Nestle's Business Environment: Internal, External Analysis Report

This report provides a comprehensive analysis of Nestle's business environment. It begins with an introduction to business environment factors, differentiating between internal and external influences. The report then delves into Nestle's organizational structure, examining the interrelationships between various departments such as human resources, marketing, finance, and operations. Task 3 focuses on a PESTLE analysis, evaluating the political, economic, social, technological, environmental, and legal factors impacting Nestle. Finally, the report presents a SWOT analysis, identifying Nestle's strengths, weaknesses, opportunities, and threats. The analysis covers the company's wide range of products and its global market presence.

BUSINESS AND BUSINESS
ENVIRONMENT

INTRODUCTION
Business environment is a most important factor that has major impact on different
organisation. These terms can be beneficial if firm already make a impactful strategy for them.
Business environment is classify in two different factors as internal and external. Internal
environmental factors can be strengths and weaknesses of firm as customers, employees,
management and high cost products. For this firm needs to analyse different activities to reduce
negative impact of them. External environmental factors are those that are beyond the control.
These factors can be political, economical, social and technological. These factors can be
positive or negative, so for this management of an organisation needs to make impactful strategy
to reduce negative impact of them. This project report is based on Nestle which is a largest food
company. This organisation was established in the year of 1905 by George and Charles Page.
This firm provide their quality services in several countries, so for them it is require to analyse
impact of different environmental factors. This report represent legal structure, framework and
stakeholder of different types of organisation as public, private and voluntary sectors firm, size
and scope of such business ventures. At last it determine relationship between organisational
function and strengths and weaknesses of different macro factors.
TASK 1
(Covered in PPT)
TASK 2
P3. Relationship between different organisational functions and its linkage to objectives
Every business organisation that is operating in market place is different from each other
on certain basis which involve its size, nature, function and type therefore, its structure also
differs from each other (Reed and et. al., 2013). Organisational structure play a essential role in
accomplishment of set goals and objectives as the style of work process is carried out in such a
manner. There are number of department that is working in single company thus, it is necessary
to coordinate the activities so that ultimate goals and objectives could be achieved in set period
of time. Nestle is a largest food company operating in several part of world hence, it is required
that structure that is to be followed should be simple and not complex. All departments carry out
their work procedure in accordance to set objectives so that it could be attained properly thus

linkage with organisational objective must also be done. Brief description about various
departments are described below: Human resource department: This section carry out the function of managing all
employees that are working in single business organisation. HR manager leads this
department and consist of several duties and responsibilities to be followed like
recruitment and selection process, imparting training and development, increasing
motivation so that best possible outcome of every employee could be realised. Staff
members are consider important resource for Nestle, proper attention must be provided to
increase their efficiency at significant level (Reinhardt and Stavins, 2010). HR manager
have to regularly review the performance of their employees and workers so that it can be
measured with standards so that deviations can be find out and proper steps could be
taken. HRD is that which control overall working of business and each division is
interrelated with each other. Because they are the one which working for the welfare of
employees. Work of human resource department is totally related with the working of
each and every division because HR manager is the one who manage as well as control. Marketing department: This department is consider one of the building block of any
company as it work in order to increase the sales volume by carrying out numerous
marketing function. There are number of activities that is section perform which involve
setting marketing plan so that actions are performed in accordance to it. Apart from it,
marketing manager also conduct promotional activities to promote the product and
services of particular company. Nestle have well defined marketing section which
conduct process starting from analysing market through number of techniques like
SWOT and PESTLE so that actions are taken place considering it. Marketing budget
include all expenses that company have to be faced so that decision could be constructed
considering all those aspects. It is an division which is linked with production department
because produced products need to be market and deliver to the customers. Along with
this finance department is also related with marketing division there is requirement of
funds and resources for daily basis marketing resources which is provided by finance
department. Marketing division is related with operation and production department
because if goods and services marketed in the particular place then only company will be

able to sale their products in the market. Along with this, finance department is also
related because they provide funds and resources for marketing of products and services. Finance department: This section is responsible for managing company's funds in
optimum way. It is the duty of finance manager to formulate budget of single year that
describes areas where finance must be allocated in proper way. All decisions are taken
place which is related to monetary terms so that cost do not increases and optimum
utilisation takes place. Financial manager of Nestle perform all his duties and
responsibilities in proper format so that mission and vision could be attained properly
without any hindrance (Shigang, 2010). In organisation there are several department
where each need funds for their working for that budget is prepared by same division.
Finance is the backbone of business without this division working of any department is
not possible because they provide funds as well as resources for fulfilling daily
requirement.
 Operation and Production Department: This section is responsible for producing such
products and services in order to convert raw materials in finished goods. Production
manager of Nestle make decisions regarding the quality, production process and selling
procedure. They continuously make efforts to study the customer's preferences and tasks
so that any changes or modifications can be introduced in proper time period. Profit and
sales maximisation is possible through this department and finance is provided by finance
division, marketing of goods produced in operation and production department is supply
through marketing division.
From the above discussion, it has been observed that Nestle conduct important function
which is performed by the department that are present like marketing, finance, operation, human
resource and accounting. They carry out diverse activities containing different nature therefore, it
is required to construct coordination between all these departments. It is required to make them
well equipped with organisation's aims and objectives so that their actions must be into that
direction. It is the responsibility of management of Nestle to formulate such structure which
highlights the proper roles and responsibilities that should be followed by every management
level so that set goals could be attained (Karagiorgos, Drogalas and Giovanis, 2011). All the
departments that has been described above are interrelated with each other on various basis.

