Identify the purposes of different types of organization
Different organizations are involved in various industries and mostly all organizations perform their activities in the same manner to achieve common objectives i.e. for customer satisfaction, for growth and expansion of the business, etc. As per the current scenario, Nestle is a company which produces chocolates, dairy products and other fast food items. Nestle is currently suffering from the situation of changing customer’s needs towards the healthier and sustainable products (Grönroos, 2011).
Mainly Nestle and other types of organizations have the following purposes:
- Fulfillment of customer’s needs: Organizations related to manufacturing or service industry, their main and centralized objective is to fulfill their consumer’s demands and requirement for building adequate customer relation. Satisfied customer will bring the adequate results for the organization in terms of profits, goodwill, etc.
- Setting up adequate place: Another important purpose of organizations is having a good and satisfactory image in the dynamic and competitive business environment. Nestle is a chocolate and fast food products manufacturing company and their primary competitor i.e. Cadbury both are struggling with changing tastes of customers, hence it is being a great opportunity for all types of organizations to set up a good image in the dynamic business environment (Brinckmann, et. al., 2011).
Apart from these common purposes, non-profit organizations are settled for helping poor people and those people who are not capable enough to earn basic necessities of life. In NPO, various organizations are serving disable people with various types of services.
Stakeholders are the people or entities which are interested in the company’s profits and its activities. It is mainly due to their investment made in the company. Internal and external, mainly two types of stakeholders exists. Internal stakeholders for Nestle are employees, directors, CEO, etc. and external stakeholders are shareholders, investment institutions, etc. All stakeholders have their own expectations from the company and following are the expectations of them with Nestle:
- Shareholders: Shareholders are the person who acts as the external owners for the organization, they are also known as the real owners of the organization. In other words, they provide funds to the organization for performing their activities in the business environment in the expectations of better returns. Hence the main and foremost objective of shareholders from Nestle is higher profits rapidly and expansion of the organization because this also relates to their returns expectations from the organization (Hill, et. al., 2014).
- Employees: Nestle is a big brand in the food industry market and as per their size in the market more than 335, 000 employees are working under this brand name. Their expectations from the company are their better future, job security and promotion as per the talent and not on the partiality or discrimination basis.
- Customers: These are the main reason for the business’ success because these are the people who consume the products and services offered by the organizations. Customers of Nestle mainly expect the products offered from them of high quality and the ingredients used for manufacturing of those products should be real. In other words, customers expect transparency from the Nestle in their food products (Pedersen, 2010).
Nestle is an organization basically deals in the food products manufacturing and distributing in various parts of the globe. Nestle and other organizations get the resources for manufacturing their goods, setting up their production places, etc. from the environment only. Nestle is responsible towards various parties i.e.:
- Responsibility for Stakeholders: Stakeholders are the person who takes interest in the activities of the business. Nestle is responsible towards them for fulfillment of their expectations towards their investment made in the company. Stakeholders should also be called for the involvement in the decision making process.
- Ethical and legal responsibilities: These are responsibilities related to the activities performed in the business environment in fair manner, following all the regulations and legal consideration of the particular place. Nestle is responsible for following all these requirements to avoid any kind of disturbance in the working procedure and this is also very crucial for maintaining the good image of the organization (Maon, et. al., 2010).
Nestle has built various strategies to match up these responsibilities:
- Strategy for Stakeholders: Nestle adopted the strategy of increasing involvement of the stakeholders in every decision making process of the organization. This helps the Nestle to improve its image in front of the stakeholders as well as nestle also gets the benefit of various options available for choosing amongst them to get better results.
- Strategy for ethical considerations: Nestle has improved their working procedures through adopting advanced techniques for production and these advanced techniques are known for extracting less pollution in comparison to the previous techniques used. Apart from this, Nestle also promoted green revolution campaigns in various parts of the world to decrease the level of pollution from the environment (Zott & Amit, 2010).
- Strategy for Legal considerations:Nestle has improved their policies through implementing the types of legal considerations issued by the governments of the certain places in consideration towards the food products. Nestle is working as per the guidelines issues by the government for manufacturing and distributing food products across the globe.
Economic system is the system through which a country allocates its available resources amongst the industries for the production of types of goods and services. Nestle has adopted types of methods for allocation of its available resources for the attainment of the adequate objectives for the organization. Following are the part of the economic system adopted by the Nestle for allocating its resources:
- Balance of payment: This aspect of the economic system of distributing available resources describes the method of payments. Building balance between the payment made to the third parties and payments received from the debtors and customers is very crucial. If it will not be applied adequately, organization could face the lack of funds or excess of funds (Boons, et. al., 2013).
