DHI Group is located in Denmark, and is a part of the water management technology, research and engineering segment. The company has completed around 2400 projects in this domain since its establishment in 1964. PESTLE Analysis of DHI will elaborate the way external environment has an impact on the business direction and performance.
Political Factors
The political factors have direct impact on the operations of an organization. Events that cause political tension result in slowdown of business, and in case of a severe conflict, organizations may have to exit from the war ridden region. The Russia and Ukraine war has induced a great deal of uncertainty for various business across the world.
DHI has been so exception in this case as the company has also been effected by the situation as the geo-political conflict made it necessary to create renewable energy solutions. At the same time the management had to navigate through the risks to ecosystem arising out of the war in the region (DHI, 2022).
Government’s rules pertaining to tax, and regulations related to import and export effect the way DHI operates as the company specializes in water management technology. In case of the import or export of some technologies is restricted, the company operations are likely to be effected negatively.
The company works in collaboration with other entities such as UN environment program division, which aims to inculcate better management of fresh water resources. Such collaboration is dependent on the relationship between Denmark with other countries. The presence of positive political ties with other countries facilitates the management to offer services to different regions.
Economic Factors
The economic stability and growth of a country enables it to invest in different forms of technologies. Countries that are going through economic decline are not able to make such investments, thus the opportunity for water management technology is low in such regions. In such cases, support from other bodies such as The World Bank and UN is critical for DHI.
One of the economic factors that has unprecedented impact on each area of economy is inflation. With the increasing prices, the companies have to adjust their operational expenses accordingly. However, DHI is not able to manage this adjustment in the similar way as other firms as the company is offering its services on the contractual basis.
Having contractual agreement, as well as pricing of the software can’t follow the other industry dynamics. As a result, the company has to deal with the effects of inflation while having restricted options of price revision (DHI, 2022). Furthermore, the number of orders that are received by the company are dependent on the global and local economic conditions.
Social Factors
The behavioral patterns that dominate a society determine the chances of business expansion and the requirement for the specific solutions the company is offering to the market. There has been a rising trend towards sustainable energy and efforts are being made to respond to the existing water crisis. This development ultimately helps the company in getting more orders.
Demographic factors such as increasing population and urbanization effects requirement for the natural resources, thus effecting the degree of water consumption. There is an ongoing water crisis, changes in population structure increases the need for sustainability technologies (Kuzma, Saccoccia & Chertock, 2023). This will generate more business opportunities for the company.
Technological Factors
Technology development is a prime factor that helps growth in the water management sector. The main focus of the company is on water management thorough AI based solutions and software, it heavily relies on technology. The sustainable development goals can be successfully achieved through the use of refined technology and software that support these objectives.
ABB Energy Industries have formed a partnership with DHI to improve its water management protocols, including both the fresh water and waste water (Market.US, 2023). Another notable example in the incorporation of digital technology by DHI is the use of software MIKE, which provides water related data to the users and facilitates in the analysis and decision making.
The use of up-to-date technology such as sensors, monitoring devices and software makes it a top innovator in Denmark and enables the company to implement the different water management projects across the world. DHI has helped different businesses to become more sustainable through bringing AI based solutions, which is a major part of the technological factors.
Legal Factors
The company follows ISO certifications and adheres to the quality standards specified for the industry. Being a consulting firm requires DHI to comply with the ethical standards outlined by the International Federation of Consulting Engineers Code. The management uses the code of conduct to shape the business processes, reporting protocols and other business activities.
The management has incorporated a sound code of conduct, including components such as whistle blower portal. Along with that, the management ensures that all parties involved in the business processes including distributors, employees, contractors etc. are informed about the code of conduct and that they adhere to it accordingly (DHI, 2022).
Environmental Factors
Sustainability is present at the foundation of the company operations as the projects managed by DHI are focusing on effective management of water as a natural resource. Within the organization, sustainability goals specify the achievement of net zero by 2025, which will be supported by different endeavors that reduce the carbon emission (DHI, 2021).
The company is also focusing on improved management of its water footprint, which is in line with the sustainability goals. Moreover, the aspect of energy consumption has also been addressed as a part of the environmental impact, increasing the dependence on renewable energy sources.
Conclusion
Some of the main factors that have supported in the growth of DHI are social, technological and environmental. The management has responded to the increasing complexity of the water management challenge through creating software and engineering solutions that help in better management of water resource. Overall, the company is operating in a favorable environment.
References
- DHI (2021). Sustainablity Impact Report. Retrieved from https://www.dhigroup.com/news/dhi-releases-sustainability-impact-report-2021
- DHI (2022). Annual Report. Retrieved from https://www.dhigroup.com/reports/annual-report-2022/index.html
- Kuzma, S., Saccoccia, L., & Chertock, M. (2023). 25 Countries, Housing One-quarter of the Population, Face Extremely High Water Stress. World Resources Institute. Retrieved from https://www.wri.org/insights/highest-water-stressed-countries
- Market.US (2023). Smart Water Management Market Size Worth USD 45.1 Billion by 2032 at 11.5% CAGR – Report by Market.us. Global News Wire. Retrieved from https://www.globenewswire.com/en/news-release/2023/05/01/2658317/0/en/Smart-Water-Management-Market-Size-Worth-USD-45-1-Billion-by-2032-at-11-5-CAGR-Report-by-Market-us.html