business environment sample of nestle

Businessenvironment of

Nestle

2 | P a g e

TABLE OF CONTENTSINTRODUCTION..........................................................................................................................1

TASK 1...........................................................................................................................................1

1.1 Purpose of different types of organizations.....................................................1

1.2 Extent to which NESLE meets the objectives of the differentstakeholders:..........................................................................................................................2

1.3 Responsibilities of the Nestle as an organization and strategies theyincorporated to meet them:.............................................................................................3

TASK 2...........................................................................................................................................4

2.1 Effective allocation of resources in different economic system................. 4

2.2 Impact of Fiscal and Monetary policy on Nestle:..............................................6

2.3 Impact of competition policy and other regulatory mechanism on theactivities of Nestle:.............................................................................................................. 7

TASK 3...........................................................................................................................................8

3.1 Market structure and determination of the price and output decision ofthe Nestle:...............................................................................................................................8

3.2 Response of the Nestle to the market forces:...................................................9

3.3 Business and cultural environment of Nestle:...................................................9

TASK 4........................................................................................................................................10

4.1 Evaluation and significance of international trade, economic integrationto Nestle:...............................................................................................................................10

4.2 Impact of Global factor on Nestle:.......................................................................10

4.3 Impact of the policies of European Union over NESTLE.............................. 12

CONCLUSION............................................................................................................................12

REFERENCES............................................................................................................................13

Business Environment Sample from Assignment Help Australia

INTRODUCTIONThe present report is about the business environment of Nestle.

Business environment can define as distinct sources or surroundings whichinfluence the business operations and functions of the organization. Itcomprises internal and external factors, such as customers, competitors,suppliers, government, regulations, and legislations, economy andemployees etc. Business environment has positive and negative impact onorganization. This research comprises distinct objectives and marketstructures of the company. It spotlights on Nestle and its strategies forattaining its strategic objectives. The study describes the responsibility of theNestle towards the stakeholders for completing their expectations. Includingthis it also includes fiscal policy and monetary policies and their impacts onorganization’s financial performance. Along with this, market structure ofNestle, distinct market forces, international, treads, economic integrationsand policies of European Union are also describing in the followingparagraphs of the report.

Nestle is a food and beverage company, management of the companyfocuses on the organization’s objective and market structure of the Nestle. Itoffers distinct baby food, chocolates, breakfast cereals, confectionery,bottled water, ice-cream, pet foods and snacks, etc. This company is usingtheir products in the global market for international treads, so it needsappropriate environmental analysis of various factors which have andpositive and negative impact on the business operation and functions of theNestle (Half-Yearly Report, 2013).

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TASK 11.1 Purpose of different types of organizations

Objective of an organization can define as the overall goals, purposeand mission of the company that have been developed by the managementof the organization and communicate to the employees for betterperformance of the association. It focuses on the long term planning foroperating the business. Overall policy, rules and regulations are based on theobjective of the corporation and it can provide effective guideline foremployees for better performance. According to the objectives, organizationcan divide in five types (Paswan and et. al., 2011):

1. Commercial organization2. Public sector organization3. Non-Profit organization4. Cooperatives5. Nom- governmental organization


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Sample on Business EnvironmentNestle

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Maximizing the profit of association is the main objective ofcommercial organizations. This type of companies uses distinct type of skills,knowledge and experience of the employees for optimum utilization of theavailable resources for increasing the profit of the organization. Mainobjective of the public sector organization is providing special benefits oradvantages to the public, society and intact commune. It offers equalchances for every single individual of the nation. Police and military are bestexample of this type of organization. Charity and welfare for society is themain purpose of Non- profit organizations. It does not focus on maximizingprofits. It provides a valuable offers and benefits to their stakeholders. NonGovernmental Organizations (NGOs) are based on a specific objective whichincludes granting some special services, resources and facilities to everysingle individual of the society for distinct political and societal agendas(Afilmohhamad, 2012). Services of NGOs include control over pollution; takeaction against the corruption, education facilities for each people,development of the entire society, etc. At last cooperative organizationshave some hybrid objectives; these are maximum profit, efficient quality,customer’s satisfaction and effective communication between differentdepartments of the organization.

