MGT553 Business Environment Management System
Though business is founded and run on its strengths and financial aids, it still has few things which are dependent on the external factors. The environment is one such important issue which plays its role in founding and running of the business. The land and the other resources which are gifts of nature are utilized by the enterprise for its growth and expansion. Hence, it is the also the duty of the businesses to give back something to the environment in return (Flohr et al. 2010). The businesses work towards the sustainability of the environment through various works and reforms. To move beyond the environmental compliance brings advantages of its own. Businesses acting in favor of social and environmental responsibility are far beyond just a legal liability. It not only helps to make the foundation strong but also helps the business in long terms (Kanter 2003). There are various aspects like waste disposal, carbon emission, etc. which has to take care of by the enterprise itself to prevent further environmental damage.
The company chosen for this assignment is Nestle. Though formed as a result of a merger in 1905 Nestle have designed its Nestle Environment Management System or NEMS to looks after its responsibilities towards the environment. NEMS works systematically to ensure the company’s compliance with the environmental policies (Swinburn et al. 2011). In fact, the business environment management is part of Nestle's duty.
1.1 Various organizations and their purposes
Different organisations come with various business objectives. There are a partnership, sole trading, co-operatives, etc. In the case of sole trading, the entire responsibility is laid on one single person who sets or starts the business. At the given company in hand, decision making puts in the hands of the only person itself (Parrish 2010). He or she possesses unlimited liability and works by meeting the needs of the consumers. There is another form of business where two or more people run it and hence is known as a partnership. Partnership pattern is followed and utilised by various companies and has an excellent productivity and competitive target achievement capacity. The partnership system is a collective approach to run a business. The profit and loss are evenly shared between the people. Franchising is another important approach to the business (Jamali 2010). In this format, a business follows the successful business format of any other successful organisation. The global presence of the successful companies is tactically followed to make the business successful. The best example to cite such examples will be MacDonald's and KFCS. These successful organisations follow a similar model of the franchise, and as a result, there is a significant rise in the day of business. The world markets already have felt their presence. As for the chosen company for this assignment Nestlé’s main aim is profit earning within its business standards. However, along with Nestle itself, various others stakeholders are associated with Nestle and are directly connected with the enterprise. As the stakeholders put their faith on Nestle, it also Nestlé’s duty to fulfil their liabilities on the part of the stakeholders.
1.2 The extent to which the organisation meets the objectives of the various stakeholders
There are various stakeholders associated with Nestle and its business. This section will discuss how Nestle caters to the stakeholders and fulfils their requirements. These stakeholders are essential for the company, its business and survival for the long race.
Employees: The most important stakeholders of Nestle are the employees. They are given the motivation and proper recognition to keep their morale high. The company keeps the employees and directs them in a proper manner to develop the sustainable workforce (Davies & Crane 2010). Various training and schooling are given to the employees to enhance their performance. However, the training is for the betterment of the company. The financial packages, incentives, appraisals, etc. are what company offers to the employees to acknowledge their performance. This is how employees get their benefits from the enterprise as one of the important stakeholders of the company.
Customers: Besides being stakeholders, customers are very life-blood of the company. Nestle is a commodity producing company and highly dependent on its esteemed customers for profit making and survival in the competition market (Moshirian 2011). The company offers the customers with quality products and items which they buy from the company. Besides the goods and products, the service also has to be top notch and is convincing to the customers who are utilising them. Hence, the trust of the customer is also laid on the company when they avail Nestle for their necessities over other available companies.
Government: They are the one’s which lays down the rules and regulations which guide the movement of the business and enterprises (Wheelen & Hunger 2011). Tax paying is one of the rules which further help to develop the society. Hence, meeting the government requirement is among the social as well as the corporate responsibility of the enterprises. Lastly, the government is authorised to issue the licenses according to their policies.
Suppliers: This group forms the backbone of the company. It is the raw material of the suppliers, and their inputs help the company with their productions. The company of Nestle maintain a good relation with providers by establishing a long term relationship, good purchase rate and timely payment (Crittenden et al. 2011). The providers in return sustain the supply of the materials promptly. The quality management is also a factor on behalf of the suppliers as well as the company.
