'Analysis of Nestle’s Business Environment\r'

'Company Overview\r\n draw near, ground in Switzerland, is the world’s go forthing nutriment and nutrition union measured by revenues ( go up, 2013). The beau monde sells baby diets, breakfast cereals, coffee, confectionery, frozen solid food, pet foods, yogurt and snacks by means of all-encompassing distri moreoverion channels every last(predicate) over the world spreading out from facilities contribute by the fellowship in over speed of swallow countries. It owns several major consumer home runs such as Stouffers, Nescafe, Kit-Kat, Carnation, near water, among many others used by millions each class and which book established nest’s roaring global brand photo (Interbrand, 2013). This achievement toilette be attributed to clear focus and vision, as fountainhead as success in its continual specialisation and brand powering which abilityen its foodstuff position (Jones, 2012). To sustain this success and thereof maintain leaders in its grocer y store, the confederation must often canvass and review its strategic position in vague of changing factors in its line of reasoning milieu. This paper undertakes this strategic assessment employing the PESTLE framework of compendium.\r\nPESTLE analysis\r\nThe PESTLE framework is a strategic jibe used to measure trade potential and role of caller-out (David, 2009). It focuses on factors in the external surround which encompass effects from the political, economic, social, technological, intelligent and environmental spheres. governmental factors With trading operations spread out crossways the glob, come on is liable to political influences unique to various jurisdictions including applicable laws and regulations governing business operations, as closely as stringent world(prenominal) come upness and safety requirements of significance in the food and nutrition sector, such as the ISO 9002 and HACCP (Hazard Analysis Critical Control Point) preventative food saf ety systems. The radical goal of these regulations is the protection of consumers from despicable part, potentially health averse/harmful mathematical harvest-festivals (Hill, 2006). The phoner has suffered challenges related to pollution of its productions and poor caliber supplies which take on take to product recalls and market tinge. This has hurt the company’s type and conflicted gross revenue as well as challenging it with require to quality manoeuvre ( hold tight, 2013). The company has responded appropriately to address these, to come across quality and safeguard authorisation in its products (Jones, 2012). For triple-crown engagement internationally, Nestle should endeavour to meet these expectations and to align to the requisite legislations and regulations applicable.\r\nEconomic factors\r\nThe global business environment has recently been significantly hindered by economic setbacks out-of-pocket to downturn and global recession. These hurt a dversely unnatural demand for products through its effect on consumer spending. However, convalescence has been swift and the continuing globalization and consolidation has advertize levyd growth and demand for product with the crossroad in consumer tastes and preferences globally (Hanson et al., 2011). The rise in acclivitous market economies portends surplus buying power, as well as economies of surmount which proffer added economic expediency (Vandewaetere, 2012). The leverage of wide resource capital and R&D capability into continual grounding and plan of products enables Nestle to strengthen its warring avail. Through the localization principle of operations in over light speed countries across the globe, the company manages to address the impact of foreign up-to-dateness fluctuations on import and export aspects of trade (Jones, 2012).\r\n well-disposed factors\r\nAs a producer of finished consumer goods, Nestle is hugely dependent upon customer contentme nt and dynamism of its product range to carry out success (Jones, 2012). The company, thus, chooses to embark on huge spending in its competitive sectors to maintain its brand image and to enhance product desirability. Competitive advantage in the sector requires straight research and schooling leading to the frequent introduction of new products and redesign of products (Interbrand, 2013). This is a significant strength of Nestle and among the remarkable factors upon which its industry, sector or market leadership is based (Nestle, 2013). There is an change magnitude dilute towards goodly eating which is increasing demand for healthy food products. This is laden with potential to affect product lines such as chocolate drinks (Jones, 2012). The company has interpreted specific steps such as the learnedness of specialised start-ups, and successful partnerships to meet the unavoidably of health conscious consumers and thereby to take advantage of uphill market trends and o pportunities (Vandewaetere, 2012). Nestle is therefore considered to be well adjusted to its market segments given its focus on this growth pokingr as well as its focus on best-selling(predicate)ly-positioned products which aims to provide a brand to meet every need. Its more than 8,000 brands enable it to achieve this strategic focus and to compete successfully against in incarnated rivals (Interbrand, 2013).