Business Environment Analysis and Strategic Evaluation of Nestle

This report provides a comprehensive analysis of Nestle's business environment. It begins with an introduction to the business environment and its importance, followed by an examination of Nestle's organizational functions such as human resources, research and development, sales and marketing, and finance, and how these functions are interlinked with the organizational structure. The report then delves into the macro environment, identifying the positive and negative impacts of political, economic, legal, technological, environmental, and social factors on Nestle's operations. Finally, it conducts an internal and external analysis of Nestle, using SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats. The report concludes with a summary of the key findings and their implications for Nestle's strategic approach.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Covered in PPT.................................................................................................................1
P2 Covered in PPT.................................................................................................................1
TASK 2............................................................................................................................................1
P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure for company.............................................................1
TASK 3............................................................................................................................................4
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific example for the organization............................................4
TASK 4............................................................................................................................................6
P5 Conduct internal and external analysis of Nestle in order to identify strengths and
weaknesses for the company..................................................................................................6
P6 Explain how strengths weaknesses interrelate with external macro factors for the
organization............................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment consider as a important aspect which define combination of
internal and external factors. Both factors are lager affect the overall performance of the
company in positive and negative way. So that it is important for manager to assess both factors
effectively. With the help of this they easily implement all the business policies in effective
manner and enhance the chances of attaining favourable results (Business Environment, 2017).
Furthermore, it include all the factors such as change in customers demand, technologies,
government and so on. By determining this firm easily improve their productivity level and serve
better services to its customers. If any kind of various are there then it impact in decision making
process of the company. For improving this, manager have to develop as well as formulate
appropriate strategies which contribute in overall success. Current report is based on Nestle, is
biggest good company in over the world. They serve variety of food services to its customers for
attaining their better satisfaction. Report discussed about various type of business organization
with their purpose of legal structure. Relation of business function to its structure is also
mentioned in this project which will aid in improving overall performance level. Along with this,
it is also discussed about impact of external environment in positive and negative ways.
TASK 1
P1 Covered in PPT
P2 Covered in PPT
TASK 2
P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure for company.
Every business organization define their functions at workplace which is relate with its
structure. As a famous company, Nestle offer number of food products and services to its
customers as per their requirements. With the help of this they enhance their profitability level at
market place (Apăvăloaie, 2014). Along with this, Nestle operate their business at global level in
which they serve their variety of products and services which mat leads in enhancing their
profitability level. In this they include various function like, finance, marketing, human resource
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and finance department which helps in attaining set goals and objectives in most effective
manner. It also helps in inviting larger number of customers towards its products and services.
Thus, all these are interlinked with each other which directly affect overall performance of the
company at market place. All these are understood by following points:
Illustration 1: Organisational Functions
(Source: Organisational Functions, 2017) Human resource department: It is one of the important department in which HR
manager responsible for recruiting capable and talented candidates who are easily
perform their task. With the help of this they easily attain positive outcomes in most
effective manner (Armstrong and et. al., 2015). Mainly this function is related with
finance department because they needs proper funds at the time of conducting
recruitment process within their business. In this they bring new and innovative process
to enhance their performance level. Research and development: This department also consider as a important in which
manager of Nestle undertake marketing research to evaluate customers needs and wants
towards the products and services. With the help of this firm easily attain competitive
advantage at market place and also create their string customers base. In this they also use
questionnaire and interview to take customers review towards the products and services.
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This department related with finance sector in which they allocate adequate funds to
effectively undertake market research which helps in enhancing overall performance
level at market place. Sales and marketing: It is also an important for Nestle to make effective marketing
process in order to improve their sale volume (Botha, Kourie and Snyman, 2014). For
attaining the same, it is important for company to understand customers needs and
demands which may leads in increasing profitability level of the firm. Along with this,
they use various tools such as social media, advertisement and many more by which firm
invite larger number of customers by promoting heir services in front of customers. This
is also relate with research and development department because they take support form
them to evaluate customers taste and preferences.
 Finance: This is one of the important function for every business organization in which
they formulate an effective budget to all the department which may leads in reducing the
unnecessary wastage within the production process. This will aid in enhancing the
profitability level of the company at market place. Along with this, it also helps in
enhancing customers base. It contribute in overall success of the company.
