Primary External Influences

Deutsche Post DHL (DP DHL) Group is the mail and logistic company and it is the world’s leading company. This group mainly focuses on being the first and foremost choice of the customers, employees, and investors in context of company’s main business activities which are operated at international level. Contribution of the company in this world is positive in nature and it is done by connecting people and enabling global trade while being committed to the answerable business practices, environmental activities which are purposeful in nature, and corporate citizenship (DP DHL, 2018). (Figure 1).

This group conducts its activities under two brands, and it is the leading postal service provider of Europe. This company maintained it position in the growth markets of the world with the help of complete range of global express, cargo transportation,  and services related to e-commerce and supply chain management. This company employed almost 510,000 employees and conducts its activities in almost 220 countries and territories worldwide.

After the privatization, DP DHL expands its business activities and other areas by way of acquisitions. During the period of 2014, the Group acquires Street Scooter GmbH, company engaged in the manufacturing of electric vehicles. After the period of two years, UK mail is also acquired by the group and UK Mail is a business entity which mainly engaged in the postal services in the UK for US$315.5 (£243 million).

DP DHL owns subsidiary in UK and this subsidiary named as DHL International (UK) Limited which also conduct its activities in postal and courier services. This company was operated in 1974 and is situated in Hounslow, United Kingdom (Bloomberg, 2018).

Structure of this report includes two sections and both the sections define different topic related to the DP DHL. First section of the report defines the primary external influences which directly or indirectly affect the Deutsche Post DHL group, and it also highlights the importance of each primary external influences.

Second section of the report defines the theme of the Corporate Social Responsibility and Sustainability and in context of this theme this section also defines relevance of this theme in chosen organization. Secondly, it states the effectiveness of the response of organization in context of stated theme and thirdly, it states the areas in the organization which needs improvement and also how organizations respond it.

Lastly, paper is concluded with brief conclusion which defines the key points of this report in brief and also includes some recommendations for the DP DHL.

PESTEL Analysis of DP DHL

Primary external Influences:

It is necessary for every business organization to deal with its environment because environment of business is directly related with the operations conducted by the organization. Success and failure of any organization is mainly established by the way through which company deals with the factors influencing business environment. As stated by Kotler and Armstrong (2004), business environment imposed various limits on all the organizations, and organization influence the environment in very little manner. Because of all these reasons, organizations must conduct its operations in lieu of environment and frame its policies as per the potential factors of the external business environment.

As stated by Shaikh (2010), any policy framed by the company must be framed after considering all the factors of the business environment because business environment imposed various restrictions on the organization and it also influence the scope and directions of the activities conducted by the company. External environment of the business include various different factors and some of these factors which influence the activities of the DP DHL are stated below. This section also defines the PESTEL analysis of DP DHL. (Figure 2).

The political environment of any country directly impact the business environment of any organization, and this type of environment include various elements which influence the business organization such as political organization, philosophy, ideology of government, bureaucracy nature and scope, political stability of country, foreign policy, defense and military policy and it also includes image of the country at both local and international level (Paypervids, 2016). Some of the political factors which affect DP DHL are:

• Liberalization of international trade: trade liberalization is considered as removal or reduction of the restrictions and trade barriers in lieu of free exchange of goods between two or more nations. For example: removing the obstacles related to Tariff which includes different duties and surcharges. It also includes removal of non-tariff obstacles such as licensing rules, quotas and other requirements. Competition for DP DHL increases because of the liberalization.
• International trade regulations: trade law at international level includes different laws and customs for managing the trade between the countries. However, it is also used in different writings of legal nature for the purpose of regulating the private sectors which is not right. International trade is regulated by multilateral agreement. It mainly focuses on reduction of tariffs and other trade barriers. DP DHL is able to expand their business in different markets of the world after the removal of these trade barriers.
• EU Expansion:expansion of EU increases the requirement of infrastructure and other information technologies which directly affects the operations of the DP DHL. Environment of Europe is stable in which major political changes are not expected. Postal market of Europe also experience complete liberalization and this ends by 2012. This result in more competition for organizations and this competition mainly increases at domestic level. However, scope is there to merge and acquire the companies operated at domestic level for the purpose of increasing the market share. Large companies which are operated their business at international level get the advantage of building global networks and modern technology.

