Business Environment For Nestle
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11305 Downloads I Published: 01 Jul ,2016
In today’s era of high competition, organizations of different countries have to perform their operations and business activity in highly dynamic environment. This environment is influences by different factors i.e. political, economical, social, technological, cultural, and legal and many more others. For the purpose of surviving in such as environment and also to achieve their organizational objectives, it is essential for company to entail sound tactics in their operations so that they can make best out of this (Morrison, 2006). With this regard, current report in prepared in order to gain deep knowledge about the business environment of and its impact over the organizations. For this, Nestle Corporation is concerned which is one of the leading companies in food sector. Discussions that are involved in this repost are organizational purpose of business, nature of national environment in which business operates, behavior of organizations in respective market environment, assessing of the significance of global factors that certainly shapes business activities at national level
There are different types of organizations in an environment and hence they can be bifurcate on the basis of their size, nature, types, structure, and capital amount and on various other bases. However, every organization is developed in order to attain certain objectives and accomplish their purpose in an effective manner (Fernando, 2011). In this regard, there are basically, two types of organizations namely private sector organizations and another is public sector. Both have different purpose, structure, nature objectives and capital etc. Private sector organizations are the business units that are developed with an aim of attaining high amount of profit by boosting their market share and level of operations (Nimwegen and et al., 2008). These are its main motive and hence they involved different set of strategies and tactics in this regard so that they can attain it in a considerable amount of time frame. Ownership of these set of organizations is individuals owned or a group of people who perform on the basis of all. Nestle is one of the example that is privately owned companies and they possess an aim of high quality products to their customer in order to boost their sale and gain high amount of profit margin over a period of time (Sloman, 2002). Company essentially wants to gain more of revenue in every successive year from each of their operations region so that they can able to capture larger market share in this regard. Hence, these set of organizations can also be named as profit making organizations.
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Apart from this, another set of organizations is public sector which is developed and run in order to offer serviced to society and supports mankind in every aspects. These organizations are not operates for the purpose of making profit and enhancing their market share unlike private sector instead they desire to enhance the standard of living of the individual in particular regions. Generally these organizations are owned and managed by government bodies only and revenue that is being earned from these operations is again invested for welfare of society (Gabriel, 2004). Moreover, they also possess an aim of enhancing the overall growth of the country and boosting the livelihood of individuals those are surviving below the line of poverty. In addition to it, another set of organization in the mixture of both public and private entrepreneur and these organizations possess an aim of making profit up to a considerable limit and also to serve society in different manner (Elsevier, 2013). These organizations are generally managed under partnership deed and hence managed by private bodies majorly in order to run this business activity in much efficient manner.
As far as nestle in concerned, company is very much conscious about their roles and duties in order to ensure that they gain continuous supports from their key participants in different scenario of needs. For this, they consider and fulfill their needs requirement of their stakeholders so that they can sustain in market for longer and also to gain high amount of edge over their rivals throughout the globe. Company posses wide range stakeholders due to their global operations (Parkin, 2002). Customers are their key stakeholders and hence nestle incorporates different set of practice in this regard in order to accomplish their objectives in best manner. For this, they offer them high quality products at much competitive price in order to ensure their safety of their customer (Martin, 2012). Moreover, they follow sound distribution system with a purpose of offering nestle products at the convenient reach of their target customers. Another key stakeholders for nestle in their employee that exist throughout the globe. They fulfill their objectives by offering them favorable working environment and timely payment of salary. Moreover they also offer different sort of bonus and incentives in order to gain high amount of support from their side and also to boost their moral in much effective manner (Worthington and Britton, 2009). This practice essentially aids in meeting out with their objectives in best manner.
