Business Environment Analysis: Nestle's Internal and External Factors

This report provides a comprehensive analysis of Nestle's business environment, examining its internal and external factors. It begins with an introduction to the business environment and its impact on organizations. The report then delves into Nestle's organizational structure, exploring the interrelati...Read More

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 and 1.2 CONERED IN PPT..................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between different organisational functions.......................................................1
TASK 3............................................................................................................................................3
P4 Impact of macro environment on business operations...........................................................3
TASK 4............................................................................................................................................4
P5 Internal and external analysis of business organisation.........................................................4
P6 Relationship between external macro factors with internal strength and weakness of
business.......................................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment defines the internal and outer surrounding of the organisation
working in commercial economy of country. Business environment is helpful in analysis various
growth opportunities for the organisation and scope of development while engaged in business
activities. Internal environment of an entity is having complex structure engaged carrying out
different types of operation in order to achieve objectives and goals efficiently (Al-Debei and
Avison, 2010). While external environment helps in developing various growth strategies in
market working in compliance with macro environmental factors like political and legal norms
of country. Organisation surroundings can be divided in three types i.e. internal, micro external
and macro external environment. All these environmental aspects react to business operations
differently. Some time these aspects negatively effect to functioning of firm while sometimes
this motivates organisational development.
Nestle is an privately owned firm working in business environment for the purpose of
making profit. The shareholders and company owner is continuously engaged in developing
various developmental plan in order to act confidently with changing requirement of present
market and external macro environmental factors. In this particular report the various types of
organisational structure is discussed along with the legal structure followed by these firms in
commercial environment.
TASK 1
1.1 and 1.2 CONERED IN PPT.
TASK 2
P3 Relationship between different organisational functions.
Nestle is engage de in variety of functions in order to deliver efficient services to its large
customer base in market (Becker, 2017). Company should comply with various needs of
organisational department to integrate the functions and brings unity in the operations which
helps in increasing efficiency of firm. The interrelationship between the different operations of
company are as follows:
Human resource department: This is the main function organisation which activities are
ultimate source of recruiting passionate and confident workforce for the organisation. This helps
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in achieving the targets of Nestle efficiently through delivering quality services to customers.
The various functions of HR department is helpful in motivating the employees through
organisation various types of training an development programme which helps in achieving
targets of firm at faster rate.
Finance department: This division of Nestle is the main source of monetary funds
available for the various investment schemes of the company (SWOT analysis of BBC. 2015).
This department regulates the financial sources and expenses of firm and also manages the
overall income of firm through controlling budget of other different department of Nestle. This
interrelationship helps in achieving the goals effectively.
Marketing: This is the department which is engaged in developing various promotional
plans in order to increase sales of company in many folds. The organisation is developing
various plans in order to target the various segments according to age, sex, preferences, choices
and different wants. This helps in capturing almost all segment of market and helps in gaining
higher sales figures in market.
Operations: This is the division which connects all the department to each other. This is
the major functional department of the Nestle which perform production function of organisation
which needs contribution of all other department employee as worker, financial funds as
investment requirements etc.
Value Chain: This carry out task of managing inventory in the Nestle company. This
department keep check availability of raw material and the distribution of finished good to the
seller and customers (Boons and et.al., 2013).
Customers Relation: This department engaged in resolving queries of customers related
to products and services. This functional department of nestle helps in enhancing the customer
satisfaction level and contribute in increase in sales of firm.
Research and Development: This department work for the development of new
opportunities for the organisation profitability. This can be achieves through researching about
new methods to expand business, increase sales, through making changes in company policies in
order to deliver efficient services to consumers, product line. This department make changes in
flavours, taste in products of Nestle according to changing needs of customers.
The organisation should develop various leadership and management style in order to
develop an efficient organisation culture and structure in the functioning. This helps in
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achievement of goals of firm effectively. The various types of organisation structure that can be
helpful in expansion of its services are as follows:
Functional: This organisation design divides the task according to different functionality
of firm. This structure helps in distributing authorities and resources according to various
operations of firm. Nestle follows autocratic type of leadership style in functional organisation
design in order to directs task accordingly (Brinckmann, Grichnik and Kapsa, 2010).
Centralised: This structure follows distribution of power within long hierarchy of firm.
This helps in maintaining an efficient way of communication ion the different level of nestle and
higher authority directs the other employee according to the strategies developed by firm to bring
higher efficiency.
Matrix: This organisation design is an integral firm the functional and centralised system.
This is followed by many of the multinational companies in order to bring efficiently. In order to
implement expansion strategies efficiently the Nestle follows this particular organisation style in
to directs the functions according to the centralised distribution of power and decisions in entity
TASK 3
P4 Impact of macro environment on business operations.
It is necessary to analyse the external influencing environment in order to develop
efficient profitable strategies for the expansion of firm and increase profitability of Nestle. The
organisation should comply with the changing environment this will helps in brining
effectiveness in functions and operations of organisation to earn more profit. The various macro
environmental factors affecting the business operations are defined below.
Political: Changing political environment of country largely affects the functionality and
profitability of firm. Various types of political policies will influence the strategy of an
organisation to large extent (Bryman and Bell, 2015). Like for an example various types of
taxation policies. Duties in export and import of material largely influence the expansion
opportunities and internal operation of Nestle. So, in order to work effectively in commercial
environment the organisation should work in compliance with changing political environment
and political policies both.
Economical: The economical factors also influence the profit margin of firm to a large
extent. Like change in exchange rate, inflation and deflation rates largely affects the growth of an
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firm in country existing economical environment. The employment rate also largely affects the
growth of economy and firm both. Financial crisis will leads to decrease in purchasing power of
customers and this negatively influence profitability of Nestle. So, the organisation should
develop various strategies in order to react confidently to such crisis situation in environment.
