Introduction of Business Environment Of Nestle
Business environment is one of the most important features of any organization. Industries are required to shape their business by managing good working culture and environment. It is mainly the combination of both internal and external factors. There are various factors includes in this processing such as suppliers, government etc. This report tells about the business environment of Nestle. It is the Swiss based multinational food and beverage company. It offers several products to their consumers. The purpose of different types of organization and nature of national environment is described here.
In any business it is essential to allocate al their resources in an effective manner. It will help to improve the productivity of the organization. Economic system is one of the most important ways which helps in allocating their scare resources in an effective way. Scare resources can be described as those assets through which companies cannot do its functioning in an appropriate way. It includes various productions such as men, merchandise and resources etc. for effective resource allocation government are required to meet all the needs of their citizens. There are different rules and regulations in different country (Fernando, 2011). Organization need to follow all those legislation. Functioning within nation is one of the most important parts and this effort is required from all the industries in order to manage their allocation of resources. In economic system of any country management of wealth is one of the most important aspects. There are various system involved in the management of wealth in nation and each having their different relations in their own way. Economic system includes command economy, free enterprise, mixed economy, private and public sector initiative etc.
Free enterprise economy can be described in a way where all decisions related to manufacturing and distributions of products depend on the private entrepreneur. All the techniques that help in understanding the forces of demand and supply will help the producer to carry out the better production. They are much more dependent on these techniques in order to carry out production (Hurn, 2011.). All the decisions related to production such as what is to be produced, who are the team members, quality of products depends on the effective decision making capability. In order to achieve high quality Products Company need to take several decisions on the level of profitability achieved by particular goods and services. The main objective of the Private entrepreneur is to make money in order to achieve success. They can charge high prices from their consumers and also adopt several strategies through which they can make feel happy to their customers. Free economic system can be described such as it is not for those buyers who are able to pay higher amount. This type of system encourages competition and demand producer to give their best results in to the buyer of products. Command economy is a key feature of any communist civilization. In this type of economy production are publically owned and all the economic activity is controlled by a central authority. All the decision related to different services is in the hand of government only.
A mixed economy can be described as a combination of free market and command economy. In this economy all decisions related to production and distribution of products are taken by both the government and private owners. It allows the private economic freedom and also allows for government to interfere in economic activities in order to achieve the social aims. The major duty of the private enterprise is to produce different goods and services according to the customer’s requirement. In order to access the demand and supply of the products private owners uses different types of marketing mechanism (Sledge, 2011). There are several decisions taken by the private producer in order to avoid the exploitation of citizens. Quality of manufacturing products depends on the various decisions. In order to achieve high quality products and improve their productivity organizations are required to avoid the exploitation of the citizens government interferes. Some mixed economies include various degree of centralized economic planning.
What extent Nestle meets the objectives of different stakeholders
There are different types of organization which have their different objectives. The market of UK possesses with various purposes and it includes partnership, sole trader etc. sole trader can be defining as a form of business enterprise that sets up and owns their own business. Here responsibility to make decisions respite in the hand of one person. A sole trader has unlimited liability and they can carry out the work of their consumers and charge accordingly. Another form of business includes partnership. It is very effective way to run their businesses in an efficient manner. It is a form which can be run by two or more people. Organizations are now a day’s adopting this technique in order to achieve their competitive targets. Industries can work in a collective manner and share their profit and loss with each other. On the other hand franchising is also an important aspect of any business. Producers can use business model of another successful firm. Business can attain their global presence in an effective manner and it can be considered as most effective tactics. For taking some examples such as KFC, US-pizza etc. it can be cleared described that franchise business is growing day by day. These models had marked their remarkable presence in the whole world (Manners and Whitman, 2000). It can be described as voluntary association of individuals who meet with each other in order to attain their objectives. Nestle have been chosen in this part of report. The main objective of Nestle is to earn profit within an enterprise. Stakeholders are very important part of any business. It can be people or a group of people that are affected by the functioning of an enterprise carried in nation.
Nestle also have various stakeholders in order to determine their competitive advantage.
Employee: In order to grow the business, organizations are required to motivate their employees in an effective manner. For this purpose companies are need to direct their staff members in a well manner. They have to schedule various training programs and induction to their employees. Organization need to motivate their workforce in an effective manner. By motivating them and providing them adequate opportunity in relation to their career growth along (Wallace, 2002). Nestle provide various offers to their employees and providing them several financial benefits. They can give those good appraisals and increment in order to satisfy them.
Customers: They are the key part of any industry. Consumers invest their money in the products of organizations. In order to achieve the trust of their customers it is the major responsibility of industry to provide them excellent service and goods. Organization need to value for their customer’s money. Buyer always expects good quality and services from Nestle along with value for money. They always organized several meetings to achieve the needs and demands of its consumers.
Government: The major responsibility of any organization is to follow all the rules and legislations that are owned by government. Nestle need to make timely payment of taxes works for the betterment of society through generating employment within nation. Organization need to go with all the corporate and social responsibility. Government provides them a license according to their policies (Poak, 2013). Each and every organization required to follow all the legislations.
