Business Environment Factors and Nestle Company Report Analysis

This report provides a comprehensive analysis of Nestle's business environment. It begins with an introduction to the business environment and its influencing factors, both internal and external, followed by an overview of Nestle's operations. The report then delves into the interrelation between different organizational departments such as marketing, production, human resources, and finance, and how they contribute to achieving organizational objectives. It explores the impact of macro-environmental factors through PESTLE analysis (Political, Economic, Social, Technological, Legal, and Environmental) and internal analysis using SWOT (Strengths, Weaknesses, Opportunities, and Threats). The report also examines the interrelation between macro-environmental factors and Nestle's strengths and weaknesses, concluding with a summary of the key findings.

Business Environment

Table of Contents
A41479 M1INTRODUCTION........................................................................................................1
TASK 1............................................................................................................................................2
Covered in PPT.......................................................................................................................2
TASK 2............................................................................................................................................2
P3: Interrelation between different organisational departments and their linkage with
organisational objectives........................................................................................................2
TASK 3............................................................................................................................................5
P4: Impact of macro-environment factors..............................................................................5
TASK 4............................................................................................................................................6
P5: Internal analysis of organisation for identification of strengths and weaknesses............6
TASK 5............................................................................................................................................8
P6: Interrelation of macro-environmental factors with organisational strengths and
weaknesses.............................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment includes various influencing factors such as internal and external
factors which may affect the business operation of an organisation irrespective of the matter
whether private, public or voluntary. Internal factors includes employee's behaviour,
technological capacity, poor management etc. which affects a lot to the business activities
performed by different departments. On the other hand, external factors includes political
conditions, economical situations, legal factors etc. which also affects huge to the sustainability
and profitability of company. In order to deal with such factors, the management are wholly
liable to make an effective decisions and plans so as to drive organisation towards growth and
success (Bovee, Thill and Raina, 2016). Nestle is a swizz company which deals in offering
beverage and food products in wide variety is selected for the purpose of preparing this report.
The project includes different types of organisation with their aims, size, scope and purposes.
Impact of micro and macro environment on the business operation are also covered under this
report. The project also summarises the PESTLE analysis along with their strengths and
weaknesses.
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TASK 1
Covered in PPT
TASK 2
P3: Interrelation between different organisational departments and their linkage with
organisational objectives
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There are different organisational department which are responsible to achieve desired
goals and objectives through performing different business functions. With the support from
such departments, an organisation can easily achieve growth and success within limited period of
time. Such departments of Nestle includes marketing, production, human resource, operation etc.
which perform according to the rules and standards formulated by management of Nestle.
Therefore, the management also play an important role in growth and achieving competitive
advantage. Through conducting research within an organisation, the managers of different
departments are able to recognise the problems or issues which are faced by their employees so
as to resolve them on time in order to provide them motivation and confidence to perform in
right direction (KazCham, 2014).
Interrelation between functions of departments of Nestle:
Human resource department: This is main department of an organisation which plays an
important role in achieving skilled and knowledgeable workforce through which maximum result
will be achieved. Such department is liable to recruit new candidates as well as existing
employees for the vacant job position. HR manager is responsible to make their workforce more
strong and knowledgeable through providing training and development programs, performance
appraisal, compensation etc.. It will help in bringing motivation and confidence thus the chances
of achieving better result will be more. It always guaranteed that effective workforce ensures an
organisation to achieve desired goals and objectives within pre-determined period of time.
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Marketing department: This is the department which is held responsible to market their
products and services in favour so as to achieve huge customer strengths. As Nestle produces
quality food products in different range thus it is essential to communicate with customers
regarding providing information about quality, price etc. of the products. This can be done
through TV, newspapers, social media etc. which are important marketing tools in order to
influence and attract large number of customers (Kolk, 2016).
Finance department: This is the department which is wholly liable to raise funds from
different sources and after which allocate them to different areas of business after analysing the
outcomes received in near future. As funds are needed by every organisation to execute business
activities in an effective and efficient manner. Therefore, without getting support of such
department, an organisation cannot able to meet customer needs and requirements thus may
failed to achieve desired goals and objectives.
Production department: This is one of the important department which are liable to
produce quality products through minimising wastage in production process. Nestle offers
quality food products which help in gaining trust and loyalty of customers among company's
products thus it is important to manufacture standard quality of products at required quantity in
order to meet market needs and demands. This will help in attaining stable position in
competitive market for longer period of time.
Organisational structure
The division of structure is based on the requirements which are defined as below:
Function based: It is a structure which is formed on the basis of functions performed
within an organisation such as human resource, operation, marketing etc.
Geography based: It is a structure which is formed on the basis of geographical locations
of countries in which the company decide to operates its business functions in order to capture
large market share (Mahmood and Hanafi, 2013).
