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Nespresso: PESTLE ANALYSIS Case Solution & Answer

Nespresso: PESTLE ANALYSIS Case Solution

Introduction

Nestle Nespresso is a Coffee processing company based in Switzerland with around 84 branches all over the world. It uses machines and coffee capsules to make its product. It was founded in 2011 and is still known for its premium coffee. The company sells its machines and capsules worldwide

Nespresso aims to provide an ultimate experience to coffee lovers all over the world with easy-to-use machines, superior quality coffee, and personalized exclusive accessories/services for our customers. The company is serving its products all over the world through local producers. (Cumming, 2020)

Pestle Analysis

Political Factors:

Decentralized

Switzerland does not practice a strictly centralized system.Companies in Switzerland are mostly decentralization, as the decisions are taken in favor of every party.These decisions are not restricted to any single party,so according to this factor; Nespresso has some power to have a voice in the decision making.

Direct Democracy:

It is the right of people to give their direct opinions through the regional and national referendums. Nespresso has to make sure that none of the sentiments of people are hurt directly otherwise they can face several consequences.

Stable Political Environment:

Being a politically stable country; Switzerland enjoys many benefits attached to it, as it is considered the safest country and the voters of parties are also faithful. It can be beneficial for Nespresso, because it doesn’t have to fear the sudden change in any political policies and it helps in running the operations smoothly.

Threats to voters:

Despite being a politically stable country, voters have some issues which they are concerned about, for example:insurance of asylum social, climate and the environment and the markets for the employment, migration and health insurance premium.

Good relations:

Switzerland has an overall good reputation due to its membership of  (UN), World Bank, International Monetary Fund (IMF), which is long-standing and neutral.It has made contributions to the global peacekeeping activities as well. Nespresso has a chance to trade all over the world as because the country’s good reputation, it would be easy for Nespresso to create its place in other countries as well.

Economic Factors

GDP:

According to Trading Economics, 2020; Switzerland has a $703.8 billion GDP that represented 0.58 percent of the world’s economy, but it is assumed that the growth rate of GDP would slow down in the upcoming years but Switzerland will be able to retrieve it soon. Taking the current situation into consideration; the chances for Nespresso to grow are higher.

Skilled Lab-our Force:

Switzerland is known for its highly skilled labor force of about 5 million. Nespresso works with a skilled labor force that increases the company’s productivity which is directly related to its overall efficiency.

Low tax rate:

Due to less imposition of tax in Switzerland; Nespresso can easily boost its profit margin with less margin of tax.

Strong Purchasing Power:

Swiss have strong purchasing power, which means the chances fora business like Nespresso to grow in Switzerland is far greater than in any other country, as Swiss people are more willing to buy the product at a certain price, which provides an easefor the businesses to recover their costs.

Stable macro-environment:

Most of the Swiss firms are small to medium-sized enterprises (SMEs). Other than that, Switzerland is a country with low public debts, a flourishing service sector with a low unemployment rate.

Biggest industries:

In Switzerland, there are five huge industries which are:manufacturing, banking, tourism, agriculture and services. The top exporting products of Switzerland are packaged medicament’s, watches, jewelry, gold, and vaccines. Switzerland is known for its chocolates and for having good skills in banking.Many countries put their money in Swiss banks, because of the reason that in Switzerland; the businesses flourish with each passing day.

Social Factors

Population:

The population of Switzerland is  8.6 million and the expectancy of life rate for men is 81 years and for women its 85 years. In Switzerland, French, Romansch, German and Italian are the most spoken languages.

Modernization:

The habits and cuisine are changing because of rapid modernization. It is considered in the top countries that provide quality of life. Nespresso needs to maintain the status of-fulfilling the needs of people living in Switzerland, because usually have higher expectations.

Hard to please:

The most concerning challenge in Switzerland is that the Swiss social circles are difficult to integrate and get into and its very hard to make local friends. When people are so choosy in making friends; they would have a critical opinion of the products and taste as well, so Nespresso has to be confident about giving them what they need.

Problems:

Poverty, hostility towards migrants, foreign workers, discrimination and an aging populationare among the key issues which the country is facing, alongside other social challenges.

Technological Factors

Most Innovative country:

Switzerland is among the most advanced countries in the world,which is whyit is considered as the most innovative-country in the world by the Global Innovation Index  in 2019,so Nespresso has to meet with all the advancement requirement to successfully compete in the Swiss market.

Major work:

Switzerland’s top universities have the most advanced technologies and on the other hand,scientists are working day and night to carry out robotics, architectural medical and bio-mechanics research to improve the lives of people. Nespresso should have all the latest technology, because if the firm fails to meet the requirement; the competitor will successfully snatch its position.

Investments:

The country is also known as “young, creative and geeky country”, mostly in biotech, ICT, and digital health,but there is still a lot of space for improvement in IT as the country needs more IT specialists to meet the future requirements. Nespresso has to strike with its creativity and its uniqueness.

Environmental Factors

Tourism:

Switzerland is a beautiful country with many other attractions and mesmerizing tourism spots, which leads the country to attract many tourists, which is beneficial for Nespresso, as with more people in the country; the company is likely to have more customers.

Climatic Change:

In the future, it is most likely to be get affected by the climatic change and the company’s natural resources are facing huge pressure.The country has major concerns regarding air and water pollution, which should be taken under consideration by Nespresso in order to minimize its risks…………………………

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