Comprehensive Business Environment Analysis: The Nestle Report

This report provides a detailed analysis of Nestle's business environment, examining various aspects such as different types of organizations, Nestle's stakeholder management, and corporate social responsibilities. It explores the impact of economic systems on resource allocation, fiscal and monetary policies, and competition policies. The report further investigates how market structures influence Nestle's pricing and output decisions, and how market forces shape its organizational responses. It also assesses the significance of international trade, the impact of global factors, and the influence of EU policies on Nestle's operations. The analysis covers key topics including resource allocation, economic systems, government policies, market dynamics, and global influences to provide a comprehensive understanding of Nestle's business environment and its strategic responses to external factors.

Business
environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Different types of organization..............................................................................................3
1.2 Nestle meets the objectives of different stakeholders............................................................4
1.3 Corporate social responsibilities of Nestle............................................................................4
Task 2...............................................................................................................................................5
2.1 Economic system attempt to allocate resources which are used by Nestle...........................5
2.2 Impact of fiscal and monetary policy....................................................................................5
2.3 Evaluating the impact of competition policies......................................................................6
Task 3...............................................................................................................................................6
3.1 Market structures determine the pricing and output decisions of Nestle...............................6
3.2 Market forces can shape Nestle organizational responses.....................................................7
3.3 Business and cultural environments......................................................................................7
Task 4...............................................................................................................................................8
4.1 Significance of international trade.........................................................................................8
4.2 Impact of global factors on Nestle.........................................................................................9
4.3 The impact of EU policies on businesses operating in UK...................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
In the modern era, every business enterprise needs to take care of the environment under
which it is carrying out its activities and operations. It can be stated that business practices are
directly affected by any kind of changes in political environment of country or at international
level. Along with this, changes in taste and demand of people in the market also force a company
to make modifications in existing practices, products and services delivered. The present
research report is based on Nestle which is one of leading brands in the world. Furthermore, the
expectation of stakeholders and the way how Nestle is accomplishing its responsibilities towards
stakeholders is highlighted in the report. Apart from this, discussion regarding the impact of
monetary and fiscal policy on activities of Nestle is also mentioned in the present research.
TASK 1
1.1 Different types of organization
In simpler terms organization can be defined as a place where different people place their
efforts towards accomplishment of common objectives and goals. The different type of
organization along with their purpose is explained below as:
 Public sector enterprise – These are the business units which operate with an objective to
provide quality services and products to people in the market. However, it can be argued
that the price policy used by these enterprises is moderate (Lusardi, and Mitchelli,2007).
 Private enterprise- These are the type of businesses whose main purpose behind carrying
out their activities is to earn higher profits and market share. The selected business
enterprise or Nestle falls under the category of private enterprise as it places efforts to
earn more and more profits.
 Non profits organization – These are the organization whose purpose is to ensure growth
and development of people living in society. Here, profit making is not taken into
consideration and these enterprises operate for social cause.
 Partnership firm – It is a kind of business enterprise in which two or more than two
individuals or parties are integrated together with an objective to achieve common goals
and aim. Profit earning is the prime purpose of such business enterprise.
 Sole traders- It is an kind of business enterprise which are being owned and managed by
a single person. Lowering down losses and earning higher profits is the main objective of
these businesses.

In terms of Nestle, it can be stated that the main purpose of selected business enterprise is
to deliver the best quality of food products and services to all its customers. Its mission is to
enhance degree of customer satisfaction (Nestle, 2016).
1.2 Nestle meets the objectives of different stakeholders
Every company has certain external and internal stakeholders which need to be managed
and taken care of in the best possible manner. External stakeholders such as customer’s wants
that the firm should deliver best quality of products and services to them at convenient prices. On
the other hand employees of Nestle want that they should be provided with adequate
opportunities of personal growth and development. The objective of stakeholders such as
shareholders is that adequate profits and return should be provided to them at regular intervals
against the money which they have invested in Nestle (Malhotra and Hinings, 2010).
Government is also considered as a very important stakeholder who needs to be taken care of by
the selected business enterprise. Here, the government of country wants that Nestle should not
indulge in any kind of unfair practices and it should strictly follow all laws, regulations at the
time of conducting its operations. In order to sustain in long run, it is the main responsibility of
cited firm to meet the objectives in the best possible manner (Chaiprasit and Swierczek, 2011).
Here, customers are being provided with quality food product according to their changing
demand. Along with this, the company strictly follows all rules and regulations developed in
different countries. It also provides personal and professional growth opportunities to workers
with the help of process such as training and development.
1.3 Corporate social responsibilities of Nestle
Nestle is considered as one of the largest brand of food in the world and it has wide range
of responsibilities towards society and people living in the same. It can be stated that Nestle is
indulge in carrying out manufacturing of confectionary products and while conducting its
operation, it is required to ensure that its business practices are not affecting environment
negatively. Here, the company needs to take care of air and noise population carried out by its
manufacturing units. Other than this, it is also the key social responsibility of Nestle to make sure
that it does not get indulge into unethical and illegal practices. At the time of carrying out
operations in any of the country, it is the sole responsibility of Nestle to make sure that it comply
with all the laws, regulation, standard at international and nation level. Apart from this, it is also
the key responsibility of Nestle to manage and take care of health and safety of all its workers in

