Nestle Global's mission statement is "Good Food, Good Life.

" The company aims to

provide consumers with tasty, healthy food and drinks for every meal and snack.
CONTINUE REANestle Global's mission statement is "Good Food, Good Life." The
company aims to provide consumers with tasty, healthy food and drinks for every meal
and snack.
CONTINUQUICK ANSWER

Nestl's vision is "to be a leading, competitive, nutrition, health and wellness company
delivering improved shareholder value by being a preferred corporate citizen, preferred
employer, preferred supplier selling preferred products."
CONTINUE READING

KEEP LEARNING
E READINGDING
 Nestl SWOT analysis

Strengths Weaknesses
Unmatched research and development Criticism over high water usage, selling contaminated
capability food, anti-unionism, forced child labor and using other unethical
Strong geographic presence, with one of practices
the best geographically diversified revenue 2. Contaminated food recalls
sources
Unrivaled product and brand portfolio
Environmental sustainability efforts
Ownership of some of the most recognizable
brands in the world

3.

Opportunities Threats
Clear and accurate labelling indicating of any harmful Poor quality water and its scarcity
products Increased competition in the beverage and food industries
Transparency in material sourcing 3. The price of coffee beans could significantly rise due to major
Growing number of small Silicon Valley based food weather disasters
startups
4. Growing ready-to-drink (RTD) tea and RTD coffee
markets

Strengths
1. Unmatched research and development capability

According to Nestl, one of its key competitive advantages is research and development (R&D)
capabilities.[1] The company spent CHF1.678 billion or US$1.697 billion on R&D in 2015. This
accounted for 1.89% of the total revenue. In comparison, The Coca Cola Company spent 0% of
its revenue on R&D and PepsiCo, Nestls chief rival, spent only 1.2% or just US$754 million of
its revenue on R&D.

Figure 1. R&D spending by the largest food and beverage companies (in US$ billions)

R&D expenditure Revenue % of revenue

Nestl S.A. 1,697 89.772 billion 1.89%

 Figure 1. R&D spending by the largest food and beverage companies (in US$ billions)

R&D expenditure Revenue % of revenue

PepsiCo 0.754 63.056 billion 1.20%

Mondelz 0.409 29.636 billion 1.38%

Coca-Cola 0 44.294 billion 0%

Source: PepsiCo SWOT analysis[2]

Nestls R&D capabilities also stem from its R&D network. The company has the largest R&D
centers network of any food or beverage company in the world, with 34 R&D facilities and over
5000 people working in them.

Nestls superiority in R&D against its rivals provides a sustainable competitive advantage and
long-term success.

2. Strong geographic presence, with one of the best geographically diversified revenue
sources

Nestl operates and sells its products in 189 countries, reaching almost the entire world. The
company has divided its operating segments into 3 geographic areas: The Americas (AMS),
Europe, Middle East and North Africa (EMENA) and Asia, Oceania and sub-Saharan Africa
(AOA). None of the regions earn over 50% of the total revenue.

Nestl, unlike most of its rivals, does not rely on any single country or a few different countries
to generate most of its revenue. The U.S., which is the single largest companys market only
generates CHF25.293 billion or 28.5% of the total revenue. The next largest market, China,
generates CHF7.06 billion or 8% of the total revenue.[1]

In comparison, PepsiCo and The Coca Cola Company earn 56% and 46% of their revenue from
the U.S. alone, respectively.[2] This proves that Nestls strong and diverse geographic presence,
gives it a competitive advantage over its rivals, especially when the U.S. market is negatively
affected.

Figure 2. Nestls main markets

United StatesChinaFranceBrasilUnited KingdomOther28.5%8%50.3%
 Percentage
Country
Revenue

United
25,293
States

China 7,060

France 4,848

Brasil 3,925

United
3,006
Kingdom

Other 44,653

Source: Nestls annual report[1]

3. Unrivaled product and brand portfolio

Nestls product portfolio is wider than any of its rivals in the industry. The company offers over
2000 different product choices in 7 main categories:[3]
 Powdered and liquid beverages. Brands include: Nescaf, Nescaf Dolce Gusto,
Nespresso, Nestea.

Milk products and ice cream. Brands include: Nestl, Dreyers, Movenpick.

Prepared dishes and cooking aids. Brands include: Maggi, Chef, Buitoni, Stouffers,
Wagner.

Nestl Nutrition. Brands include: Wyeth, Nan, S-26 Gold, Beba, Lactogen.

