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PESTLE Analysis Food Industry United Kingdom (UK)

Critical Analysis of Industry 4.0

The first section discusses the impact of industry 4.0 on United Kingdom’s (UK) Food Industry. The second part of the report evaluates the external forces using PESTLE Analysis and also evaluates changes due to transition towards industry 4.0 standards.

Introduction to NESTLE UK Industry 4.0

The current report witnesses critical strategic analysis of one of the biggest companies, Nestle’. It is known for its specialisation in nutritious health product used around the world. It is highly competitive company offering variety of chocolate products and is committed to meet demands of its customers. Nestle seeks to fulfil the demands of its individual clients with the aim to personalise user experience. The company provide them with the desired product, prepared in the best of their efforts.

Industry 4.0 Strategic Position of Nestle in UK

Developing industry 4.0 in Food Industry: NESTLE UK

Overview of Nestle’s Position in UK’s Food Industry

Nestle has a well-established high brand portfolio offering variety of products in milk and confectionaries. It is also reputable for an organised human resource management system. The management is highly knowledgeable and with a robust mechanism to share knowledge across the organisation. There success is portrayed through creation of user centred innovative products. However, the company is open to a number of threats since imitation is a problem. The brand ensures quality assurance in all its processes to provide products by mixing milk and water.

Despite the extensive global supply chain and effective brand name Nestle finds hard to sustain in UK. The UK food industry is very competitive and Nestle’s tangible resources are not enough to maintain its market position against its competitors. Nestle in order to sustain in UK makes use of its intangible resources. The most important factor is human resource and the quality based culture they follow. UK food industry is delicate and consumers demand assurance. Moreover, the image of Nestle has always served consumers concerns of quality. Nestle’s is making advertisement also supports the creation of strong global image of product assurance.

Food Industry 4.0 
TMQ Research
Pestle Forces
Food Industry Nestle Industry 4.0

How is Industry 4.0 Impacting UK’s Food Industry

The rapid globalisation and demanding consumers, food industry has always faced with the challenge to effectively meet expectations. Revolutionization via industrial 4.0 has served in leading the industries to a pathway of highly innovative products and management. Food Industry has also adopted automation to streamline its supply chain from sourcing to consumption by customers. Industry 4.0 in contrast to its preceding revolutions, has a high potential for improving profits by reducing cost. Physical cyber systems together with 5G and cloud computational properties has given the food industry the ability to map every thing. In Food Industry data is every thing, consumer like to know complete life of the product. Meaning how Nestle procured raw material and what measures did they deploy to deliver it to for consumption. The food industry 4.0 has operationalised complete organic food supply making the process greener.

Data Analysis Value in Industry 4.0

Nestle values data and takes strategic risks on an informed level. The trends in UK’s Food Industry are evolving hence, utilising the big data analysis Nestle maps changing trends. The core aspect of Industry 4.0 is agility, data allows in depth PESTLE analysis which, empowers Nestle to proactively transform. Food industry is all about consistency in quality assurance. To gain consistency in operations Nestle defines core competencies to map against threats.

Recognition of external forces benefits Nestle to capture opportunities within macro-environment. It also empowers on how to neutralise threats which are emerging as formidable force to change the course of industry’s future. The external and internal analysis under industry 4.0 requires companies to be smart and allocated resources to opportunities or threats only after effective evaluation. Generally, Industry analysis are done by Porter 5 forces to understand industrial forces. However, this report has focused on PESTLE analysis which serves as a strategic tool to recognise and deal with political legal, social, technological, and environmental challenges.

Technology and its Impact on UK’s Food Industry 4.0

Technology to Integrate Horizontal and Vertical Integration

The technology in food industry has many bottle necks in assuring the consistent supply of quality alongside quantity. The bottle necks lie in vertical and horizontal components of the supply chain. The industry faces difficulty in integrating the sourcing elements and aligning delivery to the consumer. Moreover, food security is a concern and green patterns now are essential for greater control. The technology has improved vertical integration by integrating intelligent manufacturing processes with coordinated logistics, system virtualisation, and data analytics to deliver sustainable footing for growing a truly customised system.

Data Analysis and Industry 4.0

Technological advancement is marked by the use of digital technology in the growth of industry, but digitalisation is highly deceptive. Technology looks shinny to implement but not all that glitter is gold. Hence, industry has to understand the value of technology that would facilitate. The analysis of current article recommended cost benefit analysis for comparing and selecting new technological innovations. It is true that technology is at the heart of industry 4.0 but it is not the heart. The heart is DATA and the system that utilises the data to make effective. Artificial Intelligence (AI) is a prominent factor in establishing industry 4.0 standards in food industry. AI makes use of data to make intelligent decisions. For example, for food industry this technology can make a core difference.

