Business Environment Analysis: Nestle's Operations and Strategies

This report provides a comprehensive analysis of Nestle's business environment, encompassing various aspects such as economic systems, the impact of fiscal and monetary policies, and market structures. It begins by defining different economic systems like command, free market, mixed, and transitional economies, and then delves into the purpose of different organizational types, including private, public, sole trader, partnership, and charity organizations. The report further assesses the objectives of Nestle's stakeholders, including customers, suppliers, and employees, and outlines Nestle's responsibilities in delivering quality products and adhering to environmental standards. It also examines how fiscal and monetary policies influence Nestle's operations, and explores the effects of competition policies, regulatory mechanisms, and global factors. The report concludes with a discussion on pricing, output decisions, market forces, and the influence of cultural and business environments on Nestle's behavior, along with the implications of the company's entry into the European Monetary Union (EMU).

Business
Environment
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TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
ASSIGNMENT 1 ............................................................................................................................3
ASSIGNMENT 2.............................................................................................................................5
1.1 Purpose to different type of organization ..............................................................................5
1.2 Assessing the objectives of Nestle stakeholders ...................................................................6
1.3 Responsibilities of Nestle.....................................................................................................7
2.2 Assessing the impact of fiscal and monetary policy on Nestle.............................................7
2.3 Assessing the impact of competition policy and regulatory mechanism on Nestle..............8
3.1 Determining the pricing and output decisions on the basis of market structure ...................8
3.2 Nestle responses to the market forces ...................................................................................9
3.3 Discussing how cultural and business environment shapes the behavior of Nestle.............9
4.1 Evaluating the significance of international trade.................................................................9
4.2 Impact of global factor ........................................................................................................10
4.3 Implications of the company entering into EMU ..............................................................10
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................12
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INTRODUCTION
Business environment is the combination of both internal and external factors that causes
necessary impact upon the smooth going operation of the enterprise. The given report is divided
into two assignments. Here, the first part of the assignment will state that how economic system
attempt to allocate and make effective use of scare resources effectively. However, second part
of the assignment will provide the detailed description regarding the purpose of different type of
corporations. Furthermore, this part of the assignment will also showcase the impact that fiscal
and monetary policies have on the activities of Nestle.
ASSIGNMENT 1
Economic system is the organized way in which nation allocates its resources as well as
apportions the products and services in the national community (Economic system, 2015). Every
economic system has to give answer to the three basic type of questions such as what to produce,
how to product and for whom to produce etc. Nations have to obtain the answers to the given
questions because of the scarcity of resources such as men, machine, money and material etc. In
this regard, there are different type of economic systems identified that uses varied ways for the
purpose of allocating their scare resources in an effectual way.
Command economy is the first form of economic system. Command economy is the type
of system where all the big decisions are taken by the government. Here, in this economy
government plays the role of controller and it has the sole authority with regard to regulate the
supply and prices of the products and services which are produced in nation. Thus, in this context
it can be said that in command economy all the decisions related to the allocation of scare
resources is taken by the government (Dawson, 2009). Here, in order to make the decision
relating to what, when and how to produce government forms central planning authority which
provides direction to it. The given economic system works upon the major aim that is to maintain
greater economic equality between its citizens. Here, prices of the products are set by
government in such a manner that helps in satisfying the needs and demands of all section
people.
However, free market economy is completely different from the command economy.
Free market economy is also called as capitalist economic system wherein all the decisions with
respect to the allocation of resources are taken on the basis of market forces like demand and
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supply. In free market economy, the decision of what to produce is determined on the basis of
basis of consumer preferences. Whereas, the decision of how to produce is taken by producer of
goods and services. Finally, the judgment relating to for whom to produce depends upon the
purchasing power of customers (Al-Najjar, 2012). Here, in this system needs and demands of all
section of citizens such as rich, poor and medium are not given much importance. Here,
producers have the major aim of carrying out necessary improvements in their sales and
profitability related condition. In this economy, demand is being considered as one of the most
influential factor. Thus, the economic system that gives first priority to their self interest is
termed as free market economy.
