Comprehensive Business Environment Analysis for Smith & Nephew PLC

This report provides a comprehensive analysis of the business environment surrounding Smith & Nephew PLC, a British multinational medical equipment manufacturer. The report begins with an introduction to the concept of business environment and its importance for strategic decision-making, particularly for a global company like Smith & Nephew. It then delves into the governance and organizational structure of the company, including the roles of key executives and committees. The report emphasizes the significance of PESTLE analysis (Political, Economic, Social, Technological, Legal, Environmental) for understanding external factors impacting the business. A detailed PESTLE framework is applied to assess the specific influences on Smith & Nephew, considering factors such as Brexit, economic conditions, customer behavior, and technological advancements. The analysis aims to identify potential threats and opportunities, aiding in the development of proactive strategies for long-term sustainability and market growth within the healthcare and medical equipment sectors. The report highlights the impact of various factors and their role in shaping the company's decisions and strategies.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
Governance and structure of the company.............................................................................2
TASK 2............................................................................................................................................6
Importance of carrying out PESTEL analysis........................................................................6
TASK 3............................................................................................................................................8
PESTLE framework...............................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is defined as the external environment of the business in which
various factors that are changing on continuous basis are included. In order to make ample and
effective strategies this is highly required by business manager that they analyse business
environment in prominent manner along with considering all factors (Hamilton and Webster,
2018). This report includes various concepts of business environment in the background of
Smith & Nephews PLC. The company is British multinational surgical equipment manufacture
and headquartered in Watford, England. They are international producer so this is highly
essential that they recognise and understand their business environment in prominent manner so
as to get assistance in their business in order to attain long term sustainability and high brand
image as well. This report includes various dimensions of business environment which is
required to be analysed by the company so as to pertain success.
TASK 1
Governance and structure of the company
Overview:-
Smith & Nephew is the listed British medical equipment manufacturing company based
out of Watford, England. Thomas James Smith established it in the year 1856. It has also
known by name Smith & Nephew and has multination operations in 120 countries around the
globe with over 16000 employees (Winterhalter and et.a l., 2017). Various products offered by
it include wound management products, arthroscopy products, clinical therapy products etc. It
has three-market segments i.e. advanced wound management, Endoscopy and Orthopaedics. It
was in 1928 when company procured the license to market and manufacture the Elastoplast
range of bandage and sometime later in 1986 it went for acquisition of US orthopaedic
specialist company “Richards Medical and from there on it continued to expand its business
operations.
Organization Structure of Smith & Nephew:-

Organization structure of Smith and Nephew consists of Chairman, CEO, Executive
directors and Non-Executive directors and a separate set of Board of advisors. It has 13
Executive directors including Roberto Quarta (Ntim and et. ,al., 2019). Roland Digglemann,
Susan Swabey, Brad cannon, Rick Medlock etc. and seven non-executive directors including
Vinita Bali, Virginia Bottomley, Erik Engstorm, Robin Freestone, Marc Owen, Angie Risley
and Bob White. They have various committees led by board of directors including Audit
Committee, Remuneration Committee, Nomination & Governance committee, Compliance &
culture committee and Ad hoc committee. It has also structured executive committee and
various other committees to carry on the business operations and decision-making.
Chairperson:-
Roberto Quarta is the chairperson of the company currently who joined the board in the
December 2013 and appointed as the chairperson of company in 2014 and continuing until date.
He is a graduate from Holy cross, Worcester. Currently he is being appointed as chairperson of
WPP PLC and CD&R Europe and moreover partner at CD&R. His experience in the field of
private equity played the major role in his appointment as chairperson and it brings immense
experience and value to the organization.
Corporate Governance Framework:-
The company is committed towards highest adherence for all applicable laws, regulations
and responsibilities. CEO of smith and nephew Roland Diggle Mann leads their governance
team. He was appointed as CEO with effect from November 2019. As every other listed,
company it to be responsible to report to their stakeholders. Their governance policy is framed
keeping in mind all the necessary legal requirements and regulations. It is majorly advised and
suggest by CS of the company as well as Independent directors who provides their valuable
unbiased opinions on every decision making process. Below given are some of the committees
formed for proper governance within the organization:-
1. Audit Committee: - It provides independent assessment of the financial affairs of the
Company, reviews financial statements and controls oversight of the risk management
process and key risks, such as cybersecurity. Manages use of internal and external
auditors.

