Comprehensive Business Environment Analysis Report for Softcat plc

This report presents a detailed analysis of Softcat plc's business environment, commencing with a company overview that encompasses its history, organizational structure, and corporate governance. The core of the report involves a comprehensive PESTLE analysis, a strategic tool used to evaluate the macro-environmental factors impacting the company. The PESTLE analysis dissects the political, economic, social, technological, legal, and environmental factors relevant to Softcat plc's operations, identifying both potential opportunities and threats within each dimension. The report explores how these factors influence Softcat's strategic planning, workforce considerations, marketing strategies, product development, organizational changes, and overall business operations. By examining these multifaceted elements, the report provides a holistic understanding of Softcat plc's position within its industry and the broader business landscape.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Company overview......................................................................................................................3
Organisational structure...............................................................................................................4
Corporate governance..................................................................................................................5
TASK 2............................................................................................................................................6
Importance of PESTLE Analysis for Softcat plc.........................................................................6
TASK 3............................................................................................................................................7
Political factors............................................................................................................................7
Economic factors.........................................................................................................................8
Social factors...............................................................................................................................9
Technological factors...................................................................................................................9
Legal factors..............................................................................................................................10
Environmental factors................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment refers to all the internal and external factors that directly and
indirectly impact the operation, activities, function and decisions of an organisation. These
factors are employees, supply and demand, customers, clients, vendors and suppliers,
government, market and social trends, economic conditions, environment, legalities and politics,
innovations that come with technology, internal management, competition etc (Čepel and et.al.,
2018). This report will aim to evaluate the business environment of the organisation Softcat plc,
which is an IT infrastructure provider established in 1993 and headquartered in Marlow,
Buckinghamshire. The report will provide a general overview of Softcat plc by elaborating
history, corporate governance and organisational structure. The significance of macro
environment analysis tool Pestle will be elaborated and will be applied on Softcat plc to assess
all six dimension and the potential and current threats and opportunities.
TASK 1
Company overview
Softcat plc is a UK based company that deals in IT infrastructure provision services and
is headquartered in Marlow, Buckinghamshire. It was founded in 1993 by Peter Kelly and has
multiple office branches i.e. 9 offices across UK in London, Manchester, Glasgow, Bristol,
Southampton, Birmingham and one branch in Dublin, Ireland. The company constitutes as the
FTSE 250 Index and is also listed on the London Stock Exchange. The present CEO of the
company is Graeme Watt, the chairman is Martin Hellawell and the chief financial officer is
Graham Charlton and works with more than 1500 employees. The total revenue of the company
is £1078 million and operating income of more than £ 94 million as of 2020 (Companies house,
2020).
The company was initially established as Wardswift in 1993 with business name software
catalogue. Martin Hellawell was appointed as the managing director in 2005 and the soon the
company shifted its headquarter to Marlow. In 2015, the company subjected to initial public
offering on the London Stock Exchange (Annual report, 2020). The products that are offered by
the IT infrastructure company range from software licensing, data centre, networking to cloud
based computing and security. It also provides IT intelligence, digital workspace and Hybrid
infrastructure. The company works with blue chip companies like Dell technologies, Microsoft,
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Apple, Citrix, VMware, Cisco etc. The most significant product that earns the company its
highest revenue is the software, which comprises of around half its revenue (Softcat plc, 2020).
Organisational structure
The organisational structure refers to the system which outlines various functions and
activities off an organisation which are directed in a specific manner for attainment of the
objectives and goals of the organisation. The organisation defines a particular hierarchy of
structure which elaborates the job role of employees and a layout of the overall organisation and
authorities. There are various kinds of organisational structures, like linear structures, functional
structures, flatarchy structure, divisional structure and matrix structure. Softcat plc operates on a
functional organisational structure (Raziq and et.al., 2020).
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CEO
Sales and
Marketing
Operations and IT
services Human resources Finance
International and
national dealings
Software
development
Operations
department
Customer service
Procurement

In the functional structure, the organisation is divided into smaller departments with
particular job roles. In Softcat plc, the basic hierarchical structure follows like- main departments
segregated into smaller groups of finance, human resources, Sales and marketing and IT and
Operations departments. Every department has its own head or manager who is accountable to an
executive one level up in the entire hierarchy that oversees various departments. For example,
the director of marketing, under whose supervision the marketing department functions is
accountable to the Chief executive officer who is responsible for all departments like HR, fiancé
and IT & Operations. The benefit of this organisational structure is that all working staff is
grouped via skill set, competencies and job roles which allows them to focus their energies
collectively for execution of the roles in their departments (Raziq and et.al., 2020).
