Business Environment Analysis of NESTLE: UK Market Report

This report provides a detailed business environment analysis of NESTLE, focusing on its operations within the United Kingdom. The report explores the purposes of different organizational types and NESTLE's role in meeting stakeholder objectives, including customers, employees, suppliers, and investors. It examines the economic systems, including free markets and mixed economies, and their impact on resource allocation. The analysis further delves into the influence of fiscal and monetary policies, competition policies, and market structures on NESTLE's pricing and output decisions. Additionally, the report assesses the significance of international business, global factors, and European Union policies on NESTLE's operations. The report concludes with a comprehensive overview of the challenges and opportunities faced by NESTLE in the dynamic UK business environment.

BUSINESS ENVIRONMENT ANALYSIS OF NESTLE
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Introduction
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
LO1..................................................................................................................................................3
1.1 Identification of the purposes of different organisation types...................................................3
1.2 Role of organisation in meeting the objectives of stakeholder..................................................4
1.3 Responsibilities of the organisation and strategies for meeting stakeholders’ objectives.........5
LO2..................................................................................................................................................5
2.1 Economic system in allocating resources..................................................................................5
2.2 Fiscal as well as monetary policies’ impact with respect to the organisation and its activities 6
2.3 Competition policy as well as other regulatory mechanisms’ impact with respect to the
organisational activities...................................................................................................................7
Task 2...............................................................................................................................................8
LO3..................................................................................................................................................8
3.1 Role of the structures of market in determining the business’s pricing and output decisions...8
3.2 Way of market forces in shaping the responses of the organisation..........................................8
3.3 Business and cultural environment in shaping the organisational behaviour............................9
LO4................................................................................................................................................10
4.1 Significance of the international business with respect to the UK’s business entities............10
4.2 Global factors’ impact on UK’s business entities....................................................................10
4.3 European Union policies’ impact on the airlines organisation of UK.....................................10
Conclusion.....................................................................................................................................11
Reference List................................................................................................................................12
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Introduction
It is essential for the any of the business entities to ensure the effectual analysis of the business
environment for meeting the objectives of the business, i.e. growth in terms of financial
prosperity and business development (Khan and Quaddus, 2015). The study will be focusing on
the effective analysis of the business environment with respect to the chosen organisation
NESTLE. The purpose of the organisation will be illustrated in this study. The study will be
making the elaborate discussion about the national environment of the United Kingdom with
respect to the operational activities of the business entities. In addition, the different aspects of
the behaviour of the organisation will be illustrated with respect to the environment of the
market. The study will also make discourse with respect to the importance of global factors in
shaping the national business related activities in the United Kingdom. Hence, this study aims to
ensure the enhancement of the knowledge with respect to the business environment of NESTLE
Task 1
LO1
1.1 Identification of the purposes of different organisation types
Different business entities have different purposes. The sole proprietorship plays important role
in distributing the capital as well as income amongst the people associated with the organisation.
The sole proprietorship also plays the essential role in ensuring the contact with the consumers in
a direct manner. In addition, sole proprietorship's role cannot be denied when it comes to the
matter of making effectual utilisation of the funds of the organisation for meeting business
objectives.
On the other hand, partnerships give sincere efforts in making the improvement with respect to
the effectiveness of the service. In addition, the partnership plays important role in sharing the
expertise with the objective of ensuring the business profitability. The stakeholders associated
with the partnership organisations also play important role in ensuring the facilitation of the work
process (Huang-Horowitz, 2015). The business operations are facilitated in the partnership
organisations through sharing the workload amongst the stakeholders associated with the
organisations.
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The companies function with the objective of ensuring the development of the performance of
the contract. In addition, the companies believe in ensuring the development of the business and
customer satisfaction through providing effective training to the employees. The companies
intend to increase the effectiveness level of the business operations through increasing market
share and improving the deliverance of the business profitability and service effectiveness. In
this way, the companies can fulfil the purpose of ensuring the improvement with respect to the
economic performance.
In this context, it can be said that the NESTLE can be regarded as the public limited company,
which has been playing important role in providing diary services at reasonable cost. In this way,
the NESTLE has been able to ensure the improvement with respect to the business operations.
The NESTLE has been giving sincere efforts in fulfilling its short and long term objectives
through improved customer satisfaction level thereby ensuring the achievement of the objectives
of the business.
