Business Environment Report

This report analyzes the business environment of Nestle in the United Kingdom. It examines various organizational purposes, objectives, and responsibilities. The report assesses the impact of economic systems, government policies, and market structures on Nestle's operations. It also explores organizational behavior, market forces, cultural influences, and the significance of factors shaping business activities, including international trade. The report uses PESTEL analysis and considers the impact of EU regulations and policies on Nestle's UK operations. The conclusion highlights the significant influence of the business environment on Nestle's success.

BUSINESS ENVIRONMENT
STUDENT NAME:
STUDENT ID:
UNIVERSITY:
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Executive summary
Business Environment helps in understanding organizational purposes well. Apart from the
organizational purpose, it helps in evaluating well factors that affect operations of entities. In this
report, there has been a well-enclosed research conducted on The Nestle Company Limited in the
United Kingdom. The company has its branches spread all over worlds successfully. In this
report, there has been the in-depth analysis of structures and purpose which organization follows
well. Further, the environment in which it operates and how it affects the functioning of business
are well mentioned. Lastly, a behavior of organizations in respect with market structures and
significance of all global factors those are helpful in business activities.
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Table of Contents
Introduction:....................................................................................................................................4
LO1: Understanding various organizational purposes:...................................................................4
P1.1 Identification of different purpose of various organizations (AC1.1, M1).............................4
P1.2 Different objectives (AC1.2)...................................................................................................5
P1.3 Explanation of responsibilities (AC1.3, M3):.........................................................................6
LO2: Business Environment and its nature:...................................................................................6
P2.1 Economic systems in allocation of resources: (AC2.1, M1)...................................................6
P2.2 Assessment of impact of policies (AC2.2, M2)......................................................................7
P2.3 Evaluation of impact of mechanisms along with policies: (AC2.3, M3):...............................8
LO3: Organizational behavior:........................................................................................................9
P3.1 Determination of market structures: (AC3.1, M2):.................................................................9
P3.2 Illustration of market forces (AC3.2, M2, D1):.....................................................................10
P3.3 Effects of business along with cultural environment: (AC3.3, M3)......................................11
LO4: Significance of factors that help in the shaping of business activities:................................12
P4.1 Importance of international trade (AC4.1, M3):...................................................................12
P4.2 Analyze impact of factors on U.K based entities (AC4.2, M2, D3)......................................13
P4.3 Evaluation (AC4.3, M2):.......................................................................................................13
Conclusion:....................................................................................................................................14
Reference List:...............................................................................................................................15
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Introduction:
Business Environment on general context refers to collaboration of all internal as well external
factors that affect the functioning of an organization. It comprises of various factors that affect
operations majorly. Important factors that affect ideally are technology, market structure, and
economic factors. Government rules and regulations also play a major impact on any business. In
this assignment, there is the in-depth discussion of sustainable development that is required in
commerce for its growth. Along with development business environment also plays a major role.
Further, in this assignment, there is the detailed discussion of environment and all factors that
affect Nestle operations in the United Kingdom. Herein the topic is about the business
environment through which major factors that affect operations are mentioned in detail.
I, being senior manager of Nestle Limited has very well furnished a report below as asked by
senior management. In this report I have covered well all important factors, challenges that entity
face while dealing with its operations in the United Kingdom.
LO1: Understanding various organizational purposes:
P1.1 Identification of different purpose of various organizations (AC1.1, M1)
Ideally, there are various different types of purposes accordingly which each business operates.
Purposes are generally categorized as:
Nestle caters for both the public organizations and private organizations of the market. The
public sector organizations are mainly public funded through the government controlled
operations as the structure of public organizations are mostly corporation by the legal norms. On
the other hand, the private companies can be of sole proprietorship legal structure or they can be
partnership legal structure. Nestle does interact will all kind of organizations through the market
operations.
