PESTEL Analysis of Business Environment

This assignment focuses on analyzing a business's approach and activities within its external environment using the PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) framework. It emphasizes the importance of understanding different environmental sectors for business development and provides a glimpse into this analysis.

BUSINESS
ENVIRONMENT

EXCECUTIVE SUMMERY
The report is about understanding different factors in business environment and how they
can affect functioning of organisational activity. This has focussed Thomas Cook Plc a large
tours and travel organisation and its business activities. The company is a large very renowned
company making their global presence having assert of more than 9007 million pounds (2017).
This assessment will cover the existence of company, their organisational structure, policies and
how they have used PESTEL in analysing their business activity.

Table of Contents
EXCECUTIVE SUMMERY...........................................................................................................2
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
1. A Overview of company .......................................................................................................2
1.B Governing of organisation ...................................................................................................4
2. A Purpose of PESTEL analysis .............................................................................................5
3. A PESTEL analysis of Thomas Cook PLC ............................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Travel and tourism sector is one of the fast growing business in current global scenario
due to rise of bleisure activity (a combination of business and leisure). It is regarded as one of
the main contributor in economy of a country. This sector is creation around 5 million job and
the figure is ever increasing (Hamilton and Webster, 2015). Thomas Cook Plc (an UK based
company) is one of the renowned company in all over the world. Company is a private sector
organisation working hospitality and tourism sector doing successful business. This assessment
focus on internal organisational structure of company and and effect of external environmental
structure (PESTEL) that can affect functioning of organisation.
MAIN BODY
1. A Overview of company
Thomas Cook PLC is a British global company founded in 1841. was established by
Thomas Cook with the prime focus on providing leisure to people. He has started his business
with one day rail excursion between Leices to Loughborough on 5th June 1841. They have
developed their business over the years and have been able to increase their business
successfully all over the world with over 22 million customers. In year 2007 a merger took
place between Thomas Cook AG and My Travel Group Plc with 52% shares remains with
company and 48 % is with MyTravel Group Plc. At the end of September 2017 they are able to
increase their revenue of 9 Billion pounds. They also have a strength of 22,000 employees
working efficiently in over 17 market location of organisation. They have also listed their stocks
on London Stock Exchange (TCG).
Company have managed their business activity over the year with efficient business
strategy that will help organisation to make efficient planning and strategies and execute them
in efficient manner (Halbert and Ingulli, 2011). After the merger CEO of company Peter
Fankhauser has organised a new management structure for firm. In their new management they
have planned to give more responsibility to Uli Sperl who will be looking after all major
operation related to brand and travel leisure products for organisation. He has planned some
other snuffles like Mike Hoben will look after marketing and David Taylor will be new finance
manager. The main motive behind that is to have a good management to handle business
activity. They have been efficiently able to enhance their business by distributing jobs in
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different department that helps them to properly evaluate their business activity that will further
help them to grow and sustain in new market by exploring them in an effectual way. They have
divided their management in an hierarchical structure and distribute their work accordingly. The
major functioning of organisation is given below -
Human Resource Management – Human resource management plays crucial role in
managing business activities of organisation. There are over 22,000 people working in
organisation in different locations , company require an effective leader to guide their
management. Some of the important roles of manager are providing training and development,
positive working culture, implementation of innovative ideas in business, demand forecasting
etc., making coordination between different departments (Gebauer, Paiola and Edvardsson,
2010).
Marketing and promotional activity – For reaching to new destination and increase
business activities an organisations need to analyse different opportunity for organisation and
how can they be able to compete in comparative environment. The marketing department of
company has used Marketing Mix to evaluate different factors in external environment that will
aid them to plan better in their business activities.
Finance department – This is regard backbone of a company, By having a better
financial management system company ca execute their business plan and make bug earning.
Travel and tourism practise in UK is one of the fast developing sector in the country so having a
good financial base will air organisation to perform better in business environment. The revenue
of Thomas Cook at the end of year 2017 is (9 Million Pound), that shows that company is having
strong financial planing
Operation and management –It is crucial for companies to execute their planning and
strategies in efficient manner so that they can be able to fetch more benefits from external
business environment. In recent years Thomas Cook have focussed on their operational and
management activity eyeing the effect of Brexit after its implementation, that can have major
impact on business activities in all over United Kingdom.
These are some of the important activities that will help organisation to plan activities of
their business in a potent way (Fernando, 2011).
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1.B Governing of organisation
Top level management of organisation feels that by maintaining high standard in
corporate governance will help them to make better decision making that will aid organisation to
plan better for their business activities in both micro and macro business environment.
Board of director of organisation are responsible for performing some business activities
are
 Development of Group strategy and make business plans
 Approving investment in capital expenditure
 Approving decision on dividends, recommendation and interim factors.
