Importance of PESTLE Analysis for an Organisation

This article discusses the importance of PESTLE analysis for an organisation in understanding the macro environment. It explores the political, economic, social, technological, legal, and environmental factors that impact business operations.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Structure of organisation and its governance..............................................................................1
TASK 2............................................................................................................................................4
Importance of PESTLE analysis for an organisation..................................................................4
TASK 3............................................................................................................................................5
PESTLE framework to analyse external environment................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment refers to the combination of internal and external aspects that
impact and influence operation and functions of company. Customers, suppliers, owners, supply
and demand are key perspective of organisation that leads company to gain top position in
market. The main role of business environment is to identify business opportunities that exists in
industry and leads a organisation to gain top position in market. Further, business environment is
divided into two aspects that is Micro and macro. Moreover, this report is composed from point
view of Johnson Matthey plc which is a British multi-national speciality chemicals and
sustainable technologies (Audzeyeva and Hudson, 2016). Its headquarter established in London,
United Kingdom from where company operates its business among different industries. Along
with this report highlights on structure of company. Importance of Pestle analysis and implement
of framework is also included in this report.
TASK 1
Structure of organisation and its governance
Johnson Matthey is performing their work at global level and it was established in the
year 1817 to manage their operations among various industries. It is a public limited company
which operates its business among various sectors. The major source of income in which
organisation manage all of its operations is Chemical and metal industry. According to existing
market conditions company is performing their work at a large level so large number of
employees are engaged in organisation. The existing CEO of organisation is Robert Macleod
which hold major power for making effective decisions. Along with this Chairperson of
company is Patrick Thomas who manage all authority, decision making, functions and operations
by monitoring on effectiveness of board decisions and its members. Along with this chairman is
a person who manage formal and informal meetings of the company such as general and board
meetings.
The existence of Johnson Matthey comes in market a long time ago when company start
to manage its functions in Gold sector. From the year 1851, organisational functions and
operations are considered as a essential aspect for business as it leading market area to perform
business among various places (Clarkson and Coleman, 2015). From the recent years,
organisation also active in petroleum and chemical industry that leads business to perform
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operations into new sectors with motive of earning high profits. In the present scenario, company
organise their business into four sectors which is clean air, efficient natural resources, new
markets and health. To manage functions and operations company is more concerned to manage
its functions within proper manner. It is also identified management perform functions with
proper structure as per financial performance (Davidson and Bush, 2017). The most efficient
structure for organisation is to manage task with motive of arranging task in organised manner.
In present scenario, all task which is manage by company enhance market area as per motive of
achieving long term benefits. So it is mandatory for company to formulate an effective structure
which leads company to gain top position in market. Traditional organisational structure is
divided into four different types that is functional, matrix, divisional and flat. But in the present
scenario, most of the organisation are performing their work at global level so it is essential to
gain long term benefits by completing whole task as per model and structure. Along with this
governance of respective organisation is also aware about completing all task and projects with
motive of accomplishing top position. Anna Manz is chief financial officer to company which
contribute strong financial credentials in financial leadership that directly increases company
profits.
Organisational structure refers to the system which outlines various activities that directs
company to achieve their goals and objectives in effective manner. It includes various roles,
responsibilities, policies etc. to perform work by determining value and information which
enhances overall productivity of Johnson Matthey. This work as a hierarchy that defines job,
functions and authorities which are involved in organisation and its functions. All organisation
structure are designed with motive of fulfilling organisational needs and wants. From the
perspective of Johson Matthey company is performing by implementing functional structure in
all of its operations (Dey, 2015). Alan Ferguson is independent director at a non-executive
position. Due to experience of different sectors it directly improves governance of committee.
John Walker is at position of sector executive that is currently perform their work in clean air
sector. Moreover, John has experience of different geographical sector so it work as positive
point for company to perform operations at international level. John O'Higgins is non-executive
director of company but due to changes in organisation John engages its work at global level due
to which it all functions is leading company to manage work in different continents.
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Corporate governance work as a framework that is used to define rules and practices
through which board of directors ensure transparency, fairness and accountability which
develops positive relationship with company stakeholders. The executive and non-executive
personnel of Johnson Matthey are responsible to develop positive governance that deliver
company purpose, underpinned by value that shape behaviour to conduct better research that
shape culture of organisation in proper manner (Hitchcock and et. al., 2014). With an appropriate
as well as organised framework better framework is gained by management that elements
framework of company to set and develop organised process. This is also leading business
organisation to perform all task and services as per goals and objectives that integrally relates
with key elements and processes for completing all work effectively. It also results to complete
and manage as per executive directors that understand company knowledge to meet workforce
efforts with management.