Although, they have different functions to execute but they are focused upon attaining ultimate
objectives and aims of Nestle which has been set by the management of company.
TASK 3
P4 Pestle analysis with an impact of macro environment
Political factor: It refer to the political aspect which includes export import excise duties,
taxation, goods service tax, government permission to enter in to the target segment. Nestle
should consider and recognise all related risks that could be involved.
Positive impact: It helps to implement legislations, rules or regulations, laws and orders
in organizational activities to expand their business in foreign countries. This will aid them to be
easier their trading policy.
Negative impact: Political factor leads negative effect due to trading and government
policies of different countries which is difficult to understand and implement properly in
business (Kolk, 2016).
Economical factor: It is an external effect of business environment. This includes aspect
which effect an economy of a country such as purchasing power, inflation rate, foreign exchange
rates, pricing level of a commodity.
Positive impact: This will increase growth of organization by maintaining stability in
foreign countries, develops employment opportunities and research and development work on its
products.
Negative impact: It will be difficult to purchase the products at the time of high inflation
for consumers.
Social factor: This feature point out thought and beliefs of the consumers perception. It
involves the culture, life style and considered the social perspective as well. For a business
organisation, it is require to provide quality products to their customers on the bases of their
requirement and nee. Through this, they can easily build positive image in target market of their
organisation and getting higher competitive advantages.
Positive impact: Nestle works on the consumer perception such as quality of products,
taste and preferences of customer requirement (Nishitani and et. al., 2012).
Negative impact: Recent case of Maggi has an adverse effect on the company due to
ingredients which are used to prepare spices of it.

Technological factor: These are the most effective process that helps to maximise
quality of products. All these activities are very beneficial to make positive changes in services
to provide higher satisfaction target customers. This is a most effective factors that maximise
profitability, performance and effectiveness of a firm.
Positive impact: Latest and high technology leads to complete production process in the
international market. For promoting products in several countries, organization can use internet
and mobile technology.
Negative impact: Latest technology requires huge amount for installation of equipments
and software. These activities requires trained staff to use technology in proper way.
Environmental factor: The change in weather can affect the supply of its products as
clients demand their product in a particular weather. The environment law is prepared for the
protection of environment and makes products environment friendly which can give them health.
Positive impact: These laws do not affect its overall policy and its food and beverages
provided to their clients at domestic and international level of these products.
Negative impact: In several countries, using of plastic bags and different packaging
which are hard to dispose are ban. For this, company has to produce ozone-friendly bags which
involves cost.
Legal factor: This aspects involves the legal environment of a company. Nestle has to face the
labour laws, fixed minimum wages and provisions of these laws.
Positive impact: If employees are get selected according to the job specification. This will reduce
the expenses of training and developing process (Osterwalder and Pigneur, 2010).
Negative impact: Different kinds of facilities provided to employees led to increase the cost of
company.
TASK 4
P5 Internal and External analysis of Nestle
SWOT analysis on nestle
Nestle is one of the world's leading nutrition, health and wellness company based in
Switzerland. It is a largest food and beverages company in the world. It owns several major
consumer brands such as Nescafe, Kitkat, Nestea, Milkmaid, Munch, Cerelac and most popular
product Maggi (Pikka, Iskanius and Page, 2011). The brand names are used purely for the

educational or academic purpose only. It also has a significant share in product like instant
coffee, instant foods, milk products, etc. A company sells its products across the world through
retail outlets and shopping chains such as franchises, third party distribution, online selling
products. They can also tie-ups with various online retailers and direct sell through their website
as well.
Swot analysis helps to evaluate a company's competitive position and to develop a strong
strategy by identifying its strengths, weaknesses, opportunities and threats. It is a process of an
opportunity to bring company team together and encourage their participation in, resulting
strategy. Although, strength and weaknesses cover an area of “what is” company today, while
opportunities and threats assists about “what could” happen to it. Swot analysis is discussed
detail in below:
 Strengths describes positive attributes such as knowledge, skills, reputation, background.
Tangible and intangible includes capital, credit, distribution channel and technology. It
includes all internal part of an organization. In case of nestle, factors which includes as
wide range of products. For example, their chocolates comprises of various sets of taste,
which the customer can choose their favourite. Good marketing, innovative products,
product quality are some strengths of the company (Pulver, 2012). Strength is the aspect
of organisation internal environmental factors which is important for Nestle to be identify
and make is more strong.
 Weaknesses are used to refer an areas where business or brand needs improvement.
Some of the key weaknesses of Nestle are weak websites, exportation, supply chain is the
main issue, chemicals in their products on testing, despite being a popular brand. It has to
face intense competition in the market. Hence, limited market share. Nestle is often
blamed for many products due to poor supplies, recent case of Maggie. Every
organisation have its weakness same Nestle also have but company can come out of this
easily because it is internal part and they can work on it.
 Opportunities refers to those direction in the environment which are surrounds the
business on which it can capitalise to increase its returns. It is an option where a company
can meaningfully improve itself. Nestle opportunities includes the focus on
personalisation, increase in number of consumers, especially youngsters, increase in per
capita income of people. Strong research and development team, has great advantage of

