External Environment Analysis: (Nestle vs Dasani)

1) PESTLE Analysis of Nestle Pure Life:

A PESTLE analysis is used as a strategic tool to measure industry dynamics through
recognition of the core political, economic, social, technological, legal and environmental
forces/changes having influence on the industry. Nestlé have to be able to ensure a level of
adaptation, which is appropriate to different markets driven by different cultures and consumer
preferences.

 POLITICAL
Nestle has to operate within the framework of laws set by Parliament, and that’s why it
depends on political considerations. Government set standard laws for companies that has to
meet otherwise they have to pay fines. The rules of government of Pakistan do affect the
company and its brand. The company policies are affected, and its budget is also affected.
Nestle is trying to meet all the standard laws which are set by the government

Following are some of the political factors which affect the company.

 Positive tax policy

Taxation requirements, including tax rate changes, new tax laws and revised tax law
interpretations are highly influenced on Nestle business. FMCG’s have to pay heavy
taxation, changes in any taxation system can badly affect Nestle’s productivity &sales
(profits). Nestle’s some product has like butter and cream which has more taxes. If the
government taxes increase this will because Nestle’s selling price to increase too. This will
lead to a decrease in sales and the number of customers while the stock quantity will stay
the same.

 Labor Laws
Labor is being privileged here having all the laws. Nestle company also follow these law
like government announce minimum salaries of an employee Rs. 11,000. Nestlé’s main aim
to or key potential factor is to keep their employees happy &contended because as one said
happy employees happy management & it leads to prosperity.

 Environmental Protection Laws

They do concern for environment and contribute more and more for the betterment of
environment. Nestlé’s considers a lot about CSR, nestle is worldwide an environmental
 company so as Nestle Pakistan, nestle care for poor& urban areas, in the start Nestle gave
the concept about friendly environment & to care for your environment.

 Foreign trade Regulations

Foreign trade regulation does not affect the overall policy and the working of the Nestle
because they operate nationally not internationally. However, it affects when the condition
gets so worst.

 Political instability

The Government stability also plays a great role for any industry. In Pakistan
government face lot of difficulties. Nestle have not much affect this condition but in future
it may be face some difficulty for operating. Changing policies of Government effects overall
industry.

 ECONOMIC
Economic condition varies from country to country. Following are the factors that Nestle
has to consider before setting corporate objectives:

 Inflation Rate

Now in Pakistan inflation rate is almost 11.08%, which decreases the purchasing
power of consumers. So, if any increase in inflation rate then increase in prices of Nestle
products which eventually affects the Nestle Pakistan. But high inflation also creates
higher impact on those products which transform from another product like packed milk
& powder milk because these is already sell on high prices in market because of high
quality so this whole scenario directly create impact on those organization whole deals
or manufacture these products like Nestle, it has two options in this situation either to
sustain prices or to decrease prices. Increases the prices of light and petrol effect
transportation and other costs also affect business.

 Interest rates
Interest rates and Income distribution can majorly affect the bottom line of a
company like Nestle. For an instance, if the income of the customer increases then the
demand of the product of may also increase. Current interest rate of Pakistan is 13.25/

 Economic growth rate

Economy growth rate accelerate is 5.79% and plus which eventually affect the
Nestle productivity & sales.
 SOCIAL
Social or cultural environment had great impact on Nestle. Social change involves changing
attitudes and lifestyles. The social and cultural environment is constantly changing. Different
regions of country had different culture (language, beliefs, food, family, clothing and their
lifestyle). Nestle has to take some following social and cultural factors under consideration in
order to achieve their strategic objectives:
 Changing consumer attitudes
Changing lifestyle –Product or services cannot be successful until company has enough
information about the consumer lifestyle. The need to adapt to different cultural settings
i.e. language, religious beliefs and family settings. Understanding of consumer behavior is
crucial to ensuring a personal approach to marketing.
 Health Consciousness
Today, people move towards healthier products in line with government initiatives
supporting balanced diets and the dangers of sugar. Nestle by identifying this need of the
people also produce health conscious products with more elements of pure & quality.
 Breaking down of old traditions
The least important one perhaps is tradition as still urbanized consumers have the
perception that the arrival of the doodhwala at their home on his trusty bicycle has the
fresh and natural milk which is coming straight away from the cow and still it is this
perception that only loose milk is fresh. Over the years, all companies of this sector
especially the older players like Nestle in order to convert loose milk consumer in to
processed milk consumer have been making dynamic efforts by various development
program in interior Sindh. Regardless these campaigns will not change perception of loose
milk consumer overnight, but it is not impossible, it takes time and continuous investment
to create awareness of the processed milk to the consumer of loose milk.

