Report: Business Environment Analysis of Nestle and Strategic Planning

This report provides a comprehensive analysis of Nestle's business environment. It begins with an introduction to the dynamic nature of the business environment and its importance for strategic decision-making, particularly for a company like Nestle. The report then delves into the different types and purposes of organizations, their legal structures, and the size and scope of various organizational types. It examines the interrelationship between organizational functions, their links to objectives and structure, and uses Nestle as a case study. The report then assesses the positive and negative impacts of the macro environment on business operations using PESTEL analysis, followed by an internal and external analysis of Nestle to determine its strengths, weaknesses, opportunities, and threats (SWOT). The interrelation of strengths and weaknesses with external macro factors is also discussed. The report concludes with a summary of findings and references.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purposes of organisation and their legal structure.................................1
P2 Size and scope of different types of organisations.................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between different functions of organisation and their link to objectives &
structure.......................................................................................................................................1
TASK 3............................................................................................................................................3
P4 Positive and negative impact of macro environment on business operations........................3
TASK 4............................................................................................................................................5
P5 Internal & external analysis of particular organisation to determine strengths and weakness
.....................................................................................................................................................5
P6 Interrelation of strengths and weaknesses with external macro factors.................................6
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................1

INTRODUCTION
Business environment is not stable in nature and get modify with each and every course
of time. It is really essential to understand the dynamic environment in a better and signified
frame so that absolute outcome could be drawn. Although, for managing various operations and
aspects, managers of a company have to understand such dynamic consideration properly for
crafting strategies (Business Environment. 2018). This project is based on Nestle which is one of
famous confectionery manufacturing association. In such respect management want to made a
valid comparison with public and non government associations so that they could maintain and
manage healthy consideration in frame. Along with this, it will also going to define about
differentiation on the basis of size and scope. Moreover, a business need to understand about
external environment properly by organising PESTEL. This will enable them in formulating
better strategies in nature. Moreover, it will also include about SWOT analysis with better
relationship with PESTEL framework.
TASK 1
P1 Different types and purposes of organisation and their legal structure
Cover in ppt.
P2 Size and scope of different types of organisations
Cover in ppt.
TASK 2
P3 Relationship between different functions of organisation and their link to objectives &
structure
There are different functions performed in an organisation and all are interrelated with
each other. They all are linked with objectives as well as structure of company. Nestle is
multinational firm in which various department perform their duties and functions. This
administers an opportunity to company for improving their internal strengths as well as
satisfying needs of customers (Al-Debei and Avison, 2010). Collective working of all these
departments ensures timely completion of work and attainment of firm's objectives. Different
functional departments of Nestle and their link with objectives are defined below:
Human resource department: It is the department that performs various activities such
as managing workforce, recruitment and selection, work force planning, training and
development, performance appraisal, employee benefits and compensations and many others. All

these helps in increasing motivation level of employees and a healthy and positive workplace
environment is remain maintain within firm (Bill Pasmore PhD and CMC, 2010). In Nestle,
managers provide training to their employees for increasing their working efficiency and skills. It
helps in increasing productivity of company which in turn results in attainment of goals and
objectives of company.
Finance department: It is an essential function on which growth and success of an
organisation rely. It is necessary for every business enterprise to have adequate amount of funds
so that day to day operations can run smoothly. Finance manager have responsibility to allocate
appropriate amount of funds to each department so that their activities are carrying out
effectively. In Nestle, managers maintain adequate amount of funds so that activities are
completed on time and all predetermined goals and objectives of company are achieved in an
effective and efficient manner (Brannon, 2010).
Production and operations department: Activities associated with this department
includes manufacturing of goods and services, cost control, optimum utilization of resources etc.
managers have responsibility to manage and control all the processes and operations of
department related to goods production. Main function of this department is to transform raw
materials into final products. In Nestle, operations managers ensure optimum utilization of all
available resources so that cost of production can be controlled. They have the responsibility to
ensure production of high quality goods that best satisfy needs of customers. This helps in
attaining objectives and targets of company.
Marketing department: This is one of the department that contributes highly in success
and growth of company. Various activities are associated with this department that assists in
increasing profitability and productivity of firm. Marketing managers of Nestle use various
promotional to market their product. All these helps them in communicating value and benefits
of their products to customers and attracting them more towards the products. This will
ultimately increase sales of company as well as helps in attaining objectives successfully
(Cantwell, Dunning and Lundan, 2010).
Organisational structure:
It refers to the system that underlines how activities are directed to attain goals of
company. It defines that how activities like coordination, supervision and task allocation are
directed towards attainment of organisational aims.