Economic factors of any country which influence the environment of business includes various elements of the economic system of the country, structures of the country, economic policies, organization of capital market, nature of factors of production, cycles of business, and socio-economic infrastructure. Those organizations which are successful determine the external factors related to business environment at previous stage, analyze the prospective market situations, and also take steps to minimize the cost. DP DHL is dealing with the similar factors and some of the factors which influence the organization are stated below:

• Economic integration
• Globalization economic growth
• Stage of the business cycle
• Confidence of the consumer (Haseeb, 2017).

Social environment of the company also affects the operations conducted by the company because value system of the society mainly determines the moral standards of the business. These factors determine work culture, labor mobility, work groups etc. these factors mainly consider the structure of cost, customs and conventions, cultural heritage, opinion of people in context of wealth and income, and scientific methods, seniority respect, mobility of labor.

Corporate Social Responsibility and Sustainability

Social forces influence the needs and requirements of the customers and it is necessary for organization to understand these factors and get advantage from these factors. Research and development in this context is also very important. Organizations must ensure the process which quickly responds to the society for not losing the share in the market and meeting the demand of the customers. DP DHL can use various methods for building their brand image in the market such as Customer satisfaction surveys, market surveys, and employee surveys.

EU removed its border lines and services become more accessible in complete Europe, and for this purpose opportunity is presented by emerging markets and this established their brand image. Companies are also responsible for cost of society. It can be said that social factors greatly influence the business environment and company is under obligation to remove those extra costs by implementing the more efficient and environmentally friendly technology in the organization. Some of the factors which affect DP DHL are:

• Changes occurred in lifestyle of people.
• Growing population in the world (Wang, n.d.).

Technological factors which influence the business environment include technological investment, technological application, and technological influence on markets. Any advancement in technology directly affects the business in country. In this business also determines the type and quality of the goods and services which are produced by the business organization.

It must be noted that modern technology is the most important factors for ensuring success of any business organization and it also helps he company in maintaining the competitive advantage. IT is the factor which is mainly considered by the organization while framing any strategy. This can be understood through example: Internet results in major changes in the way of communication and these changes are occurred on continuous basis. Channels related to physical communication are replaced by the channels of electronic communication which ultimately result in decrease of the volumes and revenues in the traditional mail business. On the other side, internet creates the strong and direct relationships between dealers and customers and also creates new demands for the transportation, advertising materials and contract documents. Demand related to electronic communication is increasing day by day and the main reason behind this is the safety and reliability of sources.  DP DHL responds this situation by launching E-Post brief product. Some other factors in this context are communication development, E-commerce, E-shipping, infrastructure development, usage and cost related to energy, changes occurred in IT, etc (DP DHL, 2010).

Conclusion

Legal environment greatly influence the management and operations of the business organization, and it mainly includes the flexibility and adaptability of the law and legal rules that govern the business environment. It also includes the exact rulings and decisions of the court. Legal factors also influence the income level of the income depends on the environment of operation (Ray, n.d.).

This can be understood through example, borders lines are removed because of the liberalization and it enables the organization in building and strengthens their position in the market. In this industry, there is no requirement of expensive authorizations which is considered as big advantage for the DP DHL. However, some obligations are also imposed on business organizations such as various taxes, fines, and other directives are imposed on organizations related to the environment. Companies are also under obligations to make investments in environment friendly operations (UPU, n.d.).

Environment factors also play important role in directing the business environment and the main factors in this context are continuous changes occurred in climate, destruction of climate, etc. Postal and courier industry needs transportation which mainly affects the air pollution at global level. Companies must take step to reduce the effects of their operations on pollution of the global environment such as companies can implement the projects which help the organization in satisfying the environment requirements.

