Business Environment Report: Nestle Company Analysis (Unit 1)

This report provides a comprehensive analysis of Nestle's business environment, focusing on the organizational purposes of businesses, stakeholder objectives, and the impact of market forces. It explores how Nestle meets the objectives of different stakeholders, including customers, employees, and the government. The report examines the behavior of organizations within their market environment, delving into economic systems, fiscal and monetary policies, and competition regulations. Furthermore, it evaluates the influence of global factors, such as international trade and European Union policies, on Nestle's operations. The analysis covers key responsibilities of Nestle, including ethical, social, and environmental considerations, and outlines strategies the company employs to meet these responsibilities. The report also touches upon how economic systems allocate resources and the impact of market structures on pricing and output decisions. Overall, the report provides a detailed assessment of Nestle's position within the broader business environment, highlighting its responses to various internal and external pressures.

UNIT1. BUSINESS ENVIRONMENT
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Table of Contents
Introduction................................................................................................................................2
LO1: Understanding the organisational purposes of businesses of Nestle................................2
1.1 Identifying the purposes of different types of organisation.................................................2
1.2 Describing the extent to which an Nestle meets the objectives of different stakeholders...2
1.3 Explaining the responsibilities of Nestle and strategies employed to meet them................2
LO2: Understanding the behaviour of organisations in their market environment...................2
2.1 Explaining how economic systems attempt to allocate resources effectively.....................2
2.2 Assess the impact of fiscal and monetary policy on business organisations and their
activities.....................................................................................................................................2
The economy of a nation and tax rates are focused by the government in the fiscal policy. In a
country, the stability in prices and the general trust are ensured by the process of monetary
policy..........................................................................................................................................2
2.3 Evaluating the impact of competition policy and other regulatory mechanisms on the
activities of a selected organisation............................................................................................2
LO3: Understanding the behaviour of organisations in their market environment...................2
3.1 Explaining how market structures determine the pricing and output decisions of business2
3.2 Illustrating the way in which market forces shape organisational responses using a range
of examples................................................................................................................................2
3.3 Judging how the business and cultural environments shape the behaviour of a selected
organisation................................................................................................................................2
LO 4: Assessing the significance of the global factors that shape national business activities. 2
4.1 Discussing the significance of international trade to UK business organisations................2
4.2 Analysing the impact of global factors on UK business organisations................................2
4.3 Evaluating the impact of policies of the European Union on UK business organisations
agriculture..................................................................................................................................2
Conclusion..................................................................................................................................2
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Introduction
The business environment means all the factors that may affect the functions of an
organisation that involve management, consumers, employees, supply, demand and other
business regulations. So, to run a business successfully, it is essential to comprehend the
business environment. As a newly appointed senior manager of Nestle Company Ltd, the
learner is responsible to execute to compete with the market and do a research the various
opportunities regarding business.
To succeed in the current environment, the learner will make some changes like
judging the implication of the global factors that configures the national activities through
understanding the business purpose of the organisation, the type of the national environment,
the company behaviour in the global market.
Figure 1: Logo of Nestle Inc.
(Source: nestle.co.uk, 2016)
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LO1: Understanding the organisational purposes of businesses of Nestle
1.1 Identifying the purposes of different types of organisation
Mowday et al. (2013, p.25) stated that, based on the business purposes, organizations
can be classified into three different groups- Public Sector, Private Sector and voluntary
Organisations. The public-sector organisation provides non-payer services which benefits all
of society. The private sector organisations are run by the private individuals with the sole
motive of gaining profit against the products and the services provided by them. The
activities of the organisations directly impact the economy. The non-profit charitable
organisations enjoy certain privileges in exchange for abiding by some restricted laws; and
agree to organise and solely to fulfil certain missions. Business organisations can also be
divided by the Limited Liability, Sole Trade organisations and Partnership organisations. A
Sole Trade organisation is owned and controlled by one person though they employ workers
and provide specialist service.
Public sector organisation:
The government runs the public-sector organisations. These organisations are
financed by the government. The aims and objectives of this type of organisation are to work
for the welfare of the people. Some of the examples of public sector organisations are BBC
and National Health Service. The main objective of public sector organisation is generate
maximum profits and help to contributing in economy development.
