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The document discusses Nestle's business environment and how it is impacted by various factors. It examines how different economic systems allocate scarce resources and how fiscal, monetary, and regulatory policies impact Nestle's activities. It also analyzes Nestle's responsibilities to stakeholders like customers, employees, and society, and the strategies it employs to meet these responsibilities. Competition, trade policies, and cultural differences shape Nestle's behavior and competitive strategies as it operates globally
Measures of Central Tendency: Mean, Median and Mode
Nestle's Business Environment and Impact of Government Policies
1. BUSINESS
ENVIRONMENT
OF NESTLE
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2. TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................4
ASSIGNMENT 1.............................................................................................................................4
2.1 How economic system attempt to allocate its scare resources effectively ...........................4
ASSIGNMENT 2 ...........................................................................................................................6
1.1 And 1.2 Purpose of different types of organization and to what extent Nestle meet the
objectives of different stakeholders.............................................................................................6
1.3 Explaining the responsibilities of Nestle and strategies employed by them to meet the same
......................................................................................................................................................8
2.2 And 2.3 Assessing the impact that fiscal and monetary policy have on company along with
impact of competition and other regulatory mechanism has on the activities of NESTLE ...8
3.1 And 3.2 explaining how market structure determines the pricing and output decision of
Nestle and its response to the market forces .............................................................................9
3.3 Discussing that how business and cultural environment shape the behavior of Nestle along
with competitive strategies employed by them..........................................................................10
4.1, 4.2, 4.3 evaluating the significance of international trade, economic integration and........11
Global markets and the implications the company entering to EMU .......................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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3. INTRODUCTION
Business environment is the combination of internal and external factors that causes its
necessary impact on the working of the enterprise in an effective way (Business environment,
2014). Internal factors are those factors that originated from the internal environment of the
company. These factors can be managed by enterprise by carrying out changes in their existing
operation. However, external environment comprises of factors that resides outside the working
of enterprise but causes its significant impact on the operation of corporation.
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This report is based on the case study of Nestle. It is a Swiss based foods and beverages
company that operates its operation in around 194 countries (Nestle, 2014). This report is
divided into two parts where first part will depict about the ways that different types of economic
system attempt allocate their resources effectively. In addition to this, second part of the study
will provide clear understanding regarding the impact that government policies and European
dimensions has on the Nestle.
ASSIGNMENT 1
2.1 How economic system attempt to allocate its scare resources effectively
Economic system provides the way through which nation and state allocates and
apportions its resources in the community. For the purpose to meet the needs and demands of the
citizens it is being required by the nation that they must direct their efforts in terms of allocating
its produced resources in an effective way. In this respect, there are various types of economic
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4. system identified that uses varied ways with an aim to allocate their resources in the citizens in
an effective way (Murillo, 2005). It comprises of following such as command economy, free
enterprise, transitional economies, mixed economy, public and private sector initiatives along
with private finance initiatives etc. Command economy is the type of economic system where all
the power with respect to the production of goods and services resides in the hand of
government. Here government of the nation takes all the decision with regard to the allocation of
scare resources such as capital, land and labor etc. Cuba and China are some of the country that
follows such type of economic system. In this system decision regarding what, when and how to
produce is taken by the government (Command economy, 2014). Here government has the
primary goal that is to achieve the welfare of all citizens. By taking this perspective in mind
government carries out the allocation of the scare resources among general public. For the
purpose to allocate the resources, government of nation prepares central plan. This plan will
provide detailed description regarding what to produce; in what quantity should be produce and
what technique should be used etc. In this economic system competitions between organizations
are restricted. This is because here prices of goods and services are set by the government which
is being set in such a manner that can be afforded by the citizens living in the nation (Comfort,
Jones and Hillier, 2007).