PetCare. Brands include: Purina, Friskies, Pro Plan, Felix, Gourmet.

Confectionary. Brands include: Nestl, KitKat, Cailler.

Water. Brands include: Pure Life, S.Pellegrino, Vittel, Perrier.

Wide product portfolio allows Nestl to better satisfy various consumers needs and target wider
consumer segment. The company is also less affected by the changing consumer tastes or
consumer backlash against one of its brands.

4. Environmental sustainability efforts

Nestl prides itself on companys sustainability efforts. The companys environmental initiatives
have helped to reduce waste, packaging material usage and to keep the environment cleaner.

Since 1991, the company has saved 500 million kg of packaging material by redesigning its
packages. Nestl uses recycled materials and chooses materials from renewable source whenever
possible.

By 2016, 105 of Nestls factories have reached zero waste in production, one of the best results
in the industry.

Few of the companys rivals could match the companys efforts in sustainability, which result in
lower production costs, cleaner environment and happier communities.

5. Ownership of some of the most recognizable brands in the world

Nestl owns and markets a few well recognized brands, such as Nestl, Nescaf, Maggi, Purina,
KitKat and Nan. According to Forbes[4] and Interbrand[5], Nescaf brand is the 32nd and 36th most
valuable brand in the world, and is worth US$16.3 billion and US$12.5 billion, respectively.
Nestl brand also ranks as the 49th and 56th most valuable brand in the world in Forbes and
Interbrands lists.

Brand value is closely related to brand recognition. Nestls brand recognition is also increased
by its presence in 189 countries.
Brand awareness helps the company to introduce new products and sell the current products
more easily.

Weaknesses
1. Criticism over high water usage, selling contaminated food, anti-unionism, forced child
labor and using other unethical practices

Being the largest food company in the world attracts lots of attention. Most of that attention is
criticism over the companies practices and Nestl is no exception to that.

Over the years, the company has been criticized for a number of its practices:

Unethical marketing of baby formula;

Claims that water should be privatized;

Asking for a debt payment from a famine struck country;

Misleading labeling;

Sourcing materials from suppliers using child and forced labor;

Anti-unionism.

The latest criticism is over the companys uncontrolled water usage in California, where
prolonged drought is hurting the state. California state has experienced water shortages over the
last few years and many restrictions have been placed on businesses and residents to reduce their
water consumption. On the other hand, Nestl, which drains the water from aquifers in
reservations areas, isnt controlled by state laws and does not have to restrict its water usage.
[6]
Nestls inability to address the communities needs and problems in California, but instead
increasing the problems even more, draws lots of criticism.

Negative publicity results in damaged brand reputation, lost consumer confidence and declined
sales. Few of the companys rivals receive as much criticism as Nestl.

2. Contaminated food recalls

Nestl is a huge food company selling tens of thousands of different food products daily. Even
with strict quality control measures the company often has to recall its products in various
markets due to some form of contamination. In 2014, Nestl recalled and destroyed 37,000 tons
of contaminated Maggi noodles in India. This resulted in hundreds of millions in lost sales and
damaged brand reputation. Recently, the company had to recall various prepared dishes in the
U.S., which may have contained pieces of glass. The company has to recall some of its products
almost monthly. Such negative publicity heavily affects Nestls business.
Opportunities
1. Clear and accurate labelling indicating of any harmful products

According to the study done by Delloitte,[7] consumers are more likely to buy products that are
clearly and accurately labeled. Almost 62% consumers are more likely to choose products that
are free of any harmful products. 51% of the surveyed said that their decisions will be influenced
by clear and accurate labelling and 47% would like to see clearly displayed information.

Nestl, which has a history of providing misleading nutritional information on its labels should
improve its practices and clearly label the products and include all the necessary information in
addition to nutritional values.

2. Transparency in material sourcing

Consumers are becoming more and more conscious of where the food came from and how it was
grown or made. Many young consumers are placing sustainability as an important decision
making factor when buying their food. Social responsibility of buying ethically grown,
sustainable foods is often more important that price.

Nestl could start sourcing all of its materials from sustainably grown plantations and farms.

3. Growing number of small food startups

There is a growing number of food startups that are looking for ways on how to disrupt the food
industry. According to CB Insights,[8] food startups raised nearly US$5.5 billion in 2015,
indicating a significant support for the food startups. These new startups are developing the next
generation foods and drinks, provide various solutions on food delivery, new meal kits, specialty
foods and introduce new ways to grow and sell the food.