Further, shareholder, investors and loan provider are also one of the stakeholder that plays a crucial role in the business activity of nestle as they deliver them fund at the time of requirements. In order to ensure that they attain the objectives of these stakeholders, company makes a timely payment to their respective amount in terms of interest, dividend, principal value etc. This essentially aids them in gaining fund at the time of need and hence they able to run their business activity without facing the financial barrier in it. Moreover, they are also focused towards different types of CSR (corporate social responsibility) activities so that they can fulfill the objectives of surrounding in best manner (Moon, 2010). Additionally, practices like adhering towards government rules and regulation of different countries, paying out full tax amount, fulfillment of their duties and other related practices aids them in accomplishing the objectives of government as a stakeholders. With this discussion, it can be state that nestle essentially fulfilling the objectives of different stakeholders in best manner.
For the purpose of sustaining in market for longer and also to gain best out of their desired market, Nestle fulfill different sort of responsibilities in this regard. For this, they employed different types of strategies so that they can able to accomplish their responsibilities towards different participants in much effective and better manner. They have the responsibilities towards their customer and for this they undertaken the strategies of offering high quality products at much competitive price in different region so that they able to gain loyalty from their side (Coulter, 2005). Further they focus more over health and hygiene factors in their production house in order to fulfill their social and ethical responsibilities of delivering world class products to their distinct customers. Moreover, they have certain set of responsibilities towards their shareholders and investors and in this regard they employed the strategies of delivering transparent information about accounts, fund employed and progress of the company in order to justify the amount that are being invested by different individuals (Morfaw, 2009).
In addition to it, practice of fair treatment with employees and offering them sound working environment essentially aids them in fulfilling their responsibilities in a sound manner. With this practice, high amount of supports from employee is obtained to nestle from which they able to gain larger market share in their target market (Fernando, 2011). An ethical practice essentially aids them in gaining supports from different stakeholders and also aids them in fulfilling their responsibilities in better manner.
In order to manage the economy and its growth, government involves and implements different set of policies so that better results can be attained. In this regard, however impact of this policy can be seen over the organizations that operates in that business environment. Two of the main policy within this context is monetary and fiscal policies that are being implemented by governmental bodies in order to manage and boost the economy. Fiscal policy makes an impact over the practice like subsidy, interest rate, tax rate, duty and other related practices. It impact can be seen over the operation and profitability of Nestle because it involves changes in the budget also (Samuelson, 2001). If budget is not in favor to Nestle then it will cause negative impact such as rise in their tax amount, higher payment of duty for their imports and exports, low opportunities for growth and related impact. On the contrary, if a change in fiscal policy is made in support to nestle that they will be able to gain high amount of benefits and market opportunities. Further, they will also be able to boost their market share by making necessary adjustments in their pricing strategy due to attainment of leverage from government sides (Kew and Stredwick, 2005).
Apart from this, monetary policy involves the changes in the interest rate of bank, repo and reverse repo rate. This change certainly makes an impact over the firm as this will increase the amount to be paid to bank against the loans that are being taken by company. Further, impacts can be seen over the customers of the company and hence overall sales volume of the firm may also decline in this time frame. Hence, it can state that monetary policy makes a direct impact of the operations of the company like nestle and certainly hampers their flow of goods in market place (Moxham, 2010).
Along with monetary and fiscal policy, completion policy and other related regulatory mechanism also cause serious influences over the business operations of nestle. Completion policies are framed with a motive to develop and healthy competition within the country and in case if Nestle obstructs these policies then they has to pay certain amount of compensation and penalty to government and accused parties (White, 2004). Also, this will hamper their corporate image from which their sales volume may also declined up to a significant level. With this situation, their competitors will take advantages of this scenario and hence can able be able to enhance their market share threefold. Moreover they can even be banned to operate in that particular region which will cause ultimate losses to company in both economical terms and in image term.
It is required to implement effective pricing strategy in order to gain high amount of attention from the target customer and also to boost the overall profitability of the firm. Nestle with this regard can implement sound pricing strategy by considering different market structure. Under perfect competition, where lies large amount of buyer and seller, nestle can implement competitive pricing strategy in order to attract klieg amount of customer on their side. In case of oligopoly market in which few sellers and large buyer are present, nestle can charge premium price against their wide range of products in order to boost their profit margin significantly (Kew and Stredwick, 2005). Further, they can implement the strategy of differentiated pricing strategy in monopoly market structure due to sole seller and large amount of buyers.