Product based: It is a structure which is based on the variety of products the company
offered in market.
Consumer based: It is a type of structure which is based on consumer's interest and
buying behaviour so as to attract them towards purchasing new products. The main motive of
structure is to identify the actual taste and preferences of customers.
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TASK 3
P4: Impact of macro-environment factors
Every business organisation irrespective of the size, nature and scope needs to operated
its different business operations in more smoothly manner thus it is important for them to analyse
all macro-environmental factors which may influences the business operation either in negative
or positive manner. Nestle company operated its business on large scale thus may get affected
from such factors. Macro-environmental factors includes political, economical, social etc. which
make either negative or positive impact on the business operations of company. To analyse such
factors, the management need to conduct PESTLE analysis which are described as under:
PESTLE Analysis:
Political factors: It includes factors such as government, taxation policies etc. which may
affect their sales target. As Nestle offers wide range of food products in maximum number of
countries thus changes in government of particular country may also brings changes in policies
and regulations which brings difficulties for Nestle to prorate its business functions in more
effective manner (Oke, Walumbwa and Myers, 2012).
Economic factors: The economy of country may also affect the decision making of
management of Nestle. For example, Nestle deals in providing quality food products therefore if
the economy of particular country in which company operated then it will increases the income
and purchasing power of customers due to which they can afford to buy company's quality
products instead of using unbranded food products.
Social factors: It is related with the factors such as consumer's interest and behaviour
which may influenced the decisions and strategies of company. The management of Nestle is
required to conduct research in order to find out the current trends exist in market and
accordingly direct their departments to perform in right way. For example, It has been found that
Nestle product “Maggie” contains harmful ingredients due to which the interest and buying
behaviour of customers changes thus to resolve these issues the management took corrective
measures in order to maintaining their current sales figure of such product.
Technological factors: It includes those factors which are related with advanced and
modern technologies which can affects business operation and profitability of company. For
example, implementing updated technologies in production process help in minimising wastage
due to which the cost of production goes down. It also helps in developing marketing process
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through using various marketing tools such as social media, newspapers, TV ads etc. which
increases their sales figure as well. For example, If the customers are more price sensitive then
they should prefer to consume unbranded products and ignore quality. Thus, providing the
importance of quality help in influencing the buying decision of customers (Othman and
Rahman, 2014).
Legal factors: There are different rules and regulations made by government in order to
direct organisation to perform in right way. Therefore, need to be followed by company in order
to exist in market for longer period of time. For example, Government implements different acts
for the protection of employees such as Equality act, 2010, Health and Safety act etc. which help
in bring motivation among employees to perform well.
Environmental factors: It includes such factors which directs an organisation to perform
business functions without damaging environment as it may affect the health of people as well.
Therefore, Nestle need to use cost-effective techniques which is used to produce quality products
without harming environment.
TASK 4
P5: Internal analysis of organisation for identification of strengths and weaknesses
In addition with external factors, there are internal factors as well which influences the
business operations of company. Such factors can be identified through conducting SWOT
analysis which are as follows:
SWOT analysis:
Strengths:
World Renowned brand: Nestle is one of known brand in food sector which is generated
huge revenues every year. It sells wide range of food products at single brand name thus the
customers can easily recognise their product in market.
Good distribution system: Nestle has distributed its quality products to different
wholesalers and retailers which help them in reaching their products to the targeted customers.
The company may also adopted other distribution methods such as door to door distributors,
street markets, medial outlets etc.
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Large workforce: Nestle has employed more than 340,000 employees in an organisation
which gives their maximum support in achieving desired goals and objectives (Pikka, Iskanius
and Page, 2011).
R&D centres: Nestle has attained world's largest food and nutrition research centres in which
more than 500 employees are working. It has attained over 21 research centres globally.
Weaknesses:
Brand structure: Nestle deals in offering multiple products which are sell in market
under single roof thus it becomes difficult for management to Nestle to manage individual brands
as it increases the chances of conflicts in interest
Legal and consumer issues: Nestle has indulges in many controversies which affected
their image and goodwill in market. Maggie controversy is the suitable example in which it has
been found that Maggie products contains harmful ingredients which can negatively affect the
health of customers. Through such controversy, Nestle has loses large number of customers.
Opportunities:
Expanding market: Nestle need to focus on attracting large number of customers in rural
areas through supplying their quality products. This may bring interest of customers to buy their
products (Saleem, 2017) which directly improves their sales and profit as well.
Increasing income levels: The company need to export their products to such country
where the income level of customers are high. For example, USA has stable economy due to
which the purchasing power of customers are more thus they can afford to buy products on large
basis. This will improves the sales figure of Nestle.