Private sector organisation:
Private sector organisation is the organisations where they aim to generate high
revenue by provided services to the respected customers. This sector organisation is financed
by the individual investment, bank loans. Some of the examples of the various organisations
are Virgin Atlantic Airline Airways, ASDA, Aldi and Nestle. As Nestle provides services or
products to the people for money and their organisational objectives are to get profit, nestle is
being considered as private sector organisation. Private organisation is like sole
proprietorship, partnership businesses, etc. These all are private sector organisation. Nestle is
one of prove company where they communicate with sole traders where who govern own
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individual business. Who help to making business effective. Now the main objective of
private sector is hire more skilled people and adopt new technology advancement. With the
help of all these technology advancement private companies generate high revenue.
Voluntary sector organisation:
The voluntary sector organisation works of the charity or the welfare of the people
free of cost. This type of organisations financed by the individual investments and donations
and governmental helps. Some of the examples of the Voluntary organisations are Oxfam and
British Red Cross.
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1.2 Describing the extent to which an Nestle meets the objectives of different
stakeholders
The organisational objective of Nestle is to acquire competitive advantage in the
competitive market. The objectives also include the profitability of the company, to build
trust among the customers of the concerned company. The important stakeholders of the
concerned company are employees, customers, suppliers, government shareholders, media,
trade creditors, lenders, government and their agencies, customers and public enterprises.
To acquire maximum profit for the organisation, the stakeholders of the same
contribute a lot. In business growth, the employees help the organisation most. The concerned
company can survive in the market if the customers, other important stakeholders prefer the
product of Nestle. With the help of stakeholders, the company can acquire the brand image
which can be done by providing value added services to the customers. They are also
concerned in information that makes Nestle to evaluate the company’s potentiality to pay the
bonus.
The members of the company are also interested that are related to the profit and
stability of the employers. The consumers are also interested in the information regarding the
duration of as they are involved with the enterprise. The lenders have an interest in the
information to find out whether their loans and the interest that are attached to them need to
be paid. The suppliers and the creditors have an interest in the information to find out
whether the amounts will be paid. In the opinion of Mason and O’Mahony (2015, p.74), the
Government and their agencies have an interest in the allotment of the resources to regulate
the activities and determine the taxation policies of the company. Nestle undertakes these
stakeholders’ engagements to improve and develop its relationships with the company. The
company undertakes various anti-corruption measures that are applicable for all the
organisations and suppliers who intend to engage in business relationship with Nestle.
Stakeholders Needs of the stakeholders Impact of Satisfaction of
the stakeholders
Customers The needs of the customers
are to get safe and healthy
By fulfilling the need of the
customers, the concerned
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products. The customers of
Nestle required having the
products which have taste
with nutrition value.
company can acquire
customer’s satisfaction and
loyalty which will ultimately
help the same to acquire
competitive advantage.
Employees The needs of the employees
of Nestle are to get better
working atmosphere. The
employees need to have
wage per their performance.
Different welfare policies for
the employees are required.
By considering the needs of
the employees, the concerned
organisation can increase the
productivity of the
employees as well as the
entire organisation. The
satisfaction of the employees
can also impact the business
objectives of Nestle.
governmental The government is one of
the important stakeholders,
which determines safety of
the customer. The
government also considers
that the company is running
their business in fair manner.
By maintaining the needs of
the governments needs the
concerned organisation can
build the brand image among
customers which helps the
same to get the customer’s
preference.
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1.3 Explaining the responsibilities of Nestle and strategies employed to meet them
The primary responsibility of any enterprise or business is to provide their specific
services. The organisations should abide by certain rules regarding their business
areas. In the opinion of Borrás and Edquist (2013, p.1518), the key responsibilities of
organisations include ethics and business, social responsibilities, environmental
responsibilities, legal responsibilities, management responsibilities to the employees and
customers and to the competitors.
The importance of the environmental legislations is to create the brand image. The
concerned company can follow environmental responsibilities by reducing the use of carbon
footprints. Thus, by considering the corporate social responsibility the concerned company
can create brand preference among the customers. Governmental policies ensure that the
companies in market compete in a fair manner. The customers expect that Nestle being one of
the leading brand, considers the safety and health factor of the customers. Nestle to follow the
governmental policies, set the competitive prices of the products. It also adds nutrition value
in their products.
