Detailed Business Environment Analysis of Nestle Corporation: A Report

This report provides a comprehensive analysis of Nestle's business environment, examining various aspects that impact the company's operations and success. It begins with an introduction to the business environment and its significance, followed by an in-depth look at Nestle's organizational structure, including its size, form, and stakeholder relationships. The report explores the different types of stakeholders, such as internal, external, and connected stakeholders, and their roles in the company's development. It also delves into Nestle's responsibilities, including environmental, social, and management responsibilities. Furthermore, the report analyzes the economic factors influencing Nestle, such as resource allocation, fiscal and monetary policies, and competition. It examines different market structures, like monopolies, oligopolies, and monopolistic competition, and their impact on Nestle's pricing decisions. The report also discusses the significance of market forces, including supply and demand, and how Nestle responds to these forces. Finally, the report assesses the impact of globalization on Nestle's operations and activities.

BUSINESS
ENVIRONMENT

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1................................................................................................................................................3
1.2................................................................................................................................................4
1.3................................................................................................................................................4
TASK 2............................................................................................................................................5
2.1................................................................................................................................................5
2.2................................................................................................................................................6
2.3................................................................................................................................................6
TASK 3............................................................................................................................................7
3.1................................................................................................................................................7
3.2................................................................................................................................................8
3.3................................................................................................................................................8
TASK 4............................................................................................................................................9
4.1................................................................................................................................................9
4.2..............................................................................................................................................10
4.3..............................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment refers to all those factors which have great impact on the
operations of the business as well as on company as a whole. To become an efficient
organization, it is important for them to ensure that business environment is monitored at
uniform intervals. Further, the factors involved are suppliers, customers, industrial trend,
technology and several others (Williams, 2010). Moreover, these factors affects at a higher
extent on the smooth running of the business. Among the top food industry, Nestle is an efficient
company who is serving many products with high quality. In this report analysis is done to
determine the purpose of the organization efficiently. Further, the nature of environment in
which the company is dealing with is determined. In addition to this, the behavior of the business
in the market is stated in an efficient manner. Lastly, the significance of global factors are
assessed which help in shaping the activities of the organization.
TASK 1
1.1
Nestle has created a business environment which help to achieve the purpose in the
market. Under this, the company is classified mainly in three categories size, form and shape.
Further, to achieve the competitive and successful environment, Nestle has efficiently organized
its resources. Moreover, the company is formulated in order to perform the business activities in
an efficient manner (Harrison, 2013). In addition to this, an organization is formed with the aim
to fulfill a specified purpose. The following are different organizations in the market:
According to the form-
 Partnership: It is a legal form of the business. In this two or more people work together
to achieve the common goals. Further, the each person shares limited liability and share
the in profit equally. They can choose the form of business, this include either to operate
in production of goods or rendering services (Needle, 2010).
 Companies and corporation: Under this, there are mainly two categories private and
public limited. Former one is established by small number of people who work to achieve
the common objective. On the other hand public limited is a legal form of organization
which are owned and operated by number of investors.
According to size-

