PESTEL Analysis of TSB Bank PLC

This report analyses the importance of PESTEL analysis for TSB Bank PLC and evaluates the external environmental forces of the firm. It conducts PESTEL analysis of TSB Bank PLC and discusses various political, environmental, technological, economic, political and social factors that positively or negatively affect its business.

Running head: BUSINESS ENVIRONMENT 0
Business Environment
TSB Bank PLC

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Executive Summary
The aim of this report is to analyse the importance of PESTEL analysis which is a strategic
planning tool that assists marketers in analysing the external environment of an organisation.
The report analysed the history and organisational structure of TSB Bank PLC and examined
the relationship between Board of Director and employees, shareholders, and other members
of public who are affected by the actions of the firm. The report evaluated the purpose of
conducting PESTEL analysis for a business organisation which provided that it assist in
analysing the external factors that influence a firm’s business. The report conducted PESTEL
analysis of TSB Bank PLC and discussed various political, environmental, technological,
economic, political and social factors that positively or negatively affect its business.

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Table of Contents
Introduction................................................................................................................................3
TSB Bank PLC...........................................................................................................................4
History....................................................................................................................................4
Organisational Structure.........................................................................................................4
How is the firm governed?.....................................................................................................5
Purpose of PESTEL Analysis....................................................................................................7
PESTEL of TSB Bank PLC.......................................................................................................8
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
A PESTEL analysis is defined as a tool which is used by marketers in order to monitor and
evaluate macro-environment factors that influence a firm’s business. It is an analytical tool
which is used for strategic business planning by understanding different external factors that
influences a company’s business. PESTEL is an acronym for political, economic, social,
technological, environmental and legal environment that influence a firm’s business. This
report will analyse the corporate governance structure and management of TSB Bank PLC
and evaluate how it is governed. TSB Bank PLC was founded in 1985 as Trustee Savings
Bank PLC, and it is a subsidiary of Sabadell Group. The firm is a retailing and commercial
bank situated in the United Kingdom, and it operates a network of 550 branches across
different places of Scotland, Wales and England (TSB, 2018). This report will identify the
purpose of conducting PESTEL analysis for a business organisation. Further, the report will
examine the general external environmental forces of TSB Bank PLC by conducting PESTEL
analysis of the firm.

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TSB Bank PLC
The headquarters of TSB Bank PLC is situated in Edinburgh, Scotland, UK and it provides
its services across the UK through its 550 branches which are situated in different areas of
England, Wales and Scotland. The company operates in Territory sector, and it provides its
services to more than 4.5 million customers (TSB, 2014).
History
The firm was founded on 27th November 1985 as Trustee Savings Bank, and it merged with
Lloyds Bank in 1995 which formed Lloyds TSB in 1999. On 9th September 2013, the
enterprise reregistered itself under the name of ‘TSB Bank PLC’. In 2014, the parent
company called TSB Banking Group was registered in England and the same year it ended its
relationship with Lloyds Banking Group (Simon, 2013).
Organisational Structure
The company has a hierarchical structure since it is governed by the Board of Directors.
Following is a hierarchical diagram of firm’s organisational structure:
Figure 1: TSB Bank PLC Hierarchical Chart
Chief Executive Officer (Paul Pester)
Board of
Directors
Chief Executive
Officer
(Paul Pester)
Chief Financial
Officer
(Ralph Coates )
Finance &
Strategy
Chief
Information
Officer
(Carlos Abarca
ICT
Chief Risk
Officer
(Iain Laing)
Risk and
Legal
Chief Marketing
Officer
(Nigel Gibert)
Marketing
&
Promotions
Chief Operating
Officer
(Helen Rose)
Operations
Human
Resource
Director
(Rachel Lock)
Recruitment,
Performance
management,
Consulting

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On 31st January 2014, Pester was appointed as an Executive Director of the firm. Previously,
Pester had an experience of working with first Group CEO of Virgin Money, and he had also
worked in management consulting (TSB, 2018c). He is responsible for performing actions
related to corporate social responsibility, audit, risk management, business development and
others.
Chief Financial Officer (Ralph Coates)
Coates was appointed on 1st July 2016, and he previously worked with PwC or
PricewaterhouseCoopers as a Chartered Accountant. He is responsible for performing
controllership duties which makes him responsible for providing accurate and timely
financial information of the firm (TSB, 2018c).
Chief Information Officer (Carlos Abarca)
Abarca is responsible for performing managing information technology and computer system
in the firm in order to ensure that the data of the company and clients are safe.
Chief Marketing Officer (Nigel Gilbert)
Gilbert is responsible for overseeing and ensuring that the activities relating to planning,
development and implementation of the marketing strategy of the enterprise.
Chief Operating Officer (Helen Rose)
Rose handles daily operations of the company and provides routine reports to the CEO. She is
second in command at the corporation, and she ensures that daily operations are running
smoothly and the firm is focusing towards achieving its organisational goals.
Human Resource Director (Rachel Lock)
The HR director ensures that functions of human resource department are running smoothly,
and she supervises other operations regarding staffing compensation, budget, plans, benefits
and training and development.
How is the firm governed?
The corporation has a hierarchical organisational structure since it is governed by the Board
of Directors. There are nine members included in the Board of the firm in which six
independent non-executive directors, one group COO, one group CFO and a Chairman. The

