Analysis of Barratt Development PLC: Executive Report

This report provides an executive summary and analysis of Barratt Development PLC, a major UK residential property development company. It begins with an introduction to the business environment and the importance of external factors. The report then describes the company's governance structure, including the roles of key personnel like the Chairperson, CEO, and CFO, and the roles of shareholders. It details the organizational structure, highlighting departments such as Marketing, Finance, and HR. The report emphasizes the importance of PESTLE analysis as a strategic tool for identifying macro-environmental factors. It includes a detailed PESTLE analysis of Barratt Development PLC, examining political, economic, social, technological, legal, and environmental factors that affect the business. The political factors include credit market liberalization and government policies. Economic factors such as inflation, exchange rates, and interest rates are also considered. Social factors related to population growth and employment are analyzed. The report also touches upon technological advancements and their impact. The report highlights how the company can use the analysis to make strategic decisions and adapt to changes in the business environment.

BARRATT DEVELOPMENT PLC

EXECUTIVE SUMMARY
The study will include PESTLE analysis and its importance towards the selected
organization. The study will highlight how PESTLE analysis can change the way employees
think and the way decisions are taken. The structure as well as governance of the organization is
also highlighted in the study.

INTRODUCTION
Business environment plays a crucial role in the success of the business such that it is the
combination of internal and external factor that influence the company's operations. Therefore, it
includes suppliers, stakeholders, technologies, political factor etc Zahari, A.R. and Romli, F.I.,
(2019). Thus, in the same way, current report main aim is to gain knowledge related to some
external factor that affect the business operation. The chosen firm for this report is Barratt
Development PLC which is one of the largest residential property development company in UK
who has its network over 30 divisions. The current report describe how the firm is governed and
structured, and further, describe the importance of using PESTLE analysis. Lastly, it use the
external analysis tool that helps to determine the macro environment factor within the firm.
MAIN BODY
TASK 1
Describing how the company is governed and structured.
The governing body of the company is the sponsor, Chairperson, CEO and the CFO, they
are the key persons of Barratt Development PLC. These people manage the entire company with
the help of the team. The Board of directors of the company are selected by the shareholders.
These shareholders are having the right to vote and from those votes the governing bodies are
made.
There are two major certificates known as certificate of incorporation and memorandum
of association. Certificate of incorporation is a legal document which is used as proof that the
company is having its existence and registered. This certificate is also known as birth certificate
which is having the date on which the company got registered as well name and registered
number of the company. The another document is known as memorandum of association in
which the limit of the liabilities are defined along with the details of the shareholders with the
voting rights. Objectives of the company is also mentioned in the MOA in which the physical
address of the company is also mentioned.
There is a hierarchy which needs to be followed by the company which starts from the
BOD to CEO and CFO and then managers and at last workers. The Board of the directors are the
key policy maker which makes makes the policy on the basis of which decisions are taken
Nandonde, F.A., (2019). For example if there is a chance that demand will rise by 5% and there
is shortage of the products then it will be informed first to the CEO of the company by the BOD,
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the CEO will then tell to the manager and at last the manager will tell the workers that 5%
production target must be achieved by the company by the year 2020. The workers just have to
follow the instruction of the managers and must also inform the managers what are the loopholes
and the materials required by the company.
Structure of a organization consist of various department which takes into account goals
and mission of the company. A typical corporate structure of a company consists of various
department such as Marketing department, Finance department, Operations department, IT
department, Human Resource department. All these departments have professional involved in it
which manages the department. From the diagram it can be more clarified the structure of the
company of Barratt Development PLC.
As per the diagram at the top position it is CEO, the manager is at the second position
and at the end there are workers. Structure of the organization is very much necessary which if
not followed can result in mismanagement of work which can create chaos. Single person can
not run company all alone, it is must to distribute the work to ones who are expert in the work.
This will help in better and timely achievement of the goals of the company. There are various
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Illustration 1: Barratt Development PLC organizational structure.