In comparison to this, free enterprise economy which is also called by the name of market
economy uses another approach with an aim to allocate their scare resources within nation in an
effective way. Here all the decision with respect to the production of goods and services in nation
resides in the hand of private individual. The country like Japan and USA relies with such type of
system. Here for the purpose to carry out the production of goods and services producer rely on
the market system which depict about the demand and supply forces. In this respect, it can be
said that in this economic system resources are allocated through the interaction of free and self
directed market forces (Viswanathan and Dickson, 2007). This depicts that here decision of what
to produce is taken by consumers, how to produce is determined by the producers and for whom
to produce depend upon the purchasing power of the individuals. In this economic system
producer have the main motive to earn high amount of profits. For the purpose to fulfill this
purpose producers charges high prices for the goods and services (Hin, 2012).
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5. In addition to this, mixed economy comprises of combination of both command economy
and free enterprise economic system. Here both government and private individual make
collective decision with respect to the production of goods and services. Here resources relating
to the defence, police, and fire services are allocated by the government. However, it can be
evaluated that there are some sectors such as healthcare where decision relating to the allocation
to resources is taken collectively taken by both public and private individuals. This economic
system is followed in UK.
On contrary to this, transitional economy is the type of economy that changes from the
centrally planned economy to the market based economy. This economy goes through with
varied types of structural transformation with an aim to develop the market based institution in
an effective way (Transitional economy, 2014). Here the decision of what to produce depends
upon the market forces. In this economy, price is the reflection of the scare resource. For
example, producer of goods and services charges high prices from their customers if resources
are scare. In the similar way, low prices being charged from the buyers if sufficient amount of
resources such as land, labor and capital etc are available within nation. It is through this way
only an effective allocation of the scare resources being carried out by the nation (Iqbal and
Strong, 2010).
Further with this, private and public sector initiative is the type of contract between both
private and public individual. Here decision with regard to the allocation of scare recourse is
being collectedly taken by the both the identified individuals. In comparison to this, private
finance initiative is being considered as the method where funds of nation are used for the
purpose to achieve the major capital investment. Here public enterprise takes the assistance from
the private individual with an aim to deliver the high quality of services to the citizens that are
living within nation (Oberholster, 2010). Overall, it can be said that all these identified system
uses varied forms for the purpose to allocate the scare resources within nation in an effective
way.
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6. ASSIGNMENT 2
1.1 And 1.2 Purpose of different types of organization and to what extent Nestle meet the
objectives of different stakeholders
There are varied types of organizations functions in United Kingdom that has different
purpose. It comprises of following such as partnership, sole proprietor, companies and
franchising etc. Sole proprietorship is the type of organization which is owned and run by one
natural person. This corporation has the main objective to earn money within enterprise by
delivering an effective service to the clients or the customers. In addition to, partnership is the
type of enterprise where two or more individual works together with an aim to earn profits within
enterprise (Kolk and Van Tulder, 2010). In this type of enterprise profits is shared between the
partners in terms of the profit sharing ratio being decided among them. Main purpose of
partnership business is to work in the collective manner and give equal contribution in the losses
and profits. Further with this, company is another form of enterprise (Partnership agreement,
2014). Company is being regarded as the voluntary associations of the persons that come
together with an aim to earn the high amount of profits within the enterprise. The chosen
organization for the report such as Nestle is being counted under this category only. Company
has the main purpose that is to earn the high profits within organization by satisfying the needs
and demands of their customers in an effective way. In addition to this, franchising is another
form of business. It is the type of entity where producer uses the business model of another
established firm. This business has the objective that is to expand their business in large number
of nations (Cantwell, Dunning and Lundan, 2010). This form of structure is being followed by
the corporation such as Mc Donald, Dominos and KFC etc.
Stakeholders are the persons that cause their significant influence on the working of
corporation. In this respect, there are various types of Nestle stakeholders identified that possess
varied aims. It comprises of employees, government, customers and suppliers etc.
Employees: Employees expect that in return of the services they will get an effective
payment. In addition to this, workers also expect that they get appropriate reward for their
performance. Nestle has met this objective of employees by giving them an effective
environment of working. In addition to this, organization also organizes training and
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7. development programs for their employees that helps them in terms of improving their
performance as well as raise their chance to get an effective reward for the services.