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Illustration 1: Source(https://matthey.com/-/media/files/annual-report-2019/annual-
report-separate-sections/jm-governance-remuneration.pdf)
According to existing market conditions business environment is impacting on all types of
business. This refers that there are various challenges faced by organisation due to which its
functions and operations is impacted. Like, culture and value of each country is different from
other so it work as negative point which reduce company value to complete their task due to
impact on value of products. So with functional structure company is performing its work with
motive of gaining top position in market by delegating work and responsibilities to persons as
per specific skills and knowledge. This determines company perform its work by engaging all
persons as per company departments. It results this is easy for organisation to assign right
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product and services to all persons. Moreover, functional structure is provide more advantage to
to organisation because they are performing its work among various sectors so it is compulsory
for management to delegate job responsibilities as per individual skill. Their are various
advantages are gained by management after implement of employees that is leading company to
enhance skill of all team members which increases overall productivity of department. Along
with this by implement of functional structure roles and responsibilities of teams are specified
because it increases performance of team effectively. Along with this if employees are also
getting flexibility such as be delegating equal authority and responsibility in its operations than it
is easy for management to work with positive approach. This also leads company to gain
sustainability in market for longer period (Lampadarios, 2016). It is also leading company match
with workforce needs.
TASK 2
Importance of PESTLE analysis for an organisation
Business manage their work with motive of establishing organisation as a business owner
to identify significant changes which leads to understand all aspects of macro environment.
PESTLE analysis work as an effective framework that is used to monitor and analyse macro
environment aspects of a company. The main role to understand PESTLE analysis is to manage
all task and operations with motive of performing work and task that leads company for entry
into foreign market. In the present scenario, PESTLE is one of the strategic planning method that
reduces business threats to perform all task by developing an effective organisational strategy.
The main concern for PESTLE analysis is to reduce business threats by providing effective
benefits to an organisation. Moreover, this advantages work as motive of performing work with
examine better idea that phase product development and product launching which leads company
to gain organisational success. Cost effectiveness is an example of positive point for PESTLE
that increases company profits (Martinez and et. al, 2018). Deeper understanding also work as
an important aspects that directly and indirectly impact business to develop positive image that
provides to perform work as an effective advisor which improve goodwill of organisation.
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TASK 3
PESTLE framework to analyse external environment
Johnson Matthey perform their work at large level in the metal and chemical industry.
Along with this organisation is also performing their work at a global level that is leading to
manage its operations for performing all task that is leading business to completing their work as
per technological, legal, environmental, political, economical and social. PESTLE provides
sufficient details which leads company to perform work as per macro environment. All essential
aspects for understanding of macro environment is as follow:
Political factor- Political aspect or factor play an essential role to determine all aspects
that are related with understanding of government rules and regulations. Johnson Matthey
perform its business in chemical industry among more than one country due to which
management deal with various types of political environment to reduce risk from its operations.
Chemical is a harmful substance for each country as it engage in various operations. So to gain
more success in organisation that diversify systematic risk by understanding political
environment. This results it is easy for company to invest sufficient amount in organisation due
to which all task that are completed by organisation must leads company to gain stability in its
operations (Montgomery and et. al., 2017). In context of UK, government is flexible for rules
and regulations so it work as positive point that complete all work in organised manner. Along
with this political environment impacts on organisation like if government declares an chemical
substance unsafe for country then it directly impacts on organisation.
Economical factor- Macro environment also includes economic aspects of a country that
undertakes interest rate, inflation rate, purchasing power of buyers, foreign exchange rate etc.
From the perspective of Johnson Matthey it is used by organisation to complete all task and
operations as per growth rate, inflation and trends by which customers-centric approach is
implemented by organisation. In present scenario, various organisation are performing their work
that is leading company to manage and complete task as per economic policies. Chemical
industry also undertakes inflation and interest as per economic indicators that provides
government intervention to perform all work as per free market industry. So it is easy for
management to complete all task by formulating better financial structure and policy for
organisation that reduces cost of organisational operations (Opoku, Ahmed and Cruickshank,
2015).
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Social factor- Society's aspects refers to the values, ethical aspects, background, culture
and many more are major parts of social factor. Shared belief and attitude of population perform
a great role to accomplish company task according to policy that leads marketers to design and
complete all task as per marketing message that improves company image among consumers.
Skills and demographics part of population refers to perform task which lead company to
perform task in effective manner. Johnson Matthey consists their work with motive of
completing its work as per education level that increases overall standard to perform all work as
per entrepreneurial results. In context of attitude there are various task manage by company
which is leading company to manage its task with motive of achieving long term benefits. Social
aspects impacts on business operations if company not manage its task and operations as per
trends of company that show interest to company (Sivanandan and et. al., 2015).