Shareholders: the people buy the share of the companypeople, and they become the shareholders. It depends on the expectation of high or lower rate of surplus return from the shares of the company. Nestlé needs to provide the shareholders with a high bonus so that the shareholders continue to invest in the company shares (Lee & Kotler 2011).
1.3 The responsibilities of the organisation and strategies employed to meet them
Any companies like Nestle have a set of duties and management which the company requires to adopt and maintain strictly. Nestle has to make sure that the team working within is happy and satisfied which in turn will help them to maintain the competitive advantage (Crittenden et al. 2011). The team of Nestle have devised various strategies and ideas to manage the strategies which are meant to achieve the business and organisational goals of the enterprise. A guideline is always required to fulfil the objectives. These guidelines provide a course or pathway which helps the leadership of the present and also the future leaders to stick to the plans of the organisation. In the case of products and items, the customer tendency is to purchase quality in exchange for the lowest price possible (Kose, Otrok & Prasad 2012). To fulfil this demand, Nestle focuses on cutting down extra expenses and costs related to optional activities. In this way, the quality of the product can be maintained and presented in the market with a reasonable price tag. Besides, this policy, Nestle also resorts to timely offers and other beneficial schemes so that the customers may remain loyal to the company in itself. The regular and returning customers are rewarded for their loyalty with the company. These ideas keep the customers motivated, and they come back for more of the company products.
2.1 Economic system in attempt to allocate resource efficiently
A dynamic economic system meets the both end. Both ends mean the end of the customer as well as the end of the company. The production system has got its limitations due to lack of labour, raw materials, resources and the capital investment involved. The resource allotment is done after making sure all the resources are sufficiently acquired to start and complete the production procedure (Kanter 2003). For instance, the employees appointed for the company is strictly done according to the requirement and also the qualification standards which meet them. Besides, these allotted skilled workers get their allotment of work according to their capability and working standards. The further resource distribution is done by the government terms and conditions as well as the private companies which vary from one country to another (Swinburn et al. 2011). The government exerts the distribution rules in the form of provision or prohibition. A good example of such a situation is when a product price range is kept low to increase the sales which also aids to the social benefits. However, the allocation of the resources does depend on the countries policies, their system of economy and also the tax which is imposed. Nestle may choose to stop certain product making if it’s too costly in some countries.
2.2 Impact of Monetary and Fiscal policies on Nestle and its activities
Nestle, just like other enterprises have to depend on the monetary and the fiscal policies. The government owns the monetary policy and also controls the money supply within the country. The supply can be monitored with the help of inflation, through an increase in the rate of interest (Becker, Kugeler & Rosemann 2013). If the price of the product has to be raised due to inflation, it puts an impact on the organisation in itself. In similar fashion, the fiscal policies of the government involve the expenditure, taxing which keeps a direct influence on the resource allocation. On the other hand, the interest rate of the country depends on the political situation in the country. Now, this political situation is often influenced by the policies which are enacted by the government (Dief & Font 2010). For example, an increase in the rate of tax will result in an increase in the product pricing. On the other hand, when the taxes are low, and the price of the product decreases the purchasing power and the growth of the company, in the long run, will increase. Hence, the policies are managed by the government which keeps them in control of the market situation partially.
2.3 Impact of competition policy and regulatory mechanism on activities of Nestle
There are various laws about competition policies:
Fair Trade Act 1973: It emphasises on operations as a business, merging and acquisitions.
Restrictive trade practice 1976: This act restricts the companies to mentioned trade practice. Hence, Nestle won’t be able to produce anything which it did not declare as its production.
The Competition Act of 1980: The act of 1980 prevents companies from malpractices which lead to disruption of the fair competition in the market. For example, Nestle cannot make any understanding with rivals to make stop any other company.