Government: They always expect that corporation that is working within their nation
works for the benefits of the society. Nestle has met their expectation by generating large
number of employment within nation where they functions (Jung, 2011).
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Customers: Buyers has the expectation that they will get the utmost quality of goods and
services. In order to fulfill the given expectation of the customers, Nestle carries out large
number of investment in the research and development type of activity. This enables them
to carry out the production of goods and services in accordance with the specific demand
of the customers in an effective way.
Suppliers: The working of the organization is largely depends on them only. It is due to
the presence of this aspect it is being required by the organization that is to maintain an
effective relationship with their supplier. If it is not being maintained by them then in this
condition it became difficult for the corporation that is to carry out the production of
goods and services within given specified limit. Nestle maintains the satisfaction of their
supplier by involving them in the decision making process (Chen and Chai, 2010).
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8. 1.3 Explaining the responsibilities of Nestle and strategies employed by them to meet the same
Nestle has various types of responsibilities towards sections of the society and for the
purpose to fulfill their responsibility in an effective manner, organization comply with varied
types of strategies. In this respect, there are varied sections identified for which Nestle is being
considered as the responsible. These are explained as below:
Customers: They are the final users of goods and services. Firm condition relating to
profitability depends on this section only. Towards customer, Nestle has the responsibility
to maintain the satisfaction of their customers in an effective way. This responsibility is
being fulfilled by them by employing the strategy such as carrying out the investment in
the research and development type of activity (Mainardes, Alves and Raposo, 2011).
Such type of practices helps Nestle in terms of carrying out the production of goods and
services in accordance with the specific needs and demands of their buyers in an effective
way. This leads to raise the satisfaction of the customers.
Employees: Nestle is highly responsible for this section because it is through them only
production of goods and services being carried out by them within given specified time
limit. Raising the skills and competency of the workers is the major responsibility of
Nestle which is being fulfilled by them by organizing the regular training and
development programs with respect to same (Gertler and Karadi, 2011).
Society: Nestle organizes various types of corporate social responsibility related programs
with an aim to given their effective contribution to the society where they are operating
their operation.
2.2 And 2.3 Assessing the impact that fiscal and monetary policy have on company along with
impact of competition and other regulatory mechanism has on the activities of NESTLE
Monetary policy and fiscal policy causes their significant impact on the working of
Nestle. Monetary policy depict about the rate of interest. However, fiscal policy includes rate
relating to the taxation and government funding etc. Any kind of increase and decrease in the
given rates causes direct impact on the profitability related condition of enterprise. For example,
the country where NESTLE runs their operation has increased the rate of taxation. Then in this
condition it became very difficult for the firm that is to sale their services at low or competitive
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9. prices (Nelson and Yackee, 2012). As the result of this, corporation would have to bear the loss
of losing the large base of customers that prefers to purchase the goods and services of enterprise
at low prices.
In the similar way, social welfare and industrial policy causes their necessary impact on
the activities of Nestle. For instance, the country where organization has planned for expansion
has the industrial policy that some percentage of recruitment of employees needs to be carried
out by the corporation from their nation only. This policy would be beneficial for the company if
nation possess people that have sufficient experience of working in the organization like Nestle.
However, it can be critically evaluated that if it is not being found by the Nestle then in this
situation they have to carry out vast investment in the activity like training and development
(Gatti, Gallegati and Kirman, 2000).
