Business Environment Analysis: Nestle Company Report

This report provides a comprehensive analysis of Nestle's business environment, encompassing internal and external factors that influence its operations and profitability. It begins with an introduction to the business environment concept and its significance for organizations like Nestle, a leading food and beverage company. The report then delves into Nestle's organizational structure, exploring the relationships between various functional departments such as research and development, marketing, production, human resource management, and finance. It examines how these functions contribute to achieving the company's goals and objectives. Furthermore, the report identifies the positive and negative impacts of macro-environmental factors, including political, economic, social, and technological factors, on Nestle's business operations. A SWOT analysis is conducted to assess the company's strengths, weaknesses, opportunities, and threats, followed by an explanation of how these internal and external factors interrelate. The report concludes with a summary of key findings and insights into Nestle's strategic positioning within its complex business environment.

BUSINESS
ENVIRONMENT

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT............................................................................................................................1
TASK 2............................................................................................................................................1
P3. Explain the relationship between different organizational function along with business
structure and objectives...............................................................................................................1
TASK 3............................................................................................................................................3
P4 Identification the positive and negative impact of the macro environment and business
operation......................................................................................................................................3
TASK 4............................................................................................................................................4
P5 Conduct the internal and external analysis which lead to identify the strength and weakness
.....................................................................................................................................................4
P6 Explain the strength and weakness which interrelate with external macro factors................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment is the combination of internal as well as external factors which affect the
organization in term of productivity as well as profitability. It is important for the organization to
analyse the market, its current demand and trend which help the business to increase their
customer base in order to increase their sale or profit margin. In the business environment
various factors affect the organization so it is very important for the manager to done proper
research and then build effective strategy to achieve business goals & objectives (André
Cavalcante, 2013). Nestle company choose for the better understanding of this concepts and it is
food & beverage company which founded by the Henri Nestle and it was founded in 1866. This
report includes the various topics such as purpose of the organization for an instance private,
public and legal structure of the company. Along with this, it includes the different functions of
the organization which help the business to operate their internal activities which further helps in
achieving their organizational goals & objectives. In additional, macro environmental factors
positively as well as negatively affect the business. It helps the company to identify their strength
as well as weakness which provide the higher market growth.
TASK 1
Covered in PPT
TASK 2
P3. Explain the relationship between different organizational function along with business
structure and objectives
In the organization, it include various department which help the business to perform their
duty in order to complete their task with the full of effectiveness. Every organization have their
own goals which help the manager to accomplish their daily basis activities. Every organization
have different department which perform their task in order to complete their functions to
achieve more production of profitability. There are some of Nestle functions discussed below:
Research and development: This is the important function of the Nestle because every
organization required setting up separate department which help the business to analyse or
identify the demand of market or customer. With the help of this function, manager of the
company build effective strategy to develop new product in the market which satisfy the need of
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consumers. Nestle have to done this process to identify the demand and then perform according
to the requirement. So basically, research helps the organization to identify their future
opportunity which is used by the company in order to increase their productivity or profitability.
Marketing department: This organizational function helps the business to develop
effective marketing strategy which helps the business to increase their sale, customer base as
well as productivity. Manager of the company analyse the demand and need of the market and
then prepare their promotional advertisement according to it. It helps in marketing of products &
services, finance department and other functions as well. All are work together in order to
achieve their organizational goals (Asl, 2014).
Production department: This function helps the business to convert their inputs into
finished goods or make them available for the consumers. With the help of this function, Nestle
increase their efficiency or effectiveness which further helps in achieving their business goals &
objectives. This function includes the various activities such innovation of new products which
satisfy the consumer's need & desire. This function concentrates on waste material, production
timing which reduce the profit margin of the company. So they build effective strategy in order
to reduce their cost and increase productivity which further helps in increasing profitability of the
company.
Human resource management: It is the most important function of the organization
where company make sure their operational function will perform in well manner in order to
increase their sale. This function fulfils the requirement of human resources which required to
perform their duty in order to complete their task. With the help of their efforts company achieve
their business goals & objectives.