1.2 Role of organisation in meeting the objectives of stakeholder
The NESTLE has been playing the essential and effective role in meeting the objectives of the
different stakeholders associated with the organisation. The organisation has been giving sincere
efforts in improving the satisfaction level of the customers through providing effective service at
a reasonable cost. The employees are provided with effective training and development
programs, which have helped the organisation in increasing the organisational effectiveness
level. The effective HR policy of the organisation has helped NESTLE in ensuring the job
satisfaction to the employees thereby resulting in increasing the level of employee motivation.
The NESTLE is also concerned about the suppliers and the creditors (Aldehayyat, 2015). The
investors, as well as the shareholders associated with the organisation, feel safe when it comes to
the matter of protecting their business interests. The NESTLE has faced challenges while
meeting the objectives of the stakeholders. In this way, the business related challenges put the
impact on the stakeholders associated with the organisation. The long-term objective of the
NESTLE is to ensure the business growth through increasing market share. On the other hand,
the NESTLE functions based upon its short-term objectives through taking effective policies of
ensuring customer satisfaction and improving business operations.
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1.3 Responsibilities of the organisation and strategies for meeting
stakeholders’ objectives
The NESTLE has taken responsibility in meeting the objectives of the stakeholders through
devising the effective business strategy. The organisation has devised effective service strategies
for ensuring the customer satisfaction. The efficient customer service professionals have been
employed in the organisation with the objective of increasing the customer satisfaction level. For
meeting the needs of the employees, the organisation provides the employees with monetary and
non-monetary rewards (Weinzimmer and Nystrom, P.C., 2015). The good performers in the
organisation can get the scope of making advancement in their career. The NESTLE has also
played important role in increasing the communication effectiveness for improving the
relationship with the suppliers and creditors. The investors and shareholders are provided with
effective and useful information so that they can be able to track the financial performance of the
organisation.
LO2
2.1 Economic system in allocating resources
In simple terms, resources are the goods and materials that are used in an organisation for
producing goods and services (Stone, 2013). Mainly three types of resources can be refereed
where i.e. the workers & employees, equipments and furniture, human capital and the
technological tools such as computers.
In case of NESTLE, resources are translated as human capital or personnel, dairy equipments
(different dairy products), technology and last of all the high-end machineries. As in diary
industry, Casanueva et al. (2014) opines that resource allocation is quite expensive matter.
However, thankfully, the economy of UK being financially sound, it can supplement the
necessary subsidy for the NESTLE so that the company does not run into the problem of
resource allocation.
Free Market
Free market is a form of market in which the products cost or price is determined by the
stakeholders of the organisation, especially by the customers of the business organisation. In case
of free market, the forces of demand and supply of the enterprise is not obstructed by
government. In this form of market, beneficial and profitable exchanges are done between the
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customers and the sellers mutually. In this form of market the allocation of resources are done
through the strong interaction between the self- directed forces of the market and the free forces
of the market. This means that the products to be produced are determined by the customers
linked with the organisation. Moreover, the producers determine the method of production.
Finally, the purchasing power of the customers determines the price of the products. Therefore, it
can be said that free market work with direct interaction between the customers and the
producers.
Mixed Economy
In this form of economy both the private business sectors, as well as, the public business sectors
exists together. Both these sectors work towards fulfilment of different objectives, thus structure
the economy of a country accordingly. In this kind of economy, there exists a strong combination
between the forces of market. In mixed economy the resource allocation are based on the
business sectors of the economy. For example, in case of private sectors, resource allocation is
done by other private sectors, whereas in public sectors resource allocation is done by the
government.
2.2 Fiscal as well as monetary policies’ impact with respect to the organisation
and its activities
In 2008, UK economy faced a period recession causing the GDP to fall and this event resulted
the British economy to shrink by 7.1% (Coelho and Dellepiane, 2016). As a result of it, the
national economy encountered high negative budget deficits. The debt crisis also soared high and
inflation increased. However, the economy recovered from the effects of the inflation. However,
the snowfall experience in 2011 again slow ether growth of the British economy. Finally, the
announcement of Brexit came as bolt from the blue for the economic sector.
As a result of this tumultuous economic situation, NESTLE too felt the blows. Due to the
inflation, NESTLE had to lay off some of their employees in order to address the economic crisis
(Grosjean et al. 2016). UK fiscal policy also affected the performance of NESTLE as the policy
allocated less resource for the aviation sector compared to the earlier policies.
Fiscal Policy
In this form of policy, the spending levels of the customers are determined or controlled by the
government. Moreover, the government also adjusts the rate of tax. The government performs
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these processes in order to monitor the level of profits earned by the organisations, which impact
the economy of a country. Fiscal policy enormously influences the business organisations. The
organisations are forced to structure their products price, as well as, prices of the services
according to the buying power of the customers, which are controlled by the government.