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Chairman of the company, Richard Meddings, manage the Board of Directors and implement
different policies to make the corporation one of the largest banking firm in the United
Kingdom. On 20th September 2017, Meddings appointed on the Board, and he was appointed
as the Chairman on 2nd February 2018 (TSB, 2018).
Stakeholders are referred to different people who are affected by the actions, policies and
objectives of an organisation. The example of stakeholders includes creditors, customers,
environment, shareholders, government, employees, directors, union and community (Hult, et
al., 2011). The key stakeholders of TSB Bank PLC include customers, shareholders and
investors, employees, suppliers, government, and trade unions.
Relationship with Shareholders
The Board focused on implementing policies in order to maximise company’s profits. In
2017, profits of the firm were £115.1 million which showed a reduction as compared to 2016
profits which were £128.1 million (TSB, 2017a). As per directors’ report, the firm did not
propose to pay a dividend to its shareholders, and all the returns are reinvested in the
business. Following is a graph of giving year data of earning per share of Banco Sabadell
which is the parent company of TSB Bank PLC.
Figure 2: Five Year data of Banco Sabadell
The above-mentioned data showed a growing value of shareholders’ value by investing in the
TSB Bank PLC. Policies implemented by the Board assist in increasing earnings per share
value of shareholders.
Relationship with employees

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The Human Resource director of the company, Rachel Lock, is responsible for performing
activities such as recruitment, performance management, consulting, compensation and
others. The conduct regular meeting and provide performance-based rewards to improve the
performance of its employees. For example, the firm has partnered with the Curve Group
which is a leading recruitment and HR outsourcing companies for attracting and selecting
talented candidates in the commercial banking team (APSCo, 2018).
Relationship with Other Members of the Public
As per Corporate Social Responsibility of the firm, each brand selects a local project or
charity to support and the employees volunteer for local charitable causes. Partners also
spend at least eight hours in a year to support local good causes. The enterprise complies with
the banking regulations that are implemented by local and national government. The firm has
fundraised over £500,000 each year since moving to local model (TSB, 2016).
Purpose of PESTEL Analysis
There are various purposes of conducting a PESTEL analysis for a business organisation, for
example, when a firm is expanding or establishing business in global markets, PESTEL
analysis assists in assessing the prospective market, identify potential competitors and
determine various regulations that are necessary to be compiled by the enterprise. The
PESTEL analysis identifies significant factors that change or influence a corporation’s supply
or demand levels, costs of production factors and others (Issa, Chang and Issa, 2010).
Organisations are facing rapid change in business environment due to the introduction of new
technology and changing economic environment for the link between users. The companies
are required to implement innovative strategies in order to address these challenges and
sustain their future development.
Effective PESTEL analysis provides them information regarding these marketing challenges
that can be addressed by implementing innovative approach in the firm. The PESTEL
analysis enables management to get a deeper understanding of the environments that directly
or indirectly influence a firm’s business. It also assists them in understanding different and
influential factors that affect the success of a product launch. (Ho, 2014). For example,
management might overlook the safety and consumer regulations which are necessary to
comply by them in order to launch a new product during global expansion. Therefore,

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developing alertness in the business is another key purpose of conducting PESTEL analysis
for a business organisation.
PESTEL of TSB Bank PLC
Political Factors
TSB Bank PLC face a challenging political environment in the United Kingdom as its
business is characterised by new regulatory capital rules such as UK Banking reform Act and
EU Bank Recovery and Resolution. The new laws implemented by the state and national
government affects the business of TSB Bank PLC in the banking sector. For example, Brexit
has impacted TSB’s strategy and customers, and it has created various risks for the enterprise.
The firm faces difficulties if it wanted to expand its business in European markets due to
Brexit. The regulations implemented by the government have a substantial effect on the
business of TSB Bank PLC, and it focuses on forecasting the next governmental change. The
government changes regulations in the banking industry which are required to be followed by
the management of TSB. For example, the eight percent surcharge levied by the government
on the profits excess £25 million on banking corporations in the UK has a negative impact on
company’s profits (TSB, 2017).
Economic Factors
Due to Brexit, TSB Bank PLC face various economic risks relating to operations, regulations,
impact on clients, customers and employees, and negative consequences for capital. In the
short term, Brexit did not have a substantial impact on the financial position of TSB Bank
PLC, but in the long run, the firm might face difficulties due to high rate of inflation. The
decline in the exchange rate of pound can have a potentially negative impact on firm’s
capital. In 2016, the Bank of England has reduced the base rate for banking corporations from
0.5 percent to a record low of 0.25 percent (Partington, 2017). The bank changed the interest
rate due to the negative impact of Brexit. A low-interest rate negatively affects a banking
firm’s ability to generate profits, and it reduces its profitability. On the other hand, in the final
quarter of 2017, the UK economy grew just by 0.6 percent which was slowdown due to
Brexit (Partington and Elliott, 2018). High rate of inflation has a negative impact on banking
organisations as well. Inflation has a negative impact on currency and its value which
resulted in causing instability. Foreign investors did not prefer to invest in a country which
has a high currency value. The exchange rate of currency also affect banks situated in the UK