Supplier: It may be distinguish from contractor or subcontractor who adds input to its deliverable. It can also be known as vendor. The main expectation of these vendors is timely payment of their services. Nestle have to meet the need of their suppliers; they are required to maintain strong relationship with them and also provide them timely payment for their services. For running successful business it is essential to keep happy their vendors. They can achieve high productivity in order to grow their business.
Shareholder: It can be any individual or a person that owns at least one share of company’s stock. It can be company’s owner and expect high rate of surplus from the profit of company. Organization need to provide them high bonus in order to keep them satisfy. Nestle has fully complied with this situation and they are required to distribute favorable rate to their dividends.
Responsibilities of Nestle and its strategies employed to meet them
In any business there are various duties of the management team and they need to adopt several strategies in order o achieve their target. Nestle has their responsibility towards their entire workforce. Employees produce several goods and services to their consumers. It is the major duty of management team to keep happy and satisfy their employees in order to achieve their competitive advantage. Management of Nestle has formed various strategies to achieve their goals. Consumers always expect high quality of products along with reduced price. The main strategy that they need to adopt is cost reduction strategy. It relates with the reduced cost of production by complying with the practices of eliminating all sorts of unnecessary activity. It is the main responsibility of the Nestle to keep satisfies their consumers. They need to maintain their productivity in an effective manner. They can provide various beneficial offers to their client in order to gain their repeat purchase (Terra, 2010). If customers are happy with all their services they can further go their products and it will help the company to improve their productivity and increase their market share. Organization leads to high market share. Nestle conducts various loyalty programs and give rewards to their loyal and regular customers. Nestle have their responsibility to work towards the corporate and social responsibility. They can organize various campaigns which motivates their consumers to comply with the use of their different products. It is essential to keep happy their consumers and for this they can adopt these strategies and give various offers to their employees.
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Impact of fiscal and monetary policy on organization
All the business activities of Nestle include several policies such as fiscal and monetary policy. There is a great impact of all these business activities. Monetary policy that is owned by government controls the supply of money in nation. It can control the inflation of country as well as their interest rates. The prices of products can be limit through the inflation and it has its direct impact on activities of organization. Monetary policy is often targeting a rate of interest for the purpose of economic growth and stability. The fiscal policy includes government expenditure and taxes etc. It has direct impact on the allocation of resources and rate of interest depends upon the political condition of nation. In any country it is necessary to follow all the legislations by the organizations. Political conditions depend on the policies that are governed by the government. Every nation has their different government and different policies (Oberholster, 2010). If government increases their tax rate then it directly affects the business and purchasing power both. All the products of the company available at higher prices and it will result in decrease the sales of the company. If it will go with just an opposite condition or it will say that if tax rates decreases than it will increase the rate of purchasing power. In today’s competitive environment consumers tried to purchase high quality products with the cheapest deal. The government of nation will decrease their tax rates than it will be beneficial for all the consumers as well as organization. It increases the profitability as well as the productivity of firm.
Exchange rate is also comes under the policy of government. These are contradictory from one country to another and it also affects the overall process and functioning of the firm. In today’s competitive environment people are interested to save their money rather than spending. If company increases their cost than it would automatically enhance the price of goods and services and reduce the sales of company (Laborde, 2005). Than people can buy their products and organizations can attain high market share.
The competition policy of UK includes various laws which are enumerated:
- Fair Trade Act 1973: This act deals with the strategy of merger and acquisition. It deals with various business operations and organizations are required to comply with them.
- Restrictive Trade Practices Act 1976: In this Act companies are restricted to compete fairly. This situation can be handled by this act.
- Resale Prices Act 1976: It handles all those conditions in which company have to resale their products and services. For this condition company have to put minimum price for those products. This act handles the price and tried to put least prices in order to resale.
- The Competition Act 1980: According to this act there are several laws and regulations to deal with anti-competitive practices (Comfort, Jones and Hillier, 2007). It can deal with different organizations.
The legal authority of UK has to monitor and analyze all the situations and suitable remedies also provide various recommendations. They need to inspect and evaluate the quality all the conditions according to the acts that described above. Completion policy and other regulatory mechanism effect the quality of products of Nestle as well their functioning. This regulatory mechanism can be Scale and complex monopolies, Transparency policy, Utility regulation Act etc. Nestle required to follow all the laws of UK that are owned by the government ad provide high quality products to their customers. By providing them quality products they can maintain health relations with their clients and improve their productivity as well as high market share.
How market structure determines the pricing and output decision of business
Market structure can be defined as interconnected characteristics of market. It produces number of identical products and those features that highly affects the interaction of seller and buyer. It determines all the pricing and output decisions of businesses.
There are mainly four type of market structure:
- Perfect competition: In this type of structure products are developed by using most efficient technique. It can be described as a market structure where competition is at its greatest possible level. Firms are producing homogeneous products and they have no control over the supply and prices of products in market (Hurn, 2011). Nestle set their competitive prices in order to produce unique products and increase their market share.