the best possible manner. In order to carry out smooth flow of operations and attain higher
degree of satisfaction among all its stakeholders, it is required by the selected business enterprise
to accomplish its social responsibilities in appropriate manner.
Task 2
2.1 Economic system attempt to allocate resources which are used by Nestle
It can be expressed that every country has its own set of economic system which are
being used for carrying out the task of allocating resources. Here, the focus is laid upon three
major areas which are how to produce, for whom to produce and how much to produce. Each
and every country has limited amount of resources and therefore the most optimum utilization of
those resources is almost essential. Mixed, free market and command are the three major types of
economic system which prevails in the modern era. In mixed economies the process of resources
allocation is defined by integration of both government and businesses whereas in command
economic the power of decision making lies in hands of government (Lusardi, and Mitchelli,
2007).
Apart from this, there is a free market economic system in which businesses in the country
are left free to determine and allocate resources. In a country like UK, where mixed economic
system prevails, Nestle has some authority regarding allocation of resources. Furthermore, the
decisions are being jointly taken by Nestle, private and other public sector businesses. However,
it can be critically argued that at the time of making decision regarding areas such as what to
produce and how to produce, it is required by Nestle to comply with all rules, regulations and
laws existing in UK (Eifert, Gelb and Ramachandran, 2005). Other than this, during the process
of production or manufacturing the selected business enterprise is required to lay emphasis on
factors such as labor force and rate of taxes prevailing in the country. Any kind of misbalance
between demand and supply of labor or human resources results in affecting the overall
operations of Nestle. Along with this, the changing buying behavior of people in the market is
also required to be considered while performing the task of resource allocation.
2.2 Impact of fiscal and monetary policy
The objective behind formulation of business policies and strategies by government is to
manage and maintain appropriate flow of money in an economy. Further, an economy goes to
various ups and downs along with the passage of time and in order to take care of the same, tools
such as fiscal and monetary policies are being taken into consideration. Monetary policy is

usually taken care by central bank of England whereas fiscal policy is managed from
government’s side (How does monetary policy work?, 2016). At the time of using fiscal policy
the government of UK makes changes in rate of taxes applicable in the country. On the other
hand, through monetary policy, changes are being carried out in interest rates to manage flow of
money. In terms of impact it can be stated that monetary and fiscal policies both have positive
and negative impact on activities of Nestle. For example increasing tax rates results in lowering
down the profit margin of firm and this creates obstacles in growth and success (Ekins and Lees,
2008). However, decline in rate of tax help the firm to earn higher profits and carry out more
effective flow of operations. On the other side of this, increasing rate of interest results in
lowering down the demand of Nestle products as people in the market are left with low amount
to spend on products and services.
2.3 Evaluating the impact of competition policies
It has been evaluated that the policies related to competition has affected sales and
operations of Nestle in both the ways. The main purpose behind formulation and implementation
of competition policy and other regulatory mechanism was to ensure that businesses in the
country do not get indulge in any kind of wrong and unfair practices (Chaiprasit and Swierczek,
2011). Nowadays, Nestle has been restricted to market and promote products in a way which
creates monopoly in the market. At the time of conducting its business practices, it is required by
Nestle to strictly adhere to regulations such as Fair Trading Act, Restrictive Trade Practices Act
and Resale Price Act. This clearly indicates the selected business enterprise is always required to
ensure the fact that it is carrying out fair and transparent competition in the marketplace. Apart
from this, Acts such as Competition Act 19987 and Enterprise Act 2002 also force Nestle to have
a watch on its business practices and ensure that a healthy competition is promoted within the
entire marketplace (Doving, 2010).
Task 3
3.1 Market structures determine the pricing and output decisions of Nestle
The price and output decisions of businesses such as Nestle are directly affected by the
kind of market structure in which it is operating. In market such as perfect competition there are
large number of buyers and sellers in the market and this means that businesses cannot regulate
prices as per their need and demand (Potter, Avard and Wilson, 2008). In such type of market,
customers are left with wide range of options and alternatives available and this force firms to

