1

Nestles External Environment Analysis

Student’s Name
Professor’s Name
Institution
Course
Date
 2

Nestles External Environment Analysis

Nestle Company overview

Nestlé is a Swiss-based company in the global conglomerate that was established with an

underlying mission to unleash power of foods and transform lives now, here as well as

tomorrow. The company was founded by its visionary founder Henri Nestlé as a solution to the

huge problem of high child mortality levels in 1866. He invented a formula infant cereal

formulated to meet the demands of those infants that for various reasons could not be breastfed.

The origins of Nestlé are intertwined with the merger of two entities: The “Anglo-Swiss Milk

Company” of 1866 started by brothers George and Charles Page, as well as the company "Farine

Lactée Henri Nestlé" in 1867 founded personally by Henry Nestle (Wunsch, 2023). This tactical

merger served as a foundation for Nestlé’s rise to power in the international food and beverage

market. The company’s story is innovative, quality-driven and ultimately indicates a genuine

dedication to health of the public.

The operational heart of Nestlé lies in Vevey, Vaud, Switzerland- a bright showcasing of Swiss

expertise on the world’s market. Besides supervising the Executive Board with Chairman Paul

Bulcke as its former chief executive, the board members provide strategic leadership. In 2022,

Nestlé with its workforce of about 275,000 people worldwide becomes both a fiscal giant and

one which is highly dependent on the different skills that are offered by some such members as

workers (Forbes, 2023). This inclination towards diversity fits in with Nestlé’s general approach

to unleash the power of food for people and society.

In fiscal year 2021, Nestlé showed financially strong and the CHF 87.1 billion presented a

significant period growth of over 3.3 % (Wunsch, 2023). This success on the financial level

proves once again that in adapting to ever-changing environments of world markets, this
 3

company is capable and flexible. By delivering strong financial results over the years, Nestlé

manifests its strategic input and expresses how consumers desire an array of products from this

immense company.

Nestlé’s life story represents a tale of deliberate conception, tactical changeover and relentless

determination on using the power of food to improve lifestyles. As a leading symbol of Swiss

superiority on the global scale, Nestlé has found itself in an ideal position to influence how food

and beverage business evolves.

Evaluating Nestles General Environment

Global industry in which Nestle operates

Nestle is one of the world’s largest food and beverage companies, operating in 188 nations. It has

more than two thousand brands varying from global icons to local favorites (Forbes,

2023). Scope gears towards improving the quality of life and developing a healthier future.

Nestlé is involved in the international Food and Beverage Industry. It is the world’s largest food

and beverage company, which operates in 188 countries (Gooy et al., 2023). Nestlé has a wide

range of product lines in different categories which include dairy products, beverages; processed

food confectionary infant nutrition health science as well pet care.

Nestles PESTEL Analysis

PESTEL analysis is a strategic tool used by businesses and organizations to analyze the

macroenvironmental elements that can influence their activities and actions. The acronym

PESTEL stands for: Political, Economic, Technological, Environmental, Legal (Çitilci &

Akbalık, 2020). By analyzing these six categories, companies can learn about different external
 4

factors and trends that may influence their industry to help them come up with ways of either

coping or leveraging on such opportunities

Political Factors

Nestle is active in 188 countries thus a number of multifaceted political factors influence the

company’s day-to-day performance Political factors such as political stability, government

policies and regulations may also affect the business environment (Dam, 2021). For instance,

indirect effect of changes in labor laws prohibiting the use of child labor on cocoa farms can

affect an operating company.

Economic Factors

As the Nestle group’s operations spread across many countries, there comes forth an inevitable

duty to form other economic policies, based on what is prevailing in that country. According to

Chung et al. (2020) This is because with affordability playing a major role, ensuring that the

quality foods are provided for all in an environment where the prices of raw materials keep

changing due to political and environmental factors; even if they fluctuate greatly poses serious

challenge.

Sociocultural Factors

The operations of Nestlé are influenced by various social and cultural aspects that impact

consumer preferences, lifestyles, demographics and market trends. However, According to Kee

et al. (2021) as consumer tastes are shifting towards nutritional and sustainable products, nestle is

focusing on improving the nutritious value of its goods.

Technological Factors

Nestlé never ceases investing in research and development to come up with new products while
 5

bettering the already existing ones. According to Matović (2020) The competitiveness of the

company and its industry position may be influenced by its capability to adjust towards

technological improvements or innovations.

Environmental Factors

Nestlé has made several pledges towards sustainability, including a plan to achieve zero

environmental impact within its operations by 2030 and more recyclable packaging. (Singh et al.,

2021) These ecological and environmental issues also impact the business system of operations

and decisions.

Legal Factors

Nestlé is bound by the law and policies that govern business entities and industries in each of its

operational countries. Such are food security laws, labor legislation and ecological regulations.

Trends in Nestles Macro-Environment

Political

A common approach for many governments across the globe is to set regulatory frameworks,

which are inclusive and expansive on every facet of the food industry (Singh et al., 2021). It

ranges from broadly restrictive guidelines, rising labor costs, nutritional limitations, automation

and safety requirements.

