Business Environment Sample Of Nestle

Business
environment of
Nestle

2 | P a g e
TABLE OF CONTENTS
INTRODUCTION..........................................................................................................................1
TASK 1...........................................................................................................................................1
1.1 Purpose of different types of organizations.....................................................1
1.2 Extent to which NESLE meets the objectives of the different
stakeholders:..........................................................................................................................2
1.3 Responsibilities of the Nestle as an organization and strategies they
incorporated 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 the
activities of Nestle:.............................................................................................................. 7
TASK 3...........................................................................................................................................8
3.1 Market structure and determination of the price and output decision of
the 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 integration
to 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
INTRODUCTION
The present report is about the business environment of Nestle.
Business environment can define as distinct sources or surroundings which
influence the business operations and functions of the organization. It
comprises internal and external factors, such as customers, competitors,
suppliers, government, regulations, and legislations, economy and
employees etc. Business environment has positive and negative impact on
organization. This research comprises distinct objectives and market
structures of the company. It spotlights on Nestle and its strategies for
attaining its strategic objectives. The study describes the responsibility of the
Nestle towards the stakeholders for completing their expectations. Including
this it also includes fiscal policy and monetary policies and their impacts on
organization’s financial performance. Along with this, market structure of
Nestle, distinct market forces, international, treads, economic integrations
and policies of European Union are also describing in the following
paragraphs of the report.
Nestle is a food and beverage company, management of the company
focuses on the organization’s objective and market structure of the Nestle. It
offers distinct baby food, chocolates, breakfast cereals, confectionery,
bottled water, ice-cream, pet foods and snacks, etc. This company is using
their products in the global market for international treads, so it needs
appropriate environmental analysis of various factors which have and
positive and negative impact on the business operation and functions of the
Nestle (Half-Yearly Report, 2013).
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TASK 1
1.1 Purpose of different types of organizations
Objective of an organization can define as the overall goals, purpose
and mission of the company that have been developed by the management
of the organization and communicate to the employees for better
performance of the association. It focuses on the long term planning for
operating the business. Overall policy, rules and regulations are based on the
objective of the corporation and it can provide effective guideline for
employees for better performance. According to the objectives, organization
can divide in five types (Paswan and et. al., 2011):
1. Commercial organization
2. Public sector organization
3. Non-Profit organization
4. Cooperatives
5. Nom- governmental organization
Sample on Business Environment
Nestle
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Maximizing the profit of association is the main objective of
commercial organizations. This type of companies uses distinct type of skills,
knowledge and experience of the employees for optimum utilization of the
available resources for increasing the profit of the organization. Main
objective of the public sector organization is providing special benefits or
advantages to the public, society and intact commune. It offers equal
chances for every single individual of the nation. Police and military are best
example of this type of organization. Charity and welfare for society is the
main purpose of Non- profit organizations. It does not focus on maximizing
profits. It provides a valuable offers and benefits to their stakeholders. Non
Governmental Organizations (NGOs) are based on a specific objective which
includes granting some special services, resources and facilities to every
single individual of the society for distinct political and societal agendas
(Afilmohhamad, 2012). Services of NGOs include control over pollution; take
action against the corruption, education facilities for each people,
development of the entire society, etc. At last cooperative organizations
have some hybrid objectives; these are maximum profit, efficient quality,
customer’s satisfaction and effective communication between different
departments 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 as
stakeholders of the Nestle. Stakeholders can divide in two parts; these are
internal and external stakeholders. Internal stakeholders are employees and

shareholders of the Nestle and external stakeholders are customers,
employees, supplier, government and society. As per the purpose of the
Nestle it falls in the public sector organization its major objective is providing
benefits to stakeholders of the organization. For attaining this objective
Nestle 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 appropriate
dividend policy and stock appreciation for the investment and funds of
the shareholders.
Nestle provides efficient salaries, reward, compensation, bonus,
working environment and job security for their employees (The Nestlé
Corporate Business Principles, 2010).
It offers appropriate training and development programs for enhancing
the skills and knowledge of entire workforce.
For satisfy the customer Nestle provide high quality food product and
services with competent price.
Nestle uses effective price mechanism and policies which is fruitful and
advantageous for all customers.
For maintaining effective relationship with supplier Nestle do payment
on 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 for
every individual of the society.