types of structure of a company such as Functional structure, in which the company has to follow
the structure which is already mentioned and it is also known as the standard structure of the
company. The other structure is known as the Divisional structure in which the company has to
follow structure based on products or project. Geographical structure in which is used by the
company which is located at various parts of the world.
Here Barratt Development PLC follows the Functional structure in which the company
follows the standard structure in which there are already set rules and hierarchy which the
organization and the departments have to follow.
TASK 2
Importance of carrying out PESTLE analysis.
PESTLE Analysis is the framework that is used to determine and analyse the macro
environment factor that creates direct impact upon the organization performance. Therefore, by
using this tool, company will identify what factors affect the business in negative or positive
way. On the other side, if the manager of Barratt Development Plc did not use PESTLE analysis,
then they did not identify what external factor directly or indirectly affect the business
environment. For instance, if the company extend the business at international level then at that
time, it has to comply with all legal laws that affect the business in negative way and in that time,
the business may realize that there is legal factor that should be identified before entering into
new state Perera, (2017). Thus, in the same way, the strategic tool will help to look different and
influential factor that affect the success of product. As a result, it encourages the development of
strategic thinking for the deeper understanding of the strategic planning.
In addition to this, using this external model, the company also generate different
opportunities that further help to lead a business towards success. For example, Barratt
Development Plc uses PESTLE analysis, for research social and technological trend then the
firm will easily analysis the target market is moving towards a new social media channel.
Therefore, it is now the opportunity in which the company build the marketing campaign in order
to stay competitive in the market. As the strategic management tool is consist of six different tool
such that Political Factor in which company determine how and what degree a government
intervene in the country's economy. Such that it includes political stability/ instability in oversees
market, foreign trade policy etc. Therefore, company need to be able to respond to present and
future legislation so that they can adjust their marketing policy SHTAL and et.al., (2018).
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Another factor is Economic factor which deals with the economic growth, interest rate, exchange
rate. Thus, it deals with the management of demand in given economy.
Next is social factor in which it describe the area which are involve the shared belief
attitude of population. Another is technological factor in which the company determine how the
technological changes affect the product in the market as well as its brand reputation too. Next is
Legal factor which deal with different laws that needs to be follow by the firm. Last is
Environment factor in which the company should focus on sustainable strategies in order to
prevent the environment from any harm. Therefore, it clearly shows that using PESTLE
Analysis, the company may easily determine different external factor that creates direct impact
upon the business and it save time as well as creates deeper understanding related to external
factor. Not only this, the tool also help to take better decision for the company's welfare and
provide effective improvement strategy in order to minimize the external factor that may cause
negative impact upon business Gray, S. and et.al., (2016). So, using PESTLE analysis as a
strategic management tool will help to creates opportunities which can be used by a firm in order
to sustain the brand image in market.
TASK 3
PESTLE Analysis of the company
PESTLE Analysis is best strategic management tool that helps Barratt Development Plc
to determine what external factor affect the business in negative way. Thus, these factors are as
mention below:
Political Factor: The political factor creates direct impact upon the profitability of the
company such that the political risk may vary from current political authorities to some sudden
decision taken by the government. At that time, the company has to follow all the changes made
by the government.
Credit Market Liberalisation: It is the another factor under political factor that affect
Barratt Development Plc in which the sudden rise in deregulation raise housing demand as well
as real housing prices. As a result, it directly increases the household debts in UK and it is also
analysed that due to non- monitored liberalization directly affect the recession and as a result, it
may lead to dip the demand of houses. Therefore, it directly creates impact upon the quoted firm
in negative way.
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On the other side, UK government also encourage rental housing subsidization and
further assure that all the families in low income zone are eligible for the rental subsidiaries. But
on the other side, if there is any political instability then the quoted firm have to vary their prices
of offered services in order to raise the demand of customers. Therefore, this strategy will help
the firm to deal with the political factor.
Economic Factor: The factor deals with the economic stability of the country such that
UK has stable economy but sudden change in the inflation rate and foreign exchange rate affect
the business overall performance. Therefore, before investing in other country, Barratt
Development Plc should determine the economic system, the rate of GDP growth in the country
that will affect the growth of the business. On the other side, the interest rate of the country also
affect the business such that it influence the quantity of monthly mortgage payment and it is also
analysed that rise in interest rate creates a situation of recession and it directly influences the
customer's purchasing power as well.
On the other side, high level of unemployment in the country means there is a greater
