Business Environment Analysis of Johnson Matthey PLC Report

This report undertakes a comprehensive analysis of the external business environment of Johnson Matthey PLC, a UK-based sustainable technological and specialty chemicals multinational corporation, through the application of PESTLE analysis. The report begins with an overview of Johnson Matthey PLC, detailing its organizational structure, functional management, governance by a Board of Directors, and stakeholder relationships, including shareholders, employees, and customers. It then emphasizes the importance of PESTLE analysis for identifying key external environmental factors and formulating effective business strategies. The core of the report provides a detailed PESTLE analysis of the UK business environment, examining political, economic, social, technological, legislative, and environmental factors and their potential impact on Johnson Matthey PLC. The analysis indicates that many of these factors present opportunities for the company, which can be leveraged to achieve higher growth rates. The report uses references from various academic sources to support its findings and analysis, and is a comprehensive analysis of Johnson Matthey PLC's external environment.

Running head: BUSINESS ENVIRONMENT
BUSINESS ENVIRONMENT: AN ANALYSIS OF JOHNSON MATTHEY PLC
Name of the Student:
Name of the University:
Author’s Note:

1BUSINESS ENVIRONMENT
EXECUTIVE SUMMARY
This report intends to undertake an analysis of the external business environment of Johnson
Matthey PLC through the usage of the tool of PESTLE analysis while highlighting the
importance of the same for the concerned corporation. The report begins by offer an insight into
the business activities of Johnson Matthey PLC, its organizational structure, the governance style
used by it and the other important facets of the concerned corporation. Next, an analysis of the
importance of PESTLE analysis for the different corporations had been undertaken. Lastly, the
report concludes with a PESTLE analysis of the business environment of UK and the manner in
which it is likely to affect the business operations of Johnson Matthey PLC. The analysis reveals
the fact that the majority of the components of PESTLE analysis are likely to act as opportunities
for Johnson Matthey PLC which it has the opportunity to utilize for achieving a higher rate of
growth.

2BUSINESS ENVIRONMENT
Table of Contents
1.0 Introduction................................................................................................................................3
2.0 General Overview of Johnson Matthey PLC.............................................................................3
3.0 Importance of conducting PESTLE analysis for Johnson Matthey PLC..................................6
4.0 Analysis of the external business environment of Johnson Matthey PLC through the usage of
PESTLE analysis.............................................................................................................................8
4.1 Political Factors.....................................................................................................................8
4.2 Economic Factors..................................................................................................................9
4.3 Social Factors.......................................................................................................................10
4.4 Technological Factors..........................................................................................................10
4.5 Legislative Factors...............................................................................................................11
4.6 Environmental Factors.........................................................................................................11
5.0 Conclusion...............................................................................................................................12
References......................................................................................................................................13

3BUSINESS ENVIRONMENT
1.0 Introduction
As stated by Morrison (2017), the organizational structure and the governance approach
used by the business corporation have a profound impact on the business operations of the
concerned corporation. Hamilton and Webster (2018) are of the viewpoint that these two factors
influence the business strategies, organizational strategies, new product development strategies,
marketing strategies and others which are being used by the corporations and thereby
significantly determine the success attained by the corporations as well. Furthermore, another
important factor that determines the success attained by the the corporations is the extent to
which they are being able to integrate the different external environment requirements or the key
trends within the same for conducting their business operations (Needle 2015). This in turn
makes it important for the corporations to frequently undertake an analysis of the external
business environment in which they are operational through the usage of appropriate frameworks
or tools like the PESTLE analysis and others (Boddy 2016). More importantly, it had been seen
that the results that the business corporations derive through the usage of the PESTLE analysis
helps them to identify the dominant themes within the external business environment of their
operation and thereby devise strategies or measures for capitalizing on the same. The purpose of
this report is to undertake an analysis of the external business environment of Johnson Matthey
PLC through the usage of the tool of PESTLE analysis while highlighting the importance of the
same for the concerned corporation.
2.0 General Overview of Johnson Matthey PLC
Johnson Matthey PLC, established in 1817 and headquartered in London, is a UK based
sustainable technological and speciality chemicals multinational business corporation