In the current situation, where the established brands are losing sales and the capital is still very
cheap, Nestl could increase its investments in startups that will help the company to meet the
future challenges and increase the sales.

4. Growing ready-to-drink (RTD) tea and RTD coffee markets

According to the Beverage Marketing Corporation Report,[9] RTD coffees is the fastest growing
liquid beverage sector in the U.S. for the last 3 years. While the whole beverage industry grew
only slightly, RTD coffees grew by a staggering 37%. Healthy beverages, such as RTD teas were
also growing over 4% annually.

Figure 3. RTD coffee growth compared to the growth of the whole liquid beverage market in the
U.S. (in percentages)
RTDCoffeeWholeBever2012201320142015-6061218Year
 Whole
RTD
Year Beverage
Coffee
Market

201
9.5 1
2

201
6.2 -0.1
3

201
10.7 2.2
4

201
16.5 2.8
5

Source: Beverage Marketing Corporation[9]

Even though Nestl is one of the biggest coffee sellers in the world, the company doesnt have
any significant brands in RTD coffee or RTD tea markets. The are many smaller brands that
could be acquired in the industry or the company could push its own RTD brands to the U.S.
market to take the advantage of the growing RTD sectors.

Threats
1. Poor quality water and its scarcity

Beverages, make over 25% of the total Nestls sales and water is used in all of their production.
Bottled water products alone generate 8% of the total companys revenue.
Water is scarce and is becoming even more scarce due to the factors such as climate change,
growing populations, overexploitation of resources, the increasing demand for food products,
increasing pollution and the poor management of waste water. Demand for water is increasing,
and it will likely become more difficult for Nestl to access both clean and inexpensive supplies
of drinking water, resulting in potentially increased production costs and therefore lower
profitability.

The company also currently receives lots of criticism and negative publicity over its high use of
drinking water near the communities suffering from droughts. In the future, water scarcity will
likely become a more significant problem that will negatively impact companys operations.

2. Increased competition in the beverage and food industries

According to Nestl, competitive rivalry is one of the key threats affecting the company. The
beverage and food industries are highly competitive and consist of numerous small, large and
multinational companies. Beverage, food and snack products compete primarily on the basis of
brand recognition, taste, price, quality, product variety, distribution, advertising, packaging,
convenience, service, marketing and promotional activity, as well as the ability to anticipate and
respond to consumer trends.[1]

Food and beverage markets are growing very slowly and with so many new startups, Nestl will
find it hard to compete in the future.

3. The price of coffee beans could significantly rise due to major weather disasters

Coffee generates over 10% of the companys total sales and coffee beans are the major raw
material used in its production. Therefore, Nestls profit margins are dependent, to some extent,
on the price of coffee beans, which over the past several years has been very volatile.

The major reasons for such price volatility are droughts, unusually high or low temperatures and
many other weather disasters in Brazil and other coffee-growing countries. In addition to those
factors, growing demand has increased competition for the best quality coffee beans and has
pushed the prices up significantly.

Sources
1. Nestl (2017). Annual report 2015. Available at: http://www.nestle.com/asset-
library/documents/library/documents/annual_reports/2015-annual-review-en.pdf
Accessed 6th January, 2017

2. Strategic Management Insight (2017). PepsiCo SWOT analysis 2017. Available at:
https://www.strategicmanagementinsight.com/swot-analyses/pepsico-swot-analysis.html
Accessed 6th January, 2017
3. Nestl (2017). Brands. Available at: http://www.nestle.com/brands Accessed 6th January,
2017

4. Forbes (2017). The Worlds Most Valuable Brands. Available at:

http://www.forbes.com/powerful-brands/ Accessed 6th January, 2017

5. Interbrand (2017). Best Global Brands 2016. Available at: http://interbrand.com/best-

brands/best-global-brands/2016/ranking/ Accessed 6th January, 2017

6. Smith, S. E. (2015). 5 shocking scandals that prove its time to boycott Nestl. Available
at: http://www.dailydot.com/via/nestle-california-bottled-water/ Accessed 6th January,
2017

7. Renner, B., Ringquist, J. (2016). Consumer Trends in The Food Industry. Available
at:https://www2.deloitte.com/us/en/pages/consumer-business/articles/us-food-industry-
consumer-trends-report.html Accessed 6th January, 2017

