Sage Group Plc PESTLE Analysis

This report summarizes the various factors affecting Sage Group Plc, including political, economical, social, technological, legal, and environmental elements. It also discusses the advantages and disadvantages of PESTLE analysis for the company.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
1. Governed and structure of company ......................................................................................1
2. Effects of external environmental factors ..............................................................................4
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Business environment sum total of all individual and other forces that are outside control
of business enterprise but business still depends upon them they affect overall performance and
sustainability of the business. Business environment means all the internal and external factors
that affects company function including employees, customers, management, supply, demand
and business regulation(Deasy and et.al., 2016)It is the second largest technology enterprise and
world's third largest suppliers of company planning software. This study is based on Sage Group
Plc. It is British multinational software organization headquartered in Newcastle upon Tyne, UK.
This assignment will explain governed and structured of company. It will also evaluate Effects of
external environmental factors on company.
TASK
1. Governed and structure of company
SAGE PLC:
SAGE plc is known as Sage is British multinational software organization headquartered
in Newcastle upon Tyne, UK. It is the second largest technology enterprise and world's third
largest suppliers of company planning software. The small businesses and has 61 million
customers global and its offices in 24 countries. The company was founded by David Goldman,
Paul Muller and Graham Wylie in 1981.
The vision of SAGE plc is to provide the best value to customers and help them attain
their goals and skyrocket relentlessly. Where technology is developing at a grim and rapid pace,
at SAGE Software solutions strive consistently to provide customer-friendly, flexible CRM, ERP
and payroll solution(Hamilton and Webster, 2015).
HISTORY OF SAGE PLC :
Year Operations
1981-2000 In 1981, David, Paul and Graham are to develop estimating and
accounting software for small business. In 1984, company launched
Sage software, a product for Amstrad PCW word processors which
is used in CP\M operating system.
1

2000 to 2010 In 2000, Sage shares were named best performing share of the 90's
in the UK. In 2001 Sage acquired interact, commerce Inc. in 2002
Sage won Business of the year in national Business Awards. In 2003
Graham Wylie was retired with 108. 5 Million shares in Sage worth
146 Million.
2010 to 2013 In 2010, Sage announced that its CEO, Paul Walker had indicated an
interest in stepping down from his positions. CEO of Sage's UK
business stated that Acquisition are part of their DNA. In 2010, Sage
with as much as 21 Million Walker is given his share, bonus plan
and salary.
2014 to 2017 In 2017, Sage group announced an agreement to acquire compass,
highly innovative analytics and benchmarking platform. In same
year, Sage declared that it would purchase Intacct Corporation for
850 Million.
SPONSORSHIP:
The Sage Group is a sponsor of Sage Gateshead, a Tyneside music venue designed by Sir
Norman Foster. Sage Gateshead was completed in 2004 at cost of 70 Million and has since
become main sight on the River Tyne. In 2008, Sage funded revival of The Krypton Factor
television series for ITV as part of business Brain Training campaign. Company were footballl
shirt sponsor in 2011 for Whitley Bay F.C.'s FA Vase wining match.
ORGANIZATIONAL STRUCTURE:
Sage follow tall structure of organization. It is the simplest form of tall organization has
many levels of management and supervision. There is long chained of command running from
top of organization that is Chief Executive down to bottom of the company(Tall Organisational
Structures, 2018). This type of organizational structure offers many levels of authorization for
various actions taken by managers. Tall structure integrates level of internal control by not
allowing lower level employees to make certain decisions. With the help of many layers of
management, Sage is able to promote more employees to management positions.
2

This organizational structure offers disadvantages compared to other types of structure.
Company see possible issues relating to act which is performing by employees in workplace. If
manager is not authorized to make decisions, manager must move up chain of command until an
approval is received. The purpose of tall organizational structure is to build in authorization
levels, eliminating potential for low level employees to make decisions that hold negative
consequences for company.
GOVERNED OF SAGE PLC:
The Non-Executive Chairman of Sage is Donald Brydon. The Soni Jiandani is
Independent Non Executive Directors of Sage Plc. Stephen Kelly is the Chief Executive Officers
and Executive Director of company. Blair Crump is the Presidents of Sage, leading on sales and
customers services across Group.
Financial governance: Financial governance is the way of gather, manage and control of
financial information of company. There are four components are involved in financial
governance such as Stakeholders, shareholders, employees and public.
3
Illustration 1: Tall Organizational Structure