1.2 Extent to which NESLE meets the objectives of the different stakeholders:All those individuals and cluster of people, firms who may affect and

can change the operations and functions of the business are known asstakeholders of the Nestle. Stakeholders can divide in two parts; these areinternal and external stakeholders. Internal stakeholders are employees and


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shareholders of the Nestle and external stakeholders are customers,employees, supplier, government and society. As per the purpose of theNestle it falls in the public sector organization its major objective is providingbenefits to stakeholders of the organization. For attaining this objectiveNestle uses distinct planning and strategies with effective management.Nestle has different extent to meet the expectations of the stakeholders,which are as follows:

For offering effective dividend and return Nestle uses appropriatedividend policy and stock appreciation for the investment and funds ofthe shareholders.Nestle provides efficient salaries, reward, compensation, bonus,working environment and job security for their employees (The NestléCorporate Business Principles, 2010).It offers appropriate training and development programs for enhancingthe skills and knowledge of entire workforce.For satisfy the customer Nestle provide high quality food product andservices with competent price.Nestle uses effective price mechanism and policies which is fruitful andadvantageous for all customers.For maintaining effective relationship with supplier Nestle do paymenton time to their supplier for the delivery of material.It grants resource full and pollution free environment to the society.Nestle offers various employment opportunities in different fields forevery individual of the society.


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Nestle follows all rules and regulation which are made by thegovernment for different tax and interest payment (Galbreath, 2009).It provides perfect competition to the whole market and maintains thedeco random of the perfect market structure.Therefore, Nestle utilizes valuable and effective strategies to assemble

the stakeholder’s objectives as well as organizational purposes.

1.3 Responsibilities of the Nestle as an organization and strategies theyincorporated to meet them:As per the above discussion Nestle is a public sector organization, so it

has different responsibilities towards the market and society which helpfulfor maximizing the profit of the organization and attaining its objectives.Some responsibilities of Nestle are describing below (Half-Yearly Report,2013):

Management Responsibility:Organizational success is totally depends on the management, so

Nestle has some responsibilities towards the management of the company.There are various departments in the management of the Nestle, these arepersonnel, finance, operation and production and marketing section of theorganization. For finance department Nestle is liable for the effectivefinancial management, allocation of the financial resources, and taxation anddividend policies of the company. For human resource management,company is responsible for the efficient working environment, training anddevelopment programs for employees. Nestle is accountable towards thequalitative inputs for operation and production department and healthy food


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product for customers of the organization. Thus, Nestle has variousmanagement responsibilities for attaining the organizational objectives(Davies and Ormosi, 2013).

Ethical Responsibility:Objective of the Nestle is long term and for attaining these purposes

they needs to accomplish various corporate social and ethical responsibilities.These accountabilities include effective relationship with the stakeholdersand corporate governance. Nestle uses its products and services for theinternational trades so it needs to follow the culture, beliefs and values ofeach countries, thus it is accountable for some international ethical issueswhich are relevant to the international trade, environment, culture,standards of the organization.

Environmental Responsibility:Nestle is a food and beverage organization so it’s all products are

based on the natural inputs so it has various environmental responsibilities.


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Nestle utilizes cocoa products as an input for manufacturing numerousmerchandises (Fernando, 2011). World cocoa foundation produces somepolicies for every cocoa farmers and it deals with the process of farming andtheir strategies for environmental management. So, environmentalresponsibilities of Nestle include the exercise of bets techniques forcultivation of cocoa crop. Including this it is responsible for the developmentof the ecological and communal programmes which are very useful for theenvironment of the organization.TASK 22.1 Effective allocation of resources in different economic system

All those organisms by which Nestle is manufacturing and producingdistinct goods and services with optimum allocation of the availableresources of the organization are known as economic system. Majorfunctions of the economic system of the organization are economic progressand stability and allocation of the resources. Overall production of the Nestleis depended on different resources, such as labour, land, natural resourcesand other sources of the company (Ghannadian, 2006). Some decisions arealso based on the economic system of the Nestle, these decisions are: whatto produce, how to produce and for whom to produce. On the basis of thedecision making process and allocation of the resources there are four typeof economic system and all these system are describing below:

Traditional economic system: This type of economic system followsby the primary companies and it utilizes distinct traditions and customs.Its operations and productions are based on the farming and hunting. Itmajor decisions, what, how and whom to produce are taken by the


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background and civilization of the association. All decisions areobtained by the superlative leader of the organization. Tribal areas inSouth America and Asia are the best instance for this type of economicsystem. Traditional economic system has variety of benefits anddrawbacks, such as each element of this system is separate form theirown task and work. Public networking and communication are strong,safe, conformist and constant. On other hand habitual systems areineffective in managing change and updating technologies. Thissystem does not utilize their resources and skills effectively inproducing goods and services (Gottheil, 2013).