Economic

The economic uncertainties and continuing inflation have rendered the food and beverage

industry cost sensitive consumers who are looking for cheaper alternatives. As inflation falls off,
 6

there is pressure on manufacturers to keep prices low and this does not augur well for

profitability in the middle market business (Shen, 2022).

Sociocultural

With fusion of cultures and the dissolving borders, this industry has to satisfy palate that is

forever changing and globally interlinked. Every dish not only has a cultural background but also

tells how different flavors, textures and tradition in culinary from all over the world can be

integrated (Çitilci & Akbalık, 2020; Dam, 2021).

Technological

One of the most important trends that are emerging in the food and beverage industry is AI and

data-driven technology (Akerkar, 2019). AI and data-driven models can help to optimize supply

chains, accurately forecast demand, spot patterns quickly.

Environmental

Sustainability, reduction of a carbon footprint as well as issues regarding food wastes are brought

up by the consumers treating an environmental impact with insufficient consideration. Farm-to-

table movement is gaining popularity internationally. It is not just a fad, but universal dedication

to quality.

Legal

The supply chain of food and beverage companies needs to anticipate changes in regulatory

fronts. All of these include the changing food safety laws, labeling obligations and regulations

regarding GMOs.

Artificial Intelligence (AI) and how it could affect Nestle

 7

AI and data-driven technology has been used by Nestlé to make improvements in its business

activities. AI is used by the company for sales price optimization, promotional activity and

retaining consumer demands in respect of its brands or products (Akerkar, 2019). Nestlé is also

using AI with end-to-end analytics for deepening customer collaboration, improving product

assortment and hence making promotion effectiveness According to Chui et al. (2023) It has

created a data science hub in Bangalore where it is working on the developing solutions to

monitor every return of investment into key Zone markets, and building several models

predicting best investments.

key areas of uncertainty related to this trend that could potentially impact Nestlé’s

strategy:

Data Privacy and Security

Nestle has to ensure that the data it collects and processes complies with laws regarding privacy

of an individual’s personal information, while ensuring protection against breaches in security

(Clarke, 2019). Any misbehavior in this respect may result in damaged reputation and heavy

fines.

Technological Changes

There is a constant revolution in the arena of AI and data-driven technology. The business needs

to invest in new technologies on a regular basis as well as equip its employees with adequate

skills (Loureiro et al., 2020). However, the speed of technological changes is not clear yet and it

unknown whether Nestlé will change with those technologies.

Regulatory Developments
 8

The use of AI and data-driven technology is regulated, which can differ between jurisdictions.

Changes in regulation might influence the utilization of such technologies by Nestlé (Loureiro et

al., 2020).

Reliance on External Partners

The collaboration with external partners is Nestle’s digital transformation. However, According

to Gooy et al. (2023) there is doubtfulness about the efficiency and trustworthiness of these

partners.

Economic Conditions and Market Competition

Nestlé’s profitability from AI and data-driven initiatives could be affected by general economic

conditions, foreign exchange fluctuations, competitive product pressures when it comes to

pricing as well as competing with other similar products (Dam, 2021).

Strategic analysis of Nestles Mission, Vision and Objectives

Mission

Nestlé’s mission is to provide consumers with the best tasting, most nutritious choices in a wide

range of food and beverage categories and eating occasions, from morning to night (Nestlé,

2023). In this mission statement the company’s quality and health orientation is emphasized, as it

represents a key supplier for food & beverages products. It also draws attention to the company’s

emphasis on customer demand and desires, demonstrating its oriented character.

Vision

Nestlé’s vision is to be a leading, competitive, Nutrition, Health, and Wellness Company

delivering improved shareholder value by being a preferred corporate citizen, preferred

 9

employer, preferred supplier selling preferred products (Nestlé, 2023). This vision statement

highlights the aspirations of leading in Nutrition, Health and Wellness sector. It also stresses the

value of putting shareholders first, doing what is right in terms of corporate citizenship and

becoming a company that employees prefer to work for as opposed to suppliers or customers.

Objectives

The goal of Nestlé is to release the power embedded in food and promote quality life for all

people, currently and on a global scale throughout future generations (Nestlé, 2023). Where

unlocking the power of food can have its greatest impact towards people and pets, the

environment protection and professionalization as well as creating high value for stakeholders.

Nestlé also aims to maintain equilibrium in the pursuit of steady growth through innovative,

efficient operations and connected allocations.

Nestlé’s mission, vision, and Objectives illustrate also a high priority in quality assurance

through nutrition as well consumer satisfaction. (Forbes, 2023)The aforementioned strategic

components form the basis upon which decisions are made and actions carried out by this

company while operating in such competitive food/beverage industry.

