Lehman Brothers Business Failure: Analysis of External Environmental Factors

Business
enviroment

Business environment 1
Table of Contents
Introduction................................................................................................................................1
PEST Analysis...........................................................................................................................1
Competitors................................................................................................................................2
Public Opinion...........................................................................................................................3
Reason for Lehman business failure.......................................................................................3
The effect of the external environment on Lehman brothers.....................................................5
Frameworks to resolve the challenges faced by the firm...........................................................5
Factors of Lehman Brothers in decision-making processes.......................................................7
Business case for potential growth opportunities based on analysis of external environmental
factors.........................................................................................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

Business environment 2
Introduction
Lehman Brothers, Inc. is an investment bank that serves all the institutes, government
authorities and individual clients. The main process of the organisation includes corporate
finance, equality investment and trading of foreign exchange. The company operates in three
sectors that are in investment banking, client services and capital market. The division of
investment banking covers all the corporate advices and government clients. The company is
working from last 15 years. Suddenly, due to a bankruptcy in 2008 it faced a massive loss in
its stock and asserts. The bankruptcy was immediately protected by taking following actions.
It helped the company to gain the market value immediately. The reason of collapse was
repurchase agreement that removed security from the balance sheet of the company. This
agreement affected the brand image of the firm by making financial conditions worse.
Federal Reserve Bank conducted a meeting for the future of Lehman brothers that covered all
the possible threats and risk that can exist on the liquidation of assets. Thus, it can be clearly
stated that Lehman’s bankruptcy was the largest failure in the history and also collapsed with
many firms. The failure of Lehman brothers also affected many private and small firms due
to investment banks. In this report, all the political, economic, environmental and logical
factors are discussed along with the reason due to which the business of Lehman brothers
failed. All the effects of the external environment on Lehman brothers were identified. The
framework is discussed that help in resolving all the issues faced by the firm. There are
various factors that affect the company in making decisions and the business case for
potential growth opportunities based on analysis of external environmental factors is listed
below in the report. This report is completed by focusing the entire scenario of Lehman
brothers.
PEST Analysis

Business environment 3
The Pest analysis of Lehman Brothers Inc. is carried out; the factors include political,
economic, social and technological concerns.
 Political factors- The political issues that are faced by the Lehman Brothers relate to
all the government issues that are faced by the economy of the country like tax
policies, environmental laws and political stability. It also involves the operations that
need to be considered by the nation like health education and awareness among
people. The political party of the country will keep a track of trade regarding both the
import and export conditions. . It is researched that, Lehman brothers have faced
various political issues with Federal Reverse to balance out the entire refusal to the
public. The economy of the country is directly related to export and import of the
goods (Adu-Gyamfi, 2016). The political factors that affect the business are based on
increase and decrease of tax based conditions. They work on the fact that other
courtiers shout start up new ventures so that unemployment ratio is reduced. The
political factor also works on focusing on monitoring the educational quality and
efficiency as they are the pillars for future development.
 Economic factors- It can be clearly stated that, economic factor is more important for
the growth of the country. Thus, the change in interest rate and inflation rate will have
direct impact on the company. The exchange rate of the organisation also affects the
capital cost of the country. The trading concept, like how far goods get exported to
other country also contributes in the overall economy. The change in currency also
affects the organisation as high income of the country boost the demand of the
product in the market. The population of the country also plays an important role in
deciding whether a company should invest it or not. The presence of employees who
are unemployed and poor stake holders affect the economy of the country. The
economic factor also looks for cheap labours so that country could make higher