4BUSINESS ENVIRONMENT
(Matthey.com 2020). Furthermore, the business operations of the corporation are being
organized into four sectors, namely, clean air, health, new markets and efficient natural resources
(Matthey.com 2020). More importantly, it had been seen that the concerned corporation ardently
follows the concept of sustainability within the different services which are being offered by it
and thus the chemical or the technological services offered by the corporation are modeled as per
this particular concept. As per the official website of Matthey.com (2020), the clean air services
offered by the corporation include light duty vehicles, heavy duty vehicles and stationary
emission control and thus this category of the services offered by the corporation are related to
the automobile, energy and refining industries. On the other hand, the efficient natural resources
services offered by the corporation include services like catalyst technologies, Platinum Metal
Group services, Advanced Glass Technologies and Diagnostic Services and thereby are related
to the industries of chemical, oil and gas, energy, food and beverage, glass and others
(Matthey.com 2020). The health related services offered by the corporation include generics and
innovators and thereby belong to the industries of medical and pharmaceutical industries
(Matthey.com 2020). Lastly, the new markets services offered by the corporation under
discussion here include alternative powertrain, medical device components and life science
technologies and thereby are related to the industries of agrochemicals and fertilizers,
automotive, energy and medical and pharmaceutical industries (Matthey.com 2020). These in
short are the major core services offered by the concerned corporation.
Johnson Matthey is one of the largest business corporations of the nation of UK and for
the year 2018 the profitability registered by the concerned corporation was £14,122 million
(Matthey.com 2020). More importantly, in the year 2019 the corporation offered employment
services to more than 14000 workers from the different parts of the nation of UK (Matthey.com

5BUSINESS ENVIRONMENT
2020). Furthermore, the concerned corporation follows a functional organizational structure
wherein it is seen that the workers of the corporation have been grouped into different teams and
departments on the basis of the function or for that matter the work that they perform. Moreover,
four major departments have been created within the corporation under discussion here on the
basis of the above mentioned four services that the concerned corporation offers to its customers.
These different departments of the corporation are required to report to the Chairman of the
corporation Patrick Thomas (appointed in 2018) (Matthey.com 2020). Furthermore, for the
management of the overseas business centers of the corporation, expatriates are being sent by the
corporation for the management of the business centers. In this relation, it needs to be said that
the Board of Directors of the concerned corporation consists of 11 members, namely, 1
Chairman, 1 Chief Executive (Robert MacLeod), 1 Chief Financial Officer (Anna Manz), 1
Senior Independent Director (Alan Ferguson), 5 Non-Executive Directors, 1 Executive Director
(John Walker) and 1 General Counsel and Company Secretary (Simon Farrant) (Matthey.com
2020). The Non-Executive Directors of the corporation are Chris Mottershead, Doug Webb,
Xiaozhi Liu, John O’Higgins and Jane Griffiths (Matthey.com 2020). The important decisions of
the corporation are being made in collaboration by all these Board Members of the corporation
and this in turn had greatly contributed towards the success attained by the concerned
corporation.
Hamilton and Webster (2018) are of the viewpoint that the stakeholders are the
individuals or the groups of individuals who take an active interest in the business operations of
the corporations and are directly affected by the business corporations. In the context of Johnson
Matthey, it needs to be said that three most important stakeholders of the corporation are its
shareholders, employees and its customers. In this relation, it needs to be said that the

6BUSINESS ENVIRONMENT
shareholders are the individuals who hold the shares of the corporations and thereby can be said
to have made an investment into the organizations (Morrison 2017). For the management of an
effective relationship with the stakeholders, Johnson Matthey organizes annual general meetings
(AGM) with them wherein the financial performance of the corporation along with the other
relevant details are being discussed. The last AGM was organized by Johnson Matthey in 2019
and for the same year the shareholders of the corporations got 7% of the profitability of the
corporation on the basis of the number of shares held by them (Matthey.com 2020). On the other
hand, the employees of the corporations also received various compensation, perks and other
kinds of monetary benefits because of the strong profitability registered by the corporations.
Furthermore, for maintaining an effective relationship with regular meetings, conferences and
others are being organized by the corporation. For maintaining an effective relationship with its
customers, different events, conferences and others are being organized wherein the customers
get to interact with the representatives of the corporation. The most important expectation of the
customers related to Johnson Matthey is that they would get the best quality services from the
corporation at affordable prices. Along with these, the annual report is another important
communication tool which is being used for cascading the required information to the
stakeholders by the Board of Director of the concerned corporation.
3.0 Importance of conducting PESTLE analysis for Johnson Matthey PLC
Hamilton and Webster (2018) are of the viewpoint that the framework of PESTLE
analysis is an important which is being commonly used by the contemporary business
corporations for the purpose of evaluating the external business environment in which they
operate. Adding to this, Buckley, Doh and Benischke (2017) have noted that an analysis of the
external business environment in which the corporations operate is important for the corporations

