Business Environment Report: HND Business - Semester 2

This report provides a detailed analysis of Nestle's business environment, examining various organizational types such as public, private, and charity sectors, and their respective purposes, sizes, and scopes. The report delves into Nestle's core functions, exploring how they interrelate and contribute to the company's objectives. A PESTLE analysis is conducted to assess the political, economic, social, technological, legal, and environmental factors impacting Nestle's operations. Furthermore, the report includes an internal and external analysis to identify the company's strengths, weaknesses, and how they relate to external factors within the competitive market. The analysis provides insights into Nestle's strategic approach and its position within the food and beverage industry, including an overview of its organizational structure and functional areas.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Types and purpose of different organisation..........................................................................1
P2 Size and scope of different type of organisation....................................................................2
TASK 2............................................................................................................................................4
P3 Functions of Nestle and how they interrelate with other organisational objectives...............4
TASK 3............................................................................................................................................7
P4 PESTLE analysis of Nestle....................................................................................................7
TASK 4............................................................................................................................................9
P5 Conducting internal and external analysis..............................................................................9
P6 Strengths and weaknesses are interrelating with external factors........................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment consists of all those factors which are surrounded on them i.e.
internal and external factors. The factors of these combination are influencing operational
activities of organisation. These factors include; improvements in technologies, rules and
regulations of government, social and economic trends and many more (Burns and Winter,
2011). Present report is designed to introduced about business environment which will provide
overview to readers. For present assignment, Nestle company is taken, which is largest food and
drink company in UK. Strategy of this organisation is to focus on delivering benefits to
customers with the help of food and beverages. The products which they offering to customers
are helping and inspiring people to leave healthier in their lives. Future aim of this company is to
become more sturdy competitive advantage in digital innovation and cornerstone of organisation.
In present report different types and purposes of organisation has been explained. Along
with this their size, scope, mission is also discussed. Besides this, how positive and negative
factors of macro are impacting upon on organisation objectives. Further, company has also
conducted internal and external analysis in order to determine their strength and weakness in
competitive market.
TASK 1
P1 Types and purpose of different organisation
Nestle is very popular company who is providing products and services in food and
beverages. The products include medical, baby food, coffee and tea, dairy products, snacks and
many more. This company is having many joint ventures with; Coca-Cola, Colgate-Palmolive,
Indofood and many more. The aim of this company is to satisfy needs and wants of customers by
providing them quality of goods and services and to remain in competitive market for a long
period of time. On other side, if there is any establishment of charity, then their primary
objective is to improve circumstances for providing basic needs to society. In UK, these charities
are distributing their profits but they are passing them to selected number of organisation or
recipients. As there are different types of organisation and they have established with their own
purpose and aims.
Public
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The stock of these companies are freely traded on stock exchange. So value or size of
company is called market capitalisation which is also known as “market cap”. For example,
TESCO, which is largest supermarket company in UK. The purpose and aim of this firm is; to
become outstanding retailer in online and stores, to build their strong team so that they can create
more value among customers, to increase their number of retail services in all sectors of market.
The manager of this company is trying to introduce new products and services to customers so
that they can satisfy their needs.
Charity
The primary purpose of this enterprises are to fulfil social needs of people in some kind.
For example, objective of health and social care organisation is to meet the needs of people with
the help of community. There are many communities, private and public organisation who are
making donation to charity firms in order to minimise their revenue. One of the famous
organisation in charity “save the children”. The purpose of this care home is to save the child
from illegal activities which are conducting by organisation. Along with this, they are
implementing credible national plans, focusing on new-born babies, providing proper treatment
to children during emergencies.
Private
As this company is owned and controlled by group of people or individuals for their
mutual benefits and share profits among them. For example, Mercedes Benz. The main purpose
of this organisation is to serve quality of services in which their main focus is completely based
on safety of customers. Another objective of this company is to maximise profits and gaining
large number of market share in competitive market.
P2 Size and scope of different type of organisation
The scope of this company is attain the growth of firm for a longer period of time. They
have to also attract more customers of different countries while offering them new and
innovative products. Another is, to serve quality of services and products to different customers
so that they can beat their competitors. Mission statement of this company is “Good Food, Good
Life”, is to serve best nutrition products from wide range of food and beverages.
