Pestle Analysis Of Videocon

Q2:

Answer:

Environmental Analysis for Videocon: PESTEL

PESTEL Analysis is generally used to evaluate environmental influences on a business. The acronym stands for the Political, Economic, Social ,Technological , Environmental and legal factors. Strategic development of a business gets affected by these issues.

PESTEL, as a tool is a useful way of summarizing the external environment in which a business operates .

Let us take each of the factors individually:

1. Political Factors :

Political factors influencing the scope of Videocon are:

• A government which is stable and a sound political environment.

• Tax and duties:

"To encourage production of LCD and LED TVs below 19 inches in India, basic customs duty on LCD and LED TV panels

• The products from Videocon being eco friendly with the initiative of “Green Products”.

The above is the PESTEL analysis of Videocon, below is the conclusive Porter’s five forces analysis depending upon the above PESTEL challenges.

Porter’s 5 Forces:

Porters 5 forces is a tool used to determine the competitive forces that influence the market presence of any firm, we use this model here to access the position and competitive forces against Videocon as a firm for TV manufacturers.

The following are Porter’s 5 forces:

• Competitive Rivalry

• Supplier- Power

• Buyer Power

• Threat to entrants

• Threat to new substitution

Considering the forces one by one:

1. Competitive Rivalry : Very High

There is a close margin competition among the current players. The main players of the current market of being Sony, Samsung, LG , Videocon, Hitachi , Toshiba ,Philips and Sansui. On one hand some of the regional players’ such as Hyundai and Haier are new entrants in the TV space in addition to a number of small regional players where Sony, Philips, Akai, Sansui, Aiwa and Toshiba are the other foreign brands in the

A lack of product differentiation indicates that the price needs to be highly competitive that intensifies rivalry.

Since the current market is highly competitive in LCD’s this market is likely to see price reductions future.

2. Threat of potential new entrants : Low Immense capital is required for entering into the TV industry, since a huge chunk of investment goes into innovation, technology, distribution, service outlets and plant.

Switching cost is high for customers as it is unnecessary for customers to switch if they are satisfied with their current TV as well as it is difficult for new entering firms to have product differentiation because customers are already comfortable with and trust the already established big giants of electronic world. Hence new entrants have to spend a fortune on branding and customer knowledge.

Apart from customer recognition there are various other industry issues to be faced by a new entrant, such as, difficulty in obtaining license, entry barriers - which act to prevent new firms from entering the industry difficulty in building a strong distribution network – which is elementary.

Hence threat for potential new entrants is