PEST Analysis: Political Factors:

The laptop and PC industry is expected to grow at a faster rate in developing countries compared to the developed countries. Therefore, changes in government policies in developing countries like India and China can affect the potential growth rates in their markets. For instance, the removal of import duties on laptops in India in 2005 was one of the factors that resulted in a growth of 94% in laptop sales in 2005 [6]. Increasing focus on the environmental impact of high-tech trash has lead to more stringent environmental regulations on the electronics industry such as the RoHS (Restriction of Hazardous Substances) and WEEE (Waste Electrical and Electronic Equipment) Directive. The additional testing and certification involved directly affect the supply chains for laptop and PC manufacturers, resulting in increased costs. For instance, in Canada, the enforcement of the WEEE Directive will increase the cost of computers by $15 [7]. The increase either affects the consumer or reduces profitability for manufacturers.

Economic Factors:

The global economy influences various different factors that affect the growth of the PC industry. Business capital spending for small and large corporations, resulting in reduced demand for PCs. Gartner, Inc. forecasts a decline of 3.8% in global IT spending, of which computing hardware spending is expected to decrease by 14.9% in 2009[8]. Though this decline in IT spending is likely to recover slowly during 2010 [8], the global PC market is expected to face declining growth rates in terms of market value, from an expected 5.4% growth in 2009 to 4.1% in 2012 [3] Most laptop (and PC) manufacturers such as Dell, HP, Acer, Lenovo, and Apple generate sales throughout the world and therefore currency exchange rates are an important factor as well. The strength (or weakness) of the US dollar versus other currencies can directly affect a company’s bottom line [9],[10]. The economies in developing countries such as China, India, Brazil, and Latin America are growing at a much faster rate than developed countries and therefore provide better growth opportunities for computer manufacturers, since developed countries like the US and Japan have become saturated. This trend is reflected in the slower single digit growth in the last few years as opposed to the consistent double digit growth in the developing markets

Social:

Social factors such as education, preferences, income levels, and other cultural factors influence demand patterns in the different regions and therefore affect how a company operates in each region. The education and income level of users affects the brand perception of the computer manufacturers. As shown in Figure 5, households with higher income have higher percentages of Apple computers. Such households are also more likely able to afford (and want) Apple computers [11]. This has allowed Apple to continue its strategy of premium pricing and performance compared to Windows PCs, while at the same time increasing its market share of the total laptop and PC market [12]. At the other end of the education spectrum, new devices such as the rugged and ultraportable OLPC (One Laptop Per Child) have been developed for underprivileged users in developing countries like Africa. Thus, education levels affect both product demand as well as preference. Cultural aspects of different regions affect the occurrence of seasonal sales, which significantly affect the performance of the computer industry as a whole [9]. For instance, in the U.S., the periods from November-December (Thanksgiving / Christmas) and August (back-to-school) are significant earnings period.

Technological:

Technological advances over the past decade, such as increased processing power with reduced power consumption and reduced cost, or the standardization of Windows and Intel in laptops, are one of the main reasons for the increase in market share of the laptop segment compared to the overall PC industry. For instance, the netbook category’s average selling price (ASP) of $300 was made possible by the low cost Intel Atom microprocessor, released in 2008. New technologies, such as hosted virtual desktops (HVD), threaten to completely change the industry dynamic, due to the possibility of cheaper computers along with lower software costs [13]. HVDs involve centralized computing in which the processing is done on servers instead of individual clients. Gartner, Inc. estimates that the HVD market will grow in revenue from $1.3 billion in 2008 to $65.7 billion in 2013.

PEST ANALYSIS

A PEST analysis most commonly measures a market. Generally speaking a SWOT analysis measures a business unit or proposition or idea, whereas a PEST analysis measures the market potential and situation, particularly indicating growth or decline, and thereby market attractiveness, business potential, and suitability of access market potential and 'fit' in other words. PEST helps to identify SWOT factors.

PEST assesses a market, including competitors, from the standpoint of a particular proposition or a business, whereas SWOT is an assessment of a business or a proposition, whether of your own or a competitor's.

All businesses benefit from a SWOT analysis, and all businesses benefit from completing a SWOT analysis of their main competitors, which interestingly can then provide some feed back into the economic aspects of the PEST analysis.

The four quadrants in PEST vary in significance depending on the type of business, e.g. social factors are more obviously relevant to consumer businesses or a B2B business close to the consumer-end of the supply chain, whereas this is not the case with SWOT.

a. Political Factors Influencing Indian PC Industry:-

i. Government Stability

As we know that government instability leads to economical & political hazards like inflation, dumping share markets, etc. hence government stability is a boon for the growth of any industry. ii. Environmental Protection Laws

In contemporary world of personal computing, modern PCs are needed to be disposed according to the local-state and federal laws, to protect the environment. 12

iii. Special Incentives

Such types of perks are provided to the employees in order to motivate them towards their contribution and commitment. These special incentives fill exuberance among the employees and thus increase the CAGR/SAGR of the organization. iv. Attitude Towards Foreign Companies

Indian government has already opened its doors for the foreign players in this industry. b. Economical Factors

i. GDP Trends

A country is known by the services it offers. Indian PC Industry contributes 7% of the overall GDP growth of India. ii. Inflation Rate

While entire industry‟s growth rate declined during the global meltdown, Indian PC industry also experienced the Inflation rate of 11.89%. iii. Employment Generation

Approximately 10 million people are working in this industry and it is expected to grow at the rate of 22% in the next decade. iv. Pricing Strategy

With the intervention of open market, a revolution emerged, as a result of which major global player grabbed Indian PC market, which ultimately led to the rapid downfall of PC prices thus enabling almost all the middle class people to afford computers. 13

c. Socio-cultural Factors

i. Changing Lifestyles

As we know that „human wants are unlimited‟ so, in this changing scenario, computers have become the essential part of the lifestyle of the contemporary world and in these too, anywhere and anytime computing has brought a sea change in the trends of carrying a notebook instead of antiquated desktops. ii. Career Expectations

With the introduction of PC industry, a revolutionary change is being experienced in every field of our life, be it education, transportation, business, or even small shopkeepers like groceries, stationeries, chemists, etc. iii. Consumer Activism

Several laws like RTI (Right To Information Act 05), Consumer Protection Act, etc. and majorly the internet accessibility to every door has made the consumers aware of the ifs & buts in all kinds of transactions. iv. Growth Rate of Population

Higher the population more is the demand for PCs and since we (INDIANS) stand at the second position in the world in terms of population, so there is a wide scope for the growth of this industry in our country as compared to others‟, except China.

d. Technological Factors

i. Industry Spending on R & D

Currently the Indian PC industry is spending approximately 7% of their overall revenue i.e. 945 cr in its Research and Development.

ii. Cutting-edge Technologies

Indian PC industry has introduced various innovative features like Green Computing, Noise control Technology, Aesthetic features, Face recognition technology for convenient login, and many more which has positioned it in the global market.

Transfer Rate of Technology Earlier, it used to take more than one year for any new technology to come in the market after getting developed inside the laboratory. But now, with the intervention of the ready to use technologies and increased adaptability, this transfer rate (from lab to field) got reduced to only 3 to 4 months.

iv. Patent Protection

After the Copyright Act 1957 was implemented, Intellectual Property Right regime has covered the innovative world with patent protection.