- Exchange Rates: These are the rates used for making purchase and sales activities in the abroad countries because Nestlé is situated in various parts of the world hence to commence their basic activities, requirement of funds for the performance of those activities are very crucial and for the same rates for exchange are noticed.
- Public Finance: It is a method of raising funds from the general public of the country. Nestle issues shares, debentures and public purchase those in return of a certain price. Through this process, organization distributes these funds amongst its various activities to achieve desired goals and objectives.
- Risk Awareness: This is an aspect of economic system, in this aspect all the risk factors are analyzed to develop more effective methods to deal with them. This is performed to reduce the business risk level. Available risk dealing factors such as acceptance of risk, ignorance of risk and transfer of risk are also used to allocate all the available resources amongst the departments of the organization in which risk factors are present (Koo, 2011).
Fiscal policy and monetary policy are made by the government to control the economic conditions of the certain place. All the amendments made under these policies such as increase or decrease in the interest rates, local and central government’s spending, etc. Impact of these amendments made under the term fiscal and monetary policies on the Nestle and other types of organization will mainly effect on their profit (Chude & Chude, 2013).
- Economic Goals: These goals are set up by the Nestle and other organizations of the same industry along with the consent of the government to achieve a certain percentage of growth in the food industry. Sudden change in policies related to the food industry could affect the achievement of the goals.
- Public Sector Net Borrowings: It is a method of raising funds used by the public enterprises for performing in the business environment. If the rate of the PSNB will be negative then it will be termed as fiscal surplus whereas if it will be in positive, it will be termed as fiscal deficit. Nestle and other organizations’ activities could result in the lack of funds or vice versa situation with the deficit and surplus of the PSNB.
- Interest Rates: The rates on the loans, advances, grants, etc. provided by the government or taken from the private financial institutions could effect a lot on the performance of Nestle and other organizations. This is because increase in the interest rate would lead to reduce the profit margin of the organization and due to this, goods’ prices will be increased and consumer will shift to the other brand’s products (Wheelen & Hunger, 2011).
Competition is the reason for innovation and invention of advanced products. Competition is beneficial for the consumers as they get varieties of products in the market as well as consumers also gets the opportunity of picking up the same product on different prices. Following are the competition policies which have a great impact on the performance of the Nestle and other organizations:
- Competition Act, 1998: Prior practice of this act, organizations involved in the same field were using aggressive competition techniques which is very harmful for the consumers as well as for the whole industry also. This act protects the firms and consumers from aggressive competition techniques and promotion of the fair competitive techniques are involved under the Competition Act, 1998.
- Enterprise Act, 2002: Performance of the Nestle will not be much affected after implication of this act in the competition policies as these are the laws framed for the survival of the failure companies (Kovacic & Winerman, 2010).
- Competition Commission: This is a body developed to save the unethical practices followed by the enterprises in the competition. Nestle and other organizations can work with peace with the setup of this body in the competition policies, as they could work fairly and without any fear.
- Office fair Trading: This policy was developed for the protection of the consumers from the unfair and unhealthy practices adopted by the organizations in relation with the competition. Nestle has got their separate image in the competitive business environment after successful implication of this policy.
- Directorate General for Competition: This policy has described various rules and regulations for performing competitive activities in the business environment. The organization which is breaking the rules and policies mentioned under this policy will be punished and this could also leads to the cancellation of license of commencing business activities. Nestle got the big advantage from this policy’s implication as their competitors didn’t opted any unfair practices against them (Etro, 2010).
Describe the extent to which an organization meets the objectives of different stakeholders
In business environment, lot of business structures are involved which can affect the pricing policy and other decision related to the business. Impact of these market structures over the pricing and other decisions on the Nestle are as follows:
- Perfect companion:Perfect competition is the market where more than one seller is involved in the same field, industry of the business environment. For instance, Nestle and Cadbury are two big brands of the food industry and they both are available in almost every part of the world. Hence, they need to fix the price of their products as per their competitor’s products (Ganslandt, et. al., 2012).
- Monopoly: This is the market of single seller, supplier, etc. Under this market structure, owner of the organization can control over each and every aspect of the business. For instance, only Nestle is selling its products in New York, USA. Except Nestle, there is no other chocolate producing company is available there, hence Nestle could sell their chocolates and other products at their own prices , they could also control the supply of the products to increase the demands and this will lead to increase in the prices of the products.
