Business and Business Environment Analysis: A Report on Nestle

This report provides a comprehensive analysis of Nestle's business environment, examining both internal and external factors that influence its performance. It begins with an introduction to the concept of the business environment, highlighting the roles of internal factors like organizational culture and structure, as well as external factors such as technology, politics, and legal regulations. The report then delves into the specific context of Nestle, a leading global food company, and its various departments including human resources, finance, marketing, and production. It details the organizational structure, including function-based, geography-based, consumer-based, product-based, and matrix structures. Furthermore, the report applies PESTEL analysis to assess the political, economic, social, technological, legal, and environmental factors impacting Nestle's operations. It also includes a SWOT analysis to evaluate Nestle's strengths, weaknesses, opportunities, and threats, providing a balanced view of the company's position in the market. The report concludes with an overview of the challenges and opportunities faced by Nestle within its dynamic business environment.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1............................................................................................................................................1
Covered in ppt........................................................................................................................1
P2 ...........................................................................................................................................1
Covered in ppt........................................................................................................................1
TASK 2............................................................................................................................................1
P3.....................................................................................................................................................1
TASK 3............................................................................................................................................4
P4 ...........................................................................................................................................4
TASK 4............................................................................................................................................6
P5 ...........................................................................................................................................6
P6............................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................12

INTRODUCTION
Business environment is a combination of internal and external factors that directly
impact on overall performance of the company. Basically it means of collection of all the
individuals, entities and another factors which affect the decision making process of the
company. It includes change in customers, technologies, market trends and government as well.
In this context, manager play vital role in managing as well as determining all the factors at the
time of implementing strategies and policies (Business environment, 2018). Basically, both
internal and external factors positively and negatively affect the overall functions of the business
organization. Along with this, organizational culture, policy, structure and rules and various
factors are part of the internal factor. On the other side, technologies, politics, legal factors
comes under in external factors and all these are not controllable by firm. If any kind of
variations are occur in these factors then it largely impact on company policies and strategies.
Present report is based on Nestle, is popular and largest food company in overall world. In this,
company offer various food services to its customers as per their demands which lead in
attaining better growth level at market place. In this, legal structure and its purpose also
mentioned in this report. Along with this, effective link of different organization's functions with
company structure is discussed in this report. In addition of this, impact of external environment
in both positive and negative way is also mentioned here.
TASK 1
P1
Covered in ppt
P2
Covered in ppt
TASK 2
P3
Nestle is one of the big brand which dealing in various products like chocolates, coffees,
biscuits and many more through out the world. Main aim of every firm is to increase profit and
generate high revenue (Saleem, 2017). Every companies put various effort in fulfilling the needs
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of consumers. Many department are functioning in an organisation like human resource,
production, marketing, finance etc. All roles and responsibilities of every department is different
but their aim is similar. These all work in a common interest, that help in attainment of goal of
business. In Nestle ,various departments work jointly to perform work in effective manner.
Various functions that are performed in an organisation are discussed below:-
Human Resource Department: It is necessary department of every firm which is related
with recruitment and selection of human resource which help in managing human resources. In
Nestle, managers considered manpower needs of organisation and select candidates on basis of
this (Kaufmann, Kraay and Mastruzzi, 2011). They also conduct various training programmes
which help in increasing skills of employees. This help in increasing skills, knowledge related to
work. This help them in performing their work in better ways and help in achieving of company
objectives. This help in increasing productivity and performance of employees. Function of this
department includes recruitment and selection, providing training to employees, performance
appraisal etc.
Finance department:Finance is most important factors of every firm it is life blood of
any organisation. Through this success of firm can be determined. Major work of this department
is managing all the budgets, accounts and allocation of funds which is related to various
department so that the functions of firm done in proper way. It is necessary for every business to
reserve funds for day to day operation of business. It is responsibility of finance manager to
ensures that proper amount of funds are available in organisation. In Nestle, responsibility of this
department is to prepare budget and allocate funds to different departments so that all the
functions can be carried out in an effective manner.
Marketing department: This play a major role in growth and success of firms. Marketing
managers develop products according to needs of customers by doing proper research. They
make various plans and strategies to implement in market for their product development. Various
promotional tools are adopted by managers for promoting their products in the market .This
includes media, sales promotion, advertising etc. This is adopted by Nestle in attracting more
customers and gain trust towards their products. Main function of this department is to -promote
products and services of firm in market and communicate their value and benefits among
customers.
2

Production and operations department:This department is related with production of
goods and services. Company manufactured products for fulfilled wants of consumers.In Nestle ,
operation manager confirms that all resources are utilizes in better way so that the production
cost can be minimized (Li, and et. al., 2011). Working style of this department are highly related
with objectives of company. This department focused on quality of products. Its main
responsibility is to convert raw materials into final products and ensure optimum utilization of
resources for producing high quality products.
Structure of organisation:
Company structure is basically divided into 4 parts which are discussed below:
Function based:In this division is made on the basis of various departments which
performs their functions and activities according to them. These are related with human resource,
finance, marketing, production and operations and research and development.