Public company - There are some objectives of this firm are; to decrease prices of
products and services, to introduce healthier products into range of groceries which they are
suppling. The advantage of doing this to attract those customers who are interested in purchasing
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healthy products. Another objective is, to develop online internet shopping for customers.
Mission of this company is that “they make what matters better and together”. Another side,
vision is “to become most successful business: in which they are operating their business and
stay loyal towards their shareholders, colleagues”. Further the stakeholders of this company are
government, societies, customers, employees. if organisation have to achieve their targets, then it
is essential to work in coordination with each other.
Private company - Innovating and providing high quality of products, which will ensure
about sustainable economic growth and constant contribution in group success. Another
objective is to fulfilling customer needs and add additional features in their vehicle with
comprehensive portfolio. Other is, to become reliable and long-term oriented partner for their
suppliers, employers, customers. The vision of this company is “to become world’s most
renowned centre for their customer services in automotive sector”. Through this they can meet
with their goals through creating positive environment for skilled workers in all over the world.
On other side mission of this enterprises are “dedicated to customers, driven by excellence”.
Scope of this organisation is to provide premium and best solution to their customers, partners in
every critical situation. In this there are approximately 2,85,000 employees are there who is
working under this organisation.
Charity– Mission statement of “Save the children” is to inspire breakthroughs in which
way they are treating with their children and to gain instant and lifelong changes in their lives.
Business objective of this care home is to provide better treatments services to those children or
people who are suffering from different kinds of diseases. There are no particular number of
employees who are working in this type of charity. Every employer is having right to leave or
join this as per their requirements.
The business stakeholders are government, customers, employers, employees, societies.
In every organization, stakeholder can be divided into on the basis of group and need of
communication. As they are important for organization in order to achieve their business
objectives in time period. It is essential for them to motivate other also so that they will perform
their task in appropriate manner.
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TASK 2
P3 Functions of Nestle and how they interrelate with other organisational objectives
Nestle, cooperate communication are playing essential role which is focusing on to attract
large number of customers. The works of these cooperates are related with other functions and
departments so that they can face challenge together. As there are many departments who are
working in coordination to achieve goals (Other functions, 2016). In organisation, all department
is having their own function and duties. For example, finance department is responsible to
monitor performance of company on regular basis so that they can prepare budget. Another is
human resource department, in this manager have to attract more talented person which helps
them in growing their business in competitive market. They have to give opportunities to those
people who can contribute their contribution in attaining goals and targets. Along with this, it is
their responsibility to conduct training session for new and existing employees, so that they can
work in appropriate manner. Moreover, they have to also take care of their employees while
providing them healthy working environment to them. Another function is supply chain, as this
is considered as most important function of organisation (Chavis, Klapper and Love, 2011). In
this, Nestle can gain real competitive edge with their strong supply chain. In includes that
whether the organisation is supplying goods and services in appropriate manner or not. Through
this it will help to customers to come closer with companies.
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Illustration 1: Functional Areas
(Source: Functional area in organisation, 2015)
There is different functional area in business in which they are performing several
activities in organisation. In this, all employees have to work in coordination, so that it will be
easy for them to target their goals and objectives. Along with this, all departments are having
their own responsibilities to make their work in effective manner. These are interlinking with
each other in improving the brand image of company.
The organisation structure of this company is different from other entities. This
differentiation from other provide benefit to them so much because they lead to work in different
manner which lead to attract many well skilled person towards their organisation.
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(Source: Organisational Chart, 2017)
There are different types of organisation; decentralisation, flat, broad span of control and
many more. It depends upon on organisation that which organisation structure is applicable on
them. As, company is providing wider range of products and services so it is important for them
to serve goods and services in appropriate manner. If company is following divisional structure,
then it will easy for them to distribute goods and services in proper manner. In this, the work is
divided among employees so that they can work in coordinate. With the help of this they serve
quality of services and products to customers (Chow and et. al., 2012). Another organisation
structure is functional, in this each portion of management is divided according to their purpose.
