1. The document discusses market structure, forces, and culture as they relate to Nestle's business environment. It analyzes monopolistic competition as Nestle's market structure and discusses the advantages and disadvantages. It also examines demand and supply, PESTEL analysis, and Porter's Five Forces model to understand the market forces. Finally, it defines culture and compares differences in areas like names, communication, and equal treatment between the US and other countries. 2. The document then discusses Nestle's market segmentation approaches including demography, geography, age, social class, lifestyle, and personality. It analyzes how Nestle can target various segments like people in higher social classes and those interested in health, sports, or outdoors

1. NIIENTT INSTITUTE OF INTERNATIONAL EDUCATION
Edexcel BTEC Higher National Diploma in Business
Unit: Business Environment Unit ID: Y/601/0546
Facilitator: Nguyễn Tân Thu Hiền Class: 13NIIE
Students: Students’ ID:
Phạm Cao Khánh A1131007
Trương Bích Trâm Anh
Nguyễn Hoàng Bảo Châu
Lê Ngọc Khánh Vân

2. 1/ Market structure : Monopolistic competition
 Definition: A market structure in which several or many sellers each produce similar, but
slightly differentiated products. Each producer can set its price and quantity without
affecting the marketplace as a whole.
 Characteristics:
o There are many producers and many consumers in the market, and no business
has total control over the market price.
o Consumers perceive that there are non-price differences among the competitors'
products.
o There are few barriers to entry and exit
o Producers have a degree of control over price.
o The good is slightly differentiated in some ways (advertising, branding or local
production)
o There is some degree of consumer loyalty
 The advantages of monopolistic competition
o Monopolistic competition can bring the following advantages:
There are no significant barriers to entry; therefore markets are relatively
contestable.
Differentiation creates diversity, choice and utility. For example, a typical high
street in any town will have a number of different restaurants from which to
choose.
The market is more efficient than monopoly but less efficient than perfect
competition - less allocatively and less productively efficient. However, they may
be dynamically efficient, innovative in terms of new production processes or new
products. For example, retailers often constantly have to develop new ways to
attract and retain local custom.
 The disadvantages of monopolistic competition
o There are several potential disadvantages associated with monopolistic competition,
including:
Some differentiation does not create utility but generates unnecessary waste, such
as excess packaging. Advertising may also be considered wasteful, though most is
informative rather than persuasive.
As the diagram illustrates, assuming profit maximisation, there is allocative
inefficiency in both the long and short run. This is because price is above
marginal cost in both cases. In the long run the firm is less allocatively inefficient,
but it is still inefficient.
 Price strategy is a basic, long-term pricing framework, which establishes the initial price
for a product and the intended direction for price movements over the product life cycle.

3. It consists of 3 type of pricing strategy which is Price skimming, Penetration pricing and
Status quo pricing.
Nestle currently practicing penetration pricing to market product which is a way where
Nestle charges a relatively low price for a product initially as a way to reach the mass
market.
o Choose the price strategy :
When Nestle has decided the product price, they will choose a good pricing
strategy that will give them direction of price movements over the Product Life
Cycle. Nestle are aware about higher price. If they set higher price, they have to
produce a good quality of product. Besides that, the competitors also will
influence the pricing strategy.
For example, if Nestle introduces a new product that same with competitors, the
price will be restricted and close to the price of competitors. Unless, Nestle Milo
can differentiate and convince consumers, they can set the higher price for the
product
 Output decisson
o For the price, Product should make a good pricing strategy. If they want to put a high
price for the particular product, they have to make sure that the quality and the
quantity are suitable enough with the price.
o Other than that, they also can do the packages which contain the chosen product in
one pack and they will set the price for the pack in a moderate value. This is also
known as eco pack. This pack is affordable whereas not only the high income persons
who are willing to buy it but people from low income are also able to buy.
o By doing so, consumers can make a good perception for the company who are
concern with the society. Generally we can conclude that Nestle are not bias and are
suitable for all level of person.
2/ Market forces:
 Demand and Supply
o Establishing pricing goals
Marketers have 2 choices whether to use profit oriented profit maximization or
satisfactory pricing. The marketers need to have an understanding of trends and changes
in the market place to set a goal. If Nestle have decide to go for profit maximization
objective, they must be able to afford large sum of investment. It is easy to follow
competitors pricing but they may not have the best considering cost, demand and changes
in Product Life Cycle. So they have to require a careful analysis before setting the price.
o Estimate demand, costs and profit.

