Impact of Economic Systems on Business: Nestle Company Report

This report provides an analysis of Nestle's business environment, exploring the company's responsibilities, stakeholder objectives, and the impact of economic systems. It examines how fiscal and monetary policies, competition, and market structures influence Nestle's activities and pricing strategies. The report also delves into the significance of international trade, global factors, and the impact of the European Union's policies on the business. Furthermore, it discusses how Nestle can effectively allocate resources, make pricing decisions, and adapt to market dynamics. The report highlights the importance of ethical behavior, corporate social responsibility, and the influence of cultural and business environments on organizational behavior. Overall, the report provides a comprehensive overview of the factors shaping Nestle's business environment and its strategic responses to these influences.

Business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
1.1 Purposes of different types of organisation..........................................................................1
1.2 Extent to which an organisation meet the objectives of different stakeholders....................2
1.3 Responsibilities of an organisation ......................................................................................2
TASK 2............................................................................................................................................3
2.1 How economic systems attempt to allocate resources effectively........................................3
2.2 Assess the impact of fiscal and monetary policy on business organisations and their
activities......................................................................................................................................4
2.3 Impact of competition policy on the activities of a organisation........................................4
TASK 3 ...........................................................................................................................................5
3.1 How market structures determine the pricing .....................................................................5
3.2 Market forces shape organisational responses......................................................................5
3.3 How business and cultural environments shape the behaviour of a organisation................6
TASK 4............................................................................................................................................7
4.1 Discuss the significance of international trade to UK business organisations......................7
4.2 Analyse the impact of global factors on UK business organisations....................................7
4.3 Impact of policies of the European Union on UK business organisations...........................7
Conclusion ......................................................................................................................................8
References ......................................................................................................................................9

INTRODUCTION
This report is based on the Nestle company and tells that what are the main
responsibilities of an enterprise while conducting business activities. Present report contain the
information like how an enterprise can optimum utilise its available resources by collecting the
information from economic system. This report tells how fiscal and monetary policy affects the
business and its activities. How competition forces affect the activities and decisions of an
enterprise and what are the main components which contribute in deciding the price of a product
is involved in this report. It contains how the culture of the organisation affect the activities and
behaviours of the employees and of the enterprise. The significance of international trade on UK
business is described under this and how global factors affect the various business organisations.
This report tells or show light on how economic conditions affect the allocation of resources of
an enterprise.
TASK 1
1.1 Purposes of different types of organisation
 Sole trader: The sole trader is a man who individual start a business and bear all losses
and profits generate from the business. It is the most common form of business
ownership spread in a wide area.
Purpose: The main purpose of a sole trader is to make and provide service to the clients and
charge a fix amount from them(Hamilton and Webster, 2015). A sole trader is responsible for all
his debts.
 Partnership: When two or more than two persons agree to start commercial activity with a
mutual understanding and decide to share all the profits and loss equally is known as
partnership.
Purpose: The purpose of partnership is to hold, operate and maintain the investment activities.
The nature of the business is to promote the partnership activities and saving all the interests of
the partner.
 Company: A company is a legal entity made up of a number of people for carrying on a
commercial activity(Klapper and Parker,2010). All the people shares common interest
and purpose.
Purpose: The main purpose of all the owners of a company is to generate a large number of
profit by investing the fund in high return activities.
1

 Franchising: Franchising is the activity of give license to the other party to use good ideas
or products. Franchisee take the permission from the franchise to give him the right to
sell the product to the customers in exchange of some fees.
Purpose:The main purpose of a franchisee is to sell a unique product or idea to the persons and
make a profit from this activity.
1.2 Extent to which an organisation meet the objectives of different stakeholders.
Different stakeholders have different type of needs and objectives. These objectives
affected by the following:
 Investors: Investors need the information about a company or firm because invest in it.
The collected information help them in deciding whether to buy, sell or hold the
shares( Gecevska and et.al., 2010).
 Employees: Employees are the representative of the company these are the one which
can provide various benefits to the company by delivering the good information about
the company because this will influence the stakeholders in investing the company.
 Lenders: Lenders are the one which give or provide loan to the company. Before
lending the loan they collected the information about the company that the company or
firm is that able to pay back the loan.
 Suppliers: These are the one which supply the raw material to the manufactures on
credit. Suppliers help the manufactures in start the manufacturing process.
 Customers: Customers are the one which help the enter[prise in generating revenue.
Customers who have a long term involvement in the firm collects the information about
the company in order to take investment decisions.
 Government and agencies: Government plays a big role in smoothly functioning all the
activities of an enterprise. Government all the required information about an enterprise in
order to regulate its activities(Moutinho, 2011).
 Public: The decisions taken by the enterprise affect a large number of public. The
financial information distributed by the company affect the investment decisions of the
public.
1.3 Responsibilities of an organisation
An organisation has many responsibilities while conducting the business activities. It is
an enterprise's responsibility to work in ethical behaviour and apply the concept of corporate
2