 Large business organization: These companies are characterized with the ability to
operate in more than one country. They employee large numbers of workers to perform
the activities in the firm. Nestle is included in this type of organization. They are having
number of branches in different countries which help to earn more and more profit
(Farndale, Scullion and Sparrow, 2010).
1.2
Stakeholders are the individuals or agencies which are related towards the activity of the
organization. Mainly there are three main types of stakeholders internal, external and connected.
Further the internal ones are managers and employees. Nestle has various connected stakeholders
which includes customers, financiers, suppliers and shareholders. The external shareholders are
government and community which are indirectly connected with the organization (Aula, 2010).
All the above stated stakeholders play an important role in the development and expansion of the
business. Moreover, Nestle has provided with adequate working environment and good payment
to the workers. In addition to this, Nestle also make sure that the external stakeholder by
ensuring timely tax payment to the government. Further, the company must practice several
methods which will assist in meeting the objectives of every stakeholder. Nestle is a part of
society so they must maintain healthy and good relation between the community and other
organizations. It is the foremost duty of the company to provide jobs to the society and also limit
pollution to make green environment. Further, the firm should also give the maximum
satisfaction to the customers by providing quality products at adequate prices. Nestle also adopts
ethical practices in the organization which help in improving the social responsibility. Moreover
they also enforce various principles, rules, regulations and policies which assist the stakeholders
to fulfill their objectives (Zeng, Li and Duan, 2012).
1.3
Responsibility refers to the commitment done by the organization to undertake the
activities to control mechanism and manage the internal management. In Nestle they aim to
achieve the community as well as the environment welfare. Further the following responsibilities
are practiced in the company:
 Environmental responsibilities- In Nestle, the most important aspect considered are the
environmental effect. The company uses eco friendly raw materials and proper ways of
disposing the harmful substances which help to make the environment green (Meiners,

Ringle and Edwards, 2014). This help to reduce the pollution and promote ways of saving
from global warming. Further, they also use proper recycling methods to reduce pollution
cause by it.
 Social responsibility- This refers to the duties which are defined for the organization for
benefitting the people and the environment. It is important to practice social
responsibility as it will assist the company to develop good relationship with the society
and create greater brand image. Nestle must make sure that customers are served with
best quality products at adequate price. This will also help them to attract more and more
people which directly increase the profit of the firm.
 Management responsibilities- Nestle has to satisfy all the stakeholders like customers,
employees, local community and the government. The firm fulfills the responsibility to
the staff members by creating retirement pension plans and recruitment policies. Further,
the another important responsibility of company is towards customers (Reinhardt and
Stavins, 2010). They must be provided with high quality products at lower prices.
Moreover, they should also fulfill the responsibility to the suppliers by making payments
at proper time.
TASK 2
2.1
There are several types of resources which assist in contributing towards the economic
growth of the company as well as country. Economic system mainly includes private and public,
transitional and finance economies. Further, these resources include workers, finance, suppliers
and customers. As per the economic system, Nestle must practice many ways to create effective
allocation of resources. Further it can be done by ensuring the availability of all the resources at
proper time and at adequate amount. The organization must recruit qualified and skilled
workforce which will help the company to grow in the industry (Beaumont, WHITAKER and
PEDERSEN, 2013). They must be given proper training at regular intervals so as to increase the
efficiency of performing the task. Nestle must make the objectives of the business clear and must
communicate with other members clearly so that the goals can be achieved in an efficient
manner. The company should survey to configure the customer’s choices and develop the
products according to their requirements. This will help the firm to attract more people. Further,
the organization must find the need for the finance and acquire it from the best institution or

bank. Moreover, the money should be utilized efficiently so as to get best results from it. The
company should also make provisions for risk awareness so that it will help the company at the
time of any mishappening occurred at the workplace.
2.2
Business organization is highly affected positively and negatively by the fiscal and
monetary policies. Fiscal policy refers to the government policies which mainly include the
taxation and revenues, sources of incomes and the expenditures (Bryman and Bell, 2015). Every
country has its own fiscal policy. These policies sometimes favor Nestle business or at times it
can eradicate them in the expansion of their business. Further, the trade areas are established to
stable the fiscal policy which will help in determining the business activities mobility and
success. If the state increases with its revenue, the economy of the country decreases with the
fiscal policy as it highly affects the morale of the entrepreneurs and investors. Further, increasing
with the custom duty of shipped cargos leads to less shipping the ports which results in the low
income in the economy (What is the difference between monetary policy and fiscal policy, and
how are they related?.2015).
On the other hand, monetary policy encourages the business in one or the other way.
Moreover, the usage of different currencies has made the trading very tough to be conducted.
Thus, it has resulted in inflation and loss in the value of other country’s currency. Monetary
policy refers to the enforcement used by the government to influence the circulation of the
money in the country by altering the rate of interest (Hair, 2015). It affects the economy which
dependent to the exchange rates, bank lending and the money supplied in the market.
2.3
Competition is an important indicator which helps the companies to measure the success
of the business under the wide economic growing region. The policies of the competition
includes proper strategies which assist in meeting the customer’s increasing needs. Further, it
helps in configuring the strength of the company in terms of profit maximization (Althonayan
and Sharif, 2010). Nestle first analyzes the competition and then serve their items in the market.
Further, this has reduced the power of monopoly in the market which means there are many
companies which are serving the same product in different brands. According to competition
policy of UK no firm can form a cartel on its land to give stiff competition to its competitor firm.
If any firm does so then strict action will be taken against the culprit firm by the regulatory

