Business Environment - Sage PLC

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
1. How Sage PLC is governed and structured............................................................................1
2. Analysing external factors on Sage PLC through conducting PESTLE Analysis..................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is governed by macro factors affecting company's operations.
Present deals with Sage PLC which is engaged in delivering enterprise resource planning
software including payroll, accounting and payment solutions. Report will focus on how Sage
PLC is governed and structured with variety of factors such as overview, history of firm,
organisation structure, stakeholders, shareholders, employees relationship etc. On the other hand,
PESTLE analysis will also be conducted for reviewing company's operations in effective manner
and how they are affecting organisation in attainment of goals. Thus, business environment of
Sage PLC will be analysed in report.
TASK
1. How Sage PLC is governed and structured
Overview of Firm-
Sage PLC is one of the leading software business in IT sector which provides enterprise
resource planning software by which it may be able to track on their progress. Business offers
services in 23 countries with 6.1 million customers showing its international presence. Firm is
engaged in providing integrated payroll, accounting and related payment solutions to customers
in the best way possible. It helps small start-ups to bigger enterprises for managing accounting,
finances and entire business in effective manner. Mission of Sage PLC is to deliver technology to
businesses of all size whether they are start-up, scale-up or enterprise. Thus, company provides
accounting and finance services to its worldwide customers.
History-
Chronological Order (Date) Event
August (2014) Sage PLC announced Guy Berruyer was about to retire and as
such, Stephen Kelly, CFO of UK government became next CEO
in November 2014.
March (2017) Sage PLC made an announcement to acquire Compass, innovative
analytic company. This was done to offer high quality analysis and
real-time insight by implementing big data analytic to customers.
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July (2017) It announced acquisition of Intacct for whooping amount of $850
million
August (2018) Firm made an announcement that Stephen Kelly has stepped down
from the position of director and CEO.
November (2018) Sage PLC said that firm will appoint Steve Hare as new CEO on
22 November 2018.
Organisation Structure-
The organisation structure of Sage PLC is functional organisation structure as firm is
divided into smaller groups and specific tasks are being provided in effective manner. Each
department is under the charge of manager who defines roles and responsibilities for employees
to perform. The main advantage of such structure is that employees are grouped in accordance to
their skills and abilities and work is carried out with ease. The company is managed with
reference to Board of Directors approving major decision-making for Sage PLC. The directors
are voted and elected by shareholders and day-to-day operations are handled (How is a
Corporation Organized and Managed?. 2018). Organisation chart of Sage PLC is prepared
below-
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Illustration 1: Organisation chart
Source: Sage PLC chart. 2018

Company's governance-
CEO of company is Stephen Kelly and Chairman is Donald Brydon. The Non-Executive
Directors in company are Neil Berkett, Drummond Hall, Soni Jiandani, Cath Keers, Jonathan
Howell comprising 5 non-executive directors. On the other hand, Executive Director is Steve
Hare who is one independent executive director in company (Annual report of Sage PLC. 2017).
They were being elected to manage operational activities of business in the best way possible
and to attain efficiency with ease. The governance in company is to bridge the gap of
communication between Audit Risk Committee, Nomination Committee, Remuneration
Committee, CEO and Executive Committee.
Stakeholders-
They are the persons in the business which have interest in undertaking of business and
attain useful information for making decisions with ease. There are various shareholders in Sage
PLC such as shareholders, employees, customers, government, suppliers and creditors.
Shareholders-
The relationship of Board of Directors with shareholders are fairly good. This is evident
from the fact that firm has earned revenue of £1720 million in 2017 which was 1439 in 2016
clarifying increment in sales of company in effective manner. In similar manner, net profit for
2017 was 345 (in £ million) which was 300 in previous year. This shows that organisation is able
to maintain good relations with its investors as profits are increased up to a high extent. It can be
analysed that diluted dividends in 2017 being paid to shareholders were 27.71 cent per share
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Illustration 2: Organisation chart
Source: Sage PLC chart. 2018

which was 19.16 cent per share in 2016. This means that firm has effectively earned good profits
and provided higher and increased ordinary dividends. However, cash flow position has
decreased as it was 260 in earlier year and reached to 213 in 2017. It is required to improve cash
balance for maximum liquidity.
Employees-
The relationship of Board of Directors with employees is adequate as employee benefits
are being provided to them. The bonuses are offered and bonus of 2017 was based on organic
revenue growth and satisfaction level of underpins which is related to operating margin and
recurring revenue growth accounting for 80 % of bonus and personal strategic measure accounts
for 20 % of bonus. The underpin target was fell short by 9 % as recurring revenue was lowered.
Thus, group decided not to provide bonus despite of good financial health in 2017. However,
Sage PLC provides good schemes for employees and take regular feedback from them.