 Succession planning for organisational
 Maintaining ethics for organisations including health, social responsibility,community
responsibilities in business activities.
For better governance of organisation they have been able to make good relationship with
their stakeholder, employees or other people attached to business activities of organisation.
Relationship and their advantage for positive governance for organization (Dahan and et.al.,
2010).
Stakeholder – Thomas Cook is being listed on London Stock Exchange. It is one of the
several companies that have shown continuous growth in their business environment. Over their
with their profit making ability in business activity they have been able to fetch more numbers of
investors to their business. Some of the main stakeholders of company are employees, customers,
investors,suppliers, government, industry partners, NGO and travel experts. Company have been
able to increase their business activity by having better relationship with their stakeholders in
business market.
Employees – The puller of development of organisation in their workforce. Company is
having a huge amount of skilled and knowledgable employee that helps them to grow efficiently
n business market. Organisation feels that investment on employee will aid them to make potent
plan, that will aid organisation to increase their business activities for longer run. For developing
a better organisational culture and positive environment they have planned to give benefits to
employees. It can be monitory, non monitory, appraisals, promotions, holiday packages etc. That
will help organisation to have dedicated employees, they will ultimately add valued to their
future development plan for organisation.
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Other people – This involves all those factors that helps who are directly or indirectly
attached to business activities of company. Some of hem are suppliers, customers, local
businesses and labours, Non Governmental organisations that are necessary for performance of
business activities of organisation. Organisation is having a separate management that helps in
properly evaluating the effect of these factors and how they can help company to have
comparative advantage in several business market (Cronan and et. al., 2011).
2. A Purpose of PESTEL analysis
PESTEL analysis is used to evaluate different activities of organisation in external
business environment so that they can be able to monitor their planning in external environment.
The main purpose of implementation of PESTEL in activities are as follows
 For analysing political condition of company to execute their business plan. It is
observed that company have aggressive approach to increase their business all over
world, so for performing effectively in their business activity they have observe political
condition of that country. For example in UK government has planned to implement
Brexit in 2019 so it is important for them to analysis changing political environment of
organisation.
 Economical condition – Travel and tourism company is major contributor on enhancing
revenue for country so over the tear they have been working over the years to gain
profit. Further by properly evaluating economic factor they can make better planning to
increase their revenue (Commander and Svejnar, 2011).
 Social culture - As the company is public limited company performing business in
hospitality it is important for them it plan better to serve and earn for their organisation.
Around 266 million people are connected to country in one or the another form. 1In
every 11 person is linked to business. By 2024 they have planned to support
346,901,000 jobs that is roughly 10.2% jobs of the world.
 Technology – Utilisation of technology in a better manner will aid organisation to reach
out to customer in a cheaper way. They have used internet to connect to their clients,
other tour operators and other essential people. So it is important to analyse and
implement latest technology for better analysis of company.
 Environmental factor – Environmental protection is an important factor to be discussed
today. There are strict protocols are made by government of different company so it is
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important for company to adopt several business strategies that will be helpful in doing
less damage to environment (Chow and et. al., 2011).
 Legal factor – For controlling activities in trading sector government has enacted several
policies and legal for better functioning of organisation. Thomas cook Plc must make
sure that they adopt all legal factors to minimise all deputes and conflicts that arise in
business sector.
3. A PESTEL analysis of Thomas Cook PLC
PESTEL analysis is used to evaluate influence of environment on business of
organisation. They have categorised different factors into 6 major categories to properly evaluate
different factor in external environment that includes political, economical, social, technological,
environmental, legal. These factors are used to give 360 degree analysis of external business
environment. Thomas Cook plc has efficiently applied PESTEL analysis in their business
environment so that they can be able to gain more profit from external business environment.
Political factor – This factor analyse the degree of intervene government do in business
activity of organisation. Some of the major factors that are includes in this are government
policies,labour law, tax policy, trade policy, environmental law etc. Due to political unsuitability
in UK and implementation of new policies after Brexit will affect business activities of Thomas
cook. Many employees of organisation feels that they will loose their jobs because government
of UK are focussing on providing funding to small scale organisation (Burns and Winter, 2011).
It many also effect travel and tourism sector that will decrease revenue for organisation. Thomas
cook Plc has to make proper analysis of changing political environment and make planning for
future business planning. Apart from revenue and business activity they must also focus on
assuring their employees about their jobs that will help them to perform according to their
potential.
Economic factor – This factor defines a way on how company can perform their
business activity to gain fruitful result. Factors that are included in this are interest rate,
economic growth, dispersible income, inflation etc. Thomas Cook Plc have to consider this
factor seriously because it may influence, demands, prices, costs and revenue. For example
Holiday packages that are organised in company are termed as income elastic business, it can
increase profit or lead to loss in business activities of organisation. So organisation has to work
efficiently on determining economy of company.