authority. Moreover, there is a mechanism such as taxation which highly affects the company’s
ability to produce products at bulk due to high taxation. Thus, the competition policies and
mechanism highly affects the activities of Nestle. Further, The competition policy must ensure
the following elements in the organization:
 Innovative technologies which help the company to attain the dynamic efficiency within
different markets.
 It should promote effective price competition between the suppliers (Balmer, 2012).
 They should also enhance the interest of the customers through increased choices and
providing the products at lower prices.
TASK 3
3.1
There are different types of market structure and in the market. Further every
organization needs to make different strategies so that they achieve the competitive edge over
their competitors. Different market structures are being stated which highly affects the pricing
decisions taken in Nestle:
 Monopoly – In this structure, there is only one firm in the market who is a seller of the
particular product and there are numerous buyers which are ready for buying the product.
There is single firm in the market and no competitor and this is the main reason due to
which firm operating in the market structure has a very high bargaining power (Beck,
Campbell and Shrives, 2010). As they are the only seller in the market they charge high
prices for the products. Hence, in this market structure price and outputs decisions are
taken by the firm at its own discretion.
 Oligopoly- In this market structure there are few firms and number of buyers. Thus
because of this there is high competition among the firms which are in the same industry.
Thus, firms take their price and output related decisions by looking at their competitor
price and output strategy.
 Monopolistic- In this market structure there is a slight variation in the product offered by
the firms. British airways come in this category because there is no big difference
between service offered by the mentioned firm and its competitors. However, Nestle in
order to remain in competition take decisions by evaluating competitor pricing and output
level.

3.2
Market forces helps in determining the relationship between supply and demand in the
market. Further, the reaction of the company to market forces has a great impact on the
company’s image and profit (Campbell, Edga and Stonehouse, 2011). In terms of adequate
supply and demand Nestle takes several measures to make effective market research and
analyzes it so that the supplied products meet the needs of the customers. Further, the following
market forces highly affects Nestle are stated below:
 Demand- It highly affects organization response of Nestle as these forces are considered
for developing the different types of strategies of the business. With change in demand
firm needs to change its strategy. If firm will not respond to the change in the market
changes than the company will not achieve the competitive edge in the market. If demand
for the services increase in the market then firm by framing suitable tactics can elevate its
market share in highly competitive industry (Carrier, 2010).
 People- It becomes important for the company to consider the needs of the individuals for
determining the market force and success of Nestle which is to depends on its success to
meet expectations of the people in proper way. Further, if they fail to meet the
requirements of the customers than other competitors will take the advantage of attracting
the people towards them. Thus this will decrease the market share of Nestle in the
industry.
3.3
The cultural environment has a impact on the behavior of the organization. Thus,
following are the main components of the business environment:
 Economic environment- It has a high importance for Nestle as it directly affects the
income as well savings of the people in the country. If it comes out that the economic
condition of the country is not good than it will reduce in the demand for the products.
Thus, the company must change its strategies according to the economic situation in the
country (Zeng, Li and Duan, 2012).
 Social environment- Product of Nestle is not negatively affecting people social beliefs
and customs and due to this reason firm does not having any threat from this component
of business environment.

