Analysis of Nestle's Business Environment: A Comprehensive Report

This report provides a comprehensive analysis of Nestle's business environment. It begins with an introduction to the business environment and its impact on organizations. The report then delves into the interrelation between different organizational departments, such as human resources, marketing, finance, and production, and how they contribute to achieving organizational objectives. It examines the impact of macro-environmental factors, including political, economic, social, technological, legal, and environmental factors, on Nestle's operations. A SWOT analysis is conducted to identify Nestle's strengths and weaknesses, followed by an exploration of the interrelation between macro-environmental factors and the organization's strengths and weaknesses. The report concludes with a summary of the key findings and recommendations for Nestle to improve its business strategies. The analysis covers various aspects of Nestle's operations, including its organizational structure, distribution system, workforce, and research and development capabilities, as well as the challenges and opportunities it faces in the market. The report also considers the influence of political, economic, social, technological, legal, and environmental factors on Nestle's performance, emphasizing the importance of adapting to these external factors and leveraging internal strengths to achieve sustainable growth. The report also offers insights into how Nestle can maintain its competitive advantage by effectively managing its strengths and addressing its weaknesses in the face of external challenges.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
Covered in PPT...........................................................................................................................4
TASK 2............................................................................................................................................4
P3 Interrelation between different organisational departments and their link to objectives.......4
TASK 3............................................................................................................................................6
P4 Impact of macro-environmental factors.................................................................................6
TASK 4............................................................................................................................................8
P5 Internal analysis of organisation for identification of strength and weaknesses...................8
TASK 5............................................................................................................................................9
P6 Interrelation of macro-environmental factors with organisational strength and weaknesses 9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is a collection of different aspects like individuals, entities and
other factors which may or may not be under the control of management of organisation. But
such aspects affects the profitability, performance and growth of organisation. There are many
external factors which are present in business environment like political, economical, social,
technological, legal and environmental which has positive and negative impact upon
organisation. Consideration of these factors helps to improve the strength of organisation.
Similarly, there are many internal factors which are present within the organisation like
employee morale, technological capacity, poor delivery etc. which affects sustainability of
operations. It is the duty of manager to prepare effective strategies and policies which helps to
drive success in future. Nestle is food and drink company which provides their services in all
over the world (Reed and et. al., 2013).
In the present report explain about, different types and purposes of private, public and
voluntary organisation, size and scope of different types of organisation, interrelation between
different departments of organisation and their link of organisational objectives. Also, positive
and negative impact of external environmental factors, SWOT analysis regarding identification
of strengths and weaknesses and interrelation of strength and weakness of organisation with
external factors.

TASK 1
Covered in PPT
TASK 2
P3 Interrelation between different organisational departments and their link to objectives

Success of every organisation is depends upon the working of each and every department
of organisation. A multinational organisation like Nestle need to understand the importance of
interrelation between the functions of different departments. It provides the opportunity
regarding improvement of their internal strengths and effectively satisfaction of the different
demands of customers. The different departments which are working in organisation are human
resource, marketing, finance, operational etc. Supportive nature of all department helps in
completion of tasks within stipulated period of time. It contributes regarding achievement of
common goals of organisation. Interrelation between different functions of departments of Nestle
is mentioned below:
 Human resource department: There are many functions are performed by this
department like workforce planning, appraisal of performance, determination of
remuneration etc. The function of workforce planning helps in recruitment of skilful
candidates in all other departments according to their requirements. On other hand,
appraisal of performance helps in development of training programmes which motivates
the employees to work hard regarding achievement of targets (Reinhardt and Stavins,
2010).
 Marketing department: This department has direct link with production department of
Nestle. Marketing department has the responsibility to research about the market
regarding determination of the new technologies and demands of customers. Such
information helps the production department to fulfil the different requirements of
customers.
 Finance department: This department of organisation has the responsibility to prepare
finance budget for each and every department. It helps in effective allocation of funds to
departments according to their requirements. It helps marketing department to use
modern promotional tools and production department use new and advanced equipments
(Shigang, 2010).
 Production department: It is one of the important department of organisation which
produce different food items as per the needs of customers. It uses the information which
is gathered by marketing department to make changes in the taste of their products for
attraction of large number of customers and improvement of their sales figure. This