Mixed economy is being regarded as another type of economic system which possess
features of both command and free market economy. In this economic system, private
individuals have the freedom in the use of capital, but it also allows government interference in
the economic activities with an aim to attain the social aims. The country like United Kingdom
possess the given type of economic system. There are some sectors in the mixed economy where
decision with regard to the allocation of resources is solely taken by government. It consists of
defense, police and fire services etc (Gupta, Clements and Inchauste, 2004). However, there are
some sectors in economy such as health care where resources are allocated by the combination of
both market and planning. Thus, it can be said that in mixed economy the decision with respect
to what, how and for whom to produce is partly taken by government and partly taken on the
basis market forces such as demand and supply.
On the other hand, transitional economy is the type which transformed itself from
centrally planned economy to market economy. The given type of economy undergoes the set of
structural changes with an intention to become the market based institution. In this system the
prices for the goods and services are determined on the basis of market forces. In this regard, it
has also being assessed that restructuring, legal reforms and liberalization are being regarded as
the main element of the given economic system (Kew and Stredwick, 2005).
Besides this, in this section public and private initiatives are also discussed. Public and
private initiative is the venture which is funded and operated through the partnership of both
government and private sector firm. This scheme are sometime termed as the PPP (Public private
partnership). In this partnership, a contract is established between one private and one public
sector firm. The given partnership is also functions in accordance with the mixed economy
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system. The purpose behind the given type of partnership is to provide benefits to the members
of society. Here, the resources are allocated by the partners through combined decision making.
In addition to this, private finance initiative suggest the method in which private capital is
used with an aim to fund the public infrastructure project of nation. Here, in the given type of
initiative private company handles all the up front costs (Perry, Serven and Suescun, 2008). After
that, project is leased to the public and government fulfills the authority to make the annual
payment to the private company. Here, government takes the assistance from the skills and
abilities of the private individuals with an aim to make an effective utilization of the scare
resources of country. Overall, it can be concluded from the given essay that each given economic
system possess their own way for allocating the scare resources of the country.
ASSIGNMENT 2
1.1 Purpose to different type of organization
The organizations are of several types and works from the varied type of purposes. In
accordance with the given context, the purpose to different type of firms identified and it is
depicted in below: Private company: Private company is the type of corporation whose stocks are not traded
on the public exchanges such as American Stock exchanges and new York stock
exchanges etc (Private company, 2015). This type of company has the purpose to
increase the profits of the organization. The firm cited in case study which is named as
Nestle also resides in the given category. Nestle has the aim to enhance the profits of
organization by giving best quality of goods and services to the buyers. Public company: It is the type of company whose stocks are freely traded on the public
exchanges. This firm has the purpose to produce such type of goods and services which
can be afford by all sections of society. Sole trader: It is type of business which is run by the single person who is called as the
owner of company (Stackelberg and et.al., 2010). This type of firm works upon the major
objective that is to give services to the buyers and in return of it corporation charges
necessary amount from them. Partnership: It is the legal relationship in which two or more individuals make the
decision to manage and operate business through collective efforts. The main purpose of
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this form is to distribute the profits and losses that have occur during the year on the basis
of their profit sharing ratio.
 Charity: It is the type of non profit organization that raises money through donation.
Here, the money obtained through this way will be used by firm for the benefit of society.
Thus, the main objective of this firm is to use the obtained money for the welfare of
society member (Carroll and Buchholtz, 2014).
1.2 Assessing the objectives of Nestle stakeholders
Nestle group of stakeholders possess varied individuals who have certain aim which they
expect to be fulfilled by the company named as Nestle. The expectation of Nestle stakeholders
from the company is depicted in below: Customers: These are the person who are considered as final users of goods and services
which is being produced by the firm. Here, in return of investing their money upon firm
products they expect best quality of goods and services. The given expectation is being
effectively met by Nestle. Here, corporation uses all type of quality measures with an
aim to enhance the quality of its final goods. Suppliers: They are the person who fulfills raw material related demand of Nestle.
Suppliers of the firm always expects that they get timely payment for their services.
