BACHELOR’S DEGREE OF OPERATION
MANAGEMENT (BA244)
MKT420
TOPIC : HOW MICRO & MACRO ENVIROMENT
WILL AFFECT A COMPANY?
CHOOSEN COMPANY : NESTLE SDN BHD
PREPARED BY : NURSHAZWANI ALIAH BINTI HISHAMUDDIN
STUDENT NO : 2019466326
CLASS : NBO2A
PREPARED FOR : SIR NOR SHAHRUL NIZAM BIN MUHAMAD
NOR
DATED OF SUBMISSION : 17th MAY 2020
ACKNOWLEDGEMENT
With the name of Allah, the most gracious and the most merciful, all praises to Him for
giving us strengths, mind, and healthy body. I am surely will not be able to complete the
assignment without Him as our Creator.
Firstly, I would like to thank my lecturer for this subject, Mr. Nor Shahrul Nizam bin
Muhammad Nor. Because of his special skills and good performance in the class, I understand
more clearly about the assignment that we need to complete. He guides us with a full of
excitement and he inspired us to the do the assignment more cleans and neat by following the
criteria.
Finally, a very special thanks to my family and friends as they have helped me a lot to
complete the assignment. My family keep supporting me by giving morale support. My friends
also always help each other whenever I am doing the discussion for the assignment. Their helps
and support make me to boost up my spirit to complete the assignment. Without all helps from
the persons that mentioned above, I agree that I will face many obstacles and difficulties in
completing this assignment
Table of Contents
1.0 INTRODUCTION....................................................................................................................1
2.1 MICRO ENVIRONMENT.....................................................................................................2
2.2 Suppliers.................................................................................................................................2
2.3 Marketing Intermediaries.......................................................................................................2
2.4 Customers...............................................................................................................................3
2.3 Competitors............................................................................................................................3
2.2 Marketing...............................................................................................................................3
3.1 MACRO ENVIRONMENT....................................................................................................4
3.2 Political Environment.............................................................................................................4
3.3 Cultural Environment.............................................................................................................4
3.4 Economical Environment.......................................................................................................4
3.5 Technological Environment...................................................................................................4
4.0 CONCLUSION........................................................................................................................5
5.0 REFERENCES.........................................................................................................................6
1.0 INTRODUCTION
NESTLE LOGO
Nestle was established in Malaysia at 1912. The first Nestle office in Malaysia was set up
in Bishop Street, Penang, which was known as Anglo-Swiss Condensed Milk Company. Then, in
year 1939, due to growth and expansion, Nestle Company expanded to Kuala Lumpur
The first Nestle factory in Malaysia was developed at 1962 in Petaling Jaya. Now, it
manufactures its products in its seven factories from Petaling Jaya and Shah Alam at Selangor,
Chembong at Negeri Sembilan, and Kuching at Sarawak. Moreover, Nestle Malaysia’s head
office is located at Mutiara Damansara.
Since 13 December 1989, Nestle Company was publicly listed in the KLSE, which is
known as Bursa Malaysia Berhad now, at an issue price of RM5.20 for each share but it
increased sharply to RM21.00 each in year 2000. (Nestle. 2015.)
Today, Nestle Malaysia Sdn Bhd employs more than 5000 people and manufactures as
well as markets more than 300 Halal products in Malaysia. Many of our key brands have now
become a part of Malaysian households for generations including Malaysian favourites such as
MILO, MAGGI, NESCAFÉ and KITKAT. Having been present in the nation and in the hearts of
Malaysians for over a century, we are firmly committed to offering the very best in quality,
nutrition and taste. Nestle becomes the leader in nutrition, health and wellness industry. Nestle
employed local autonomous regional employees to manage the company. This is because they
understand the culture and taste of the local market compared to foreigners. Besides, Nestle
produces different products that are suitable for each religion in a country.
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2.1 MICRO ENVIRONMENT
The micro environment of Nestle includes three divisions:
i. Suppliers
Suppliers provide the raw material resources, unfinished goods and labors to the company in
order to produce goods and services. The effectiveness of suppliers determines the efficiency of
the company in terms of producing the goods. In addition to that the quality of the finished
product has a strong with the suppliers of the firm especially in case of food products. As the
presence of the company is in more than hundred companies, it is a challenge for the company to
maintain its standard all over the world and provide the consistency to its customers in the taste
and quality of the product.
Further we can divide the supplier of Nestle into two parts: Labor suppliers and material
suppliers. Labor suppliers deal with the quantity of labor is required at the optimum level in
order to prevent the loss of labor force and prevent the company from the shortage of labor
which again can lead building of inventory as a cost for the company. The skills of labor is again
maintained by the labor suppliers, wherein the labors of different skills are managed in such a
way that the operation of the firm can run smoothly. Labor strikes and labor relations are other
factors which we cannot ignore in the current scenario as the efficiency of the business depends
largely on the factors like attrition and employee satisfaction.
Material supplies handle all the material required by the firm in order to manufacture the
finished product for sale. Nestle is in the food and quality markets and the quality of such item
plays an major role in its success in the market.
Nestle has maintained a high quality efficiency in handling the quality and quantity of the
two different supplies i.e. labor supplies and material supplies and hence the company has been
able to run its business smoothly for more than 100 years in spite of the different business trends
in the world market.
ii. Marketing Intermediaries
The market intermediaries of the company help to advertise, sell and distribute its product to
the end customers. The physical distribution network of the company decides the medium by
which the finished product is delivered to the end customer on time and with safety. This
department also ensures the proper storage of the firm that prevents the product from getting any
king of damage.
