Impact of Global Economic and Political Challenges on Nestlé Inc's Business Activity

Impact of Global Economic and Political Challenges on Nestlé Inc's Business Activity
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Impact of Global Economic and Political Challenges on Nestlé Inc's Business Activity
Introduction
Nestlé Inc, an expansive corporation in the food and drink industry, operates within a intricate and intricate global business sphere that is sensitive to a multitude of economic and political hurdles. The primary objective of this comprehensive analysis is to evaluate the extent to which global economic and political challenges influence the operational undertakings of Nestlé. Through a meticulous examination of the predominant hurdles confronted by the company and their subsequent ramifications, valuable discernments can be gleaned pertaining to the measures employed by Nestlé to counteract these obstacles and secure long-term and viable expansion.
1 Global Economic Challenges:
1.1. Economic Recession: During economic downturns, such as the recent recession, there is typically a decrease in consumer spending. This can have a negative effect on the sales of non-essential items, including food and beverages. Nestlé, as a company that provides consumer goods, is vulnerable to a reduction in demand for its products during these periods.
1.2 Currency Fluctuation
Nestlé, being a worldwide corporation, conducts its operations in numerous nations and faces the impact of currency fluctuations. In instances where the local currency loses strength vis-à-vis the Swiss franc (Nestlé's official reporting currency), it can bring about a decline in revenues and profit margins (Allen, 2021).
1.3 Rising Production Costs: Nestlé may face significant hurdles in maintaining its profitability due to the mounting expenses of sourcing raw materials, energy, and logistics. The volatility in prices of key commodities like coffee, cocoa, and dairy directly impacts production costs.
1 Global Political Challenges:
2.1 Trade Barriers and Tariffs
Nestlé's worldwide operations can be impeded by obstructions to global commerce, such as trade barriers and safeguarding actions.
2.2 Political Instability
Nestlé's activities expand over nations with diverse levels of political stability. Instances of political disturbance, internal clashes, and alterations in government can interrupt the flow of supplies, distribution channels, and production sites (Kumari & Muralidhara, 2021).
2.3 Regulatory Environment
Nestlé's operations can be greatly affected by alterations in rules and guidelines concerning food safety, labeling, advertising, and taxation. Adapting to ever-changing regulations necessitates investments in research and development, manufacturing procedures, and marketing approaches.
1 Impact on Nestlé's Business Activity:
The aforementioned worldwide economic and political predicaments bear palpable repercussions on the operations of Nestlé, impacting Revenue and profit variations as a consequence of economic downturns and currency fluctuations
- Escalating production expenses affecting profitability and pricing tactics
- Interference in supply chains, distribution networks, and manufacturing establishments due to political instability
- Limitations in market entry and elevated expenses stemming from trade barriers and tariffs
- Persistent necessity to adjust to evolving regulatory landscapes, necessitating investments and resources.
1 Mitigation Strategies: In order to wrestle against the repercussions of worldwide economic and political obstacles on its business operations, Nestlé has successfully executed numerous tactics:
Background of the Study
Slides 2-3: Background of the study Description of the chosen company, association theme (Brexit, innovation management, digitalization of the retail industry, etc.) and the relevance of the study/topic
* Introduction to Nestlé Inc.
* Nestlé Inc. is a multinational food and beverage company headquartered in Switzerland.
* Established in 1866, Nestlé has a global presence and operates in over 180 countries.
* Nestlé's diverse product portfolio includes brands like KitKat, Nescafé, Maggi, and Purina.
* The company is known for its focus on nutrition, health, and wellness.
Slide 3: Association Theme and Relevance of the Study/Topic
* Association Theme: Global Economic and Political Challenges
* The study focuses on evaluating the impact of global economic and political challenges on Nestlé's business activities.
* The relevance of the study lies in understanding how external factors can influence the performance and sustainability of a multinational corporation.
Slide 4: Research aim and objectives/questions Clarify the aim of your study (what are you trying to find and achieve); state your research objectives and questions.
Research Aim: The aim of this study is to critically evaluate the impact of global economic and political challenges on Nestlé Inc's business activity.
Research Objectives:
1 To assess the influence of economic recessions on Nestlé's sales and profitability.
2 To analyze the impact of currency fluctuations on Nestlé's revenues and profit margins.
3 To examine the consequences of rising production costs on Nestlé's profitability and pricing strategies.
Research Questions:
1 How do economic recessions affect Nestlé's sales and profitability?
2 What is the impact of currency fluctuations on Nestlé's revenues and profit margins?
3 How do rising production costs influence Nestlé's profitability and pricing strategies?
Theoretical discussion Generally, discuss relevant theoretical frameworks and models related to your case study problem (Porter’s Five Forces, Agency Theory, Liberalization, etc.). This is some sort of ‘literature review’ section; hence, the use of academic sources is compulsory.
In this section, we will discuss relevant theoretical frameworks and models that are applicable to the case study problem of assessing the impact of global economic and political challenges on Nestlé Inc's business activity.
1 Porter's Five Forces: Porter's Five Forces framework is a widely recognized model for analyzing the competitive dynamics of an industry. It consists of five forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and intensity of competitive rivalry.
2 Institutional Theory: Institutional theory emphasizes the influence of institutional environments on organizational behavior and strategies. Institutions encompass formal and informal rules, norms, and values that shape the behavior of organizations (Steele, Ruskin & Stuckler, 2020).
3 Resource-Based View (RBV): The RBV focuses on analyzing a firm's internal resources and capabilities to achieve sustainable competitive advantage. In the face of economic and political challenges, Nestlé's unique resources such as strong brands, research and development capabilities, and global distribution networks become crucial.
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