It is the duty of the government to monitor and ensure that the company abide by the practices and rules laid down. In this way, Nestle must maintain healthy and fair practice environment with the consumers as well as the competitors who will help them to increase the market share and the productivity level (Smith 2013)
3.1 Explain how market structures determine the pricing and output decisions of businesses
There are various types of markets for different products and services, according to which the output and pricing decisions are taken. In most of the cases except the perfect market, the output and pricing decisions are interdependent. In the case of the perfect market, the firms cannot compete with the competitor's price because it's a single small sized firm (Davies & Crane 2010). In the case of the perfect market, the price is first identified and then the quantity of product. In monopolistic, the price can change as the company has huge power over the market, but with the increase in the price of the commodity, the quantity demanded decreases. The third type of market is Oligopoly where the pricing decisions depend on the strategy of other firms. Nestle has a monopolistic market structure where the seller is a sole provider who determines the price and output decision (Kotler 2011). They are the price makers and can charge whatever price they want to. In such cases, the consumers have to pay the price because they don't have a choice or an option to buy the same product at a lower cost somewhere else. If the demand for the product increases, the organisation will have to hire more employees to increase the supply. The decrease the demand for a product leads to decrease in cash flow because of which the cost exceeds the profit margin.
3.2 Illustrate the way in which market forces shape organisational responses using a range of examples
The demand of the commodity, its supply, advertisement, promotion strategies all these market forces affect the organisation in various ways. Supply of the product is the amount of product available on the market for sale and demand is some goods of services required or desired by the consumers in the market (Testa & Iraldo 2010). For example, Nestle launched a new chocolate bar into the market, and the supply of that chocolate bar is more than its demand. Usually, this happens when a new product is launched in the market. This shows a negative relationship between demand and supply. The price of the commodity is affected by the change in its demand or supply (Flohr et al. 2010). Every organisation wants to reach to a point where the demand is either greater or equivalent to the supply known as equilibrium. The equilibrium point of the company can be changed by various marketing strategies or activities which help in increasing the demand for the product. This is a point where the demand and supply meet the consumers need.
3.3 Judge how the business and cultural environments shape the behaviour of a selected organisation
The business and the culture environment have a significant influence on the organisation. There is two types of business environment namely, economic and noneconomic environment. The economic environment of the place consists of the economic system, policies, and conditions, whereas the noneconomic environment includes the natural, technological, social, legal and political environment (Kanter 2003).
The political environment consists of the government policies and their behaviour towards the business sector. Legal environment refers to the rules and regulations which can affect the working system of the organisation. Nestle has to work within the framework set by the law of that particular country. Thirdly the technological factors like the manifesting technique, method, used for the product which may vary from country to country (Parrish 2010). Factors like population, its growth rate, density all come under demographic environment.
Let’s take the example of Nestle which is a Swiss-based company which deals with the production of food and beverages all over the world. This multinational company was blamed for selling horse meat in the name of beef, because of which the European Union imposed restrictions on their meat products. Along with this they also asked Nestle to seek forgiveness from the consumers (Davies & Crane 2010). This example shows the culture of the people in that particular country where horse meat is not consumed. Whereas in countries where horse meat is consumed, there this scene would not have been created. This is how the cultural environments of the place affect and shape the business behaviour. Language, values, beliefs, social life, custom, education, etc. all play an essential role to develop the cultural environment of the place (Swinburn et al. 2011). Another example is the word " YES " which in America means yes I heard you, and I agree, but in Japan, it says " Yes I heard you, but I may or may not agree.“
4.1 Discuss the significance of international trade to UK business organisations
The exchange of products and services for monetary gains across the country is known as International trade. International trade leads to better utilisation of resources, the products that cannot be produced by the organisation locally they can be easily imported from another country; also the customers get good variety and choice of products. But with advantages, there are a few disadvantages also like there is a possibility of loss of local jobs, and the dependency on the foreign market also increases (Crittenden et al. 2011). Trade between two countries is possible only when there is a competitive advantage, and it's beneficial for both the parties. This means that the country should have a competitive advantage to manufacture the products which have to be traded. With the help of Martin Lishman and Aqua, we can illustrate the impact of international commerce on UK business (Kotler 2011). A UK based manufacturer as well as a distributor of material for agricultural and building industries who generates revenue by exporting its products to more than 20 countries of the world. Even Aqua, which is a grey water recycling and rainwater harvesting company which sells its products and services to 14 countries of the world and earns about 35% of the total revenue from it. All these examples show that how international trade benefits the local business in the UK.