Monetary Policy
In case of the Monetary Policy, the actions or the functions of the currency board, central bank,
as well as, other regulatory bodies are meant to determine the supply of money in the market,
such that it maintains price stability. Business organisations, such as NESTLE are highly
affected by this policy. There is no price fluctuation prevalent of Monetary Policy in the
economy.
2.3 Competition policy as well as other regulatory mechanisms’ impact with
respect to the organisational activities
Competition policy is immensely crucial for the performance of any organisation as the existence
and operations of competitors in the market decides what the organisation will adopt to survive
in the market. As NESTLE is the flagship carrier of United Kingdom, it enjoys some extra
facilities and provisions in the UK market. Thus, it gains an upper hand than their competitors in
the British market. However, in the outside market, the immense competition in the aviation
sector poses challenging situation for NESTLE.
In order to keep pace with the difficulties of the market, NESTLE planned to merge with Metro.
They planned that this merging and acquisition would yield fruitful result for both the companies
(Nolan, Ritchie and Rowcroft, 2014). After some time, negative results started to show negative
outcomes that were not foreseen earlier. Therefore, it can be said that though NESTLE planned
and implemented some measures to address the competition policy, the measures failed in the
end.
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Task 2
LO3
3.1 Role of the structures of market in determining the business’s pricing and
output decisions
The market structure of the diary industry in the United Kingdom has been playing important
role in putting the impact with respect to the demand and pricing for the milk products. The
market structure of the dairy industry in the UK is oligopoly in nature. The customers of the
diary industry in the UK prefer to buy the milk products through giving prices at the lower cost.
There are some of the customers, who book the flight late. They pay higher prices for purchasing
of the milk products. The changes in the pricing and output decision with respect to the dairy
business play important role in influencing the travel decision-making of the consumer. The
price of the dairy services generally pressures down when the customers purchase the dairy
products through internet. The diary product can be increased if the commercial tax in the United
Kingdom is increased (Lee et al. 2015). The NESTLE makes effective utilisation of the price
discrimination for increasing the selling number associated with seats on the dairy products. The
reduction in the ability of the UK's dairy industry with respect to the price-based competition is
ensured if the variable cost of the price rises of the raw materials or milk. The up-down trend in
the demand and its elasticity also plays important role in influencing the prince and business
output related decisions.
3.2 Way of market forces in shaping the responses of the organisation
The role of market forces cannot be denied when it comes to the matter of shaping the responses
of the organisation. There are different market players in the United Kingdom's dairy industry.
The NESTLE has devised effective policies for dealing with the competitors in an effective
manner. For dealing with the competitors in the market, the NESTLE has taken effective
customer service strategy. The NESTLE has to deal with different forces of the market. The lack
of access with respect to the channels of distribution can be regarded as barriers for the new
arrivals in the market. The airline organisations in the UK including the NESTLE have to deal
with the governmental regulations with respect to the airline industry (Niemann-Struweg, 2014).
As far as the substitute services are concerned, it can be said that there are other transportation
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modes, such as sea. The existence of video-conferencing has reduced the necessity of opting for
long-distance travels largely. It has affected the airline industry largely. The bargaining power of
the buyers has been able to influence the airline industry largely. The switching cost is absent in
the airline industry. The competition is at the high level in the airline industry because of the
existence of so many business entities. In this situation, the NESTLE has lain emphasised in
ensuring the effectiveness with respect to the communication with the consumers as well as the
suppliers. For dealing with the competitors, the organisation has also been giving sincere efforts
in increasing the quality level of its airline services.
3.3 Business and cultural environment in shaping the organisational
behaviour
The cultural and business related environment plays the prominent role to shape the behaviour
with respect to the organisation. The organisation's behaviour and culture keep changing in
accordance with the variety of the cultures and working practices of the different countries. The
NESTLE takes care of its employees as they are considered as the most important and valuable
assets of assets of the organisation. The organisation has also played the prominent role in
building up the positive attitude amongst the employees. In this way, the NESTLE has been able
to improve productivity in the organisation. The British organisation has increased the level of
organisational effectiveness with the help of effective training and development program
(Mohamed, 2013). The NESTLE believes in the idea of cost efficiency and improved working
practices for meeting the business objectives. The NESTLE has introduced employee assistance
programs with the objective of ensuring the retention of the employees in the organisation. The
corporate governance in the organisation has been implemented. The organisation has taken
positive attitude for dealing with the cultural diversity in the organisation through the
introduction of effective grievance handling procedures. The NESTLE does not make any
discrimination based on race or colour when it comes to employing talented people. The
organisation follows the corporate social responsibility for increasing the brand loyalty and
awareness amongst the consumers.
