Analysis of Nestle’s Business Environment

familiarity Overview nestle, found in Switzerland, is the worlds take sustenance and keep order whole stepd by revenues ( nose, 2013). The order sells baby foods, breakfast cereals, coffee, confectionery, quick-frozen food, pet foods, yoghurt and snacks finished extensive distribution channels all(prenominal) over the world spreading out from facilities run by the fellowship in over 100 countries. It owns several major consumer brands much(prenominal) as Stouffers, Nescafe, Kit-Kat, Carnation, near water, among many others used by millions each year and which yield established come ons masteryful ball-shaped brand persona (Interbrand, 2013). This success can be attributed to clear direction and vision, as wholesome as success in its continual specialism and brand berth which stanceen its market position (Jones, 2012). To sustain this success and then defend leadership in its market, the family must often audit and follow its strategic position in light of c hanging factors in its ancestry environment. This paper undertakes this strategic assessment employing the PESTLE framework of abbreviation.PESTLE analysisThe PESTLE framework is a strategic tool used to measure market potential and situation of friendship (David, 2009). It heightenes on factors in the outdoor(a) environment which encompass upshots from the political, economic, social, technological, legal and environmental spheres. Political factors With trading trading operations spread out across the globe, Nestle is liable to political influences uncomparable to various jurisdictions including applicable laws and regulations governing line of reasoning operations, as s considerably up as stringent international wellness and safety requirements of significance in the food and nutrition sector, such as the ISO 9002 and HACCP (Hazard Analysis Critical Control Point) hang-up food safety systems. The primary goal of these regulations is the protection of consumers from unfortunate quality, potentially health averse/harmful crops (Hill, 2006). The party has suffered disputes related to contamination of its fruits and poor quality supplies which shake direct to product recalls and market concern. This has hurt the companys regard and trespassed sales as well as challenging it with regard to quality meet (Nestle, 2013). The company has responded appropriately to cry these, to ensure quality and safeguard confidence in its products (Jones, 2012). For successful meshing internationally, Nestle should endeavour to meet these expectations and to conform to the requisite legislations and regulations applicable.Economic factorsThe global crinkle environment has recently been strongly hindered by economic setbacks out-of-pocket to downturn and global recession. These have adversely run intoed convey for products through its effect on consumer spending. However, recovery has been swift and the continuing globalization and desegregation has f urther enhanced growth and film for product with the convergence in consumer tastes and preferences globally (Hanson et al., 2011). The rise in emerging market economies portends surplus buying power, as well as economies of scale which proffer added economic re screen (Vandewaetere, 2012). The leverage of huge resource capital and R&D dexterity into continual introduction and redesign of products enables Nestle to strengthen its competitive wages. by dint of the localisation of operations in over 100 countries across the globe, the company manages to address the push of foreign currency fluctuations on import and export aspects of trade (Jones, 2012).Social factorsAs a producer of finished consumer goods, Nestle is hugely babelike upon customer satisfaction and desirability of its product spew to achieve 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. h awkish advantage in the sector requires continuous research and development leading to the frequent introduction of new products and redesign of products (Interbrand, 2013). This is a significant strength of Nestle and among the notable factors upon which its industry, sector or market leadership is based (Nestle, 2013). There is an increasing thin towards healthy take in which is increasing ask for healthier food products. This is laden with potential to affect product lines such as chocolate drinks (Jones, 2012). The company has taken specific steps such as the acquisition of specialised start-ups, and successful partnerships to meet the call for of health conscious consumers and thereby to take advantage of emerging market manners and opportunities (Vandewaetere, 2012). Nestle is therefore considered to be well adjusted to its market segments given(p) its focus on this growth driver as well as its focus on popularly-positioned products which aims to provide a brand to meet every need. Its to a greater extent than 8,000 brands enable it to achieve this strategic focus and to compete successfully against unified rivals (Interbrand, 2013).Technological factorsThe fast pace of technological development and associated capabilities portend significant challenge for competitiveness in modern industry. Nestle has endeavoured to keep up through enormous investments in research and development to enhance its capability, as well as process efficiency which have enabled its successful differentiation and enhanced competitiveness (Nestle, 2013). However, the company still experiences challenges in its quality lead with its inability to provide consistent quality in food products pain in the neck company image and touch on sales (Jones, 2012). The companys repartee in this regard has been preferably appropriate enabling it to weather this challenge successfully. It has endeavoured to ensure quality in the foregoing and