Food Industry PESTLE Forces
TMQResearch
Food Industry
Developing Intelligent System Industry 4.0

The industry can use it to automate its supply chain to allow managers to gather information and upload it in real time. A consumer purchasing from Nestle’s products would be able to scan all the information. Moreover, in future using Augmented Reality (AR), the consumers will have the power to view the whole process. Additionally, food industry can use 3D Printing to make more animated design for their food products. The 3D printing is used for research purposes to ensure lower cost. Furthermore, digitisation of the data will ensure evaluation of the system. So that employees can utilise it to improve over all system. There is always room for improvement this why it is important to invest in Human Resource. Industry 4.0 demands food industry to align banners on “talent search war”. As only talent can remain at the heart of delivering effective results.

Innovation, Technology and Industry 4.0

Industry 4.0 is all about waste reduction and improving the current system. When the food industry adopts industry 4.0 practices. The core change comes in the system to make it lean and agile at the same time. Nestle consistently reduces waste and focus on process improvement. They trains its employees to take risks to improve every facet of the organisation. The company operates in around 194 countries with a varied range of environmental and political regulations, which have been studied in depth to recognise and identify their impacts on its operations and productivity.

Technology and Changing Consumer Behaviour

Consumers in food industry have changing trends from flavour, ingredients, to packaging choices. Using the technology industry 4.0 has enabled Nestle to understand consumer preferences. These trends are not stated demands, rather require careful analysis to map the changing choices. Nestle in food industry constantly maps consumer choices and proactively transform. Understanding and adopting according to the consumer choice is the key impact of industry 4.0.

Macro-Environment and Industry 4.0

Political environments as a macro force influences industry 4.0 to a great extent. Political environment dictates complete and serves as the bottlenecks in the form of arduous regulatory environments can act as an aspect of hindering the development of the businesses. UK food supply chain has already warned food industries with efficient disruptions.

Moreover, the 4.0 industry has disruption of digital policy dimensions for policy makers. Even governments can channelise digital infrastructure which is competitive to satisfy specific talent demands of industry 4.0. Increased level of human capitalisation and investments in their skills for transformations. The subsequent forces mentioned determine the dynamic environment of Nestle, these forces also inform influences on market position in UK. Consumer behaviour is exclusively varied to gain in depth understanding Nestle needs to further explore social forces.

PESTLE Analysis of Nestle in light of Industry 4.0

Political and Economic Forces

Politcal Factor

Sustainable Politics: PESTLE Analysis

Industry-4.0 efforts in UK are politically driven, commitment from the top is a motivating factor for companies to adopt new practices. The government is responsible for initiating many efforts to improve industrial output. UK wants to support the industry to become green with reduced carbon footprint. The country has legislated to reduce carbon footprint and minimise impact on the environment. Political positioning guide the companies on having benefit of compliance, UK government responds to developing wishes of the masses. This means Food Industry adopting industry 4.0 standards is a compliance need to become more effective in its eco system. Nestle has initiated many projects to completely transform into an effective industry 4.0 company. The industry trends demand transformative changes to deliver excellence.

Developing Focus of UK Government

Nestle is a responsible company, it engages in community services but after ensuring right full tax payments. This attitude of the company creates a positive image in the mind of masses. On the other hand, the UK government is actively legislating on regulatory framework of food products giving more focus and attention towards sustainable sourcing and ingredients. The government is discouraging genetically modified food though it is at its early stages but intent of the government is clear. This create a strong possible opportunity to innovate the product line while focusing on healthy chemical free products.

Brexit and UK Politics: PESTLE Analysis

The British government is undergoing Brexit, which will require Nestle to formulate new contractual agreements with British government. Brexit changes a lot of things for NESTLE in UK. New legislations and contracts would allow access to Europe and market size is altered. Hence, these conditions requires Nestle to carry out an impact analysis. It will help to crave a new sustainable pattern of engaging in UK. However, Brexit is an opportunity as many companies/rivals would have to redesign supply chain. Nestle can capitalise on the scenario to gain competitive advantage. Nestle can render a serious blow to its competitors in Food Industry.

Due to Brexit Nestle will have to transform is recruitment policy. As its employees from all over Europe will have to relocate from UK. Brexit would demand Nestle to hire increase number of local resource and it might create bottlenecks in talent management. Proactively formulating new arrangements will help Nestle to respond and capitalise on its competition. A company like Nestle can effectively capture market share if responds timely.

Economic Forces and UK PESTLE Analysis of Food Industry

Brexit and Economic Conditions

Economic framework will also change due to Brexit. Foreign exchange rates will become a problem for Food Industry as Brexit will cause much fluctuation in the rate. Power of Euro against GBP is measured, sudden spike in prices can damage acceptance of product in masses. The price rise would increase user expectation of the product. The food industry will have to adopt industry 4.0 practices to ensure they can weather the storm in an effective way.

Lifestyle in UK and Food Industry

The declining purchase power parity for local UK citizen challenges the food industry. Lowering purchase power directly means that UK citizens can no longer afford luxury brands. Nestle’s many products are challenged even if they are a mid range brand. Naturally, they get the pressure from consumer to offer better pricing. UK living style shows that people enjoy eating and like to utilise ready made food. Hence packed Nestle’s products might experienced improved. However, this is a complex mix. On certain occasions food industry is blamed for shrinkflation to counter price increase.