DP DHL annual report stated that an operation of the company highly shows the awareness of the company towards the environment and climate which considerably impacts the logistic industry. In all the divisions of the organization, an ever increasing customers of the organization demands for the climate-neutral products.

Corporate Social Responsibility and Sustainability:

Sustainability is a term which is completely related to the management of the organization and mainly focus on creating and increasing the value of the organization in context of economic, social and environmental factors of business environment. It is mainly considered as answer of the organizations operating in the modern world and facing challenges (Deloite, n.d.).

It is difficult for organizations to operate in this interconnected world to and it is necessary to understand, identify, and manage their issues related to social, environmental and economic impacts. Corporate responsibility & sustainability (CR&S) enable the organization to deal with the issues created by social, economic, and environmental factors by framing appropriate strategy and process for the same. This approach also improves the risk related to management of business while ensuring the long-term social and environmental sustainability (Cranfield, n.d.).

On the other hand, there is universal definition for CSR but generally it includes the right approach of organization under which organization does the right thing and takes some extra actions beyond legal requirements to reduce the negative impact of their operations on environment and society. It mainly includes the actions to provide the benefits to the environment, community in which organization conduct its operations, and society. CSR mainly includes the internal decisions of the organization and it is necessary that management aligned the strategies related to CSR with the corporate values and stakeholder expectations. A responsible business will also implement principles related to sustainable development.

For the purpose of understanding the CSR in better way ISO 26000 Social Responsibility defines the meaning and other important aspects of social responsibility of an organization and it also state the impacts of its decisions and activities on the society and the environment through transparent and ethical operations of the organization. Following are the advantages of CSR activities:

• It mainly ensures sustainable development in an organization and provide benefits to both organization and society.
• It also fulfills the expectation of stakeholders and other investors in the organization.
• It ensures the compliance of various laws and also meets the international norms of behavior.

Therefore, it can be said that CSR is the social responsibility which must be fulfilled by the organizations ISO 26000 is applicable to all organizations (New Ground, 2014).

DHL group conduct various strategies and other actions to comply with the CSR approach and obligations. The main aim of the organization in this context is to become provider, employer and investment of choice and company also adopts the balanced approach to pursuing economic, social and environmental interests. In context of CSR, this group mainly focuses on the topics related to employees & workspace, principles & guidelines, society & engagement, and environment & solutions. DHL group conduct various projects and missions for ensuring CSR compliance in their organization (DP DHL, 2018), and some these missions and activities are stated below:

Corporate Citizenship: In 2014, DHL group becomes the member of the Corporate Citizenship network LBG, and they conduct their activities related to corporate citizenship on the basis of the criteria defined by LPG. DHL continuously make efforts to improve the quality and scope of the collected data. For the purpose of identifying the social impact in context of corporate citizenship activities, organization state some key indicators for each and every program. Since each program has different approach and direction, criteria is different from program to program:

• Team related to disaster response:  It provides operational capability in disaster area within the period of 72 hours.
• Get airports ready for disaster: in this organizations conducts training sessions.
• Global volunteer day: in includes number of volunteers and number of hours worked.
• Go teach: in this organization tries to improve educational opportunities and employability.

This can be understood through example, by following the GARD training sessions, trainers and participants filled the evaluation form and this form is used for the purpose of determining the success of training on the basis of point system. A set rating system also ensures comparability.

Activities conducted by DHL group in connection with Global Volunteer Day are registered and recorded by volunteers on a particular website. The number of hours and volunteers are the key indicators which are invested by organization in individual projects (DHL DP, 2018).

DHL also get the successful participation in their GoTeach partnerships with SOS Children’s Villages and Teach for All, and because of this opportunities related to education and employment in context of maximum number of children’s and adolescents improve and this happen because of the collaborative efforts with our employees.

Shared value proposition: the basic idea that contribution of organization towards the society and the environment also makes the business of the company stronger, and because of this approach DHL play important role in all the activities related to environmental protection. This is shown in our Group strategy Strategy 2020: Focus.Connect.Grow.