For example, marketing, sales department are divided. But there is also drawback of this
structure is that, it become restriction for organisation that they have to coordinate and
communicate with in their boundaries only. If Nestle follow this, then they will not attain their
goals and objectives in time period.
Divisional structure, this is typically used in larger number of organisation whose
operating their business from outside country. In this structure, the company divide their work
according to geographic so that they can satisfy needs of customers. The advantage of this
structure is needs of consumers can be meet rapidly; however, communication between
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Illustration 1: Organisational Chart

customers will become more strong. But this structure is costly because of their size and scope. If
Nestle will follow this structure, then they can easily their work according to customers and
achieve their objectives within time period. Thus, their profitability of business tend rise and thus
they can sustain at market for more and more years (Govindasamy and et. al., 2011).
Management have to take appropriate steps for this context because sometimes this process
provides lack of flexibility in working which is not appropriate for long term survival of an
organisation. hence, management have to use this approach in more and more appropriate
manner through which their work become effective in nature.
TASK 3
P4 PESTLE analysis of Nestle
There are number of issues which are facing by organisation. The manager of Nestle, is
responsible to conduct external analysis. This company is belonging from food industry which
demands a lots of efforts so that they can penetrate exactly in competitive market. While
analysing pestle analysis, it will give hint to firm to improve their operations in time period, at
exact place with right direction. It will also give more oriented opportunities to entity for expand
their business and attain growth with sustainable profits. These factors also giving both positive
and negative impact on operation activities which make difficult for organisation to achieve their
objectives. Following are explanation given below of pestle analysis.
Political factor - This entity is operating their business in several countries. The rules
and regulations which are set by government is different from each other (Gronwald, 2017). So,
it is manager responsibility to focus on political dynamic for example, import excise duty,
taxation policy, government permission in order to enter into new segment of market etc.
Moreover, company have to considered all factors which are related with risk and could be
involved in organisation. The positive impact of this factor on Nestle is that government are
protecting their own companies in increasing tariff rates. Through this, company can generate
high amount of profits. Another side, negative impact is, if there is unstable of government then
it became difficult for to accept all rules and regulations at same point of time.
Economic factor – As there are many countries and all having different level of
development (Harrison, 2011). So cited firm have to set different economic policies so that they
can operate their business in numerous segments. The price of products should be set according
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to needs of customers and the decision should be taken on the basis analysing economic policies.
The inflation rate or buying power of customers are affecting objectives of firm. Positive impact
on Nestle is that company can expand their products in vast cities and make more effective
supply chain network. Further, they can also introduce new products according to needs of
customers. Moreover, negative impact is, company will face many problems in supplying their
products to customers regarding different economic policies of other countries.
Social factor – Nowadays, level of education is increased in developed and developing in
countries which has also increase the awareness of quality of products regarding healthy and
unhealthy ingredients. The thoughts which are share by customers with organisation are
influencing their operational activities. It is responsibility of manager to deliver products
according to customer’s needs. Along with this, cited company have to clearly understand the
concept of consumer changing behaviour. The positive impact of this factor is that, Nestle has
built their reputation and understand consumer behaviour in dynamic environment also. They are
also attracting large number of customers by maintain their quality of products (Loughlin, 2015).
But negative impact is, if there is suddenly change in lifestyle of people, then it can also impact
on aims and objectives of organisation.
Technological factor – In modern era, there is introduction of many technologies which
has given opportunity to organisation to develop new products or make improvements in existing
ones. Cited firm can use new techniques of marketing such as; e-commerce or internet in order to
promote their brand name also. For example, this company is maintaining their database with the
help adopting new technologies. Positive impact of this factor is, Nestle can maintain their whole
records in one system and operate their business from one place (van Wijngaarden, Scholten and
van Wijk, 2012). But negative impact is, if company is working in competitive environment and
required technology is not available, then organisation may not able to retain in market for a long
period of time.
Environmental factor - There are many large and small organisations which very
conscious about to have clean environment. The organisation has to use those resources which
are available with them in appropriate manner (Moutinho, 2011). Positive impact is, company is
providing user friendly products to user and following all rules and regulations to do business in
other country. Negative impact is, if there is suddenly change in weather, then it will directly
impact on the supply of products and demands of customers.