 TECHNOLOGICAL
Nestle uses technology by taking orders via telephone and online by internet. Moreover,
nestle uses technology in various business activities such as record of their customers and
employees. Rise of social media, consumers interacting with firms and being able to do so
across a range of platforms. Following factors affect the company:
 Product innovation
Innovation is fueled by technological developments. Product innovation is becoming
more necessary for the organization because of globalization people are becoming aware
about the changes being taken place around them so in order tackle the situation Nestle is
focusing on product innovation by introducing new products with help of technological
factors.
  Productivity improvement through automation
There is increase in automation. Automation doesn’t matter a lot but to some extent it
contributes towards productivity and improvement. Now by the help of technology Nestle
maintain the efficient scale of production which normally called economies of scale.
 Total spending on R&D
Spending on R&D is long term investment for any organization. Nestle has R&D
department and Nestle total spending on R&D $1.73 Billion. Because with true
technological changes this research & development cannot takes place. So, with the help of
technological changes Nestle can enhance its products & diversify its portfolio of products.
 New communication technology
All the modern as well as traditional ways of communication are being adopted by
Nestle including own emails, letters, faxes and monthly visit indifferent offices of Nestle for
better communication among customers. Nestle has also established own web site which
can be visited any one for most recent news innovation and activities being taken in the
organization. With the technological change adoption, the whole organization can be
increased. By Nestle shifting to a more advance technology they would be able to reach a
wider community of people. The customers would be able to get any information they want
from the Nestle website. Nestle employees could also use these services to find out what
are the current trends in the market and implement those changes to better Nestlé's sales.

 LEGAL
The legal factors are related to the legal environment of the organization and the impact on
the demand and cost. For an instance, nestle created and provided a health and safety covers
for their employees. Nestle would pay the fee for their employees via their free legal help
scheme with personal medical/ legal cover. By being briefed with the country’s' laws and
regulations, Nestlé would be able to create a good relationship with the country's government
for the future of their corporation. Nestle could use these relations to be able to test out and
market new products, gaining an overall competitive edge against rivals and creating a bond
between Nestle and a country.

 ENVIRONMENTAL
There are many environmental factors that Nestlé needs to abide by since it is working in
the food industry. Nestle takes care for the raw materials sustainability, infrastructure, and
climate change. The company has already pledged its support to:
 Environmental concerns
Nestle consider a lot about the environmental factors because they are very much
socially responsible towards nature & humans. For example, nestle respects the
environment and is committed to environmentally sound business practices throughout the
 world, thus taking into account the need to preserve natural resources and save energy.
Increased attention directed towards corporate social responsibility
 Work life quality
Quality of work life is very safer & environment friendly company of the world as every
MNC is maintaining the same standards abroad with a slight cultural change. Moreover, the
different agricultural and livestock methods that preserve soil and protect water supply,
they use the least amount of energy and only safe chemicals.
 Recycling
Environmental concerns from consumers including concerns over packaging/recycling.
The research and development team has also been seeking a new kind of packaging which is
environmentally friendly hence transforming those harmful materials into eco – friendly
recyclable materials that would be suitable for both the customers and the environment.

 COMPETITORS
Following are the Water bottle competitors of Nestle:
1. Aquafina
2. Dasani
3. Kinley
4. Vey
5. Smart Water
6. Local Water companies
2) PESTLE of Dasani (Coca Cola Beverages Pakistan):
The PEST analysis is an important mean to determine and study the market growth and decline
in a given political and economic conditions, opportunities and barriers. It helps to evaluate the
position, potential and direction for a business. Despite being a strong brand, Coca-Cola is
influenced by the factors in which the business is operated. PEST Analysis appraises the existing
fundamentals of a business in strategic context and effect.

 POLITICAL
The political factor is the degree of political intervention in the economy, for example the
terms and conditions, laws and regulations, taxation policies, trade barriers and quality check
and control are some important dimensions for business support and survival. The following
factors affect the operations of the company.

 Government Tax
Coca-Cola management is not happy with the Govt. tax laws. As company is offering
different products like Coke, sprite, Fanta and they have to import Different concentrate for
each product so this factor in the end causing Coca Cola to pay heavy taxes. Last
government was giving rebate to Coca Cola but the present government is not giving any
kind of rebate.

 Political Instability and Strikes

CCBPL claims to have warehouses that stores cokes suffice to meet the demand in case
of series of strikes and political disruption for 1-3 months.

 Effect of Labour Laws

The union of CCBPL possess a detailed past of struggle. It started in early 2000 when the
labour union was discouraged by the unfit management worthless negotiations. It was thus
banned. Later with the revival of the labour union since 2010, the management guaranteed the
effective social dialogue with the factory workers and took initiatives towards a procedural and
institutional framework. However, despite of these efforts, we observed the unhealthy and
unsafe working environment at Karachi plant. We found labours with no eyewears in the glass
bottling area moreover; the noise was too much to bear. It can be said that the management is
nearly failed to attempt its procedural obligatio.

 Consumer Laws

It’s an essence of consumer law that a company should let its consumer know the content
and nutritional information of their product. Many preservatives like ascorbic acid, aspartame
and saponins are used in the manufacturing of the carbonated drinks, despite the fact that
most of the proportion of the drinks is composed of carbonated water and sugars. The Coca
Cola Company doesn’t reveal the composition of the concentrate it imports from USA and
hence, is in vulnerable position in this regard.