Corporate governance
Corporate governance refers to the assimilation of various rules, laws, policies and
processes through which Softcat plc operates, regulates and controls its business. The
organisational governance consists of maintaining a balance between the interests of all the
stakeholders such as employees, clients, vendors and suppliers, customer or end users,
government and other regulatory bodies, investors and shareholders, media and the community
(Aguilera, Judge and Terjesen, 2018). All the action plans and strategies of Softcat, its internal
controls disclosure of corporate activities, performance measurement etc, is encompassed in
corporate governance.
The board of directors are the primary stakeholders of the company that directly impact
corporate governance. In Softcat the board of directors consist of chairman, independent non-
executive directors and executive directors. The chair person of Softcat plc and head of the board
is Martin Hellawell who joined the company in 2006 and took the chair in 2016 and has a huge
experience of 14 years (Annual report, 2020). The chief executive officer is Graeme Watt, who
was appointed to the board in 2018, Graham Charlton who is the chief financial officer was
appointed to the board in 2015. The three other non-executive directors are Vinn Murria Obe
who deals in workforce management, Peter Ventress and recently appointed senior independent
non-executive director Karen Slatford. The board’s gender diversity is highly notable as it
comprises of 50% female members and 50% male members (Annual report, 2020). The key
committees led by the board of director are Nomination, Audit, Remuneration and Disclosure.
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The major responsibilities of the board of Softcat plc are oversight of the entire company,
reviewing of significant aspects of company and its operations and performance monitoring and
measurement. The board also oversees that the appropriate skills and resources are attained for
Softcat to meet all corporate and business objectives and goals. The board is also responsible for
the dividend policies of the company, devising the capital structure and decision-making
regarding allocation of capital and resources (Softcat plc, 2020).
TASK 2
Importance of PESTLE Analysis for Softcat plc
Business environment of Softcat plc is majorly influenced by its macro environment and
analysing it is a significant constitute of strategic management. Macro environment refers to the
condition of the economy as a whole instead of a specific region or sector. Generally, it consists
of social and market trends, gross domestic product, fiscal policies etc. and is linked with the
usual business cycle of organisations like Softcat plc. The macro environment of the organisation
will focus on aggregate spending, production and the level of price in the market and IT industry
(Priporas and et.al., 2019).
The macro environment can be analysed through the use of strategic tool PESTLE
analysis. This analysis is utilised for determination of various external factors and the macro
environment of the organisation and the factors that operate its business. This tool helps the
company in establishment of areas of threats and opportunities both current and potential in six
dimensions of external factors like politics, economics, societal, technology, law and
environment (Shtal and et.al., 2018). These factors don’t directly impact the operations or
profitability of the company but a thorough understanding would help in maximization of
opportunities and minimisation of threats. The application of this tool can help the company in
scanning these external factors for detection and understanding long term trends in wider
context. It can be then used in multiple business planning situations which encompasses:
 Strategic business context: A PESTLE analysis can be conducted for the process of
business planning. The tool offers the top management of the company with contextual
data about the direction of the company’s operations and business (Perera, 2017). It helps
in identification of brand positioning, growth strategies, areas of concerns in terms of
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profitability, goals etc. Apart from that it helps in determination of validity of current IT
services that Softcat provides and defining software and service development.
 Workforce planning: This process helps in the determination of required workforce and
skills and the process also aligns business with human resource strategies. It can
determine the disruptive change sin the present business models and evaluate potential
employment landscape (Shtal and et.al., 2018).
 Marketing planning: The PESTLE analysis helps in the evaluation of environment
climate in context to market, consumers, economy and society for conduction of the
situational analysis stage in the development of marketing strategies.
 Product/ service development: As the analysis provides insights into the external situation
around the company, it can determine which route can be followed in the market and help
in decision-making regarding gaps in the market and launching of new product line.
