Analysis of Nestle's Business Environment and Strategies

This report provides a comprehensive analysis of Nestle's business environment, examining its organizational purposes, stakeholder objectives, and operational strategies. It delves into the different types of organizations, including private, non-profit, voluntary, and commonwealth organizations, and how Nestle interacts with each. The report assesses Nestle's approach to meeting the objectives of its various stakeholders, such as employees, customers, government, vendors, and shareholders. Furthermore, it explores Nestle's responsibilities and the strategies employed to fulfill them, particularly in relation to product quality, employee satisfaction, and operational efficiency. The report also investigates the national environment in which Nestle operates, analyzing economic systems, fiscal and monetary policies, competition policies, and market forces. Finally, it assesses the significance of global factors, including international trade and the impact of the European Union's policies on Nestle's business activities.

Table of Contents
INTRODUCTION...........................................................................................................................................2
UNDERSTAND THE ORGANIZATIONAL PURPOSES OF THE BUSINESS..........................................................2
Identify the purposes of different types of organizations........................................................................2
Describe the extent to which an organization meets the objectives of different stakeholders...............3
Explain the responsibilities of an organization and strategies employed to meet them.........................4
UNDERSTAND THE NATURE OF THE NATIONAL ENVIRONMENT IN WHICH BUSINESSES OPERATE.............5
Explain how economic systems attempt to allocate resources effectively..............................................5
Assess the impact of fiscal and monetary policy on business organizations and their activities.............5
Evaluate the impact of competition policy and other regulatory mechanism on the activities of a
selected organizations.............................................................................................................................6
UNDERSTAND THE BEHAVIOR OF ORGANIZATIONS IN THEIR MARKET ENVIRONMENT.............................7
Explain how market structure determines the pricing and output decisions of businesses....................7
Illustrate the way in which market forces shape organizational responses using a range of examples. .7

Judge how the business and cultural environments shape the behavior of a selected organizations.....8
BE ABLE TO ASSESS THE SIGNIFICANCE OF THE GLOBAL FACTORS THAT SHAPE NATIONAL BUSINESS
ACTIVITIES....................................................................................................................................................9
Discuss the significance of international trade to UK business organizations..........................................9
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Analyze the impact of a global factors on UK business organizations......................................................9
Evaluate the impact of policies of the European Union on UK business organizations.........................10
CONCLUSIONS...........................................................................................................................................10
...................................................................................................................................................................12
INTRODUCTION
The best explanation of business environment is sum of internal and external factors
because these factors can potentially affect any business organization beside its size and area of
operation. Though these factors impact the overall business more negatively rather looking for
positive benefit but still there are no option left for these business house instead to deal with the
same. This assignment explains the business environment and its effect with help of taking a case
study of Nestle, a packaged food product company.
UNDERSTAND THE ORGANIZATIONAL PURPOSES OF THE
BUSINESS
Identify the purposes of different types of organizations
The mission and vision statement of company is to develop the strong business strategy
and it further look to provide nutritional value to its consumers. The main purpose of Nestle is
provide best quality of goods and services to their targeted audience and try earn best profit
margin. The main purpose of private organization is sell their goods and services in international
market try earn more profit margin. These companies are run by the individual person not by the
government or there is no interference of legal statutory bodies. They needs to promote their
goods and services in international market in order to introduce them among people ans try ton
increase sale as well. The company has strong research and development department which
continuously work in favor to increase the nutritional aspect of different food product offered by
company. (Aziz & Fady, 2013), There are different type of organizations and each have its
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different purpose to fulfill. There are majorly four type of organizations which are run by people
or group of people but all have different method of earning and the purpose of business. The
explanation of type of organizations have been explained below:
Normal Business Organization – The normal business organization either provides
goods or services to people and in lieu of those services and goods, the organization demands
money in return from its customer which is recorded as revenue of business. The main purpose
of these types of organization is attract more and more customers and try to earn large amount of
profits as well. They have to use effective methods and approaches in order to increase their
earning and market presence as well. Through which they want to spared their business
international market and attract large number of people as well. The purpose of such business
organization is purely profit earning. These business organizations hire people to work for them,
who also demands money as salary.
Non - Profit Organization – Non – profit organization are those organizations such as
universities, hospitals which are operating to help people rather than focusing on profitability.
Non profit organizations are incorporated for the purpose of social welfare. The main aims and
objectives of these companies are providing best quality services to people at cheaper rate in
order to improve their standard of living. Though, these organizations also take some amount as
fees from people availing its services because it must pay basic salary to people working for
them and meet other managing expenses.