7BUSINESS ENVIRONMENT
since it enables the corporations to adequately identify the most important factors within the
same that are likely to directly or indirectly affect their business operations. More importantly,
this also affords the opportunity to the corporations to devise or to formulate adequate strategies
or measures for capitalizing on the business opportunities presented by the external business
environment in which they operate (Leitner and Meissner 2017). Furthermore, this also helps the
corporations to devise or to formulate the measures or the strategies which will help them to
minimize the business threats that they face or for that matter to completely resolve the same. In
addition to these, it had been seen that the business environment in which the contemporary
corporations are presently operational had become more dynamic as well as complex in nature in
comparison to that of the earlier times (Akhmetshin et al. 2017). Thus, it is important for the
corporations to effectively identify the different emerging trends which are dominant in the
business environments of their operation and integrate them within their business operations or
business activities for attaining the desired level of success and also to achieve competitive
advantage as well. It is precisely here that the importance of the framework of PESTLE analysis
lies since it helps the corporations to identify the different emerging trends dominant within the
business environment of their operation.
In the context of the above discussion, it becomes apparent that PESTLE analysis is an
important framework which is likely to help the corporation Johnson Matthey PLC significantly.
For instance, through the usage of this framework the corporation would be able to identify the
most important business threats and also business opportunities and thereby devise adequate
strategies or measures for capitalizing on the same. Furthermore, the usage of this framework
would also offer the opportunity to the corporation to identify the most important emerging
trends dominant within the business environment of its operation. The integration of these

8BUSINESS ENVIRONMENT
emerging trends within its business operations will help Johnson Matthey PLC to not only attain
the desired level of success but also to acquire competitive edge within the business market of its
operation as well.
4.0 Analysis of the external business environment of Johnson Matthey PLC through the
usage of PESTLE analysis
4.1 Political Factors
Roberts (2018) is of the viewpoint that the UK government is presently focusing on the
development of sustainable business corporations in UK because of the damage that the business
corporations of the concerned nation are causing to the environment and the natural ecosystem of
the nation. Adding to this, Lea (2019) has noted that the national government of UK in order to
extent its support to the development of sustainable business corporations in the concerned
nation is giving active support to the different entrepreneurial start-up ventures which are being
established taking into account the concept of sustainability. This is likely to act as an
opportunity for Johnson Matthey PLC since the entire business operations of the concerned
corporation had been designed taking into account the concept of sustainability. For instance, the
business model, products and services offered by the concerned corporation and the other aspects
of its business are completely sustainable in nature. Thus, the concerned corporation can utilize
the support which the UK government is offering to the sustainable business corporations for
facilitating its growth and development within the business environment of UK. Another
important trend which is seen within the political arena of the nation of UK is the Brexit deal
which is likely to adversely affect the prospects of the business corporations of the concerned
nation (Cumming and Zahra 2016). In this relation, it needs to be said that this deal acts as a
threat for the corporation under discussion here since it would no longer be able to enjoy free

9BUSINESS ENVIRONMENT
trade within the European Union (EU) member nations, procure cheap labor from the EU
member nations and the other benefits that it used to enjoy when UK was a part of the EU. This
in turn would require Johnson Matthey PLC to substantially modify its business operations so as
to overcome the negative connotations of the concerned deal.
4.2 Economic Factors
The economy of the nation of UK is the 5th largest one of the world and despite facing a
financial crisis in 2008 the economy of the concerned nation had recovered significantly from the
same (Tudor et al. 2017). Furthermore, the economic stability of the concerned nation had helped
the concerned nation to get numerous foreign direct investments (FDIs) in the recent times have
significantly enhanced the strength as well as the stability of the economic framework of the
nation even further (Gov.uk 2020). The economic stability of the nation of UK actually acts as an
opportunity for the corporation Johnson Matthey PLC since this ensures the fact that the business
clients of the concerned corporation would have the required capital to purchase the services or
the products offered by the corporation. In addition to these, the economic stability of UK also
ensures the fact that the nation would not face any significant financial crisis in the near future
and thus the corporation would be able to achieve the desired level of financial performance.
However, at the same time it had been seen that the UK government had substantially increased
the borrowing interest rate for the business corporations of the concerned nation. As a matter of
fact, in the year 2017 itself, the interest rate was increased by 0.5% so as to accelerate the
economic growth of the nation (Gov.uk 2020). This actually acts as a threat for Johnson Matthey
PLC since it would have to pay a higher interest rate for borrowing capital from the national
government of UK for the enhancement of the prospects of its business.

10BUSINESS ENVIRONMENT
4.3 Social Factors
Cumming and Zahra (2016) are of the viewpoint that the people of UK in the recent times
are increasing focusing on the brand image or the brand reputation of the corporations for the
purchase of the goods or the services offered by them and thus they are increasingly purchasing
products or services from the corporations which are following the concept of sustainability. This
social trend seen with UK actually acts as an opportunity for Johnson Matthey PLC since the
corporation already enjoys a positive brand image within the concerned nation which it can use
for influencing the buying behavior or the attitude of its customers. Another important social
trend seen within UK is that the consumers are increasingly opting for the products or services
which are environmentally friendly so as to reduce the damage caused by them to the
environment (Tudor et al. 2017). This also acts as an opportunity for the corporation since the
products or the services by it are intended to reduce environmental damage and are also
environmentally friendly as well.
4.4 Technological Factors
UK is one of the most technologically advanced nations of the world and the national
government of the concerned nation itself invests in various research and development projects
which the corporations operational in the nation can utilize for attaining the desired level of
growth or development (Roberts 2018). This acts as an opportunity for Johnson Matthey PLC
since it has the opportunity to use the technological advancements of the nation of UK for
facilitating its growth and also for the development of the kind of products or services which
would be in conjunction with the needs or the requirements of its customers. The active relations
that UK maintains with the different Commonwealth nations and also the other countries of the
world ensure the fact that its business corporations have access to the required technology which