Stakeholder: Stakeholder is person who is concerned with financial information of
organization. They are required information about profits, policies, schemes regrading to Sage
Plc. For example employees, suppliers, customers etc. considered stakeholders(Smith, 2016).
Shareholders: Shareholder is the person who is owned of shares in company. They are
referred to as members of organization. They are required data or information about share prices,
financial breakdown, cash flow, Annual General Meeting, profits, dividend etc.
Employees: Employee is the person who is working in the organization. They are
helping in decision making, customers services, selling of products and services of
Sage(Hamilton and Webster, 2015). They are also required information about rising of pay,
bonuses, benefits, schemes, feedback, review, labour turnover etc. in the organization.
Public: Public is group of people who are purchasing of product and services of Sage. On
other word, company contribute in corporate social responsibility. Firm is also sponsorship to
many organizations.
2. Effects of external environmental factors
PESTLE ANALYSIS :
Pestle analysis is framework or tool used by marketers to analysis and monitor the macro
environmental factors that have effects on company. The purpose of pestle analysis for
organization is to identify and analysed different environmental factors. With the help of it,
companies are better planning of an effective strategy to meet their objectives and reducing
errors. PESTLE stand for political, economical, social, technological, legal and environmental
(Bah and Fang, 2015).
Advantage of PESTLE analysis:
Easy to understand: It is advantageous for easy to understand things and easy to
implement in the organization. With the help of this analysis tool, company identify different
factors that are affecting on business environment both negatively and positively.
Preparing for threats: It is beneficial of company in preparing for potential threats that
arises time to time due to external factors.
Disadvantages of PESTLE analysis:
4

Rapid Changes: There are the fastest changes in all six factors that are affecting both
positively and negatively on environment of organization. These elements are also affecting
decisions of company's owners.
Valuable resources: If costs of doing pestle analysis are higher than detected benefits
than this analysis is no utilize to the company. In simple term, due to use of valuable resources of
organization by using this analysis.
PESTLE ANALYSIS OF SAGE PLC:
Political Factors: Political factors play important role in determining elements that impact Sage
group Plc's long term profitability in certain country or market. Sage Group plc is operating in
technology in more than a dozen countries. They exposure itself to different kinds of political
environment and system risks(Sage Group Plc PESTLE &Environment Analysis, 2018). Due to
such dynamic technology industry across many countries, Sage is to diversify the systematic
risks of political environment. For example: trade regulations, taxation, industrial safety
regulation anti-trust laws etc. Organization has closely analysis various factors before entering
and investing in certain market. Such as:
 Political Stability: It is the most ineffective factors that are affecting growth and
development of technology sector in certain market. Changes in government rules and
regulation are affects on developing technology in market.
 Legal framework for contract enforcement: It is the most bad factors that are affecting
on development of technology sector in market. Therefore, Sage Group Plc follow legal
framework for contract enforcement in the market.
 Industrial Safety regulation: Government has regulated industrial safety law, so that
Sage make sure that follow all laws relates to safety in their workplace for health and
safety of their employees.
 Pricing regulation: Government has also regulated laws relates to pricing of technology.
Therefore, Sage Group make sure that follow all rules and regulations regarding pricing
of technology(Cai and Yang, 2014).
Economic Factors: The economic factors such as inflation rate, interest, foreign exchange and
economic cycle determine multiple demand and investment in an economy. In terms of
5

competition norms that impact on competitive advantage of the Sage. Organization utilize
country's economic elements such as growth rate, inflation etc. In terms of industry's economic
indicators like technology industry growth rate, consumer spending etc. For example, types of
economic system in countries of operations, government invention relating to technology,
efficiency of financial market, education level in economy etc.
 Inflation rate: If inflation rate is increased, so that customers are limited purchasing of
product and services of company. This type of factor affects on product and services of
firms (Zalengera and et.al., 2014).
 Exchange rates: It means changes in exchange rates in currency of host country. This
type of factor affects on development of Sage in technology sector.
 Infrastructure quality: It is also economic factors that utilizing appropriate quality
technology in the Sage for developing software in market. Therefore, company make sure
that use the best quality of technology.
 Labour costs and productivity: If labour costs is very high, so that company is limited
hiring to labour for working in technology sector. This kind of factors directly impact on
productivity of Sage.
 Skill level of workforce: Company make sure that HR manager is hiring skill employees
those are experted in technical field. This type of factor influence on productivity of
company (Crowley and Weirauch, 2014).
Social Factors: Society's culture impact on culture of organization in an environment. Through
sharing values and attitudes of population play great role in how marketers at Sage Group Plc
understand customers of give market and design marketing message for technology industry
consumers. Leadership of Sage Group Plc includes social factors. Such as:
 Demographics: Demographics and skill level of population includes in social factors.
Therefore, Sage Group Plc make sure that targeting customers in appropriate segment,
because of there are categories many segments such as gender, age, etc. Selecting the best
segment helps in increasing profits of company.
 Attitude: Many of people have different attitudes such as health, environmental
consciousness etc. Therefore, company make sure that providing better quality product
6