Nestle has met this expectation in an appropriate manner (Cavusgil and et.al., 2014). In
this regard, the firm gives first priority to this aspect such as maintaining the satisfaction
of its supplier. In order to fulfill the given priority firm makes efforts in terms of giving
timely payment to its supplier.
 Employees: Workers always expect that the organization where they are working must
provide them good career opportunity. In addition to this, they also anticipate that the
firm must take appropriate measures for improving necessary skills among its employees.
In this regard, it has been assessed that Nestle organizes varied type of training and
development programs for its employees and it is through this way only enterprise meet
the expectation of its employees (Vanhaudenhuyse and et.al., 2011).
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1.3 Responsibilities of Nestle
Different type of strategies identified that is being employed by Nestle for the purpose to
fulfill its responsibilities in an effective manner. The detailed explanation regarding the same is
depicted in below:
 Nestle has the responsibility to deliver the best quality of goods and services to it's
customers. In order to accomplish the given objective, Nestle organizes varied training
and development programs for its employees. Through this way, enterprise develops
necessary skills among it's employees which leads to them with regard to deliver their
best performance to the firm in an effective manner (Leith, Moldovan and Rossi, 2012).
 The organization has the duty towards country where it is operating its operation. Here,
firm has the responsibility that it must perform the production of its goods in such a
manner which will not cause any negative impact upon the environment of nation. In this
regard, Nestle follows good business practices which enables it to make measures
towards the protecting the environment of country. Furthermore, Nestle has the
environmental policy which ensures that firm carries out the production of its goods and
services as per the set environmental standards.
2.2 Assessing the impact of fiscal and monetary policy on Nestle
The fiscal and monetary policy set by the government causes necessary impact upon the
activities of firm like Nestle. Fiscal policy include the factor like tax rates whereas monetary
policy comprises of tool like interest rate with the help of which government controls the
conditions like inflation and deflation. For example, Nestle has decided to carry out reduction in
the prices of its product. The given objective of firm cannot be met if government of respective
nation has increased the rate of taxation for manufacturing company. This is because, in this
situation Nestle will be forced to charge high prices for its product (Davig and Leeper, 2011).
Thus, as the result the objective as established by Nestle cannot be achieved.
Besides this, any kind of social welfare initiative taken by Nestle will leads to cause
positive impact upon the company. This is because, the given type of effort will showcase that
the firm has concern towards the member of society. As the result of it positive brand image will
be created in the mind of buyers. Through this way, Nestle can achieve benefits in the form of
increased profits and sales.
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2.3 Assessing the impact of competition policy and regulatory mechanism on Nestle
The competition policy and regulatory mechanism have its affect on the activities of
Nestle. The competition policy of UK states that the monopoly power of company must be
prevented. In addition to this, the given policy also entails that government must make efforts in
terms of protecting the interest of buyers from the ineffective practices as being carried out by
firms. For example, Nestle has the objective to create monopoly in UK market. Then in this
condition the given aim cannot be met by it (Afonso and Sousa, 2012). Thus, it can be said that
the presence of such type of policy will leads to impact the aim and objectives as being
formulated by the organization.
Furthermore, the rules and regulations framed by the government helps in streamlining
the production process as being followed by Nestle. For example, government of UK has set a
quality rule for food and beverage company. Here, by following the rules of UK government
Nestle can produce high quality of goods and services. This will leads to the organization in
terms of increase profits and sales.
3.1 Determining the pricing and output decisions on the basis of market structure
Market structure of the nation helps in determining the pricing and output decisions of
company like Nestle. In this regard, there are different type of market structure identified in
which varied type of pricing and output decisions needs to be taken by corporations. Oligopoly: This structure has very few seller and here the decision taken by one seller
will leads to affect the activity of other (Oligopoly, 2015). Here, prices are set by Nestle
on the basis of its competitors. Perfect competition: It is highly competitive market structure which possess large
number of buyers and sellers with regard to the particular goods and services. In order to
work in the given type of market structure, Nestle has to adopt competitive pricing
strategy.
 Monopoly: It is the situation in which single company sells unique product in market.
