PESTLE Analysis of ReUse Company

This article discusses the PESTLE analysis of ReUse Company, which includes the six forces that affect business operations. It also covers the sources of finance for SMEs in the UK. The article highlights the importance of identifying external forces and adjusting accordingly.

PESTLE Analysis of ReUse Company
Organizations whether small or big it usually operates in a dynamic business
environment. There are numerous factors which makes up this environment, and in the
long run, it might affect the organization positively or negatively. Thus it is the
responsibility of the organization to identify these forces and adjust itself accordingly. A
strategic analysis tool known as PESTLE is the most useful analytical tool used to
analyze the impact of external forces. The PESTLE analysis entails Political, Economic,
Social, Technological, Legal, and Environmental the six forces that affect the business
operations. To make the company aware of the current and upcoming external problems
the marketers use this marketing strategy. A PESTLE analysis is vital in recycling
business just like any other business (Atighechian, Maleki, Aryankhesal, & Jahangiri,
2016).
Political factors
ReUse is operating in a stable political environment in the UK. The only political
issues that the company need to be ready to face is when implementing government
policies, especially environmental laws.
Economic factors
Any sudden change in exchange rate; a microeconomic condition or global
macroeconomic situation could lead to revenue fluctuation if the company operates in
multiple currencies. However, ReUse will operate in the UK and use the British pound as
its only currency. The favourable economic condition enables the company to make
maximum profit and grow.

Social factors
It involves taste and demand for people which varies according to income.
Therefore ReUse Company will be affected by general social changes and will bring
particular threats. Moreover, the demographic changes which depend on age, number of
people employed and region (Hasan, 2013). A high population with many working
individuals will increase the number of people who want to recycle fabrics thus more
income. On the other hand, a government policy limiting family size might lower the
company profits.
Technological factors
The use of advanced technology to increase efficiency, to improve performance
and to forecast customers' expectations is essential in the competitive recycling industry.
ReUse must design its services and products which helps to meet the competition.
Technology will help ReUse bring positive impacts to the business. The Company can
advertise and sell its products online to increase revenue.
Legal factors
These include rules and regulations of a country which may adversely affect the
recycling industry. The regulations and policies allow ReUse recycling to be more
cautious in its local dealings. Favourable regulations will make ReUse grow its revenues.
Unfavourable regulation affects the revenue of the company (Gheibi, Karrabi,
Mohammadi, & Dadvar, 2018).
Environmental factor

Recycling industry concerns are environmental changes. The credibility of their
services highly influences the environment. Poor waste disposal from the production
sector of the company will lead to pollution of the environment.
Political, Social, Technological, Legal, and Environmental factors are the six
forces that affect business operations. To make the company aware of the current and
upcoming external problems the marketers use this marketing strategy. A PESTLE
analysis is vital in recycling business just like any other business (Berry, 2017).
Sources of Finance
There is a relative non-transparent system of registration and information
disclosure for start-ups in the UK as compared with publicly held businesses, due to
which SMEs face difficulties in sending credible signals to banks, creditors and venture
capitalist and get limited access to the external funds. Due to this problem, a financial gap
exists for the SMEs that hinder them from accumulating revenue, generate assets and
contribute a major share in economic growth. In this situation, most of the SMEs
operating in UK and US mostly rely on their internal finance sources during their initial
stage, and as they continue to grow, they also start getting access to the external and
better finance sources (Barthelemy, 2013). Thus the sizes, related industry, year of
operating and organizational forms are the most important factors that determine the
finance sources for an SME and most of the SMEs get finance through their internal
funds like the starting capital of the owner, loan arranged by the owner of SME and the
retained earnings. However, along with these internal sources, the SME get external debts

from the financial institution also, and this credit helps the SMEs in financing their
different business operations.
The main sources of finance for the SMEs of the UK are identified in the survey
conducted by the Federation of Small Businesses (FSB) in 2004. According to the figures
provided by FSB, SMEs do use more than one source to finance their business. 50.8% of
the SMEs in the UK use the bank drafts to finance their business, 30. 6% used personal
savings, 29.5% use bank loans, 28.5% use retained profits and 25.5% use credit cards
debts to finance their business. The report of FSB further disclosed that leasing and
factoring are not commonly used by the SMEs for getting credits to finance the business.
The new SMEs mostly depend on personal saving and credit cards whereas the older
SMEs depend more on supplier’s credit ("Expert: Today's nonprofit leaders should look
to scale, develop new funding sources," 2015).
There are five major lending technologies used by the financial institutions and
banks to provide credit to SMEs for financing their business operation. In the UK and
US, the SMEs get loans from different financial institutions through different lending
technologies among them the relationship lending and transaction-based lending is the
most important types.
The commercial banks in the UK mostly find it more profitable to provide credits
to the SMEs through relationship lending as they got shelter ageists price competition by
using this lending technology (Staniewski, Szopiński, & Awruk, 2016). However, this
trend is more common among the UK banks like to provide credit to SMEs through
transaction-based lending as they get high-interest rates and there is poor risk rating for

this type of credit lending. In UK when the SMEs failed to get credit from banks and
other financial institutions through relationship lending strive to get credit through
transaction-based lending however in many cases there are other lending technologies
like “financial statement lending, small business credit scoring, asset-based lending,
factoring, leasing, and trade credit” are used for lending credits to SMEs operating in the
UK.
Along with the lending technologies, another important aspect of the SMEs
financing scene is the increasing trend of consolidation of banks and financial
institutions. In the UK there has been a large number of mergers and acquisitions
occurred in the banking and finance sector over the last few years due to which there is a
decline in the number of banks. However, the banks are still the most important source
for credit lending for the SMEs, and in June 2004 there was more than 50% of the loans
provided to the SMEs were from the banks (Wright, 2014). This is because, despite the
decrease in the total number of the banks, the branches of the giant banks are opening in
different parts of the country providing a variety of financial products and services of the
SMEs. In the UK also this trend is observed by the financial experts and economists that
SME lending is grabbing major share in the overall business lending along with the
passage of time. As the banks in the UK also provide credit facilities to SMEs through
credit line and credit cards, there is a substantial increase observed in the number of loans
acquired by the SMEs in the UK. The consolidation of the banks has drawn an overall
positive effect on the finance sources for SMEs because there are new options, facilities
and technologies available to the SMEs to acquire credit to finance their business.

Although the ratio of small loans (less than 1 million $) is still very low in the UK it is
supported by the fact that in the early days SMEs are less dependent on banks credit and
this dependency increased along with the growth of the business. Thus the growth of the
SMEs in terms of age, assets and size bring it more credits from banks and financial
institutions and the banks also show their interest in providing credits to the growing
SMEs. In this situation, the expanding branches network of UK and US banks is a
positive sign for the SMEs because they get more credit opportunities to lend money
from these banks by utilizing different options (Wright, 2014).

References
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Micro Environment Affecting Management of Fresh Water Resources? A Case
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Expert: Today's nonprofit leaders should look to scale, develop new funding sources.
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Gheibi, M. J., Karrabi, M., Mohammadi, A., & Dadvar, A. (2018). Controlling air
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analysis, SWOT analysis, Comprehensive analysis of financial ratios, and
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Wright, T. C. (2014). The Funding Is Out There!: Access the Cash You Need to Impact
Your Business. New York, NY: Morgan James Publishing.