and services to their customers by taking care of health and safety. This assists in
increasing profits of company.
 Education level: Company make sure that hiring of high level education level and
standards of employees, so that they are effectively working at Sage. This assists in
increasing profits and sales of technology sector.
 Class and power structure: This type of factor involves in social factor, so that
company make sure that providing high standards' product and services according class
and power structure in society. There are different culture of people live in society.
Technological Factors: Technology is fast disrupting various industries across the board.
Transportation industry is good example includes in this point. Industry has been transformed
really fast not even giving chances to established players to cope with changes over last 5 years.
Firm not only do technological analysis of the industry but also speed at which technology
disrupts that industry(Crowley and Weirauch, 2014). Fast speed of technological disruption gives
little time to cope and more profitable while slow speed give more time and low profits. For
example product offering by technology's impact, costs structure, value chain structure, rate of
technological diffusion , recent technological developments etc.
 Product offering: Due to some technology impact, company is not offered better quality
of product. Therefore, this factor negative effect on profits and customers demand in
market. Company make sure that utilizes appropriate technology in product and services
of organization.
 Cost Structure: If cost structure of product is not appropriate, so that company make
sure that effective structuring of price of good and services. This kind of factor affects on
profits and revenues of business.
 Value chain structure: If value chain structure is better still company make sure that
structuring of value chain effectively. This kind of factor affects profits and revenue of
business and overall technology sector(Zalengera and et.al., 2014).
 Recent technological development: Company make sure that adopt recent technology
development in the business. This kind of factors affecting customer demand and profits
of business.
7

Legal Factors: The legal framework and institutions are not robust enough to protect intellectual
property rights of an organization. A firm carefully evaluate before entering such markets as it
can lead to theft of organization secret sauce thus that overall competitive edge. There are
various factors includes in this such as :
 Consumers protection: It is very important laws relating customers health and safety by
utilizing their product and services of company. Therefore, firm make sure that follow
this act or law in business regarding customer's health and safety. Company also adopt
law relating e-commerce in their organization(Hamilton and Webster, 2015).
 Health and safety law: It is very important law relating health and safety of labour in the
workplace. Therefore, company make sure that adopt this law carefully for taking care of
health and safety of employees.
 Copy right and patents: Government has many regulation relating to copyright and
patent, so that Sage Group make sure that adopt this law for protecting of products of
their business. If any of company theft copy right of another firm, so that those
organizations can file case against that company (Cai and Yang, 2014.)
 Discrimination Laws: In this law, many of factors are included such as age, race, sex,
gender and other elements. So that, company is equally treatments of all employees in
their organization by utilizing this act.
Environmental Factors: Different markets have various norms or environmental standards that
can impact profitability of Sage Group Plc in the market. Even within country often states can
have different environmental laws and liability laws. Before entering markets or starting new
business in existing market the firm carefully evaluate environmental standards that are required
to operate in those markets(Eling and Schaper, 2017). There are many factors included such as
weather, climate changes, recycling, laws regulating environment pollution, endangered species
etc.
8

CONCLUSION
This report has summarised that many boards of directors, sponsorship, organizational
structure, history of Sage Group Plc, it can be concluded that various factors such as political,
economical, social, technological, legal and environmental that are affecting on business. It can
be discussed that advantages and disadvantages of pestle analysis of company.
9

REFERENCES
Books and Journals
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Cai, S. and Yang, Z., 2014. On the relationship between business environment and competitive
priorities: The role of performance frontiers. International Journal of Production
Economics. 151. pp.131-145.
Deasy, S. and et.al., 2016. Controlling use of a business environment on a mobile device. U.S.
Patent 9,247,042.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research. 258(3). pp.1082-1094.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA
Pestle, W.J., Crowley, B.E. and Weirauch, M.T., 2014. Quantifying inter-laboratory variability
in stable isotope analysis of ancient skeletal remains. PLoS one. 9(7). p.e102844.
Smith, B., 2016. Nature and Geography: Tragic Voids within Marketing Textbooks and the
External Business Environment. In Global Perspectives on Contemporary Marketing
Education(pp. 47-64). IGI Global.
Zalengera, C. and et.al., 2014. Overview of the Malawi energy situation and A PESTLE analysis
for sustainable development of renewable energy. Renewable and Sustainable Energy
Reviews. 38. pp.335-347.
Online
Sage Group Plc PESTLE &Environment Analysis, 2018.[ONLINE]. Available through. :
<http://fernfortuniversity.com/term-papers/pestel/nyse4/8323-sage-group-plc.php>.
Tall Organisational Structures, 2018.[ONLINE]. Available through. :
<https://www.learnmanagement2.com/Tall%20structure.htm>.
10

11