Logitech PESTLE Analysis
Detailed PESTLE analysis of Logitech examining political, economic, social, technological, legal & environmental factors.
Political Factors:
Logitech is one of the leading computer peripherals & consumer electronics companies. Certain regulations in the US mandates disclosures of certain minerals and the steps being taken by manufacturer to avoid it. For instance, due to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC requires company to make disclosures related to conflict minerals, mined from Congo and neighboring countries. Another requirement is for the manufacturer to take steps avoiding sourcing of such minerals. The European Union is also considering making mandatory such disclosures. Compliance to such legal requirements and possible passage of law in the European Union could increase the costs for Logitech. Also, there are limited suppliers who sell the products. Furthermore, there are other costs such as due diligence required to find out source of minerals, costs of changes to products, processes, etc. The company has a complex supply chain, which makes verification of origin of related minerals difficult. Any such non-disclosure, if discovered by regulatory authorities may led to punitive action. This could affect the goodwill of the company.
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This concludes the political factors in the Logitech PESTLE Analysis.
Economic Factors:
Below are the economic factors in the PESTLE Analysis of Logitech:
The spread of Covid-19 has had a severe impact on economies across the world. During the months from January to March, 2020, the pandemic has had mixed effects on the company’s operations and financial performance.
Since the outbreak began from China, the pandemic has also affected company’s supply chain and logistics. This has resulted in increased costs to manufacture. The pandemic continues to pose great challenges and uncertainty on the financial performance of the company. Also, Logitech is exposed to risk of fluctuations in currency exchange rates. For the Financial Year 2020, the company earned about half of its revenue in non-US dollar-denominated currency. Any increase in international pricing may adversely affect the demand of the products. Strengthening of currency rates may increase the component costs of products, affecting the profitability of the products. Although the company uses derivative instruments to offset risks due to fluctuations in exchange rate, it can’t completely eliminate it.
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Social Factors:
Following are the social factors impacting Logitech PESTLE Analysis:
Logitech sells peripherals for the personal computer platform. However, in recent years consumer demand for personal computers in mature markets like North America, Western and Nordic Europe, Japan and Australia has been reducing for many years. Thus, demand for PC peripherals has decelerated and is expected to decline in future, too. Hence, the company is diversifying its peripheral business. For example, it is building its business in gaming peripherals. This market is growing with many rival firms also pitching in their products. It is also working on video collaboration for the small and medium-sized user groups. It is also manufacturing and selling products related to digital music in the market. It sells mobile speakers and headphones. Another opportunity lies in the fact that many consumers are refreshing their old PCs. This has helped sales of company products like PCs, pointing devices, keyboards, webcams and other PC peripherals. These trends present opportunities for the company to address new markets and continue growing as well.
Technological Factors:
The technological factors in the PESTLE Analysis of Logitech are mentioned below:
Logitech is a consumer electronics company and its websites are important for interaction with its consumers. Also, the company has a centralized information technology system and it uses this to store its intellectual property, business forecasts, maintenance of financial data, managing operations and inventory, etc. Yet, there is still the risk of disruption or shutdowns because of outages, hardware failures, computer viruses, hacking, telecom failure, etc. The spread of Covid-19 has increased the risk of breach of data. This is because the current norms mandating work-from-home for company employees and third-party suppliers working on less secure systems. Thus, any such data breach, data corruption or any other security issues could affect the reputation of the brand in the market. Apart from this, the company is also reliant on third-party platforms or technologies for its operations.
If such access is cancelled or is not available at reasonable rates, this may again affect the operational performance of the company.
Legal Factors:
Following are the legal factors in the Logitech PESTLE Analysis:
Logitech may not be able to adequately protect its proprietary technology and intellectual property. It depends on various patents, trade secrets, copyrights, trademark and other intellectual property laws. The company holds patents in US and has pending applications in other countries. Yet, there is a risk that such patents could be invalidated, deemed unenforceable, legally challenged and thus reduce the competitive advantage for Logitech. Also, not all jurisdictions in various countries provide the same level of intellectual property rights protection. In case of any infringement of such rights, the company may have to file legal cases and incur costs. Even then, some businesses may attempt to copy aspects of the company’s products and illegally use such information. Such events can adversely affect the reputation and sales of the business. Also, the company has to safeguard its consumers’ personal data. This is especially important in the European Union, which has passed a legislation on the General Data Protection Regulation. The law is applicable to all companies who process the data of European Union residents.
Environmental Factors:
In the Logitech PESTLE Analysis, the environmental elements affecting its business are as below:
Logitech uses Design for Sustainability to make a combination of products that follow Eco Design, Circular Design and Social Design. Eco design aims to design lighter, more efficient products and packaging that use lower impact materials. Circular design aims to design products for longevity, reuse and recycling at end of life. Social design aims at delivering products to create positive social impact with users. For instance, K400 keyboard uses post-consumer recycled plastic. This helps reduce adverse environmental impact. The C40 TR Controller is made for durable use and delivers longer product life.
In another example, the Adaptive Gaming Kit has been designed with the objective to ensure accessibility to gaming for users of all abilities. The form also aims at developing environmentally-friendly packaging solutions. The packaging is PVC free and wherever possible; the packaging avoids toxic materials also.
To conclude, the above Logitech PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
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