4.2 Analyse the impact of global factors on UK business organisations
Any business can be affected by its internal as well as external environment. The Global factors which include political, social, economic, legal, technological, and environmental impact the organisations in the UK.
1) Political factors: Political factors include the government policies, rules, regulations, which influence the operation of business. For example, if a UK based organisation is opened up in the European Union then it has to follow the rules and policies set by the European Union only. The Political factors can also affect the consumers spending habit (Jamali 2010). Every business operating in the UK must consider the stability of government's policy and the political environment.
2) Economic factors: Economic factors like the interest rates, change in wage rates, inflation rate can influence the purchasing power of the consumers, decision-making and operation system of the organisation (Wheelen & Hunger 2011). The increase in demands for products or services means the standard of living in that country is high which a beneficial aspect for any business a there is are high chances or earning more profit. In the case of the lower standard of living the demand is comparatively less which means the prices will go down.
3) Social factor: Factors like religion, values, customs, beliefs, lifestyle, gender, population, are all included in social factors (Testa & Iraldo 2010). These factors vary from country to country. All these factors play a great role in determining the buying pattern of the consumers. According to these factors, the business or marketing strategies are set to attract the customers towards the product or service.
4) Technological factor: Technological factors help the business to adopt new strategies to grow and expand. With the help of technology, the business can reduce the cost of the product and also innovate their product and services. It has become very easy to share the data, easy to communicate, manufacture of the goods and services at a lower cost, new modes of distribution can be used, etc. Technology has helped the business to gain competitive advantage (Jamali 2010).
5) Legal factors: Factors related to a government like a consumer protection rights, environmental legislation, health & safety laws, which the organisation has to follow and abide by are all under legal factors (Kose, Otrok & Prasad 2012). The rules keep changing from time to time, and accordingly, the business is affected.
6) Environmental factor: some basic environmental factors affect the business organisations. Those are- air emissions, sustainable development of water and raw materials and industrials wastes (Jamali 2010). To preserve the surrounding environment, many businesses in the UK have to take strict legal decisions.
4.3 Evaluate the impact of policies of the European Union on UK business organisation
There is some government policy that affects the business organisations of UK. The government policies are- taxation policy, inflation policy, employment policy, education policy, regional policy and international policy.
1) Taxation policy: Paying taxes is one of the key responsibilities of any business organisations. As a result of this, the government can help the organisation by improving the infrastructure like roads, air transport and any other infrastructure of the country (Parrish 2010).
2) Inflation policy: By implementing the monetary policy, the government make it sure that there will be no rise in price or inflation that drives the interest rates. In the case of borrowing money, raising interest can be harmful to business.
3) Employment policy: The present government of UK plays a vital role in developing the structure of business. It helps to create more jobs. The people for whom finding job is difficult, government help them by providing them training (Flohr et al. 2010).
4) Education Policy: As per the previous point, training and education are crucial for the people who are not trained or capable of finding a job. By school education and vocational training, government help them to get the job.
5) Regional policy: In UK, to support the regions that are affected by social deprivation and high unemployment, the government made the fund available for them (Wheelen & Hunger 2011).
6) International policy: The UK government can stimulate foreign trade to encourage the business organisations. By this process, they can also discourage import of the goods.
In this report, the business environment of UK is analysed here. To study the business organisation of UK the company Nestle have been chosen. From this report, it can be summarized some outcome of this study. From this study the researcher can figure out the purpose of the business of an organisation. It is also find the different types of organisation, objectives of the organisation and how to meet the objectives of the organisation. It is analysed that how fiscal policy and monetary policy effect the company and showed its activities. It is also shows how market policy effectively allocate the resource. It is found out the market structure of the Nestle Company and how it determines the output and the pricing of the product. The study explain that the effect of the cultural behaviour on the business. It is also discuss the significance of international trade to the UK business organisation environment. It is also define the UK business organisation is effected by the global factors. It is discussed about the effects of various policies of European Union on the UK business organisation such as political factor, social factor, economic factor, legal factor, technological factor. The competition policies of Nestle related with various act. Finally, in this study is explain that business environment of UK is related with global organisation.
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