- Oligopoly: This market is almost similar as the monopoly and the difference is in monopoly, only one firm rule the market and in oligopoly market, more than one firm rule the market. For instance, Nestle, Cadbury, Mother Dairy selling their products in the same place by mutual consent in setting up price of the products to avoid the shifting of customers (Chung & Van Oorschot, 2011).
There are a lot of approaches which could affect the Nestlé’s response in terms of price of the product, supply of the product, etc.
- Demand and Supply: The most common factor of changing the consumer’s response towards the Nestle is demand and supply of their products in the market. If supply of the products is decreased with an aim of increasing the demand amongst the consumers could results in the favor of the organization as well as it could also result in shifting of consumers to the other brands’ products (Black, 2010).
- Customer Perception:This concept of market structure describes the changing tastes and preferences of the consumers due to promotional campaigns, advertisements, personal findings or with the personal experience with the products. For instance, customer will change the brand if his/her requirements will not be fulfilled while consuming Nestlé’s chocolates.
- Pricing decisions: This is an important aspect of market forces which affects the organizational responses. For instance, Nestle increase prices of its products due to increase in prices of the raw material and other factors of production. Increased price of the products could create negative situation till the time their competitors will not perform the same action to maintain their profit margins.
- Cost & Output Decisions:These decisions of Nestle and its competitors will be affected when an effective competitor launches its products with adequate price, high quality and with effective promotional techniques. Due to this, Nestle and their other primary competitor’s needs to decrease the prices of the product to match up the level of the price set up by the new competitor (Vernon, 2014).
Organization’s changes in the behavior will be noticed as per the various factors involved in the business environment. Such factors could reduce the demand of the products, increase in the prices of the products, beaten the competitor’s marketing strategies, etc. Nestlé’s behavior changes as per the changes noticed in the customer’s tastes and preferences, improvement of technology, research and development results to improve the quality features of the product, changes in the political, social, economic and technical factors, etc. (Cavusgil, et. al., 2014).
For instance, changes recorded in the technical factors of the business environment would force all the organizations of the same industry to follow or to adopt the same technologies to survive in the business environment. If those changes would not adopt then it could create difficult situation for the organization because customers will not opt the products manufactured under outdated techniques (Nieuwenhuis, et. al., 2011).
Activities of the business performed outside the area of the country is known as international trade. With the rapid development in the business environment, increases in the trading practices of the various organizations amongst the different countries are normal. Being an important part of the international trade, chances of growth and expansion has also increased in these periods for Nestle. Along with the Nestle, various organizations are using this approach and their contribution towards the national income has also increased with the increase in their income (Han, et. al., 2013).
UK which is an important market for almost all organizations for trading activities as this is dream place for every organization to perform. This step also helps the organizations to build good image in the international market as well as it also helps to expand the business. This increases the profit margins, goodwill and chances of better survival in the competitive market. After commencing the activities in the international market, stakeholders of the organization start expecting more.
Every business organization’s performance is being affected by the different types of the global factors present in the business environment. Following are the global factors which affect UK business organizations are:
- Competition: Competition level of the national level and international level differs from each other because the policies, rules and regulations for the competition vary as per the geographic area.
- Employment: With the expansion of the business’ organization at international level, requirement of the employees also raises. Business organizations of the UK help the local public of the particular place to get adequate employment opportunities.
- Workforce Skills: UK is the place where advanced techniques, improved labor skills, talent exists at its peak. Performing the business’ activities with these qualities helps the organization to gain the adequate results.
- Labor Costs: UK is the most emerging part of the world for every business organization and this is being the most demanded place to work in. Hence with the increase of the area, increases in the labor and other relevant costs are also increased and with this effect, products’ prices increased rapidly (Trkman, 2010).
Explain the responsibilities of an organization and strategies employed to meet them
Following are the European Union policies which have created impact on the UK business organizations along with the Nestle:
- Agriculture Policy: This policy describes to boost up the productivity level of the UK to fulfill the demands of the products and this also describes the food security of the products. Nestle needs to follow this policy as they are involved in the production of food products.
- International Business Environment: Under this environmental factors, a set of aspects are involved in this environment i.e. political, economic, social and technical factors. Policies made by the government, social and cultural issues, enhancement of the technologies, etc. needs to be analyzed by Nestle to perform their activities in the UK (Mensi, et. al., 2014).
- Commodity Prices: Prices of the commodities also rises due to adaptation of these advanced aspects of the policies developed under the European Union. Due to high labor costs, high training cost and high investment made in the production of the commodities, their effects imposed on the selling price of the commodities which needs to be paid by customers. Hence, Nestle needs to adopt adequate pricing policies so that customers didn’t get much burden of the increased price (Galí, 2015).
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