Importance of PESTEL analysis for a business firm

This article discusses the importance of PESTEL analysis for business firms. It explains how PESTEL analysis helps in analyzing the external business environment and identifying opportunities and threats. The article also provides insights into the application of PESTEL analysis in the context of Morrison's, a British multinational retailer.

BUSINESS ENVIRONMENT
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Description of organization structure, its administration and how it is governed..................3
TASK 2............................................................................................................................................5
Importance of PESTEL analysis for a business firm..............................................................5
TASK 3............................................................................................................................................6
PESTLE of Morissons Company...........................................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
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INTRODUCTION
Business environment term indicate collection of all workers, individuals, businesses and
other factors that are outside strength of sector but that may impact companies production
procedure. This concept caters numerous chances or great opportunities to firms that can help to
determine key benefits use to improve performance of a company. The current study will be
based on Morrison’s, which falls under list of British multinational retailers and well known
supermarkets in the UK. This study will explain organizational structure of chosen firm, number
of directors and detailed information about chairperson. Furthermore, this report will define
significant of PESTLE analysis for a venture firm and it will also describe application of chosen
framework to analyse external environment of selected company.
TASK 1
Description of organization structure, its administration and how it is governed
Overview of chosen firm’s including their history-
Morrison’s is number fourth biggest chain of supermarkets in UK; they provide range of
products and services to local or residential people in nation according to their taste and
presences as well (Munson, Tiropanis and Lowe, 2017). This organization was founded by
William Morrison in 1899 with the beginning as a butter and egg stall in England. Firm operated
their 492 outlets effectively and served a ratio of around 12 million consumers every week,
which is one of the biggest things for its business (Miao, 2019). Management worked and drive
their activities towards achieving set objectives and aims of supermarket. They wants to become
more competitive, serve excellent services to customers, reach at international level and gained
great buyer experience more than its main competitors such as TESCO, ASDA, Sainsbury’s, etc.
Company ethos is to be competitive that means helping and supporting people to make
their every penny go further, saving them money on daily products they need and want to
purchase. Firm has used their expertise as shopkeepers and food makers to make assure that its
own brand items offer the best quality at excellent possible cost. Food, drink, books, apparel,
DVDs, magazines and CDs are included in list of supermarket goods.
The owner of chosen supermarket operates his venture under name of WM Morrison
Limited and his son took over firm after him in 1952. He successfully opened a small outlet in
the main centre of town.
Structure of chosen supermarket-
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An organizational structure can define how practices such as resource handling, work or
task allocation, collaboration and coordination are directed towards achievement of business
goals. Each organization follows specific structure according to their size, scope and operations.
Just like them, Morrison's supermarket also used particular one and that is Matrix business
structure (Funminiyi, 2018). With this formation organization efficiently manage their
operational and functional units and obtain several benefits in term of increasing sales and
profitability even better. It is permanent company designed that help to achieve desire outcomes
by utilizing groups of specialists from varied functional areas in venture.
Number of directors on Board-
The organization structure of chosen supermarket defines their 9 main directors including
David Potts, Trevor Strain and Michael Gleeson. David Potts and Trevor included in list of chief
executive and Andrew Higginson, Rooney Anand, Kevin Havelock, Neil Davidson, Paula
Vennells, Belinda Richards and Tony van Kralingen are considered as non executive directors of
Morrison’s who are able and capable to take right judgement in context of organization success
and progress. They all are usually not engaged in daily administration of business but are
included in planning and policy making practices, which is really very important to do (Al
Okaily, Dixon and Salama, 2019). Non executive directors of company are accountable for
monitoring of executive directors, who are member of board of organization.
Figure 1Organizational Structure
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(Source: The Official Board, 2020)
Chairperson and CEO of Morrison’s-
The role of Chairman is quite different in supermarket, he is accountable for major
activities such as decision making, problems solving, coordination and communication with all
board members. Andrew Higginson is the chairperson of Morrison’s, who takes steps on betting
giant flutter. He set to take similar role at gambling giant flutter entertainment as he closes in on
11 Billion pounds merger. His duty in company is to manage meetings and conferences in a
manner that motivated judgments.
David Tom Potts is the chief executive officer of this British supermarket chain, he has
high rank executive in organization, whose most important responsibility is taking major
business decisions, managing entire operations, functions and resources of firm in systematic
manner. His role is to act as main phase of communication between board of members and
venture (Li and et.al., 2018).
When CEO and Chairperson was appointed and elected-
Andrew Higginson joined Group as chairperson in supermarket and elected in 2014
October and he become a chair man at end of 2015 January. He brings important board, retail,
commercial and leadership experience to board. He played his external roles in effective and
systematic manner.
Along with him, CEO named David Tom Potts has been elected in Morrison’s 2015
March he has been chief executive officer of supermarket, having succeeded Dalton Philips.