Nestle follows all rules and regulation which are made by the
government for different tax and interest payment (Galbreath, 2009).
It provides perfect competition to the whole market and maintains the
deco 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 they
incorporated 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 helpful
for 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 are
personnel, finance, operation and production and marketing section of the
organization. For finance department Nestle is liable for the effective
financial management, allocation of the financial resources, and taxation and
dividend policies of the company. For human resource management,
company is responsible for the efficient working environment, training and
development programs for employees. Nestle is accountable towards the
qualitative inputs for operation and production department and healthy food

product for customers of the organization. Thus, Nestle has various
management 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 stakeholders
and corporate governance. Nestle uses its products and services for the
international trades so it needs to follow the culture, beliefs and values of
each countries, thus it is accountable for some international ethical issues
which 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.
Nestle
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Nestle utilizes cocoa products as an input for manufacturing numerous
merchandises (Fernando, 2011). World cocoa foundation produces some
policies for every cocoa farmers and it deals with the process of farming and
their strategies for environmental management. So, environmental
responsibilities of Nestle include the exercise of bets techniques for
cultivation of cocoa crop. Including this it is responsible for the development
of the ecological and communal programmes which are very useful for the
environment of the organization.
TASK 2
2.1 Effective allocation of resources in different economic system
All those organisms by which Nestle is manufacturing and producing
distinct goods and services with optimum allocation of the available
resources of the organization are known as economic system. Major
functions of the economic system of the organization are economic progress
and stability and allocation of the resources. Overall production of the Nestle
is depended on different resources, such as labour, land, natural resources
and other sources of the company (Ghannadian, 2006). Some decisions are
also based on the economic system of the Nestle, these decisions are: what
to produce, how to produce and for whom to produce. On the basis of the
decision making process and allocation of the resources there are four type
of economic system and all these system are describing below:
Traditional economic system: This type of economic system follows
by the primary companies and it utilizes distinct traditions and customs.
Its operations and productions are based on the farming and hunting. It
major decisions, what, how and whom to produce are taken by the

background and civilization of the association. All decisions are
obtained by the superlative leader of the organization. Tribal areas in
South America and Asia are the best instance for this type of economic
system. Traditional economic system has variety of benefits and
drawbacks, such as each element of this system is separate form their
own task and work. Public networking and communication are strong,
safe, conformist and constant. On other hand habitual systems are
ineffective in managing change and updating technologies. This
system does not utilize their resources and skills effectively in
producing goods and services (Gottheil, 2013).
Market economic system: It is based on the self production of the
companies and allocates the resources on the basis of the demand and
supply and distinct market forces of the organization. Obtaining higher
profit is the major objective of this type of economic system. Market
economic system uses effectual price mechanism system for pricing
decision of the organization. There is no real life instance for this type
of system it is only working in the economic theories. Advantages and
disadvantages of the system comprises that it is very free for
producing different product and services. It does not involve the
government policies and rules for any decisions and all decisions are
taken by the single and responsible authority. Whereas, organization
can blemish the customer trust because there are no obstruction of the
government.

Command or planned economic system: In this type of system
government play an important role (Shaikh, 2010). All operation,
activities and functions of the association are monitored and controlled
by the government of the nation. Government uses the integrated
planning system for distributing the resources and various decisions
making of the company. North Korean organizations are a suitable
example for this type of economic system. Objective of the planned
economic system includes the pleasure of all individuals, effective use
of scare resources and maintain perfect completion. This system
majorly focuses on the quality of the products rather than quantity of
products and services. In his type of system customers have very less
choices for buying any product. It has a rigid production process which
can not capable for change management. It requires high paperwork
and complete data base management which is very time consuming.
Due to centralize planning organization does not use its personnel
resources effectively.
Mixed economic system: according to the name this economic
system uses the planned and market economic system (Haigh and
Brubaker, 2010). Allocation of the resources is based on both
approaches planned and public. Every decision is taken by the equal
participation of the government and price mechanism of the
organization. It is a mixed economic system so their main objectives
are enhancing the social interest and higher profit. United states are
most appropriate example for this type of economic system. This type

of system produces some rules and regulation for preventing
customers from unfair prices and practices. Some drawbacks of this
system are that it is using too much of government participation which
may reduce the potential of the company and increase the monopoly
in environment.
Therefore, every economic system has their own tools and techniques
for allocating the resources, making decisions and operating the whole
business for attaining different objectives of the company (Jones and
Vagliasindi, 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 on
borrowings and landings, expenditure level of capital and distribution
of the revenue.
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Monetary policy: Monetary policy of the organization is very useful for
the government authorities for control over the money supply of the
country. High supply rate increase the inflation and low supply rate
deals 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. High
interest rate increases overall expenses of the business and decrease the
revenue, sales and profit of the organization. If interest rate of monetary
policy is low then it will increase the sale, revenue and profit of the company.
Fluctuation in interest rates of monetary policy affects the currency
exchange 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 which
increase the capacity of the investment. It assists in the attaining the
demand of the customers. Due to the high tax rate Nestle will face the cash
problems which increase the price of the product and decrease the demand
of the company.
Therefore, fiscal and monetary policies both impinge on the various
decision of the business, such as recruitment and selection of the personnel,
obtaining funds from different financial resources, export and import cost of
distinct products and services of the Nestle.

