Importance of PESTLE Analysis for Business Organization

This article discusses the importance of PESTLE analysis for a business organization, focusing on the impact of political, economic, social, technological, environmental, and legal factors. It explores the application of PESTLE framework in analyzing the external environment of National Express Plc, a multinational transport company. The article highlights the significance of strategic planning and decision-making based on PESTLE analysis.

Business Environment

EXECUTIVE SUMMARY
National express Plc is a reputed transport based company which deals at international
level. The company follows the hierarchical organisational structure which follows a chain of
command from top to the bottom. It is important for the company to analyse the external
environment by identifying the external factors so that it can take such decisions which are
beneficial for the growth and success of the company. PESTEL analyses helps the company to
exploit the opportunities and mitigate the threats so that business can survive and grow easily.
Moreover, the PESTEL framework of National express Plc helps the company in identifying the
potential opportunities in the environment so that it can battle the competition and retain the
customer base in the market. These external factors have positive as well as negative impact on
the working of company. Additionally, the political, social and technological factors have
positive impact whereas economic, legal and environmental have negative impact as it obliges
the company to adhere with laws and come up with such strategies which can help in surviving
in the market.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION ..........................................................................................................................4
MAIN BODY...................................................................................................................................4
Describe the structure of the company, its management and how it is governed.......................4
Evaluate the importance of PESTLE analysis for a business organisation.................................6
Use the PESTEL framework to analyse the external environment of your chosen company....7
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business is considered as that entity which carries on the commercial activity with the
sole motive of earning profits and maximising revenues. There are many internal and external
factors which influences the working of the company. The internal factors are present within an
organisation which includes strength and weakness of the company and the external factors
involves political, economic, social, legal, environmental and technological factors which have
major influence on its working (Khajeheian, Friedrichsen and Mödinger, 2018). The organisation
chosen for this report is National Express Plc, a multinational company dealing in transport. It is
headquartered in Birmingham, UK. This report analyses the overview of company and
additionally discusses the importance of PESTEL analysis and application of this model in
respect to organisation.
MAIN BODY
Describe the structure of the company, its management and how it is governed.
Overview of company
National Express group Plc is a multinational British company which operates coach,
bus, tram and train services in United Kingdom, United States, Ireland, Germany, Spain, Canada,
Portugal and other countries. It also provides long distance coach services in whole Europe. In
the year 1972, the National Bus company, a state owned organisation decided to bring under one
brand the scheduled coach services which are operated by the bus companies in UK. A
prominent industrialist and businessman was given the charge to oversee this creation of this new
model and become chairman from the year 1972 to 1978. In 1980s, national bus company was
privatised and National express was then subject to management buyout in 1988 and the
management tea, began to diversify itself and as a result it purchased Crosville Wales.
Subsequently, the financial performance deteriorated from 1990s and in 1991, new management
team took over it and in 1991, it sold the Crosville Wales was sold to British Bus. The company
was listed in London Stock Exchange in the year 1992. The organisation is governed by its top
management who have the authority to make relevant policies and practices in order to ensure its
smooth running.
In 1996, the company began to operate its UK rail franchises for the first time and in
1997, the company acquired Tay-bus public transport and rebranded Travel Dundee. Likewise,

many other companies were acquired by National Express group Plc in order to take charge of
whole UK, USA, Canada, Germany, Spain and many other countries (Hamilton and Webster,
2018).
Organisational structure of National Express Plc
The National Express group Plc follows hierarchical organisational structure which
involves a direct chain of the command beginning from top to bottom. The senior management
of the company have the authority to make the critical decisions and these are then passed to the
subsidiary level. In this structure, if the lower level wants to take the decision, they need to first
make the request for the approval through the chain of command and the decision is eventually
then returned. The main purpose for which the National Express Plc follows this organisational
structure is that there is control over the key personnel of the management only which reduces
the risk of miscommunication. Moreover the company have a clear reporting system as the
power is centralised and it is determined as to who is authorised to make the decision (Akhtar
and Sushil, 2018).
The board of directors have the duty to frame the policies for the company so that it can
be operated in efficient manner. Moreover they have the sole authority to make the decision and
have the power to give command to the subordinates. The directors are also obliged to present
the report to the concerned stakeholder.
Subsidiary of National Express Plc
National Express Conventry which operates bus in and around the Conventry and Travel
Surrey which operates in Surrey and South West London are subsidiary of National Express Plc.
Number of directors
The Board of directors of the company involves the chairman who is currently the non
executive director, Chief financial officer, Group chief executive, Deputy Chairman who is also
the non executive director, and five other non executive directors.
As per the Articles of association of the company National Express Plc and the codes, the
director of the organisation are offered for either the election or the re election of themselves at
each of the Annual General meeting. The non executive directors are appointed for the specific
terms and are subject to re election but they can re elected on the basis of their performance
evaluation if the board believes that the performance of director is effective and demonstrate the
commitment to their roles and responsibilities.

