How a business should cope with changing Business Environment
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A set of internal as well as external elements which affects to the company in terms of both positive and negative manner is known as business environment. The company has to give response to the environment accordance to different kinds of factors affecting. The present study is on the basis of Nestle company which is operating in food processing industry. It is public limited company and serves its food across the world. The report shows about different types of companies and their purposes along with strategies employed by them to meet with objectives of stakeholders. Further, it shows about economic systems, influence of monetary and fiscal policy, market structures as well different forces of market. At the end, it focuses on impact of international trade and European Union on business enterprise such as Nestle Plc.
1.1 Identification of purposes of various kinds of businesses
In the corporate world, there are many types of entities operates in different sectors and industries as well. The various kinds of companies have different purposes and objectives in the market and operate for achieve it. In the market there are mainly three kinds of firms operates which are like as public, private as well as volunteer sector(Chavis, Klapper and Love, 2011). These kinds of enterprises and their purposes are given as below:
Public sector : Those kinds of business entities which are enclosed with the government and operate under its rules and regulations are known as public companies. Such types of firms have not their own authority and liabilities on the overall business. Main purpose of public companies is to provide better products and services to the customers at the affordable and low prices. Further, these not have objective to earn more profit from the buyers. For example: Nestle, National Health Services, Tesco, Primark etc.
Private sector : Another kind of businesses are those which operates at their own responsibilities and having overall ownership as well as liabilities, known as private companies. Further, government not having any kind of role and interfere in the private business organisations (Aterido, Hallward-Driemeier and Pagés, 2011). Purpose of the private sector companies is to earn or maximize level of profit at the end of every financial year. Along with this another purpose is to attract more number of customers and increase market share as well. Example of the private sector is Iceland supermarket.
Charity sector : Another sector is charity where companies operate in the industry for the welfare of the local community. There are key purpose of the charity sector companies is to provide better services and to the needy people as well as who cannot afford any services in exchange to money.
1.2 Objectives of stakeholders which are meet by Nestle up to which level
Those people who are connected with the company in either direct or indirect manner are known as stakeholders. There are different stakeholders such as internal or external have various objectives towards which are described as below:
Customers : These are the key stakeholders of the company by it able to exist as well as earn in the market (Commander and Svejnar, 2011). Customers want from the that it provides high quality of food products along with the higher nutrition. Further, they think that it offer hygienic food items at the lower prices compare to rivalry firms.
Employees : Those stakeholders by which Netsle able to produce food items and can offer to consumers are known as employees. Such stakeholder’s objective is that firm provide higher salary and wages along with effectual compensation, allowances, monetary and non monetary rewards etc.
Government : Further, government percept towards the Nestle that it generates higher profit level at the financial year ending. Due to this it able to contribute more sum of money in growth of the economy (Adeoye and Elegunde, 2012).
1.3 Responsibilities of the firm and strategies in order to meet with their objectives
Every business entity has different roles and responsibilities towards various stakeholders and it has to fulfil objectives as well as requirements of them. In context to this, the Nestle has different kinds of strategies which help to it to meet above mentioned objectives of potential stakeholders. In order to meet such requirements at the very first the management has to manage the firm and control over the extra expenses. When it uses such things then able to generate higher sum of profit. Nestle can fulfil objectives of stakeholders when it has higher profit and with help of higher money it can provide better quality of food products, high salary, various benefits such as compensation, allowances, rewards etc. It is the main responsibility of Nestle to achieve various objectives of different stakeholders which helps to sustain in the food processing industry and earn profit (Hamilton and Webster, 2015).
2.1 Explaining impact of economic systems in order to allocate resources effectually
Every company wants that it has all the resources in the firm in adequate manner and allot to each function as well. Economy plays an important role in the firm for operate and run in the respective sector. When talking about economic system then different countries have different economic system which helps to the firm. In the UK economic system followed is mixed economy which is a combination of two or more economic systems like as socialistic, political etc. In the mixed economy, on the organisation owner as well as government both having a role and interfere in the business process.
Furthermore, the mixed economy affects to the respective limited firm like as Nestle. According to the economic system of UK, the firm has to follow norms and conditions of government and then can take actions for the further process (Avramenko, 2012). When the Nestle going to allocate resources to the organisational functions then of government says that only particular sum of money is allotted to respective function. Further, appropriate strategies to allocate resources will be hamper and reduce efficiency of the firm in order to utilize different resources.
2.2 Assessing influence of fiscal as well as monetary policies on Nestle
In the country there are many kinds of policies and regulations are imposes on an organisation which lead to affect the business process in positive or negative or both way. Among them two are the most important policies which are like as fiscal as well as monetary. Fiscal policy is handled by government of UK while authority body of monetary policy is central bank of the UK. Fiscal policy consists with different taxation rules, tariffs, export import terms and conditions which affect to the business process of Nestle. For example: if government increases tax rate then Nestle has to pay high amount of taxation on the profit. It leads to increase indirect expenditures and decline total net income of the firm.
Further, monetary policy includes different factors such as interest rate, reserve rate etc. When central bank of UK make changes in the interest rate then it directly impact on the company in reverse direction (Scheer, 2012). For instance, if the bank takes decisions to reduce rate of interest then Nestle not need to pay more cost of loan to the bank. Due to which extra indirect expenses gets reduces and profitability of the firm affects in positive way.