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Legal factor – The cited firm is facing obstacles regarding labour laws and but they have
to fixed minimum wages of workers as per provision of these laws. As there are many laws such
health and safety, employment law etc. which can make restriction and negative impact on the
activities of organisation (Venegas and et. al., 2012). But positive impact is that, Nestle will be
sure about that everything is under control and protecting rights of customers. The activities
which are performing by managers have to be execute in such a manner where they can comply
with all rules and regulation which is framed by government.
TASK 4
P5 Conducting internal and external analysis
It is essential for organisation for conducting a swot analysis. Through this they can
analyse their weaknesses and strength in competitive market (Perdana, 2016). Nestle, is a world's
nutrition is leading company which is providing products and services according to customer’s
desires and wants. When manager of this company are taking any decision for benefit of
organisation, then they have to also analyse their strength and weakness which will aid them to
take better decision. As there are many factors which can influence decision which are taken by
managers. The strategies which are used by Nestle will ensure about their success in competitive
market. The objective of this company is to become trusted leader in nutrition. Cooperative
strategy of this company is operation pillars, competitive advantage and growth drivers which
allow company to maintain their strong position over its rivals. Internal analysis consists with
strength and weaknesses; external involve with opportunities and threats. SWOT analysis of this
company are as follows;
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Figure 2: SWOT Analysis.
Source: Competitor Analysis, 2017
Strength – Nestle is highly diversified company which is operating different markets and
sectors to make customer base. As this firm is selling variety of number products which gives
them strong ability to serve in different market segments (Jurevicius, 2017). This company is
having more competitors but they are not relying on single country to generate their revenue.
Along with this, product portfolio of cited firm is wider than any of its rivals. Moreover,
environmental initiatives of this company is helping in reducing waste, packaging of material
usage so that they can keep environment clean. The manager of this company have to take
decision on the basis of their strong position in market. If, they have taken any wrong decision,
then it will directly impact on operation activities of organisation. As it is concerned with
internal analysis and it is responsibility of manager to maintain ambiance so that they can retain
employees for a long period of time. Further, make those appropriate changes in rules and
regulations where it is required so that it become easy for employees to execute their function in
appropriate manner.
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Weaknesses – The selling of product of this company is depending upon few well-
recognised brand. It makes organisation vulnerable to suddenly work in dynamic environment of
consumer behaviour. Another weakness of this firm is that, it is heavily depend upon advertising
which also give opinion of consumer regarding their products. It can also lead in high marketing
cost of organisation with a questionable on return on investment (Pestle and Colvard, 2012). This
also selling contaminated food which are against the unethical practices. In this marketing
department have to look upon promotional strategies so that they can attract customers in
different manners.
Opportunities – The company can also sell their products through online through which
their distribution channels. Nowadays, there is growing in middle class in nation so it gives an
opportunity to them to create more products for these countries. Along with this, if there is
change in lifestyle, it will increase the demand of pre-package food. Further, there are many
customers who preferred for coffee, so it gives them opportunity to sale more products in this
food (Zhang and et. al., 2011). As there are growing in number of small food start-ups, so the
cited firm can increase their investment in start-ups which will also help to company to meet
with their upcoming challenges and improve their sales. It is considered as external environment
where so many opportunities are available in competitive market. While adopting these chances,
it will improve their existing performance and beat their competitors. These opportunities are
giving positive impact to organisation to perform their operational function in efficient manner.
Threats – There are many competitors of this company is selling same kind of products
such as in terms of chocolates; Cadbury, Walmart, Aldi and many more. They are promoting
their brand name which provides, through which they can generate more profits. There is also
pressure from large retailers which is creating problem for them to cut prices of products.
Another is, prices of coffee beans could be significantly rise due to major change in weather
disaster (Pham Duy and Chau, 2015). The company is generating revenue from coffee over 10%
and if price of coffee beans is generated, then it will impact on the organisation sales. In addition
to this, growing demands of customers has been increased number of competition and pushed the
cost up significantly. While analysing these threats it influencing on their goals and objectives.