Conclusion

One of the world’s most well-known food and beverage corporations is Nestlé, which was

established in 1867—this company retains its mission to uplift lives with the power of

eating. The company signifies a key economic player and significant employer with some 275,00

individuals worldwide under the visionary leadership of Chairman Paul Bulcke. Such

outstanding strategic resilience turns into financial success exhibited by 3.3% sales rise in 2022

to CHF 87.1 billion are exactly presented

 10

Nestlé is a large and global company with operations in 188 countries; as such, its

macroenvironment has complex elements of political, economic socio-cultural technological

environmental and legal factors. In its active approach to these factors, the company becomes a

leading trendsetter within the industry trends in which artificial intelligence plays an integral

role. It is true that AI makes things more efficient, but such uncertainties about data privacy

issues and technological changes as well as regulatory shifts remain pressing concerns.

The vision, mission and objectives of Nestlé serve as a strategic framework that focuses on the

customers’ satisfaction achievement through responsible corporate citizenship and commitment

to developing using food for human beings’ pets, nature. As Nestle shines its path in the dynamic

food and beverage sector, strategic flexibility has equipped it for long-term success contributions

to community welfare.
 11

References

Akerkar, R. (2019). Artificial Intelligence for Business. In SpringerBriefs in Business. Springer

International Publishing. https://doi.org/10.1007/978-3-319-97436-1

Chui, M., Hazan, E., Roberts, R., Singla, A., Smaje, K., Sukharevsky, A., Yee, L., & Zemmel, R.

(2023). The economic potential of generative AI The next productivity frontier.

http://dln.jaipuria.ac.in:8080/jspui/bitstream/123456789/14313/1/The-economic-

potential-of-generative-ai-the-next-productivity-frontier.pdf

Chung, E. Y., Kee, D. M. H., Chan, J. W., Tiong, S. Y., Choke, Y. W., Low, J. S., Al Ajmi, D.,

& Motwani, H. (2020). Improving Food Safety and Food Quality: The Case of Nestle.

International Journal of Tourism and Hospitality in Asia Pasific, 3(1), 57–67.

https://doi.org/10.32535/ijthap.v3i1.724

Çitilci, T., & Akbalık, M. (2020). The Importance of PESTEL Analysis for Environmental

Scanning Process. Handbook of Research on Decision-Making Techniques in Financial

Marketing. https://www.igi-global.com/chapter/the-importance-of-pestel-analysis-for-

environmental-scanning-process/241707

Clarke, R. (2019). Principles and business processes for responsible AI. Computer Law &

Security Review, 35(4), 410–422. https://doi.org/10.1016/j.clsr.2019.04.007

Dam, J. (2021). Change in managerial decision-making through data analysis. a thorough

analysis of Nestle. Dspace.bracu.ac.bd.

http://dspace.bracu.ac.bd/xmlui/handle/10361/15112

Forbes. (2023). Nestlé | Company Overview & News. Forbes.

https://www.forbes.com/companies/nestle/?sh=5780511d5512
 12

Gooy, S. Y., Gong, P. S., Gong, W. K., Han, R., & Rana, V. (2023). A Study of Nestlé Financial

Analysis. International Journal of Accounting & Finance in Asia Pasific (IJAFAP), 6(1),

82–95. https://doi.org/10.32535/ijafap.v6i1.2200

Kee, D. M. H., Gan, Z. W., Chan, Y. Q., Lee, H. T., Tan, X. Y., & Lee, S. W. (2021). Customer

Satisfaction and Brand Loyalty: A Case Study of Nestlé. Advances in Global Economics

and Business Journal, 2(1), 13–26. http://www.agebj.org/index.php/agebj/article/view/24

Loureiro, S. M. C., Guerreiro, J., & Tussyadiah, I. (2020). Artificial Intelligence in business:

State of the Art and Future Research Agenda. Journal of Business Research, 129(1).

Matović, I. M. (2020). PESTEL Analysis of External Environment as a Success Factor of Startup

Business. ConScienS Conference Proceedings, 96–102.

https://www.ceeol.com/search/chapter-detail?id=1022070

Nestlé. (2023). Our purpose and values. Nestlé Global. https://www.nestle.com/about/how-we-

do-business/purpose-values

Shen, Y. (2022, April 29). SWOT Analysis and Strategy Selection of Nestle. Www.atlantis-

Press.com; Atlantis Press. https://doi.org/10.2991/aebmr.k.220405.134

Singh, P., Sin, L. G., Binti Kama’Aziri, N. S., Jian, O. Z., Binti Mohd Azlan, N. A. S., Binti

Ibrahim, P. N. I. B., Sheng, D. H., Kee, D. M. H., Heng, J. T. S., Wee, L. S., & Ying, L.

Y. (2021). A Study on Nestle Promotion Strategy. International Journal of Accounting &

Finance in Asia Pasific, 4(1), 60–70. Researchgate.

https://doi.org/10.32535/ijafap.v4i1.1033

Wunsch, N.-G. (2023). Nestlé: best-selling Markets worldwide, 2018 | Statistic. Statista; Statista.

https://www.statista.com/statistics/413407/nestle-s-leading-markets-worldwide-based-on-

sales/