Accounting and finance department: It is the most important department of the
organization because it provide finances to other department so they can complete their task.
This department manage or operate the each activity which is important for the organization.
Finance department maintain their records and each financial transaction which help to identify
that total income or expenditure of the company.
Every department have their essential role which help the organization to perform their
task in order to achieve their organization goals & objective. It will increase the productivity
which automatically increases the profit margin.
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TASK 3
P4 Identification the positive and negative impact of the macro environment and business
operation
Macro environment is the uncontrollable factors which affect the organization and it
include the internal as well as external factors which affect the business. It can be positive or
negative, so manager of the company have to analyze that and build their decision according to
it. These factors affect the sustainability as well as profitability which further helps in achieving
business goals & objectives.
Political Factor: These factors involve government stability, policies, tax and duties that directly
affect to company's functions. Nestle serves in broad level of perspective so manger should
consider and understand related rules and future risk for their business plans (Bendekkoum and
Boufaida, 2012). These legal factors influence to operation and production department when
company works with different countries. Such as food and safety law that Nestle consider for
providing hygiene and safe products to their customers. Therefore, everything is being like
which have different kind of laws are there:
Positive impact: UK's government builds various laws which affect the organization in
positive due to stable government in the country. Then there is less chances of changes in the
regulation because it will affect the production as well as profitability.
Negative impact: Some of the legislation are not good for the Nestle because it
negatively affect the business and its policy which reduce the profit margin.
Economic Factor: This factor include the various elements which affect the organizational
growth and it' profit margin. This factor will influence the internal process of the business which
further affect he productivity and then automatically profitability.
Positive impact: Nestle Company working across 86 countries which positively affect
the operation which increase the demand of product and maintain a large network among the
customers with the help of wide product range.
Negative impact: Due to different policy in every country will create problem to deliver
their product to the consumers. Continuous change in the price of raw material will affect the
production and then productivity also.
Social factor: It involves norms, beliefs, preferences, attitudes, and customer's values that assist
to winning trust in target market. Nestle should understand about consumer behaviour and
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consider on social factors in order to sustainability of quality of products. These factor also
clarify the market segment decisions and seeking potential customers.
Positive impact: Strong research and proper knowledge increase productivity level of
Nestle by fulfill customer requirement timely.
Negative impact: Maggie case heavily affect the organization and it also destroy the
image as well as brand value of the company. It affect the production as well as profitability of
the organization.
Technological factor: It opens great opportunities for innovation in new and existing products.
This technique includes e-commerce and e-media that provide knowledge and attract to people in
less time. With the help of internet Nestle interaction with their customers directly that helping in
operational functional area. (Welford, 2013).
Positive impact: This is the best way by which company can choose correct medium of
sale by capturing market and although they have to attain the desire and also the growth profit
too.
Negative impact: Untrained staff will develop problem in the organization at the time of
perform their task in order to achieve higher production. It will affect the business as well as
reduce the profit margin of the company.
TASK 4
P5 Conduct the internal and external analysis which lead to identify the strength and weakness
Internal or external factors affect the organization so manager of the company need to
analyses the their strength, weakness, opportunity and threats. These analysis will be done with
the help of SWOT analysis which further help the manager to take effective decision and build
strategies in order to achieve their organizational goals & objectives. Their are various aspect
which affect the Nestle company and it will be discussed below:
Strength Weakness
 Nestle is the second largest food &
beverage company which is strength of
the company.
 Company have huge consumer base
which generate more revenue for them.
 Company face the criticism due to high
usage of water, unethical practices and
force child labour.
 After Maggie controversy, company
loose the trust of various people and it
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 Currently business attains more than
2000 brands from local icons.
 Nestle have strong geographical
presence which diversify the revenue
source.
 Business has strong research &
development capability which identify
the customer's need and desire.
includes the mothers and old generation
people (Classi and et.al., 2018).