Nestle has reduced the use of carbon foot prints to maintain environmental
legislations. Nestle has taken continuous excellence initiatives to maintain the governmental
policies regarding the health and safety of the customers. To maintain a balance between
economy and ecosystem, it is necessary to perform the social responsibilities. The companies
are answerable to the public for their environmental, social and financial performance. It is
about going above and beyond what is called for by the legal responsibilities.
Again, in the opinion of Borrás and Edquist (2013, p.1518), legal obligations cover all
the area i.e. health and safety, child protection, insurance and professional conduct. Policies
and procedures provide the framework within an organisation as Nestle operates. Nestle is
bound to provide safe work environment to its employees. The company also ensures that the
advertisement do not encourage any type harmful consumptions and do not mislead in
anyway.
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LO2: Understanding the behaviour of organisations in their market environment
2.1 Explaining how economic systems attempt to allocate resources effectively
Economic system determines the system which includes the process of resource
collection, production of the products and the distribution of the products among the
customers of the target market. Different governmental policies ensure that the business
organisation needs to compete in the market in a fair manner and the products they are selling
need to consider the safety and health of the customers. Tietenberg and Lewis (2016, p.111)
opined that, the resource allocation is a plan to use available resources that includes
managing tangible assets. Some factors that aid this allocation of resources for Nestle are as
follows:
Mixed and Free Enterprise
The market price in a free economy allocates goods and services without any
intervention from the government, while the mixed economy includes ample sources to
achieve the final purpose and help in the allocation of resources. Nestle’s allocation of
resources is mainly based following the mixed economy, along with the consideration of the
governmental policies that rule the market conditions. The effective analysis of the business
behaviour acts as an efficient strategy for Nestle to prosper well in its ventures.
Transitional Economy
The transitional economy is a shifting economy that moves towards the market
economy from the planned economy. The allocation of the resources in Nestle is done per the
existing market prices that are dependent on the taxation policies of the country and the
availability of public finances. As the resource allocation in Nestle includes the governmental
policies, the cost of capital and the levying of taxes are becoming instrumental in the
operation of Nestle’s line of business actions.
Economic system determines that a business organisation will produce how much
products and from which it will collect the raw materials. The distribution of the final
products in the market determines the earning of profit by the company. This criterion makes
it imperative to understand the economic status of the country with specific reference to the
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balance of payment and balance of trade that are the integral factors in regulating the entire
economic system of the country.
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2.2 Assess the impact of fiscal and monetary policy on business organisations and their
activities
The government in the fiscal policy focuses the economy of a nation and tax rates. In
a country, the process of monetary policy ensures the stability in prices and the general trust.
Public Sector Net Borrowing (PSNB)
To meet the spending requirements, the government and the local are in need to
borrow net. This may result to national debt occurrence and inflation.
Central and Local Government Spending
As Hansen (2013, p.335) stated, there are two types of the Central and Government
Spending i.e. capital spending and current spending. It stimulates the macro-economy by
incurring some changes taken together demand of the economy and affects the business
activities of Nestle.
Public Sector Net Cash Requirement (PSNCR)
In order to fulfil the financial commitment, the government needs to take over money
at the particular rate incurred by the Public-Sector Net Cash Requirements. It includes the
local government, the central government as well as the public corporations.
Control of Aggregate Demand
The aggregate demand is the sum of services and goods. The term is used to evaluate
the amount spent by the government, consumers and people. By impacting the GDP, the
prices and the employment rates, the aggregate demand of an economy takes in the
organisational behaviour of Nestle.
Fiscal policy:
Per this policy the government balance the rates of the taxes and expenditure which
directly influences and impacts the national economy. Fiscal policy determines the economic
condition of one country which impacts the purchasing power of the customers. The
government generates different policies which influences the business operation of the
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company. As Nestle has business over many countries it needs to follow and adhere the
policies and taxations of that certain countries based on their economic system.
Monetary policies:
Monetary policy is mainly controlled by the banks which provide the sources of
money. It determines the rate of taxations, inflation. It creates the trust in the currency
among the citizens of one country. Monetary policy ensures the continuous economic growth
which helps to get the stable employment opportunities. The exchange rate stability is also
being stable through monetary policies. Nestle as it operates its business in many countries,
through monetary policy it acquires knowledge regarding economic condition of the
company through which the concerned company can plan their business operations.
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