 Organisational change: When accompanied with SWOT analysis, the tool can be
effectively used for determining areas that require changes, identify potential
opportunities, competitive threats etc (Perera, 2017).
 Reports, people strategies and project: this framework will prove quite useful to Softcat
plc as it will look beyond the company to hypothesize the possibilities of the future. It
helps in ensuring that foundational business factors are not overlooked when it comes to
alignment of departmental strategies to widen busines strategies.
TASK 3
Application of PESTLE analysis in Softcat plc.:
Political factors
Political factors are important for determination of areas that can impact the long-term
profitability of Softcat plc in a particular market in various countries as the company is providing
IT infrastructure and software solutions to multiple countries and exposes itself to political risks
in the process. The political stability of UK and the countries of business dealing sis highly
important as the government determines major policies such as taxations, global trade
agreements, restrictions through duties and tariffs and takes regulates industry. For example, the
decision of UK government to leave European Union, or Brexit has made pound weaker along
with various uncertainties and potential trade restrictions in European countries. The supply of IT
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systems and other import duties might reduce the profit margins of Softcat plc. Industrial safety
regulation in the information Technology sector and Anti-trust laws can impact the company
(Bloom and et.al., 2019).
Economic factors
Various macro environmental factors like rate of inflation, level of income of consumers,
foreign exchange rate, labour cost, unemployment level, interest rate, cost of living, consumer
spending habits, aggregate demand for IT services and aggregate investment in the economy of
UK, globalisation and overall condition of the economy can impact the costs, price level,
strategies and decision of Softcat plc. Softcat plc raise capital in local market and the efficiency
of the financial markets can be affected directly due to the economic recession and growth rate.
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ENVIRONME
NTAL
FACTORS
LEGAL
FACTORS
TECHNOLOGI
CAL FACTORS
SOCIAL
FACTORS
ECONOMIC
FACTORS
POLITICAL
FACTORS
PESTLE
ANALYSIS

Apart from that people have started spending slowly and there might be lack of proper skills in
the labour cost that company can afford, which would negatively affect the operations and costs
of Softcat plc. Also, the exchange rates are currently highly volatile and the business dealing in
global markets can impact the profit margin of the company (Martin and et.al., 2016).
Social factors
The socio-cultural factors that impact Softcat’s business are beliefs, values and traditions
of the customers along with their tastes and preferences, lifestyle, attitudes, purchase behaviour
of customers. Apart from that the current market trends, social media, career attitudes,
population, work-life balance and the demographics of the target market determine the king of
ricing and marketing policies Softcat plc can adopt. A huge amount of investment and time is
needed to conduct a market research for moving towards an inclusive approach. Entrepreneurial
spirit and society in wider context also impact the company. Currently Softcat plc has great
opportunities due to the rise of demand for technological software and other services especially
by the B2B channels. Also, there is a rise in the entrepreneurial spirit as many businesses and
start-ups have come up in UK who need various IT software and infrastructure services in their
companies (Robinson, 2020).
Technological factors
Technology in the current world is growing by the minute and disrupting various
businesses. As an IT company, Softcat plc has to determine the technologies it currently operates
on such as the query languages and software development or coding languages for front end and
back end development of various software, hybrid structure, digital space etc. The company also
has to analyse the cost structures it incorporates for maintenance and functioning of these
infrastructures. The rate of technological diffusion and value chain structure in the IT sector has
to be scanned by the company. If Softcat plc remains updated with the coding languages ad other
core components and operations, it can sustain perfectly in the near future market where new
languages and techniques for provision of IT services are coming up. Apart from that there is a
high requirement for IT solutions providers as there are various IT companies like Apple and
Microsoft that continuously need support services. But the current competition level in the IT
industry is high as it is a fast-developing market. The present competitors of Softcat plc are
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Switchfast Technologies, Kentico Implementations and Migrations, CDW, Sirius, Magna5, Hero
Digital, CompuData, Cyberduo etc (Wynn, 2018).
