Fonterra's Business Environment: Internal and External Factors Report

This report provides a comprehensive analysis of Fonterra's internal and external business environment. It examines the impact of various factors, including legal, economic, social, and technological aspects, using PESTEL analysis. The report also delves into the impact of organizational culture on Fonterra, highlighting issues such as gender diversity and employee motivation, and utilizes SWOT analysis to evaluate the company's competitive positioning. Key issues discussed include the Dairy Industry Restructuring Act, environmental concerns, and the company's response to social media marketing. The report further explores the company's internal cultural factors, such as the underrepresentation of female employees in higher positions and lack of diversity, which affect its overall performance and competitive advantage. References are provided to support the analysis. This report is an example of the kind of high-quality academic content available on Desklib, a platform offering past papers and assignment solutions to students.

Running head: INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
Name of the Student
Name of the University
Author Note

1INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
Table of Contents
Question 1............................................................................................................................2
Question 2............................................................................................................................2
Question 3............................................................................................................................3
Question 4............................................................................................................................4
Question 5............................................................................................................................4
Question 6............................................................................................................................5
Question 7............................................................................................................................5
Question 8............................................................................................................................5
References............................................................................................................................6

2INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
Question 1
Impact of the external environment on organizations
The external environment of the organization impacts the development of the business
organization. The evaluation of the external environment of the business helps the concerned
managerial department of the organization to formulate as well as implement the various
strategies within the company. The external environment of the business organizations includes
the political factors, the economic factors, the social factors, the technological factors, the
environmental factors as well as the legal factors (Song, Sun & Jin, 2017). These factors cannot
be controlled by the concerned company and need to be evaluated in order to help the concerned
organization to attain a proper position within the given industry. The depiction of the negligence
towards the concerned external environment of the organization might lead to the various
negative consequences for the company. The external environment of the organization might be
influential in the development of the concerned company according to the changes that are
evident within the external environments of the concerned organization. Rastogi and Trivedi
(2016) state that the external environment of the organization further affects the competitive
advantage within the company.
Question 2
Impact of legal factors on Fonterra
The company in discussion, Fonterra, is known to have been facing huge issues in the
legal arena. The major issue that is faced by the company refers to the implementation of the
Dairy Industry Restructuring Act or the DIRA within the concerned industry. The
implementation of the act has led to the regulation of the milk industry within the country of

3INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
New Zealand (Stuff.co.nz., 2018). The implementation of the act has stated an influence on the
supplier chain of the company in discussion, Fonterra. The implementation of the Dairy Industry
Restructuring Act within the territorial boundaries of New Zealand has compelled Fonterra to
accept the milk from all the new suppliers that have been functioning in the area
(Nzherald.co.nz., 2018). The dairy industry within the territorial boundaries of New Zealand is
observed to have been majorly competitive within the last few years of their operation. The
implementation of the law is known to have a greater influence on the stakeholders of the
company who have been constantly searching for the returns to their investments that they
extended to the concerned company.
Question 3
Outline of the tool of analysis, PESTEL
The PESTEL analysis is a tool that is generally used to put forth an analysis of the
macro-environmental factors that are known to have been impacting the concerned organization
in the given market. The six major areas that are discussed in the PESTEL analysis of any given
organization are the political factors, the economic factors, the social factors, the technological
factors, the environmental factors as well as the legal factors. The political factors that affect
organizations are those that deal with the degree of the governmental intervention within the
given organization (Atighechian et al., 2016). The economic factors discuss the ways of
conducting business and the profitability of the discussed ways. The social factors aim at the
discussion on the beliefs and the attitudes of the concerned population of the area wherein the
company has been functioning. The technological factors involve the ways in which the
production and the distribution of the goods might be improved in order to bring about an
improvement in the overall performance of the concerned organization (Moutinho & Phillips,

4INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
2018). The environmental factors deal with the influence of the organizational activities on
environment of the country wherein the company has been operating. The legal factors on the
other hand aims to deal with the information that should be accessible to the company so that it
might operate properly within the given market.
Question 4
Impact of external factors on Fonterra
The company in discussion, Fonterra, is known to have been facing a number of issues
that might be analyzed through the PESTEL analysis of the organization. some of these issues
are discussed as follows.
 Implementation of implementation of the Dairy Industry Restructuring Act in New
Zealand thereby Fonterra to accept the milk from all the new suppliers (Stuff.co.nz.,
2018).
 Several fines being imposed on the company due to the poor management of the waste
products of the company (Nzherald.co.nz., 2018).
 Introduction of the social media marketing for the global clients of the concerned
company in discussion. The company is also known to have a better technological
support for their suppliers which in turn helps in the creation of the quality products
within the company (Nzherald.co.nz., 2018).
Question 5
Impact of organizational culture on the organizations
The organizational culture helps in putting forth an involvement of the employees of the
organization. This further helps in the proactive engagement of the concerned employees of the

5INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
organization thereby lessening the needs for motivating the concerned employees of the
organization. The organizational culture also helps in the maintenance of the consistency of the
employees of as well as the management of the company at large (Rastogi & Trivedi, 2016). A
consistent culture within the organization helps in the consistent progress of the company
thereby leading to the improvement in the competitive advantage of the company. The proper
organizational culture also helps in the maintenance of the retention of the workforce within the
organization. The proper implementation of the flexible rules within the organization helps in the
retention of the employees within the organization (Theaker, 2017). An effective organizational
culture also helps in communicating the mission of the organization towards the concerned
employees of the organization.
Question 6
Impact of organizational cultural factors on Fonterra
The factors that have been affecting the organizational culture at Fonterra have a huge
impact on the company in discussion. The concerned company is generally observed to be in the
headlines of the current news due to the lower incorporation of the concerned female employees
within the concerned organization (Nbr.co.nz., 2018). This has led to the emergence of the
various issues within the management of the company as well. the company has also been facing
issues in the incorporation of lower number of female employees at the higher hierarchical
positions within the organization (Nzherald.co.nz., 2018). This has further led to the rise of the
issues that are related to the equality within the given workplace. The diversity within the
workplace faces several questions due to the lesser employment of the female employees within
the higher positions within the organization.

6INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
Question 7
Outline of organizational cultural analysis tool, SWOT analysis
The SWOT analysis is generally used for the evaluation of the competitive positioning of
the concerned company within the given area. The SWOT analysis of the company helps in the
identification of the strengths, the weaknesses, the opportunities and the threats that are met by
the organization. The SWOT analysis of the company helps in the foundational assessment of the
concerned company (Reinhardt et al., 2017). The SWOT analysis of the organization helps in the
description of the capabilities of the organization within the given market. The tool also helps the
concerned organization to map the several opportunities and the threats that are faced by the
concerned organization within the given organization. The strengths of the organization refer to
the areas wherein the concerned company bears the maximum expertise as opposed to the
weaknesses of the company that hinder the progress of the concerned company (Tong, Li & Wei,
2015). The opportunities of the organization help in the identification of the areas wherein the
company might flourish as opposed to the threats that might need improvement.
Question 8
Impact of internal cultural factors on Fonterra
The internal cultural factors that are faced the company are majorly known to have been
dealing with the competitive advantage of the concerned company in the given market. The
concerned organization might be known to have been facing issues that deal with the impression
of the company on the concerned clientele of the company as well as the industry at large. The
internal cultural factors might also deal with the lower retention rates within the organizational

7INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT
workforce thereby affecting the overall performance of the company. The major issues that are
faced by the company are enlisted below.
 Lesser employment of female employees at higher positions (Nzherald.co.nz., 2018).
 Lack of proper motivation of employees (Nzherald.co.nz., 2018).
 Lack of the cultural diversity within the given members of the workforce of the company
in discussion, Fonterra, New Zealand (Nzherald.co.nz., 2018).

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References
Atighechian, G., Maleki, M., Aryankhesal, A., & Jahangiri, K. (2016). Are Macro and Micro
Environment Affecting Management of Fresh Water Resources? A Case from Iran with
PESTLE Analysis. Materia socio-medica, 28(4), 307.
Moutinho, L., & Phillips, P. (2018). Strategic analysis. In Contemporary Issues in Strategic
Management (pp. 46-79). Routledge.
Nbr.co.nz. (2018). The Fonterra crisis, and the real problem with New Zealand's economy.
Retrieved from https://www.nbr.co.nz/article/fonterra-crisis-and-real-problem-new-
zealands-economy-ck-143963
Nzherald.co.nz. (2018). Fonterra facing 'profound' issues - director says. Retrieved from
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12109690
Nzherald.co.nz. (2018). Fonterra fined $362,000 over pollution. Retrieved from
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11491232
Nzherald.co.nz. (2018). Going sour: Why Fonterra is under attack as never before. Retrieved
from https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12075231
Rastogi, N. I. T. A. N. K., & Trivedi, M. K. (2016). PESTLE technique–a tool to identify
external risks in construction projects. International Research Journal of Engineering
and Technology (IRJET), 3(1), 384-388.
Reinhardt, R., Domingo, S. G., García, B. A., & Christodoulou, I. (2017, June). Macro
environmental analysis of the electric vehicle battery second use market. In European
Energy Market (EEM), 2017 14th International Conference on the (pp. 1-6). IEEE.

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Song, J., Sun, Y., & Jin, L. (2017). PESTEL analysis of the development of the waste-to-energy
incineration industry in China. Renewable and Sustainable Energy Reviews, 80, 276-289.
Stuff.co.nz. (2018). Changing technology creates new selling environment for Fonterra.
Retrieved from https://www.stuff.co.nz/business/farming/86589363/changing-
technology-creates-new-selling-environment-for-fonterra
Stuff.co.nz. (2018). DIRA Act reform the biggest issue for new Fonterra chairman. Retrieved
from https://www.stuff.co.nz/business/farming/105794775/dira-act-reform-the-biggest-
issue-for-new-fonterra-chairman
Stuff.co.nz. (2018). Fonterra fails diversity test says Equal Employment Opportunities
Commissioner. Retrieved from
https://www.stuff.co.nz/business/farming/97130606/fonterra-fails-diversity-test-says-
equal-employment-opportunities-commissioner
Theaker, A. (2017). What is public relations?. In The Public Relations Strategic Toolkit (pp. 17-
27). Routledge.
Tong, J., Li, H., & Wei, Q. (2015). Development Environment and Strategic Choice for Rural
Endowment Insurance Fee-to-Tax: An Analysis Based on PEST-SWOT Model.
In Proceedings of the Ninth International Conference on Management Science and
Engineering Management (pp. 743-758). Springer, Berlin, Heidelberg.