supply of the job rather than demand and as a result, people are willing to work even in lower
cost and as a result, it lower down the economic rate of the country and which would further
decrease the cost of Barratt Development Plc.
Social Factor: Society is a place where the organization operates and social factors are
the factors which influences the business. The business must consider these factors while doing
business. They are the external factors which can effect the business to make changes. Social
factors generally contains factors such as geographical boundaries, taste and preferences,
lifestyle, safety, health, etc. Bharratt Development PLC must focus on finding out what are the
needs and wants of the customers and accordingly design the products Muntoha, A. and
Sudiarno, A., (2019). After the analysis it is found that the company must focus on social factors
such as population growth rate and employment level of the company in which the Bharratt
Development should provide employment to the individuals by expansion of the business.
There is a positive as well as negative side of social factors, the positive side of the social
factors are it helps in determining what are the needs and wants of the audience, how should
business react towards the society and how to influence the society. Also there is negative side of
it as well such as if social activities are not done by the company then it will result in spoiling the
image of the company, if the societal needs are not determined then it will result in loss of the
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company and dissatisfaction among the customers. Bharratt Development must do strategical
planing which is more customer and profit driven, because if the business is satisfying the
customer then it will automatically result in profit making.
Technological Factor: In this modern era, every company uses effective ways of
advance technology because it helps to save time and provide opportunity option for the
company's success. There are different technological factor that affect the success of Barratt
development Plc such that Enterprise Resource Planning plays a key role in housing sector as
well as or Barratt in which due to higher complexity of supply chain has led to complete the
automation and that is why company uses advance technologies as well. Therefore, it is quite
essential for the firm to use effective and advance technologies into its working area in order to
cope up with this factor.
Legal Factor: Legal factors are also predominant factors, they must be followed in order
to prevent from any future liabilities. They are the external factors which considers how the law
effect the business and also how it affects the consumers. Bharratt Development PLC should not
avoid following of laws and regulations in order to make more profits. There are some important
laws such as Consumer law, Health and Safety law, Employment Law, Copyright Law,
Decriminalization law and the company law. All these are the integral laws and must be followed
constantly.
Bharratt Development PLC must understand if all these laws are not followed then it can
result in higher penalty which can be much higher than making profits. For example The
company must focus on paying the minimum wage to the employees and must keep updated, in
UK the minimum wage rate is 1450 EUR per month as per 2019. The same must be paid and no
less than it must be paid.
Environmental Factor: Environmental factors are also important factors which are must
to be considered by the Barratt Development by not polluting the area, avoiding soil erosion,
taking care of waste management, not spreading dirt, taking care of the water bodies and also
plantation of trees. Environmental factors are the factors which if not considered than it can
completely spoil image of the company Mann, E. and et.al., (2019. For the benefit of the
environment the company must do better to the environment factors. This will benefit the
company by winning the trust of the customers and the audience will be always ready to invest in
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the company. Barratt Development must focus on CSR activities such as plantation of trees,
building of eco friendly circle and statues etc.
CONCLUSION
As per the study it is concluded that it is very important for the organization to do
PESTLE analysis. It helps the company to do analysis of it on the basis of various external
factors and what are the points in those factors. The governing body of a company is the Board
of Directors and structure of a company which is followed by the Barratt Development PLC is
the functional structure. PESTLE analysis helps the company to do analysis of external factors
which can affect the company and the same can be corrected by proper planning by which the
Barratt Development can take competitive advantage over the other companies.
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REFERENCES
Books and Journals
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
SHTAL, T. V. and et.al., 2018. Methods of analysis of the external environment of business
activities. Revista ESPACIOS. 39(12).
Gray, S. and et.al., 2016. Strengthening coastal adaptation planning through scenario analysis: a
beneficial but incomplete solution. Marine Policy.
Zahari, A.R. and Romli, F.I., 2019. Analysis of suborbital flight operation using
PESTLE. Journal of Atmospheric and Solar-Terrestrial Physics. 192. p.104901.
Nandonde, F.A., 2019. A PESTLE analysis of international retailing in the East African
Community. Global Business and Organizational Excellence. 38(4). pp.54-61.
Koshesh, O.S. and Jafari, H.R., 2019. The Environmental Strategic Analysis of Oil & Gas
Industries in the Kurdistan Region Using PESTLE, SWOT and
FDEMATEL. Pollution. 5(3). pp.537-554.
Muntoha, A. and Sudiarno, A., 2019, August. Integrating House of Risk Method with PESTLE
and CIMOSA for Risk Assessment of Java-Bali I Power Plant Construction Project.
In IOP Conference Series: Materials Science and Engineering(Vol. 598, No. 1, p.
012044). IOP Publishing.
Mann, E. and et.al., 2019. Geochemical analysis of Tequesta calcretes. Journal of
Archaeological Science: Reports. 27. p.101988.
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