The marketing service department of the firm helps in the promotion of the product and acts
as a communication channel between the company and customers. It not only communicates the
features of the product to its customers but also get the feedback with the help of survey, which
helps the research and development department to develop a product according to the need of the
customers.
The other intermediaries of the company like banks help to provide the funds to the
companies and play an important role in the continuity of the business. Insurance companies
insure the
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property and the goods of the company against the risk involved in various operations, buying
and selling of the product. Nestle has the differential advantage of working in a smooth
coordination with all its marketing intermediaries which helps in providing the best and pure
food products to its valuable customers in the different parts of the world.
iii. Customers
The immediate customers of Nestle are retail and grocery stores which provide the products
of the company to the end customers at a reasonable price and a reasonable profit. The end
customers of Nestle are the consumers who consume its wide range of product. The company has
a bright brand image in its big pool of end customers.
iv. Competitors
Although Nestle is leader in packaged food industry of Malaysia but the other competitors
who are giving tough competition to Nestle are Petra Foods Limited, Chocoladefabriken Lindt &
Spruengli AG, Yeo Hiap Seng Limited and Maeil Dairy Industry Co., Ltd
Nestle has a clear advantage over the above mentioned companies is its presence in Malaysia
for over a century now. Nestle has been able to setup a good and trusted distribution channel and
a huge retail network. The trust worthiness gained by Nestle among the Malaysian people is
build in decades on hard work and quality products and varied range of prices, thus even after
facing stiff competition with the above mentioned companies in chocolates, dairy products and
other packaged food products the company is able to maintain the bottom lines of its profit and
loss statements attractive for its investors and good image in public.
v. Marketing
The basic marketing strategy of the Nestle was to develop brands for each their product
instead of focusing on making brand value for the entire company, thus never allowing
cannibalization of products and gaining multiple brand value for the entire company. The vision
of the company could be summarized in following statements
• Be the leading multinational company in food, nutrition and wellness.
• Produce and sell world-class products of the highest consistent quality, reliability and
convenience based on business excellence principles throughout our operations.
• Maximise the use of good quality local raw materials
• Be an exemplary employer with a progressive human resource and social policy; with a
management style that is based on "Management Commitment and People Involvement"
• Be a responsible corporate citizen, fulfilling all obligations to Government, shareholders,
customers, communities and consumers.
• Protect the environment by being committed to environmentally sound business
practices, and taking into account the need to preserve natural resources and save energy.
• Guarantee that all products manufactured, imported and distributed by Nestlé Malaysia
are certified HALAL by authorized Islamic certification bodies.
• Deliver shareholder value through the achievement of sustainable and profitable long-
term growth.
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Adhering to the above vision statements the company has been able to maintain the
marketing and branding unique and ahead of the competitors.
3.1 MACRO ENVIRONMENT
Macro environment include following environment of the country
i. Political Environment
Government of Malaysia has never imposed any political pressure in fact they have always
supported foreign investment and foreign businesses to grow in Malaysia. As the company is
into food and nutrition business they have to just adhere to the laws of food and nutrition policies
of government and constantly provide good quality which is the vision and mission of the
company thus Nestle never faces any problems on political front.
ii. Cultural Environment
Malaysian culture is no doubt of having light food at constant intervals and young crowd of
Malaysia likes to have good nutritional food thus Nestle has great scope there.
iii. Economical Environment
The disposable income of country and the high living standard of Malaysia always give
better bigger business opportunities for Nestle.
iv. Technological Environment
Malaysia is technologically rich country both in terms of availability of technology and also
the technological work force the highly skilled and educated manpower is abundant in Malaysia.
In case of Nestle and the product offered by the company these factors do not create much
impact in general scenario. However as we have seen the major events like World War had
created a positive impact on the sale of confectionary products of the company. The culture has
some impact in this company as whether the country has most people as vegetarian or non
vegetarian the consumption of milk products is always there. However the countries where the
people are more dependent on milk products are profitable market for Nestle.
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4.0 CONCLUSION
Nestle exerts great attempts to achieve its visions to be the leader in Nourishment, Health,
and Wellness Company by producing better quality of products to the consumers. Nestle also
research about the consumer's needs from time to time and gratify the consumers as much as
possible. Nestle's advantages such as high financial capabilities, effective strategic marketing
capability, strong research and development, as well as great leaderships have helped them
through the obstructions. Most importantly, Nestle targets its missions and ensures regularity by
making the right decisions to manage and build its business to deliver the assurance of Good
Food, Good Life all around the globe .
Several factors affect Nestlé in its international operations among them political,
economic, social, technological, as well as environmental and legal factors, which are significant
influences determining the success of operations in modern business environment. Three
particular challenges are identified as having substantial impact on Nestlé’s operations and
business potential which quality of products and supplies which portends loss of confidence in
product; the company’s weak implementation of eco-friendly initiatives which are essential not
only to check the environmental impact, but also serve as proof for goodwill to society; and, the
increasing trend towards healthy eating which is a concern for future competitiveness of the
company’s products. These challenges should be addressed to guarantee success of products in
markets, as well as overall competitiveness.
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References
Interbrand. (2014, September 1). Best Global Brand 2012. Retrieved from
[Link]
[Link]
Nestle. (2014). Nestle Annual Report 2013. Retrieved from
[Link]
library/Documents/Library/Documents/Annual_Reports/2013-Annual-Report-
[Link]
waheedahmedarain. (2013, March 17). Scribd. Retrieved from Micro and Macro Environment of
Nestle: [Link]
of-Nestle
Weiler, M. (2012). NESTLE MARKETING ANALYSIS. Kindle Edition.