Public -
CSR (Corporate Social Responsibility) has also been engaged by company which
provides clarity that public health is being prioritised by firm in the best way possible. It can be
analysed that greenhouse gas emissions are taken into account. Mandatory reporting is done with
pursuant to Companies Act 2006 so as to provide report on emissions (Gladkikh, 2017).
Moreover, organisation is aiming for reduce the energy used by business and effectively explore
most of recycling opportunities. Moreover, it is taking part in global Carbon Disclosure Project
for maintaining its responsibilities towards environment and people.
2. Analysing external factors on Sage PLC through conducting PESTLE Analysis
The external factors are required to be analysed so that the effect on company may be
assessed in the best way possible. For analysing this, PESTLE analysis has been conducted in a
better manner for assessing political, economical, social, technological, legal and environmental
impact on the Sage PLC so that macro factors which are influencing company may be assessed
with ease. PESTLE analysis is a framework utilised by marketers for assessing external
marketing environment factors having impact on operations of company. The main purpose of
PESTLE is to conduct influences to company from external environment which might affect its
working and as such, strategies are implemented for enhancing its position. In relation to this,
PESTLE analysis of Sage PLC is provided below-
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Political (P)-
It is one of the important factor which may have greater impact on operations of Sage
PLC up to a major extent. There are various political factors by which organisation can be
impacted namely as political stability and significance of accounting technology i.e. enterprise
resource planning. Moreover, change or increase in inflation with the help of which company
may sell at accounting, payroll and payment solutions at higher price which may have bad
consequences on customers (Cumbers, 2018). This is evident from the fact that when prices are
increased, customers will not avail products and as a result, sales would decline along with
elevated turnover of clients.
Since, Sage PLC is engaged in technology sector, anti-trade laws of various nations are
different. It is required to follow anti-trade laws relating to technology so that company may be
able to conduct smoother operations with ease. The political factor of increase in inflation and
anti-trade laws with relation to technology are main political factors which have effect on
company and it is required to analyse the same for reducing overall impact on firm. This will
have much productivity and efficiency up to a high extent and furthermore, Sage PLC will be
able to prevent such factors for increasing efficiency in the best way possible.
Economical (E)-
The macroeconomic environment such as inflation rate, savings rate, rate of interest and
foreign exchange rate collectively determines aggregate demand and investment in the economy
in effectual manner. Sage PLC has to consider the skill level of 23 countries in which it is
operating and type of economic system for making analysis of economic factors in effective
manner. It is required that firm should purely focus on type of economic system of particular
system (Au-Yong-Oliveira and et.al., 2018). There are various types of economic system such as
traditional system, command economic system, market economic system and mixed economic
system. It is essentially needed that company should analyse economic system prevailing in the
country so that business may be able to provide services in effectual way.
On the other hand, technological advancement is tough to be handled by people because
it has direct impact on them. Since, accounting and payment solutions were being done with
traditional methods by using more of paperwork resulting in more time and less productivity.
However, with the advancement of technology, enterprise resource planning software is being
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used which seems to be new for employees and resistant comes from them. Thus, the skill level
of employees in countries decides whether they will avail such services or not leading to impact
on sales and profits of Sage PLC.
Socio-cultural (S)-
The socio-cultural factors are another major one impacting company up to a major extent.
Society's belief and culture has impact of getting things of organisation. Shared beliefs and
attitudes of people play crucial role in how marketers at Sage PLC will understand needs and
beliefs of customers and accordingly design, message for marketing for technology industry
business enterprises (Melo and et.al., 2018). Education level of people and entrepreneurial spirit
are the two main heads which are important for company and has much impact on it. Education
level of customers is required to be analysed as if they are less educate, then they will not avail
accounting and payroll services which are offered resource planning software.
Furthermore, it is required that company should focus on entrepreneurial spirit of people
in concern country up to a major extent. It can be analysed that when more of the ventures are
being started, then demand for the accounting and payroll software products of Sage PLC will
increase in the best way possible leading to attainment of stated objectives in effective manner.
On the other hand, ventures are few, then customers will not avail services and product will lose
its worth in the market and leading to decline in sales. Thus, socio-cultural factors impact
company's operations.
Technological (T)-
Technological advancement is disrupting business sectors. If technology changes slowly,
then more time may be given to business to effectively cope up with the same and remain
profitable. It is required that company should evaluate as to where it exists in the market
(Brannen, Piekkari and Tietze, 2017). The competition in software technology in which Sage
PLC is engaged quite disruptive because there are plenty of innovative products being introduced
by companies. It can be said that competition is becoming fierce and little time is provided to
firm to cope with situation to remain competitive in market. There are two factors such as cost
structure of product offerings and technological development by rival businesses.
