Know How Business Environment Contributes For Economic Development
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Business environment consist internal or external factors which are influence business concern. analysing business environment is essential for every organisation , because it will helps to determine current performance of marketplace. Environment is create render impact on any business. Business environment is help to contribution economic development. Nestle is one of the leading brand in UK. (Wild, Wild and Han, 2014). It provide consumer goods with high quality services. Nestle have a wide rage of product. Nestle provide quality products with in less prices. It will help to attract for many customers. Nestle is purely able to fulfilling customer needs and expectations. In current market situation Nestle has a good probability ratio and high production. In context of case explain some various types of organisation and their repositories of business concern. Discussion on Forms of economic system and explain what should be appropriate for Nestle. Also discuss fiscal and monetary policy impact on Nestle. Determine market structure for business expansion and measure importance of international trade for economy development(Belás, and et.al., 2014).
1.1 Purpose of different types of organisations
- Private Limited Company: Private sector is constituted by those companies which are based on maximum profit earning objective. This is the main purpose of private organisation where they produce maximum outputs and generate supreme profit also. Nestle is also one of the private companies which manufacture a wide range of products with having main purpose to earn maximum profits.
- Public Limited Company: Public organisations are those types of firms which generate their shares and distribute the same to other companies. With the help of share distribution, company raises fund for some developments and growth(Belás, Machácek and Hudáková 2014).
- Sole trader: Sole traders are those individuals who own their business without any partnership and other funder. Main purpose of sole trader is to channelize all resources and generate maximum revenue with the help of optimum use of resources (Wild, Wild and Han, 2014).
- Partnership: Partnership is that type of organisation where two or more business investors are associated with one company and perform together for achieving the set objectives.
1.2 Ways through which Nestle meets the objectives of different stakeholders
There are various types of stakeholders for which Nestle has met the objectives. Stakeholders can be best described as those individuals who put a direct impact on the organisation. The stakeholders have certain expectations with the organisation and business entity need to meet the same. Ways in which objectives of different stakeholders are met by Nestle are:(Belás, and et.al., 2014).
- Shareholders: Shareholders invest capital in company and somewhere, they are considered as the owner of firm as they have the shares of business. Shareholders expect that company should generate high revenue for raising their dividend from business. Nestle's Shareholders also expect increase in the prices of shares along with suitable returns on the investment from high profit margin (Wetherly and Otter,2014).
- Employees: In an organisation, employees play a vital role. They are the assets for organisations. They manage the whole organisation to make high profits and to grow. Employees expect more growth opportunities in their organisation. They want high remuneration for fulfilling their needs. Along with that, they expect job security and safety from company to work more effectively(O'Boyle 2014).
- Customers: Customers are the people who buy products from Nestle. According to marketplace, customer is the king for any company. In their all companies have to fulfil customer needs and expectations. Customers have many expectations from Nestle like they want high quality products and services at less price as well as they want some discounted offers as well.
- Government: Government expects high from the business concern. It sets some rules and taxation policies for the business concern. They want each and every company to properly follow all rules and regulations. Government expects that Nestle’ should submit their tax properly and want companies to show their real income. It will be helpful for the development of economy(Belás, Machácek and Hudáková 2014).
1.3 Responsibilities and strategies of an organisation to meet their expectations
Nestle is a leading brand in the UK, it comes to fulfilling its responsibilities towards various entities (Wetherly and Otter,2014). There are so many responsibilities that Nestle has to fulfil the expectations of stakeholders. Organisation make some responsibility towards some different unities. They want to properly follow all these responsibilities. However, responsibilities towards shareholders, organisation make sure provide proper information to shareholders. Organisation also has to display all profitability ratios with shareholders. It can aid to increase number of shares for company. On the other hand, responsibilities towards customers, organisations have to fulfil their customers' need and expectation(Belás, Machácek and Hudáková 2014). Customers expect high quality services as well as products and so, organisations have to produce better quality offerings and also, they should provide after sales services. Firm has responsibility to manage their customer relationship management which help to provide the relevant information about customer demands (Wild, Wild and Han, 2014). Organisation must develop supply chain department where services will be served on time. Furthermore, responsibility towards employees, where enterprise also focus on employee needs and expectations because workers are assets for the organisation. Company can provide some accommodation to each employees, remuneration on time which can help to motivate them and will increase their performance level. The cited entity provides safety and job security to each employee.
These all responsibility which can be properly followed by the organisations it will be helpful for the increase productivity and profitability(Belás, and et.al., 2014).
2.1 Economic system to allocate resources effectively
Economic system is the way to make arrangement of resource allocation and organise goods and services in the national community. In other words, economic system is a combination of different entities . Resource allocation system is the most essential aspect of any type of profitable method where economy allocates is based on company profitablilty. Economic allocation system is based on supply and demand. Allocation of resource is directly proportional to the demand of particular product in marketplace. There is discussion about various types of economic systems as given below: (Wetherly and Otter,2014).
