Environmental Analysis and SWOT Matrix of British Gas

This report focuses on the micro and macro environmental factors and how they directly affect the energy companies. This report considers British gas as an example and also highlights all external factors which are impacting it. It includes a PESTLE analysis, SWOT matrix, and conclusions on how businesses can improve their performance.

Business Report
Table of contents
Introduction:............................................................................................................3
Environmental analysis and how these affect Energy Company:.........................3
SWOT matrix of British gas..................................................................................5
Conclusion:...............................................................................................................6
References:...............................................................................................................8

Introduction:
This report focuses on the micro and macro environmental factors and how
they directly affect the energy companies. This report considers British gas as an
example and also highlights all external factors which are impacting it. British gas
is an energy and home service provider company in United Kingdom. It is serving
around twelve million houses and is considered one of the leading gas and
electricity Market Company in United Kingdom. In addition, it provides gas
through pipes and maintained by other companies. It is the oldest company of UK
founded in 1812 as the gas light and Coke Company and later renamed as British
gas in 1973. As per trend analysis, it has been figured out company has generated
net profit of around 27 million British pounds through its energy generation
segment in 2020. This report showcases the external drivers of energy sector such
as economic activity level, government rules and regulations, organizational
policies, weather and season and various others. So, how company faces these risks
and challenges are all discussed here.
Environmental analysis and how these affect Energy Company:
Energy sector is category of companies who deal in the production and supply of
energy. According, to global industry classification standard, it covers all the
companies which explore, produce, refine, store oil, gas, coals, consumable fuels.
As in this pestle analysis will be done, which explains all the factors which
management has no control over and changes constantly. To compete in the market
successfully, managers have to continuously study these changes and adapt their
business as per the prevailing situations. (Gour and et.al., 2017)
Micro Factors : As in relation to British gas, it includes its owners and managers
who have control on the business operations. They manage day to day affairs of the
businesses. They choose their suppliers for purchase, hire employees as per needs,
as well as have high degree of control over on the products they sell and location
where they sell. In addition to this, they use their skills and traits in order to create
goods and services that will satisfy current and future potential customers. So, all
these factors are internal and can be easily controlled by making certain changes.
Pestle analysis of company:

 Political factors: These include changes in government rules and
regulations, bureaucracy, corruption level, tariffs and trade regulations,
education law, employment law and various others. Besides this, countries
wars can destroy energy resources or make them difficult to exploit. In fact,
corruption exists everywhere and United Kingdom is no exception, so there
are chances money is spent on things other than energy projects. In relation
to British Gas, changes in corporation taxes as determined by the leaders can
directly affect profits of the company. Moreover, by raising value added tax
on products and services companies profits get down. Other than this,
political leaders may make changes with respect to prevailing laws of
country, such as by introducing national minimum wage; it will directly
impact profit making capacity of the operation. (Harris, 2017)
 Economic factors: These factors include interest rate, exchange rate, tax
rate, inflation, demand and supply, wages and so on. All these factors have
capacity to impact business operations positively or negatively. In addition
to this, fluctuations in the level of economic activity decide whether
company would able to achieve its objectives or not. In relation to British
gas, how many houses demand of services will determine the profits of
company whereas, company’s capability of providing energy sources will
also affect the market. So, businesses have to keep an eye on the changes of
economy to survive in the market for long term. (Vance, 2017)
 Social factor: This is an uncontrollable which directly affects the
operations. It includes religion, values, and buying habits, family size,
attitude towards renewable energy, investing and saving will directly impact
the businesses. In relation this, British gas has opened energy trust in 2004,
as an independent charity to help people fuel poverty to pay their energy
bills and get back on feet and remain debt free. So, these social factors are
all taken into consideration to run operations smoothly.
 Technological factors: These are the factors used for enhancing
performance of business operations. These include technical innovation and
development that could affect market or industry. Besides this, it includes
changes in digital or mobile technology, automation, research and
development. As these factors brings opportunities for the business to grow
in various dimensions by minimizing costs and increasing productivity. In
relation to British gas by using various technologies it is leading and

creating 75% of electricity form environment friendly sources. So,
businesses have to keep modifying their technologies as these get obsolete
with time. Therefore, business operations have to keep up with these
changes on consistent basis to successfully run their operations for long
term.
 Legal factors: These are external factors which affect the way businesses
operate and customers behave. These include customer law, copyright law,
health and safety law, import and export law and so on. Well coming to
British gas, all these factors will directly impact the operations as company
has adhered all rules and regulations. So, legal regulations are important for
deciding how businesses will operate and what profits will they generate
while following all terms and norms of business operations.
 Environmental factors: As of now, people are preferring environment
friendly and mostly they prefer friendly products. Here, British gas is also
providing them energy in an environment friendly manner.
SWOT matrix of British gas
SWOT matrix is a tool which is used by companies to analyze their current
performance and frame fruitful strategies for future. (Srinivas and et.al., 2018)It
stands for strength, weakness, opportunity and threats of the business concern.
Strength and weaknesses are internal to concern whereas, opportunities and threats
are external factors. In British gas, SWOT analysis is done to evaluate its current
situation and compare its performance with its competitors. (Naqvi and et.al.,
2019)
Strengths of British gas: These are internal factors which help in increasing the
productivity of the concern. These factors are as follows:
1. It is the first one to introduce electricity generating boilers and mobile
controlled heating device in the United Kingdom market. So, this has given
its advantage over its competitors.
2. It offers gas, electricity, boilers, plumbing and drains, home appliances and
various other devices. So, all these have given it an edge over its
competitors. (Safari, 2021)

Weaknesses of British gas: These are the internal attributes and resources that
work against the successful outcome. So, company should take advantages of
opportunities to minimize its weaknesses.
1. Dependence on wholesale market has been a negative factor for this
company.
2. British government scrutinized British gas for raising tariff prices; this has
negatively impacted the image of company.
Opportunities of British gas: These are the external factors of the business
concern which helps to upgrade organization performance. It gives competitive
advantage to the business and helps to expand its areas.
1. It has abundant opportunities to expand its operations in retailing sector. So,
this will led to more profits for business operations. (Patel and et.al., 2018)
Threats to British gas: As businesses conduct this analysis to analyze the risky
areas of business concern. So, these inefficient areas need to be addressed regularly
in order to improve performance of organization.
1. Increasing in wholesale gas and electricity prices, would reduce the
consumption on the part of consumers and led to less profit to enterprises.
2. Frequent changes of government rules and regulation disrupt the ongoing
activities of the business concern.
Conclusion:
With respect to above report, it is concluded there are internal and external
factors of the business which directly affect its activities. In this, British Gas
Company of United Kingdom is taken and what all external and internal challenges
it faces are all discussed. So, after analyzing all factors business can improve its
performance and increase its productivity. Besides this, SWOT analysis is also
done which indicated company strong and weak areas and which all factors
company can improve by taking the advantages of opportunities. So, this report
highlights all economic factors which impact the operations and how businesses
take help of strategic tools and techniques to improve performance of business
concern.

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