4. After the pricing goals have been established, Nestle have to estimate demand, costs and
profit. It is important for Nestle to know the corresponding cost for each product price.
So they need to estimate the profit that they will earn, determine level of price and how
much market share they will get.
 PESTEL Analysis-
Analysis-is a simple and effective tool used in situation analysis to identify the key external
(macro environment level) forces that might affect an organization.
Therefore, the aim of doing PEST is to:
Iind out the current external factors affecting an organization;
Identify the external factors that may change in the future;
To exploit the changes (opportunities) or defend against them (threats) better
thancompetitors would do.
The outcome of PEST is an understanding of the overall picture surrounding the
company.
 Political : The United States is a representative federal democracy driven by elections in
which citizens' and lobbyists' diverse interests compete.
Strict quality control played a role in political factor. It means that Nestlé’s products quality
will not be different with other countries. Consumers are guarantees with full satisfaction of
the products all over the world.
Nestlé’s products are always come with the seal of guarantee. By having the seal of
guarantees, consumers are now more confident and trust of Nestlé’s products. Strict quality
control played a role in political factor too. It means that Nestlé’s products quality will not be
different with other countries. Consumers are guarantees with full satisfaction of the products
all over the world.
 Economy : The United States, with an economic freedom score of 75.5, is the 12th freest
economy in the 2014 Index. Its score is half a point lower than last year, primarily due to
deteriorations in property rights, fiscal freedom, and business freedom. The U.S. is
ranked 2nd out of three countries in the North America region, and although its score
remains well above the world and regional averages, it is no longer one of the top 10
freest economies.
GDP (by sector) : agriculture: 1.2% industry: 22.1% services: 76.7% (2011 est.)
Corporate tax rate of 35%
 Nestlé also collaborates with local government to provide technical assistance to farmers
in planting and harvesting crops. The farmer will get income and Nestlé will get to

5. purchase good and fresh raw materials to produce their food. By having own local
productions, Nestlé should no longer needs to import any raw materials from other
country where they will save much more money. It will also benefit the consumers
whereby consumers could enjoy the local productions with low price. More consumers
will use this product and therefore Nestlé will gain more profit from that.
 Socio cultural : Multiculture American has a variety of expressions due to its
geographical scale and demographic diversity.
->A good diet and adequate food supply, the central for promoting health and well-
being is the focus of every person even these days; whether people tend to value products
that incorporate with them healthy benefits.
 Technology : Internet and Mobile Technology is currently growing so rapidly in the
market where almost all of the people nowadays will get contact with it. Nestlé could use
this advantage to benefit them by using technology to promote their products over those
advanced technology.
->Customer could get any information from their site. Nestlé’s employees could use this
internet service to connect to its industry in other country such as Australia, Singapore,
U.K and more. They did research and development by using the technology to find more
information to satisfy the local tastes and cultural flavours in each country market. By
understanding what each country asks for, Nestlé could market difference product
according to the customer demand in difference country. It is already proven that the
technology factors are important for Nestlé Company.
 Environment: The industry environment has a more direct effect on the firm’s strategic
competitiveness and to earn above-average returns. The intensity of industry competition
and an industry’s profit potential are functions of five forces of competition such as the
threat of new entrants, bargaining power of supplier, bargaining of power buyers, threats
of substitute products, and intensity of rivalry among competitors.
->Porter singled out five different forces that impact competitive intensity which
portrays an image of the overall attractiveness and profitability of a market. To aid in my
evaluation of Nestle and its status in the industry, I will apply Porter’s Five Forces Model
to the company.
 Legal: Protection of crucial business processes by copyrights and patents
-> They have to make sure that they follow not only the laws in US but also the laws in
the countries they operate

6. 3/ Culture
 Definition:Culture is the characteristics of a particular group of people, defined by
everything from language, religion, cuisine, social habits, music and arts. Today, in the
United States as in other countries populated largely by immigrants, the culture is
influenced by the many groups of people that now make up the country.
• Spelling of name
Name of Americans own name written in the first name, then the middle name and finally
is surname. Surname taken from their father and do not taken from their mother.
• Way of communicating
Except for some special cases, Americans often call each other by their first name.
However, there are some common principles that foreign traders should follow.
For once direct contact or by mail first, should call each other by Mr., Mrs., Miss, Ms. or
Dr. and then is surname.
• Greeting
As in other places in the United States, shaking hands is a common greeting .Sometimes ,
man with woman or woman with woman greet each other by hugging, and even has the
cheek to cheek or kiss cheek each other. Forms are usually offered only to those who are
longtime friends, or at least have known each other well.
• Equal treatment for women
• Equal treatment with the other races
 2/ Market segmentation
• Market segmentation: dividing a market into distinct groups of buyers who
share the same or similar attitudes and patterns of behavior.
• Market can be segmented by:
₊ Demography
₊ Geography
₊ Age
• Demography:

7. ₊ Nestlé’s demographic segmentation than they will find that our product is
for everyone. People from any area, any culture, any age, any sex, any belief and
an income will use it. It is not any luxury item which is used by a specific people.
• Geography:
₊ The company segments its market geographically on divisional basis.
They divide each division in different zones and every distributor is restricted to
sale its products.
• Age:
₊ The products for everyone, for all age, for all social. Anyone can use the
products as per need.
Psychographic segmentation:
• Social class and life style: People belonging to the higher social classes tend to spend
more on luxuries as compared to people in the lower classes. Such people can be easily
targeted as they are very health conscious. Nestle can urge these people to buy Nestlé’s
product which is rich in nutrition.
• Personality: People who are outdoorsy and are involved in sports can also be targeted
by tagging the brand with some sport celebrity.

8.  Reference: https://economicsonline.co.uk/
https://www.academia.edu/5366973/Nestle_Global_Strategy_INTRODUCTION