Market economic system: It is based on the self production of thecompanies and allocates the resources on the basis of the demand andsupply and distinct market forces of the organization. Obtaining higherprofit is the major objective of this type of economic system. Marketeconomic system uses effectual price mechanism system for pricingdecision of the organization. There is no real life instance for this typeof system it is only working in the economic theories. Advantages anddisadvantages of the system comprises that it is very free forproducing different product and services. It does not involve thegovernment policies and rules for any decisions and all decisions aretaken by the single and responsible authority. Whereas, organizationcan blemish the customer trust because there are no obstruction of thegovernment.


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Command or planned economic system: In this type of systemgovernment play an important role (Shaikh, 2010). All operation,activities and functions of the association are monitored and controlledby the government of the nation. Government uses the integratedplanning system for distributing the resources and various decisionsmaking of the company. North Korean organizations are a suitableexample for this type of economic system. Objective of the plannedeconomic system includes the pleasure of all individuals, effective useof scare resources and maintain perfect completion. This systemmajorly focuses on the quality of the products rather than quantity ofproducts and services. In his type of system customers have very lesschoices for buying any product. It has a rigid production process whichcan not capable for change management. It requires high paperworkand complete data base management which is very time consuming.Due to centralize planning organization does not use its personnelresources effectively.

Mixed economic system: according to the name this economicsystem uses the planned and market economic system (Haigh andBrubaker, 2010). Allocation of the resources is based on bothapproaches planned and public. Every decision is taken by the equalparticipation of the government and price mechanism of theorganization. It is a mixed economic system so their main objectivesare enhancing the social interest and higher profit. United states aremost appropriate example for this type of economic system. This type


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of system produces some rules and regulation for preventingcustomers from unfair prices and practices. Some drawbacks of thissystem are that it is using too much of government participation whichmay reduce the potential of the company and increase the monopolyin environment.

Therefore, every economic system has their own tools and techniquesfor allocating the resources, making decisions and operating the wholebusiness for attaining different objectives of the company (Jones andVagliasindi, 2013).

2.2 Impact of Fiscal and Monetary policy on Nestle:Main features of the fiscal and monetary policy of the financial system

of the organization:Fiscal policy: it helps government to decide the rat of tax onborrowings and landings, expenditure level of capital and distributionof the revenue.


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Monetary policy: Monetary policy of the organization is very useful forthe government authorities for control over the money supply of thecountry. High supply rate increase the inflation and low supply ratedeals with the decreasing of the economic growth (Riley, 2012).Monetary and fiscal both policies influence the operation and functions

of Nestle. Monetary policy affects the money supply of the Nestle. Highinterest rate increases overall expenses of the business and decrease therevenue, sales and profit of the organization. If interest rate of monetarypolicy is low then it will increase the sale, revenue and profit of the company.Fluctuation in interest rates of monetary policy affects the currencyexchange rates of different countries which influence the international trade,export and import of the different products and services of the Nestle (Hall,2013).

Fiscal policy influences the taxation policies and level of tax of Nestle.Low tax rate help in generate more money and cash for the Nestle whichincrease the capacity of the investment. It assists in the attaining thedemand of the customers. Due to the high tax rate Nestle will face the cashproblems which increase the price of the product and decrease the demandof the company.

Therefore, fiscal and monetary policies both impinge on the variousdecision of the business, such as recruitment and selection of the personnel,obtaining funds from different financial resources, export and import cost ofdistinct products and services of the Nestle.


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2.3 Impact of competition policy and other regulatory mechanism on theactivities of NestleNestle is Swiss multinational food and beverages company and it is a

biggest food firm in the world in terms of revenues. In the present time, thefood industry is a most competitive industry and most of the organizationsinvest their huge amount of investment for taking the competitiveadvantages as well as good return of investment (Diehi, 2012).

