grow or increase the ability to increase the market participation. Proper practicing of research
and development can enhance the innovation and talents of the employees. An active research
and development team can help to proceed the stakeholders to achieve the ultimate target of
profitability. Nestlé can successfully provide a dimension to the issues by proper assessment
of the socio-cultural environment of the specific business market of UK.
LO4 Significance of the global factors that shape national business activities.
AC 4.1 Significance of international trade
International trade is stated as the exchange of products or services across worldwide
countries. It is essential for firm to adopt effective strategies and thus helps business in
expanding the operations of firm in market. Importance of international trade benefits Nestle
that it could enter into different nations such as India, China, Brazil and Russia. Like any
other international well-established brand, Nestlé should also be aware of the key global
factors that can influence their business activities. After Brexit, the economy of UK has
caused a complexity both inside and outside of the UK economy. As mentioned by Zijl and
Belle (2014), UK has been the third most open economic country of the world. After the
harsh Brexit, there has been a subtle shake created inside this image of UK.
Business is also being supported by WTO and thus develops nations in regard to
provide subsidies and help firm in operating at international level. Hence, through operating
at developing countries it helps firm to improve its market share and satisfy the needs of
clients. International trade has been providing an enormous positive impact to the economic
growth of UK. As per the business operation of Nestlé, the company can a positive vibe from
the effectiveness and flexibility of the international trade nature of UK. The company has
been able to maintain their business network in all over the world solely with though the
medium of international trade. Nestlé has been successfully competing with the ever-
fluctuating global market condition.

Because of globalization, the financial management team of the company is facing
some challenges like dwindling of operating margins, continuous increase in economic
operation, non-conforming regulatetory pressure, etc. If the management can bring more
flexibility and effectiveness in their international trade, it will be easier to overcome the
present challenges, as well as the company will be able to earn more profit from the overall
international market.
Nestlé might face the effect of protectionism while conducting business in UK. On the
other hand, Branten and Purju (2015) argued, in the present international economic policy,
UK is more open towards the international trade and getting more flexible in order to gain
more profitability from the global trade. Therefore, Nestlé will be able to gain more demand
in the UK market and earn more profit.
As mentioned by (Brexit Britain: What Has Actually Happened So Far? - BBC News,
2016), in the post-Brexit economic status of UK, the international trade functionalism of the
country is facing some complexity in conducting international trade. As a member of World
Trade Organization (WTO), UK will differently participate in the global economic operation.
As the country is not a part of European Union anymore, the nation might face a clash on
business interest with the EU member countries and find an individual economic policy to
overcome this obstacle.
Inflation is already rising in the nation’s economy; further currency fall and other
economic de-standardization might cause a negative impact on its international trade
operation. While maintaining international business for Nestlé, the financial management
team has to consider these factors before opting for business expansion. As opined by
Gehani, (2000), the government is continuously taking effort to overcome these challenges in
international trade. Therefore, Nestlé management can concentrate on the UK market area in
order to flourish their international market, but they have to be careful about the continuous
fluctuation of the economic standard of UK.
AC 4.2 Analysis of the impact of global factors
There are different global factors that influences business to enhance its operations in
market. Nestle aims to identify competition factors and thus improve their performance so
that innovation in technology could help in improving firm's performance. To conduct an
international business successfully, Nestlé must be aware of the specific global factors, which
are affecting or can affect their international business result directly or indirectly. The
continuous financial improvement of the developing countries is resulting a hard competition

to the developed countries in global market. As a developed country, UK can provide enough
scope of profitability and business growth to Nestlé.
Still, the company must depend on the developing countries for the supply of raw
materials. As these countries are rapidly progressing with financial success, they would
demand higher charge for their exported materials. Nestlé has to assess this factor and plan
more carefully before investing further in the UK market. As mentioned by Karami, (2007), a
company must be aware of every detail of the international market and global exchange rates.
In the presently unpredictable economic condition of UK economy, Nestlé must be
more informative and aware of the mentioned aspects. Nestlé should look for new
competitors in the global market, which can help the company to win over new global
markets and expand their business further. In order to do that, the management should be
aware of the trading blocs in this present condition of globalization. Either member of a
trading bloc or not, each country is highly influenced by the global economic terms,
conditions and internal diplomatic decisions while conducting international business trade.
As UK has stepped out of EU, Nestlé should seriously analyze the economic strategies and
diplomatic decision of the nation critically. The WTO policies can help with proper
information about global economic transactions in order to conduct business in UK market.
AC 4.3 Evaluation of the impact of European Union EU policies and the other factors
The European Union policies had influenced the economy of UK enormously. As
mentioned by (), UK has left the Union because of some specific economical nature of EU
policies, which were not going well with the domestic and international terms of the country.
There some other specific factors, which have major influence on the UK business
organization and ensure the financial stability of Nestlé’s business in this nation.
The capital investment for UK market region will depend on the present international
trade structure of the nation’s economy. Along with that, environment and climate change is
also an important to conduct business in the global market. Nestlé company management can
never violate the Climate Change Act (2008) (Climate Change Act 2008, 2016) while
production and marketing in UK. It is essential for Nestle to undertake effective EU policies
and thus operate its business operations in regard to improve firm's performance in market.
Also, firm needs to enhance its business operations and thus obtain desired outcomes.
The nation has participated in the global climate prevention initiatives like Kyoto
Protocol and Rio Earth Summit. To sustain business in UK market, Nestlé company has to be
aware of the rules and regulations of the specific terms of agreements that will help to make a

better world environment. They have to specifically focus on reducing the amount of Carbon
Emission while production and business operation.
The policies that are formed in respect of business organization by EU can be
categorised under
 fiscal and monetary policies,
 competition policy and other regulatory measures.
The policies that has been created effects the operations of business organization.
Monetary techniques affects the supply of money along with interest rates of nestle
company by acting as an regulator for inflation. In accordance to comply with Fiscal policies
made by EU, the cite company stimulates decreased CRR which enable them to make higher
profits and make better development of their business organizations.
Along with this, under the competition policies, nestle is required to adopt those
strategies by which it can sustain n the competitive world. Also, the cited company should
not adopt those practices which are treated as unfair in the terms of law. Further more, EU
does not allow artful exploitation of regulations and policies which are framed in the market.
Conclusion and recommendation
This paper has thoroughly analysed the areas of business environment- a proper
assessment of which can ensure massive increase of profitability in business operation. In this
paper, the issue has been evaluated with the context of the business networking of Nestlé in
the UK market segment. As the assessment suggests, the economic, social, cultural and legal
factors of the market environment can shape overall business strategy of the company.
In order to succeed in an international trade, Nestlé management team has to be well
aware of the impacts of Fiscal and Monetary policies, as it determines the consumer
behaviour. Along with that, the company management should properly assess the political
and economic stand of the country in the overall and complex global economic environment.