adhere the prices which has been implemented by other market players. On the other side of this,
monopoly is a kind of market structure in which there is only single seller in the market and
buyers are very large in number. Here, price and output decisions entirely lie in the hand of
single seller (Sloman, 2007). Nestle operates in monopolistic market in which there are large
number of sellers but the product they sell are entirely different from each other. Therefore,
Nestle is free to determine the price of products and to take various decisions regarding output.
Furthermore, changes in pricing strategy and output decision do not affect the selected business
enterprise to a great extent. If the firm was operating in market structure such as oligopoly then
the decision regarding price and output would have been taken by the leading players in the
market and this would have directly affected the pricing strategy adopted by Nestle (Thomas,
2007).
3.2 Market forces can shape Nestle organizational responses
Market forces consist of two major elements which are demand, supply and these forces
have direct impact on activities and operations of an organization. In order to sustain in highly
competitive and changing market, it is required by Nestle to take care of forces such as demand
and supply in the best possible manner (Malhotra and Hinings, 2010). In context of demand it
can be asserted that the business practices of Nestle are shaped according to demand of its
products prevailing in the market. For instance in case of low demand in the market, Nestle
needs to invest large amount of resources such as human, finance and technology in order to
carry out more aggressive marketing and create demand among customers. Along with this, low
demand also forces the brand to make certain changes in its prices and products characteristics.
High elasticity of demand means that any kind of changes in prices of Nestle’s products will
directly results in affecting their demand in the market. On the other side of this, market forces
such as supply also affect the selected business enterprise to a great extent (North, 2010. In case
of low supply and high demand the company needs to increase its product prices to maintain
balance between demand and supply.
3.3 Business and cultural environments
In the modern era, carrying out business operations and activities is no longer an easy task as
there is wide range of factors which needs to be taken into consideration (Lee and et. al. 2008).
The impact of business and culture environment of activities of Nestle is mentioned below as:

 Political factors – It is a factor which is associated with the taxes rates and subsidies
provided by government to a business in any country. It can be stated that being an
international brand, it has become very important for Nestle to take care of country’s
political environment. Increase in tax rates and instable political conditions lower down
the profit margin of Nestle (Kew and Stredwick, 2005).
 Economic factor – It can be asserted that situations such as high economic growth help
the firm to earn desired profits and carry out its operations very smoothly. On the other
hand, economic down turn creates obstacles in growth and expansion of selected
business.
 Social factors - Changes in need and demand of people in market also affect the
operations of Nestle to a great extent. In order to compete in the market, it is required by
the company to make changes in products and prices as per customer demand.
 Technological factors – These factors affect Nestle in positive sense as adaption of new
and latest technology at regular intervals helps in carrying out more effective flow of
operations and activities (Kensler, 2007).
 Legal – If the laws and regulations prevailing in different international countries are not
followed by Nestle then the company may required to face several kinds of legal
consequences. This result in affecting the entire brand image in negative sense and also
low down the sales.
 Environmental – Over the past few years, the selected business enterprise has been
forced to make sure that its activities do not create any kind of negative impact on
environment. By taking care of all its operations and carrying out more sustainable
practices Nestle has been able to develop strong brand image in the market.
Task 4
4.1 Significance of international trade
In the present era, international trade has started to play very important role in growth and
success of companies. It can be stated that each and every firm is available with limited
opportunities for growth and development ion domestic market (Hamilton and Webster, 2015).
Therefore, international trade provides new opportunities to increase market share and customer
base to companies such as Nestle. International trade has also supported the brand in acquire
detailed and more accurate knowledge about the taste and preference of customers in market like

UK. Organizations such as European Union and WTO have always supported Nestle in earning
desired profits by promoting international trade (Hartwell and Michael, 2015). The rationale
behind this is that these organizations have provided chances of carrying out smooth flow of
operations and goods in other countries. Apart from this, WTO and European Union have also
helped Nestle by providing several kinds of subsidies and benefits in taxes.
4.2 Impact of global factors on Nestle
Nestle has been also affected by the factors which exist at global level and therefore it is
always required to take care of all these factors. Any changes in employment laws and
regulations forces the brand to make changes in its policies and practices related to employment.
However, international competition has affected the brand in negative sense and it has also
resulted in lowering down the profit margin of Nestle (Halbert and Ingulli, 2014). Intense
competition at global level has forced the brand to make changes in products and service at
regular intervals. Along with this, it also needs to invest large amount of resources in marketing
activities to create more and more awareness among customers. The other global factors
affecting Nestle’s operations include tax rates, exchange rates and laws at international level.
4.3 The impact of EU policies on businesses operating in UK
It can be stated that the policies and action plan developed by European Union has both
negative and positive impact on operations and activities of businesses which are operating in
UK. In order to sustain in highly competitive market, it is required by the companies to work
upon these policies and follow the same in the best possible manner. In negative terms, it can be
stated that the policies and action plan developed by EU has resulted in making the activities and
operation of companies more complicated (Gani, 2011). On the other side of this, in positive
terms, it can be stated that EU policies has helped businesses operating in the country to carry
out smooth flow of all operations and activities beyond the domestic territories. Nestle as an
organizations needs to take care of all the policies developed and strictly follow them. Other
than this, Earth Summit and Kyoto protocol are some of the conferences carried out at
international level and they are affecting the organization to a great extent. As per the Earth
Summit the selected business enterprise needs to make sure that its activities do not create any
kind of negative impact on environment (Fernando, 2011). On the other side of this, Kyoto
protocol was carried out with an objective to take care and control the climate change happened
because of the activities of organization.

CONCLUSION
From the above carried out research report, it can be concluded that in order to sustain in
long run, every company is required to take care of business environment and the major factors
associated with the same. Along with this, it can be also inferred that Nestle as an organization
has been able to meet its responsibilities towards all its externals and internals stakeholders. It
can be also concluded that changes in external business environmental factors directly results I
affecting activities and operations of a company. At the time of carrying out its business
practices, Nestle needs to take care of all laws, regulations and rules developed in different
international countries.

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