department also has link with functions of distribution department to properly provide
their products to end customers.
Organisational Structure
Structure of organisation is divided on different basis which are mentioned below:
 Function based: Decide the structure of organisation as per different functions which are
performed in organisation. For ex., human resource, marketing, finance and operation.
 Geography based: Under this organisation is divide as per different regions of countries
where it provides their services and products. It helps in determination of the demand of
customer as per different regions (Karagiorgos, Drogalas and Giovanis, 2011).
 Product based: Fix the structure of organisation on the basis diversified products
provided by organisation. For Ex., Nestle provides food and drink products.
 Consumer based: Here customer behaviours are identified for structuring the
organisation. It helps to use innovative ideas to make changes in their products as per
their preferences.
TASK 3
P4 Impact of macro-environmental factors
Every organisation which provides their products and services in many countries have
suffer the impact of macro-environmental factors. Nestle is multinational organisation due to
which macro-environmental factors like political, economical, social, technological, legal and
environmental have both positive and negative impact upon organisational activities. To
ascertain positive impact from such factors need to implement strategies and policies which
provides direction to employees. It helps in accomplishment of their organisational objectives
within given period of time. Positive and negative impact of different external factors are defined
below:
Political factors: Nestle serves in many countries. Different countries have different
rules and regulations. Under this, management of Nestle need to focus on different political
dynamic like taxation, import export excise duties, government permission for entrance etc.
Also, need to see the stability of government (Kolk, 2016).

 Positive impact: If all such rules and regulations are in favour of organisation then it has
positive impact. For ex., Nestle follow health policies to maintain quality of their
products.
 Negative impact: High taxation and tight import export policies have adverse impact
upon business of Nestle (Nishitani and et. al., 2012).
Economical factors: Every country where Nestle provides services have different level
of development. So, management need to adopt different policies according to inflation and
deflation rates. Other factors includes flow of cash, level of income etc.
 Positive impact: Preparation of analysis report helps to gather knowledge regarding
inflation rates and different income levels. It helps to get positive impact.
 Negative impact: Low level of income of individuals has direct impact upon the demand
of their goods (Hamilton and Webster, 2015).
Social factors: It includes the thoughts and belief of the customers which has influence
upon business operations. Different factors includes about education, age, value, belief etc.
 Positive impact: To ascertain positive impact need to analyse behaviour of customers, it
helps to improve their sales.
 Negative impact: Lack of education among individuals has adverse impact upon
profitability.
Technological factors: This includes new techniques and methods which are present in
modern era which provides the opportunity for development of new products and improvement
of existing ones.
 Positive impact: Application of new techniques like internet and e-commerce helps in
marketing and improvement of sales. Helps to build direct relation with customers.
 Negative impact: Use of obsolete techniques decreases the quality of products which has
adverse impact upon goodwill also (Osterwalder and Pigneur, 2010).
Legal factors: Different legal regulations are provided by government which is need to
follow by Nestle. It is the duty upon management is to follow such legal requirements to meet
the demand and minimisation of cost.
 Positive impact: Following health and safety laws by Nestle helps to ascertain the trust
of customers towards their activities.