In addition to this, the competition policy and regulatory mechanism also affects the
activities of Nestle. The competition policy has its both positive and negative effect on the
corporation. The policy encourages enterprise that is to carry out innovation their product for the
purpose to build the distinct image of enterprise in market. However, in order to comply with the
practice like innovation Nestle has to carry out the thorough environmental analysis which takes
lots of time and money of corporation. Nestle has to follow all the rules and regulations of the
country where they have plan for expansion. If it is not being done by them then it became
difficult for the firm that is to carry out their operation in the nation in an effective way
(Campbell and Craig, 2008). In addition to this, the competition policy of UK hinders
organization in terms of maintaining the monopoly of the firm in the market. The given thing
will tend to influence the operation of that particular organization that is interested in terms of
maintaining the monopoly of operation in the market in an effective way. In addition to this,
government of UK has framed strict policy regarding the electrical or varied other type of waste
that needs to be abide by all the firm. The given will force the organization like Nestle with
respect to comply with the given type of act in an effective way. However, if the given act will
not being followed by it then in the given circumstance strict action can be taken by government
of UK towards firm. Due to this, the brand image of the firm will be impacted. Thus, from the
given section it is found out that for the organization it is necessary that it must gather the
information regarding the varied rules and policies followed within the country. This is because,
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10. if the given type of activity will not being directed by the firm at that time the operation of brand
image of the firm will be impacted in a negative way.
3.1 And 3.2 explaining how market structure determines the pricing and output decision of
Nestle and its response to the market forces
Market structure helps in determining the pricing and output decision of Nestle. In this
respect, there are three different types of market structure identified such as perfect competition,
oligopoly and monopoly etc. For example, in order to function in the situation like perfect
competition it is being required by the Nestle that is to comply with competitive pricing type of
tactic. This is because in this structure firm faces large amount of competition from the
corporation that produces similar kind of goods and services. In addition to this, oligopoly
market structure contains very few amount of seller. Here in this structure prices are set by the
sellers through mutual decision making. Here productions of goods are carried out in accordance
with the demand of the customers (Fernando, 2011). In addition to this, monopoly is the type of
market structure which contain single seller of goods and services. In this type of market
structure Nestle can change any amount from their customers with respect to their goods and
services. This is because in the given structure presence of large amount of competition is absent.
Market forces such as demand and supply of product shape the organizational responses.
For example, if the demand of Nestle product is high in UK market but corporation does not
possess sufficient and timely supply of resources with respect to the production of goods and
services in order to meet the demand. In order to deal out with the given situation Nestle has to
search for varied other means of supplier. In addition to this, they have to comply with the
practice like building an effective relationship with their supplier. It is through this way only
demand of the UK customers can be fulfilled by them. In addition to this, if the supply of Nestle
product is increases but the demand with respect to same is decreases. Then in order to build the
demand of their product, enterprise would have to comply with the practice like advertisement. It
is through this way only the balance can be maintained by them between the demand and supply
of the product (Kew and Stredwick, 2005).
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11. 3.3 Discussing that how business and cultural environment shape the behavior of Nestle along
with competitive strategies employed by them
The external factors such as business and cultural environment plays very effective role
in shaping the behavior of Nestle. Business environment comprises of all the factors such as
political, economical and social or cultural etc. Nestle has to carry out the changes in their
operation in accordance with the political situation prevailing within country. For example, the
government where corporation function has introduced new policy with respect to the
employment.
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Then in this condition Nestle would have to rely with the given aspect. If it is not being
done by them then its direct impact can be seen on the sales and profitability related condition of
firm. In addition to this, economical condition like recession causes its significant impact on the
pricing strategy of Nestle. For example, corporation has decided to use price penetration strategy
in UK market with an aim to raise their profits. This tactic cannot be applied by the corporation
in recession because in this situation customers are more interested in saving money rather than
investing it (Baldwin and Scott, 2013).
In addition to this cultural environment plays significant role in shaping the behavior of
employees working in Nestle. For example, if the Nestle has the culture of inviting the open
suggestions from their workers then in this condition motivation of the employees can be
enhanced and this leads to them in terms of increased profits and sales. Further with this, Nestle
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12. has positioned itself as the food, nutrition, health, and Wellness Company. It is through this
aspect only they tend to maintain the competitive position in the market in an effective way.