Competition policy helps in promoting the competition and improve theefficiency of Nestle. It gives the assurance to the enterprise about thecustomer choice, new innovation in technology, effective price competitionbetween the suppliers and distributors (Davies and Ormosi, 2013). There arepolicies on which competition policy is based market liberalization, mergercontrol, antitrust and cartels and state aid. With the help of these it easy tomake the restriction on pricing and remove the monopolistic market strategyfor open the new ways to enter the competitors in the market in front ofNestle. (Galbreath, 2009).

On the other hand, regulations are formulating and imposed by thegovernment on the organizations and consumers to forecast theperformance of market and its outcomes on the basis of customers buying


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behaviour (Fernando, 2011). In the context of Nestle, regulations of thegovernment for firm are such as standard product quality, fair trading, bettercustomer services, environmental policies etc. These all are used to monitorthe pricing in the market and level of competition between the competitors.The list of competitors of Nestle is large and to expand the business atinternational level, it is required for the firm to follow the regulation ofgovernment (Shaikh, S2010).Impact of competition policy on activities of Nestle:

Increase the market share by lower down the prices,Increase competition level by improving the quality of the foodproducts and services to attract more and more customers,Create a balance between the supply and demand of the food items inthe market, (Manning, 2013)Brining the new innovation in product or establish the new product line,Improves the performance of existing machines and production volume.

TASK 33.1 Market structure and determination of the price and output decision of

the Nestle:Market structure includes the different similar companies, sellers,

buyers, new entrant and exists in the market, products, services anddifferent decisions of the organizations. There are different types of marketstructures, theses are monopoly, perfect, oligopoly, duopoly andmonopolistic market. Whole market structure of the company influences thepricing and output decisions of the company.


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Nestle is a public sector organization and its market structure isperfect. This market structure includes large number of buyer and seller soprice taking is the best strategy for these organizations. As well as there areno costs for entering into the market and exist form the market so it hasfaire and strong competition. Information about the products is equallycommunicated to the all buyers and sellers of this market structure. Differentdecisions are describing below (Shaikh, S2010):Determination of the price of Nestlé’s products in the perfectmarket:

In the perfect market pricing decisions are completely based on thedemand and supply of the product in the market. This company is price takernot maker. It is based on the competitor’s price and demand and supply ofthe product. Nestle can increase the price of their products in only one casewhen its competitors are facing loss. Price equation for Nestle:

Price= Average Revenue (AR) = Marginal Revenue (MR)Determination of output of Nestle in the perfect market structure:

By considering the market price of the products and services Nestlecan improve the capability of the output. The pricing mechanism of theNestle comprises the average and marginal cost which influence the totalcost of the company. At the equilibrium stage Nestle will get the maximumprofit and at this level the marginal revenue is equal to the average cost ofthe company (Market structures and pricing and pricing decisions- anoverview, 2013).


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3.2 Response of the Nestle to the market forces:Market structure of the Nestle is perfect and due to the competition

policy it has competitive market. There are different market force whichinfluences the demand and supply of the organization and price mechanismof the company. These forces are:

1. Huge number of buyer and seller2. Perfect competition in the whole market3. No cost on the entry and exit from the market.4. Homogeneous product5. Every buyer and seller has perfect information about the market.

Nestle responses very positively in case of each market force. Itsproduction volume is varying as per the demand and supply of the products.For following the all market trends Nestle follows each and every pricingpolicy and taking the price form the market. As per the above discussionNestle is facing the perfect competition in the perfect market structure. Itdifferentiates their products by using the new innovation and makes adistinction their products from the competitors and develops perfectcompetition in the whole market (Diehi, 2012).

3.3 Business and cultural environment of Nestle:Business environment of the organization comprises internal and

external environment and culture of the organization. Nestle uses effectivestrategies for managing its internal and external environment of thecompany which provide perfect competition to the overall market. Everysingle component of the market affects the structure, shape and


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organizational behaviour of the Nestle. Nestle provides efficient andqualitative products to the customers for satisfying their needs andexpectations.

