Business Environment Report: Nestle's Market Analysis and Strategies

This report provides a comprehensive analysis of Nestle's business environment, examining various aspects that impact its operations and strategic decisions. The report begins with an introduction that highlights the significance of the relationship between business and its environment, particularly within the competitive food industry. Task 1 focuses on Nestle's interactions with different sectors (government, private, non-profit, and cooperatives) and identifies the interests of key stakeholders (customers, suppliers, employees, and government). Task 2 explores the impact of economic systems (free market, command, and mixed economies) and fiscal and monetary policies on Nestle's activities. It also discusses the role of competition policies and regulations in the food industry. Task 3 delves into market structures (monopolistic, oligopoly, and perfect competition) and the market forces influencing Nestle's decisions, including customer perception, pricing, and supply and demand dynamics. The report concludes by summarizing key findings and insights into Nestle's business environment and its strategic responses to various market challenges.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
1.1................................................................................................................................................3
1.2................................................................................................................................................4
1.3................................................................................................................................................4
TASK 2............................................................................................................................................5
2.1................................................................................................................................................5
2.2................................................................................................................................................6
2.3................................................................................................................................................6
TASK 3............................................................................................................................................7
3.1................................................................................................................................................7
3.2................................................................................................................................................8
3.3................................................................................................................................................9
TASK 4............................................................................................................................................9
4.1................................................................................................................................................9
4.2..............................................................................................................................................10
4.3..............................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The business and the environment have a close relationship between them. The business
is an ongoing process and it is affected by number of factors like political, social and economic.
The interaction between the business and the environment is important as it helps in
strengthening the company and using resources in an efficient manner (Hazlina Ahmad and
et.al., 2010).
Among the leading companies in the food industry, Nestle is one of the most successful
corporations. They are expanding their market all over the world with different food items. The
report will carry out the research about competitive market and the business opportunities for the
company. Accordingly, the decisions for the new plans would be made to identify cost-effective
ways and in delivering high quality with different products to the customers.
TASK 1
1.1
The Nestle Company deals with various organizations of different sectors which include
private, public, and voluntary sectors. Every aspect has different purposes in serving the people.
The following prospects are discussed below:
 Government- These companies are owned or are having maximum share in the
company. They are formed with the regards of sustainable development and satisfying
the people in the long run (Botha, Kourie and Snyman, 2014.). Their main purpose is the
welfare of society and making little profit out of it. These have mainly high market share
and an over growing sales.
 Private limited companies- They are owned by a single or group of partners and have
minimum interference by the government. Their main motive is to earn maximum profit,
expand the business, increasing share in market and to enhance their sales. The power is
in the hands of the individuals.
 Non-profit organizations- These can be either formed by the government or by the
group of individuals. The main purpose of these companies is to serve customers and not
to earn profits. They are made to work on social issues and to serve the community
(Chavis, Klapper and Love, 2011).

 Cooperatives- In this, the group of members are working together for achieving common
needs. They are focused on accomplishing the requirements of the community to whom
they are serving. They do not work to earn large amount of profit rather for creating value
for the group members.
1.2
In Nestle, all the stakeholders have different interest in the company. Their power and
role have a great influence on the operations within the organization (Craig and Campbell,
2012). The objectives of the stakeholders are listed below:
 Customers- It is the most crucial element in the growth of the company. They create
demand in the market for getting right products at the appropriate price with high quality.
They urge in getting healthy and efficient item from the company. Nestle ensure to
provide customer with quality products with the minimum prices.
 Suppliers- They provide raw material or the semi-finished goods to the company. They
are also important for the organization to maintain healthy relations with them as finished
goods cannot be formed without the initial ones (Halbert and Ingulli, 2011). Nestle make
sure to acquire an efficient relationships with its suppliers.
 Employees- These are responsible for performing the operations of the company. They
are an effective means to meet objectives and targets of the company. They are paid
salary against their work. Nestle ensures to benefit employees in the best possible manner
and take measure to motivate them in achieving the targets.
 Government- These authorities are interested in collecting tax revenue from the
company. They also define rules and duties which are to be followed by the firm for the
betterment of the society (De Jonge, 2011). Nestle make sure to follow all policies and
regulations formulated by the government.
1.3
The corporate responsibilities of Nestle and the strategies for them are a crucial element
for achieving targets of the company. The major ones are discussed as under:
 Responsibility towards social responsibility- In context to meet this, Nestle is required
to carry out the responsibility towards the community by satisfying their needs. It results
in effective development of society. The company should consider the preferences of
people to meet their needs effectively (Fernando, 2011).