Chairman and Chief Executive Officer of the company
The chairman of National Express Group Plc is John A. Armitt, who was appointed in
the month of February, 2013 and was re elected in the year 2018. He is known to have an
extensive experience in transport, construction and engineering sector which includes the
experience of working at ministerial level with Government. The key strength of Sir John
includes the strong leadership to the Board in order to oversee the delivery and development of
company's strategy. The Deputy chairman of the organisation is Jorge Cosmen Menendez
Castanedo who was initially appointed in the year 2012 and was re elected in 2017. He is an
independent non executive director of the organisation.
The Chief Executive Officer of National Express Plc is Ignacio Garat who was appointed
as CEO in November 2020. he has an extensive operational and the strategic experience at
international level. He has a strong leadership skills with main emphasis on the safety and use of
technology in order to drive service efficiency and excellence.
Evaluate the importance of PESTLE analysis for a business organisation
The businesses are influenced from the internal and external environment and these
environment determine how the business must be operated. There is model called the PESTLE
analysis which is a tool to determine the external factors which affects the working of the
company. There are six factors which influences the working of the organisation which includes
political, social, economic, technological, environmental and legal.
PESTLE analysis plays a very pervasive role in the growth of the company, be it
expansion of the product or company or opening a new venture in a new location as it helps in
framing the strategies and the planning the layout. The companies who are working globally
have a great value of its result as their major decisions are relied on this analysis. The importance
of PESTEL analysis in context to businesses are discussed below-
This model helps the owner of the business in identifying the changes in the external
environment which consists of six factors, namely political, social, technological, economical,
legal and environmental. Any significant change in these factors can be identified with the help
of PESTLE analysis which in turn helps in making the strategies to implement the change in the
organisation. For instance, the multinational companies like Tesco were affected by the impact
of Brexit as there was limitation on free flow of trade. Pestle analysis helped the company to deal

with it as helped in making new trade deal strategies which are beneficial for the company (Barr
and et. al., 2018).
PESTLE analysis helps in doing the strategic planning in order to expand their business.
Through this analysis, the organisation on one hand gets to evaluate their strategy which fits in
the broader environment and on other side encourages strategic thinking. For instance, when
companies need to expand their business they analyses the economic factors in order to know the
fluctuations in foreign currency so that they can get maximum return from their investment and
decision to expand in particular country.
It opens the scope of companies to analyse the laws and regulations of the particular
nation when expanding at international level so that a deep strategical thinking can be increased.
For instance, when any business wants to work or operate at global level, it needs to figure out
the laws which are essential for compliance like consumer law, trade law, employment law and
many other.
PESTLE analysis help the organisations to get prepare for the future possible threats
which may arise anytime due to external factors. For example, Samsung regularly analyses the
external environment in order to overcome the threat of any change in technology like
innovation. If Samsung does not adopt any change or innovation, it may loose its market share so
it is important for companies to analyse their external environment in order to retain their
business share (Pérez-De-Lema and et. al., 2019).
This framework helps in exploiting the opportunities which may arise at any time for the
company. For instance, if there is low interest rate in real estate sector, the company can identify
this opportunity through analysing its economic factor so that it can grab the opportunity to
increase the demand for the housing (Halbert and Ingulli, 2020).
Use the PESTEL framework to analyse the external environment of your chosen company
(A) (PESTEL) factors that influence the environment of the company
Pestle analysis is a tool to identify the external factors of the environment. In context to
National Express Plc, the company needs to identify the impact of six external factors which
influences its working. These are discussed below-
Political
 Political stability
 Changing policies