 Political environment- The company has to make sure the political environment of the
country as it will help to make the policies and rules to be followed in the organization.
 Legal environment – There are strict rules and regulations in UK and it needs to follow
same in proper way. Failure to do may invite penalty from regulatory authority. Hence, it
is necessary for Nestle to make sure that company is following all the rules and
regulations in a proper manner.
 Technological environment – Nestle is having several competitors in the market, thus
keeping this in mind it must adopt the latest technology in the company. This will help to
produce greater quality products at lower cost
(Reinhardt and Stavins, 2010). This will also help to enhance their sales and earn more
profit. Thus, it is necessary for Nestle to make sure that with passage of time it is
upgrading its technology. If it does not do so then after few year its market share will
decline in the industry.
TASK 4
4.1
International trade refers to the exchange of goods and services within different countries
are known as international trade. Nestle being the leading food industry distribute their products
in many countries. The following are the benefits of international trade for the UK business
organizations are:
 Broad horizons and market- From the research done it has been stated that UK
companies produces goods only for the domestic market than only it can be said that they
are been compromising with their potential limit. However, they can produce in larger
quantity and can distribute to different countries (Needle, 2010). As by trading within
the country will lead to steady growth but if they do it with other countries they will gain
international reputation in the market.
 Production cost- The supply of goods to different countries helps in lowering the
production cost of products. As producing in bulk aids in decreasing the per item cost.
This help the company to earn more profit and also enhance in number of sales.
 Materials- To produce goods UK is highly dependent on the different countries for the
raw materials. It mainly includes the cotton cloth etc which are imported from different
countries to produce the finished products (Farndale, Scullion and Sparrow, 2010).

Further, international trade gives the opportunity for exchanging the goods otherwise
there will be limited choices in the domestic market.
4.2
The following elements help in determining the impact of global factors on UK business
organization:
 Market opportunity- UK has gained good reputation for the latest technology and the
development of the country. Further, the global factor provide with the opportunity to
UK business organization to spread their business all over the world.
 Global growth- This factor help in expanding the business which help in developing the
GDP and brand image of the country (Meiners, Ringleb and Edwards, 2014).
World trade organization: It deals with the global rules of trade between different
nations. It core function is to ensure the trade flows are smooth, predictable and free in
terms of trading.
Protectionism: It refers to the economic policy which helps in restraining trade among
the countries through introducing tariffs on imported goods, restrictive quotas and
government policies which are designed to allow fair competition between countries.
 Government impact- It make the rules and regulations associating with the global
factors which will help the UK organization to do trading all over the world.
 Emerging market- The BRIC economies are growing at a rapid speed and in the little
time they will lead in the market (Needle, D., 2010). These countries are developing a
high threat for the UK economy.
4.3
The European Union has achieved the power than before with the policy guidance
provided by the UK business organization. EU has a greater impact on the UK businesses.
Further, they have to follow the rules determined by the EU. Moreover, all the countries have to
follow the law as well as the legislation stated by the EU. Further, it has a great influence on
businesses of UK by spending and taxation law, spending and directive and also providing with
subsidies for supporting the companies. In addition to this, it also help in strengthening the
industry and make them environment friendly. They have been provided with rights that all the
EU countries can trade between themselves without any kind of barrier. If the companies are
having license they can easily import or export their goods to different countries. Moreover, it

assists in promoting the small companies for developing their businesses by establishing policies
such as competition policy which helps in fair treatment to all. Further, it improves the quality
and choice of the customer. National authorities are responsible for monitoring the activities of
the business organizations. Further, the directives are been implemented in the national
legislation effectively.
CONCLUSION
From the above report, it can be concluded that Nestle is a leading brand which
distributes their products all over the world. It has been stated that the firm has to satisfy the
needs of all the stakeholders which includes customers, suppliers, government etc. Further, the
resources must be allocated and utilized in an effective manner so as to get maximum benefit out
of it. Thus UK companies must follow the rules and regulations which are determined by the EU.