 Negative impact: If not following such regulations then legal penalties are faced by
organisation. This will have adverse impact upon profitability of organisation.
Environmental factors: It is the duty of Nestle is to clean the environment. They have to
follow such rules and regulation which helps in production of healthy foods and environment
friendly operations. This also includes about the CSR activities of Nestle.
 Positive impact: Helps to gather the support of society. Adoption such equipments
which are environment friendly.
 Negative impact: Not taking care of environmental regulation impacts the brand image
of organisation (Osterwalder and Pigneur, 2010).
TASK 4
P5 Internal analysis of organisation for identification of strength and weaknesses
Internal analysis is effective tool which helps in identification of the strength and
weaknesses of organisation. For this purpose, management of Nestle decided to conduct SWOT
analysis which provides internal information about organisation. This helps in determination of
the different strengths, weaknesses, opportunities and threats. It provides the opportunity
regarding development of effective strategies which helps to attain sustainability in their
operations. SWOT analysis of Nestle is mentioned below:
Strengths
 World Renowned brand: Nestle is known as biggest brand organisation in food sector.
It is also very strong in terms of revenue. It uses single brand name to provide their
different products. It helps in creation of awareness among customers about their
different offerings (Pikka, Iskanius and Page, 2011).
 Good distribution system: Nestle has good distribution system which helps the
management to effectively penetrate into the market with the help of locally adapted
distribution methods. This method will includes supply chain, street markets, door to
door distributors, medical outlets etc.
 Large workforce: There are large number of employees are working in Nestle around
340000 for continuously provide quality products in every corner of the world.

 R&D centres: Nestle has world's largest food and nutrition research centres where
around 500 employees are working. It has more than 21 research centres globally.
Weaknesses
 Brand structure: There are many products are provided by Nestle under same umbrella
group. This will makes the work more difficult for management to manage their
individual brands because creation of conflicts in interest.
 Legal and consumer issues: There are many issues and controversies are attached with
the name of Nestle which affects their image in market and between the customer's. Due
to which large number of legal penalties are imposed upon Nestle.
 Maggie controversy: It is observed that due to the ban of Maggie in India there is huge
impact is ascertained on their profitability. This will happen because of appearance of
harmful additives in Maggie. This will creates the feeling of distrust among customer's.
Opportunities
 Expanding market: Nestle has large number of opportunities to expand their activities
in rural areas with help of robust supply chain and conversion of unorganized business
activities into organised (Pulver, 2012).
 Increasing income levels: It is observed that due to stability in the large number of
external factors and improvement of the income level of individual there is large number
of chance to earn more profits through improves their number of sales.
 Quality products: They have the opportunity to provide the quality products to their end
customers to ascertain their trust and loyalty towards their brand. It helps in attraction of
the large number of customers because now individuals of country are more health
conscious. For ex., Maggie oats, cereals etc. to penetrate into new markets.
 Strategic Alliances: This will includes getting the support of other organisation to attain
their targets. For ex., Nestle has partnership with many major organisations like Coca
cola which opening new paths of expansion for organisation (Hair, 2015).
Threats
 Competition in market: On of the major threat for Nestle is local and national players
which impacts their sales and profit. This will destroy their brand image in market.
 Price of commodities: Another threat upon the sales of Nestle is continuous increasing
price of their commodities. Due to this customers are switch to other brands.

TASK 5
P6 Interrelation of macro-environmental factors with organisational strength and weaknesses
It is important for organisation to interrelate external factors with their strengths and
weaknesses. It provides the opportunity to use their strengths to attain positive outcomes from
such factor (Cavalcante, Kesting and Ulhøi, 2011). It also the responsibility of management of
organisation is to remove such weaknesses and contributes their efforts in accomplishment of
desired objectives. Through this large number of benefits are goatherd by Nestle like competitive
advantage, large number of sales, higher profitability, good brand image, large market share etc.
PESTLE analysis helps in identification of the impact of all the external factors and their relation
with strength and weaknesses of Nestle is defined below:
Political: It is one of the important factors which affects the growth activities of business
in all over the world. It includes the factors related to the stability of government and rules and
regulation which is need to follow by organisation while providing their services in different
countries. Nestle has separate legal team which helps to to bind all such regulations.
 Strength: Different legal teams are working in different countries. It helps to know about
different regulations and adequately pay their taxes in proper manner. It helps to build
image (Avramenko, 2012).
 Weakness: provide functions in 194 countries. So, it is difficult to understand different
laws of various countries.
Economical: Every country has different economical conditions and different level of
cash flows in countries. So, Nestle need to follow different economic policies regarding different
segments. The different factors which are considered under this includes inflation and deflation
rate, import/export ratio, international exchanges rates etc.
 Strength: Nestle has good business operations in Asia where economic condition is
better. This will become strength of Nestle.
 Weakness: Higher international exchange rates in some countries affects the profitability
of Nestle.