- Mixed economic system: Mixed economical scheme refers to the economic system in which both social and transitional system are mixed together. In mixed economic system, private or public; both sectors are encouraged to work with principles(Belás, Machácek and Hudáková 2014). All public sector and private sector is a mixed economy based system where company have to follow all principles and their main motive is to generate profit with the help of proper utilisation of resources. Nestle is based on mixed economic system where company generates maximum profits(Belás and et.al., 2015. ).
- Social economic system: Social economic method is different from mixed system. Social system includes non-profit organisations, social firms and charities. Social system does not rely on the revenue. Government plays only comprehensive role in the social economic system where government raise funding for such type of organisations. These are such limitation in social system which can be given by the government. Government plans for the funding system and help in generating employment, allocation of resources and some other advertising limitations.
- Transitional economic system: In this economical system, economy system based on principles in market. In this method, governance role is limited. Main function of government here is to maintain law and some regulations about money supply. In this scheme, government has control over the supply of money(O'Boyle 2014).
2.2 Impact of fiscal and monetary policies on business concern
Fiscal policy are framed for monitoring all expenditure which are provided by the government. It will also control over the expenditures. In other words fiscal policy deals with taxation and government spending and control economy over of the business cycle. In context of Nestle company has to faced so many ups and down. If government increase expenditure for ecomony growth , it will increase spending for goods and services (Wetherly and Otter,2014). This will increase demands for goods where demand up production must go up, if production grow than nestle need to hire more people and Nestle company generate more profit. If in case government think economy is overheating so they decrease spendings it will be create bad impact on company and also decrease demand. Company production is slow which means profit ratio is decline.
On other hand monetary policy deals with the changes in interest rate and manage money supply, where monitory policy is control over the supply of money. If increase in money supply interest rate is down which affect customers who can able to able Nestle products. Moreover money supply is decrease interest rate is high in product and increase inflation in market place where customers are not able to buy products and services (Wetherly and Otter,2014).
2.3 Impact of competition policy and other regulatory performance of Nestle
- Competition act 1998: In this act government would be focus on change structure for identifying and handling restrictive business activity and maltreatment in marketplace. In other word government create some limitations for doing business activity where as build some rules and regulation to each type of company , and organisations must to follow all these legal regulations (Wild, Wild and Han, 2014). As per the competition act Nestle face one problem, they cant set own price and other promotional activities. Moreover company can't reach out competitive advantage.
- Office of fair trading: This act is making for fair dealing system where company fairly trading with others and reduce risk. In this legal act government main focus on fairness in trading system and legal create a fair competitions between companies. As per this act Nestle follow the all legal terms and never create unhealthy competition with other one. They always follow all ethical forms which is made by the business concern(Belás, Machácek and Hudáková 2014).
3.1 Market structure determine the pricing and output decisions
There are various market structure which spatiality different from other market behaviour. In these day company will focusing on entire market structure before determinant the sale and marketing strategies(O'Boyle 2014).
- Perfect competition: In market place so many companies are available with related products. They all have create a perfect competition to each one of them. Nestle company produce so many product range and other company has also making same products. In business concern nestle has to face perfect competition in market. They will change in strategies and manufacturing some new innovative products.
- Monopoly: In this market structure only on seller is available in market place . In context of Nestle is only one company to producing so many products. In that case increase customer demands and profit ratio.
- Competitive advantage: Nestle introduce some new innovations in products and use some new technologies. They also think creatively which helps to take better decision for unique strategy making, where strategy is different from other companies. It will be helps to create competitive advantage in marketplace. With the help of competitive advantage company generate maximum revenue (Wild, Wild and Han, 2014).
3.2 Market force shape organisational responses
Nestle company are highly impacted by various market forces. Market forces are responsible for constructive the whole business strategy of a enterprise. Company consider porter's five force model to understand other market forces.
- Threat of substitution: Nestle company has faced perfect competition in marketplace. Where some other company is also having related products . It is create render impact on Nestle productivity (Welford, 2013).
- Threat of new entry: Nestle face terror about new entry which will be comes in marketplace and growing successfully. It will be affected company strategy and productivity. New companies are taking out some new innovations and new technologies. Nestle can't met their situations.
- Bargaining power of supplier: Supplier is a key person for any organisation. They provide products to met their satisfy customer demands.
- Bargaining power of customer: Change in customer demand and perception is create bad outcome. Customer is switch to other products it will be make bad outcomes for Nestle.
- Competition rivalry: In this point nestle face competition in marketplace. On the basis of new entry and some other growing company is create high impact on Nestle product and services.
3.3 Business and culture environment of Nestle
- Political: In political environment changing global regulation are render impact on Nestle marketing actions, because in different countries some products are not allowed due to various reason.(Belás and et.al., 2015.)