 Taxation and trade restrictions Corruption and bureaucracy
Economic
 Inflation
 Labour market condition
 Economic structure Financial market efficiency
Social
 Gender roles
 Societal norms and the class distribution
 Spending patterns Demographic trends
Technological
 Technological innovations
 Research and development on technology
 Shortened product life cycle Social media marketing
Environmental
 Renewable technologies
 Weather and climate change
 Eco friendly products Environmental regulations
Legal
 Employee protection law
 Consumer protection law
 Intellectual property law
 Health and safety laws (Uluskan and Godfrey, 2018)
(B) Apply the PESTEL factors on company
Political Political stability- The National express Plc is working in different countries and each
state has its own political tension so when a company grows in such tension, this limits

their opportunities for National express Plc. And the political stability helps company to
grow. For example in UK, there is political stability which helps in smooth working for
the organisation. The impact of Brexit have shaken the working of state but the
government was successful to regain its stability which did nt affect the working of
company. Changing policies- National express Plc must study current trends as government may
change its priorities when developing in different industries so it is important that
National express Plc must comply with and regularly check the new policies of the
government in each state. Any change in policy may affect the operations of the company
(Rialp-Criado and Komochkova, 2017). The company have changed its internal policy
due to change in natiuonal policy in order to have adherence to it.
Economic Inflation- The company with high GDP have consumers which have high purchasing
power so National express Plc must expand its operations in such state which have high
GDP so that it can attract customers from different segments. For instance, USA have
high GDP which means low inflation so customers can get easily attracted to avail the
service of the company. So the organisation have increased prices during low inflation to
generate maximum revenue. Labour market conditions- When the labour market is flexible, the National express Plc
can take advantage of the high productivity workers in order to increase its business
productivity. And if it works in rigid labour market, it may cause the labour wage and
other issues to arise. For instance, UK have high productive staff which helps the
company to work with full potential and move ahead of its competitors (Nurmi and
Niemelä, 2018). so National Express Plc have hired the talented workforce in order to
make utilisation of it (Case48, 2020).
Social Demographic trends- National express Plc must study the demographic characteristics of
the customers so that it can choose the right target market which have high growth
potential. The marketing strategies requires the right attitude of customers in order to plan
effective growth strategies.

 Spending pattern- National express Plc must study and forecast the purchasing power of
customers so that it can analyse its interest and spending behaviour. The company must
invest its time to understand the consumption motivations and the social trends which
defines the consumption of people so that they can provide their service in such state. For
instance. UK and USA have low inflation which means there is more spending power of
people which helps the company to grow in the market (Çitilci and Akbalık, 2020).
Technological Social media marketing- The information technology have led to the adaptation of the
innovative techniques of marketing which helps in enhancing the collaboration with the
customers. The company National express Plc must use social media to leverage the
opportunities in order to improve its performance. It uses twitter and other channels of
social media which helps to reach large audience in short span of time. Technological innovation- National express Plc must bring on regular innovation in its
product so that they can battle the competition. By bringing technological advancement,
the company can bring transformation in this industry which will help in attracting more
customers for National express Plc (Merzy and et. al., 2018)..
Environmental Renewable technologies- National express Plc can invest in such technologies in order to
expand its customer base which will in turn enhance the brand image of company. For
instance, the company can use eco friendly buses or vehicles which can help in less
polluting the environment and on other side, will attract customers as they have now
become more environmental conscious. Eco friendly products- This is a great opportunity for company as it will help in winning
the trust of stakeholders. The National express Plc must focus on marketing the product
which have eco friendly nature so that it can gain customer value. Like for example, it
can promote is eco friendly buses in order to attract more customers (Schomaker and
Sitter, 2020).
Legal Consumer law- National express Plc must comply with the laws like data protection so
that it can keep the data of the customers private and prevent any breach of security and

privacy. It is the duty of company to protect the data of consumers so that there is no
breach and make such policies which can govern the data management effectively.
 Employee protection law- Adherence to these legislations will help National express Plc
to attract and retain the talent workforce for the company so that they can work on
towards growth and success of the company. As employees are the asset for the company
so compliance with employment law will motivate the staff to give their best which will
help in success of the company.
CONCLUSION
It is concluded form this report that business operates in the external environment which
is necessary to be analysed. The National express Plc is a transport based company which deals
in transportation industry. It is important for companies to use the tool of PESTEL analysis so
that it can identify the external factors in order to make growing strategies. These factors help the
company to make such strategies which can lead it towards the growth and success.

REFERENCES
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Online
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