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since currencies such as US dollar influence spending habits, inflation rates and currencies
value in the country.
Socio-cultural Factors
The way people live their lives has a substantial impact on the decision of banking firms. Any
change in lifestyle, social mobility, labour composition, fashion or other demographic trends
has a potential to influence banking companies. TSB Bank PLC requires implementing
innovative approach in order to address the issues faced by them due to rapidly changing
socio-cultural factors. For example, the population of the United Kingdom is ageing which
creates various potential business opportunities for TSB Bank PLC. Currently, the median
age in the UK is 40 years which has grown from 33.9 years in 1974 (Office of National
Statistics, 2016). Further, many studies have provided that the number of 55-64 years old
people will double by 2019 in the UK. The ageing population provide a significant business
opportunity to TSB Bank PLC as pension age of customers generate an earning and have a
higher disposable income. The firm is shifting its focus towards providing savings, wealth
management and investment facilities to its customers as their behaviour changes. Migration
is another crucial factor for TSB Bank PLC as more than half (55 percent) of the growth in
the UK population between 1991 and 2016 has resulted due to migration (Migration
Observatory, 2018). In order to find illegal immigrants, UK banks are required to check more
than 70 million accounts (Travis, 2017).
Technological Factors
The continuous and rapidly changing has a substantial impact on the business of TSB Bank
PLC. The firm faces several potential opportunities and threats due to the advancement of
technology. Most banks provide their services through the internet for convenience of their
customers, but, it increases the risk of cybersecurity attacks. TSB has to ensure that it
implements the latest cybersecurity programs in order to protect company’s and customers’
data from hacking which increase their overall costs. Innovation assists in providing
technological solutions of banking enterprises which resulted in improving their services and
security. Financial innovations such as FinTech companies are able to prove banking
facilities to their customers through modern ways (Dapp, et al., 2014). The traditional
methods of financial services have changed with the introduction of smartphones, mobile
banking, cryptocurrency and online investing services. These factors provide various
opportunities to banking organisation in order to expand their business and increase the

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number of customers. The Security Operations Centre (SOC) of the firm focuses on
protecting the company’s data from cyber-attacks.
Environmental Factors
The awareness regarding environment protection is growing between modern companies, and
they focus on implementing innovative policies to reduce their carbon footprint and protect
environmental resources. TSB Bank PLC use innovative approach to establishing energy
efficient operations and using renewable energy in order to reduce their carbon footprint and
improve their overall operations. As per regulations implemented by the UK government,
GHG (Greenhouse Gas) and environmental reporting are mandatory for corporations situated
in the United Kingdom, including banking (CDSB, 2018). Therefore, TSB Bank PLC also
have to mandatory provided GHG and environmental reporting to the government which
require them to implement appropriate policies for reducing their carbon footprint.
Legal Factors
In recent years, there have been a number of significant changes in the legal environment in
the UK which affects TSB’s behaviour. For example, introduction of age and disability
discrimination require the corporation to improve their HR policies for the requirement for
avoiding discrimination. Legal changes also have an impact on company’s costs; for
example, they are required to implement new systems or procedures as per legal requirements
(Yuksel, 2012). Another example is while providing online financial services to customers;
the firm is required to comply with the provisions of Consumer law which protect customers
from any fraud or unfair trade practices. Similarly, TSB has to comply with Employment
Law in order to ensure that it complies with different regulations relating to dismissal,
redundancy, minimum wage and working hours. Any changes in law have a substantial
impact on company’s operations, for example, the Banking Regulations in the United
Kingdom changed after Brexit which influence the business of TSB.

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Conclusion
In conclusion, the PESTEL analysis is a strategic tool which is used by marketers in order to
evaluate and analyse the external factors which influence a firm’s business. The report
analysed the example of TSB Bank PLC to conduct a PESTEL analysis. The organisational
structure of TSB Bank PLC is hierarchical since it is governed by the Board of Directors. The
executive officers of TSB are responsible for managing and performing daily operations
whereas the directors implement policies for sustaining the future of the enterprise. The
Board maintained a relationship with different stakeholders by implementing different
policies such as establishing training and development program for employees, funding local
charities, complying with government regulations and others. The main purpose of PESTEL
analysis is that it provides necessary information to corporation regarding their external
environment which assists them in formulating appropriate policies to address such
challenges. PESTEL analysis of TSB Bank PLC is conducted above which provide different
challenges and opportunities faced by the enterprise such as cybersecurity risks, change in
government policies, ageing population, and others.

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References
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