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Social factor – All the factors in social factor must concentrate on understanding belief
and attitude of organisation (Aterido, 2011). Some factors that are included in these are
population growth, career attitudes, health consciousness. These factors are used by organisation
to understand thinking and approach customer in different geographical location. In social
environment of UK several government cut has affected life of people. It is observed that around
12% of people are not interested in leisure and joyful activities, 35% people are couscous about
spending more different activities., 30% are nit that much cautious, and 5% do not bother on
spending. All these types of factors disrupt disposable income of people and ultimate affect their
buying power. If income of people decrease it will ultimately tour and travel activity of
organisation.
Technological factors – Technology is having huge impact on business activity of
different company. It has provided different tools and techniques that has helped in organisation
activities of company and helps in making planning and strategies (Agarwal, 2012). In external
environment it helps in evaluating marketing strategy by observing different factors like
competitors, business activities etc. Thomas Cook has implemented technology to put their
business online. They have been able to operate different functions like online promotion, online
marketing, promotion and marketing. Technology has also helped organisation to maintain
online trading practice,termed as huge source of income for organisation. It has also affected
working behaviour of their their employees also. They can now implement some innovative
ideas in business activities of organisation.
Environmental factors – This is an important factor that has been included in external
environmental factor of organisation. It has to be evaluated because many activities of different
organisation has influences and damaged environmental (Auzair, 2011). It has to be considered
very seriously because there is increase of scarcity of raw material, increase in population,
carbon emission etc. So it is responsibility of government and organisation to coordinate with
each other reduce harmful effect on environment. Considering aviation industry is among the
major industry that is affecting environment in a drastic way. For increasing more revenue and
dominating the travel and tourism market Thomas cook PLC is planning to to roll out more
number of airlines to fulfil demands of their business. They have to follow some protocols for
diminishing pollutants from their business activity other wise it will affect business because
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there are many countries, especial in Europe are concern about global warming and climate
change
Legal factors – It includes different elements like health and safety, consumer rights and
laws, product safety, product labelling, equal opportunity and advertisement factors. Thomas
Cook Plc follows legal laws in internal and external factors for proper functioning of their
organisation. For example company is strictly following legal policies in their business for
smooth functioning of organisational activity. For example they have efficiently implemented
labour law for controlling the large amount of labour force for their company (Avramenko,
2012).
CONCLUSION
From the above report it is concluded that for performing better business external
environment a company has to adopt a better business policy for smooth working in both micro
and macro sector. Thomas Cook Plc is a large scale organisation has shown their strong
presence in tours and travel in last over the years. They have adopted PESTEL as an efficient
tool for examining their approach and activities in external environment. Analysis of business in
different environmental sector is an essential part for development of business and this
assessment has shown a glimpse of that.
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REFERENCES
Books and Journals
Agarwal, R., Grassl, W. and Pahl, J., 2012. Meta-SWOT: introducing a new strategic planning
tool. Journal of Business Strategy. 33(2). pp.12-21.
Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’
growth? Business environment and employment growth across firms. Economic
Development and Cultural Change. 59(3). pp.609-647.
Auzair, S., 2011. The effect of business strategy and external environment on management
control systems: a study of Malaysian hotels. International Journal of Business and
Social Science. 2(13).
Avramenko, A., 2012. Enhancing students' employability through business simulation.
Education+ Training. 54(5). pp.355-367.
Burns, C. and Winter, S., 2011. Introduction. Australian Farm Business Management Journal.
8(2). p.iv.
Chow, A. T. and et. al., 2011. Broadband network with enterprise wireless communication
system for residential and business environment. U.S. Patent 7.944,948.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Cronan, T. P. and et. al., 2011. Decision making in an integrated business process context:
Learning using an ERP simulation game. Decision Sciences Journal of Innovative
Education. 9(2). pp.227-234.
Dahan, N. M. and et.al., 2010. Corporate-NGO collaboration: Co-creating new business models
for developing markets. Long range planning. 43(2). pp.326-342.
Fernando, A.C., 2011. Business environment. Pearson Education India.
Gebauer, H., Paiola, M. and Edvardsson, B., 2010. Service business development in small and
medium capital goods manufacturing companies. Managing Service Quality: An
International Journal. 20(2). pp.123-139.
Halbert, T. and Ingulli, E., 2011.Law and ethics in the business environment. Cengage Learning.'
Hamilton, L. and Webster, P., 2015.The international business environment. Oxford University
Press, USA.
Online
Thomas Cook Group. 2015.[Online]. Available
through<https://www.thomascookgroup.com/governance/>
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