Voluntary Organizations – Mutual organizations are clubs, trade unions which a person
joins willingly to get some advantage and here the person has to pay membership fees to avail
the benefit. The aim of these is completing their goals and objectives and provide best customer
services to people. They needs to opted various types of methods and plans and try to impliment
them in order to meet their goals and objectives.
Common Wealth Organization – Common wealth organizations are those organizations,
which are basically run by government to help common public. These organizations do not
charge any money from public. These organizations are police, fire services etc.
The different type of organization with which Nestle deal are given below. Suppliers: Suppliers are the one of the main entity with which Nestle deal. Under this
Nestle give orders to suppliers and remain in contact with them. According to change in
situation different quantity of raw material are purchased from the suppliers.
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 Government departments: Government department are the other organization with which
business firm deal. Under this with government department firm enter in to negotiation in
respect to obtaining permission. Thus, it is another organization with which firm deal.
 Wholesalers: These are the organizations that purchase items from Nestle. Mentioned
firm remain in contact with the wholesalers and receive order from them on regular basis.
According to received order product is supplied to relevant entity on time.
Describe the extent to which an organization meets the objectives of different
stakeholders
Nestle takes care of its stakeholders in different ways and there are below mentioned
supports been provided by stakeholders:
Employee – The business organizations need to motivate their employees in order to
make them work effectively and in this manner, Nestle provides various training and perks to its
employees in order to motivate them. The company also provides appraisals and increments time
to time to bring employee satisfaction. (Hills, 2008) Employees are helpful for companies to
meet corporate goals and objectives. Workers have to provide their collective efforts to the
company in order to improve their performance of company.
Customers – The customer buys product of any particular organization expecting that
product would meet his requirement and in the same way, Nestle provides value for customer’s
money. The company make sure that it provides nutritious and good quality food product to
customers and in order to improve customer’s satisfaction, the company organize regular
customer meet. If customers purchase large number of goods this can increase the sale of
company and they are able to increase profit margin as well.
Government – Nestle follow the required rules and regulations of particular country
where it operates and pay required taxes as well in order to determine the growth of society.
Nestle make sure that, it even provides the corporate social responsibility. (Hills, 2008)
Government should support the fair trading which is beneficial for companies. Also government
framed various types of rules and regulation which have to fulfill by the companies and try to
perform well in the market.
Vendors – The vendors supplying raw materials to business organizations and quality of
raw material also add value to final product produced by business house. Nestle maintains
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healthy relationship with its vendors making timely payment and providing required services
demanded by vendors. The services of vendors would result into better productivity too.
Shareholders – Shareholders are the major stakeholders who not only invests in company
but also helps in building the reputation of company. Nestle understands the services of its
shareholders because of which the company provides regular dividends, profits and bonuses to
its shareholders.
Explain the responsibilities of an organization and strategies employed to meet them
The management of business house need to use various business strategies and process in
order to achieve the profitability of the company. In the same manner, Nestle also make sure that
it could meet its desired responsibility towards its employees because employees are the major
part of organizations which have ability to design the growth and reputation of company and also
have ability to vanish the company from industry. (Aziz & Fady, 2013) The company must keep
its employees satisfied in order to gain competitive advantage over its other industry
counterparts. The responsibility of organization is providing goods quality of products and
services to their customers and also offer better working environment to their employees.
Through which companies are able to improve their performance and try to expand their in
international market in order to earn large amount of profit. The top management and human
resource department of Nestle collectively designed various strategies for human resources
which have been explained below:
 People buy product of any organization because of quality and in order to meet the
requirement of customer, Nestle is investing huge amount in research and development
process of its food products along with maintaining its safety standard.
 The responsibility of business organization is to provide the products required by
customer on timely basis because of which the company make sure that, there should be
efficiency of operation because of which regular flow of products in the market is
possible. (Aziz & Fady, 2013)
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UNDERSTAND THE NATURE OF THE NATIONAL
ENVIRONMENT IN WHICH BUSINESSES OPERATE
Explain how economic systems attempt to allocate resources effectively
In any economic system, the resources are allocated as per the system of country and
basically there are three system which are followed globally such as free market economy,
command economy and mixed economy. Economic system can be defined as a structure through
which a country can employ better strategies over various economical structures so that these
structures can earn revenue for nation and its residents.
Mixed Economy – In mixed economy, there are separate private and public sector which
are operating in different business segments. In such nation, the resources are allocated to
different organization or individual on basis of their viability in the market and also their
proximity to government in order to provide services to general public. (Hill, 2008). Mixed
Economy can be defined as the mixture of more than one economy. It consists the mixture of
marketing strategies and planning. Both the public and private ownership are there in mixed
economy. Some Asian countries like India is the example of nation which is having mixed
economy. It can be further considered as market economies which is having strong regulatory
oversight.
