Business Environment - Barratt Developments PLC

Business environment

Table of Contents
Executive summary..........................................................................................................................1
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
structure and governance of company.........................................................................................2
TASK 2............................................................................................................................................4
Importance of PESTLE analysis for Company...........................................................................4
TASK 3............................................................................................................................................6
PESTLE analysis of company.....................................................................................................6
Conclusion.......................................................................................................................................9
References........................................................................................................................................1
Books & Journals.............................................................................................................................1

Executive summary
Situational analysis is used by companies to examine external environment of business.
There are many different factors which are part of this macro environment and they affect
decision making in company. There are many alternatives available with every company and
they have to choose one among them it is essential that they analyse such options based on their
merits and demerits and then on basis of that a particular option is selected. In case of Barratt
Developments PLC also PESTLE analysis is done and different aspects are analysed and based
on that decision is taken. According to changing circumstances, way they affect business also
changes, for Barratt Developments PLC its is important to consider these factors before making
any decisions in company. This analysis of macro environmental factors will play a major role in
providing company a competitive advantage in market.

INTRODUCTION
Business environment includes all those factors which are present in external
environment of business and they affect all internal functions of a business. This is a type of
situational analysis done by companies to form various strategies for company. This report is
based on structure & governance of companies, importance of PESTLE analysis and finally a
macro analysis is done of macro or external factors which can have an affect on company. In this
report Barratt Developments PLC has been taken into consideration(Virglerová, Dobeš and
Vojtovič, 2016). It is one of biggest residential companies of UK and they have a operating
network which is spread over 30 divisions. It was established in 1958, by Greensitt Bros.
TASK 1
structure and governance of company
Structure and governance are two most important components of every company. In case
of Barratt developments PLC board of company has a policy that they regularly believe in
reviewing composition of company. Apart from this annual evaluation is also done to check
effectiveness of committees formed in company and also of different type of directors of
company.
Structure of Barratt Developments PLC: Barratt developments plc is a UK based company. This
company is having operating network which is spread over 30 divisions. There are approx6330
employees working here. It is listed on new york stock exchange. They manage properties and
real state business. Jeremy Hipkiss is Director in this company. David Thomas is executive
director and John Allan is Non- executive chairman of this company. Sharon Michelle white has
been appointed as Independent Non – Executive director of company. Executive directors of this
company manage day to day business(Sodeyfi, 2016). Non executive directors help company in
ensuring scrutiny, dealing with challenges and providing of support to various proposals which
are related to performance, accountability, strategy, performance and sustainability. All these are
related to interest of stakeholders of company. These all efforts help board of directors of
company in ensuring timely board decisions. Following points include structure of company for
performing various functions:

 Stakeholder engagement: Board has recognized importance of open dialogue with
stakeholders. Communications and events taking place whole year are maintained contact
with stakeholders and then they take feedback from different areas of business, which
includes operational processes, governance and remuneration of executive.
 Remuneration Committee: Board in Barratt Development PLC has formed a transparent
and formal procedure for development of policies on remuneration. Their shareholders
have approved policy of Groups current remuneration in their annual general meeting of
2017. this policy has been designed for promotion of long term success of group(Prajogo,
2016).
 Accountability: There is risk management system and internal system of control being
maintained by this department. Various functions being done by this section is manage
risk and internal control system in company, work to be done by Audit committee of
company, process to evaluate accounts and annual report of company to be balanced, fair
and clear in understanding.
All the above mentioned three sections form a very important part of company's structure as they
all influence operations and functions of company.
Governance of company: John Allan who is chairman of Barratt developments PLC has given a
statement that good corporate governance is actually foundation of this company's success.
Board of this company is responsible for long run success of company. Governance of a
company includes Framework of practises and rules through which board of directors of
company ensure that there is transparency, accountability and fairness being maintained in
company(Prajogo, 2016). These are most important factors which must also be present in
relationship between company and its various stakeholders such as customers, employees,
management, government, financiers and community. In relation with Barratt development PLC
its governance framework includes:
1) Implicit & Explicit contracts made between stakeholders and company. These contracts
actually consist of all guidelines on which various operations of company are done.
2) There are laid down procedures which are for reconciliation in situations when there is
occurrence of conflicts between stakeholders of company in context to their roles, duties
and privileges.