Technological factor- Technology is one of the fast and disrupting aspect that is
enhancing industries to complete all work as per industries requirement. It is also leading
company to perform and transform work with motive of transforming and implementing
modifications in industries within minimum time period. Johnson Matthey utilise technology
aspect to complete all work with motive of gaining competitive advantages in market. Moreover,
technology impacts to complete task to increase cost as it technological adoption is costly and
dynamic in nature. So it impacts directly on profits of firm due to which changes in technological
diffusion is impacting on overall cost structure of company.
Environmental factor- From last several years all organisation are performing their work
with motive of completing task and operations that are eco-friendly to complete its operations.
Different markets follow different norms that leads company to complete all work to perform all
task as per standards that impact on profitability of organisation. Johnson Matthe diversify its
business to complete all work as per environmental laws that leads company to complete task as
per tax and laws. Similarly, laws and regulations of country are defined as per motive of offering
benefits to local countries. It is also used by organisation to enter into new markets that start new
business by evaluating all environmental standards (Zarra and et. al., 2015). The major impact on
organisation is to perform all task as per attitude of company to perform as per renewable energy
sources.
Legal factor- All of the countries perform their work with motive of completing all task
that not impact negatively on organisation. The main concern for a company is to ensure legal
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rights of company in order to ensure safety of intellectual property that provides and secure
safety due to which Johnson Matthey easily complete their work and gain long term benefits that
increases overall perspective to gain competitive edge in market. Health and safety law,
environment law are major points through which functions of Johnson Matthey is impacted.
Along with this organisation also focuses on completion of their task as per laws which increases
profits of data protection (Martinez and et. al, 2018). This is also analysing to complete all work
as per motive of laws to manage task in proper manner.
With all practical perspective it is analysed that company is performing all work as per motive of
enhancing profitability of organisation. According to present market conditions, it is identified
that functions which relates with PESTLE, Johnson Matthey engages more individual to
complete task as per motive of gaining long term benefits from company operations.
CONCLUSION
In the end, by summarising above report it is analysed business environment is one of the
most important aspects for organisation. Due to this company is performing their work as per
motive of engaging task and formulation of strategy according to business environment.
Governance and structure of organisation also relates with company functions and operations of
company so by analysing structure of company it is easy to gain long term benefits. PESTLE is
also an effective framework that provides better understanding of macro environment and also
leads company to gain top position in market.
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REFERENCES
Books and Journals
Audzeyeva, A. and Hudson, R., 2016. How to get the most from a business intelligence
application during the post implementation phase? Deep structure transformation at a
UK retail bank. European Journal of Information Systems. 25(1). pp.29-46.
Clarkson, P.J. and Coleman, R., 2015. History of inclusive design in the UK. Applied
ergonomics. 46. pp.235-247.
Davidson, K.L. and Bush, M.F., 2017. Effects of drift gas selection on the ambient-temperature,
ion mobility mass spectrometry analysis of amino acids. Analytical chemistry. 89(3).
pp.2017-2023.
Dey, P.K ., 2015. Strategic supplier performance evaluation: A case-based action research of a
UK manufacturing organisation. International Journal of Production Economics. 166.
pp.192-214.
Hitchcock, I and et. al., 2014. Impact of chemical heterogeneity on the accuracy of pore size
distributions in disordered solids. The Journal of Physical Chemistry C. 118(35).
pp.20627-20638.
Lampadarios, E., 2016. Critical challenges for SMEs in the UK chemical distribution
industry. Journal of Business Chemistry. 13(1). pp.17-32.
Martinez, E.J and et. al, 2018. Pharmaceutically acceptable salts of B-guanidinopropionic acid
with improved properties and uses thereof. U.S. Patent 9,884,813.
Montgomery, S.L and et. al., 2017. Direct alkylation of amines with primary and secondary
alcohols through biocatalytic hydrogen borrowing. Angewandte Chemie. 129(35).
pp.10627-10630.
Opoku, A., Ahmed, V. and Cruickshank, H., 2015. Leadership style of sustainability
professionals in the UK construction industry. Built Environment Project and Asset
Management.
Sivanandan, S.T and et. al., 2015. Palladium‐Catalyzed α‐Arylation Reactions in Total
Synthesis. European Journal of Organic Chemistry, 2015(1), pp.38-49.
Zarra, S and et. al., 2015. Molecular containers in complex chemical systems. Chemical Society
Reviews, 44(2), pp.419-432.
Online
PESTLE ANALYSIS, JOHNSON MATTHEY, 2018. [Online]. Available
through:<https://www.researchandmarkets.com/reports/1315205/johnson_matthey_plc_
jmat_financial_and>.
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