But to get succeed in competitive market, it is crucial for manager to identify these threats which
help them to adopt new strategies.
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The manager of this company have to analyse their position and see that how customers
are there who is not happy with our products and services. However, it is responsibility of
manager to take consumer feedbacks on regular basis so that they can take better decision for
benefit of organisation as well as customers.
P6 Strengths and weaknesses are interrelating with external factors
The manager of this company have applied both internal and external analysis. They have
conduct both SWOT and Pestle which help them to determine their position in market. The
strength of this company is that, revenue of firm is not depending upon single number of country.
As it comes under social factor, in this there are many customers who attracted towards the
product of cited firm. For example, financial position of this company is very strong. As it come
under economic factor. When company is doing their business in other they are setting policies
according to that which will help them to work properly (Porter and Rivkin, 2012). With the help
of SWOT analysis, the company can also make design their rules and regulation according to
government in which they can target new customers also. The policies which are designed by
government is essential to follow and protect the rights of customers. There are many laws such
as labour, health and safety which has to be applied by organisation.
Further, company is conducting programmes in which they are giving message to people
that do not waste so much resources. The resources which are using by company is in limited
manner which helps them to retain them for future uses. There is interrelation between strength
and weaknesses of company with external because without this the company cannot attain their
objectives in time period. There interrelations are as follows.
Strength – Nestle is having strong position in market in selling range of products to
customers. When company is doing business in other country, then they are setting prices of
products according to needs of customers which is coming under economic factor
(Reihanian and et. al., 2012). Through this, entity is making sturdy position in market and beat
their competitors. The government is also supporting them in terms of making rules and
regulation according to them. So this also support to organisation in building their strong image
in competitive market. There are huge number of employee in organisation who are coordinating
with each other in order to achieve their objectives. If they are not working in coordination, then
to will impact legal factor of entity.
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Weaknesses – The weakness of company is that they are hugely depend upon advertising.
For this they have to use latest technologies which are available in market. As this factor comes
in technological factor. Sometimes it also difficult for company to fixed labour amount of
workers as per according to minimum wages act. So this can give negative impact on firm image.
If company have to introduce new product and no new technology is available, then it became
difficult for organisation to compete with their competitors (Yuan, 2013). Another is high cost of
launching new brands which are selling less-fashionable food which is affecting to consumer
taste and preferences.
Opportunities – As it is concerned with external analysis. In this managers are having
option to identify more customers who are willing to use these products and services. As it also
comes in social factor, where manager can target different group of people for satisfying their
requirements.
Threats – This is considered as external factor because if there is suddenly change in
government rules and policies, then it became burden on organisation to operate their function in
market. Manager of Nestle have to considered all these pitfalls whatever they are facing in order
to retain in market for a long period of time.
All these factors may also affect to decision making process of organisation. Manager
have to considered all these factors because these are affecting to their decision. Along with this,
they have to also take view point of employees which helps them in making decision more
effective. These decisions should be changes according to needs and requirements of employees
and customers.
Management have to look upon all of their strength and weakness which aid them in their
operation. Weakness always restrict them in managing all task in an appropriate manner. This
create barrier in successfully running the business operations (Sakunia and Jha, 2016). Moreover,
external factor affect business more as compared to internal and for this authority have to link up
their strength and weakness with this context. If they failed in do so then whole concern get
affected which is not proper. Thus, management have to show more and more concern towards
on all these perspective.
CONCLUSION
After summing up report it has been concluded that, it is essential for organisation to
analyse both internal and external analysis. It will give advantage to company to make their plans
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accordingly so that they can retain in market for a long period of time. Further, there are different
types of organisation whose objectives, mission, vision is different from each other. They are
adopting strategies according to capabilities so that they can work accordingly. Moreover, Nestle
company has conducted pestle analysis, through which they can evaluate their position in
competitive market. But these factors have given both negative and positive impact on
organisation objectives which have to considered by company on regular basis. There is also
different function of company who is coordinating with each other. It is responsibility of
manager to make coordination with other department so that they can divide their work load and
run their business objectives smoothly.
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