Syngenta SWOT & PESTLE Analysis

Detailed PESTLE Analysis of Syngenta

Political

1. Adverse impact on sales due to Brexit: Brexit has negativity affected Debenhams sales as it has had substantial impact on the business conditions. This is primarily due to the dip in discrepancy purchases. The customers in UK region have reacted to the volatile business conditions by reducing their spending post UK's vote to exit from the European Union. Brexit has also weakened the sterling which affected the revenue for 2016 & 2017. The trade agreements, foreign access to different markets, freedom of goods and services flow, people and capital movements will be negatively affected due to competition from EU.

2. Positive impact of decrease in corporation tax: The effect of the decrease in corporation tax rate which was enacted in 2015 Act was reflected by the decrease in deferred tax liability by around £2.3 million in 2016. As a result of the Finance (No. 2) “the 2015 Act”, that was enacted on 18 November 2015 led to decrease of the main rate of corporation tax to 19.0% from 1 April 2017 and to 18.0% from 1 April 2020. The overall impact of these tax rate changes reduced the deferred tax liability to £0.9 million and the deferred taxation expense plunged in 2016 by £0.9 million. 2016's corporation tax liability fell by £0.3 million and for 2017 current taxation expense fell by £0.3 million. These reductions create more room for profit margins.

Economic

1. Hedging against Currency Fluctuations: 35% of the sourcing costs of material bought by Debenhams are in US dollar or linked to the dollar. Thus, to avoid negative impact of decrease in the value of sterling in the spring & summer of 2018, Debenhams has adopted a hedging strategy. They hedged for 12-18 months in 2016 to fully hedge for Financial Year 2017. They partially hedged for FY 2018 to avoid adverse impact on spring and summer sales of 2018. This would help in mitigating the additional costs associated with currency fluctuations. It also shields against cash & liquidity constraints that may adversely affect operations & financial health of the group.

2. Prudent strategizing for inflationary situations: Fluctuation in inflation has significant impact on liability calculations, material costs, sourcing decisions & pricing decisions. The net profitability sales & social pension schemes for employees are affected by inflation. Brexit has increased sensitivity to inflation though the difference between wage growth and inflation rate has started dipping. Thus the group has developed policies which prioritise cost control. They review operational effectiveness of their processes and systems which aid in building a strong supplier base and maintaining product quality. It mitigates against cost price inflationary situations and gives leverage in supply change. Its sourcing decisions are reviewed by keeping the assumptions of inflation in perspective which help in development of more international channels as further product consolidations are done.

Social

1. Growing smartphone users globally to increase sales: The number of smartphone users in the world are growing at exponential rates with China, India and America leading the pack of maximum number of smartphone users. It is aiming at these markets, especially China which holds the greatest potential as it has the maximum number of smartphone users. Debenhams is expanding its digital footprint in tandem with the customer demands. This enables progress in online sales as the number of smartphones increase. It recorded 9.3% growth in digital sales in 2016. They are also building their brand online by improving brand projection, enhancing outfit-building and cross shopping. Regular updates on its mobile app are aiding in increasing site traffic as well as increasing conversion rate.

2. Keeping Pace with Changing Customer Demands: Debenhams keeps tapping its customers’ changing tastes and preferences in fashion choices across its stores. New spring/summer collections, fall collections & winter collections help in catering to the fashion forward masses whose preferences change with time. They also introduced a new Designer range studio by Preen in 2017 spring. Debenhams has received great responses from its fashion forward customers and it would thereby launch more designer brands with fresh talents to add newer dimensions across its channel to cater to the demand of premium ranges.

Technological

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Legal

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Environmental

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