4.1, 4.2, 4.3 evaluating the significance of international trade, economic integration and
Global markets and the implications the company entering to EMU
International trade allowed organization that is sale the goods and services to the large
group of customers. By complying with such type of practices an effective presence in the global
market can be marked by the organization. In this respect, there are several significance of the
international trade has been identified for the Nestle.
Increases sales and profits of business: By complying with the practice like international
trade improvement in the sales and profitability related condition of the Nestle can be
carried out. This is because with the help of this approach new market as well as
consumers can be created for the organization. This leads to increases the profitability
related condition of enterprise in an effective way.
Benefit of low cost of production: By opening the operation of Nestle in the country like
India which possess low cost of production as compared to UK, goods and services of
corporation can be sale at the lower prices (Wild, Wild and Han, 2014). Overall, it can be
said that international trade has these two significant benefits for enterprise.
The global factors cause their necessary impact on the working of Nestle. These are all
explained as below:
Factor Impact
Political The taxation policy as set by the government of
nation affects the strategy of firm in an
effective way. For example, Nestle has decided
in enter into the specific market through price
skimming strategy where low prices are being
charged from the customer. The application of
the given tactic would not be carried out by
them if government of the nation has increased
the rate of taxation. This forces Nestle that is to
carry out the changes in their existing tactic.
Economic The condition like recession and inflation
causes its necessary impact on the existing
strategy of the firm. Recession is the situation
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13. which causes direct impact on the purchasing
power of customers. In this situation it became
difficult for the firm that is to attract customers
towards the enterprise (Carroll and Buchholtz,
2014).
Social It involves the factor like change in the tastes
and preferences of customers. Nestle has to
carry out changes in this product in accordance
with the given aspect, if it not being done by
them then their profits would be affected.
Technological Introduction of the new technology in the field
of production of goods and services influence
firm to comply with the same which takes lots
of time and money of Nestle.
Legal Various types of laws being developed by the
government with respect to the business
regulation, pollution control and advertisement
etc. These all regulations have to be followed
by the Nestle. If it is not being done by them
then strict action against firm could be taken by
the government.
The European Union policy relating to employment and competition affects the functions of
Nestle. Employment policy of EU states that safety and welfare of the employees must be carried
out by the organization. Nestle fully complied with this policy and it is reason why they provide
all kind of safety measure to their workers in the work. In addition to this, competition policy of
European Union states that monopoly of the specific firm must be restricted from the market.
This type of practices as written in the given policy affects the motivation of Nestle (Laszlo and
Zhexembayeva, 2011). This is because each and every firm that enters into the market is more
interested in creating the monopoly of their firm in the specific industry. Overall it can be said
that policies of EU causes necessary impact on the working of Nestle. Here I have taken
responsibility with regard to manage my activity and completing my work within the given
specified time. This is done by me by using the time management strategy. It is with the help f
given tactic only I can be able to direct my efforts in terms of completing my task within the
specific time period.
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14. CONCLUSION
From the whole report it can be concluded that by analyzing the purpose of different type
of organization selection of the specific firm can be carried out. In addition to this, by assessing
the impact of varied kind of policies on the working firm, strategy with respect to same can be
formed by the organization. Overall, it can be said that business environment consist of various
types of factors that causes significant influence of the working of organization. By making prior
strategy with respect to the given factor impact of same could be reduced on the working of
enterprise in an effective way.
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15. REFERENCES
Books and journals
Baldwin, W. and Scott, J., 2013. Market Structure and Technological Change. Taylor & Francis.
Campbell, C. and Craig, T., 2008. Organisation and the Business Environment. UK:
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understanding international business activity: The co-evolution of MNEs and the
institutional environment. Journal of International Business Studies. 41(4). pp.567-586.
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder
management. Cengage Learning.
Chen, T. B. and Chai, L. T., 2010. Attitude towards the environment and green products:
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Comfort, D., Jones, P. and Hillier, D.. 2007. Changing times and changing places for market
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16. Laszlo, C. and Zhexembayeva, N., 2011. Embedded sustainability. Stanford, CA: Stanford
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December 2014].
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