Importance of PESTEL Analysis for Organisations

This report discusses the governance and organisational structure of Schroders PLC, importance of PESTEL analysis, and uses the PESTEL framework to analyze the external environment of the company. It highlights the political stability and economic development of the UK, as well as the opportunities and threats faced by Schroders PLC.

BUSINESS
ENVIRONMENT

Executive Summary
The present report is based on Schroders PLC and is divided into 3 main tasks. The first
task exhibits that the organisational structure is composed of mainly two sectors, namely, Asset
management and wealth management. Further, it is analysed that the governance structure
followed by the entity vests power in the hands of committees members who look after both the
operational areas. Further, the second task reveals that PESTLE analysis is important to be
conducted by an organisation to reduce business threats by leveraging opportunities in business
environment. The last task concludes that UK is politically stable and economically developed
which presents opportunities to the organisation. Also, the entity has the opportunity to capitalise
on social media marketing to build extensive goodwill. On the contrary, huge level of corruption,
low rate of unemployment prevailing within the nation pose threat to the sustainability of
Schroders PLC at international scale.

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
Examine how your chosen company is governed and structured...........................................1
Task 2...............................................................................................................................................3
Evaluate the importance of carrying out PESTEL analysis for an organisation....................3
Task 3...............................................................................................................................................4
Use the PESTEL framework to analyse the external environment of your chosen company.4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Each and every business entity is significantly affected by the factors present within its
business environment. In this regard, it is important for a company to constantly review and scan
the internal as well as external factors of this environment with a view to devise and develop
effective marketing and other corporate strategies. Through the analysis of environment, a firm is
able to acknowledge its market positioning in comparison to other rival firms operating within
the confines of same market. The present report is conducted to gain knowledge of the business
environment of Schroders PLC which is an asset management organisation carrying out its
corporate operations within the periphery of United Kingdom. The present report takes into
account the organisational and governance structure of respective organisation. Also, it includes
the significance of PESTEL analysis for the growth of an entity. Lastly, the report throws light
upon the PESTEL analysis of the respective company.
Task 1
Examine how your chosen company is governed and structured.
Schroders PLC is a multinational corporation which is British based and this business
entity mainly deals in asset management. This company employs around 5000 people in around
32 locations across the global periphery.
Organisational Structure
The organisational structure of Schroders PLC is determined as follows:-
The structure of Schroders PLC is divided into two sectors, which is Asset management
and wealth management. There are two broad categories of asset management department, that
is, Investments and distribution. Further, investment department has four broad heads, and each
of these head perform vital function in its business operations and activities. The investment
department of Schroders plc includes equities, fixed income, Multi-assets and EMD
commodities, and Real Estate. The other part of asset management which is Distribution
department includes major components of organisation which are product dvt, product specialist,
channels sales specialist, marketing, communication and client servicing executive. They
perform vital role in monitoring overall activities of market and controlling the changes which
can negatively affect functioning of this organisation. The other department of Schroders is
wealth management department which includes four broad categories that are investment
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management, that focuses to make sure that investment is done in right way. Second is deposit
talking and cash, third is custody and execution and the last category of wealth management is
specialised lending. All these positions and roles helps in appropriate and proper financial
planning for a long term for this organisation.
(Source: Organisational Structure of Schroder's PLC, 2019)
Governance Structure
Governance structure refers to the effective framework that is supportive in developing
strong relationship among various factors that places influence over company. For making better
corporate structure, the company often uses builds effective team of board of directors who are
responsible for making organisational policies, long term planning, policies and procedures for
the main aid of meeting organisational objectives and mission. Along with this, board of
directors are also responsible for managing relationship staff members and others committees in
order to ensure that they all work associated activities of the company should be executed at
workplace in effective manner. With reference to Schroders PLC, its governance structure is
handled by its committees members which looks after various sort of areas. Some of the main
responsibilities managed by committee members includes:-
 It mainly reviews remuneration strategy of company. It also looks after overall Schroders
PLC group's annual compensation review.
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Illustration 1: Organisational Structure of Schroder's PLC