It uses the international trades so culture of different countries affects thebusiness operations of the organization. It includes taste and preferences ofdifferent customers, traditions and customs of distinct nations, beliefs andvalues of different regions etc. Therefore, the entire production process isaffected by the production process of the organization (Global FactorsAffecting Business, 2011). Competitors of the organization can be regardedto play a very crucial role towards environment and culture of any firm.Hence, it is the competitive strategy of firm which aids in attaining thecompetitive advantage. It can thus be defined as the manner in which firm isable to compete with the competitor in order to attain the competitiveadvantage. Nestle has been regarded as a well known food and beveragecompany. Here, the belief is that effective leadership is the key area ofcompetitive and corporate strategy. Hence, Nestle has focused on someprinciples that are required to attain competitive advantages.


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Provision of safe products to the consumers.Ensuring for effective communication between consumer and sellers.Provision of leadership and training for employees.Providing for Safe and healthy environment in workplace setting.Creation of Nutritious and healthy product.Optimum resource allocation.Provision of human rights and well defined labor practices to theemployees.Ensuring towards maintaining Perfect and honest relation with supplier(Davies and Ormosi, 2013).

TASK 44.1 Evaluation and significance of international trade, economic integration

to Nestle:International trade refers to exchanging finished goods, capital and

services of a firm at an international level and market. Greater competitionswill be confronted by Nestle in the global market on account of internationaltrade. As a result of the prevailing perfect and high competition, Nestle isallowed to expand its markets of goods and services. This type of trade givesresults that clearly indicate that a competitive pricing strategy is beingfollowed by nestle. This strategy allows it to provide products at low price toits domestic as well as international customers.

Efficient coordination is maintained between the fiscal and monetarypolicy of nestle owing to economic integration. This trade also serves as a


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means for the organizations such as nestle to reduce barriers forinternational trade. Along with this, nestle is also allowed to makearrangements regarding the traffic between different countries. Significancethat economic integration carries for nestle can be elicited in many ways. Itperforms the function of enhancing opportunities for international trade fornestle. It also helps in reducing the cost of the product of the concernedorganization (Fernando, 2011).

4.2 Impact of Global factor on Nestle:Owing to the impact of factors present globally, every organization

makes use of different ways that are employed in running operations of thebusiness, planning for activities, production processes and strategies formone country to another. Global factors can be categorized in to the followingtwo parts:

Controllable or internal factorsUncontrollable or external factors

The performance, operations and culture of organizations such as nestleare affected by both the internal and external factors. Controllable factorsare those that can be controlled. These include labour, land, capital, locationof the business, employees, internal policy, available resources etc.Uncontrollable factors are those on which the organization has no control.These are inclusive of demography, technology, legislations, rules andregulation, competitiveness etc. Global factors have an influence on variousaspects of Nestlé such as economic, technological and social (Galbreath,2009).


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Economical impact:Among the economic factors of nestle are included money supply,

monetary policy, fiscal policy, etc. These are uncontrollable factors for theorganization. Goods and services are traded by nestle in the internationalmarket. Its market share in the internal trades is high. Hence, the economicstability of the company is affected by the economical factors. There is noneed for nestle to bring any inputs from other countries for its productionprocesses. It has belief in self producing the goods in the manufacturingcountry for low cost of the products. Thus, more profit will be generated bynestle through its production processes that will lead to economic stability. Itwill also help in obtaining additional customers who will use Nestlé’sproduct.

Technological impact:

High and latest technology is used by the international market forcomplete production process. It is for this reason that marketing policy andstrategy of nestle will be impacted by technological factor. Latest internetand mobile technology can be used by nestle for promoting its products,increasing its sales and market share.

Social impact:

Among the social factors of a organization are included tastes, behaviour,life style, preferences, gender, age and educational background f thecustomers. These are relevant with respect to the demand and supply of theproducts of company in the market. The buying behavior of the customers


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will be impacted by the change in social factors of nestle. Marketing strategyneeds to be changed owing to changes in buying pattern. In this way, greateffects are caused of social factors on nestle (Manning, 2013.).

4.3 Impact of the policies of European Union over NESTLEFor controlling the business activities, the following are the rules,regulations and policies of European Union:

➢ Inflation policies➢ Education and training policies➢ Employment policies➢ Taxation policies➢ International policies➢ Regional policies

Free international trade is done by nestle across the European Union regions.This is because every policy of the international as well as national tradedeveloped by EU is followed by Nestlé. With internal policies, regulations andrules, the operation and production policies are made easier and flexible. But,a very important part is played by these policies in the increase of marketshare and profit of nestle when it operates in various countries of Europe.However, some negative impacts are being faced by nestle on its operationsdue to the limitations imposed by these policies (Galbreath, 2009).

