PESTLE Analysis of Nestle | Nestle PESTLE Analysis
The PESTLE analysis is an external strategic business tool that helps to understand the business tactics of any company. The PESTLE analysis of Nestle gives complete details about various external factors such as political, economic, social, technological, legal, and environmental. It gives complete information about the extrinsic scenarios that can influence the brand or business. It is a useful business tool for big companies like Nestle, as it aids to identify changing market dynamics and promote the level of business constantly. Scroll down to check out the PESTLE analysis of Nestle.
PESTLE Analysis of Nestle | Nestle PESTLE Analysis
Political Factors:
According to surveys, Nestle works across 190+ countries and it is heavily influenced politically due to different rules and regulations of countries. They experience different challenges on daily basis due to its huge size. They have to look at things closely and carefully such as environmental regulations, taxation, and import/export laws of several countries. Sometimes these things work in the favor of the company but sometimes they have to face severe consequences. The change in labor laws is also a big problem for the organization because it forbids the exploitation of child labor in cocoa farms. According to reports, this thing can affect the company’s operation indirectly. It is a fact that big global companies like Nestle perform well in suitable and favorable conditions.
The instability creates a bad impact on the working and operation of the company. For example, the Brexit period was really challenging for the company. This thing forces the company to rethink its decisions in this country. This type of instability disturbs the working of Nestle. It creates several problems for both companies and people in the form of unemployment and low wages. Due to strict food regulations, the company has to face stringent and extensive testing in order to create new products according to the regulations. You can take the example of Maggi which faces the same problem. Recently, India reduces the corporate tax which is really welcoming for Nestle. It gives Nestle a good opportunity to form better and more products at an economical rate. It directly gives benefits to customers.
PESTLE Analysis of Nestle | Nestle PESTLE Analysis
Economic Factors:
Nestle is a global organization that is operating in various countries. It is really crucial for the company to make several economic policies according to the economic situations in a specific country. As affordability is the biggest factor, so it is really hard to provide more and better-quality products in those markets where the prices of raw material keep fluctuate due to economic and political factors. As the cost of raw material is increasing on daily basis and the trade tension between the US and China also creating problems, so it is really challenging for Nestle to manage things properly. This thing creates instability between suppliers.
Disposable incomes are also a big hurdle in the way of best quality products. Political unrest and fluctuating exchange rates are also problematic for the organization. The company is trying to improve local production in order to reduce the manufacturing cost. The increasing cost of agricultural products and different segments are influencing the profitability of Nestle. As China and US are two major markets of Nestle, so the political stability in these markets increase the revenue system and offer growth opportunity to Nestle.
PESTLE Analysis of Nestle | Nestle PESTLE Analysis
Social Factors:
No doubt, Nestle is a big organization. These kinds of large-scale organizations are easily influenced by changes in trends formed by the customers. The company is trying to manufacture healthy products such as low fats and sugar items for health-conscious consumers. The company has strong monitoring, processing, and manufacturing system that provides high-quality products. These products are minimizing health risks. It is due to the effective storage and supply chain network. The biggest success of Nestle is its better planning and strategy because they understand the needs of consumers.
Due to the rising sustainability goals, the company has inaugurated the ground-mounted solar plant in the United Arab Emirates. As people are more concerned about pre-cooked and canned products, the company ensures the quality of products by investing a huge sum in the R&D sector in order to satisfy the customers. In order to fulfill the requirements of customers, the company is really improving its working environment by implementing innovative technologies which surely increase the profitability and popularity of Nestle.
PESTLE Analysis of Nestle | Nestle PESTLE Analysis
Technological Factors:
Nestle firmly believes in the assimilation of digital solutions, models, and services. They are essential factors for both the internal and external integrity of the company. Due to the rising cyber-attacks, privacy of data, security issues, and reliability, it is crucial to develop a solid plan to protect the system in case of any emergency or mishap. For achieving desired goals, the company heavily invested in technology segments such as real-time data. They are also investing in different programs that help to check the nutritional information of different products. To complete this plan, Nestle has partnered with several authorities.
In the US, the company has partnered with SmartLabel transparency which helps to give information about allergens, nutrition, and ingredients. With such dedication and innovation, Nestle is continuously trying to improve the life of people with its products and services. There is no doubt that Nestle is a trendsetter in the relevant field. They just need to improve their technology on a constant basis in order to remain competitive in the market.
PESTLE Analysis of Nestle | Nestle PESTLE Analysis
Legal Factors:
It is really necessary to abide by the legal formalities of the different countries in which Nestle is currently operating. It requires a strong legal team that observes these legalities in every aspect and finds solutions for the company. Basically, these laws are designed for the safety and health of consumers and employees such as labor laws and consumer safety laws. They need to follow all the rules and regulations of countries for smooth and constant growth. On the other hand, it is also essential to watch out for IPO and trademark rules occasionally along with environmental laws.
In case of any breaking rules, the company has to face severe problems in the form of court cases and public trials. They also face criticism for supporting studies for breast milk which is against international and local laws. These kinds of negative things can break the reputation and image of Nestle globally. These things can be threatening for the profitability and market position of Nestle.
PESTLE Analysis of Nestle | Nestle PESTLE Analysis
Environmental Factors:
Nestle is trying to reduce its environmental impact by adopting eco-friendly options. They are reducing the use of plastic in their products and also focusing on creating 100 percent recyclable packaging. This thing really contributes towards the sustainability of and also welcoming for eco-conscious people. In case of any severe changes in environmental laws, the company has to face real problems in its operation. They were suspended by RSPO for the reason that they fail to submit the sustainability report on palm oil. They are also working to reduce its footprint of greenhouse gas emissions.
The company officials are also claiming zero-waste production in their manufacturing plants. They are also planning to develop sustainable goals globally in order to catch the attention of consumers. Recently, they are working on a water efficiency program. In short, they are trying their best to fulfill the environmental laws that can contribute to its success and growth.
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