 Another role of committee member is to consider and check whether overall legislation,
guidance, regulations and recommendations must be followed by company so that future
errors could be sorted in effective manner.
 They are also responsible for monitoring remuneration structure, performance of
employees by taking into account towards organisational objectives etc. This will support
in ensuring that overall workforce is working in such a manner that supports them in
attaining organisational objectives.
 Along with this, the last role of committee members is to ensure that annual report is
provided to shareholders as well as board team regarding remuneration policy of the
company.
Task 2
Evaluate the importance of carrying out PESTEL analysis for an organisation.
PESTEL analysis is a concept coined by Harvard Professor Francis Aguilar. It is used
within strategic planning with a view to eliminate the threats posed by business environment in
which an organisation operates. This framework is taken into use to conduct analysis as well as
monitoring of macro environmental aspects which have a significant influence upon the
performance delivered by an enterprise at market place. This is a strategical tool that is
specifically used while starting a new venture project or undergoing entry into a new foreign
market place. This provides an in-depth knowledge about the manner in which external factors of
business environment impact upon the working and operations of a company. PESTEL is an
acronym which stands for Political, Economic, Social, Technological, Environmental and Legal
factors. An enterprise carries out this analysis at the time of different phases such as idea
development, product or service launch, stipulation of content marketing strategy and other key
stages. PESTEL analysis provides aid to companies like Schroders PLC in enhancing the scope
of its success at such different stages.
Importance of PESTEL analysis for an organisation
PESTEL analysis holds significance for a company in a number of ways. These are
illustrated in a detailed manner as follows:-
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Cost Effectiveness: The only cost that has to be incurred by an organisation for
conducting PESTEL analysis is in terms of “time”. The amount to be incurred for carrying out
research into aspects of external environment is not exposed to any kind of fluctuations (The
Advantages of PESTLE Analysis, 2019). The intervals at which this analysis is conducted, the
scope of research carried out and the time invested varies from one company to another.
However, one thing that can be obviated is that it is a cost effective procedure used for strategic
management as well as planning within Schroders PLC.
In-depth understanding: PESTEL analysis provides assistance to an organisation in
gaining deeper comprehensibility of the external environment which has a profound impact upon
the operations of an enterprise. This analytical framework renders information about consumer
as well as safety legislations while developing prototype of organisational ware. Also, it provides
data about the emerging and latest technologies that are being employed within the concerned
corporate sector by rival firms. In this regard, execution of this macro environmental analysis
aids corporations such as Schroders PLC in gaining knowledge about various influential factors
that may impact positively or negatively over organisational offerings.
Exploiting Opportunities and combating threats: Through the conduction of PESTEL
analysis, a firm is able to identify the opportunities and threats linked to external business
environment. This provides aid to companies such as Schroders PLC to exploit the opportunities
with a view to gain competitive edge over rivals present at market place. Also, this framework
renders assistance in identifying the ways in which strategic course of action can be adopted to
deal with the threats posed by macro environmental factors (The Advantages of PESTLE
Analysis, 2019). Thus, this analysis provides overwhelming outcomes for a company, helping it
in ensuring its long term sustainability within hyper competitive and turbulent business
environment.
Task 3
Use the PESTEL framework to analyse the external environment of your chosen company.
The execution of PESTEL analysis would provide assistance to Schroders PLC in
identification of macro environmental aspects which tend to influence the strategic and
competitive planning of the company. As the respective organisation is looking upon expansion
and leveraging of its core competencies and strategic abilities, use of PESTEL framework would
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be significant for the entity to develop strong strategies and attain long term corporate goal and
objective. PESTEL analysis as applied to Schroders PLC is presented as follows:-
Political Factors: This includes aspects pertaining to a country, such as political stability,
changes in policies, governance, corruption, bureaucracy, trade regulations etc. Schroders PLC is
operating at an international scale and this tends to increase the vulnerability of organisation
towards changes taking place within political environment of a nation. In this regard, the political
state of UK is stable. An instance of political turbulence within the nation would deter the
potential investor and harm the belief of stakeholders in performance of Schroders PLC. In
addition to this, the well developed governance structure of United Kingdom with democratic
policies tends to make it easy for global companies like Schroders PLC to carry out its operations
at market. UK stands on 11th rank in terms of “Most Corrupt Countries across the Globe” (The
UK is becoming more corrupt and our democracy is at stake, 2019). In this relation, it is
important for the management of respective entity to take due care of this and ensure the
investors that the concerned nation is a lucrative market for business.