- Economical: Nestle company is working across the world and have a wide and most effective supply chain network. Due to different economic policies, the company has face so many problems in supplying product to the customers. Chaining inflation rate and economical growth is render impact on company. Change in monetary or fiscal policy company faced some issues like decrease on productivity and profit ratio.
- Social: advertising is create image of the product, where social media is way to promote their product specifications and quality services. Nestle is healthy product which offer healthy specification. Due to some reason Nestle face some problem against their product and company has to face problems. In marketplace customer change in lifestyle and switch to home made products.
- Technological: IT sector is too vast there is so many advance technologies. With the help of new technologies company reach maximum productivity and high profitability (Welford, 2013).
- Legal: Nestle face some legal compliance like minimum wages. Where they are not providing minimum wages to each one of employees and company faced some problems like union strike
- Environmental: Nestle company introduce some health care products where customers use so many different product. They use only based on weather. Consumers over concern about packaging system where products are user friendly.
4.1 Significance of international trade
- World trade organisation: WTO is the only global international organisation which help to trade dealing one nation to another nation. on the basis of WTO, it provide some rules and regulation for the trading companies where they trade easily and legally. WTO helps to provide goods and services between two different countries.
- BRIC: BRIC is a group of Brazil, Russia, India and China, which all are consider to be as a similar level of economic development. BRIC is generally helpful to all these countries to trading easily. Where In Brazil, Russia, India and China where ever you dealing it will be helpful and easy to imparting and exporting of trade.
Significance of international trade can be create comparative advantage, where trade between two companies can be made in a mutually beneficial manner, each country has comparative advantage to manufacture product to be traded (O'Boyle 2014).
4.2 Impact of global factors on business organisation
- Competition: Companies going for global trading is good of country economic, but they will also face competition in marketplace, because there are so many companies which are trading internationally and going world wide for their business expansion. They will create a perfect competition in international market.
- Employment : Globalisation is help to increase employment for the country. Which means most of the companies are going world wide for some expansions so they have need some more people to manage their business. They hire more skilled people and help to contributing towards economic (Welford, 2013).
- Technology advancement: IT company are making so many new technologies for their business concern. Technology advancement is somewhere create a comparative advantage for enterprise.
They used so many new technologies and increase their image and productivity. Technological advancement is helpful to met work efficiency (Kim, Suresh and Kocabasoglu-Hillmer 2013).
4.3 Impact of policies made by EU on UK business organisation
- Agriculture (CAP): On current market condition most of the companies are based on agricultural. They produced raw material from agriculture. Nestle produce so many products which are healthy so human being. So many products of Nestle is depend on agriculture organisation. Agriculture build some policies to making their raw materials. They produce raw material fro so many different company if agriculture source change in policies like they increase tax of raw material and also increase tax on trading . It will be affected Nestle business. Increase rate of tax is make profitability ratio decline and increase slow production system (Belás, Machácek and Hudáková 2014).
- International business Environment: Business concern environment is based on different environments In political environment changing global regulation , in economical factors are Chaining inflation rate and economical growth of company. Change in monetary or fiscal policy company faced some issues like decrease on productivity and profit ratio. Social impact effect In marketplace customer change in lifestyle and switch to home made products. Technological factor is helpful to reaching out new technologies and some new innovations. Legal factors are create some legal compliances for company and due to many reason company face so many problems(Kim, Suresh and Kocabasoglu-Hillmer 2013).
In present report discussed about the different types of organisations purpose. Where organisation met objectives from the different stakeholders and describe individuals expectations. In context of this case organisation have some responsibilities to fulfilling their stakeholder needs (O'Boyle 2014). In this present report describe various economic system and found Nestle company render on mixed economic system where company able to generate maximum profits. Also discuss about the fiscal or monetary policies is create high impact on Nestle productivity. As per the above report conclude some various market structure for Nestle and describe porter five force factors which effect the Nestle profit margin. Also concluded international trading is useful for business expansion and with the help of worked trade organisation it well be more easier to trading between two countries (Welford, 2013).
Journals and Books
- Belás, J. and et.al., 2014. Significant attributes of the business environment in small and meduim-sized enterprises. Economics & Sociology, 7(3). p.22.
- Belás, J. and et.al., 2015. The business environment of small and medium-sized enterprises in selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management, (1). p.95.
- Belás, J. and et.al., 2015. The business environment of small and medium-sized enterprises in selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management, (1). p.95.
- Belás, J. Machácek, J. and Hudáková, M., 2014. Business Risks and the Level of Entrepreneurial Optimism among SME in the Czech and Slovak Republic. Journal of competitiveness, 6(2).
- Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business environment: Knowledge management and knowledge management technology. Elsevier.
- Harrison, A., 2013. Business environment in a global context. Oxford University Press.