Business Environment: Structure and Governance of Barratt Developments PLC

This report discusses the structure and governance of Barratt Developments PLC and the importance of PESTLE analysis for the company. It also includes a PESTLE analysis of the company.

Business Environment
Company Name : Barratt Developments PLC
STUDENT NAME:
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Table of Contents
Executive summary..........................................................................................................................1
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
structure and governance of company.........................................................................................2
TASK 2............................................................................................................................................4
Importance of PESTLE analysis for Company...........................................................................4
TASK 3............................................................................................................................................6
PESTLE analysis of company.....................................................................................................6
Conclusion.......................................................................................................................................9
References........................................................................................................................................1
Books & Journals.............................................................................................................................1

Executive summary
Situation analysis can be defined as a methods that a company utilises in order to analyse both
internal along with the external environment for enhancing the firm's capabilities, customers
base, and so on. This report is referring to how business environment impacts upon a firm's
business strategies to gain competitive advantages. Also, structure along with the governance of
the Barratt Developments PLC is operating all the networks i.e. spread among 30 divisions as
well. Situational analysis is used by companies to examine the external environment of business.
There are many different factors which are part of this macro-environment, and they affect
decision making in the company. There are many alternatives available with every company, and
they have to choose one among them. It is essential that they analyse such options based on their
merits and demerits and then on basis of that a particular option is selected. In case of Barratt
Developments PLC also PESTLE analysis is done, and different aspects are analysed based on
the decision making. According to changing circumstances, the way the PESTLE factors affect
business also varies; for Barratt Developments PLC it is important to consider these factors
before making any decisions in the company. This analysis of macro-environmental factors will
play a significant role in providing the company with a competitive advantage in the market. On
the other side, the limitation of this report is that number of factors like political, legal and more
continuously changes, which impacts upon overall working of the operations of Barratt
Developments PLC and this is what not has been analysed in an appropriate sense, where change
is occurring regularly.

INTRODUCTION
The business environment includes all those factors which are present in external environment of
business, and they affect all internal functions of a business. This is a type of situational analysis
done by companies to form various strategies for company. This report is based on structure &
governance of companies, importance of PESTLE analysis and finally a macro analysis is done
of macro or external factors which can influence company. In this report Barratt Developments
PLC has been taken into consideration (Virglerová, Dobeš, and Vojtovič, 2016). It is one of the
biggest residential companies in UK, and they have an operating network which is spread over
30 divisions. It was established in 1958 by Greensitt Bros.
TASK 1
Structure and Governance of the Company
Structure and governance are the two most important components of every company. In the case
of Barratt developments PLC board of company has a policy that they regularly believe in
reviewing composition of company. Apart from this, annual evaluation is also done to check
effectiveness of committees formed in company and also of different types of directors of
company. If it is talked about the organisational structure of this firm, then it follows hierarchical
structure and consists with three layers and these are : Board of directors, Executive Committee
and Regional managing directors.
Structure of Barratt Developments PLC: Barratt developments plc is a UK based company. This
company is having an operating network which is spread over 30 divisions. There are approx.
Six thousand three hundred thirty employees working here. It is listed on the New York stock
exchange. They manage properties and real estate business. Jeremy Hipkiss is Director in this
company. David Thomas is executive director and John Allan as non- executive chairman of this
company. Sharon Michelle white has been appointed as Independent Non – Executive director of
company. Executive directors of this company manage day to day business (Sodeyfi, 2016).
Non-executive directors help the company in ensuring scrutiny, dealing with challenges, and
providing support to various proposals that are related to performance, accountability, strategy,
performance, and sustainability. All these are related to interest of stakeholders of company.