Thus, in this type of market structure firm like Nestle are free to set any prices for the
products which is being produced by them (Adam and Billi, 2014).
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3.2 Nestle responses to the market forces
The market forces such as demand and supply helps in shaping the responses of the firm
like Nestle. For example, the demands of Nestle products increases in UK market. However, in
order to meet the given demand organization do not possess sufficient supply of raw material.
Thus, with an aim to deal with the given type of situation manager of cited firm has to give
response in the form of increasing the production of demanded good. However, its reverse action
will be taken by the manager of Nestle when the products which is being produced by it is not
demanded by the customers (Harrison and van der Laan Smith, 2015). Here, in this condition
organization will have to put control over product production type of activity. Thus, it can be
said that market forces helps in shaping the responses of the corporation.
3.3 Discussing how cultural and business environment shapes the behavior of Nestle
The business and cultural environment of the country direct the behavior of organization.
For example, the country where Nestle is operating its operation are using all the modern
marketing means with an aim to spread the information about the produced product. Then in
order to function in the given type of business environment Nestle has to adopt the given type of
tactic. This is because, lack of adoption by firm will leads to cause direct impact upon the profits.
Thus, it can be said that business-environment shapes the behavior of company. Likewise,
culture shows the value and belief of the citizens. For instance, in some culture people have
belief that eating dark chocolates is more beneficial that that of other. Thus, while working in the
given type of culture Nestle has to considered the given aspect (Merrilees, Miller and Herington,
2012). This is because, lack of consideration regarding the same will leads to hamper the profit
of corporation in a negative way. Besides this, there are two competitive strategies identified
that is being employed by Nestle in order to gain the competitive advantage.
 Using quality measures with an aim to carry out the production of high quality goods and
services.
 Performing changes in the product as per the reviews which is being given by it buyers.
4.1 Evaluating the significance of international trade
Number of benefits can be gained by Nestle establishing its operation in the international
market. Attracting the large number of buyers towards product can be considered as one of such
type of benefit. By starting operation in global market Nestle can develop new base of its
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customers. Thus, it is by complying with the given type of activity only Nestle can gain benefit
in the form of increased profits and sales (Crucini, Kose and Otrok, 2011).
Furthermore, economic integration has its significance for the company. Economic
integration is the process of eliminating all tariff and non tariff barriers for the firm. This type of
integration opens several opportunities for firms like Nestle. It also allows them with regard to
freely open their operation in the international market.
4.2 Impact of global factor
The operation of Nestle is impacted through different type of global factors. The detailed
description regarding the same is depicted in below: Social factor: Change in the tastes and preferences of buyers possess necessary impact
upon the operation of company. For example, by conducting research in UK market it has
been assessed by the manager of Nestle that majority of buyers are demanding for such
type of chocolates which possess some healthy element. Then in this situation firm will
have to fulfill the given need. This is because, if not fulfilled then direct impact can be
seen upon the profits of organization (Rugman, Verbeke and Nguyen, 2011).
 Political factor:The strategic decision that is being taken by Nestle is impacted through
this factor. For example, Nestle has decided to reduce prices of its product. The given
objective cannot be fulfilled by it, if political government of nation increases the rate of
taxes.
4.3 Implications of the company entering into EMU
The European union frames varied rules and regulations which needs to be followed by
the companies that operates their operation under given region. EU has the regulation or
standards for the protection of environment. This regulation states that firm must consider all the
environmental practices while carrying out the production of goods and services. These all thing
is being effectively abide by Nestle. In this regard, it is assessed that firm has the strict
environmental policy which is followed by it while carrying out the production of goods.
CONCLUSION
From the given report, it can be concluded that for the manager it is necessary that it must
gather thorough information regarding the factors that are prevailing in external environment of
nation. This is because, by complying with the given type of practices an effective decision can
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be taken by manager. In addition to this, it is important for the enterprises to make significant
efforts in terms of maintaining the satisfaction of its stakeholder in an effective manner. This
objective can be met by organization by assessing needs and demands of its stakeholders.
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Perry, G., Serven, L. and Suescun, R., 2008. Fiscal Policy, Stabilization, and Growth: Prudence
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