Main aim of the connect pillar is to develop environmentally-friendly logistics solutions and also for bringing the Group’s divisions together under a unified approach to commercializing these solutions. Climate protection goals of DHL group are accompanied with the shared value approach.  In 2008, DHL becomes the first biggest logistics company which makes the voluntary commitment for improving the carbon efficiency by 30% over the 2007 baseline by the year 2020. While conducting actions for reaching this target, various measures are developed in context of environmental protection program GoGreen for the purpose of improving the carbon efficiency of our air and road transport operations as well as other infrastructure also. DHL achieved this goal in 2016 (DHL DP, 2018).

Corporate strategy of the DHL group also includes the goal of the company to be Benchmark Company in context of responsible business. DHL codified their responsibility in the code of conduct, and this code of conduct is guided by the principle of the Universal Declarations of Human Rights and also the United Nations Global Compact and it also follow the recognized legal standards. DHL also supports the United Nation’s Sustainable development goals. The main area on which organization focuses is the employees, climate, customers, society, etc (DP DHL, 2016).  

Responsible business practices of DHL group ensure that business of the company operates in compliance of applicable laws, ethical standards, and international guidelines. DHL mainly co-ordinate the main aspects and issues of the business through the Group-wide Responsible Business Practice network of the company. By communicating with the stakeholders of the company on the continuous basis, DHL also ensures that their expectations in context of social and environmental matters are met by the company and the business of the company is united systematically with their interests. During the period of reporting year, DHL established a guideline and process for the purpose of dealing with the dangerous issues and handling related inquiries.

DHL also achieved its climate protection target with the help of the complete group of the organization and also by implementing GoGreen environmental protection program. Products and services of this program also help the customers for achieving their own targets related to environment, and it also provide new business opportunities for the company.

For measuring and managing the carbon efficiency, organization use of a carbon efficiency index (CEX). During the period of 2016, direct and indirect greenhouse gas emissions amounted to 6.05 million tons of CO2e (previous year: 6.05 million tons of CO2e). The indirect greenhouse gas emissions of DHL transport subcontractors amounted to 20.87 million tons of CO2e. During the period of reporting year, DHL adjusted the allowance of the carbon efficiencies of the divisions, and these divisions are included in the CEX calculation (DP DHL, 2016).

Company mainly aims to be the leading mail and logistic company which not only connects the people but also improve the lives of people. Because of the size of the company, DHL not only owns responsibility towards the stakeholders but it is also responsible towards the employees, to society and the environment. Responsibility owned by DHL towards the society and community has important influence on the way Deutsche Post DHL Group conduct its business operations and it is very important for corporate culture of the organization. Following are the areas of the organization which needs improvement:

• Area of employment- in this area, organization must conduct actions for raising the living standards of their employees and ensures that all the employees of the organization must get basic and other necessary facilities while working in the organization.
• Community- various programs are conducted by the DHL for improving the conditions of the community in which they work, but still it is necessary to make extra efforts such as company can provide opportunities of employment to the community.
• Society- educational and other programs are implemented by the organization, but some other issues are also there which needs improvement such as child labor, equal rights of women, etc.

Conclusion:

After considering the above facts, it can be said that that various primary external factors influence the working and other processes of the business. Success and failure of any organization is mainly established by the way through which company deals with the factors influencing business environment. Any policy framed by the company must be framed after considering all the factors of the business environment because business environment imposed various restrictions on the organization and it also influence the scope and directions of the activities conducted by the company. External environment of the business include various different factors and some of these factors which influence the activities of the DP DHL such as Social, political, environment, etc.

Second part of this report defines the corporate responsibility of this organization, and for all this purpose it is necessary for organizations to include the corporate responsibility in the corporate strategy of the organization. Company wants to become Benchmark Company in context of responsibility and for this purpose it is necessary that company relates the business goals and sustainability targets in direct manner. However, in today do world maximum customers consider the social value of the organization before purchasing product or service. Those company whose management makes strong commitment towards ethical business practices are also at an advantage such as their employees are motivated and loyalty of employees.

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