Social: This will relates to cultural aspects, attitudes, beliefs of customers. This will have
huge impact upon demand and business operations. Different factors includes demographics,
work ethic, lifestyle trends etc.
 Strength: R&D team of Nestle is proved as their strength. It helps in determination of the
trends which are present in market. It helps in production of food items as per their
preferences and influence their behaviour to buy their products (Bovee, Thill and Raina,
2016).
 Weakness: Due to large number of employees working in Nestle creates the disputes
among employees because of cultural differences. It is arises due to lack of work ethics.
Technological: This will related to different technological aspects, innovations, barriers
and incentives etc. It is the responsibility upon management is adopt new techniques to improve
quality of products and attain the confidence of customers. Other factors includes technology
legislation, information and communications, intellectual property issues etc.
 Strength: Nestle is uses new techniques of production in their factories to fulfil all the
standards which provided by government. They have good technical team which gives
training to employees for improvement of their skills and effective use of machineries.
 Weakness: This will increase the production cost of Nestle. It affects the affordable
pricing policies of Nestle and impacts their sales and profitability.
CONCLUSION
It has been concluded from the above report that, internal analysis of organisation
provides the opportunity to the manager of Nestle to understand about their strengths and
weaknesses. It helps to use such strengths to improve their profitability and contributes some
new steps regarding removal of weaknesses. It seems that there is huge relation between all
departments which provides support each other to achieve their individual and organisational
objectives. Consideration of macro environmental factors helps in preparation of effective
strategies which in turns proved as strength of organisation to perform well in flexible business
environment. Through this large number of benefits are gathered by Nestle like higher sales,
better brand image, higher market share, more profits etc.

REFERENCES
Books and Journals
Reed, O. L. and et. al., 2013. The legal and regulatory environment of business (p. 328).
McGraw-Hill/Irwin.
Reinhardt, F. L. and Stavins, R. N., 2010. Corporate social responsibility, business strategy, and
the environment. Oxford Review of Economic Policy. 26(2). pp.164-181.
Shigang, Y., 2010. Competitive strategy and business environment: The case of small enterprises
in China. Asian Social Science. 6(11). p.64.
Karagiorgos, T., Drogalas, G. and Giovanis, N., 2011. Evaluation of the effectiveness of internal
audit in Greek Hotel Business.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Nishitani, K. and et. al., 2012. Are firms' voluntary environmental management activities
beneficial for the environment and business? An empirical study focusing on Japanese
manufacturing firms. Journal of environmental management. 105. pp.121-130.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Pikka, V., Iskanius, P. and Page, T., 2011. The business enabling network–a tool for regional
development.International Journal of Innovation and Regional Development. 3(3-4).
pp.324-344.
Pulver, S., 2012. Business and the Environment.
Avramenko, A., 2012. Enhancing students' employability through business simulation.
Education+ Training. 54(5). pp.355-367.
Bovee, C. L., Thill, J. V. and Raina, R. L., 2016. Business communication today. Pearson
Education India.
Cavalcante, S., Kesting, P. and Ulhøi, J., 2011. Business model dynamics and innovation:(re)
establishing the missing linkages. Management Decision. 49(8). pp.1327-1342.
Hair, J. F., 2015. Essentials of business research methods. ME Sharpe.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Online:
Business Environment. 2018. [Online]. Available
through:<https://www.slideshare.net/NikhilSoares/business-environment-
featuresmeaningimportanceobjectives-porters-model>
What SWOT Analysis is in simple words. 2016. [Online]. Available through:
<http://pestleanalysis.com/swot-analysis-examples/>.