Geography based:On the basis of various factors division is done it includes region,
locality etc. According to region company identifies needs and demands of consumers who are
living on those region in order to meet their need effectively (López-Gamero, Molina-Azorín and
Claver-Cortés, 2011).
Consumer based: Main differentiation is based on behaviour of buyers. This help in
improving new ideas in firm to satisfy demands of customers.
Product based: According to offering of products to customers, segmentation of firm is
done. Various varieties of goods are offered by Nestle to its customers It includes chocolates, ice
cream, coffee, tea etc.
Matrix organisational structure: It is a complex structure in which reporting
relationships among divisions are set up as matrix inspite of in traditional hierarchy. It is a
combination of divisional and functional organisational structure. Matrix structure is followed by
Nestle as it is a decentralized firm. In this structure, departments of firm can work together and
frequently communicate with each other to get issues resolved. It provides advantage to company
by bringing managers and employees together to work on particular goal.
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TASK 3
P4
Nestle is a Swiss food and drink company headquartered in Vevey. Switzerland. It is
largest food company in the world .It products include baby food, medical food, bottled water,
breakfast, coffee and tea etc. This company perform its operations in 195 countries. Business
environment of all nations are dynamic which gives impacts on working of company in positive
and negative manner(PESTEL ANALYSIS, 2018).
Factors which consider in external business environment are social, political, legal,
environmental, economical and technology. Management of Nestle necessity to follow all these
factors. With considering all these forces help in decision making of designing effective plans
and strategies that help in fulfilling of firm's aim. Positive and negative affect of macro
environmental factors are given below:
Political Factors:
Every firm has its operations in many countries, consequences of political factors on
working of business is very high. This consider many factors which is related with government
stability, tax policies, legislation, excise duty etc. Because of all these elements, many problems
may arise which organisation need to manage.
Positive impact: By considering all these factors manager take help in designing
effective strategies and policies that provide direction to them in achievement of goals.
Negative impact: Strict regulations which is imposed by government give negative
influence on working of business. Due to increase in tax rates affects the profitability of firm
which is one of political factor.
Economical Factors:
It is clearly defines that economy of every nation is different. This comprises of economy
policies, structures, and systems (Meiners, Ringleb and Edwards, 2014). It includes inflation
rates, deflation rates, income and cash flow etc.
Positive Impact: In developed countries , economic condition is better which help in
providing business development of firm and help in increasing their sales figures.
Negative impact:Due to high inflation rate the income of individual is low .It directly
impact on demand of Nestle products.
4

Social Factors:
There are some social factors which includes culture, religion, values, beliefs, age ,
income and consumer behaviour etc. These factors also influence the operations of Nestle.
Educations is one of important factors which influence in both positive and negative way.
Positive impact:If youth of country is more it influence the positive side of business. This
help in increasing sales and expand working by using online technology.
Negative impact: Due to lack of education business transactions of firm are highly
influenced (Sekaran and Bougie, 2016).
Technological factors:
Due to change in technology there is emergence of new methods and techniques, new
machinery and tools etc. are some factors which firm need to keep updated for better results.
This provides better image to firm in market. By adoption of new technology, operations the
productivity of company can be developed.
Positive impact:It help in enhancing product quality that finally help the firm towards
high productivity.
Negative impact:If company using old technology this gives adversely impact on
business operations (Tayur, Ganeshan and Magazine, 2012). This increase production cost and
decrease manpower efficiency.
Legal factors:
This consist of various laws and regulations which is formulated by government. Legal
environment of every country is different where business is operate.
Positive impact:If government regulations are fulfilled it help in running operation of
business smoothly.
Negative Impact: Due to change in government regulations this gives adverse impact on
business working styles.
Environmental factors:
Keeping the nature clean and green is main responsibility of every firm. Many firm
adopts waste disposal system which can easily converted into useful products. Every company
have to follow rules and regulation related with this.
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Positive impact:Due to following regulations related with environment company helps in
rising their product image.
Negative impact:Nestle deals in various part of country and there are many changes
taking place in climate, need, requirement, etc. of consumer. If these factors are not considered
by management of company then it gives adverse effect on growth of enterprise.
TASK 4
P5
In this report, internal working of the firm, will be analysing through SWOT analysis which is
also covering the strength and weaknesses, opportunities and threats (Meiners, Ringleb and
Edwards, 2014). Nestle has some internal factors which are included with strength and weakness
whereas external factor includes opportunities and threats. SWOT analysis as follows:
Positive Factors Negative Factors
Internal Factor Strength Weaknesses
Nestle is one of the biggest
brand in food and drinks,
ahead of PepsiCo and Coca
Cola.
It found tainted in some
scandals such as child labour
in Ivory Coast, Hazelnut
supply chain in Turkey, forced
salve labour in Thai fishing,
baby food scandal in 2013.