Organizational structure: Function based: Under this segmentation, business organization perform various
function to attain set goals and objectives in appropriate time frame. Basically it include
marketing, HR, production and many more function which may leads in improving
overall performance of the company at market place. Geography based: In this firm segment their aspects as per regions basis in which all the
products and services are offered as per customers demand. Due to this firm enhance
their productivity level at market and also maintain their positive image. Product based: In this segmentation is based on products and its quality which offer by
the company to its customers (Cai and Yang, 2014). Under this, Nestle produce baby
products, food items and many more which leads in attaining better results at market
place.
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 Consumer based: Under this, segmentation is related with consumer behaviour which
define various ways to offer their services to its customers as per their needs (Cascio,
2018). By this firm enhance their profitability level.
Illustration 2: Organisational Structure
(Source: Organisational Structure, 2017)
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific example for the organization
As a famous company, Nestle operate their business at global level in which they serve
their variety of products and services to its customers as per their demand. In this various factors
also include in overall business environment which largely affect the overall performance of the
company in positive and negative manner. This relate with macro environment that includes
various factors like, political, economical, legal and so on (Congleton, Hölzel and Lazar, 2015).
By considering all these factors manager formulate effective business plan which leads in
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attaining profitability level at market place. All these can be understood by following factors and
its impact: Political factors: It is one of the important factor which largely affect the performance
level of the business organization. Along with this, it includes various rules and
regulation which set by government authority that help company in maintaining their
performance level at market place. Furthermore implementation of all the policies aid in
enhancing profitability of the firm. Legal factors: Every country define their rules and legislation which is important for
business organisation to follow it effectively (Doh, McGuire and Ozaki, 2015). By
following this, Nestle easily enhance their performance level at market place. If they
ignore it then they responsible for paying penalty which negatively affect on brand image
of the company at market place. Technological factors: For improving productivity level, it is important for Nestle to use
new and innovative technologies within their production process which may leads in
attracting number of customers towards its products and services. Economic factors: It is also an essentials factors which include various aspect such as
interest rate and so on that larger affect on business organization. If economic condition
is good then it helps company in improving their performance level in another areas. On
the other side, if high rate of inflation rate then it negatively affect the purchasing
decision of the customers. Environmental factors: It is also an important factor in this it is important for Nestle to
use ecofriendly techniques to produce their services in effective manner. Along with this
they also consider effective principle of minimum wastage by which firm improve their
permanence level. The positive impact of this factor is to enhance positive image at
market place by using quality raw material. On the other hand, if firm ignore environment
safety then they create number of criticism which negatively affect the performance level
of the firm.
 Social factors: This is important factor which cover customers culture, age, attitude and
many more that largely affect the performance level of the company. So that it is
important for Nestle to effectively evaluate and provide their services accordingly which
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may leads in attaining better results at market place (Huang-Horowitz, 2015). In this
context the positive impact of this factor is increase sale volume by assessing customers
needs and wants towards the products. On the other side, the negative impact of this that,
if any kind of variation are occur that affect on company sales.
TASK 4
P5 Conduct internal and external analysis of Nestle in order to identify strengths and weaknesses
for the company
The factors which are linked with external analysis are Valuable in order to identify all
those factors which create a negative impre4ssion on the overall operations of firms. This is an
important factor for company as they can easily know their strong and weak factors. This also
helps in achieving strong positions at market places (Klapper, Love and Randall, 2015). Nestle is
offering products to their potential customers according to their needs and wants and this is an
important factor which helps in retaining loyal customers. The SWOT analysis are important
tools for firms in order to know the opportunities which are available at market places.
STRENGTH
 Nestle have organised effective research
and development which is the core function
of management as it helps in analysing the
trends at market places. The budget of
research and development department of
Nestle is very high as they are involved in
identifying needs and wants of customers
in order to retain their loyalty.
 Nestle is running their business activities
all around the globe thus they are earning
high market and have achieved strong
positions in the economy. The major
locations where the business activities are
carried out are Europe, America and Asia.
WEAKNESS
 The firms have achieved strong
positions in the economy but then
also they are facing criticism as
they are using water in high
quantity, ethical practices and child
labour act. Thus all these activities
are affecting business operations of
Nestle
 The customers are switching to
other brands as firms are not
offering quality products. They
have to recall all those products
which are purchased by them in
bulk amount. The overall impact of
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Thus firms are earning high profitability
from their business activities.
these activities is that it affect the
profitability of firms.