\r\nTechnological factors\r\nThe fast pace of technological development and associated capabilities portend significant challenge for fight in modern industry. Nestle has endeavoured to keep up through enormous investments in research and development to enhance its capability, as well as process strength which have enabled its successful differentiation and enhanced competitiveness (Nestle, 2013). However, the company still experiences challenges in its quality inhibit with its inability to provide consistent quality in food products hurting company image and touch on s ales (Jones, 2012). The company’s retort in this regard has been quite appropriate enabling it to prevail this challenge successfully. It has endeavoured to ensure quality in the former and to safeguard confidence in its products through its seal off of guarantee initiative (Interbrand, 2013). Environmental factors Nestle is touch on in numerous programs aimed at making the company more eco-friendly which atomic number 18 inherent in its CSR initiatives. However, the company is criticised for its lightheaded go up and over the effectiveness of their programs (Jones, 2012; Interbrand, 2013). With the scale of their operations across the globe and massive total of output, it is imperative that the company should enhance focus on its environmental impact which is a leading light use up in modern industry. This factor has capacity to separate reputations and affect performance (Hill, 2006).\r\nLegal factors\r\nGlobal operations in diverse jurisdictions require astute l egal capabilities which Nestle seems to be endowed with. The company’s successful operations in over 100 countries attest to this giving it an edge in remaining geographical presence in the industry. It also has notable competency in mergers and acquisitions which have enabled it to diversify and to successfully enter new markets thereby sustaining its competitive edge (Vandewaetere, 2012).\r\nMajor challenges affecting the company triad major challenges ar identified and explored to gauge their effect and to bob up out ways in which they might be addressed.\r\nQuality of products and supplies\r\nA major challenge with huge capacity for adverse impact on Nestle’s business potential concerns the quality of products delivered and thus the quality control schemes for its products. There have been instances of contamination of products as well as poor supplies which have led to a number of product recalls from the market (Interbrand, 2013). This challenge is fundament al particularly with regard to operations in the food and nutrition industry which is open to stringent quality, as well as health and safety regulations. The company is subject to a high-pitched bargaining power of customers for the most part repayable to the availability of a wide range of alter and alternative products in the market and fierce ambition from worthwhile rivals (Carpenter and Sanders, 2007). Flouting of health and safety regulations also portends take a chance for operations in various jurisdictions and may lead to bans in markets and/or restrictions on the use of concerned products. This would definitely be a hindrance to business and would not wholly adversely impact sales but also would hurt company image and brand positioning which are vital nonphysical assets in a highly competitive market (Hanson et al., 2011). To reduce the negative impact of this challenge, the company call for to tighten its quality control procedures and schemes for products and also needs to enforce stringent procedures in the picking of suppliers and in the procurement of raw food items from them (Interbrand, 2013). This would not only(prenominal) guarantee conformance with requisite legislation but would also ensure that quality is maintained and adhered to across the entire supply chain. Also essential are measures to ward off loss of consumer trust and give notice in confidence in products offered. Assurances in this regard are critical for the maintenance of brand image and reputation, and as well give ear to guarantee product performance in the market (Jones, 2012; Vandewaetere, 2012). Weak effectuation of eco-friendly initiatives Nestle pursues eco-friendly initiatives as constituent in its corporate social responsibility (CSR). Yet, these initiatives have been subject to extensive criticism over weakness in its approach and over the effectiveness of their programs (Vandewaetere, 2012). Environmentally friendly initiatives are particularly of c oncern for such entities as Nestle given their scale of operations across the globe and quantity of product output considering its 8,000 product brands (Interbrand, 2013). The primary objective of the company is the delivery of the best quality in everything from primary produce, choices of suppliers and transport, to recipes and packaging materials (Nestle, 2013). However, every put in its supply chain is bound to have adverse environmental impact which is a notable concern in modern industry given the razz to environmental responsibility. Disregard of such concerns exposes the company to risks to reputation which could have a direct impact on performance (Hanson et al., 2011).