Business environment includes various influencing factors such as internal and external factors which may affect the business operation of an organisation irrespective of the matter whether private, public or voluntary. Internal factors includes employee's behaviour, technological capacity, poor management etc. which affects a lot to the business activities performed by different departments. On the other hand, external factors includes political conditions, economical situations, legal factors etc. which also affects huge to the sustainability and profitability of company. In order to deal with such factors, the management are wholly liable to make an effective decisions and plans so as to drive organisation towards growth and success (Bovee, Thill and Raina, 2016). Nestle is a swizz company which deals in offering beverage and food products in wide variety is selected for the purpose of preparing this report. The project includes different types of organisation with their aims, size, scope and purposes. Impact of micro and macro environment on the business operation are also covered under this report. The project also summarises the PESTLE analysis along with their strengths and weaknesses.
Interrelation between different organisational departments and their linkage with organisational objectives
There are different organisational department which are responsible to achieve desired goals and objectives through performing different business functions. With the support from such departments, an organisation can easily achieve growth and success within limited period of time. Such departments of Nestle includes marketing, production, human resource, operation etc. which perform according to the rules and standards formulated by management of Nestle. Therefore, the management also play an important role in growth and achieving competitive advantage. Through conducting research within an organisation, the managers of different departments are able to recognise the problems or issues which are faced by their employees so as to resolve them on time in order to provide them motivation and confidence to perform in right direction (KazCham, 2014).
Interrelation between functions of departments of Nestle:
Human resource department: This is main department of an organisation which plays an important role in achieving skilled and knowledgeable workforce through which maximum result will be achieved. Such department is liable to recruit new candidates as well as existing employees for the vacant job position. HR manager is responsible to make their workforce more strong and knowledgeable through providing training and development programs, performance appraisal, compensation etc.. It will help in bringing motivation and confidence thus the chances of achieving better result will be more. It always guaranteed that effective workforce ensures an organisation to achieve desired goals and objectives within pre-determined period of time.
Marketing department: This is the department which is held responsible to market their products and services in favour so as to achieve huge customer strengths. As Nestle produces quality food products in different range thus it is essential to communicate with customers regarding providing information about quality, price etc. of the products. This can be done through TV, newspapers, social media etc. which are important marketing tools in order to influence and attract large number of customers (Kolk, 2016).
Finance department: This is the department which is wholly liable to raise funds from different sources and after which allocate them to different areas of business after analysing the outcomes received in near future. As funds are needed by every organisation to execute business activities in an effective and efficient manner. Therefore, without getting support of such department, an organisation cannot able to meet customer needs and requirements thus may failed to achieve desired goals and objectives.
Production department: This is one of the important department which are liable to produce quality products through minimising wastage in production process. Nestle offers quality food products which help in gaining trust and loyalty of customers among company's products thus it is important to manufacture standard quality of products at required quantity in order to meet market needs and demands. This will help in attaining stable position in competitive market for longer period of time.
The division of structure is based on the requirements which are defined as below:
Function based: It is a structure which is formed on the basis of functions performed within an organisation such as human resource, operation, marketing etc.
Geography based: It is a structure which is formed on the basis of geographical locations of countries in which the company decide to operates its business functions in order to capture large market share (Mahmood and Hanafi, 2013).
Product based: It is a structure which is based on the variety of products the company offered in market.
Consumer based: It is a type of structure which is based on consumer's interest and buying behaviour so as to attract them towards purchasing new products. The main motive of structure is to identify the actual taste and preferences of customers.
Impact of macro-environment factors
Every business organisation irrespective of the size, nature and scope needs to operated its different business operations in more smoothly manner thus it is important for them to analyse all macro-environmental factors which may influences the business operation either in negative or positive manner. Nestle company operated its business on large scale thus may get affected from such factors. Macro-environmental factors includes political, economical, social etc. which make either negative or positive impact on the business operations of company. To analyse such factors, the management need to conduct PESTLE analysis which are described as under:
Political factors: It includes factors such as government, taxation policies etc. which may affect their sales target. As Nestle offers wide range of food products in maximum number of countries thus changes in government of particular country may also brings changes in policies and regulations which brings difficulties for Nestle to prorate its business functions in more effective manner (Oke, Walumbwa and Myers, 2012).