OPPORTUNITIES
 Nestle should properly label all their
products in order to develop their own
brand image thus it results in attracting
customers who will be buying their
products and services. This is an important
factor in order to retain loyal customers.
 The firms are having opportunities in order
to expand their business activities all
around the globe thus earning higher
profitability.
THREATS
 There are many rivalry who are
running their operations in similar
business and they are offering
similar products to their customers
and firms can eb affect6ed by this
as it affects their overall sales and
profitability index. Management of
Nestle have to made plans and
policies in order to develop
effective strategies from their
competitors.
 In the present time the prices of
coffee products are constantly
increasing and this declines the
overall margins rates of gaining
profitability of products. The main
reason behind the rates of products
which are constantly increasing are
rise in disaster rates in Brazil.
P6 Explain how strengths weaknesses interrelate with external macro factors for the organization
Management of NESTLE has conducted PEST analysis in order to know the market
condition where the company an establish their business. For this, organisation is using
appropriate tools and technologies which is helping them in determining strengths and
weaknesses. Thus, it is very essential that superiors of any company use their strengths in
increasing their sales and profit and also helps in changing their flaws and overcoming the
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weaknesses (Menychtas and et. al., 2014). This kind of process assist the company in optimising
the resources to its maximum so that they can deliver the best quality products. Apart from this
Nestle is considering some of the external and internal factors along with strengths and
weaknesses are explained below:
Political Factors: To run a business it is essential for the organisation to follow all the
rules and regulations that are formulated by governmental bodies. As they are the one who
formulate laws and legislations including implementation of taxes, political stability and many
more (Moroni, Arruda and Araujo, 2015). Therefore, Nestle is making strategies by considering
the norms that are made by regulatory bodies. It is assisting them in increasing the sales and
profitability at the same time.
Strengths: Nestle has established various departments that are guiding their workers to
perform the work effectively. Thus, it is helping them in enhancing their brand image along with
market shares and values.
Weaknesses: Managing business across the world is not an easy task so it is essential that
managers of Nestle makes strategies according to the nation. Thus, they should have appropriate
knowledge about the country before formulating the norms for organisation.
Economic Factors: Sudden change in economic policies like inflation, change in taxation
policies etc., by regulatory bodies can have an adverse effect on a company. So, pre planning is
very necessary so as to minimise the risk. Nestle is working smart on it and before fixing the cost
they are determining the economical conditions in a particular area.
Strengths: As compared to other continents Nestle is gaining maximum benefits in Asia
and it is helping them in generating more and more revenues. Therefore, managers should ensure
that they also get large amount of profits form other countries as well.
Weaknesses: Variations in rates is the biggest weaknesses as they are decreasing the
growth and sales. Thus, it is important to consider the rates in different nations so that alterations
can be made accordingly.
Social Factors: This is important to be considered before establishing the business in a
particular area. As it will help the company in knowing the nature and behaviour of customers
towards their commodity.
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Strengths: Manufacturing goods according to the needs and demands of customers will
assist them in enhancing their brand image (Niemann-Struweg, 2014).
Weaknesses: Quality of products are to be determined as delivering poor quality
commodities can leads to decline in the growth of the organisation.
Technological Factor: With the change in course of time new technologies have come
up and it is helping them in manufacturing good quality products. Nestle is using machineries in
order to remove impurities form their food items (Pinto, 2015). Thus, they are delivering
excellent superior commodities.
Strengths: This is helping them in producing maximum amount of goods in specific
period of time as a result it is enhancing the performance of the company.
Weaknesses: Complicated tools are creating problems and because of this employees are
facing difficulties in their initial processes and operating them.
CONCLUSION
From the above mentioned report, it can be concluded that business environment is sum
of internal and external factors which impact on overall business activities. So that, it is also
important duty of manager to keep all the factors in their mind at the time of taking any decision.
If they fails in managing it effective than it directly affect the overall performance of the
company at market place. Along with this, function of business organization are also interrelate
with its structure in which manager develop an effective strategy to take right decision in most
effective manner. By this company enhance their overall performance level at market as compare
to its rivals.
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