Importance of PESTEL Analysis in Analyzing the External Environment of Pearson Plc

This report focuses on the management and overall structure of Pearson Plc, a multinational publishing and education company. It discusses the benefits of PESTEL analysis and its impact on the external environment of the business. The report also provides insights into the political, economic, social, technological, legal, and environmental factors that influence Pearson Plc.

Business Environment

Executive Summary
Business environment is a collection of various environmental factors that effect an
organisation. The report focused on management and overall structure of Pearson Plc. Further,
the report elaborated about benefits of PESTLE and its impact on external environment of
business.

Table of Contents
Executive Summary ........................................................................................................................2
INTRODUCTION...........................................................................................................................1
1: Management, structure of company.........................................................................................1
2: Importance of PESTEL............................................................................................................3
3: Analyse external environment of company using PESTEL....................................................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is a collection of internal or external factors. Requirement of customers,
supplier, supply and demand, management, innovation in technology, market or social trends and
economic changes include in business environment factors that influence an organisation. The
study focus on Pearson Plc, multinational company that done its operations in education field or
publishing. Pearson Plc key aim is to have direct in connection with its customers or lifelong
learners. Link education in an efficient way that human inspire in their life. Company collaborate
with wide range of partner to shape better future. The report elaborate structure of company, its
management and how it governed. Report further discuss about importance of PESTEL analysis
to analyse external environment. Lastly the report elaborate PESTEL factors with examples.
1: Management, structure of company.
Pearson Plc is publishing and education company and headquartered in London,England. It
was found as constructions business in 1840s, but company changes its operations and switched
to publishing in year 1920s. Now, Pearson Plc is one of the largest education company and
become the largest publisher of book all over the world. Pearson become UK's largest awarding
enterprise. Company decided to just focus on education department in year 2015. Company also
primarily listing on the London Stock Exchange. In year 2011, Pearson announced to open of its
own college and named Pearson college (Crespi, and et.al 2019). Further in year 2013, company
declared a reconstructing plan to invest in growing markets and digital learning. In 2014,
company had cut down almost 4000 jobs which representing only 10 percent of its overall
workforce. Company announced that it was rebranding in year 2015 that also includes creation
of new logo that completely pay attention on education.
Pearson Plc is a learning company with almost 22,500 staff member and operating in approx
70 countries all over the globe. Company combine high quality educational content to provide
effective personalised learning that powered by technology. Pearson also offers qualifications
related to vocational and academic as well and recognised across the globe. Company bringing
together assessment and education specialist and developing qualification that encourage learners
to empower learner to improve important skills so that it helps to make progress in their lives
with effective learning (Kuznetsov and et.al 2019). Company work with qualified leaders and
experts in education sector to ensure that it retain high standard. Company strategy focused on
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major growth opportunities like to make investment in structural grow markets and become more
efficient.
Glen Moreno is appointed chairman of company in year 2005. Glen is also the senior
independent director of Man Group Plc. Company's executive director is Marjorie Scardino and
appointed in year 1997. Marjorie trained as a lawyer and David Bell become director of people
in 1996. David appointed as director having roles and responsibilities for findings, encouraging
and rewarding staff member. Will Ethridge is appointed as chief executive and joined board of
company in 2008. Rona Faihead joined company in June 2002 as chief financial officer.
Additionally, Robin Freestone is chief financial officer and joined in 2004 and become chief
financial officer in 2006.
Pearson Plc designates Andy Bird, as a post of chief executive, 2020. At present, Andy is
Non-executive director at Pearson and also worked at Walt Disney company as a chairman.
Sidney Taurel is chairman of Person Plc. From perspective of board, management is executing
on company's strategy, as actions taken to simplify company, more focus on portfolio and invest
in digital capabilities. Company also invest in growth opportunities that will drive its successful
future. Its strategy meet arising requirements of potential learners and deliver sustainable returns
to shareholders. Company focus on following priorities that includes to invest in the biggest
structural growth markets, delivering good customer experiences, more efficient in providing
services and growth share with digital transformation (Board of directors.2008).
Company's chief executive is John Fallon. According to John, tremendous opportunity in
education will emerging in education in next few years. Company global spend 3.6 dollar per
year. Currently Pearson only spend 2 percent on digital but forecast that to grow. As per John,
going digital in practices is important for company that means transforming world of better
learning anywhere and everywhere. It also helps in driving positive outcomes and better or
meaningful work experience. Its diverse customer base shares common values of wanting to
have more control of their futures. Hence, Pearson make sure that they drive strong engagement
and by helping all learner to realise true value of education. Pearson mainly focus on providing
confidence to future generations to be successful in career. As per John, company is now
creating goods and services to benefit people learn and grow in more powerful ways. With
transformation, Person will provide better learning. Technology inspires more personalised and
flexible learning and help to improve engagement.