3) There is a specific procedure which is laid down by company to ensure that there is
proper supervision, flow of information and controlling & monitoring activities taking
place in company.
4) There is proper system of checks & balances being maintained by company.
Communication of these rules of governance in company is very important for Barratt
developments PLC as this sets the basis on which different functional departments of company
will be carrying out their roles and duties. To ensure good corporate citizenship companies also
focus on ethical behaviour, awareness related to external environment and sound practises of
corporate governance(Kolk,2016). All these factors together help in creation of a transparent set
of rules in company which all internal stakeholders have to necessarily follow. when a company
is not having proper governance then there can be several negative implications which include
effect on reliability of company, transparency and integrity, this sometimes also leads to
affecting financial status of companies.
TASK 2
Importance of PESTLE analysis for Company
Pest analysis means external analysis of company on five different aspects which include
Political, technical, economic, social and legal analysis. Pestle analysis is a tool which is mostly
used by person who are taking various decisions in company, this all have influence on strategies
to be formed by company from future prospective(Khan and Quaddus, 2015). These factors are
very uncertain and are dynamic also. It is necessary for companies to forecast changes which
may take place in macro environment. Following points denote the overall importance of
PESTLE analysis for companies:
 Strategic Planning: All different departments of company including sales, marketing
and finance are important departments which affect functioning of whole company.
whenever a company is planning to do expansion in terms of new branches, new location
there is need to analyse external market so that various strategies can be planned.
 Cost effectiveness: Effort and time are only needed to do pestle analysis of a company.
No cost is involved in this process. This means that this is a cost effective process and has
lot of benefits for company they can forecast their strategies and plan various operations..

Make use of opportunities: There are many opportunities prevailing in market which
can be used by companies if they are able to properly analyse external environment of
business. Opportunity can occur anytime in market and if advantage is not taken then it
may benefit competitors of company. Therefore to survive in market it becomes
important for Barratt developments PLC to understand different factors which can affect
them presently and in future(Huang-Horowitz, 2015). every company wants to increase
their productivity, for this they want to reduce cost and increase their profit margins.
Barratt developments PLC also can use PEST analysis this will be very cost effective for
company and at same time it will also be helpful in panning and forecasting of various
strategies of company.
 Helps companies checking Feasibility : Companies are able to develop some options
but there is always need to analyse these options based on certain parameters. This
analysis actually is very helpful in selection of on particular option. Whenever Barratt
developments PLC is facing a dilemma then it is PESTLE analysis which can help this
company in checking the feasibility of all available options with company.
 Make use of opportunities: There are many opportunities prevailing in market which
can be used by companies if they are able to properly analyse external environment of
business. Opportunity can occur anytime in market and if advantage is not taken then it
may benefit competitors of company. Therefore to survive in market it becomes
important for Barratt developments PLC to understand different factors which can affect
them presently and in future(Saleem, 2015).
 Mitigate from risks of market: There are many different types of risks and threats in
market. There are many different types of risks which are present in external environment
of company which includes supply and demand conditions, which affect company's
overall cost. PESTLE analysis basically analyses a company based on certain important
aspects, whose results can be used after analysis has been done to develop various
preventive measure in case anticipated risks actually occur(Hillary, 2017).
 Provides deeper understanding of Market: PESTLE analysis helps companies in
having a deep understanding of factors which can affect their business. When in case of
new product development there is requirement that company needs to understand these
external factors in depth so that final decision making can be done. There are various

macro economic conditions which are constantly changing such as inflation rate in
country, situations of recession, growth an declining situations of market and many others
all this play a very crucial role in impacting sales of Barratt development PLC. Hence,
company needs to make attempts to use this research in mitigating with future losses
which can happen with company.
 Research reports: another very important aim of PESTLE analysis is to make use of
pest analysis in making research reports for company(Grigore and Drăgan, 2015). These
researches are important as they are done with a specific aim and then use results of such
researches in formulating various strategies for some specific purposes.
TASK 3
PESTLE analysis of company
PESTLE analysis helps company in dealing with challenges taking place in the external
environment. Following Points denote PESTLE analysis of Barratt developments PLC:
 Political Factors: Barratt Developments PLC is dealing in household and personal
category of goods they are having presence in more than 12 countries. Company is
exposed to various political system and political environment risks. There are various
political factors affecting a company such as military invasion which can sometimes be
very risky for any company(Georgescu and Popescul, 2015). Corruption level of country
especially those which are related to sector of consumer goods. Tariff and trade
regulations, laws related to taxation, pricing regulations, legislations related to wage, acts
passed by government which are governing employee & employer. All such factors are
part of political environment of a country and they affect Barratt developments PLC for
example if company is launching something new then they have to adhere to follow
labelling requirements in household goods as it has been decided by government of UL.
 Economic Factors: Economic factors of a country also have a effect on Barratt
developments PLC. There are many economic factors of UK which Barratt
Developments PLC can use many economic factors such as present rate of inflation,
growth rate of country, personal disposable income present with prospective buyers of
company etc. apart from these there rae certain more factors such as economic system of
UK which will include some aspects such as Unemployment rate in country, stage of