2.3 Impact of competition policy and other regulatory mechanism on the
activities of Nestle
Nestle 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, the
food industry is a most competitive industry and most of the organizations
invest their huge amount of investment for taking the competitive
advantages as well as good return of investment (Diehi, 2012).
Competition policy helps in promoting the competition and improve the
efficiency of Nestle. It gives the assurance to the enterprise about the
customer choice, new innovation in technology, effective price competition
between the suppliers and distributors (Davies and Ormosi, 2013). There are
policies on which competition policy is based market liberalization, merger
control, antitrust and cartels and state aid. With the help of these it easy to
make the restriction on pricing and remove the monopolistic market strategy
for open the new ways to enter the competitors in the market in front of
Nestle. (Galbreath, 2009).
On the other hand, regulations are formulating and imposed by the
government on the organizations and consumers to forecast the
performance of market and its outcomes on the basis of customers buying

behaviour (Fernando, 2011). In the context of Nestle, regulations of the
government for firm are such as standard product quality, fair trading, better
customer services, environmental policies etc. These all are used to monitor
the pricing in the market and level of competition between the competitors.
The list of competitors of Nestle is large and to expand the business at
international level, it is required for the firm to follow the regulation of
government (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 food
products and services to attract more and more customers,
Create a balance between the supply and demand of the food items in
the 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 3
3.1 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 and
different decisions of the organizations. There are different types of market
structures, theses are monopoly, perfect, oligopoly, duopoly and
monopolistic market. Whole market structure of the company influences the
pricing and output decisions of the company.

Nestle is a public sector organization and its market structure is
perfect. This market structure includes large number of buyer and seller so
price taking is the best strategy for these organizations. As well as there are
no costs for entering into the market and exist form the market so it has
faire and strong competition. Information about the products is equally
communicated to the all buyers and sellers of this market structure. Different
decisions are describing below (Shaikh, S2010):
Determination of the price of Nestlé’s products in the perfect
market:
In the perfect market pricing decisions are completely based on the
demand and supply of the product in the market. This company is price taker
not maker. It is based on the competitor’s price and demand and supply of
the product. Nestle can increase the price of their products in only one case
when 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 Nestle
can improve the capability of the output. The pricing mechanism of the
Nestle comprises the average and marginal cost which influence the total
cost of the company. At the equilibrium stage Nestle will get the maximum
profit and at this level the marginal revenue is equal to the average cost of
the company (Market structures and pricing and pricing decisions- an
overview, 2013).

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 which
influences the demand and supply of the organization and price mechanism
of the company. These forces are:
1. Huge number of buyer and seller
2. Perfect competition in the whole market
3. No cost on the entry and exit from the market.
4. Homogeneous product
5. Every buyer and seller has perfect information about the market.
Nestle responses very positively in case of each market force. Its
production volume is varying as per the demand and supply of the products.
For following the all market trends Nestle follows each and every pricing
policy and taking the price form the market. As per the above discussion
Nestle is facing the perfect competition in the perfect market structure. It
differentiates their products by using the new innovation and makes a
distinction their products from the competitors and develops perfect
competition 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 effective
strategies for managing its internal and external environment of the
company which provide perfect competition to the overall market. Every
single component of the market affects the structure, shape and

organizational behaviour of the Nestle. Nestle provides efficient and
qualitative products to the customers for satisfying their needs and
expectations.
It uses the international trades so culture of different countries affects the
business operations of the organization. It includes taste and preferences of
different customers, traditions and customs of distinct nations, beliefs and
values of different regions etc. Therefore, the entire production process is
affected by the production process of the organization (Global Factors
Affecting Business, 2011). Competitors of the organization can be regarded
to play a very crucial role towards environment and culture of any firm.
Hence, it is the competitive strategy of firm which aids in attaining the
competitive advantage. It can thus be defined as the manner in which firm is
able to compete with the competitor in order to attain the competitive
advantage. Nestle has been regarded as a well known food and beverage
company. Here, the belief is that effective leadership is the key area of
competitive and corporate strategy. Hence, Nestle has focused on some
principles that are required to attain competitive advantages.
Nestle
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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 the
employees.
Ensuring towards maintaining Perfect and honest relation with supplier
(Davies and Ormosi, 2013).
TASK 4
4.1 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 competitions
will be confronted by Nestle in the global market on account of international
trade. As a result of the prevailing perfect and high competition, Nestle is
allowed to expand its markets of goods and services. This type of trade gives
results that clearly indicate that a competitive pricing strategy is being
followed by nestle. This strategy allows it to provide products at low price to
its domestic as well as international customers.
Efficient coordination is maintained between the fiscal and monetary
policy of nestle owing to economic integration. This trade also serves as a