Apart from this, market force also plays a crucial role in the operations of the company and hence effective steps must be entailed min this regard in order to gain sound results in return. It involves technological forces from which nestle can boost their market share by gaining better results from it. Moreover, legal force also make an impact and nestle can manage it by adhering to norms and regulations (Nimwegen and et al., 2008). Perceptional and attitude of customer also influence nestle and they can responds to it by making considerable amount of changes in their products set that better meet with the needs and requirement of their target customers. Steps must be entailed in order to response to cultural force by offering products and entailing sound promotional practices in this regard (Worthington and Britton, 2009). By responding to all these market forces, they can able to boost their market share and also be able to enhance their profit margin in much effective and better manner.
Different cultural factors and business environment are the prime elements that shape un the work relationships between employees, enjoyment and work process.Culture is made up of different values, behaviors, attitude, beliefs and assumptions that are being shared with a group of people. Business culture reflects in the actual results that a group attains while undertaking together.
The business culture of Nestle is a collection of norms, values and assumptions that are being shared among team members of the organization and it assists in the workforce to attain increased amount of benefits. Its culture involves a number of functions and is associated with assessment of actual points that the way does employees perceive in different factors of company (Rogers, 2011). Managing business environment and culture attains much of enhanced skills and traits that provides in significance to teamwork as well as individualism from the actual assumptions. There are numerous competitors available in the FMCG market and it faces in tough competition as well as need to manage laws framed by European Union with a convenient path to enter in the European market easily for trading and it has probably added an increased competition in the market (Harit, 2013).
Globalization is an important factor that promotes and shapes in the national business environment. There are several different countries that prominently rely on trading globally to add on value in the national level of income.Much of advancement in technology has given rise to enhancement of transportation, infrastructure and communication system (Polanyi, 2001). The increased usage of information technology with globalization has transformed in the way in which company’s structure produces in prominent results.
International trading has given rise to propensity in the nation and there are several competitive factors of globalization that accomplishes much of importance with transforming global business environment (Griffin and Moorhead, 2011). Diverse global factors have brought increased as free trading policy of government have considerable impact on the business environment of Nestle. This corporation is making in huge investments in several other countries and has expanded its operations all around the world. International trading has attained in much growth over the years because of its numerous benefits all across the globe.
It involves in exchange of capital, products and services among several countries and it accounts for a good part of countries GDP (Kokemuller, 2011). It also helps in attaining increased revenue within the developing countries and it is an important factor for the rise in globalization.
The global factors that offers in numerous opportunities, threats and challenges for Nestle to achieve its business activities prominently. In FMCG sector it offers in the standardization of world trading that involves in different services in trading and it has resulted into formed general agreement in the service level (Krasner, 2003).
It is usually a range of factors that integrates global business operations in services and possesses defined structure for all the companies in FMCG sector. This provides in opportunities for company to expand its business operations and at global level all around the world there has been intense amount of challenges in this path (Schmidheiny, 2000). There are different global factors that impacts on Nestle and it needs to be given much of consideration that operates at global level. The swift rise in technology crucially impacts on business and need to be monitored effectively from time to time to reach ahead in business.
There are several political and environmental factors that effects on the business decisions Nestle and need to be given attention while framing organizational regulations. Economic conditions of a country varies with the demand and supply as it need to be given importance with religion and culture because it is an essential trait that organization needs to design its plans and polices (Fried and et.al., 2011).
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From the above analysis it can be stated in that business organization in current condition accomplishes its business activities in a diversified manner and all this influenced on the appropriate flow of goods and service on Nestlé’s international system. The developmental and growth strategies have impacted on today’s policies of nation and it gives probable growth various global corporations. Here, in the success and failure of a corporation majorly depends on the level to it’s within the organizational environment. Business environment is a natural system that has made aware about different benefits that give attention on maintenance of prominent relationship within the economic activity.
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