business cycle which can be recession, prosperity or recovery depending upon
circumstances, level of skilled workforce of UK, what will be cost of labour for the
company and their productivity level all such factors have to be analysed carefully as
they will help company in determining aggregate demand and aggregate investment
which should be done by company.
 Social Factors: Every company establishes itself for a aim to serve society and culture of
society influences basic culture of a company. Marketers of Baarratt Deevlopments need
to make proper analysis of attitude and belief of the target market or population which
they are willing to serve(Banica and Hagiu, 2015). Social factors include some aspects of
people such as their attitude in for health, environment etc., leisure interests of people.
What is scope of entrepreneurial spirit in society, class structure, power structure and
hierarchy in society. Demographics of population and level of skills & education which
people in society posses also is a economic factor which can influence decisions in
Barratt Developments PLC.
 Technological Factors: Technology is a rapid changing phenomenon which keeps on
varying and can never be constant. A company should always do technological analysis
as speed at which technology is changing may cause disruption in any company. Time is
needed by companies to cope up with such technological disruptions so that they are not
affected in a negative manner. some technological factors which can affect Barratt
developments PLC are Cost structure of household goods, chain structure, technological
diffusion and other technological advancements help company in analysis of of these
factors.
 Environmental Factor: Environmental factors or different environmental standards also
have a effect on profitability of companies present in that market. Whenever a company
is planning to enter a new market or a new business in already existing market, there
must be careful analysis of these factors. Some of environmental factors which Barratt
development PLC should consider are climatic change, weather conditions, recycling,
water and air pollution regulations, attitude of company towards waste management
system being installed in their manufacturing process, support of company for
developing new sources of renewable energy, what are various water & air pollution

regulations present in household and personal goods industry as this is sector in which
Barratt developments PLC is dealing in(Bah and Fang, 2015).
 Legal Factors: all countries have some legal framework in which they are working.
Legal laws are something which must carefully be taken into consideration by Barratt
Development PLC. Evaluation needs to be done very carefully before entering into any
industry as if any non compliance is done then it may lead to negative affect on
competitive advantage of company. Barratt Developments PLC must consider some of
legal factors or laws which include anti trust law which is very important as this has
relation to household goods industry(Bah and Fang, 2015). Laws related to Employment
in country, health and safety law, laws related to protection of consumers. This law also
helps a company in satisfaction of consumers and building goodwill in market. This helps
in long term survival of company in market.

Conclusion
This report is based on analysing of importance of factors present in external environment of
business. PESTLE analysis is a very useful tool which is used by companies to evaluate merits
and demerits of major decisions to be taken by company. PEST analysis is a framework
consisting of macro environment factors used in scanning of environment and is a very essential
element of strategic management in every company. This analysis is helpful for managers in
business in better understanding, better implementation and acceptance of projects available with
company. Through this analysis a option is analysed from all different prospectives present in
external environment of business. Proper understanding of market decline, growth, position of
company, potential and directions related to different operations of company is developed by
using this tool of PESTLE analysis.

References
Books & 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.
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.
Banica, L. and Hagiu, A., 2015. Big data in business environment. Scientific Bulletin-Economic
Sciences, 14(1), pp.79-86.
Georgescu, M. and Popescul, D., 2015. Social Media–the new paradigm of collaboration and
communication for business environment. Procedia Economics and Finance, 20, pp.277-
282.
Grigore, A.M. and Drăgan, I.M., 2015. Entrepreneurship and its economical value in a very
dynamic business environment. Amfiteatru Economic Journal, 17(38), pp.120-132.
Hillary, R., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Huang-Horowitz, N.C., 2015. Public relations in the small business environment: Creating
identity and building reputation. Public Relations Review, 41(3), pp.345-353.
Khan, E.A. and Quaddus, M., 2015. Examining the influence of business environment on socio-
economic performance of informal microenterprises: content analysis and partial least
square approach. International Journal of Sociology and Social Policy, 35(3/4), pp.273-
288.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
pp.23-34.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics, 171,
pp.241-249.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics, 171,
pp.241-249.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Sodeyfi, S., 2016. Review of literature on the nexus of financial leverage, product quality, &
business conditions. Journal of Economic & Management Perspectives, 10(2), pp.146-
150.
Virglerová, Z., Dobeš, K. and Vojtovič, S., 2016. The perception of the state’s influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
Public.