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Cost structure of company's products should be competitive as it can be said that rivals
such as Oracle and SAP are offering more benefits in similar package offered by Sage PLC. The
costs should be low so that sales may be increased and customers are retained as well. On the
other hand, technological advancement such as cloud-base services are being provided by rivals.
It is required that Sage PLC should provide such services along with access to real-time data by
customers so that they are attracted to it (Caiazza, Shimizu and Yoshikawa, 2017). This will help
company to earn profits and customers will become loyal to it.
Legal (L)-
The legal environment has also impact on company up to a major extent. It can be
analysed that Sage PLC has worldwide operations and it is required that legal factors should be
conducted in a better way for reducing impact of legal issues on company. There are two factors
which may affect company such as changes made in copyright law and data protection law. Both
are required to be analysed so that business may be mitigate the same with ease. Copyright law
of nations are different and for maintaining intellectual property of firm, copyright stands
valuable. It is used to get protection from other businesses in effective manner so that features of
accounting software may not be imitated by them. For this, different nations has different law
which has to be followed for maintaining its confidentiality.
Data protection law has also major impact on company. It is required that company may
be able to protect the enterprise's data which avail their services. In relation to this, if privacy of
data is not carried by the firm, then it will not lure customers and company may lose potential
customers in effective manner. Thus, both the laws have much impact on company and as a
result, Sage PLC has to follow the same for maintaining its position in market.
Environmental (E)-
The environmental factors have major impact on company as it operates in multiple
locations. Sage PLC engaged in software services of accounting, payroll and complete enterprise
resource planning and environment laws are required to be followed the same so that company
may not violate the same (Rick and et.al., 2017). In relation to this, there are two environmental
factors impacting Sage PLC such as waste management in technology sector and climate change.
The climate of every country is different and not two are same. This means that environment has
to be protected so that change in climate may not affect company up to a major extent.
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On the other hand, waste management is another major concern as firm has to make
proper strategies and to implement optimisation software so as to reduce wastage. Furthermore,
recycling of wastage is also important so that environment may not be degraded quite
effectively. This will have positive impact on firm's operational activities if followed
appropriately. Moreover, highly modernised landfills should be complied with federal and state
regulations in order to ensure that proper protection is provided to nature and thus, impact of
environment can be minimised. Hence, company needs to assess the external factors for reducing
impact over it by following environmental norms.
CONCLUSION
Hereby it can be concluded that business environment is important to be analysed so that
firm may be able to effectively perform in the market. It helps to attain market clarity and
various external factors or macro factors can be analysed in a better way. This is essentially
required for company for enhancing its position in market quite comfortably. Furthermore, by
conducting PESTLE analysis, it can be assessed that Sage PLC is effectively attaining worldwide
operations with ease.
The political, economical, social, technological, legal and environmental factors have
major influence on company and is needed that these are followed so as to enhance operations
with ease. Moreover, it can be concluded that organisation structure is appropriately designed
and governed in effective manner. Moreover, company's operations are good and has acquired
few companies in recent years. In relation to financial position, net profits are good and higher
dividends are being paid to shareholders leading to maximum satisfaction.
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REFERENCES
Books and Journals
Au-Yong-Oliveira and et.al., 2018, March. The Rise of the Unicorn: Shedding Light on the
Creation of Technological Enterprises with Exponential Valuations. In World Conference
on Information Systems and Technologies (pp. 967-977). Springer, Cham.
Brannen, M. Y., Piekkari, R. and Tietze, S., 2017. The multifaceted role of language in
international business: Unpacking the forms, functions and features of a critical challenge
to MNC theory and performance. In Language in International Business (pp. 139-162).
Palgrave Macmillan, Cham.
Caiazza, R., Shimizu, K. and Yoshikawa, T., 2017. Cross‐border M&A: Challenges and
opportunities in global business environment. Thunderbird International Business
Review.59(2). pp.147-151.
Cumbers, A., 2018. What is a ‘person’like you doing in a ‘place’like that? Reflections on the
business school migration from economic geography. Environment and Planning A:
Economy and Space, p.0308518X18782704.
Gladkikh, T., 2017. The International Business Environment and National Identity. Routledge.
Melo, M.F.S and et.al., 2018. Business strategy and environmental practices: Evidence in the
sugarcane energy sector in Brazil.African Journal of Business Management. 12(2). pp.44-
57.
Rick, A.H.I and et.al., 2017.Directed communication in a virtual environment. U.S. Patent
9,592,451.
ONLINE
Sage PLC chart. 2018 [Online] Available Through: <http://www.cogmap.com/chart/sage-group-
plc>
How is a Corporation Organized and Managed?. 2018 [Online] Available Through:
<https://www.mycompanyworks.com/how-is-a-corporation-organized-and-managed/>
Annual report of Sage PLC. 2017 [Online] Available Through:
https://www.sage.com/corporate/investors/annual-report/
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