social responsibility(Iskanius and Anbuudayasankar, 2010). There are many responsibilities of a
enterprise which are as follows:
 The personal data should be used only in a fairly manner no misuse of data should be
there.
 Personal data should be used in a lawful purpose.
 The data collected must be adequate and relevant.
 The data must be accurate and updated.
 The personal data should be kept secretly.
Other than the above responsibilities it is the main responsibility of a manager of an enterprise to
take ethical decisions in the business environment. This means all the decisions should be in the
favour of the public at large and should not harm the public interest. Other than corporate social
responsibility is the other main responsibility of a enterprise(Halbert and Ingulli,2011). Under
this it is the main responsibility of every enterprise to adopt that production process which
should not make any harm to the environment and all those decisions come under this which
should not only benefit the enterprise but all the decisions which are taken in the enterprise
should benefit the public or its customers at large.
Nestle can increase its goodwill by fulfilling all its responsibilities and can achieve a competitive
place in the market.
TASK 2
2.1 How economic systems attempt to allocate resources effectively
The economic system helps in deciding the price of the product and also helps the
enterprises in deciding what to produce, whom to produce and how much to produce. This helps
the enterprise in allocate all the resources effectively in order to meet the specific demand of the
customers. By collecting all the relevant information from the economic system the enterprise
can decide its production schedule and can make the specific policies to meet the targets of the
production schedule. Economic system of the tells the demand and supply needs of a product
and if the supply of a product is in shortage than the enterprise can make that product to meet
the specific demand of the customers and can earn profit. Nestle can better take the decisions
about the optimum allocation of available resources by study the information collected by the
economic system(Xue, Shen and Ren 2010). Economic system helps the enterprises in deciding
the price of a product. So before allocating the resources the enterprise can better study the
3

economic system and can collect the useful information and than take the decisions which will
help the enterprise in achieving its objectives and goals easily.
Economic system helps the enterprise by providing all the important information like what
should be the price of the product( Commander, Svejnar, 2011). It helps the firm in achieving its
objectives easily.
2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities
Fiscal policy refers to the regulations made by the government of the country relating to
the taxation and spending related to the business of the nation. Fiscal policy affect every business
owner in many ways like it affect the cost of borrowing, the average amount can be spent by an
individual and the taxation amount.
Its effect on business and its activities
Fiscal policy made by the government affect the business activities of a enterprise. Every
enterprise had to take the decisions according to the fiscal policy made by the government.
Enterprise has to take decisions according and has to pay the tax according to the fiscal policy.
Monetary policy is a tool of government used to increase or boost up the economy
through lower interest rates. Monetary policy control the supply of the money in the country by
the central bank.
Its effect on business and its activities
Monetary policy affect the activities every enterprise at a large level because it decides the
sources of fund of an enterprise. Monetary policy affect the enterprise and influence its financial
needs monetary policy decides or fulfils the financial needs of the company(Aula, 2010).
Monetary and fiscal both policy affect the business activities of an enterprise. Fiscal
policy affect the taxations policy of the enterprise and the monetary policy decides the number of
sources from which the enterprise can get the finance in order to carry out the business activities.
2.3 Impact of competition policy on the activities of a organisation
Every business enterprise has its competition exist in the market and it affect the
activities of every business at small or large level. Any change done by the competitor in the
product influence the enterprise to do the necessary changes in the product to increase its sales
than its competitor's product(Becker, 2017). The main competitors of nestle are Unilever,Amul,
walmart and many more any change done by these companies affects the nestle in changing the
variations in its products and services to face the competition. Any new product launched by the
4