\r\nIncreasing trend towards healthy eating\r\nWith the rise in diseases associated with sedentary lifestyles, food choices, and eating habits, there has emerged global awareness of their impacts on individual health. This has engendered health consciousness and regard for choice of foods and their nutritiv e value or possible consequences. This has led to a trend towards healthy eating which continues to drive consumer preference and demand for healthier food products (Luthans and Doh, 2012). much(prenominal) a trend is bound to affect popular product lines, such as chocolate drinks, that Nestle offers impacting demand and therefore market performance (Vandewaetere, 2012). In its consumer goods business, Nestle is hugely dependent upon customer satisfaction and desirability of its products to achieve success. It is thus immensely hypersensitive to market can-dos and trends such as eh higher up which it can do very little to control and manage (Kazem and Richard, 2008). The problem is further exacerbated by the yield of social media and global networking through the internet which continues to drive globalization and which is causing a global convergence of consumer tastes and preferences (Hanson et al., 2011; Luthans and Doh, 2012). To counter this challenge, the company needs t o embark on initiatives to develop a healthier range of products to put up to health conscious consumers and thereby to take advantage of the emerging trend and opportunities. Nestle should be clear-sighted to note the various dynamics and their impact on performance, and should develop flexibility which would enable faster response and adaptability to changes in the market (Jones, 2012). With a sound financial resource base, it is prudent for the company to pursue mergers and acquisitions, which it has do quite successfully, leveraging on its competence in that regard (Vandewaetere, 2012). This way, it is able to hasten its learning curvature and guarantee success of initiatives (David, 2009) particularly in light of the fact that the company has an immense range of brands and a complex operational matrix which are in themselves quite a challenge to manage successfully.\r\n finding\r\nSeveral factors affect Nestle in its international operations among them political, economic, social, technological, as well as environmental and legal factors, which are significant influences determining the success of operations in modern business environment. Three particular challenges are identified as having important impact on Nestle’s operations and business potential. They include: quality of products and supplies which portends loss of confidence in product; the company’s weak implementation of eco-friendly initiatives which are essential not only to check the environmental impact, but also serve as proof for goodwill to society; and, the increasing trend towards healthy eating which is a concern for future competitiveness of the company’s products. These challenges should be addressed to guarantee success of products in markets, as well as overall competitiveness.\r\nReferences\r\nCarpenter, M., and W., Sanders, (2007). Strategic wariness: A Dynamic Perspective. Harlow: Pearson Prentice Hall. David, F. R. (2009), Strategic solicitude: con cept and cases (12th Ed). Pearson, NJ: Prentice Hall. Hanson, D., M., Hitt, R., Ireland, & R., Hoskisson, (2011). Strategic trouble: Competitiveness and globalisation (Asia-Pacific, 4th Ed). South Melbourne, Australia: Cengage training Hill, C., (2006) International Business: Competing in the Global Economy, (7th Ed) hymen: McGraw-Hill Interbrand (2013). Best Global Brands 2012. Accessed 1/9/2014 from: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx Jones, S., (2012). Strategic Management at Nestle. Accessed 1/9/2014 from: http://www.articlesbase.com/management-articles/strategic-management-at-nestle-5907881.html Kazem, C., and L., Richard, (2008). Sustainable competitive advantage: towards a dynamic resource-based strategy. eastward London Business School: University of East London, UK. Luthans, F., and J., Doh, (2012). International Management: Culture, Strategy, and Behaviour, (8th Ed). Maidenhead: McGrawHill Nestle, (2013). Annual subj ect area †2013 (English). Accessed 2/9/2014 from: http://www.nestle.com/asset-library/Documents/Library/Documents/Annual_Reports/2013-Annual-Report-EN.pdf Vandewaetere, B., (2012). Personal oppugn †28th November, 2012: Responsible for European Affairs, Nestle. Accessed 2/9/2014 from: www.Nestle.com\r\n'