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Further, Coram Williams appoints as Chief Financial Officer. Albert Hitchocock is Chief
Technology and Operations Officer (Pearson Leadership.2021). Vivienne Cox is appointed as
Senior Independent Director. Pearson appointed Sally Johnson as Chief Financial Officer and
Dame Elizabeth Corley, Michael Lynton, Sherry Coutu, Tim Score, Lincon Wallen along with
Linda Lorimer as Non Executive Director.
2: Importance of PESTEL.
A PESTEL analyse is important tool that help to examine key factors that includes Political,
Economical, Social, Technological, Legal and Environmental which influence an organisation. It
is beneficial to use PESTEL analysis whether to start a business or have existing business. It
delivers professional insight into external factors that impacting organisation. PESTEL analysis
is flexible in nature so that company can use this in any situations. It play huge role in growth of
business. Following are essential factors of PESTEL and its related benefits:
Political and its importance
This factor includes government intervenes in the economy. It helps Pearson Plc about how
and what degree of level government influence in economy. Political factor can include political
stability or instability in overseas market, government policies, labour law, foreign trader policy,
environmental policy, trade restrictions, tariffs, trade restrictions etc. This factor has a major
effect on a business and set guidelines on how should they do business. Enterprises must able to
respond to the current and future legislation. Pearson Plc must adjust its marketing strategies as
per the set guidelines.
Economical and its importance
It is essential for a company to acknowledge economic factors. Economic factors incudes
economic growth, interest rates, inflation or recession, disposable income of consumers,
exchange rates, wage rates, credit availability and cost of living. All these factors have
significant effect on how a company operate its business and how profitable they are. Economic
factors have two main elements for instance, microeconomic and macroeconomic factors.
Macro-economic factors mainly focus to deal with overall management of demand in any given
economy. While, microeconomic factors are concern about the way a person spends their income
(Widarti, and Pramajaya, 2018). Government use taxation policy and expenditures as their main
mechanisms that they use for microeconomic factor.
Social
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This factor also known as socio-cultural factors. Social factors include attitudes, perspectives
and shared belief of the population for example, age distribution, career attitudes, qualification,
population growth, health or safety. Company can also involve technological advancement,
innovation and creativity, social media movement in their operations. All factors are of specific
interest because they directly effect on how marketers understand customers and what are
requirements of customers.
Technological
Every company must utilize technology in order to survive in competitive market. Now, world
is emerging and entered into digital era. Technology change the way business operate. With
technology, company can enter into market and mark its presence across the world. There are
various social platforms, app development and laptops are used for marketing and business deals
this days, hence become way of conducting business. Technological factors impact management
operations and marketing in different ways. Firstly, new way of distributing products and
services for example, Pearson Plc used many digital platforms like Facebook and Instagram and
increase its customer base. Secondly, another ways of producing services and products. Lastly,
creative methods of communicating with its potential customers (Çitilci and Akbalık, 2020). All
these factors impact operations of the technology market favourably or unfavourably. It is
important for companies to acknowledge recent trends of technology, as it may help company to
prevent from spending on technology which is going to be fluctuate very soon due to frequent
changing trends. For example, Pearson Plc use mobile apps and other technologies have create
an opportunity to increase its sales. However, other free education app become threat to Pearson
Plc.
Economical
These factors become important because of increasing shortage of raw materials, pollution
targets and carbon footprints that is set by government. There are some issues that marketers are
facing with economical factor. Therefore, it is vital for companies to analyse impact of
economical factors in particular country where it operate.
Legal
Legal factors help company to analyse various factors associated with it like health and safety,
marketing standards, product labelling and safety. It is crucial for every enterprise to
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acknowledge what is legal. If a company trade globally then this become become very difficult
to get correct because every country has its own set of rules and regulations.
It is essential for an organisation to carefully look into all these factors as it can either bring
advantages or disadvantages to business. If a company conduct a research to examine effect of
PESTEL then company able to proceed with SWOT analysis because it is essential to
incorporate a SWOT with PESTEL analysis. PESTEL analysis in strategic management and also
in advertising or marketing strategy become relevant in overall development strategy. PESTEL
analysis helps organisations with strategic planning so that it expand their businesses. Whether it
is established or start-up company, PESTEL analysis help every owner of company to determine
significant changes in political, economic, social factors and so on (David, 2019).