Types of organisational structure:
Functional structure:
This structure is based on firm that is being divided in small groups with some specific
roles and tasks. The company is divided into various functions like sales, production, finance,
human resource management, research and development etc. Each function is performed through
an expert (Cassell and Blake, 2012).
Divisional structure:
It is the structure that groups each function of company into a division. In this, business
activities are organised around product, geographical area, market and service group. It provides
an ability to larger business organisations to discriminate large sections of business in small
autonomous groups (Charter, 2017).

Matrix structure:
It is the mixture of functional and divisional organisational structure. In this structure,
there is more than one reporting manager. It is a complicated structure that is used in larger
organisations as there are 2 or more bosses to report and it is challenging for employees to report
multiple bosses (Ebert and et. al., 2014).

Nestle use matrix organisational structure as it is decentralized firm and allow
subordinate branches to enjoy high independence level. Size and complexity of company is
growing up to a dimension that demands constant development in firm (Griffin and Pustay,
2012).
TASK 3
P4 Positive and negative impact of macro environment on business operations
Business runs in society so it is important to make changes in business plans and policies.
In case of change in business factors, them Nestle has to alter their plans as per requirement. This
helps to make brand familiar in industry. There are main changes which has to taken in by top
level management but at the some time it must be conveyed to lower level workers s they can
perform activities ion better and effective way (Halbert and Ingulli, 2011). Some exterior and
interior factors has to be kept in mind to make policies. There must be regular emphasise on
external elements which includes political, environmental, social, technological, economic
factor. There is requirement of policies which can be achieved with change in plans and policies.
Factors Positive aspect Negative aspects
Political As per this factor, there is
important role of government
Due to this factor there is
interference in business and

to plan business operations.
Nestle is the brand which
operates in different parts of
country and hence there must
be difference in plans and
policies so business runs in
better and efficient manner
(Iskanius, Page and
Anbuudayasankar, 2010).
this affects working style of
workers. Due to excess
government control all plans
and policies remains leaked
and this might cause affect on
profits and revenue.
Economical There is need of finance to run
business, so there must b e
regular satisfaction of
economic need. Through
economic satisfaction there is
achievement on targets on
time.
There are various sources of
raising funds, but due to
change in interest rate, this
affects list of raising funds.
There is change in demand so
managers has to make efforts
which cause diversion of
activities.
Social This is effective because
business runs in society and it
is important to make use of
policies which can b used to
run business in better way.
As these days there is variation
in taste of customer so they
can analyse changes in better
way. This alters the plans of
company (Klapper, Lewin and
Delgado, 2011).
Technological There is use of various
equipments to manufacture
product and services. In this
case there is completions and
operations can be done in
better way.
There is requirement of funds
and training so this is time and
cost consuming process.
Sometimes people don not like
to take work under changes
environment.
Legal In this factor, there are some Due to legal factor, there are

rules and regulation which has
to be considered through
which activities are done in
ethical manner.
many policies which has to be
undertaken otherwise there
will adverse effect on business
operations.
Environmental There are different product
which are offered by Nestle, so
it is important to consider them
and take actions in proper way.
Due to alteration in policies, it
is effective with change in
plans and policies (Robbins,
Judge and Campbell, 2010).
As per change in
environmental factors, policies
has to be refrained and hence
there will confusion in actions.
Employees must be aware of
policies so they can perform
activities in better and
effective way.
TASK 4
P5 Internal & external analysis of particular organisation to determine strengths and weakness
SWOT analysis is an effective tool that assists in determining strengths and weaknesses
of company. It administers an opportunity to manager of business firm for formulation of
effective strategies. Implementation of these strategies assists in attaining excellence in
operations. In Nestle, SWOT analysis is conducted by managers that provides it information
regarding strengths, opportunities, threats and weaknesses (Solomon, 2014). These are defined
below:
Strengths:
Strong distribution system: Distribution channel of firm are strong that assist
management to penetrate effectively into market by assistance of locally adapted distribution
techniques. It involves street markets, medical outlets, supply chain and door to door supply etc.
Research and development centres: The company has largest nutrition & food research
centre in the world in which approximately 500 individuals are working and performing their
duties. More than 21 research centres are located globally.
Weaknesses:

Maggie Controversy: A huge impact is observed on profitability company because of
Ban on maggie in India. It occurs because of large number of harmful addictive are found in that
product. This put huge impact on image of company and a feeling of distrust is created among
their potential customers.
Legal and consumer issue: Various issues and controversies are there associated with the
name of company that influence largely their image in market as well as in minds of customers.
This will results in imposition of high legal penalties on Nestle (Ullah and Lai, 2011).
Opportunities:
Quality products: Firm has huge opportunity to administer high quality products to their
target customers in order to gain their trust and loyalty towards brand. Goods with high quality
helps in attracting large group of people as in current scenario, people are more conscious
regarding their health. Some examples are: cereals, oats etc. to penetrate the market.
Expanding market: Number of opportunities the company has regarding expansion of
their business operations in rural areas by the assistance of their strong supply chain as well as by
transforming unorganized business activities of company into organised one.
Threats:
High competition in market: The major threat that Nestle face in market place is
competition. Large number of competitors are available in market at local and national level
which is the biggest threat. This will put direct impact on sales and profits of company and leads
to decline in their market share (What SWOT Analysis is in simple words, 2016).
Price of commodities: Other threat that company face is constantly increase in prices of
their goods than their competitors. This will leads to decline in sales of their product and is one
of the main reason that customers are switch to another brands as their prices are low and quality
is good in comparison to Nestle.
P6 Interrelation of strengths and weaknesses with external macro factors
Factors of macro environment are highly interlinked with strengths and weaknesses of
organisation. It renders opportunity to company to utilize their strengths in order to gain positive
outcomes. Management of Nestle has the responsibility to use opportunities and strengths for the
purpose of effectively overcome their weaknesses and threats. It helps company in
accomplishing their goals and objectives effectively. This will also provide competitive
advantage to firm in market over its rivals (Adeoye and Elegunde, 2012). Company gets large

number of benefits like high profitability, increased market share, good brand image etc. PEST
analysis assist in identifying influence of external forces as well as their interlink with strengths
and weaknesses which are defined as follows:
Political:
It is the factor that influence growth of company worldwide. Political stability, laws and
regulations etc. are the variables that highly impacts operations and activities of Nestle. As the
firm operates in various countries, it is very essential for manager to consider this factor while
performing operations in various countries (Cantwell, Dunning and Lundan, 2010).
Strengths: As political condition of each country is different, consideration of political
factors helps manager of company in complying with laws effectively and they enable to deal
with it effectively.
Weaknesses: As firm perform their operations in more than 190 countries, it is difficult
for them to understand properly all the regulations and laws of that respective country.
Economical:
Economical conditions of each country is different. Various variables of this factor
influence working and operations of business in both negative and positive way. These includes
inflation, exchange rates, deflation, import export ratio etc. manager of company is require to
consider all such factors.
Strengths: In some countries, firm run their operations smoothly as economic condition
of those countries is good. It is one of the strength of Nestle.
Weakness: High exchange rates of some countries put direct impact on profitability and
revenues of company.
Social:
It is related with cultural aspects, beliefs and attitudes of customers which will directly
influence demand of product. It involves variables like work ethics, demographics, life style etc.
Strengths: Research and development team of Nestle is good and conduct research in
order to get knowledge regarding needs and preferences of customers (Halbert and Ingulli,
2011). It assists in developing products according to that which best satisfy needs and demands
of customers.
Weakness: Because of large number of manpower, there are various conflicts arise
sometimes in between workers due to their cultural differences.

Technological:
This factor is concerned with technology. Manager of firm has responsibility to adopt
latest techniques in order to manufacture high quality of goods.
Strengths: Use of new technology in process of production helps in producing goods of
high quality. This also helps them in meeting standards administered by government. Their
technical team is good which helps in handling machinery properly (Al-Debei and Avison,
2010).
Weakness: Use of high end technology in production process may increase their
production cost due to which their prices of products are high.
CONCLUSION
It get concluded from the project that business environment is ever changing which get
modify with each and every course of moment. It is really essential for managers of a company
to determine the environment in which firm operates so that better and suitable working could
get done. A business manager have to estimate other kind and nature of associations whom are
operating in such kind of nature so that they could estimate their consideration and behaviour
better. Moreover, each and every company get vary on the basis of their size and scope better so
that effectiveness and efficiency could be crafted. Moreover, it will also going to describe about
the things better while performing appropriate PESTEL analysis. A SWOT analysis enable in
disseminate all major kind of strength and weakness with determined relationship with external
environment influences so that supportive working attribute could get done.

REFERENCES
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Brannon, N., 2010. Business intelligence and e-discovery. Intellectual Property & Technology
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understanding international business activity: The co-evolution of MNEs and the
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changing business environment–a case study of the Finnish steel product industry.
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Robbins, S. P., Judge, T. and Campbell, T. T., 2010. Organizational behaviour. Financial Times
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Solomon, M. R., 2014. Consumer behavior: Buying, having, and being (Vol. 10). Upper Saddle
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Online:
Business Environment. 2018. [Online]. Available
through:<https://www.slideshare.net/NikhilSoares/business-environment-
featuresmeaningimportanceobjectives-porters-model>
What SWOT Analysis is in simple words. 2016. [Online]. Available through:
<http://pestleanalysis.com/swot-analysis-examples/>.
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