It is a highly diversified firm,
which is operating in different
markets (Sekaran and Bougie,
2016).
It has low economic growth in
key markets such as the United
Kingdom after the Brexit.
It has strong culture and
values, which aid to grow the
company from its roots, that
make it able to accomplish its
commitments with the
It has come across some
criticism due to its nutritional
value which says that they are
not fulfilling its mission of
good food, good life.
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stakeholders to retain profit.
It is supported by three key
elements like quality
leadership, customer
satisfaction and prolongation.
On international level there is a
need to recognize and balance
the standard to adopt
differences in culture
environment.
It has made a brand image
among people because of good
background history since its
inception.
The main reason for its
sustainability is that it has a
strong teamwork which gives
job satisfaction to the
employees through promotions
(Tayur, Ganeshan and
Magazine, 2012).
It has a powerful research and
development team.
External Factors Opportunities Threats
Nestle has an ability to emerge
in new international markets.
It has huge force of buyers, for
great choices but may be they
are not loyal for one brand.
Focused on economic growth
of BRICS (Brazil, Russia,
India, China And South
Africa)
The fluctuating prices of raw
materials, sometimes draw it to
the tough situations to sustain
on consistent price of products,
as it committed, and that
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results in less profits in
comparison with expanses.
Developing new intangible
capabilities that offers
competitive advantages.
External environment is
fuelling up with dynamics that
led to short – term decision
making and increase in
competition.
It has innovative concepts and
strong distribution channels
(Türetken and et. al., 2011,
June).
There are regular changes in
technology that derives the
innovation and challenges.
Raising demand of healthy low
calorie beverages such as
value added bottled water,
coffee, teas, etc.
The UK government
introduced new law in the year
2016, to ban the
advertisements of high fat, salt
sugar, foods or drinks that
influence children under 16.
A new major breakthrough
offers a huge sales advantage
that is to reduce sugar in its
chocolates bar by 40%, that
will catch more consumer,as
they are health conscious.
New sugar tax in the UK
which is implied on the sugar
drinks.
P6
While considering the macro environment factors, PESTEL is used recognize the six
major aspects which affects decision-making, these all are impact on industry kinetics, and these
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are such external factors which are having influence on a business (Vaiman, Sigurjonsson and
Davidsson, 2011). Below is the PESTEL analysis that is elaborating all these factors:
Political Economic
 There are some rules and regulation
which are established by the
government, so there are some
standards are predetermine for foods
and beverages and marketing activities.
 Government economic decision in new
market can be a risk for a Nestle as it
imposes new import and export charges
and other duties.
 Extending a business across the
borders can be forced by so many
political aspects, yet the business need
to adopt that concept first.
Strength : Nestle will be aware for all the
government laws, and that it has a team which
works according to the regulations, so there is
no hassle for managing the government
guidelines.
Weaknesses : It has business in various
country so it needed to manage different
guidelines as per distinct rules for that it need
more extensive hands which can manage its
business effectively (Zsambok and Klein,
2014).
 A business must be aware about
changing economic conditions of a
country, like growth rates, income
values, potential economy in fiscal
year.
 Per capita income that affects the
changing consumer needs as their
budget affects the sales, if there is rise
in income that will, reflect in rising
sales through influence in cost
conscious customer (Zeng, Li and
Duan, 2012).
 Suppliers and raw material cost in local
market may have an impact on the
manufacturing cost of product as they
increase in price thatmake its difficult
to stay in market for so long.
Strength : Nestle is already working in so
many countries so the economies which are
less flexible will give it more benefits.
Weaknesses: As it is investing in various
economies but it may give it a drastic fall as
every country set there economic policies on
globalized standards. It may be possible that
numerous countries increase there import
duties.
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Social Technological
 Customers have changing behaviour as
they are moving towards the healthy
foods.
 Needs of different culture adoption like
languages, religions, etc.
Strength: Customer can stay with it if they are
health conscious and familiar with the brand.
Weaknesses : Because of the diverse culture
customers may not find it well suited for them.
 Extensive approach of new rising
technologies, as in terms of social
media.
 Innovation with digital technological
development.
 E – commerce is one of the most large
platforms which is giving it a boost.
Strength: New technologies are giving it new
heights as it is rising on new levels.
Weaknesses: Working staff may not be techno
savvy so they find difficulty to work with new
technology (Wack, 2017).
Legal Environment
 There may be a change in laws.
 It should keep in touch with
regulations and international markets
Strength: Legislation make a firm authorized.
Weaknesses : Prohibition is not accepted.
 Saving environment from corporate
carbons that are generated through
packaging, recycling, manufacturing.
Strength: Safety measures for global warming
are carefully followed by a firm.
CONCLUSION
As per the above mentioned report, it has been concluded that in environment of
business, various factors are exist which firm needs to be considered in order to run their
operations smoothly and successfully. Different types of organisations are there which includes
public, private & voluntary firms and each one have its different purposes and scopes. Various
functions of an organisation are linked with each other and objectives of firm. Assessment of
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