 Due to unhealthy products, it will affect
the brand image of the company.
 Lots of legal & consumers Issues
Company face the huge loss which
affect their productivity or reduce the
profit margin for the longer period.
Opportunities Threats
 Maggie oats is the healthy breakfast for
the individuals which are good product
and in the future it will create a huge
opportunity for the organization which
increases sale as well as profit margin.
 Nestle is the big brand name so market
expansion can become beneficial for
the organization because they does not
required enough promotion or extra
efforts on their logistics.
 Due to stable political environment,
literacy rate will improve and inflation
is in under control. In result, it will
increase the demand of consumers and
change the lifestyle.
 Company have to focus on more
research & development which help the
business to identify the market as well
as consumer demand which help the
idea to develop new products according
to it.
 In the FMCG market, Nestle have
various competitors which affect the
organization in term of productivity or
profitability.
 Almost every company produce same
type of product, so it is very difficult to
make difference and choose any one for
the consumers.
 Price of commodity will affect the
profit margin of the company because
all the competitors have same price
policies.
 Due to lot of competitors in the market
will increase the power of the buyer. So
Nestle have to produce quality product
under the affordable price or make
consumer loyal for the longer period.
 Maggie controversy becomes biggest
threats for the company which reduce
the market share and brand image of
the company.
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P6 Explain the strength and weakness which interrelate with external macro factors
Political Factor: Nestle company expended their business in various countries and every
nation have different rules and regulation which is prepared by the government. Due to stable
movement organization can grow in the market and achieve their business goals & objectives. It
is the biggest strength of the company and another side change in the taxation related rules affect
the business in negative way. It will affect the profit margin of the company because higher tax
will reduce the profit and lower tax will increase the profit margin of the company.
Economic Factor: Every country have different level of development so Nestle company
affected with the different policies which affect the production as well profit margin of the
company. Economic factors include various influences such as inflation, GDP, change in the tax
rates etc. so manger of the company need to analyze the these affect and then build strategy
according to it.
Social Factor: This factor includes the customer attitude, behavior etc because taste and
preference of consumers will as per the time. So it is important for the manager to done regular
research and then develops effective strategy for the further decision making process. This factor
analyzes the consumer demand along with current market trends which will be identified after all
the research. After effective research, company can gain competitive advantage in order to
achieve their business goals & objectives (Imandaru and Inggriantara, 2013).
Technological Factor: Change in the technology will affect the organization in positive
manner because it will reduce the cost of production which increase the productivity and increase
the profit margin. Nestle have to make sure that, they use latest technology to produce goods
which increase the productivity as well as profitability which further help the business to achieve
their goals & objectives. With the help of latest technology, company attracts the large number
of customers in order to increase demand and provide their services to achieve their goals. Nestle
use the social or e-commerce techniques to promote their products among the consumers.
Environmental Factor: Climate or change in the weather also affects the organization
along with this, various rules or legislation related to the nature which not affects the
environment. Nestle manage the discharge and other wastage of production which positively
affect the business and make them capable to build strategy in order to achieve their goals &
objectives.
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Legal Factor: In this factor, organization has to follow some rules & legislation in order to
perform well as per the standards. These rules will prevent the disputes and conflicts among the
working environment. It will also help in understanding the different law’s and regulation which
help the Nestle to export & import the product.
CONCLUSION
From the above discussion, it has been concluded that effective plans, manager's
strategies are most important for business environment. It affects also from external factors, so
company need to evaluating overall performance of organisation to deduct exist and future risks.
It assists in improving performance level individually as well as organisation by reducing
recurring errors in production and operational departments. Through same time solutions and
response increase enthusiasm of employees with their work and encourage to their continuity by
incentives and convenience. Moreover, it creates flexibility in functional area through training
sessions by which company enables to gain new opportunities and accomplish their goals in
marketplace. Understanding the knowledge of threat and strengthen company creates unique
features and reasonable prices of products that reduce complexity with rival companies.
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