Types of organizations: There are various different categories of entities and their types are
defined as per their operations performed by them. Business Organizations have their sole
purpose of making the profit. In order to make the profit as it is the main purpose behind its
formation, entities ensure that they do it by all ethical means. Above stated entity also follows
this strategy well as it lies in this category. Since corporation makes the profit as it is profit
making company but has never followed any unethical means to achieve.
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Apart from profit-making organizations, there are also nonprofit making ones whose purpose are
only to serve society and others (Bryman and Bell, 2015, p.34). These organizations work in
order not to make the profit and whatever income they generate out of their operations they
directly use that amount for some social cause. The purpose of the private sector organizations is
mainly about gaining sustainable profit through the business in order to sustain organizational
growth. On the other hand, the public sector organizations are mainly coherent with the
government policies as the operations are directed by the intentions and projects of the
government for social and economic development. Being a private organization, Nestle has a
purpose of enhancing the life quality of the customers through their products that can also make
contribution for a healthier future. Nestle also has a purpose to inspire the customers to thrive for
healthier lifestyle for contributing society whereas revenue generation and profit are also basic
purposes of the company to satisfy the shareholders and investors.
P1.2 Different objectives (AC1.2)
The selected organization sets its certain sort of objectives that are prepared well by higher
management or board. Similarly stated entity has also set its own objectives and takes necessary
actions accordingly. Firstly as per in reference of objectives of shareholders it has set increasing
profit a size of business increase its first preference. In order to acquire that company provides
the highest quality of food products as in compared to its competitors.
Several stakeholders have played their parts in the overall functioning of the organization. The
investors provide capital during times of risk. They are concerned with getting the main returns
for their investment. The chosen financial entity has managed to satisfy their investors with the
generated returns. The investments made by them have been observed to help the company in
times of crisis. Suppliers and the ones that provide credit, the creditors, are mainly interested in
getting payments in return for their services. The main aim of both the corporate entity as well as
all of its stakeholders is a generation of profits.
Recent observations have indicated that the chosen entity has managed to keep its suppliers and
creditors satisfied. However, any failure in doing so inevitably has the potential consequences of
severing the business relationships. This creates difficulty in finding new suppliers in that
particular market.
Employees: In context with employees entity focuses on providing them the desired livelihood.
As everyone working has some goals to fulfill (Chang, 2016, p.48). Therefore, the business
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focuses completely on providing continuous rewards, increments to meet their satisfaction levels
well.
Customers: In terms of customers it provides best quality products in affordable price. The aim
of mentioned entity as it deals in food products ensures high safety standards as it's in finished
products.
Most of the customers are adequately satisfied with services that the chosen company has
provided over the years. They rely on proper services and expect good quality of products.
Failure in satisfying the targeted consumers results in potentially catastrophic consequences. The
chosen organization has succeeded in maintaining a loyal customer base by providing effective
services. This has ensured the maintenance of a proper brand image and has resulted in its
growth.
Institutions: Claycomb and Martin (2013, p.22) have well mentioned that there are various
institutions through which company deals on daily basis and thus look forward to helping them
always as it even helps in developing connections better
Environmental Groups: One of the entity's main objective that is very well covered in its CSR
policies is to promote methods that can ensure healthy and safe environment. It provides funds
to these specialized groups as to help in achieving green, clean and safety.
Agencies: Lastly there are various agencies that above organization is in enacted with. As per
them, it provides help. Kuratko et al. (2014, p.40) have well stated that along with normal
agencies there are government agencies which define rules and regulations and laws in which
entity has to function. All parameters are followed and cross checked by law officers of the
company (nestle.co.uk. 2017).