8. CB Insights (2016). The Periodic Table of Food Tech. Available

at:https://www.cbinsights.com/blog/periodic-table-food-tech-startups/ Accessed 6th
January, 2017

9. Beverage Marketing Corporation (2016). Press Release: The U.S. Liquid Refreshment
Beverage Marketing Accelerated in 2015, Reports Beverage Marketing Corporation.
Available at: http://www.beveragemarketing.com/news-detail.asp?id=335 Accessed 6th
January, 2017

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Strategy

Strategy
Nutrition plays a profound role in everyones life. Our strategy focuses on delivering distinct benefits to
people through the food and beverages, products and services we provide. Over 150 years we have built
a successful business by understanding and anticipating the needs of society, and continuously adapting
ourselves to seize the opportunities presented to us.
The fast-evolving needs and expectations of society today reconfirm the validity of our Nutrition, Health
and Wellness strategy. The world is at an inflection point. The speed, intensity and the breadth of change
is unprecedented. Digital disruption is reshaping our industry, our relationships with our suppliers and
retailers, and with the people who buy our brands. Advances in science and technology are opening up
new opportunities for us to play a role in addressing the challenges society faces. In a world where
hundreds of millions of people are under-nourished, malnourished or over-weight we are well positioned
to help contribute solutions.
Through our brands, our products and the services we offer, we are helping and inspiring people to live
healthier lives. We are building, sharing and applying nutrition knowledge, and empowering people to
make informed decisions about what they eat and what they feed their families. Our Start Healthy Stay
Healthy programme helps parents and caregivers provide their children with the best start in life. In
partnership with other stakeholders, our United for Healthier Kids programme helps establish healthier
eating, drinking and lifestyle habits, and the Nestl Healthy Kids Programme is teaching nutrition and
encouraging physical activity.

Delivering healthier foods

Objectives And Goals Of Nestle
To achieve compatibility with international voluntary standards on
environmental management systems.
To build mutual trust with consumers, governmental authorities and business
partners.
To ensure continuous improvement of nestles environmental performance.
Conservation of natural resources and minimization of waste.
To establish the benchmark for good business practice.
Employing new technologies and processing.
Measuring the cost and benefits to business of its activities.
Monitor progress.
Audit results.
Delivering healthier foods
We want our products to be the healthiest and the tastiest choices in each and every category we
compete in. We use quality ingredients people know and trust, adding nutrients where appropriate. We
are substantially reducing sugar, saturated fat and salt. By communicating clearly about the contribution
each product makes to a healthy diet, we are helping people make informed decisions about what to eat
and drink.
Our new nutrition and health platforms, Nestl Health Science and Nestl Skin Health, allow us to apply
the knowledge we have developed with the most advanced Research and Development network in the
industry. They enable us to develop products and services that meet specific needs of different parts of
the population, to help address issues the world faces, for example rising healthcare costs.
By keeping ourselves relevant in this fast-changing world, we can deliver industry-leading growth. We
work with agility, creativity and discipline, constantly innovating and renovating our portfolio. Our
Research and Development capability ensures we maintain our leading positions in the categories we
compete in, driving growth throughout the portfolio. The innovation is broad-based across all categories,
brands and markets. It comes in many forms from blockbusters like Nespresso, to renovating products
to keep them fresh and relevant as we have done with brands like Nescaf and Nescaf Dolce Gusto,
Nido, Milo and Maggi.
Digital innovation is a strong competitive advantage and a cornerstone of the companys future
development. For some time now we have been creating a digital-first culture that enables us to manage
and to benefit from the disruption digital is bringing. As the fourth industrial revolution takes hold, we are
confident that we can capitalise on the efficiencies and the opportunities digital brings.
Competitive Advantages of Nestle: Leading
overall market position and number one or two
brands in most areas.The extraordinarily large
scope of Nestl s business provides for
significant economies of scale inmanufacturing,
marketing and administration.The research and
development capabilities allow the Company to
lead the way in innovation andprovides for
maximum portfolio flexibility.Competitors of
Nestle:Food and Beverage: P&G, Mars, Danone,
Kraft, ConAgra Foods, Sara Lee, Kellogg s,
Unilever.Commercial Products and
Pharmaceuticals: Johnson & Johnson, Novartis,
Bayer, P&G.Private Label: Costco (Kirkland s
Signature), Wal-Mart (Sam s Choice, Great
Value), Loblaw (President sChoice), Aldi,
TESCO.Regional and Local Manufacturers: China
Yurun Food, Nissin Foods, Indofood Agri, Illova
Sugar, MarfrigAlimentos, etc.Barriers to Entry
for Nestle:Economies of scale - To be
successful in today s food and beverage sector
the cost component is criticaland economies of
scale are a main cost driver.Shelf space -
Between the shelf share of multi-billionaire
brands and the recent push of
retailer drivenprivate-label products a new
entrant would be challenged into executing a
successful distributionstrategy
Competitive Advantages of Nestle: Leading
overall market position and number one or two
brands in most areas.
The extraordinarily large scope of Nestl s
business provides for significant economies of
scale inmanufacturing, marketing and
administration.The research and development
capabilities allow the Company to lead the way in
innovation andprovides for maximum portfolio
flexibility.Competitors of Nestle:Food and
Beverage: P&G, Mars, Danone, Kraft, ConAgra
Foods, Sara Lee, Kellogg s,
Unilever.Commercial Products and
Pharmaceuticals: Johnson & Johnson, Novartis,
Bayer, P&G.Private Label: Costco (Kirkland s
Signature), Wal-Mart (Sam s Choice, Great
Value), Loblaw (President sChoice), Aldi,
TESCO.Regional and Local Manufacturers: China
Yurun Food, Nissin Foods, Indofood Agri, Illova
Sugar, MarfrigAlimentos, etc.Barriers to Entry
for Nestle:Economies of scale - To be
successful in today s food and beverage sector
the cost component is criticaland economies of
scale are a main cost driver.Shelf space -
Between the shelf share of multi-billionaire
brands and the recent push of
retailer drivenprivate-label products a new
entrant would be challenged into executing a
successful distributionstrategyINTRODUCTION
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 customers 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 days 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 customers 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
companys stock. It can be companys 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 todays 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
todays 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.
CONCLUSION