These efforts help board of directors of company in ensuring timely board decisions. Following
points include structure of company for performing various functions:
 Stakeholder engagement: The board has recognized the importance of open dialogue
with stakeholders. Communications and events taking place the whole year are
maintained contact with stakeholders like government, investors, employees, customers
and so on, and then they receive feedback from different areas of business, which
includes operational processes, governance, and remuneration of executive. If it is talked
about open dialogue communication, it is said to be one of the crucial element that
majorly helps a firm in maintaining the engagement and interest of investors about the
desired goals and objectives that company is holding for new future.
 Remuneration Committee: Board in Barratt Development PLC has formed a transparent
and formal procedure for the development of policies on remuneration. Their
shareholders have approved the policy of the Group's current remuneration in their
annual general meeting of 2017. This policy has been designed for promotion of long-
term success of group (Prajogo, 2016). This is continuously helping employees in
maintaining the good faith towards firm, because with the help of this policy their
engagement towards operations of company has improvised in much effective and
efficient manner.
 Accountability: There are risk management systems and internal systems of control
being maintained by this department. Various functions like preparation of the annual
report, calculating different ratios like liquidity ratio, profitability ratio, debt equity and
more are being done by this section manage risk and internal control systems in the
company, work to be done by the Audit Committee of the company, process to evaluate
accounts, and annual report of company to be balanced, fair, and transparent in
understanding.
All the above mentioned three sections form a very important part of the company's structure as
they all influence the operations and functions of the company.
Governance of company: John Allan, who is chairman of Barratt developments PLC has stated
that good corporate governance is the foundation of this company's success. The board of this
company is responsible for the long-run success of company. Governance of a company includes
Framework of practices and rules through which board of directors of company ensures that

there are transparency, accountability, and fairness being maintained in company (Prajogo,
2016). These are most important factors which must also be present in relationship between
company and its various stakeholders such as customers, employees, management, government,
financiers and community. In relation to Barratt development PLC, its governance framework
includes:
1) Implicit & Explicit contracts made between the stakeholders and the company. These
contracts consist of all guidelines on which various operations of the company are done.
2) There are laid down procedures which are for reconciliation in situations when there is an
occurrence of conflicts between stakeholders of the company in context to their roles,
duties, and privileges.
3) There is a specific procedure which is laid down by the company to ensure that there is
proper supervision, flow of information and controlling & monitoring activities taking
place in company (IPR and its scope, 2019).
4) There is a proper system of checks & balances being maintained by company.
Communication of these is done through organisation of sessions, programs, through notices.
Company has a realisation that timely communication of these rules of governance in the
company is very important for Barratt's development PLC as this sets the basis on which
different functional departments of company will be carrying out their roles and duties. To
ensure good corporate citizenship, companies also focus on ethical behaviour, awareness related
to external environment and sound practices of corporate governance (Kolk,2016). All these
factors together help in creation of a clear set of rules in company which all internal stakeholders
must necessarily follow. When a company does not have proper governance, then there can be
several negative implications, which include effect on reliability of company, transparency, and
integrity; this sometimes also leads to affecting financial status of companies.
TASK 2
Importance of PESTLE analysis for Company
Pest analysis means external analysis of the company on five different aspects, which include
Political, technical, economic, social and legal analysis. Pestle analysis is a tool which is mostly
used by a person who is making various decisions in the company; this influences strategies to be

