Nestle: Macro Environment and Micro Environment Analysis Essay

1005 Words Apr 30th, 2013 5 Pages
External Analysis of Nestle:
Nestle in the Global Environment:
Nestle operates in over 130 countries and in order to understand the business environment they operate in analysis on the external factors that lie outside the control of Nestle has to be conducted (Grant et al. 2011, 101). The tool tasked with conducting an external analysis of the macro environment is PEST while the external micro environment will be analysed with the help of Porter's Five Forces. However it is worth mentioning that Nestle is not however exclusively influenced by the mentioned factors below (Shaw 2004).
Macro Environment Analysis:
PEST Analysis:
Political: Nestlé is a global company and in the food and beverage industry one of the most important
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Power of Buyers (High): The power of buyers in the food and beverage industry is high. This is because typical buyers are large retailers like Wal-Mart, Carrefour etc. these retailers are financially strong and prefer to have long term agreements with market players. Furthermore majority of buyers are integrated backwards, while several retailers offer their own branded food and beverages.
Power of Suppliers (Low): The power of supplies in this industry is low because of the sheer number of available suppliers and markets to purchase from. It is important to point out that the raw materials in question here are fruits, meat, fish, grains and cereals just to name a few which can easily be purchased in open markets as well. Furthermore some firms have integrated backwards and produce their own raw material handicapping the suppliers further (Bradley et al. 2005).
Threat of Substitute (High): Given the lack of switching cost between alternative for the consumer and the availability of cheaper alternatives to packaged food this has caused the threat of substitutes to be high (Bradley et al. 2005; Hager n.d.).. The industry has experienced a surge in private label products and organic food which has caused consumers to experiment with new products.
Rivalry amongst Existing Competitors (High): The food and beverage industry is vast

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