Free market Economy – Free market economy is such economy where system work on
basis of capitalism. There is no such control of government on general public whereas the
resources are allocated on basis of exchange between producers and customers. In free market
economy, the market is self-direct and as the allocation of resources. (Hill, 2008). It is all about
the voluntary exchanges which takes place in a business environment. It can be characterized as
the spontaneous and suburbanite economic structure. There are lots of benefits which an
organization which is running their in free market economy as they can implement their project
plans related with the benefit of it. Further they can carry their business operations in more
liberal way but it doesn't support unethical business operations as it generally means that owners,
managers and leaders can implement much effective plannings over the organizational structure
through which its economic and other financial background can be strengthened.
Command Economy – Command economy is something where the actions of
organizations and reaction of customers are monitored and controlled by government. The
government take charge of distribution and allocation of scarce resources among people on basis
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the availability (Hill, 2008). In command economy government have the control over the system
in which any entity can carry out its processes. In other words, in this type of economy
government on national and local level possess the control over the decision that what an entity
can produce through carrying out its organizational functions. In this type of economy
government is accountable for each and every activities which is carried out by industries
running over there.
Assess the impact of fiscal and monetary policy on business organizations and their
activities.
(Hills, 2008), The economy of any nation depends upon the fiscal and monetary policy
governed by its government because fiscal and monetary policy controls various financial aspect
of country. These fiscal and monetary policy also affects the business organizations operating in
said country.
The monetary policy affects the money supply of nation and in this scenario, the
favorable monetary policy would benefit the business house positively as the company would
able to get the business loans at lower interest rates and also need to pay lesser amount as interest
whereas it becomes difficult for organization to get easy working capital when the monetary
policy of any nation is unfavorable. Monetary policy also controls the inflation and deflation of
country which has also an impact on operation of business organizations.
Fiscal policy is related to taxation policy and government expenditure matter which has
also a positive impact on operation of particular company. The government provides various
subsidies on certain kind of product offered by companies such as in India, the government of
India provides subsidy to those people buying Reva car which is hybrid car using electricity as
fuel, in the same way the business house gets affected because of taxation process. The company
will pay lesser tax when the taxation policy would be favorable but has to pay higher tax and also
in different forms when there would be improper taxation policy.
Evaluate the impact of competition policy and other regulatory mechanism on the
activities of a selected organizations
The business house operating in any industry would have to definitely deal with
competition in market where the competitor may bring either better or poorer product as
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compared to company. For example, like Nestle there are various other companies such as
Britannia etc. which are also into packaged food product industry. (Aziz & Fady, 2013)
In various circumstances, there are possibility of unhealthy of competition in market
where one competitor use poor practices to hurdle the customer base or market structure of
another business house. There are various situations been noted earlier when one competitor
either maligns the image of other competitor, or blocks the vendor providing raw material to
other competitor or even stocks the entire production in its own warehouse to block the supply of
goods in market and that will lead to customer dissatisfaction. (Hills, 2008),
In UK, there are certain business laws which controls the poor business activity in
industry such as competition act 1980, where the law inculcate that there should be healthy and
proper competition in the market where each business house would get equal opportunity to rise
and another law is fair trade act 1973 which discusses the situation of mergers and acquisitions
and also the conditions applicable in both the situation. In UK, there are also the law exists
regarding trade practices, goods sales and service act along with goods resale act showing
various restriction and ben. There are four European Union Policies that needs to be used in
improving the overall business nature of entity is given as below:
 Enterprise free trading- This legislation is related with the improvement of overall
business entity in enhancing its overall performance.
 Free movement of goods- Custom duties abolished by the European Union in which
preferences is given to the businesses exists in the external market.
 Free movement of capital- The officials of European Union will provide capital o the
business enterprise in order to accomplish the objectives.
 Anti-competition- Exploitation of customers will be protected by imposing this
legislation on the external business offered to both buyer and seller.
UNDERSTAND THE BEHAVIOR OF ORGANIZATIONS IN
THEIR MARKET ENVIRONMENT
Explain how market structure determines the pricing and output decisions of
businesses
The industry operates on market structure depending upon the kind and category of
product line and the equilibrium of market depends upon the pricing and output decision. Even in
case of Nestle, where the company produces packaged and nutritious food and there are also
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other business organization exists in industry which also sells similar kind of product line. The
pricing and output of any industry depends upon the interaction between buyers and sellers.
Organizational behavior is the way to interact with the group of people. It is the study to attempt
more efficient business which is able to attract large number of people and increase large number
of customers as well.
