Importance of PESTLE Analysis for Business Growth

This report discusses the importance of conducting PESTLE analysis for business growth and improving overall performance. It examines the governance and structure of Schroders Plc, a public limited company in the investment management industry. It also analyzes the value of PESTLE analysis and its impact on the external environment. The report concludes with a PESTLE analysis of Schroders Plc.

Business

EXECUTIVE SUMMARY
The following Report has outlined the history, governance of the company that includes
board of directors that is executive as well as non-executive directors of the organization,
Further, it has found out that PESTLE analysis is very important for the business because it helps
to improve overall performance of the company.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
Examine how the organization is governed and structured.........................................................4
TASK 2............................................................................................................................................7
Analyse the value of conducting PESTLE analysis for the business...........................................7
TASK 3............................................................................................................................................9
Use PESTLE model for conducting analysis of external environment.......................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................11

INTRODUCTION
The term business environment can be defined as all the factors that exists in internal as
well as external environment of the organization that affects the functions of the business
including management, customers, employee's, supply and demand and regulations of the
business (Bayer and et.al, 2018). The present Report is based on Schroders Plc. It is a type of
public limited company. It belongs to the industry of investment management. Headquarter of
the company is located in London, United Kingdom. The Report will outline history,
organizational structure and how company is governed. It will also explain the importance of
conducting PESTLE analysis for the business and the factors that are influencing the
environment of company.
TASK 1
Examine how the organization is governed and structured.
Overview -
Schroders Plc. is a type of asset management company. It operates the business in the
industry of investment management. The company was founded in year 1804. In year 2018, there
are 5000 employees who are employed by the organization. Operating income of the business in
year 2018 was £ 761.2 million. It provides services at nearly 32 locations such as America, Asia,
Middle East, Asia, Africa etc. The website of the firm is www.schroders.com. Headquarter of the
organization is located in the City of London (Devine and Shrives, 2017). It is a constituent of
FTSE 100 Index and also traded on London Stock Exchange. Key people of the business are
Peter Harrison, Michael Dobson. Company is actively involved in managing investment
solutions that helps to develop future prosperity for the customers of the business. It offers
innovative solutions and products across a wide range of class of assets such as fixed income,
equities, private assets and alternatives.
History -
The history of the organization started in year 1804. During this period, Johann Heinrich
Schroder came into the partnership with the firm of Johann Friedrich which is based in London.
In year 1818 the company J. Henry Schroder & Co. was established in London. In year 1959,
company has offered shares to the public for the first time through London Stock Exchange.
In year 1986, the business has disposed of Schrobanco which is one of banking arm
which is based in New York. At that time, Schroder Plc. Has acquired 50% shares of Wertheim

& Co. which is an investment bank based in New York whose activities are similar with the
company.
Schroders has played an important role in the privatizations that are performed by the
Government in year 1980. In year 1984, the company was worth £30 million when Winfried
Bischoff has taken over as CEO. Of the business. In year 2000, Schroders Plc. has sold Citigroup
which is one of the investment banking division of the company for £1.3 billion. In year 2006,
business has acquired NewFinance Capital which is based in London that manages funds of
hedge funds.
In year 2013, company has acquired Cazenove Capital Holdings for £424 million. It is a
investment funds and wealth management business. Further, Schroders has purchased 20% share
capital of Secquaero Advisors based in Switzerland that manages insurance linked investments.
Organization structure -
The term organization structure can be defined as the system that defines how specific
activities are directed for attaining particular aim and objectives of the organization. These
activities may include responsibilities, rules and roles etc. It also determines how the information
will be travel between different levels of the organization (SHTAL and et.al, 2018). There are
various types of organization structures such as centralized, decentralized etc. It provides various
advantages to the business. The structure not only defines the hierarchy of business but, also
allow company to lay out structure of pay for the workers. The organization structure of
Schroders Plc. is as follows -

Governance structure -
All the major decisions of the business should be taken by board of directors and
approved through a vote. Companies are governed by a certificate of incorporation which
sometimes also known as articles of corporation or a charter and a set of bye-laws that set out
voting procedures and board election.
Board of directors -
Executive directors : These directors are at highest ranking in the company and having ultimate
duties to take managerial decisions. Executive directors of Schroders company are-
Peter Harrison ( Chief Executive of the group) :
Peter is appointed as chief executive of the group in April 2016 and head of investment
from May 2014. Peter has begun the career at Schroders and later play the role at Newton
Investment Management, also as a head of Global Equities in JP Morgan Asset Management.
Richard Keers ( Chief Financial Officer) :
Richard was appointed as Chief Financial Officer and Director of the company in May
2013. Richard is a chartered accountant and also senior partner of Price water house Coopers
LLP having experience of 25 years for conducting audits of global financial services groups
(Rastogi and Trivedi, 2016).
Non executive directors-