competitor affect the enterprise to introduce the same product with the unique feature to satisfy
the unmeet demand of the customers. Any change done by the competitors of the enterprise like
decrease the price of the product, launch of a new -product and many more affect the enterprise
in changing its policies according to the change done by the competitor in order to attain the
specific objectives. If the enterprise does not do the necessary changes than it can loose a number
of customers because every customer buy a unique product and a product with continue
modifications(Laumer, Eckhardt and Weitzel, 2010). If a competitor enterprise launch a new
product with unique features than it is possible that a lot of customers will but that product and if
the enterprise does not launch the same product with some unique features than it can loose a
number of customers and the competitor will achieve a large number of market share.
TASK 3
3.1 How market structures determine the pricing
There are a number of different kind of market in different sectors. And according to that
sector the decision of pricing is taken place. In a monopoly market the monopolist decide the
prise of the product according to the margin he wants on his product. But a monopolist should
consider both negative and positive effects of increase the price of a product because increase in
the price of a product does not always give good results. In the condition of perfect competition
the buyers of the product decide the price of the products and the sellers have to low the price of
their product in order to increase the market share(Chow and et.al., 2012). Under the oligopoly
market structure sellers charge the same price from the whole customers but use different
techniques to attract a large number of buyers. It is the responsibility of every company to sell
the product to their customers at a price in which the customers can get the value service. A
market structures affect the process of deciding the price of a product other than this demand and
supply both are important variable that affect the price of a product.
A manager should give the advise to the enterprise in order to fix a optimum price for the
product the price should be like that it can generate large number of profit for the company and
at the same time satisfy the needs of the customer.
3.2 Market forces shape organisational responses.
There are number of forces which affect the organisational responses like the change in
the quality of the product due to the changes in price or the change in demand or supply of a
product(Oh, 2010). Market disequilibrium is the another factor that affect the organisational
5

responses. Disequilibrium arises when demand or supply are not equal of a product an excess or
a shortage of a product is there. The situation of equilibrium arises when demand matches with
the supply. The changes occur in the economic system affects the organisational responses.
Other than all these factors there are various miscellaneous factor that affect the reposes of
organisation(De Jonge, 2011). The market equilibrium or disequilibrium affects the
organisational responses of nestle in a large context.
The change and the variation creates between the demand and supply affect the organisation
decision. In order to fulfil the excess demand of a product the enterprise does more production of
that product on the other hand if the product are in excess than the enterprise can sell that product
to the customers by giving some discount on that product. Other than demand and supply there
are various other factors which affect the organisational responses like government policies,
wage rate, labour skills and more more determinants are there that affect the organisational
response(Chow and et.al., 2011). A manager can predict the determinants and can do the
necessary changes in the enterprise in order to adjust according to the situations.
3.3 How business and cultural environments shape the behaviour of a organisation
The culture exist in the organisation affect the behaviour of its employees. Managers of
the nestle should care the behaviour of its employees. Cultural environment influence the
manager in taking a business decision. The organisation culture of nestle is to make a ethical
work environment and motivate and influence the employees in taking ethical work decisions.
Every operation done by the enterprise is get affected by its environment, management style and
many more factors exist in the system. To be successful an organisation should maintain the
followings things in its work environment like empowerment of employees, open
communication, honesty in the work life, ethics and positive behaviour and attitude of the
enterprise. Nestle should try and motivate its employees to take ethical business decisions and
should try to develop a healthy work culture environment in order to achieve the success.
The success of the enterprise is highly dependent on the culture exist in the environment. If the
culture and environment is cooperative and friendly than that enterprise can resolve any big issue
rise in the organisation(Chavis, Klapperand Love, 2011). The manager of the nestle should try to
create a environment in which empowerment of employees takes place and open communication
exists this will increase the morale of the employees and will create harmony in the work
6