Economic factors: The economy of country may also affect the decision making of management of Nestle. For example, Nestle deals in providing quality food products therefore if the economy of particular country in which company operated then it will increases the income and purchasing power of customers due to which they can afford to buy company's quality products instead of using unbranded food products.
Social factors: It is related with the factors such as consumer's interest and behaviour which may influenced the decisions and strategies of company. The management of Nestle is required to conduct research in order to find out the current trends exist in market and accordingly direct their departments to perform in right way. For example, It has been found that Nestle product “Maggie” contains harmful ingredients due to which the interest and buying behaviour of customers changes thus to resolve these issues the management took corrective measures in order to maintaining their current sales figure of such product.
Technological factors: It includes those factors which are related with advanced and modern technologies which can affects business operation and profitability of company. For example, implementing updated technologies in production process help in minimising wastage due to which the cost of production goes down. It also helps in developing marketing process through using various marketing tools such as social media, newspapers, TV ads etc. which increases their sales figure as well. For example, If the customers are more price sensitive then they should prefer to consume unbranded products and ignore quality. Thus, providing the importance of quality help in influencing the buying decision of customers (Othman and Rahman, 2014).
Legal factors: There are different rules and regulations made by government in order to direct organisation to perform in right way. Therefore, need to be followed by company in order to exist in market for longer period of time. For example, Government implements different acts for the protection of employees such as Equality act, 2010, Health and Safety act etc. which help in bring motivation among employees to perform well.
Environmental factors: It includes such factors which directs an organisation to perform business functions without damaging environment as it may affect the health of people as well. Therefore, Nestle need to use cost-effective techniques which is used to produce quality products without harming environment.
Internal analysis of organisation for identification of strengths and weaknesses
In addition with external factors, there are internal factors as well which influences the business operations of company. Such factors can be identified through conducting SWOT analysis which are as follows:
World Renowned brand: Nestle is one of known brand in food sector which is generated huge revenues every year. It sells wide range of food products at single brand name thus the customers can easily recognise their product in market.
Good distribution system: Nestle has distributed its quality products to different wholesalers and retailers which help them in reaching their products to the targeted customers. The company may also adopted other distribution methods such as door to door distributors, street markets, medial outlets etc.
Large workforce: Nestle has employed more than 340,000 employees in an organisation which gives their maximum support in achieving desired goals and objectives (Pikka, Iskanius and Page, 2011).
R&D centres: Nestle has attained world's largest food and nutrition research centres in which more than 500 employees are working. It has attained over 21 research centres globally.
Brand structure: Nestle deals in offering multiple products which are sell in market under single roof thus it becomes difficult for management to Nestle to manage individual brands as it increases the chances of conflicts in interest
Legal and consumer issues: Nestle has indulges in many controversies which affected their image and goodwill in market. Maggie controversy is the suitable example in which it has been found that Maggie products contains harmful ingredients which can negatively affect the health of customers. Through such controversy, Nestle has loses large number of customers.
Expanding market: Nestle need to focus on attracting large number of customers in rural areas through supplying their quality products. This may bring interest of customers to buy their products (Saleem, 2017) which directly improves their sales and profit as well.
Increasing income levels: The company need to export their products to such country where the income level of customers are high. For example, USA has stable economy due to which the purchasing power of customers are more thus they can afford to buy products on large basis. This will improves the sales figure of Nestle.
Quality products: Nestle need to give priority on improving quality instead of lowering the price as the people prefer to consume quality products in order to maintain their health. This will help company in retaining loyal customers for longer period of time.
Strategic alliances: In order to expand business to different countries, Nestle need to get support from other established organisation to achieve desired target. For example, Nestle should required to partnership with major organisation such as Coca-cola in order to expand the sale of their beverage products.
Competition in market: Due to high competition in market, Nestle may find difficulties in maintaining their stable position in market for longer period of time. For example, Sun-feast company deals in similar products and services thus giving tough competition to Nestle in market.
