PESTLE analysis is a powerful tool to visualize external surroundings, which enables comprehension of influential factors and stakeholders in a firm’s external environment. These factors are grouped into six environmental segments such as political, economic, socio-cultural, technological, legal and environmental. The challenge to the firm is to scan, monitor, forecast, and assess these elements.
Political Forces
In UK political factors have altered the food related industries. Where increasing focus is on maintaining health and safety standards. The Ice-cream industry like any other is strictly monitored and regulated. Frequent regulatory changes are made. Nestle will have to continue to use its leverage of brand name and develop its ice-cream brand with same amount of trust and confidence.
Economic Forces
According to IBIS world reports, demand for standard and premium ice-cream products has considerably increased in UK. Moreover, the purchase power of Pound Sterling is going good and individuals purchase parity has improved. Furthermore, industry is operating at £395 million with an average annual growth rate of 3.5%. This is a strong market and it is a good time for Nestle to expand in Ice-cream market as it can penetrate due to its brand value and cost effectiveness due to established economies of scales.
Socio-cultural Forces
Increasing health awareness among consumers is negatively impacting the overall demand for ice-cream products. The consumers want to procure ice-cream however, they fear obesity and other health related matters (Rowlands et al., 2013). It is a great opportunity for the Nestle to target social patterns and deliver a low-calorie ice-cream. Nestle can replace sugar with healthy plant stevia.
Technological Forces
Technology has allowed Nestle to create better packaging and seal system. Internal process control has been greatly improved due to technology. It is a necessary source of competitive advantage.
Legal Forces
There are many influential legislations and regulatory factors in a firm’s environment that can alter the firm’s operations. Nestle needs to design its strategies according to each country and region’s health and safety laws as well as keep a close watch on changing tax and economic policies.
Environmental Forces
Every large organization takes social initiatives for environmental sustainability. Nestle is committed to practice environmentally sound business throughout the world, thus playing a vital role in preserving natural resources. Nestlé’s manufacturing needs to be environmentally sound and it needs to ensure that its environmental impacts are minimal.