introducing new product in the future. It has broad distribution channel all over the world.
In case of opportunity, it has been building partnership with major companies such as
Coca-Cola (Avramenko, 2012). Opportunity is external environmental factor which
company can grab by taking several major steps.
 Threats are those factors in the environment which can deceive the growth of the
business or have potential to harm an organization. These includes increase in
government regulation, introducing a competitive product, trend towards healthy eating
at any cost. Threats can also refer to how economic conditions affect the company to
change in interest rates, inflation etc. The price of coffee beans could significantly rise
due to major weather disasters, such as price volatility are drought, changing environment
temperature and many other reasons.
The above mentioned factors are described about the risk of internal and external factor
of business environment. It includes study of several strengths and weaknesses of company to
take an appropriate steps towards them to generate desired outcomes and reduce risk factor as
well. Strength of Nestle help them in taking correct decision by keeping in mind their strength
and weakness. They are serving their products at worldwide level which needs proper
distribution channel decision making. Apart from this weakness of the company must be kept in
while while taking several decision related to supply chain, weak websites and several others. So
all these can be resolves properly.
P6 Interrelation of strengths and weaknesses with external macro factors
For a business organisation, it is require to analyse their strength and weaknesses in order
to maximising their effectiveness in target market (Bovee, Thill and Raina, 2016). Nestle is a
well known organisation that needs to analyse such activities in order to manage profitability and
growth. There are interrelation with macro environmental factors are given below as -
Political and legal factor- These factors are related to governmental values and norms that are
related to several factors. For this Nestle needs to analyse effectiveness of such business factors
and its impact to getting maximum benefits easily.
 Strength – By implementing legislation and legal approaches in business firm, Nestle can
easily getting higher competitive advantages. These legality helps to provide higher
competitive advantages and build positive environment in firm.

 Weaknesses – Illegal activities and terms can reduce market policy and terms of an
organisation.
Economic factors – Major economic factors change in inflation rate, economic growth rates and
income level. Because of that raising price if raw material which is related to the requirement to
sources from sustainable suppliers.
 Strength: By identifying and doing work according to the economic factors Nestle easily
do their work in better manner with minimum cost.
 Weakness: Change in economic factors result can give negative impacts also sometimes.
For which Nestle have to use several tools and techniques for its minimisation.
Social factor – For a business organisation, it is require to implement effectiveness by analysing
customer's demand and requirement. Through this, Nestle can easily build long term relation
with their target customers.
 Strength – These activities helps to maximise sales and growth of firm to getting
desirable outcomes and benefits. These activities assist to make positive relation with
target customers to getting higher competitive advantages easily (Cavalcante, Kesting
and Ulhøi, 2011).
 Weaknesses – These activities can impact negatively on organisation and its production
approaches. Unsanctified customers ignore services of target organisation.
Technological factors – These factors are related to implementation of advance technology in
business organisation to maximise profitability and growth easily. For Nestle these advancement
can be uses for several approaches as -
 Strength – Through these activities, Nestle can easily promote their products and services
to target customers. By these activities, they can easily build long term relation with
target customers to getting long term advantages easily.
 Weaknesses – Implementation of advance technology requires proper fund, skilled staff
and trained workforce who analyse business approaches in positive manner (Hair, 2015).
Legal Factor – This is the factor which include laws and legislation as well as have to be
implemented in the business for its easy and smooth working. Below mention is the strength and
weakness of legal factors within business:-
 Strength – Through these activities, Nestle can easliy do their work by following laws
and legislations.

 Weakness – major weakness of legal factor is that company have to follow all these in
proper manner which needed to be implemented in better manner.
CONCLUSION
As per the above report it has been summarised that an organisation needs to analyse
impact of different organisational activities. These factor can be internal and externals that affect
on business activities in different manner. All these activities are require proper analysis of
market and customers trends to getting higher business advantages easily. Business environment
are not an easy process because it consider several factors that has direct impact on business
elements and decision making procedure as well. External environmental factors are those that
are beyond the control. These factors can be political, economical, social and technological.
These factors can be positive or negative, so for this management of an organisation needs to
make impactful strategy to reduce negative impact of them. This report represent legal structure
and framework of different types of organisation, size and scope of public private and voluntary
sector firms. It also determine interrelationship between different organisational functions that
can be marketing, finance, human resources as well as IT and impact of macro environmental
factors. It also determine positive and negative impact of these factors as well as its strength or
weaknesses. For internal analysis of firm, it determine SWOT analysis to getting proper analysis
easily.