TASK 2
Importance of PESTEL analysis for a business firm
PESTEL analysis is most common framework or approach that has been utilized by
several marketers to gain a lot of benefits (Shtal and et.al., 2018). In today’s period, use of this
tool is very important because it help to determine external factors that can put negative or may
be positive impact on current strategies and practices of companies. By carrying out this method
firms are able to analyse external business environment that have an effect on a company. With
the help of this tool companies can successfully identify challenges, threats and other elements
that are affecting growth opportunities and success factors of businesses. The best thing about
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this framework is that it make firm capable to determine any trends or changes within corporate
world.
The importance of this analysis for companies can be defined in several ways for instance
PESTLE tool give a easy and simple use of model for environment analysis, it includes cross
functional expertise and abilities (Sánchez-Cambronero, González-Cancelas and Serrano, B.M.,
2020). Furthermore, it helps to eliminate affects and influence of potential threats to firms and
supports in development of strategic approaches and methods within a organization. It is
essential because it provides a procedure that enables companies in the whole world operated in
any sector to determine and find out new chances in regard to great progress and excellent
success.
PESTLE analysis as strategic tool is quite beneficial and useful for organizations in term
of growth planning, marketing, strategic management and product development planning at
organizational degree. It provide so many benefits to a firm for instance, firms can easily carry
out this concept because it is cost effective and provide deeper comprehending about current
business environment that help management while making decisions related to businesses. The
unnoticeable truth about this tool is that id indirectly or directly influence venture atmosphere
either internal or external. This model helps in different terms like contribute assessing outside
chances and threats that put negative impact on sales, operations and functions of firms. It can
aid businesses to comprehend external trends. For example, with this approach, management and
its leaders can saw how target consumers is moving towards a specific social media platforms.
Research in that specific thing is an great chance for companies to build their strong brand image
in market through development effective marketing content that can be promoted on most
popular social media channel or application, where number of potential buyers are higher than
other sources.
This framework is important to use because it help to provide clear understanding about
political changes, social, technological, economic and further modifications that allow
companies to consider it and then take better judgements. It give the best opportunity to
organization in form of giving chance to make their teams and management prepare to deal with
further threats and barriers. Through this tool in recent time companies can gain a lot of data that
is important to collect and use to handle further situations in effective and ethical manner.
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TASK 3
PESTLE of Morissons Company
The macroeconomic factors impacting Morissons Company within hospitality industry
are widely strong for gaining larger goal in business scenarios and also for stronger synergy at
work which will potentially develop stable revenue targets within longer consumer’s goodwill
paradigms. The facts of macro environment within global industry have been widely imposing
strong impact among business scenarios which are as follows:
 Political factors: Change of government
 Economical factors: high rate of inflation
 Social factors: Increased rate of inflation
 Technology: Automation
 Environment: Climate
 Legal: Changes in law
Analysis of macro environment aspects will enable in depth analysis of larger goal innovation,
determining horizons to be widely impacting on profitability aspects and here are various factors
within macro environment within dynamic industry paradigms which has been found to be
widely essential for larger goals advancement. Functional goals efficiency and for stronger
profitability metrics can be achieved in business as follows for being the best brand within
hospitality industry (Capuder, Sprčić and Pandžić, 2020).
 Political factors: The political factors are highly essential for business domains
within Morrissons Company where there are high domains of functional strength
implemented. The political factors such as changing government policies and
structural working advancement within functional rules have strong presence, where
yielding synergy is wide and where parameters are strongly imposed among higher
quest operations. The political stability when strongly measure enables management
to develop longer business scenarios and widely also focus on keeping up with new
horizons of innovative paradigms. Political factors strongly impacting in various
aspects, where UK has to also favourably focus on innovation and stability
parameters to keenly grow on varied scenarios.
 Economic factors: The economic factors such as high inflation rate, changing tax
rates scenarios and working paradigms have been found to be widely impacting long
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term revenue goodwill, profitability scenarios and also for gaining effective new
consumers growth revenue standards. The economic stability is widely essential
where Morison’s company for stable expansion in new growth scenarios have been
able to keep up the innovation, leveraged scenarios and also for technical exploration
for stronger target growth in business domains. Economic factors have large scope for
Morison’s company have
 Social factors: The varying social factors within business hospitality industry are
widely essential for larger goals advancement and new functional standards
efficiency, to keep up with varying larger customer oriented services where there are
wide changes developing. The hospitality industry have been widely developing
stronger innovation, diverse paradigms among stronger synergy aspects where
various customers preferences have been taking innovative step and also for keeping
up with larger goals functional aspects, to highly also evolve widely on new quest
paradigms. The Morrison’s Company have wide business opportunities for
implementing social changes at place by investing in digital media and working on
varied digital avenues where larger evocative governance takes place (Christodoulou
and Cullinane, 2019).