 Ability to penetrate emerging and developing markets

The ability to penetrate in the market or discover new market has direct relation with the
political conditions, such as civil conflict and governmental changes. Coca-Cola's ability to form
an efficient strategic business alliance with local bottlers is a crucial approach in this 11 regard,
along with its capacity to enhance their production amenities, distribution networks, sales
equipment, and technology

 ECONOMICAL
Economic Factor is composed of the variables like inflation rates, interest rates, taxation
changes, GDP and exchange rates. Economic change have a major impact on a firm’s objectives
and revenues for example, higher inflation stimulates employees to demand high wage. It also
increases the costs of production. Similarly, a strong currency may hinder the country to
successfully export its products worldwide.

 Highly Volatile Economy

The fluctuations in Pakistan economy also effect Coke market position. Because of high
inflation and low purchasing power Coke is unable to capture many potential customers of
the large Pakistani population who have to struggle hard to make both ends meet rather
than afford the luxury of drinking Coke as often as they would like to. The current interest
rate is very high and this is really affecting Coca Cola because they are doing business on
credit this factor in the end increase there cost.
 Job Creation
Though its value cycle, Coca-Cola claims to boost job creation. It acts as a responsible
organization by contributing to the society by paying taxes, hiring local individuals, paying
suppliers on time and engaging in community welfare projects.

 SOCIAL
Social factors include the aspects like the reordering in social trends. Such amendments in
wants, lifestyles and even some of the values can impacts on the demand and therefore,
consumption for a firm’s product or any organization services and also the availability and
willingness of people to consume that product. Social factors that affect the sales of CocaCola's
products include the following:
 Customer Social Responsibility
 Coke a customer oriented company, always takes steps for the welfare of its consumers.
It also helps the needy and knowledge seeking people with fewer resources by providing
them books, scholarships & opportunities to work. It has launched a program
in Gujranwala and Rahim Yar Khan where it provides basic education to children. It has also
launched programs to increase awareness about the conservation of water & natural
resources, climate changes, waste environment education & recyclable products.
 Healthy Lifestyle Concerns
Media today, is fostering interest in healthy lifestyles. That has strongly influenced the
sales within non-alcoholic beverage sector as many customers switch to mineral water
bottles and fresh juices. In this regard, CCBPL has successfully come up with the products
such as Coca-Cola Light or Zero that addresses the healthy diet concerns. However, the
attitude of this segment of people towards the harmfulness of carbonated drinks doesn’t
seem to be altered for the diet cokes either. Also, as the baby boomers are aging, they are
getting more conscious and more concerned about diet choices that will influence their life
expectancy. This contributes to the increasing demand for healthier drinks on the non-
alcoholic beverage sector.
 Adaption and cultural borrowing
Adaption plays a significant role in capturing the international markets. And willingness
to adapt is a crucial attitude. Adaptation is a key concept at smaller as well as bigger levels
of market accommodation. The Coca-Cola Company recognizes the need of affirmative
action, that is, open tolerance to concept of being different and equal. The company
realizes that these differences exist and tries to understand and cope with them in a proper
manner. The advertisement campaigns focus on relationships, family events and gatherings,
festive occasions like Eid and music.

 TECHNOLOGICAL
 New Technological Advancements
The new methods of filling the bottles, the refrigeration methods, the disposable
bottles, the PET bottles all made so many changes in the beverage industry. Coke is
adopting all the new technologies available. Coke is providing refrigerators, visichest coolers
and many more for keeping the bottles chilled, as they claim in the subcontinent "thanda
matlab Coca Cola". Coca Cola Company got the technology of dispensers so they give Coke
to people that is as fresh from the fountain. Coca Cola Company has opted the technology
for the usage of PET bottles. Coca Cola Company is producing new packaging sizes with
differentiated packaging with the help of new technology every day.
 Coke’s Marketing, Advertising, and Promotional Programs
The most evolving media for promoting the company’s products are through the
TV, websites, and social media. CCBPL possess mind-blowing strategy to effectively
promote their products through these channels that enhances its sales. It is reported
 that Coke Studio Session 8 raised the company’s sales by 42%. Its “Share a Coke”
campaign in which customized bottles was introduced with various popular names
created a buzz among consumers.
 Access to the Internet
With the ease to access internet, social media has become a great mean to
provide huge growth in consumer awareness, brand identity, promotions and direct-to-
consumer Communication.
 Packaging design
As the cans and plastic bottles were introduced, the sales volume increased with
a great margin for the company because of the ease in carrying and disposing the
containers.
 New Equipment
Because the technology is continuously advancing, new equipment is constantly being
introduced by CCBPL. Because of these new technologies, Coca-Cola's production volume
has increased sharply compared to that of a few years ago.
 Reduced Cost of Production
With the up gradation of technology and high levels of automation in manufacturing,
volume production is being done that has reduced the cost of production.

 COMPETITORS
Following are the Water bottle competitors of Nestle:
1. Nestle
2. Aquafina
3. Vey
4. Dasani
5. Kinley
6. Smart Water
7. Local Water companies