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.

REFERENCES
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.
200209.
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. 199205.
Laborde, J. P., 2005. Social Security and the European Union. Managerial Law. 47(6). pp.
59 67.
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We want our products to be the healthiest and the tastiest choices in each and every category we
compete in. We use quality ingredients people know and trust, adding nutrients where appropriate. We
are substantially reducing sugar, saturated fat and salt. By communicating clearly about the contribution
each product makes to a healthy diet, we are helping people make informed decisions about what to eat
and drink.
Our new nutrition and health platforms, Nestl Health Science and Nestl Skin Health, allow us to apply
the knowledge we have developed with the most advanced Research and Development network in the
industry. They enable us to develop products and services that meet specific needs of different parts of
the population, to help address issues the world faces, for example rising healthcare costs.
By keeping ourselves relevant in this fast-changing world, we can deliver industry-leading growth. We
work with agility, creativity and discipline, constantly innovating and renovating our portfolio. Our
Research and Development capability ensures we maintain our leading positions in the categories we
compete in, driving growth throughout the portfolio. The innovation is broad-based across all categories,
brands and markets. It comes in many forms from blockbusters like Nespresso, to renovating products
to keep them fresh and relevant as we have done with brands like Nescaf and Nescaf Dolce Gusto,
Nido, Milo and Maggi.
Digital innovation is a strong competitive advantage and a cornerstone of the companys future
development. For some time now we have been creating a digital-first culture that enables us to manage
and to benefit from the disruption digital is bringing. As the fourth industrial revolution takes hold, we are
confident that we can capitalise on the efficiencies and the opportunities digital brings.
Competitive
Advantages of
Nestle: Leading
overall market
position and
number one or two
brands in most
areas.The
extraordinarily
large scope of
Nestls business
provides for
significant
economies of
scale inmanufactu
ring, marketing
and
administration.T
he research and
development
capabilities allow
the Company to
lead the way in
innovation
andprovides for
maximum portfolio
flexibility.Competi
tors of
Nestle:Food and
Beverage: P&G,
Mars, Danone,
Kraft, ConAgra
Foods, Sara Lee,
Kelloggs,
Unilever.Comme
rcial Products and
Pharmaceuticals:
Johnson &
Johnson, Novartis,
Bayer, P&G.Priva
te Label: Costco
(Kirklands
Signature), Wal-
Mart (Sams
Choice, Great
Value), Loblaw
(PresidentsChoic
e), Aldi,
TESCO.Regional
and Local
Manufacturers:
China Yurun Food,
Nissin Foods,
Indofood Agri,
Illova
Sugar, MarfrigAli
mentos,
etc.Barriers to
Entry for
Nestle:Economie
s of scale - To be
successful in
todays food and
beverage sector
the cost
component is
criticaland
economies of scale
are a main cost
driver.Shelf
space - Between
the shelf share
of multi-billionaire
brands and the
recent push of
retailer drivenpriv
ate-label products
a new entrant
would be
challenged into
executing a
successful
distributionstrate
gy
Nestle is a Swiss based corporation emerged as food and drink enterprise. Its head quarters are in Vevey, Vaud,
Switzerland. Nestle has been one of the biggest companies of the world in terms of revenue and other
measures. Fortune Global 500 ranked Nestle on 11th positioning 2014, while Forbes Global 2000 list public
companies gave Nestle 33rd rank in the world. Production lines of Nestle manufacture medicated food, baby
food, water containers, breakfast cereals, tea, coffee, bakery products, dairy items, ice cream, freeze food,
snacks and also pet animal food. Nestle operates 447 production units, serving in 194 countries and hired
almost 339,000 employees.Nestle was established in 1905 resulted by the merger of the Anglo-Swiss Milk
Company. With the support of all these business operations Nestle generated revenue of $88.8 billion in 2015.
Food industry demands a lot of efforts to penetrate exactly in the targeted population. The pestle analysis of
entire business environment of Nestle will give the hints to improve the operations on right time, at right place
with right direction. Pestle analysis can give more result oriented opportunities to Nestle for the future business
growth along with sustainable profits.