11BUSINESS ENVIRONMENT
is needed by them (Lampadarios 2017). Thus, Johnson Matthey PLC can use this particular
aspect in order to attain a higher level of growth.
4.5 Legislative Factors
The business corporations operational in UK are required to comply with the employment
regulations, business regulations, competition laws and other regulations of the concerned nation
(Gov.uk 2020). Furthermore, failure to comply with these can incur severe penalties and also
liquidation and thus it becomes important for the corporations to comply with them ardently.
This is likely to act as a threat for the corporation Johnson Matthey PLC since the disregard of
even one of these regulations is likely to adverse effect the corporation. The corporations
operational in UK are required to follow the minimum wage stipulation of the national
government of UK (Gov.uk 2020). However, Johnson Matthey PLC follows the system of work
based pay and thus this is likely to act as a threat for the concerned corporation.
4.6 Environmental Factors
The corporations operational in UK are required to follow the stipulations of the Paris
Agreement of 2016 for the conduct of their business operations (Gov.uk 2020). Furthermore, the
corporations are also required to follow the different environmental regulations of the concerned
nation as well which are intended to reduce the environmental damage caused by the
corporations. These are actually going to act as opportunities for Johnson Matthey PLC since the
products or the services offered by it and also the diverse facets of the concerned corporation had
been designed taking into account these aspect.

12BUSINESS ENVIRONMENT
5.0 Conclusion
To conclude, the success of the corporations is greatly determined by the organizational
structure and also the governance style which is being used by them. Furthermore, the
corporations also need to maintain an effective relationship with their key stakeholders. In
addition to these, the corporations are also required to conduct environmental analysis through
the usage of adequate frameworks like PESTLE analysis and others so as to effectively identify
the key business opportunities and threats. This in turn enables them to formulate strategies for
capitalizing on the same. In the context of Johnson Matthey PLC, an analysis of the business
environment of UK reveals that the majority of the factors within the same act as opportunity for
it which the corporation can use for attaining a higher level of growth.

13BUSINESS ENVIRONMENT
References
Akhmetshin, E., Danchikov, E., Polyanskaya, T., Plaskova, N., Prodanova, N. and Zhiltsov, S.,
2017. Analysis of innovation activity of enterprises in modern business environment. Journal of
Advanced Research in Law and Economics, 8(8 (30)), pp.2311-2323.
Boddy, D., 2016. Management An Introduction, (7th edition). Pearson Press.
Buckley, P.J., Doh, J.P. and Benischke, M.H., 2017. Towards a renaissance in international
business research? Big questions, grand challenges, and the future of IB scholarship. Journal of
International Business Studies, 48(9), pp.1045-1064.
Cumming, D.J. and Zahra, S.A., 2016. International business and entrepreneurship implications
of Brexit. British Journal of Management, 27(4), pp.687-692.
Gov.uk 2020. Welcome to GOV.UK. [online] Available at: https://www.gov.uk/ [Accessed 26
Feb. 2020].
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Lampadarios, E., 2017. Critical Business Environment Factors for SMEs in the UK Chemical
Distribution Industry: A Qualitative Perspective. Journal of Research in Business Economics and
Management, 8(1).
Lea, R., 2019. The UK as a place to do business: still very highly regarded
internationally. Arbuthnot Banking Group, 4.

14BUSINESS ENVIRONMENT
Leitner, J. and Meissner, H., 2017. State Capture, Political Risks and International Business.
Abingdon: Routledge.
Matthey.com 2020. We're Johnson Matthey | Johnson Matthey. [online] Available at:
https://matthey.com/en [Accessed 17 Feb. 2020].
Morrison, J., 2017. The Global Business Environment, (4th edition). Palgrave.
Needle, D., 2015. Business in Context, An Introduction to Business and Its Environment, (6th
edition). Cengage Learning.
Roberts, J., 2018. Multinational business service firms: development of multinational
organization structures in the UK business service sector. Routledge.
Tudor, T.L., Da Silva, T.N., Vaccari, M., Dutra, C., Banga, S. and Guidat, T., 2017.
Environmental management legislation and competitiveness: case studies from Brazil, Germany,
Italy and the UK. International Journal of Business Environment, 9(2).