3: Analyse external environment of company using PESTEL.
PESTEL analysis is a vital tool to examine a thorough external analysis of business
environment. It provides valuable knowledge into conducting challenges that a company face in
future. A through understanding of competitive landscape will prevent investors from pertaining
any risk in future. Following paragraph will provide more detail to analyse external environment
for Pearson Plc.
Political
Political factors may effect profitability of company. Political issues differ from unexpected
changes in political regimes to important decisions made by administration. As Pearson being a
multinational company, it must involve political factors that occur in host country along with all
those countries that include business performance or if company may hold in business with. In
order to correctly analyse accurate political issue that company can exposed, then company must
mention following essential elements that involve level of stability in political at particular
country has in recent years, laws which nation imposes specifically with context to business
(Perera, 2017). Company's trademark is protected or not, for instance, Pearson Plc is invest in
that country in which it has no rules for its IP security than owner may find it too risky to make
any investment. Low wage could refers as maximum revenues, therefore it increases possibility
of survival for Pearson Plc.
Further, higher political stability allows friendly or stable environment for business with actual
market trends, however political instability may harm investors. Pearson company present in
various countries and every country has its political tensions. Hence, increasing instabilities in
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the global political environment can negatively impact company and limit its growth
opportunities.
Economical
Economical elements are those which occur to the economy of nation for example, deflation
rate, foreign exchange rate etc. These factors has effect on aggregate supply, business climate
investment etc. Economic factors at Pastel analysis are consider as microeconomic. Pearson Plc
must examine economic factors that could be empathetic and mention those factors before
investing. Economic growth of any nation may influences organisational achievement, hence
emerging economies provide higher development opportunities to Pearson Plc. This is also
essential for company to acknowledge life-cycle stage of industry as entering in mature industry
may become more challenging (Phan, 2021).
Business operation of Pearson Plc are effected by emerging economic shape. As regulatory or
economic environment in a monopolistic system may differ from perfect competition and
monopolistic. Further, global exposure or expansion techniques of Pearson Plc are impacted by
financial market because if company working in highly effective market then it leads towards
improved position and upgrade strength to take up into another market. If financial market is in
better health or efficient then it will identify company's ability to increase capital at upright
prices. Pearson Plc must predict and understand labour market conditions so that it help them to
attract potential staff member and improve their abilities to upgrade its company performance.
Social
Social factors are reflection of community that functions in, and include belief, values and
attitudes that maximum population can hold as community. Social elements are not only
essential for workable purpose, hence also vital for marketing aspects of Pearson Plc. There are
various social factors that influence company and its operations (Meletiou, Sgouropoulou, and
Skourlas, 2020). Predict purchasing power of buyers which is build on economic indicators is
vital for company so that it assess customers spending patterns. Pearson Plc need to understand
consumption motivations and socials trends which determine consumption behaviour.
Additionally, emergence of social media has now empower digital shopping behaviour among
buyers. Therefore, company must acknowledge shopping behaviour while considering
generational variation as junior audiences are much interested to shop on phone as compare to
old generation. Pearson should also consider digital sites and mobile phones when developing
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marketing strategies. Modifications in demographic figure like migration trends and population
have vital importance for business who operates internationally. Pearson Plc must study different
demographic patterns that help company in selecting correct market parts with maximum
potential growth. As business strategies are effected by moving pattern so it is essential for
Pearson to acknowledge general attitude of an individual towards migration as it help to invite
international guests to host country (Matovic, 2020).
Technological
Technology rapidly changes price structure and competitive landscapes in an organisation.
Growing technological advancement all over the world have increased importance of
understanding factors of technology in making strategic decision process. Pearson Plc need to
examine technological trends to achieve specific business advantages that includes boosting
innovation and improving efficiency of operations. Adoption of new technologies has now lower
down life-cycle of new good development because new goods are now constantly developed ,
then supply chain partner obtained more power. It influences Pearson Plc to produce new
products quickly, combine flexibility into production process and develop better relationship
with production members (Flor, Cooper and Oltra, 2018).