environment. This culture helps the enterprise in managing coordination and achieve goals
easily.
TASK 4
4.1 Discuss the significance of international trade to UK business organisations
Economics helps the enterprise in proper allocation of available resources and funds to
achieve efficiency in the operations. In the UK trade business organisations the product are
produced and than sold in the competitive market areas in order to get the maximum cost of the
product. This try to achieve the efficiency by providing large number of quality products to the
customer. The international UK business organisations make or buy the product from the country
which provide it on a lower price and than sell it in a market which can provide them highest
price. This process help the UK business organisation in generating a large number of profit and
can reinvest the amount in other expansion activities. The organisation import the technology
from the other country and use to make an updated product and sales it on a competitive price
which can give the chance to generate more profits(Welford,2013). International trade plays a
big role in any country to earn foreign currency and to expand its business operations.
International trade helps every enterprise to earn more.
4.2 Analyse the impact of global factors on UK business organisations
Global factors affect the UK business organisation in various ways. International business
is highly sensitive than any business because there are a lot of factors which can affect the
international business like any change in government policy of one country and changes in the
wage rate of the labour(Czinkota and et.al., 2010). The country from which the organisation was
purchasing the equipments any change or increase in the price of that equipment in that country
can affect the process of UK business organisation. Other than this the changes in the economic
conditions of the country affect the business organisation process.
4.3 Impact of policies of the European Union on UK business organisations.
The policies made by the European union affect the activities of UK business
organisation. The new rules and regulations made by the European union affect the UK business
organisations. It affects the old process of UK business to carry out the activities in order to
achieve efficiency in the business operations(Aterido, Hallward-Driemeier and Pagés, 2011).
The European union makes the the rules relating to the import and export and this affect the
business organisations.
7

Conclusion
From the above information in the report it can be concluded that the culture of an
organisation affects the activities and behaviour of its employees at a large level. There are
number of market forces that affects the organisational responses and the market structure
decides or affects the price of a product. The report tells or shows that the economic system
provide useful information to the managers of the enterprise and helps them in making optimum
allocation of resources. There are number of competitors exist in the market of any enterprise so
how the enterprise can better take the decisions or can do the changes in the existing products or
services in order to achieve the goal or objective. The report tells how monetary and fiscal
policy affect the decisions and important activities of a business and shows how many types of
organisations exist in the market with their purpose.
8

References
Books and journals
Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’ growth?
Business environment and employment growth across firms. Economic Development
and Cultural Change, 59(3). pp.609-647.
Aula, P., 2010. Social media, reputation risk and ambient publicity management. Strategy &
Leadership, 38(6). pp.43-49.
Becker, K., 2017. Editorial. Journal of Transnational Management, 22(1). pp.1-3.
Chavis, L.W., Klapper, L.F. and Love, I., 2011. The impact of the business environment on young
firm financing. The world bank economic review, 25(3). pp.486-507.
Chow, A.T and et.al., 2011. Broadband network with enterprise wireless communication system
for residential and business environment. U.S. Patent 7,944,948.
Chow, A.T and et.al., 2012. Computer readable medium with embedded instructions for
providing communication services between a broadband network and an enterprise
wireless communication platform within a residential or business environment. U.S.
Patent 8,155,155.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics, 93(1). pp.309-337.
Czinkota, M.R and et.al., 2010. Terrorism and international business: A research agenda. Journal
of International Business Studies, 41(5). pp.826-843.
De Jonge, A., 2011. Transnational corporations and international law: accountability in the
global business environment. Edward Elgar Publishing.
Gecevska, V and et.al., 2010. Product lifecycle management through innovative and competitive
business environment. Journal of Industrial Engineering and Management, 3(2).
pp.323-336.
Halbert, T. and Ingulli, E., 2011. Law and ethics in the business environment. Cengage Learning.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Iskanius, P., Page, T. and Anbuudayasankar, S.P., 2010. The traditional industry sector in the
changing business environment–a case study of the Finnish steel product industry.
International Journal of Electronic Customer Relationship Management, 4(4). pp.395-
414.
Klapper, L. and Parker, S., 2010. Gender and the business environment for new firm creation.
World Bank Research Observer, 26(2). pp.237-257.
Laumer, S., Eckhardt, A. and Weitzel, T., 2010. Electronic human resources management in an
e-business environment. Journal of Electronic Commerce Research, 11(4). p.240.
Moutinho, L. ed., 2011. Strategic management in tourism. Cabi.
Oh, S., 2010. New role-based access control in ubiquitous e-business environment. Journal of
Intelligent Manufacturing, 21(5). pp.607-612.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Xue, X., Shen, Q. and Ren, Z., 2010. Critical review of collaborative working in construction
projects: business environment and human behaviors. Journal of Management in
Engineering, 26(4). pp.196-208.
9

10