Social: The social aspects like preferences, choices, attitude and response of social
people towards organisation image and products largely influence the sales of organisation
(Company business structure. 2015). Now a days people, are more concerned about the healthy
life so adopting quality food in their habits. Organisation should take care of ingredients other
content in their products to increase profitability of firm in present market scenario.
Technological: The various technological up-gradation largely increase the profitability
of firm. Implementation of new technological danced system in organisation functioning helps in
developing higher efficiency in Nestle firm which helps in reducing extra cost and expenses and
increase profit margin of products.
Legal: The company should work in compliance with all the legislation defined in the
law of country. This helps in decreasing the risk of legal complications over the firm activities
and business contact in commercial environment.
Environmental: The Nestle is developing various type of strategies in order to increase
the profitability of firm through gaining trust of customers by adopting various types of
environmental protection strategies in environment. The different type of strategies like reducing
carbon footprint in their products helps in protecting environment and reducing global warming
helps in building good brand image in marketplace.
TASK 4
P5 Internal and external analysis of business organisation.
For identifying strengths and weaknesses of an particular company
then SWOT method can be used. With the help of this, effectively identify
actual position and status of organisation in significant manner (Cantwell,
Dunning and Lundan, 2010). Moreover, business firm is mainly affected by
several factors, due to business environment is divided into two parts such
as internal and external. In the context of internal environment, it includes
employees, employers, management system, objectives, corporate culture
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etc. In the other words, suppliers, customers, competitors, government and
so more. Therefore, it is important to properly analyse and evaluate all
factors and issues for taking better and appropriate decision regarding any
situation of company. In the context of Nestle company, for identify this
organisation's strengths, weaknesses, opportunities and threats then SWOT
method can be used, it includes some major steps such as follows:
SWOT Analysis
Nestle is one of the leading nutrition, health and wellness
organisation, which is based in Switzerland. This company includes several
major consumer brands such as Nescafe, Nestea, Nestle, Purina, Kitkat and
Vittel (Business Environment. 2017). With the help of SWOT analysis method
easily identify this organisation's strengths, weaknesses, opportunities and
threats such as follows:
Strengths
 World renowned brand: Nestle is an individual food brand at
national and international level. For enchaining awareness of
company's products, effective and appropriate branding and
advertising methods used in their working system.
 Extensive distribution system: With the help of diversify portfolio
strategy in working system, Nestle has been successful in penetrating
urban and rural market place.
 Broad product portfolio: In the context of broad product portfolio,
Nestle has more than 8000 brands and products (Carroll and Shabana,
2010). All these products are includes in food and beverages like
coffee, mineral water, breakfast cereals, soups and sauces, maggi,
biscuits etc.
 Large workforce: Nestle have engaged 340000 approx work force in
their organisation. Also this company focuses on to make it products
and goods are available in ever corner of the world.
Weaknesses
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 Maggi controversy: In current time period, Maggi was banned by government, due to
found contains of additive in products which were harmful for consumer's health. This
situation negatively affected on brand name and image of company.
 Brand structure: In this sector or areas has many competitors, which produce same
products and goods for consumers. They all are wants to build brand image in external
market as well as wants to attract high number of consumers towards their firm.
Opportunities
 Healthy breakfast: Maggi oats and other healthy breakfast products have a bright future
because at this time most of the consumers are more health conscious.
 Expanding market: This company has an opportunity to expand their business firm in
rural marketplace, this business organisation will become one leading company across all
over the world (Annual Report. 2017).
Threats:
 Competition in the market: With increasing competition in market place, who produce
same products. Its becoming very hard for the company to differentiate their products
from others.
 Price of commodities: While increasing price of commodities, sometimes its negatively
impacting on company's sales, margins and brand switching.
P6 Relationship between external macro factors with internal strength and weakness of business.
The organisation can not change and regulate the external macro factors. So, in order to
work efficiently changing external commercial surrounding firm has to develop an strengthened
strategies to act confidently towards the ching factors which may influence the profitability of
the firm to large extent. The interrelationship between the Nestle strength and weaknesses with
the macro environmental aspects are defined below.
Strength: The organisation is having large passionate workforce which will be helpful in
acting confidently against the changing any political and economical condition to increase
profitability (Cavusgil and et. al., 2014). Any change in technology also helps in faster
adaptability of the employee. The great development history of Nestle helps in building good
brand image and helps in reacting to the changing social environment with confidence and
effectiveness.
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Weaknesses: The controversy of Maggie is an biggest weakness of the firm which will
ehag8itrvely effect the social responses and economical factors to large extent. This will reduce
organisation profitability in many folds. So, the firm have ton react strategically to the
controversy in order to reduce the impact of this respective weakness.
CONCLUSION
This can be concluded from above report that external environmental factors is having
great influence in the working of an organisation. These factors also influence the actions of
business firm which are carried out in order to accomplish goals of firm to large extent. Through
Pestle analysis of an external environment which is affecting functioning of organisation various
types growth strategies developed to increase the profitability of firm. This assignment also
concludes that complexity and legal structure of an organisation largely defines its functionality
of business organisation. There is significant relationship between the macro environmental
factors and the development of strength of an firm in commercial environment. These factors
influence the strength and weaknesses of firm to a large extent. Various strategies developed by
an firm in order to act confidently against the changing nature of market trends and external
environment. The positive attitude towards the changes helps in development of competitive
advantage in organisation through implementing efficient change management strategies in
business operation. It can also be concluded that maintaining an good relationship between the
various organisation department and functions helps in increasing effectiveness of firm and helps
in achieving the purposes of business efficiently.
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