Use of various digital platforms have now common in a business environment. Development
of communication or information technology has now led into adopting of creative marketing
methods to improve connection with customers. Pearson Plc utilize chances offered by digital
sales to enhance performance of business. Further, company should also consider technological
innovations in order to sustain in competitive market. Company can enter into market where
advancement of technology has not reached its maximum level, hence company will upgrade its
market share by focusing on growing technological innovations. Pearson Plc must fund in
emerging technologies to maximize its productivity and profits.
Environmental
Different businesses carries different standards of environmental protection in their norms.
Growing concern of environmental and climatic conditions have made environmental factors an
essential role of Pestle. The global existence of Pearson Plc require organisation to observe
environment factors to avoid unforeseen circumstances. Growing pollution linked with tech
innovations drive all businesses to adopt creative recycling waste and regulation practices.
Adopting effective waste management practices in its operational unites that are operated near
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urban area is extremely crucial for Pearson Plc. Many countries have now imposed rules to
safeguard their rural areas through efficient waste regulation practices.
Pearson can make investment in technologies that is renewable to make sure long term growth
in marketplace. As with this investment can upgrade satisfaction of shareholders and enlarge
consumer base with its enhanced brand image in market. Change in climatic condition can
impact business productivity. For example, Pearson must examine climate condition as bad
weather condition can expand operation and its related cost. Such changes in business may
impact consumer's spending patterns and causing organisation to modify its marketing tactics.
Their is an emerging shift with use of eco-friendly goods and services. Company must take this
opportunity and adopt sustainable practices for business.
Legal
Legal is sixth factor in Pestle analysis. Legal factors influence business practices, hence before
entering into new market Pearson must understand detail legal and regulatory framework of new
buyers market. An execution of legal points is needed to avoid getting into major issues. Pearson
must follow labour health law as many counties have tight rules to make certain safety of
labour. Developing a safe surrounding for workplace is moral or ethical commitment of company
(McCorquodale, and et.al 2017). Further, protection of data also a vital issue due to security and
privacy concerns. Pearson understand privacy of information and regulations in order to
safeguard consumer information. Additionally, several laws are present for setting price, ensure
quality in goods and save consumers from fake advertising. Pearson identify all these factors to
assess and accommodating with protection law of consumers.
CONCLUSION
To conclude, the above report summarised structure or management of company. As it is very
crucial for enterprise having effective management team so that it take care of overall operations
efficiently that includes CEO, executive and non-executive member, chief account officer and so
on. Overall structure of company is determine how it handle challenges that occur in
marketplace. Additionally, the report elaborated how PESTLE analyse will benefit company in
so many ways.
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REFERENCES
Books and Journals
Crespi, T.B.,and et.al 2019. The alignment of organizational structure and R&D management in
internationalized public company. Innovation & Management Review.
Kuznetsov, V,and et.al 2019. Re-engineering the business process of sales in view of life cycle
stage and the company organisational structure. International Journal of Trade and
Global Markets.12(3-4). pp.412-423.
Widarti, S. and Pramajaya, J., 2018. The Effect Of Profit Management On Company
Performance. International Journal of academic research in Economics and Management
sciences. 7(4). pp.44-63.
Çitilci, T. and Akbalık, M., 2020. The Importance of PESTEL Analysis for Environmental
Scanning Process. In Handbook of Research on Decision-Making Techniques in
Financial Marketing (pp. 336-357). IGI Global.
David, J., 2019. PESTEL analysis of the UK. Retrieved October. 30.p.2019.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Phan, S., 2021. The effect of PESTLE factors on development of e-commerce. International
Journal of Data and Network Science. 5(1). pp.37-42.
Meletiou, G., Sgouropoulou, C. and Skourlas, C., 2020, June. Quality Assurance in Higher
Education: The Role of Students. In International Conference on Intelligent Tutoring
Systems(pp. 427-431). Springer, Cham.
Matovic, I.M., 2020. PESTEL Analysis of External Environment as a Success Factor of Startup
Business. ConScienS. p.96.
Flor, M.L., Cooper, S.Y. and Oltra, M.J., 2018. External knowledge search, absorptive capacity
and radical innovation in high-technology firms. European Management Journal. 36(2).
pp.183-194.
McCorquodale, R. and et.al 2017. Human Rights Due Diligence in Law and Practice: Good
Practices and Challenges for Business Enterprises §. Business and Human Rights
Journal. 2(2). pp.195-224.
Online -
Board of directors.2008.[Online].Available through<https://ar2008.pearson.com/pdfs/board.pdf>
Pearson Leadership.2021.[Online].Available through <Board of directors.2008.
[Online].Available through>
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