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LO4
4.1 Significance of the international business with respect to the UK’s business
entities
The different trade-related organisations, such as World Trade Organisation and International
Civil Aviation Organisation have been playing the prominent role in influencing the business
operations of the NESTLE. In accordance with the ICAO, the NESTLE has taken some of the
effective aviation safety measures. The organisation has also been able to maintain efficiency
and capacity thereby resulting in improving the safety performance. The NESTLE has given
sincere efforts in implementing the safety programs recommended by ICAO. On the other hand,
the NESTLE has to deal with the WTO's guidelines for ensuring the expansion of the business in
international level. In the case of trade-related negotiation over the services, the NESTLE has to
follow the guidelines of the WTO (Corcoran and Gillanders, 2015). In this way, the NESTLE has
been able to expand the business with the help of the guidelines framed by WTO and ICAO.
4.2 Global factors’ impact on UK’s business entities
There are some of the business factors, which play the prominent and essential role in
influencing the business operations of the NESTLE. The regulations framed by the Government
of the United Kingdom have played important role in influencing the business operations of the
NESTLE. On the other hand, the taxation policies may cast the influence on the operational
activities. Changing pattern with respect to the international exchange rate is utilitarian in
influencing the business operations. The tax and tariffs in the global market may put the impact
on the business organisation's activities (Mohamed, 2013). In addition, the international
competitiveness and different aspects of global business environment play the prominent role in
influencing the operations of NESTLE, such as legal, technological, political factors etc. These
global factors play the prominent role in influencing the business operations of NESTLE.
4.3 European Union policies’ impact on the airlines organisation of UK
The role of policies framed by European can be considered as important as they play important
role in influencing the business operations. The NESTLE has to consider different aspects of the
travel policies of the European Union, such as rights of the passengers, documents required for
international travel etc. In addition, the safety of the passengers has to be considered by the
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NESTLE. The aviation policy of the European Union has also to be considered with the
objective of increasing the level of competitiveness in the aviation industry in the UK's airlines
industry (Niemann-Struweg, 2014). The airways organisation in the United Kingdom including
the NESTLE will have to deal with competition policies of EU with the objective of providing
good services to the customers. The fairness and transparency need to be maintained in the
business practices through following the competition related policies of European Union.
Conclusion
The NESTLE can be competitive in the dairy industry through adoption of effective business
strategy. The organisation needs to make effective utilisation of its expertise in adding value to
the customer service. The uniqueness ought to be brought about in the performance of the service
through laying emphasis on the innovation and quality. The job satisfaction of the employees has
to be ensured. In these ways, the organisation will be able to ensure the maintenance of
competitiveness in the market.
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Reference List
Aldehayyat, J.S. (2015). Environmental scanning in business organisations: Empirical evidence
from a Middle Eastern country context. Management Research Review, 38(5), pp.459-481.
Casanueva, C., Gallego, Á., Castro, I. and Sancho, M. (2014). Airline alliances: Mobilizing
network resources. Tourism Management, 44, pp.88-98.
Coelho, M.C. and Dellepiane, S., (2016). Power, Transport, Aviation and Water: the Political
Economy of Infrastructure in the UK. Available online at
http://strathprints.strath.ac.uk/56082/1/Coelho_Dellepiane_IPPI_2016_political_economy_of_inf
rastructure_in_the_uk.pdf
Corcoran, A. and Gillanders, R. (2015). Foreign direct investment and the ease of doing
business. Review of World Economics, 151(1), pp.103-126.
Grosjean, G., Acworth, W., Flachsland, C. and Marschinski, R., (2016). After monetary policy,
climate policy: is delegation the key to EU ETS reform?. Climate Policy, 16(1), pp.1-25.
Available online at
https://www.mcc-berlin.net/fileadmin/data/pdf/Publikationen/Grosjean_et_al_2014_Is_Delegatio
n_the_Key_to_EU_ETS_Reform_May2014.pdf
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Khan, E.A. and Quaddus, M. (2015). Examining the influence of business environment on socio-
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Lee, Y.K., Kim, S.H., Seo, M.K. and Hight, S.K. (2015). Market orientation and business
performance: Evidence from franchising industry. International Journal of Hospitality
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Mohamed, F.A.A. (2013). Changes in the business environment and the level of management
accounting practices in Egypt: A case study. Journal of American Science, 9(10), pp.78-89.
Niemann-Struweg, I. (2014). An integrated communication implementation model for the post-
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