means for the organizations such as nestle to reduce barriers for
international trade. Along with this, nestle is also allowed to make
arrangements regarding the traffic between different countries. Significance
that economic integration carries for nestle can be elicited in many ways. It
performs the function of enhancing opportunities for international trade for
nestle. It also helps in reducing the cost of the product of the concerned
organization (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 the
business, planning for activities, production processes and strategies form
one country to another. Global factors can be categorized in to the following
two parts:
Controllable or internal factors
Uncontrollable or external factors
The performance, operations and culture of organizations such as nestle
are affected by both the internal and external factors. Controllable factors
are those that can be controlled. These include labour, land, capital, location
of 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 and
regulation, competitiveness etc. Global factors have an influence on various
aspects of Nestlé such as economic, technological and social (Galbreath,
2009).

Economical impact:
Among the economic factors of nestle are included money supply,
monetary policy, fiscal policy, etc. These are uncontrollable factors for the
organization. Goods and services are traded by nestle in the international
market. Its market share in the internal trades is high. Hence, the economic
stability of the company is affected by the economical factors. There is no
need for nestle to bring any inputs from other countries for its production
processes. It has belief in self producing the goods in the manufacturing
country for low cost of the products. Thus, more profit will be generated by
nestle through its production processes that will lead to economic stability. It
will also help in obtaining additional customers who will use Nestlé’s
product.
Technological impact:
High and latest technology is used by the international market for
complete production process. It is for this reason that marketing policy and
strategy of nestle will be impacted by technological factor. Latest internet
and 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 the
customers. These are relevant with respect to the demand and supply of the
products of company in the market. The buying behavior of the customers

will be impacted by the change in social factors of nestle. Marketing strategy
needs to be changed owing to changes in buying pattern. In this way, great
effects are caused of social factors on nestle (Manning, 2013.).
4.3 Impact of the policies of European Union over NESTLE
For 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 trade
developed by EU is followed by Nestlé. With internal policies, regulations and
rules, the operation and production policies are made easier and flexible. But,
a very important part is played by these policies in the increase of market
share and profit of nestle when it operates in various countries of Europe.
However, some negative impacts are being faced by nestle on its operations
due to the limitations imposed by these policies (Galbreath, 2009).
CONCLUSION
The present study concludes that Nestle is one of the leading
organizations in food and beverage industry. It is a public sector organization
and major objective of this organization is offering healthy and qualitative

food products to their customers. It also finds out that company has a perfect
market structure and facing the perfect market competition. Along with this
fiscal and monetary policy influence the financial management and money
supply of the organization. In addition, Nestle has some management,
environmental and ethical responsibilities for attaining the organizational
objectives. International trades and economic integration, business
environment and culture influence the production and operation department
of the Nestle. At last European Union and its different business policies
increases the market share of the Nestle.
REFERENCES
Books and Journals
Alcidi, 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.
Nestle
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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 European
Union. 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 restoration
strategy impacts perceptions of corporate social responsibility,
organization-public relationships, and source credibility. Corporate
Communications: An International Journal. 15(4). pp.453–468.
Jones, B. J. and Vagliasindi, M., 2013. Power Market Structure: Revisiting
Policy Options. World Bank Publications.
Manning, L., 2013. Corporate and consumer social responsibility in the food
supply chain. British Food Journal. 115(1). pp.9–29.
Paswan, K. A., and et. al., 2011. Relationalism in marketing channels and
marketing strategy. European Journal of Marketing. 45(3). pp.311–333.
Shaikh, S., 2010. Business Environment. 2nd Ed. Pearson Education.
Online
Afilmohhamad, 2012. Competitive advantage and value chain Nestle, 2013.
[Online]. Available through: <
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the Known Unknowns?. [pdf]. Available through: <
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Diehi, K., 2012. Resource Allocation: traditional, command, and market
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pricing-decisions-an-overview >. [Accessed on: 30th April 2014].
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effects.html >. [Accessed on: 30th April 2014].
The Nestlé Corporate Business Principles, 2010. [pdf]. Available through: <
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