Economic factors: This encompasses aspects such as interest rates, foreign exchange
rates, conditions of labour market, inflation rates, savings rates etc. These are important to be
taken into account as they tend to define the overall economy of a nation. The economically
developed stage of United Kingdom fosters the growth as well as development of Schroders PLC
as it offers wide range of opportunities to the entity. The organisation also benefits from the
extensive amount that the government of United Kingdom has incurred upon development of
core infrastructure of the country. Excellent infrastructural development of the nation facilitates
the potential of Gold Industry to inflate with the passage of time. The low unemployment rate of
3.9% within UK Labour Market indicates the availability of labour at relatively higher wage
rates, making it more difficult for Schroders PLC (Office for National Statistics. Unemployment,
2019).
Social factors: This encompasses elements such as societal values, norms, traditions,
customs and trends which tend to have a significant impact upon the culture and working of an
enterprise. This is also associated with analysis of demographic trends, power structure, and
disposable income of consumers. By studying all of these, Schroders PLC can effectively craft
marketing content and strategies with a view to attain the long term objective of the firm. Having
a low Power Distance Index of 35, it can be analysed that the country believes in a sense of fair
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play by giving equal treatment to all the individuals belonging to the nation (Hofstede Insights.
WHAT ABOUT THE UK?, 2019). Further, having a score of 66, the respective nation is a
Masculine country depicting the actions of society to be extensively success and goal oriented.
UK has a higher rate of migrations in relation to other European nations. The current figures are
estimated to be an average of 3.5% of the overall population moving every annum (Seven things
you did not know about migration in the UK, 2019). This tends to have a significant impact over
the marketing strategy designed by Schroders PLC.
Technological factors: With the passage of time, rapid advancements as well as
technological diffusions take place across the global periphery. This tends to inflate the
significance of gaining comprehensibility of latest and emerging technological trends for a
company to perform strategic planning and management. Through the detailed analysis of
emerging trends, Schroders PLC can apply the same within organisational premises to attain
competitive edge, enhance operational efficiencies, boost the innovation procedure and inflate
the profitability ratio. Social media marketing is one of the growing trends within United
Kingdom with a total of approximately 45 million users of social media accounts at present. This
is equivalent to almost 65% of the overall population persisting within the confines of UK. Out
of the total of 45 million, 39 million are using mobile social media. Of all the social media
handles, Facebook remains the most dominant with over 78% of the total population of UK using
this medium. YouTube and Instagram are the second and third most used sites respectively
within United Kingdom (THE LATEST UK SOCIAL MEDIA STATISTICS FOR 2019, 2019).
Thus, UK being a mobile first and social media centric country, presents opportunities for
Schroders PLC to leverage the same to build extensive brand image and attain rapid growth in
market.
Environmental factors: This encompasses environmental standards, regulations and laws
pertaining to a particular nation. In this regard, it is crucial for Schroders PLC to adopt and apply
effective waste management procedures and policies with a view to operate in the favour of
environment. Also, the company can adopt green business practices with a view to gain the trust
of stakeholders and ensure long term sustainability at market place. Further, the entity also has
the opportunity to emphasize upon marketing of its eco-friendly offerings over the customary
value proposition. This provides aid to Schroders PLC in gaining support and facilitation from
public.
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Legal factors: This encompasses various laws and legislations pertaining to a particular
nation. In this regard, the main concern of Schroders PLC is upon ensuring that all the units and
departments across the organisational premises belonging to asset management and wealth
management, comply with the laws of United Kingdom. In an instance whereby the
organisations fails at abiding by the legislations related to health and safety, employment etc., it
would have to deal with adverse outcomes. Thus, is is required by management of Schroders
PLC to carry out activities as well as practices in the favour of statute.
CONCLUSION
On the basis of above stipulated information, it can be easily stated that the analysis and
examination of business environment is essential for a corporation. This is significant to devise
strategical course of action for the survival of company in market place for a long period of time.
In addition to this, it has been analysed that macro environmental analysis of an entity is
specifically important to gain knowledge of the manner in which external factors impact upon
the operations and functioning of business. Further, it has been acknowledged that PESTEL
factors hold opportunities as well as threats for a company which have to be taken into account
by the firm to reduce the effects of significant business threats.
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REFERENCES
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Online
The Advantages of PESTLE Analysis. 2019. [Online]. Available Through:
<https://pestleanalysis.com/advantages-of-pestle-analysis/>.
The UK is becoming more corrupt and our democracy is at stake. 2019. [Online]. Available
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