 Responsibility towards environment- The Nestle organization is required to protect the
environment to meet its obligations. They should use eco-friendly products for the
production. The sewage system should also be managed properly so that no harmful
leftovers affect the environment.
 Responsibility towards government- The Nestle Company is obliged to follow all the
rules and regulations formed by the government. They should pay all taxes and adopt the
policies in the organization (Teece, 2010). If the certain product is under the licence
scheme, than the company should take the permission from the government before
starting the organization.
 Responsibility towards employees- The Nestle should ensure that the employees are
satisfied in the company. They must be provided with best working conditions which will
help them to achieve the targets. As they are the core asset for the firm, the company
should take several measures to motivate them.
TASK 2
2.1
Every country has its own economic system formulated according to demand and thus
they make proper allocation of resources so that it can be utilized effectively and efficiently.
These are mainly free market, centrally planned and mixed economy (Solomon, 2014). The
following are discussed in detail:
 Free market economy- In this, there is little or no intervention on supply and demand.
The decisions are developed on the basis of market mechanism. They can easily import
and export products with different countries. Here, no decision is made by the
government and have a little interference. In this, the company like Nestle are entered in
this economy so that the resources are allocated according to demand of supply in the
market. It means that the decision regarding what to produce is according to the
customer's preference but how to produce things are decided by the producers (Trkman,
2010).
 Command economy- In this, the government is responsible for making decisions
regarding distributing resources. Mainly, the socialist countries have fully command

economy. Moreover, the government distributes resources accordingly to the people
demand and the demography.
 Mixed economy- It is the combination of both command as well as the free market
economy. In this, the countries are run either by the government or the private
organization. However, public sectors are owned by the government.. But for the private
companies, they run their operations on their own but they are mostly under the
supervision of government (Cavusgil and et.al., 2014). The legal authorities monitor
private organizations on a regular basis.
2.2
Fiscal and the monetary policy have a great impact on business organization and its
activities. The government gets money from these policies that further are invested in the public
welfare activities such as education, health etc. The financial policy is the amount of tax which is
paid by the organization and is mainly determined by the government (Why is competition policy
important for consumers, 2012). It they increase the amount of tax than the companies would
have less money to invest in the operations. Hence, the Nestle Company will charge amount to
the customers for its products and services. If the government impose low taxes on the company,
it will invest in many sectors which will help in creating jobs for the people (Wheelen and
Hunger, 2011).
However, monetary policy is been controlled by the central bank. It not only affects the
organization but it impacts on the whole economy. It is used for obtaining the credit. There are
mainly two types of monetary policy namely expansionary and contractionary. The former one
ensures the low interest rates and availability of credit. Hence, the Nestle company will be able
spend more upon the investment activities. This helps in reducing taxes and increasing
government expenditure. However, the later policy helps to lessen the money supply and makes
it tough to borrow money for the organization (Bryman and Bell, 2015).
2.3
Nestle is one of the most crucial company in the food industry. Now days, this industry
has become very challenging and every company is investing a lot of money in the product and
service development. Due of this, every firm is competing with each other to get competitive
advantage. The regulations mainly include competition, fair trading, standard customer services
and the environmental policies (Werther Jr and Chandler, 2010). Competition policy encourages

the emulous feeling among the firms and helps in increasing efficiency of them. Competition Act
1998 is been implemented to prevent the organization from the issues like fraud practices and
also from abolishing the dominant market positioning. Moreover, the different ventures have
expanded their working and functions of operations at various levels. Hence, this policy was
formulated for ensuring the working of the firm in an efficient manner without any restrictions.
Competition policy helps in breaking the monopolistic market and assesses the entry of new
competitors in the market (Hair, 2015).
The UK competition network has been formulated for providing more transparency and
to face tough competition all over the world. It is also giving its best in promoting the fair
competition and securing the interest of their customer base.
However, the changes which have been made in the competition law associated with the
insolvency and bankruptcy was introduced through the Enterprise Act 2002 (Welter and
Smallbone, 2011).
TASK 3
3.1
The market structure plays an active role in determining the price and production in a
particular company. The market structure which include monopolistic, oligopoly and perfect
competition have a great impact on companies.
In monopolistic market, there is large number of firms and every organization is having a
small portion in the market share. In this, the firms have less impact on pricing and output. They
mainly supply goods in the market (Haidar, 2012). Nestle company is required to maintain its
price to the minimum so that they can attract more customers over the competitors. For example,
the Nestle coffee is having many substitutes in the market like Bru etc. so they should mak e sure
the quality and fixing the price accordingly.
In oligopoly market, there is less number of firms and together have a control on market
share. They are responsible for determining the price and supply of the goods (Haidar, 2012). If
the demand of products is high in the market than Nestle increases the price of it but sometimes
the excess price decreases the demand for the product.
In perfect competition market, there are a large number of buyers or consumers but at the
same time there are many firms selling the same product. The prices of the goods are