STAKEHOLDERS OBJECTIVES
Employees Proper functioning
Customers Good quality service
Institutions Development of connection
Environmental Groups Promotion of safe environment
Agencies Defining rules and regulations
Table 1: Stakeholders need Objectives
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(Source: Created by self)
P1.3 Explanation of responsibilities (AC1.3, M3):
In addition to business responsibilities, an above-chosen company also has certain social
responsibilities. All its responsibilities as are categorized as:
Environmental: The above-chosen firms in its environmental aspect encourage plans to make
funds as to promote the green environment. The chosen company is responsible for maintaining
the issues related to environmental concerns. It has to work in accordance with the laws
regarding the environment, such as environmental legislations and government policies. The
working processes of the organization have to be in ways that do not harm the environment in
any shape or form. It even in its production makes important that all its methods especially
packaging of products are according to environmentally friendly.
Ethical issues: Li and Liu (2014, p.2795) have well mentioned that it is recommended for all
organizations to work on ethical grounds, the same is well applied by a company. It has always
ensured that none of its practices incorporated are unethical whether trade, production, marketing
sales al are in a context of ethics given by the government. It has the responsibility of
maintaining a proper ethical code of conduct. It strictly does not adhere to its own policy of not
engaging in any kind of workplace discrimination, nor does it violate any ethical rights of the
employees and the customers associated with it.
Consumer legislations: According to this legislation it has always been mandatory to provide
quality of products worth for the price. Therefore enterprise has always focused on it and has
kept as its main strategy by providing better quality products at an economical price. It has to
follow them in a proper manner.
Fair trade: Fairtrade well encloses that trade practices followed by any corporation are done
well or not (Ramanathan, 2014, p.215). Even above chosen products sell its products to all its
various regions within national and international boundaries. Thus, all trade practices are
followed by the enterprise in a fair manner, which is one of its responsibilities.
Codes compliance: There are various codes given especially to companies who are dealing in
food products, thus above entity has always followed same. It is necessary for the legal and
proper functioning of the market.
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LO2: Business Environment and its nature:
P2.1 Economic systems in allocation of resources: (AC2.1, M1)
Economic Systems helps in allocating of important resources well. There are various categories
of systems such as:
Mixed economy: In this type of economy usually it is seen that some resources are truly own by
the public sector and rest over belong to the private sector. Hence, in this type of economy,
above chosen firm focuses well on different uses of resources available.
Free enterprise economy: According to Schryen (2013, p.150) has clearly mentioned that in this
kind of economy there are various resources that are household owned and rest of resources are
allocated through price mechanisms. The price mechanism is one of a key component which
enterprise focuses maximum.
Transitional population: It usually refers to change in transition that covers well high birth rates
along with high death rates (Ramanathan, 2014, p.215). Apart from high it also covers a lower
aspect of both. Therefore entity ensures well that its products are well designed accordingly.
Labor force: It is clearly described well as employees working together for the single enterprise.
The labor force is referred as the backbone of an organization which ensures smooth functioning
of an organization. Therefore company focuses well on recruiting well-skilled employees which
are categorized as labor forces. The labor forces are mainly pivotal in commanding the economy
of a market.
Monetary policies: The monetary policies of a government is sheer impactful on the business of
Nestle. The interest rates set by the government can be impactful for creating pressure on the
company for the borrowed loan from the banks. Apart from that, the flow of capital in the market
along with the inflation are very much important to decide the profitability of the business of
Nestle. The monetary policies of government are mainly targeted for preventing excessive
inflation for developing the economic growth for creating a better market for profitability.
P2.2 Assessment of impact of policies (AC2.2, M2)
There are various impacts that can be clearly experienced by any enterprise. Firstly it can be well
observed in Fiscal Policy. It is on simpler terms referring to adjustments made by the
government in reference to spending levels. This adjustment of spending levels helps in the
influence of money supply of a country.
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Control of aggregate demand: Ideally aggregate demand refers to an equilibrium point of
demand along with a supply of all products. On simpler terms, it refers to meeting well demands
made by consumers and supply of product made by the entity (Chang, 2016, p.48). This has
always been a major impact on operations as it helps in defining production levels.
Central as well as local government spending: It helps in identification of resources well
obtained by the government through it spending done.