These are the members of board of directors of the company. They are not a part of
executive team. Non -executive directors of Schroders company are-
Michael Dobson (Chairman) :
Michael is appointed as the chairman of Schroders in April 2016. Prior to this, Michael is
been the Chief Executive of the company since November 2001. Further, they are also Chairman
of Nominations Committee.
Ian King (Senior Independent Director) :
Ian was appointed as non-executive director of the firm in year 2017 and also senior
independent director in year 2018. From year 2008 to 2017, Ian was appointed in BAE Systems
as Chief Executive. Until year 2014, they also serve as Senior Independent Director of Rotork
Plc.
TASK 2
Analyse the value of conducting PESTLE analysis for the business.
PESTLE analysis -
It can be defined as the tool that helps businesses to evaluate different types of factors
that are existing in external environment that can influence the business from outside. Such as
Economic, Political, Legal, Sociological, Environmental etc. It provides human resource
manager an insight to understand different external factors and forces that can impact the
organization.
It is very important for the business to conduct PESTLE analysis. It plays a major role in
improving growth and success of the company. The tool will help Schroders company to develop
new strategies related with different functions of the business as well as it will also help to
conduct planning for performing different types of activities such as acquiring a particular
company, entering into the partnership etc. The framework helps to organize, examine, discover
and track macro environment factors that can impact current and future business performance. It
also helps to overcome threats and grabbing opportunities that helps to gain competitive
advantage over other companies (Zahari and Romli, 2019).
Whether, the business is a new company or an already established organization, tool of
PESTLE analysis helps the owner of every type of the business to determine significant changes
in external environment. Such as economic, political, environmental, technological and legal
factors etc.

Schroders company should use PESTLE analysis as it will help to expand existing
business of investment management of the company. Whatever be the type of department of the
business whether it is of sales, accounts or marketing etc. it can be controlled by people working
in the organization because management can employ more people to generate revenue. At the
end, all these things are dependent on the people that are working in the business. Although,
external factors such as legal, social, environmental, economic, political etc. exists and continue
to exist without the efforts of people working in the company. Therefore, PESTLE analysis plays
an important role in effective functioning of the business. The results of PESTLE analysis is very
useful in using other types of business management tools such as Business Model Canvas, risk
analysis, SOAR analysis and SWOT analysis etc.
It is very important for Schroders company to carry out PESTLE analysis because it
offers various advantages to the company.
Deeper understanding -
One of the best thing is that, PESTLE analysis makes it easy for the business to
understand external forces and factors that influence the internal business environment of the
company. It improves the strategic thinking of the business for launching a new product or a
service. Further, it helps management to improve the understanding of different factors such as
new trends in technology, laws related with consumers etc.
Developing Alertness -
The tool will also help Schroders Plc to get prepared for possible threats that may occur
due to the factors of external environment. Such as alertness regarding new technology of
offering a product or a service etc. If, company will not act according to the developments in that
case, it may lose its market share.
Exploiting the opportunities -
The company should conduct PESTLE analysis as this will help management to identify
the opportunities existing in external environment. For example – favourable foreign currency
exchange rate, increase in demand of clients etc (Perera, 2017).
PESTLE analysis will assist Schroders Plc in conducting marketing activities, planning, product
development, in conducting research and managing projects. Companies should use this tool as it
supports the management in taking decisions regarding different functions in effective manner.
Further, it is useful for company to gauge future as well as current markets.

TASK 3
Use PESTLE model for conducting analysis of external environment.
The factors that may affect the business environment of Schroders Plc. are as follows -
Political factors -
There are various political factors that can influence the business environment of the
company. Political factors create strong impact on profitability and long term sustainability of
the business. Schroders Plc. is required to consider various factors during the process of
strategic planning (Roberts, 2016). For example – high stability in political environment of UK
provides friendly business environment with easily predictable trends of future growth in the
market. Schroders Plc. Operates its functions in different countries and each country is having
own political tensions. This may limit the opportunities of growth available to the firm. It is
important for the firm to study the trends that are prevailing in political environment.
Economical factors -
It is very important for the organization to evaluate economic factors such as conditions
in labour market, foreign currency exchange rate, saving rate etc as all these factors determines
Figure 1 : PESTLE analysis, 2017
Source : (PESTLE analysis, 2017)