formed by company from future prospective (Khan and Quaddus, 2015). These factors are very
uncertain and are dynamic also. It is necessary for companies to forecast changes which may
take place in macro environment. Following points denote the overall importance of PESTLE
analysis for companies:
 Strategic Planning: All different departments of the company, including sales,
marketing, and finance are important departments that affect functioning of whole
company. Whenever a company is planning to do expansion in terms of new branches,
new locations there is need to analyse external market so that various strategies can be
planned. Strategic planning helps company in getting the direction in which operations
and functions of company are planned and have to be executed.
 Cost-effectiveness: Effort and time are only needed to do a pestle analysis of a company.
No cost is involved in this process. This means that this is a cost-effective process and
has a lot of benefits for company they can forecast their strategies and plan various
operations. Make use of opportunities: There are many opportunities prevailing in
market which can be used by companies if they can adequately analyse external
environment of business. Opportunity can occur anytime in market, and if advantage is
not taken then it may benefit competitors of company. Therefore, to survive in market it
becomes important for Barratt development PLC to understand different factors which
can affect them presently and in future (Huang-Horowitz, 2015). Every company wants
to increase their productivity. For this, they want to reduce costs and increase their profit
margins. Barratt developments PLC also can use PEST analysis. This will be very cost-
effective for company, and at same time, it will also be helpful in planning and
forecasting strategies of company related to procurement of raw material, using the
material in manufacturing activities of company, payments to be made to employees, all
such strategies should be cost effective.
 Helps companies checking Feasibility: Companies can develop some options, but there
is always needed to analyse these options based on specific parameters. This analysis is
beneficial in selection of on particular option. Whenever Barratt developments PLC is
facing a dilemma related to pricing policy of company or to target which segment of
customers then it is PESTLE analysis, which can help this company in checking the
feasibility of all available options with company.

 Make use of opportunities: There are many opportunities prevailing in the market
which can be used by companies if they can adequately analyse external environment of
business. Opportunity can occur anytime in market, and if advantage is not taken then it
may benefit competitors of company. Therefore, to survive in market it becomes
important for Barratt development PLC to understand different factors such as changing
consumer behaviour, their tastes and preferences, increasing number of competitors
which can affect them presently and in future(Saleem, 2015).
 Mitigate from risks of the market: There are many different types of risks and threats
in market. There are many different types of risks which are present in external
environment of the company, which include supply and demand conditions, which affect
company's overall cost. PESTLE analysis analyses a company based on certain
important aspects, whose results can be used after analysis has been done to develop
various preventive measures in case anticipated risks occur (Hillary, 2017).
 Provides a more in-depth understanding of Market: PESTLE analysis helps
companies in having a deep understanding of factors which can affect their business.
When in case of new product development there is requirement that company needs to
understand these external factors in depth so that final decision making can be done.
There are various macro-economic conditions that are constantly changing, such as
inflation rate in country, situations of recession, growth declining situations of the
market, and many others all these play a very crucial role in impacting sales of Barratt
development PLC. Hence, company needs to make attempts to use this research in
mitigating with future losses which can happen with company.
 Research reports: another very important aim of PESTLE analysis is to make use of
pestle factors such as all those which are present in the macro environment of company
and they can help in doing research(Grigore and Drăgan, 2015). These researches are
important as they are done with a specific aim and then use results of such researches in
formulating various strategies for some specific purposes such as deciding of the target
market, target segment customers, decisions regarding products design, pricing, quantity
of production etc.

TASK 3
PESTLE analysis of the company
PESTLE analysis helps the company in dealing with challenges taking place in the external
environment. Following Points denote PESTLE analysis of Barratt developments PLC:
 Political Factors: Barratt Developments PLC is dealing in household and personal
categories of goods. They have presence in more than 12 countries. The company is
exposed to various political systems and political environment risks. There are various
political factors affecting a company, such as military invasion, which can sometimes be
very risky for any company (Georgescu and Popescul, 2015). Corruption level of country
especially those which are related to sector of consumer goods. Tariff and trade
regulations, laws related to taxation, pricing regulations, legislations related to wage, acts
passed by government, which are governing employee & employer. All such factors are
part of political environment of a country, and they affect Barratt's development PLC. For
example, if company is launching something new then they must adhere to follow
labelling requirements in household goods as it has been decided by government of UL.
 Economic Factors: Economic factors of a country also influence Barratt’s development
PLC. There are many economic factors of UK which Barratt Developments PLC can use
many economic factors such as present rate of inflation, growth rate of country, personal
disposable income present with prospective buyers of company, etc. apart from these
there are certain more factors such as economic system of UK which will include some
aspects such as Unemployment rate in country, stage of business cycle which can be
recession, prosperity or recovery depending upon circumstances, level of skilled
workforce of UK, what will be cost of labour for the company and their productivity level
all such factors have to be analysed carefully as they will help company in determining
aggregate demand and aggregate investment which should be done by company.
 Social Factors: Every company establishes itself for an aim to serve society, and culture
of society influences basic culture of a company. Marketers of Barratt Developments
need to make proper analysis of attitude and belief of the target market or population
which they are willing to serve (Banica and Hagiu, 2015). Social factors include some
aspects of people such as their attitude in health, environment, etc., leisure interests of
people. What is scope of entrepreneurial spirit in society, class structure, power structure