perfectively elastic. The entry and exit of the companies are free; this makes the makes the
existing firms to sell their products at the market price (Zairi, 2012).
3.2
 Market forces helps in defining relation between supply and demand within the
market. The organizational response is the reaction of the Nestle to the economic
circumstances. It has a great impact on company's reputation and profits (Hazlina Ahmad
and et.al., 2010). The following are the market forces which influence decisions of the
company:
 Customer's perception and actions- Perception for the products changes from one
individual to other. Every person has the right to choose according to their own
preferences as no one can force them to use a single product (Trkman, 2010). Nestle
should conduct a market survey to identify the customer's preferences and produce goods
according to their requirements.
 Pricing decisions- The market structure have great influence in determining price of the
product. It should be fixed by considering the requirements of the customers (Botha,
Kourie and Snyman, 2014). The Nestle Company should determine its price by seeing
structure for developing the product and also according to the market price.
 Supply and demand- It is the most crucial factor which influence decisions of the
company. The analysis is done as to identify the demand of products and according to it
the supply can be processed. If the demand is low the company has to sell products at low
price (Bryman and Bell, 2015). However, if the demand is high than the organization can
raise its price according to them. Nestle company should produce goods according to
demand of the customers. Economies of scale- The situation of the economy is having a
great impact on the pricing of the products. The decisions should be taken by considering
the economic condition (Chavis, Klapper and Love, 2011). The Nestle Company should
set their prices according to the market conditions in the specific economy.
3.3
Organizational behaviour is highly affected by the business and cultural environment.
There are mainly two conditions of environment- economic and non-economic. The former one
includes economic system, policies and the conditions. The later one includes natural,
demographic, technological, legal and social factors of the environment (Craig and Campbell,

2012). The products of Nestle company are been sold in many countries so they have to consider
the cultural environment of all of them. Economic policies such as industrial, fiscal, import-
export and monetary policies are not the same for all countries which highly affect the
organizational behaviour. Political factors such as the government policies, political system are
considered in formulating strategies of the Nestle Company. The stability of the government
influences business activities at a higher extent. The legal environment which is associated with
the setting of laws, regulations etc. influence the operations of the company (Halbert and Ingulli,
2011). Nestle has to work within the framework of law to become an efficient company.
Technological factors include methods, techniques and approaches for producing goods, the
organization should use the latest technology in developing products so as to attract maximum
number of customers. Demographic environment includes size, density and growth rate of
population. These factors have direct impact on demand for the goods of the company.
TASK 4
4.1
International trade is crucial for every nation as it is not possible to produce all goods
within the country (De Jonge, 2011). Nestle is required to exchange their products and services
with different countries, as it is not possible to execute operations without international trading.
The following factors have a great significance on the company: International trade and the UK
economy
 Market opportunity- Global factor helps to create opportunity in developing
international trade which is rising in the UK economy (Impact of Global Forces on UK
Business Organisations, 2013). The organization should expand business in countries in
which they are selling their goods. This will help the company to raise its revenue. Global market- It helps the company to set up their business all over the world which is
positive for Nestle organization in the UK economy.
 World trade organization- This includes the global rules of trade between different
countries. Its core function is to ensure that the flows in smooth, predictable and in a free
manner.
 Emerging market (BRIC economies) - The economies of Brazil, Russia, India and
China are growing at a rapid speed and in the near future they will be the leading