to safeguard confidence in its products through its seal of guarantee initiative (Interbrand, 2013). Environmental factors Nestle is involved in numerous programs aimed at making the company more eco-friendly which ar inherent in its CSR initiatives. However, the company is criticised for its weak approach and over the long suit of their programs (Jones, 2012 Interbrand, 2013). With the scale of their operations across the globe and massive quantity of output, it is overbearing that the company should enhance focus on its environmental blow which is a notable concern in modern industry. This factor has capacity to demolish reputations and affect performance (Hill, 2006).Legal factors orbicular operations in different jurisdictions require astute legal capabilities which Nestle seems to be endowed with. The companys successful operations in over 100 countries present to this giving it an edge in unmatched geographical presence in the industry. It excessively 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).Major challenges affecting the company Three major challenges are identified and explored to gauge their effect and to find out ways in which they might be communicate. timberland of products and suppliesA major challenge with huge capacity for adverse impact on Nestles 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 fundamental particularly with regard to operations in the food and nutrition industry which is subject to stringent quality, as well as health and safety regulations. The company is subject to a heights bargaining power of customers for the most part due to the availability of a wide be given of substitute and alternative products in the market and tearing competition from worthwhile rivals (Carpenter and Sanders, 2007). Flouting of health and safety regulations also portends risk 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 barely adversely impact sales but also would hurt company image and brand positioning which are snappy intangible assets in a highly competitive market (Hanson et al., 2011). To slue the negative impact of this challenge, the company needs to tighten its quality control procedures and schemes for products and also needs to enforce stringent procedures in the choice of suppliers and in the procurement of raw food items from them (Interbrand, 2013). This would not only guarantee conformation with requisite legislation but would also ensure that quality is hold and adhered to across the entire supply chain. A lso essential are measures to ward off loss of consumer trust and drop in confidence in products offered. Assurances in this regard are critical for the maintenance of brand image and reputation, and as well serve to guarantee product performance in the market (Jones, 2012 Vandewaetere, 2012). Weak implementation 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 re deduction over weakness in its approach and over the effectiveness of their programs (Vandewaetere, 2012). environmentally friendly initiatives are particularly of concern 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 a nd packaging materials (Nestle, 2013). However, every stage in its supply chain is bound to have adverse environmental impact which is a notable concern in modern industry given the drive 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).Increasing trend towards healthy eatingWith 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 awareness and regard for choice of foods and their nutritive 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). Such 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 convincible to market dynamics and trends such as eh above which it can do very little to control and manage (Kazem and Richard, 2008). The problem is further exacerbated by the emergence 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 to embark on initiatives to develop a healthier range of products to offer to health conscious consumers and thereby to take advantage of the emerging trend and opportunities. Nestle should be keen to note the various dynamics and their impact on performance, and should develop flexibility which would enable faster response and adaptability to changes in th e market (Jones, 2012). With a sound financial resource base, it is prudent for the company to pursue mergers and acquisitions, which it has done quite successfully, leveraging on its competence in that regard (Vandewaetere, 2012). This way, it is able to hasten its learning curve 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.ConclusionSeveral 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 substantial impact on Nestles operations and business potential. They include quality of products and supplies which portends loss of confidence in product t he companys 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 companys products. These challenges should be addressed to guarantee success of products in markets, as well as boilersuit competitiveness.ReferencesCarpenter, M., and W., Sanders, (2007). strategic Management A Dynamic Perspective. Harlow Pearson Prentice Hall. David, F. R. (2009), Strategic focal point concept and cases (12th Ed). Pearson, NJ Prentice Hall. Hanson, D., M., Hitt, R., Ireland, & R., Hoskisson, (2011). Strategic Management Competitiveness and globalization (Asia-Pacific, 4th Ed). South Melbourne, Australia Cengage Learning Hill, C., (2006) International Business Competing in the Global Economy, (7th Ed) Maidenhead 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. eastern United States 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 Report 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 Interview 28th November, 2012 Responsible for European Affairs, Nestle. Accessed 2/9/2014 from www.Nestle.com