There are basically four types of market scenario exists in normal market structure, where
first structure is perfect competition where particular organization produces and sells products
which is very similar to product manufactured by other competitors. In perfect market condition,
the price of products offered by all the organizations in industry use to be similar unless there is
any different circumstances. Second type of market structure is monopolistic competition where
there are large number of firms in this market structure but less than perfect competition. The
monopolistic firms also produce similar products but are differentiated because of brand name.
Third type of market structure is oligopoly where there are very few firms exists in market and
those firms themselves decides pricing and output decisions and lastly fourth market structure is
monopoly where there is only single seller exists in market and the firm can solely decide the
pricing and output decision. (Aziz & Fady, 2013)
Illustrate the way in which market forces shape organizational responses using a
range of examples
The market forces actually decide the shape and size of organization and there are
basically two factors such as internal stakeholders and external stakeholders. Internal
stakeholders refers to employees, management etc. whereas external stakeholders refers to
vendors, government, customers, shareholders, other agencies etc.
Both stakeholders actually affects the demand and supply pattern of company. In case,
any one stakeholder influences the company’s operation then it would directly result into fall in
sales and profitability of company. While discussing about internal stakeholders, in case the
employees are dissatisfied then they can affect the operation of company and may not produce
desired output and same could be the case with management too. External stakeholders impact
the output and sales of company even more severely and also the external stakeholders are
beyond the control of company.
The dissatisfied customers would not buy the products of company and there would also
be possibility of negative publicity in market and at the same manner, the dissatisfied vendor
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may affect the supply chain process of company which can severely impact the production of
company. (Bhalla, 2009) The government policies also can affect the business positively as well
as negatively. When government announces positive financing decision for industries then that
would result into better and less costly financing option whereas the negative aspect of
government can hamper the profitability of organization by levying extra taxes and binding rules
on operation.
Judge how the business and cultural environments shape the behavior of a selected
organizations
The human resource of any organization actually designs the culture of that organization
and the culture of organization depicts the true picture of its quality and reliability in market. In
simple terms, the human resource of Nestle is liable to give shape to cultural environment of
company and same is also liable to develop its reputation in market too. It is also true that, a
company operating in more than one nation also differs in its cultural aspect because it may be
possible that, people of one nation is different as compared to another in terms of their beliefs,
values and attitude. Business and cultural environment both are helpful for companies to improve
their work. These factors are able to provide good environment in companies in which
employees are employees are easily complete their set of target and try to meet objectives and
goals.
But overall, the business culture of Nestle is to take its stakeholders in every walk of its
life even during hard times too. The company has one of the exercise which is done on regular
basis where the companies invites its stakeholders to take their suggestions and make
improvement in its regular business operations. (Bhalla, 2009)
The company invites representative of its employees who are the major force in
designing the company’s culture and expects them to impart solutions to motivate employees at
regular intervals and also to impart necessary training and development for their personal growth
which would also help be beneficial for growth of organization too. Nestle believes that a
satisfied employee would satisfy its customers too and the customers would give profitability
and sustainability to company.
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BE ABLE TO ASSESS THE SIGNIFICANCE OF THE GLOBAL
FACTORS THAT SHAPE NATIONAL BUSINESS
ACTIVITIES
Discuss the significance of international trade to UK business organizations
United Kingdom is strategically located where it acts as center point of world and its well -
known airport Heathrow is also undergoing an expansion activity to cater more flights and
people to UK. Global factors like political, legal, social and environmental are able to improve
the performance of company and through which they smoothly survive in the international
market. These factors can effectively provide proper shape to them. Though, still being located
very strategically, UK has not been considered as business country and neither it’s any of the
organization being taken as seriously in international business. But, now a day, its ongoing
government is planning to reap its competitiveness in business again and trying to establish itself
as financial economy at global level. In case, the business organizations of UK come into open
market and starts competing with other global business houses then it would be beneficial for
UK business:
 The business organization of UK would be able to get more market which is currently
dependent upon its domestic market only.
 The business house would be able to generate new market, more profitability and also be
able to serve new and fresh customer segment.
 The business house while competing with other global giant business house would be
able to gain confidence in the market and be able to get new and advanced technical
know-how.
Though, there are various other significance attached with business organization of UK when
it will actually come out from its closed economy.
Analyze the impact of a global factors on UK business organizations
When any business house gets global then it has to deal with various problems and in case of
UK, there are various benefits are being attached with same. The factors affecting UK business
organizations are as below: Political factors – UK is a kind of closed economy where external business organizations
have to make lot of effort to survive and the major benefits are being given to UK
organizations only. Unstable political factors are having impact on the UK business
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