countries of the world (Fernando, 2011). The Nestle Company should deal with these
nations so as to expand its economy and earn more profit.
4.2
The organization is a leading global company which have a great impact on the
operations by different factors. The main problem is competition in the market as there are many
firms which serve the same products. This has increased the competition within different
organizations at a higher extent (Teece, 2010). In addition to this, there is high demand for
skilled and talented worker in labour market which has raised the problem for the Nestle
Company related to the employee unrest. This has resulted to high investment in the recruitment
process. Further, the factors related to business environment include political, economic and the
legal factors that highly impact on the operations of company.
Moreover, the norms related to the preferences of the customer, environmental factors
and the new technology affect the organization. They should produce the goods in the country
where the labour is easily available and at the minimum wage rate (Cavusgil, and et.al., 2014).
With the development in globalisation, the Nestle is able to use its resources at optimum level
and attaining an international competitiveness in the market.
4.3
The policies of the European Union have high impact on UK businesses. They have to
follow all rules and regulations defined by EU (Hair, 2015). Nestle being the FMCG company is
not able to increase price as per their own desires; rather it has to be done according to norms of
EU. It has an immense influence on UK businesses by taxation, directive and the inspiring the
business activities by giving support and providing with subsidies. The companies within
different countries can exchange their products without any obstacle. If the UK firms are having
the license, they can easily export and import goods to other EU countries. The monitoring of the
legal and political norms is been done by the national authorities. They keep a check on activities
of the business organization (Zairi, 2012). Following are the policies affecting the business
activities of Nestle:
CAP - The Common Agriculture Policy is the agriculture policy of the European Union. It
implements a system of agriculture subsidies and other programmes for the companies. However
the policy has received criticism on the grounds of its cost and the environmental and
humanitarian impacts.

Kyoto Protocol – It is an international treaty which extends the 1992 United Nations Framework
Convention on Climate Change (UNFCCC). The protocol has been designed in order to fight
against the issue of global warming. It establishes the obligations to decrease the gas emissions
on the developed countries of the world.
G20 – It is an international forum which brings integration between world’s leading and merging
economies. The group consist of 85% of world GDP and two-thirds of its population.
CONCLUSION
From the above report it can be concluded that, it is important for Nestle Company to
understand its business environment to become a leading organization. By analysing it, the firm
is able to recognise its strength, weaknesses, opportunities and threat. Further, for better
understanding the entity should also monitor other environmental factors which include political,
economic, technological etc. on a regular basis. Hence, the Nestle Company would plan its
strategies by analysing the environmental factors.

REFERENCES
Journals and books
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: knowledge management and knowledge management technology. Elsevier.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Cavusgil, S. T and et.al., 2014. International business. Pearson Australia.
Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review. 25(3). pp. 486-507.
Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.
De Jonge, A., 2011. Transnational corporations and international law: accountability in the
global business environment. Edward Elgar Publishing.
Fernando, A. C., 2011. Business environment. Pearson Education India.
Haidar, J. I., 2012. The impact of business regulatory reforms on economic growth. Journal of
the Japanese and international economies. 26(3). pp. 285-307.
Hair, J. F., 2015. Essentials of business research methods. ME Sharpe.
Halbert, T. and Ingulli, E., 2011. Law and ethics in the business environment. Cengage Learning.
Hazlina Ahmad, N and et.al., 2010. Is entrepreneurial competency and business success
relationship contingent upon business environment? A study of Malaysian SMEs.
International Journal of Entrepreneurial Behavior & Research. 16(3). pp. 182-203.
Solomon, M. R., 2014. Consumer behavior: Buying, having, and being. Engelwood Cliffs, NJ:
prentice Hall.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range planning.
43(2). pp. 172-194.
Trkman, P., 2010. The critical success factors of business process management. International
journal of information management. 30(2). pp. 125-134.
Welter, F. and Smallbone, D., 2011. Institutional perspectives on entrepreneurial behavior in
challenging environments. Journal of Small Business Management. 49(1). pp. 107-125.
Werther Jr, W. B. and Chandler, D., 2010. Strategic corporate social responsibility:
Stakeholders in a global environment. Sage Publications.
Wheelen, T. L. and Hunger, J. D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
Zairi, M., 2012. Measuring performance for business results. Springer Science & Business
Media.
Online
Impact of Global Forces on UK Business Organisations. 2013. [Online]. Available through:
<http://research-methodology.net/impact-of-global-forces-on-uk-business-organisations/
>. [Accessed on 6th September 2016].
Why is competition policy important for consumers, 2012. [Online]. Available through: <
http://ec.europa.eu/competition/consumers/why_en.html >. [Accessed on 5th September
2016].