I would say many Nestle products have gone shrinkflation in past, the most important parameter here is that the company comes out with full disclosure for consumer so that they know what value they will receive for the price they will pay.

Economic Overview

UK is an overall a robust country with a huge inflow of foreigners. It is standing on sustainable pillars with a thriving business community. Yes, overall economic stressors do make the situation uncertain but the country is effectively resilient to make effective developments. The country can respond to changing dynamics and risks. The economic strategy most concerning for the Nestle is to have a robust pricing model coupled with an cost effective supply chain. These parameters will ensure Nestle’s sustainable footing in UK.

Social Forces

Society as a Macro Force

Social environment is a macro force defining consumer behaviour and community mind set towards food industry. Changes in social structure, innovative lifestyle, available talent, education, and social class structure impacts the UK’s food industry. UK’s changing demographic are also revolutionising the food industry.

Diversity and UK’s Society

The social structure of UK is highly diverse with variant cultural tastes, Nestle will find a truly international taste in UK. Hence, there is no specific need for localisation rather generalisation would be an effective strategy. However, Nestle has to continue targeting niche structures of UK to meet specific needs of the community. These Niche markets, if defined geographically, like in parts of UK where Muslim population is sizeable they must offer Halal food.

Consumer Behaviour and Society

In this report we have already established that consumer behaviour is fast transforming. The rise in education and advancements in the food health and safety research consumers are now actively looking better food options. The lifestyle is also transforming towards an easy go comfort living which means that users like consume easy products but also want assurance for positive health impacts.

In UK markets of food and beverages focusing on healthy drinks and food with high concern on the use of sugar in them. Nestle explore new consumer trends via social media data, where appropriate gather detail information via survey. The close contact with consumer is the key success factor in determining the consumer behaviour.

Technology

The technological factors in the macro-environment of Nestle are well-known for significantly effecting the environment. In present times, business sustainability is completely focused on technological advancements. Currently we are living a digital revolution, it has delivered variety of opportunities, which businesses can exploit to thriving for developing a robust industry 4.0 support system. The impacts what the digital revolution yields on the industry are termed as the 4.0 industry revolution which has noteworthy role in change of technological environment.

Above all, digital revolution has been challenging for the food industries like Nestle as they have well developed tracking systems and calls for quality technological handling to avoid disruptions and make communications with owners and clients feasible. Besides this, Competitive advantage is achieved via incorporating big data within organisational ecosystem. Nestle, operates in diverse countries hence, big data can facilitate them in processes large amount of data in a meaningful manner.

Legal Environment

UK government uses Legal environment to motivate companies to adopt more sustainable practices. UK is a good score in ease of doing business, legal environment is overall supportive. The government always try give a direction to foreign companies to adopt practices that will render better outcome. These implications tends to effect the company’s operation in multifaceted ideas as the UK government has introduced the less sugar plan within the country. For these efforts the government has imposed sugar taxes on the food and beverages in order to reduce their consumption and minimise risks associated with it.

Environment Forces

We like to talk things in economic terms and most comment that focusing on environment is never economically sustainable. Individual holding this ideology, I would like to explain that global economy is dependent on the environment. The companies area now only able to effectively compete because they have identified new systems to reduce reliance on fossil fuel. The companies have located means of developing sustainable energy sources. Even food leftovers are effective means of obtaining bio gas. Many restaurants in the world are using it to full fill their energy needs.

New sustainable energy sources are significantly reducing the pressure on the financial capital. With these cost effective measure Nestle frees up a lot of cash to invest in new product development or on market research. Furthermore, reduced carbon footprint the consumers are able to gain confidence in the organisation. Hence, these some parameters are prominently exposing financial viability of focusing on environmental development.

Organisational Sustainability strategy can only complete when the organisation focuses on all three pillars. The pillars are financial, social, and environment. Lots of waste is produced by the consumption of Nestle products. There is a need to adopt eco-friendly packaging which doesn’t pose a threat to the environment. However, UK government has appreciated Nestle for dealing with these issues through undertaking responsibility for concerns about changing climatic conditions as well as participation in sustained clean supply chain countrywide.

Conclusions

To conclude, it is compulsory to state that Nestle must collaborate with companies in the same industry in order to introduce new services enhance its products and workout innovative production ways thereby extending their channels of distribution under UK rules and regulations. Introducing new products with the required country regulations will result in increase of the sales and generating profits from them.

Nestle should make a strategy for its tax payments and pricing of products in order to attract customers and retain clients as high prices are the reasons of hindrance behind the attraction of customers. To be competitive in the market the company should be linked well with rules of the government and other legislative bodies.

The current analysis has reported for need of improvements in policies of marketing, but it is worth mentioning that the current technological condition is effective in the reputation of the company. It has many opportunities for growth and advancements in strategic plans and ideas as rapid changes have imposed challenges for the food industry in UK. In short, Nestle like other companies, has the pressure from UK government to cut down sugars and salt usage in food and drink industry.

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