Quality products: Nestle need to give priority on improving quality instead of lowering
the price as the people prefer to consume quality products in order to maintain their health. This
will help company in retaining loyal customers for longer period of time.
Strategic alliances: In order to expand business to different countries, Nestle need to get
support from other established organisation to achieve desired target. For example, Nestle should
required to partnership with major organisation such as Coca-cola in order to expand the sale of
their beverage products.
Threats:
Competition in market: Due to high competition in market, Nestle may find difficulties
in maintaining their stable position in market for longer period of time. For example, Sun-feast
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company deals in similar products and services thus giving tough competition to Nestle in
market.
Price of commodities: Due to charging high prices on their products, the loyal customers
may shift to other brands where they get same quality products at lower price. For example, sun-
feast charges low prices on their “Yippee” product as compared to the nestle product “Maggie”.
(Business Environment, 2018).
TASK 5
P6: Interrelation of macro-environmental factors with organisational strengths and weaknesses
It is essentially required for management to interrelate external factors along with their
strengths and weaknesses. It provides an opportunity to company to utilise their strengths and
improve their weaknesses in order to deal with external factors in more effective and efficient
manner. Therefore, the management of Nestle should required to give maximum efforts in
implementing effective decisions and policies in order to operate their business operation in
more effective manner without getting affected from such factors. The advantages the company
will achieved are competitive advantage, increasing sales figure, increase profitability etc.
Conducting PESTLE analysis along with strengths and weaknesses are more helpful in
identifying the impact on external factors. Such are described as below:
Political: It is such a factor consist of stability of government, changing in taxation
policy etc. which can affects their sales figure and exist business operation in particular country.
Thus, the management of Nestle need to ensure that company should follow rules and standards
in order to avoid legal consequences. Strength: Different legal teams are formed in order to analyse such factors and make
corrective actions for the betterment of an organisation. For example, forecasting the
future situations that may arises due to changing taxation policy will help in making an
effective plans and strategies.
 Weakness: Nestle operated its business in more than 194 countries thus may difficult for
management to understand various laws of each country.
Economical: There are different economical situation in which some countries are
suffered whereas the economy of such country increases rapidly. Thus, it will largely affect the
sales figure of company as Nestle offered their products in number of countries.
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 Strength: Nestle has expanding its business in Asia which in return they enjoy huge
revenues. It will become huge strength of Nestle.
 Weakness: Expanding business to other countries increases the price of product due to
adding taxes to the price of product.
Social: It is related with interest and behaviour of customers which changes frequently.
This will make huge impact on the sales figure of company. Thus need to make changes in
decision and strategies in order to cope up with changes in behaviour and interest of customers. Strength: R&D team of Nestle brings valuable information to company regarding
changing interest and behaviour of customers which help management in making an
effective decisions and plans (What SWOT Analysis is in simple words, 2016).
 Weakness: Nestle has attained large number of employees which increases the chances of
conflicts and issues results in getting negative results to company. Thus, required to
provide optimum solution in order to resolve such issues and problems which negatively
affect the performance of employees.
Technological: This factors are related with advanced technologies which play an important role
in bringing efficiency in work of employees as well as performance of company. Strength: Nestle is always focused on implementing cost effective technologies in
production and marketing process which help in reducing cost of production through
minimising the wastage.
 Weakness: This will require huge investment in adopting new technologies thus if result
may gone wrong then the company may faces losses.
CONCLUSION
It has been concluded from the above project report that an organisation if sustain in
market for longer period of time then it must required to have an effective management who are
capable to make an effective decisions and plans in order to deal with internal and external
factors. Efforts of different departments are essentially required in order to achieve desired goals
and objectives of an organisation. To identify such factors, PESTLE and SWOT analysis need to
conducted by management.
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REFERENCES
Books and Journals
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Business Psychology. 29(1). pp. 1-19.
Hair, J. F., 2015. Essentials of business research methods. ME Sharpe.
Hamilton, L. and Webster, P., 2015. The international buA41479 M1siness environment. Oxford
University Press, USA.
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characteristics, market orientation, and actualizing innovation effort. Technovation.
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KazCham., 2014. Current economic and business environment in Kazakhstan 2014. KazCham.
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environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
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mediator. International Journal of Business and Social Science. 4(1).
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firms’ revenue growth: the roles of environmental uncertainty and innovation
performance. Decision Sciences. 43(2). pp. 273-302.
Othman, Z and Rahman, R. A., 2014. Attributes of ethical leadership in leading good
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Pikka, V., Iskanius, P. and Page, T., 2011. The business enabling network–a tool for regional
development.International Journal of Innovation and Regional Development. 3(3-4).
pp.324-344.
Saleem, M. A., 2017. The impact of socio-economic factors on small business success.
Geografia-Malaysian Journal of Society and Space. 8(1).
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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