overall economic environment of the country. Overall understanding of the economical factors
will help Schroders Plc. To evaluate growth trajectory of the industry (Kuznetsova and
Markova, 2017). For example – The growth rate of gross domestic product of the country will
determine the ability of Schroders Plc. to follow long term growth strategies. The demand and
availability of labour in the country will determine the rate of wages to be paid to workers.
Company is required to predict the labor market to analyse the ways in which it can attract
skilled workforce towards the organization.
Social factors -
It includes various types of social factors that can impact the performance of the business.
Company should make efforts to understand social factors that can influence present and future
operations of the business. The impact of social factors is not only important from operational
aspect but also from marketing aspect of the business. The factors that are to be considered by
Schroders Plc. while performing PESTLE analysis are demographic factors, class distribution
among population, For example -Changes in demographic factors like migration trends, aging
population, socio-economic variables are of great value for the business that is operating at
international level.
Technological factors -
The rapid advancement in technology and diffusion of technological factors has increased
the value of understanding technological factors while performing the process of strategic
decision-making. Detail analysis of technological factors will provide various benefits to firm
such as boosting process of innovation, increasing profitability, enhancing operational efficiency
etc. For Example - Schroders Plc. can leverage the opportunities existing in technological
environment by using innovative techniques of marketing such as social media marketing etc.
Firm should consider continuous changes that are happening in technological environment to
remain ahead of the competition. Company have to consider the investment made by competitors
on macro and micro level to understand the influence of technology on firm's value chain.
Schroders Plc should invest funds in technologies to increase the current level of profits.
Legal factors -
It is one of the major factor under PESTLE analysis. It is not possible for the business to
enter into a new market without understanding the factors that are existing in legal environment
in detail. A careful analysis of legal environment is important for avoiding the situations in

which business may be in trouble. Ignorance of legal factors can cause undesired situations for
Schroders Plc such as hurting competitive advantage due to violation of intellectual property
rights or harming image of business due to violation of environmental, consumer, employee
standards (Appiah and Possumah, 2017). Schroders Plc should comply labour safety and health
laws and it should provide a secure working environment to the employee's that are working in
the company. Further, management is also required to ensure that, it should follow data
protection regulations to protect the data of customers. Further, inability of the organization to
protect the patents and valuable ideas may result in loss of competitive advantage over other
businesses.
Environmental factors -
The increasing changing climatic conditions and consciousness towards environment has
become an important part of PESTLE analysis. Due to international presence of the company in
different locations, it is important for Schroders Plc to understand the differences in
environmental laws, standards and regulations in different countries. Environmental analysis is
important before entering into a new market. There are various things that should be considered
by the company while analysing environmental factors. Such as company should invest in
renewable technologies to ensure long term sustainability of the business. The investment will
also help to improve satisfaction of stakeholders and it will also improve image of the company
in the minds of clients of the business.
CONCLUSION
From the above Essay, it has been concluded that PESTLE analysis is an important tool
that helps business to evaluate various types of factors that are existing in external environment
that can impact the working of company. It includes factors such as political, social,
technological, legal and environmental etc. The tool helps to manage, examine, observe and
track macro environment factors that can impact current and future business performance. There
are various reasons due to which business should conduct PESTLE analysis such as Developing
Alertness, Exploiting the opportunities, Deeper understanding of environmental factors etc.
REFERENCES
Books and Journals -
Appiah, M.K. and Possumah, B.T., 2017. External business environment and SMEs investment
in the ghanaian oil and gas sector.

Bayer, C.N., and et.al, 2018. GLOBAL GOVERNANCE–Compliance and Conformance with
UK MSA and Good Practice in Human Rights: FTSE 100 and Real Estate 100.
Devine, A. and Shrives, P., 2017. Insights into corporate governance and risk. The Routledge
Companion to Accounting and Risk. p.28.
Kuznetsova, S. and Markova, V., 2017. New Challenges in External Environment and Business
Strategy: The Case of Siberian Companies. In Financial Environment and Business
Development (pp. 449-461). Springer, Cham.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and Technology
(IRJET). 3(1). pp.384-388.
Roberts, R., 2016. Schroders: merchants & bankers. Springer.
SHTAL, T.V., and et.al, 2018. Methods of analysis of the external environment of business
activities. Revista ESPACIOS. 39(12).
Zahari, A.R. and Romli, F.I., 2019. Analysis of suborbital flight operation using PESTLE.
Journal of Atmospheric and Solar-Terrestrial Physics, 192, p.104901.
Online -
PESTLE analysis. 2017. Online Availabile Through : <http://www.mindmapsoft.com/pestle-
analysis-mindmap/>