Political Factors
Nestle serves in several countries. The rules and regulations set by the government are different in different
regions. Nestle should focus on these political dynamics like taxation, import export excise duties, government
permission to enter in to the target segment and also to introduce hygiene products allowed by the regulated
bodies. Moreover in the contemporary trends keeping in view the government stability, Nestle should consider
and recognize all the related risks that could be involved. Nestle should also consider the changing global
regulations which are yet to adopt by the company. Albeit nestle is such an organization which in real sense
promote the government health policies by maintain the quality standards and rules and regulations.

Economic Factors
Different countries have different level of development. Economy of countries differs everywhere. So Nestle
has to set different economic policies for different targeted segments. The price of the product is an important
decision to take while strategizing the economic policies according the inflation rate and the buying power of
the segments. Nestle company should made an analysis report on frequent basis to get the knowledge of the
inflation rates and different income levels. Nestle is contributing a lot in promoting the economic worth of
farmers by producing the products at a local level for the satisfaction of the consumer.

Social Factors
The shared thoughts and beliefs of the customers influence the business operations. The culture, life style,
norms and values force Nestle to deliver the specific product to the right segment. Nestle so far has considered
the social perspective well. The company has well understood the concept that consumers changing attitude
has immense importance. People are now very much prone to the healthy life style. Nestle has made a good
reputation of understanding and evaluating the consumers behavior and the related dynamics. Nestle is a
global brand but the product has been produced locally in order to sustain the quality. Adherence to the strong
values and principals has always been the priority of the company that assists in building the trust on the
consumers.

Technological Factors
Technology gives many opportunities for the development of new products or improvement of existing ones.
New techniques of marketing such as internet and e-commerce are important to focus in this modern era.
Therefore Nestle uses technology in several business operations like to maintain the databases with the help of
software. The rampant use of social media has narrowed the gap between the direct interaction of consumer
and the company. Nestle should follow such a maxim that accelerate innovation with the help of technological
 advancements. Nestle is already using the state of the art technology for the production of various products,
they are meeting the global standards by installing the contemporary plants.

Legal Factors
Legal factors involve the legal environment of a company and its influence on the operation to meet the
demand and minimize the cost. For instance, Nestle has to follow the health and safety laws for their
employees and also to produce hygiene products for the customers. Nestle need to focus on these too while
operating in different regions of the world.

Environmental Factors
Today the world is more conscious to have clean environment. Nestle need to focus on these rules and
regulations also to produce healthy food with environmental friendly operations. Several countries set different
rules, so to increase the acceptance of the products by the targeted segment the rules are significant to follow.
Nestle has also been taking into account the considerable attention towards the social contribution. The other
related concerns are the realm of recycling and the issues pertaining to the packing.
Related
Marketing Plan of NestleMarch 29, 2016In "Marketing"
SWOT of NestleDecember 18, 2016In "SWOT"
Pestle Analysis of MaggiFebruary 12, 2017In "PESTLE Analysis"

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