2. Remuneration Committee: - Formed to determine Remuneration Policy and packages
for Executive Directors and Executive Officers, having regard to pay across our
workforce. Ensures alignment with our purpose, values and long-term strategy.
3. Nomination & Governance Committee: - It has formed with intention to Review size,
skills, experience, knowledge and composition of the Board, succession planning,
diversity and governance matters.
4. Compliance & Culture Committee: - Reviews and monitors ethics and compliance,
quality, regulatory, and related legal matters across the Group. Role was expanded
in 2019 to include oversight of culture, sustainability and stakeholder relationships.
5. Ad hoc committees: - Ad hoc committees may be established to review and
approve specific matters or projects.
Executive Committee: -
In addition to the above given committees there has been framed an Executive committee
for Smith & Nephew consisting of executive directors of the company which helps the CEO
Roland Digglemann in day to day business operations and decision makings. Executive
committee has been delegated with the responsibility to suggest plans, strategies, ideas, and
frameworks for both commercial and corporate matters to the CEO and Board of Directors in
the best interest. Below given are some of the main functions expected out of Executive
committee:-
1. Monthly Operating Review.
2. Franchise, Functional and Regional Leadership Meetings.
3. Defines portfolio allocation principles, reviewing and challenging current shape
of portfolio.
4. Oversees health, safety and environmental matters.
5. Implements strategies to promote diversity and inclusion.
6. Oversees all policies and processes relating to pensions and employee benefit plans.
7. Reviews compliance matters and country business unit or function compliance reports.
8. Oversees Corporate Mergers & Acquisitions Investment Strategies and processes.
9. Monitor Sustainability strategy and deliver agreed plan (Akbar and et. al., 2016).

TASK 2
Importance of carrying out PESTEL analysis
PESTLE analysis is a framework which can be used by businesses in order to
understand outer environment and impact of various factors in the business. This analysis is
helpful in recognising those factors which are providing positive implications to the company
so as to determine growth opportunities and those factors which may provide negative
implications to the company so as to in grow proactive measures in the business in order to
protect their business operations form any major difficulty. PESTLE is a helpful tool for the
organisation in various dimensions which are elaborated as under:
Identification of potential threats: With the help of PESTLE analysis potential threat
within the market can be identified due to which high business benefits can be enumerated and
this is assisting in making robust strategies to overcome from them. In the context of Smith &
Nephews PLC the company is dealing at global level so PESTLE analysis is highly effective
for them in understanding those factors which are providing them opportunities and threat in the
global periphery market (SHTAL and et. al., 2018). By this any proactive strategies can be
made by them which are creating hurdle in their path due to which high end growth and
sustainability can be achieved by Smith & Nephews PLC for long run.
Create method for exploiting new opportunities: With the help of PESTLE analysis
new opportunities can be seen by the businesses which are prevailing in the marketplace. For
instance if a company is using high technology equipment and processes in their manufacturing
procedure then they are having immense opportunities to expand their business in developed
countries as those countries are prone to assess these aspects in a very significant manner. In the
context of Smith & Nephews PLC, they are required to use this approach in order to provide
high end opportunities to their business regarding expansion within various marketplaces so as
to get longer sustainability.
Analysis of external environment: With the help of external environment outside
environmental factors can be analysed so these could be helpful in judging those factors which
are required to be assessed when business is planning to tap within new marketplace (Collins
and et. al., 2016). With the help of PESTLE information can be gathered which could be helpful

in holding market share in different market. In the context of Smith & Nephews PLC they are
requisite to use PESTLE in order to examine market situation and to gather information which
are associated with various factors and plays an essential role in business expansion.
Understanding impact of decision: With the help of PESTLE analysis decision taking
becomes easier as this is an essential aspect in which various dimensions are undertaken. This
approach is used by businesses in order to frame a clear path in decision so that all the persons
can follow the same without any prominent barrier. In the context of Smith & Nephews PLC
the company is dealing in medical equipment in which they are willing to expand their business
in global periphery so PESTLE approach is helpful in analysing various factors which can
impact their decisions.
TASK 3
PESTLE framework
Political factors: This factor includes intervention of government interventions in the
business by which high implications can be drawn out in positive or negative aspect. In the
context of UK as the country is facing high implications due to Brexit then this factor is
providing negative implications to all the businesses operating in UK. In the context of Smith &
Nephews PLC as the company is dealing in manufacturing of medical equipment so
government is having high intervention in their business. On the other side this factor is
impacting their business as well, because due to high interventions all the governmental
fulfilment is required before filling up any new tender which creates difficulties in their
operations. Similarly with governmental interventions frauds can be avoided by them due to
which they are having liner business functions.
Economic factors: These factors involve economic condition of country and their GDP
rate. All the businesses are having high impact of international economy if they are having their
operation at global level. In the context of UK the country is having sound and stable economic
condition which provides high opportunities in growing of businesses operated in UK. On the
other side this factor includes trade laws and effect of currency exchange rate in the businesses
which are operated at global level. In the context of Smith & Nephews PLC the company is