Public sector net borrowing: It refers to a measurement of fiscal surpluses along with deficits in
reference with a creation of debt. It helps in analyzing economic status of a company. For
example, if there are positive figures as implying fiscal deficit. On another hand, a negative
figure clearly represents fiscal surplus.
Public sector net cash requirement: Ideally this requirement is well met as per cash borrowings
did by a government. It ensures financial commitments well fulfilled by a government and above
stated entity.
Euro convergence criteria: According to these criteria countries after collaboration has adopted
one common currency Euro. This was very well applicable for all neighboring countries in
Europe (McCabe and Snyder, 2016, p.58). The main purpose of Euro convergence was to make
trade practices easier. It has helped economies and companies operating in the specified regions
a lot.
P2.3 Evaluation of the impact of mechanisms along with policies: (AC2.3, M3):
There are various important impacts that can be clearly seen through:
Competition Act 1988: On implementation of this act it clearly states well on various necessary
actions that are well taken by companies. The action in details encloses an agreement which
helps in ease of trade practices (Hair et al. 2014, p.110). On follow-up of this act well
completion of chosen firm along with other existing firms pressure have eased out well.
Enterprise Act 2002: On implementing this act the firms were able to see various changes as it
specifically deals with mergers between firms that are held to escalate profits. It even deals in
resolving of bankruptcy issues.
Competition Commission: The above-chosen organization from this regulation has benefitted as
law helps in laying guidelines which work well with rest of competitors.
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Office of fair trading: This is one of trading practices that very well monitors implementation of
all codes and policies in which a particular firm operates.
Directorate General for competition: It is held solely responsible for firstly implementing and
further establishing completion policies (McCabe and Snyder, 2016, p.58). All are framed in
context with European Commission which is well followed and its impacts can be clearly seen
by an above-chosen organization.
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LO3: Organizational behavior:
P3.1 Determination of market structures: (AC3.1, M2):
Market
Structures
Strategies Regulations Pricing
decisions
Output impact
Perfect
Competition
A number of
sellers and
buyers.
Freedom of both
exit as well as
entry.
Price taker No externalities,
Homogenous
output.
Monopoly Promote new
suppliers.
Fewer barriers to
entry and exit.
Price maker The chosen firm
gains this
advantage as by
launch of few
selected
products
Monopolistic Many sellers Independent
decision making
Price creator This type of
market has
always led
various sellers
thus above firm
experiences low
in sales.
Duopoly Limited sellers Highly
interdependent
Maker of price The above firm
launches some
of its products
in this market
structure.
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Oligopoly Low
allocation in
terms of sales
Huge level of
competition
Price maker
through
independent
behavior
Selected
organization has
faced this type
of competition
very closely.
Table 1: Market Structures
(Source: self-developed)
P3.2 Illustration of market forces (AC3.2, M2, D1):
The preferred entity incorporates well according to market forces such as:
Supply and demand: It meets well both demand and supply equilibrium. The demands have to
be processed and analyzed. Then strategies for meeting them have to be implemented. A study
regarding the ways of going about providing the supplies has to be conducted, which the chosen
financial firm has managed to do fairly successfully.
The firm has been observed to abide by the law of supply, which states that the quantity of
supplied good rises as its price in the market rises, and falls accordingly. Similarly, the quality of
the most popular products that have a good demand falls in case its price rises above a certain
level. This is the law of demand. The chosen organization maintains a sale of its best products
keeping this law in mind.
Elasticity demand: Elasticity in terms with price represents well with firm
The elasticity of supply: Supply elasticity helps in estimating out of supply well in terms of
price.
Customer perceptions: According to customer preferences the above company manufactures its
products. In reference to taste, choices,
Pricing decisions: pricing decision is always kept as economical
Cost along with output: Cost is well calculated with output terms which company produced.
Economies of scale: It helps in determination of wavelength of production in reference with both
production and supply of firm in comparison with rest of firms in a market. Working in
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