Price of commodities: Due to charging high prices on their products, the loyal customers may shift to other brands where they get same quality products at lower price. For example, sun-feast charges low prices on their “Yippee” product as compared to the nestle product “Maggie”. (Business Environment, 2018).
Interrelation of macro-environmental factors with organisational strengths and weaknesses
It is essentially required for management to interrelate external factors along with their strengths and weaknesses. It provides an opportunity to company to utilise their strengths and improve their weaknesses in order to deal with external factors in more effective and efficient manner. Therefore, the management of Nestle should required to give maximum efforts in implementing effective decisions and policies in order to operate their business operation in more effective manner without getting affected from such factors. The advantages the company will achieved are competitive advantage, increasing sales figure, increase profitability etc. Conducting PESTLE analysis along with strengths and weaknesses are more helpful in identifying the impact on external factors. Such are described as below:
Political: It is such a factor consist of stability of government, changing in taxation policy etc. which can affects their sales figure and exist business operation in particular country. Thus, the management of Nestle need to ensure that company should follow rules and standards in order to avoid legal consequences.
- Strength: Different legal teams are formed in order to analyse such factors and make corrective actions for the betterment of an organisation. For example, forecasting the future situations that may arises due to changing taxation policy will help in making an effective plans and strategies.
- Weakness: Nestle operated its business in more than 194 countries thus may difficult for management to understand various laws of each country.
Economical: There are different economical situation in which some countries are suffered whereas the economy of such country increases rapidly. Thus, it will largely affect the sales figure of company as Nestle offered their products in number of countries.
- Strength: Nestle has expanding its business in Asia which in return they enjoy huge revenues. It will become huge strength of Nestle.
- Weakness: Expanding business to other countries increases the price of product due to adding taxes to the price of product.
Social: It is related with interest and behaviour of customers which changes frequently. This will make huge impact on the sales figure of company. Thus need to make changes in decision and strategies in order to cope up with changes in behaviour and interest of customers.
- Strength: R&D team of Nestle brings valuable information to company regarding changing interest and behaviour of customers which help management in making an effective decisions and plans (What SWOT Analysis is in simple words, 2016).
- Weakness: Nestle has attained large number of employees which increases the chances of conflicts and issues results in getting negative results to company. Thus, required to provide optimum solution in order to resolve such issues and problems which negatively affect the performance of employees.
Technological: This factors are related with advanced technologies which play an important role in bringing efficiency in work of employees as well as performance of company.
- Strength: Nestle is always focused on implementing cost effective technologies in production and marketing process which help in reducing cost of production through minimising the wastage.
- Weakness: This will require huge investment in adopting new technologies thus if result may gone wrong then the company may faces losses.
It has been concluded from the above project report that an organisation if sustain in market for longer period of time then it must required to have an effective management who are capable to make an effective decisions and plans in order to deal with internal and external factors. Efforts of different departments are essentially required in order to achieve desired goals and objectives of an organisation. To identify such factors, PESTLE and SWOT analysis need to conducted by management.
- Bovee, C. L., Thill, J. V. and Raina, R. L., 2016. Business communication today. Pearson Education India.
- Craig, T and Campbell, D., 2012. Organisations and the Business Environment. Routledge.
- Dawson, J. F., 2014. Moderation in management research: what, why, when, and how. Journal of Business Psychology. 29(1). pp. 1-19.
- Hair, J. F., 2015. Essentials of business research methods. ME Sharpe.
- Hamilton, L. and Webster, P., 2015. The international buA41479 M1siness environment. Oxford University Press, USA.
- Jaw, C., Lo, J and Lin, Y., 2010. The determinants of new service development: service characteristics, market orientation, and actualizing innovation effort. Technovation. 30(4). pp. 265-277.
- KazCham., 2014. Current economic and business environment in Kazakhstan 2014. KazCham.
- Kolk, A., 2016. The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business. 51(1). pp.23-34.
- Mahmood, R and Hanafi, N., 2013. Entrepreneurial orientation and business performance of women-owned small and medium enterprises in malaysia: competitive advantage as a mediator. International Journal of Business and Social Science. 4(1).