Detailed Report: Nestle's External Environment - MGMT Analysis

This report provides an analysis of Nestle's external environment, examining the forces and events outside the company that influence its operations. The analysis is structured around the general environment, which encompasses economic factors (employment, income, inflation), technological trends (impact on business strategy), socio-cultural trends (beliefs, customs, and practices), and political/legal trends (government regulations and laws). The report highlights Nestle's approach to sustainable development, technological advancements in its product lines, and socio-cultural considerations, including the impact of its infant formula marketing and its commitment to projects like The Cocoa Plan. The report also addresses the political and legal aspects of Nestle's operations across various countries, underscoring the importance of compliance with local laws and regulations.

External environment
“External environments are the forces and events outside a company that have the potential to
influence or affect an environment” Williams, C. & McWilliams, A. 2013. MGMT 2nd Asia-Pacific Edition.
In the other words, ‘external environment’ is anything that affects the company which happens outside
said company.
External environment is separated into two environments which are General and Specific. General and
Specific environments spread to 4 and 5 elements respectively.
The General environment represents the forces that exist outside of the company that have the
potential to indirectly affect it in some way. During a manager’s analysis of the general environment,
four specific areas will be assessed which are economy, technology trends, sociocultural trends, and
political/legal trends.
Firstly, there is economic.Economic is the totality of economic factors, such as employment, income,
inflation, interest rates, productivity, and wealth, that influence the buying behavior of consumers and
institutions. What Nestle company define sustainable development as the process of increasing the
world’s access to higher quality food, while contributing to long term social and economic development,
and preserving the environment for future generations.
Secondly, there is technology.
External factors in technology that impact business operations. Changes in technology affect how a
company will do business. A business may have to dramatically change their operating strategy as a
result of changes in the technological environment. Nestle is one of the largest food and beverage
companies in the world. Nestle have many food products such as Baby foods, bottled water, cereals,
chocolate, coffee, chilled and frozen food, dairy, drinks and ice cream.Nestle from packaging and
equipment, to food processing technologies and manufacturing new beverage systems such as
Nespresso,Nescafé Dolce Gusto, Special. T and BabyNes. They have also developed a large number of
different technologies. For example; Fermentation and probiotics, Extrusion, Healthier fats, Foam
booster technology, Malt extraction, and Portion dispensing systems.
Thirdly, there is socio-cultural.
Socio-cultural environment is a set of beliefs, customs, practices and behavior that exists within a
population. International companies often include an examination of the socio-cultural environment
prior to entering their target markets.
Case against Nestle

In 1800s, Nestle had a harmful image. Nestle created and marketed infant formula as a substitute to
human milk for mothers who do not breast feed. However, due to profit motive reason. Nestle managed
to persuade a large proportion of mothers in the Third World that infant formula was better for their
babies than human milk. But the fact is that breast milk is essential for babies because it provides them
with certain nutrients and antibodies that cannot be substituted. This negatively affected the society’s
lifestyle.
Case for Nestle
On the other hand, Nestle has undertaken many projects to help the society. One particular project that
has brought upon significant change to the society is The Cocoa Plan. Nestle launched The Cocoa Plan
project to facilitate African cocoa farmers and encouraged the society to take advantage of mounting
market prices by increasing their productivity. As a result of The Cocoa Plan initiatives, many have
benefited. Nestle, as a partner of International Cocoa Initiative and the World Cocoa Foundation tackled
problems such as child labour and lack of excess to health and education. For example, sending farmers
to field schools not only educates the farmer on methods to increase cocoa productivity, but they are
also educated on diseases and prevention methods.
Lastly there is political/legal trend.
The basic understanding of the political legal environment is when the government implement’s laws
and or regulations which effects the way a business operates. Not only do corporations in the food and
beverage industry have to follow the political and legal aspects of their home country, they are required
to follow the political laws and regulations of other countries the corporation is doing business in. Nestlé
operates and sells their products in over a hundred countries. In each and every country they (Nestlé)
are operating in, they are being regulated for the specific country’s laws and taxes, whether it is through
their products or employment. By being equipped for the countries’ laws and regulations, Nestlé and
other corporations create a good standing relationship with the countries’ government for the future of
their corporation. For example, Nestlé operates in Saudi Arabia and United Arab Emirates among others.
In these two countries, Nestlé faces the Islamic Law and has created the Nestlé Halal Committee to
foresee the Halal products produced by Nestlé Malaysia. (Ahmadnawi & Nestlé)