supplying their medicated equipment around the globe by which they are impacted from
economy of those countries in which they are dealing (Blott and et. al, 2016). In the current
situation of pandemic COVID-19, the economies of all the countries are declining but at the
same time due to requirement of medical services Smith & Nephews PLC is having
opportunities to enhance their market size and business as well.
Social factors: These factors are associated with taste and preferences of customer and
their buying behaviour as well. In the context of Smith & Nephews PLC the company is dealing
in surgical equipment, devices and products so their customers are not normal people. Their
customers are hospitals and wholesaler who deals in selling of medical equipment. On the other
side their buying behaviour and inclination can be judged through various factors such as price
and quality. In the terms of quality Smith & Nephews PLC is standing at a very prominent
position in the marketplace so they are having huge opportunities within marketplace under this
factor. In the current situation of COVID-19 the world is facing its worst situation and in this
people are in need of medical services and products so Smith & Nephews PLC is coming up in
order to fulfil market demand in a very significant manner and by this they are generating
immense opportunities for their business to grow in future in desirable manner.
Technological factors: These factors are associated with using high technology
processes or machines in business which is latest and trending in the market. In the context of
UK the market is highly demandable for latest technology and population are prone to use the
same in a very prestigious manner. People of UK are wealthy and adapt technology in a very
prompt manner as they are educated and willing to go ahead with the latest technology. In the
context of Smith & Nephews PLC the company is manufacturing medical equipment so this is
highly required by them that they use latest technology in their business so that required person
or patients may have high benefits from the same. Smith & Nephews PLC is famous for
surgical devices such as orthopaedic reconstruction, sports medicine and ENT so these are the
speciality of them and in their equipment high technology are introduced by them in order to
sustain in the marketplace and lead the market with high level of prominence.
Legal factors: These factors are associated with legal framework and legislative laws
which are used by business so as to make their employee ad customer happy and to avoid any
legal suits on them (Palmer, Listing Power Tools Inc, 2018). In the context of UK the country is

highly rigid on their laws and all the companies operating over there are required to adapt these
laws in a very priority manner. In the context of Smith & Nephews PLC as the company is
directly associated with health of people so they are required to follow various laws such as
health and safety and employment laws. Employment laws are inculcated by them in order to
safeguard interest of their employees and on the other hand other laws are used by them in
order to maintain level best quality in their product so that it could not provide any harm to the
user and provide accurate usage as well.
Environmental factors: These factors are associated with applicability of
environmental friendly techniques in the business so as to eliminate provided harm to the earth
and atmosphere as well. UK has made various laws in which environmental friendly techniques
are required to be used by the companies such as waste management or green approaches. On
the other hand as Smith & Nephews PLC is manufacture of medical and surgical equipment
then they are having huge production of waste and they uses huge amount of plastic by which
environmental harm is being produced. But at the same time the company is using waste
management techniques in their business by which they are reducing negative implications over
environment and nature.
CONCLUSION
From the above report this can be concluded that business environment is required to be
analysed by business in order to avoid those circumstances which may be harmful for the
business operations. With the help of PESTLE analysis external factors can be recognised by
which opportunities and threats can be identified and corrective measures can be taken on time
(Veselovsky and et.al., 2017). Business environment is the set of those external and internal
factors by which high implications on the business are drawn out whether positive or negative.
On the other hand when businesses are planning to expand their business at global level market
analysis plays significant role in recognising their expansion strategies and exposure as well.

REFERENCES
Books and journals
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performance in the UK: Evidence from the application of generalized method of
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Blott and et. al, 2016. Wound cleansing apparatus. U.S. Patent 9,289,542.
Collins and et. al., 2016. The importance of terrestrial subsidies in stream food webs varies
along a stream size gradient. Oikos, 125(5), pp.674-685.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Ntim and et. ,al., 2019. Executive pay and performance: The moderating effect of CEO power
and governance structure. The International Journal of Human Resource
Management. 30(6). pp.921-963.
Palmer, R., Listing Power Tools Inc, 2018. Display box for marketing materials. U.S. Patent
Application 29/589,713
SHTAL and et. al., 2018. Methods of analysis of the external environment of business
activities. Revista ESPACIOS. 39(12).
Veselovsky and et.al., 2017. Business environment in Russia and its stimulating influence on
innovation activity of domestic companies. Journal of Applied Economic Sciences.
12(7).
Winterhalter and et.a l., 2017. Business models for frugal innovation in emerging markets: The
case of the medical device and laboratory equipment industry. Technovation, 66, pp.3-
13.