Legal factors
In different countries, the laws and legislations are different and are a major source of
concern in both home and host countries. When it comes to It industry, Softcat can face many
legalities like employee legislation, anti-trust laws, consumer protection rights, discrimination
laws, health and safety laws etc. The most important laws pertain to Intellectual property rights
and Data protection and privacy laws. Softcat plc has to be careful regarding proper copyright
laws after software development and protect the data and confidential information of its clients
and end-users, as the UK strictly follows rules and regulation regarding the data protection
through data protection policy. Any non-adherence to any of the above laws can result in
payment of hefty fines and penalties by Softcat plc (Burt and Mansell, 2019).
Environmental factors
The markets differ in terms of environmental standards and norms which impacts the
goodwill and profitability of any company. There has been a rise in the environmental awareness
since the last decade and sustainable development of business ahs become extremely important.
Also, there have been many environmental laws and standards to adhere to, non-compliance of
which may result in law suits and penalties. There can be a great opportunity in this area as
sustainability of operations and eco-friendly approaches will not only improve the goodwill of
Softcat plc but also help the company in getting healthy tax breaks that are provided by the UK
government to companies following in renewability approaches. It is also a good method to
improve customer relationships and marketing. The company can aim to reduce its carbon
footprint by a certain period of time and engage in environment friendly policies in its premises
and operations, practice proper electronic waste and garbage disposal, using green methods of
transportation and supply-chain and follow appropriate corporate social responsibility (Yuan and
et.al., 2017).
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CONCLUSION
From the above report it can be concluded that the business environment of Softcat plc
consists of employees, supply and demand, customers, clients, vendors and suppliers,
government, market and social trends, economic conditions, environment, legalities and politics,
innovations that come with technology, internal management, competition etc. the organisational
structure followed by the company is functional structure and has a diverse and robust
composition of board of directors. The importance of PESTLE analysis for analysis of macro
environment was elaborated and resulted in improvement of Strategic business context,
Workforce planning, Marketing planning etc. The PESTLE framework was applied to Softcat
plc. and the result were Brexit issues, economic issues of exchange rate fluctuation and slower
growth rate, socio cultural opportunities due to entrepreneurship, technological factors like
disruption, legal problems and importance of compliance along with environmental factors like
adoption of environmental standards in company operations.
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REFERENCES
Books and Journals
Aguilera, R.V., Judge, W.Q. and Terjesen, S.A., 2018. Corporate governance
deviance. Academy of Management Review, 43(1), pp.87-109.
Bloom, N., and et.al., 2019. The impact of Brexit on UK firms (No. w26218). National Bureau
of Economic Research.
Burt, E. and Mansell, S., 2019. Moral agency in charities and business corporations: Exploring
the constraints of law and regulation. Journal of Business Ethics, 159(1), pp.59-73.
Čepel, M., and et.al., 2018. Business environment quality index in the SME segment. Journal of
Competitiveness.
Martin, R., and et.al., 2016. Spatially rebalancing the UK economy: towards a new policy
model?. Regional Studies, 50(2), pp.342-357.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Priporas, C.V., and et.al., 2019. The impact of the macro-environment on consumer scepticism
towards cause-related marketing. International Marketing Review.
Raziq, M.M., and et.al., 2020. Organisational Structure and Project Success: The Mediating Role
of Knowledge Sharing. Journal of Information & Knowledge Management, p.2050007.
Robinson, C., 2020. Social enterprise and social entrepreneurship: developing the evidence base
using the UK Small Business Survey. In Handbook of Quantitative Research Methods in
Entrepreneurship. Edward Elgar Publishing.
Shtal, T., and et.al., 2018. Methods of analysis of the external environment of business activities.
Wynn, M.G., 2018. Technology transfer projects in the UK: an analysis of university-industry
collaboration. International Journal of Knowledge Management (IJKM), 14(2), pp.52-72.
Yuan, X., and et.al., 2017. Evolution analysis of environmental standards: Effectiveness on air
pollutant emissions reduction. Journal of Cleaner Production, 149, pp.511-520.
Online
Softcat Official website, Softcat plc 2020. Available through:
<https://www.softcat.com/corporate-responsibility/>
Softcat plc Annual Reports and Account, Softcat Annual report 2020. Available through:
<https://www.softcat.com/assets/uploads/investors/assets/uploads/Softcat_plc_Annual_R
eport_and_Accounts_2020.pdf>
Softcat plc, Companies House, 2020. Available through: < https://find-and-update.company-
information.service.gov.uk/company/02174990>
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