 Technological factors: Hospitality industry has been developing varied new
technological growth factors where there are stringent innovation taking place among
larger goals, use of new end marketing and promotion scenarios where Morrison’s
have to competitively focus. The Morison’s Company has to emerge focus on best
technology usage of marketing and promotion scenarios for pertaining focus towards
pertaining stringent innovation on larger paradigms to serve people with best skills.
Technology has been recognised as one of the most advanced asset for larger revenue
standards, larger goals advancement within varied effective paradigms and to keep up
innovation on longer scenarios. New technology shall be widely used for stronger
marketing and promotion parameters where larger functional goals diversification
have been implemented, and also for keenly usage of determinants and working
horizons to be developing actively.
 Legal factors: The legal factors hold wide importance where new governance factors
are widely strong where there are stronger working scenarios analysed and also
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legally it is important for determinants which has been impacting widely. The legal
factors has high determining scope for larger goals advancement and primitively also
developing wide pace, to keep up the consumer goodwill. Hospitality industry has
been also focusing to develop stronger working paradigms, new larger goals
advancement and quest horizons where legally there is high scope for major legal
changes. Hotels have been also imposing stringent focus on keeping up with
innovation paradigms and varied larger changes taking yield focus for quest horizons
to be detrimentally be active.
 Environment factors: The climate changes within world have opened up varied new
changes and fundamental growth towards sustainable responsible tourism facilities
among hospitality paradigms to keep up with keen scenarios and larger functional
demands (Simões, 2020). The environment factors also actively focus towards
keeping up with innovation synergy and new diverse paradigms to yield stronger
consumer goodwill among wider horizons. Major changes coming on within
environment factors have larger productivity goals and operating efficiency
demanded within major scope horizons where there is larger productivity aimed.
There have been stronger logic goals within new decisions paradigms, to yield quest
high focus on sustainable parameters to keep up the innovation functional ethics.
Environment factors are highly influential for hotels within tourism and hospitality
industry where various companies are widely focusing to head with diversity aspects,
stronger governance goals and new fundamental aspects for stronger working
preferences within consumer demands.
These factors have in detail analysed macro factors widely imposing larger goals focus and new
quest horizons widely leveraging quest parameters to be impacting, determining larger revenue
standards and consumer goodwill widely productive. Morison’s for larger functional expansion
in new paradigms of hospitality industry have been widely focusing new domains of CSR
services, partnering onto working quest goals to evenly focus on determining scope. Morison
has to also productively focus on diversion of new strengths as per consumer preferences
variably and also to year focus on quest larger goals to keenly raise higher scale innovation. It
has been also analysed that the macro business environment has been widely growing to be
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highly important pace, where scenarios of efficacy have been strongly analysed to be largely
essential (Walsh, Bhagavatheeswaran and Roma, 2019).
CONCLUSION
From above analysis, it has been summarized that Morrison’s as leading supermarket by
taking right decisions and considering appropriate approaches effectively overcome negative
impact of key external factors such as political, economic, social, technology, environment and
technological elements. Furthermore, it has been analysed that by using PESTEL analysis as
strategic framework companies obtained a lot of benefits which they has been used in the current
and future business scenario. Chairperson, non executive and executive directors of Morrison’s
playing vital role in company as they manage overall organization functions and practices
successfully. Moreover, management by recognizing key methods effectively increased
operational efficiencies. It has been analysed that, Andrew Higginson as chair man and David
Tom Potts as CEO in Morrison’s developed ranges of tactics which he has been used to gain
competitive edge.
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REFERENCES
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electric vehicles integration policy goals: Integrated risk analysis approach. International
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from the Implementation of a Port Energy Management System: A SWOT/PESTLE
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Funminiyi, A.K., 2018. Impact of Organisational Structure on Employee Engagement: Evidence
from North Central Nigeria. International Journal of Advanced Engineering,
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Li, Y and et.al., 2018. The impact of environmental, social, and governance disclosure on firm
value: The role of CEO power. The British Accounting Review. 50(1). pp.60-75.
Miao, M., 2019. Do the different store formats of the same brand matter to Chinese customers?
An International study on a Japanese fashion brand. Journal of Global Fashion
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Sánchez-Cambronero, A., González-Cancelas, N. and Serrano, B.M., 2020. Analysis of port
sustainability using the PPSC methodology (PESTEL, Porter, SWOT, CAME). World
Scientific News. 146. pp.121-138.
Shtal, T and et.al., 2018. Methods of analysis of the external environment of business activities.
Simões, E.N., 2020. A decision support system application module-for PESTLE analysis-
competitive intelligence algorithm (Doctoral dissertation).
Walsh, K., Bhagavatheeswaran, L. and Roma, E., 2019. E-learning in healthcare professional
education: an analysis of political, economic, social, technological, legal and
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Online
The Official Board. 2020. [Online]. Available Through: <https://www.theofficialboard.com/org-
chart/morrisons>
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