2.3 Evaluating influence of competition policies and regulatory mechanism
When the company is operating in industry then it has to use different competition rules and policies which help to compete in the market. Some policies related to this criterion are described as below:
Low cost : Customers want that business entities provide at the very low or affordable cost and prices. When the Nestle offers its food to consumers by charging low prices then it is able to attract higher number of users. Further, it can compete rivalry companies and then earn sales and yield at the ending of financial year.
Antitrust laws : Moreover, in the country different antitrust laws and regulations are formulated by the company in order to compete those firms which provide same kinds of food products. As per the antitrust legislations Nestle is able to make the firms more better and enhance financial performance in its segment such as food processing.
Differentiate food products : In addition to above both the policies, another is to produce and offer very unique and different innovative and unique dishes as compare to competitors (Isik, Jones and Sidorova, 2013). The Nestle offer different kinds of innovative dishes which are not provided by rivalry entities such as high class sectors, hygienic refreshments etc.
The above analysed policies to compete in the market are formulate and regulated by authority body or mechanism such as government of UK, competition act, world trade organisation etc.
3.1 Explanation of market structures for determining decisions
To take effectual business decisions structure of the market plays a key role and on the basis of it the company able to perform well. In the corporations, there are many types of markets are available and in accordance to that Nestle make business plan and decisions. Different markets are like as oligopoly, monopoly, duopoly, mixed etc (Types of market structure, 2016). In context to this, if there are monopoly market then the entity can charge prices of food products as it wants from customers. Because there is not any other firms are operate and sell same kind of food items and products. Further, in the monopoly type of market the company takes decisions without involving any authority body and customers as well.
Another type of market is oligopoly in which very few companies operates of same industry such as food processing which lead to create lower competition market (Crane and Matten, 2016). In such type of market structures business entity cannot take every decisions at their own stage. It has to consult with customers as well as regulatory mechanism in the firm for taking decisions.
3.2 Methods by which firm gives responses to market forces
In the market there are various forces and drivers help to the Nestle for determine cost and prices of the food products provided by it. There are mainly two forces of market by which the Nestle gives response to them and take different decisions related to business. The forces are like as Demand as well as Supply and these both are key point of market structure. On the basis of both of the points firm able to take decisions. When supply increases in the market then prices of food offered by Nestle gets down. In the situation of higher supply the enterprise has to give response in terms of reducing level of pricing of the food items and dishes. By which it can sell its products and can generate revenue along with profit at the end (Iyer and Henderson, 2012).
Another market force to which the business firm needs to provide response according to that is demand. Higher the level of demand in the particular sector leads to increase prices of the food. On the other side, when the demand of food products are low then the management of Nestle reduce its charges and prices by which able to generate level of yield effectually.
3.3 Behaviour of Nestle in terms of business as well as cultural environments
Culture aspect also has an integral role in the company and it affects to the business entity in positive and negative types. It is the set of different values and beliefs of customers which lead to make changes in the behaviour of the Nestle. When the consumer’s values are changes and they want to consume high quality of food products then behaviour of the company gets affects and it has to produce such kind of products. Due to which the operation process affects and then the business unable to become more financially sound in the air segment. In regard to this, organisation has to make changes in the business and operation process as the culture of the customers gets changes (Vaiman, Sigurjonsson and Davidsson, 2011). The Nestle behaves with the customers after taking care of their cultures as well as business.
4.1 Importance of international trade for the business firms in UK
International trade is a term where an enterprise able to enter in new and emerging market and can expand its range of food. It plays an integral role in every business firms of the UK country for further expansion and generates higher sales. With the help of international trade system the companies can easily enter in the international market and enhance global presence in the world. Apart from this, they are able to earn international or foreign currency by exporting as well as importing food products in another market (Chen, Chiang and Storey, 2012). For the UK business entities it is highly significant due to helping to cover two or more number of market. Further, by the international trade different rules and policies are prepared which helps to protect the firm when occurring any obstacles related to international business.
4.2 Analysis that how global factors affect to businesses of UK
To the business environment there are various global factors influence to the firm in order to do international trade or business. The elements at the global level affects to the UK companies are such as exchange rate, tariffs, export import rules and regulations etc. When a company of UK country going to enter in global market then if government reduce level of importing food products from another market. Then it will unable to purchase food from the international company which lead to reduce efficiency of the enterprise. In context to this, if exchange rate gets enhance then level or value of the currency will be ultimately affects (Pingali and Roger, 2012). Further, the overall business hamper in terms of generating high amount of sales and yield as well.
4.3 Evaluation of European Union’s policies on UK enterprises
A union which is made by the European countries where various kinds of policies and regulations are prepared in order to run the firm is known as European Union. As per the respective union’s policies it allows the UK companies to export and import the food without charging any tax and tariff rate. In short the area of EU is tax free area where any European and UK business enterprises can sell the food products freely in international market (Xu, 2011). Hence, it can be said that the EU is better and helps to the UK firms in order to generate higher revenue up to higher extent.
It can be assessed from the above analysis that private, charity and public sector firms have different objectives and purposes for operating in the market. There are different stakeholders plays key role in Nestle and it is necessary to meet their objectives. It can be concluded that market forces as well as different types of market structures affects the respective business entity. It can be said that various economic systems, different policies such as fiscal and monetary etc. also impact on the smooth functioning of the Nestle. Furthermore, European Union as well as international trade are highly important for the different businesses of UK country.
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