- Monopolistic Competition: In this type of market structures there are no competitors of the organizations. According to this firms are required to increase their prices and profits. They need to reduce supply of products.
- Oligopoly: In this structure there is less competition in market. As there are few companies in the market and they need to reduce output in market. Organizations are only one who can make and decide their prices according to their product quality. In this type of market firms can gain profit by making higher prices. Nestle set their product prices according to their customers in order to get a successful business.
- Monopoly: it is one of the organizations which have no competitors. It can be described as an individual or organizations have all the control over the supply of products. They are the only price maker and they can set the product priced accordingly (Laborde, 2005). They can make higher profits in their market share and achieve higher competitive advantage. NESTLE has develop its brand image and due to this they are price maker of their products.
Judge how business and cultural environment shape the behavior of NESTLE
In any business it is essential to maintain the cultural as well as social environment in order to shape the industry. Working culture is one of the most important features of Nestle. It includes the beliefs, values, way of doing business and the objectives of organization which reflects in the structure of business. It also includes various stakeholders which are the key part of industry (Aziz and Fady, 2013). Nestle involves their stakeholders in various decision making process and it creates confidence and trust among all of them. Company provide healthy work environment in order to develop positive behavior among them towards firm. They provide effective training to their staff members in order to feel them safe. Customer satisfaction is very important in order to increase the productivity. They can attract their customers by adopting latest technologies.
Significance of international trade to NESTLE
In order to provide such goods & services to customer which are not available in country is done by International trade. This technique provides opportunities to various organizations to expand their business in different countries across the world. Nestle uses international trade to expand their business and increase their market share (Worthington and Britton, 2009).
Significance of international trade is described below:
- It helps in reducing dependency of this organization on domestic market and controls fluctuation in seasonal market.
- Profits and revenues of company are increased due to global business operations.
- It helps in expansion of business and increases potential of an organization.
- Nestle can target to new customer segment and it helps in increasing customer base of the organization.
- Market share of company can be increased and it facilitates this organization to develop a good reputation among customers of different countries.
- Dependency on domestic market is reduced due to international trade and risk of expanding business is also diversified.
- Company can adopt new technologies from countries where they are performing operations.
- Profitability of this organization can be increase due to increase in business operations.
These factors are further explained in detail below:
- Political factors: Policies & budgets within an organization are affected due to change in government rules & regulations. This organization encourages active life style and supports effort made by government to provide healthier diets to their customers. With this initiative, company is able to resolve various health problems of their consumers such as obesity & diabetes.
- Economic factors: The economical factors which affect operation & activities of Nestle are interest rate, taxation rate and distribution of income (Terra, 2010). Trade activities of consumer are affected due to inflation as it leads to decrease in their savings and reduction in purchasing power of customer.
- Social factors: The major focus of every customer these days is to have a high quality product at low price. Business of nestle is affected due to changes in various demographic characteristics such as life style, preference, need and population.
- Technological factors: Advancement in technology has great impact on operations of this organization as it helps in improving quality of their products with reduced cost. Technology helps this company to indentify needs & preference of customers located in different countries.
- Legal factor: There are various legal factors which has impact on Nestle such as employment law, consumer protection law, and health & safety law and business regulation policies. All these factors help this organization to create loyalty among consumers and increase in their profitability.
- Environmental Factors: The business of this company is highly affected due to change in climate, air emission or natural resources (Poak, 2013). In order to reduce waste and protect environment, Nestle is building various environmental protection strategies.
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From the above report on Business Environment it is concluded that in any organization it is essential to fulfill the requirements of their consumers. Nestle develop various strategies in order to meet the requirements of their stakeholders. Market structure helps in the pricing and output decision of Nestle. There are several market forces such as supply, demand etc force the response of the company. The policy is developed by European Union highly impact the business of organization.
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- Suggested Business Environment Assignment Topics
- Aziz, E. A. R. and Fady, R., 2013.Business improvement using organisational goals, Riva technique and e-business development stages: A case study approach. Journal of Enterprise Information Management. 26(5). pp.577-595.
- Calderini, M., Garrone, P. and Sobrero, M., 2003. Corporate Governance, Market Structure, and Innovation. Edward Elgar Publishing.
- Comfort, D., Jones, P. and Hillier, D.. 2007. Changing times and changing places for market halls and covered markets. International Journal of Retail & Distribution Management. 35(3). pp. 200–209.
- Fernando, A. C., 2011. Business Environment. Pearson Education India.
- Gatti, D. D., Gallegati, M. and Kirman, P. A., 2000. Interaction and Market Structure: Essays on Heterogeneity in Economics. Springer.
- Hurn, B. J., 2011. Simulation training methods to develop cultural awareness. Industrial and Commercial Training. 43(4). pp. 199–205.
- Laborde, J. P., 2005. Social Security and the European Union. Managerial Law. 47(6). pp. 59– 67.