and hierarchy in society. Demographics of population and level of skills & education
which people in society possess also is an economic factor which can influence decisions
in Barratt Developments PLC.
 Technological Factors: Technology is a rapid changing phenomenon which keeps on
varying and can never be constant. A company should always do technical analysis as
speed at which technology is changing may disrupt any company. Time is needed by
companies to cope up with such technological disruptions so that they are not affected
negatively. Some technological factors which can affect Barratt's development PLC are
Cost structure of household goods, chain structure, technological diffusion, and other
technological advancements help company in analysis of these factors.
 Environmental Factor: Environmental factors or different environmental standards also
affect profitability of companies present in that market. Whenever a company is planning
to enter a new market or a new business in already existing market, there must be careful
analysis of these factors. Some of environmental factors which Barratt development PLC
should consider are climatic change, weather conditions, recycling, water, and air
pollution regulations, attitude of company towards waste management system being
installed in their manufacturing process, support of company for developing new
sources of renewable energy, what are various water & air pollution regulations present
in household and personal goods industry as this is sector in which Barratt developments
PLC is dealing in(Bah and Fang, 2015).
 Legal Factors: all countries have some legal framework in which they are working.
Legal laws are something which must carefully be taken into consideration by Barratt
Development PLC. Evaluation needs to be done very carefully before entering any
industry as if any noncompliance is done, and then it may lead to negative effect on
competitive advantage of company. Barratt Developments PLC must consider some the
legal factors or laws which include antitrust law, which is very important as this has
relation to household goods industry (Bah and Fang, 2015). Laws related to Employment
in country, health and safety law, laws on protection of consumers. This law also helps a
company in satisfaction of consumers and building goodwill in market. This helps in long
term survival of company in market.

Conclusion
This report is based on analysing of importance of factors present in the external environment of
business. Initially the structure of company and its governance is being discussed. After that
importance of PESTLE analysis for company is mentioned. Further PESTLE of company is
done. From above discussion it can be summarised that PESTLE analysis is a very useful tool
which is used by companies to evaluate merits and demerits of major decisions to be taken by
company. PESTLE analysis is a framework consisting of macro-environment factors used in
scanning the environment and is an essential element of strategic management in every company
(Corporate entrepreneurship is an essential element of strategic management in any
organization, 2019). This analysis is helpful for managers in business in better understanding,
better implementation, and acceptance of projects available with company. Through this analysis
an option is analysed from all different perspectives present in external environment of business.
Proper understanding of market decline, growth, position of company, potential, and directions
related to different operations of company is developed by using this tool of PESTLE analysis.

References
Books & Journals
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
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Banica, L. and Hagiu, A., 2015. Big data in business environment. Scientific Bulletin-Economic
Sciences, 14(1), pp.79-86.
Georgescu, M. and Popescul, D., 2015. Social Media–the new paradigm of collaboration and
communication for business environment. Procedia Economics and Finance, 20, pp.277-
282.
Grigore, A.M. and Drăgan, I.M., 2015. Entrepreneurship and its economic value in a very
dynamic business environment. Amfiteatru Economic Journal, 17(38), pp.120-132.
Hillary, R., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Huang-Horowitz, N.C., 2015. Public relations in the small business environment: Creating
identity and building reputation. Public Relations Review, 41(3), pp.345-353.
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economic performance of informal microenterprises: content analysis and partial least
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