CONCLUSIONThe present study concludes that Nestle is one of the leading

organizations in food and beverage industry. It is a public sector organizationand major objective of this organization is offering healthy and qualitative


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food products to their customers. It also finds out that company has a perfectmarket structure and facing the perfect market competition. Along with thisfiscal and monetary policy influence the financial management and moneysupply of the organization. In addition, Nestle has some management,environmental and ethical responsibilities for attaining the organizationalobjectives. International trades and economic integration, businessenvironment and culture influence the production and operation departmentof the Nestle. At last European Union and its different business policiesincreases the market share of the Nestle.

REFERENCESBooks and JournalsAlcidi, D. and Gros, D., 2011. Great recession versus great depression:

monetary, fiscal and banking policies. Journal of Economic Studies.38(6). pp.673-690.

Fernando, C. A., 2011. Business Environment. Pearson Education India.


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Galbreath, J., 2009. Building corporate social responsibility into strategy.European Business Review. 21(2). pp.109–127.

Ghannadian, F. F., 2006. Fiscal policy and political limitations in the EuropeanUnion. International Journal of Commerce and Management. 16(1).pp.41–50.

Gottheil, F., 2013. Principles of economics. Cenage learning publication.

Haigh, M. M. and Brubaker, P., 2010. Examining how image restorationstrategy impacts perceptions of corporate social responsibility,organization-public relationships, and source credibility. CorporateCommunications: An International Journal. 15(4). pp.453–468.

Jones, B. J. and Vagliasindi, M., 2013. Power Market Structure: RevisitingPolicy Options. World Bank Publications.

Manning, L., 2013. Corporate and consumer social responsibility in the foodsupply chain. British Food Journal. 115(1). pp.9–29.

Paswan, K. A., and et. al., 2011. Relationalism in marketing channels andmarketing strategy. European Journal of Marketing. 45(3). pp.311–333.

Shaikh, S., 2010. Business Environment. 2nd Ed. Pearson Education.

OnlineAfilmohhamad, 2012. Competitive advantage and value chain Nestle, 2013.

[Online]. Available through: <http://alfimohammad.wordpress.com/2012/11/22/caompetitive-advantage-and-value-chain-nestle/ >. [Accessed on: 30th April 2014].

Davies, S. and Ormosi, P., 2013. The Impact of Competition Policy: What arethe Known Unknowns?. [pdf]. Available through: <http://competitionpolicy.ac.uk/documents/107435/107587/13-7+complete.pdf/1478fd9c-4e6e-40fd-80aa-dbd147af8275 >.[Accessed on: 30th April 2014].


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Diehi, K., 2012. Resource Allocation: traditional, command, and marketeconomy. [Online]. Available through: <http://edisc.economooc.com/?p=33 >. [Accessed on: 30th April 2014].

Global Factors Affecting Business, 2011. [Online]. Available through: <http://www.studymode.com/essays/Global-Factors-Affecting-Business-632998.html >. [Accessed on: 30th April 2014].

Half-Yearly Report. 2013. [pdf]. Available through: <http://www.nestle.com/asset-library/Documents/Library/Documents/Half_Yearly_Reports/2013-Half-Yearly-Report-EN.pdf >. [Accessed on: 30th April 2014].

Hall, S., 2013. The Implications of Fiscal Policy and Monetary Policy toBusiness. [Online]. Available through: <http://www.ehow.co.uk/facts_6899691_implications-policy-monetary-policy-business.html >. [Accessed on: 30th April 2014].

Market structures and pricing and pricing decisions- an overview, 2013.[Online]. Available through: <http://www.managementguru.net/index.php/corporate-management/product-managenment/107-market-structure-and-pricing-decisions-an-overview >. [Accessed on: 30th April 2014].

Riley, G., 2012. Fiscal Policy - Effects. [Online]. Available through: <http://tutor2u.net/economics/revision-notes/a2-macro-fiscal-policy-effects.html >. [Accessed on: 30th April 2014].

The Nestlé Corporate Business Principles, 2010. [pdf]. Available through: <http://www.nestle.com/assetlibrary/documents/library/documents/corporate_governance/corporate-business-principles-en.pdf >. [Accessed on: 30th April 2014].


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