Intel is a leading technology brand known worldwide as a chipmaker and recognised by its Intel inside logo. Due to growing competition and fast changes in the technology industry, Intel decided to make changes to its business model to grow its competitive strength. From being a PC centric business, it has changed its model and transitioned to a data centric business model from a PC centric model. This has resulted in faster growth for the company. Apart from that, Intel has also started exiting its non core businesses to focus exclusively on the core business areas. Intel is an international brand with operations and employees in around 43 countries. However, it sells its products to customers and clients throughout the globe using direct and indirect channels. As a technology business, it focuses heavily upon research and development. During the last five years, it has increased its focus and investment in this area significantly. As the company changed its business model, its product mix has also broadened significantly. Being an international business, Intel also faces several risks and challenges globally in it various markets. Have a look at how these factors affect Intel and its profitability through this PESTEL analysis.
The role of political factors has grown more dominant than ever in the context of international business. Governments and government agencies have grown their oversight of international businesses and their operations. The companies are facing heavier pressure from government agencies related to their business practices. Moreover, business operations are affected directly by the changes in the political environment of the markets where these companies operate or the regions where their supply chains are located. Trade relationships between two nations also have a direct impact on the businesses and their profitability. As the trade war between US and China has continued to intensify,, it has resulted in heavier pressure for both US and China based firms. Particularly, the technology brands like Intel, Apple or Tesla are feeling helpless as this trade war is affecting their profitability and supply chain. The Trump government continues to impose higher tariffs. Semiconductor producers like Intel and Qualcomm are going to face the pressure in the form of lower demand since higher tariffs mean higher commodity costs. The trade wars between US and China is also affecting the supply chain of Intel. China is the leading market of Intel and being a US based company, the pressure on it will grow as the trade wars grow stronger.
Economic factors also play a central role in the context of international business. GDP, level of employment, level of economic activity among others have a direct impact on sales and profitability of large technology businesses. Apart from the condition of the local economy, the overall global economy also affects how businesses perform internationally. Asian economies including China have seen faster growth in the recent years. China has grown into the world’s largest business hub for tech and other businesses. Economic fluctuations in the local economies affect the revenue and profitability of businesses. Whether it is China, US, or India, economic fluctuations can reduce the profits of businesses like Intel. The recession was the worst period for these businesses. However, the world economy has returned on track since then and local economies are also performing well. This has led to growth in spending by consumers and in the recent years, Intel’s revenue and profitability have accelerated. In this way, economic factors play a major role in the area of international business. Competition is also an important factor that affects businesses and their performance directly.
The role of sociocultural factors has also grown a lot in the world of business. Social and cultural factors are now playing a dominant role in the area of international business. Worldwide sociocultural changes affect business patterns and revenue and profitability of the international businesses. With growing use of internet and computing globally, the business of companies like Intel has grown. Moreover, sociocultural factors are affecting how businesses market their brands and products in specific markets.
Technological : –
Technology’s role in running a successful business has grown increasingly bigger. First of all, technology has driven most of the leading changes around the world in the 21st century. In the world of business, it has become the driver of growth and revenue. Intel has changed its business model to transition it from being a PC centric business to data centric business. Technology has proved to be a game changer for several businesses and the tech industry is currently the largest industry in the world. As Intel changed its business model to adapt to the changing trends, its business has seen fast and profitable growth around the world. It has added a large range of new products and services to its portfolio. The company’s spending on research and development has also grown to improve the existing products and to bring new products and services to the market. As competition in the technology industry grows, businesses like Intel have to focus more on improving their product portfolio to stay ahead of their competitors.
Environment has also emerged as an important concern for large businesses. Around the world, the companies are focusing over how they impact the environment. They are also working to reduce their carbon footprint and to create a better social image. Intel is also investing heavily in CSR and sustainability. Apart from growing more self dependent in terms of energy consumption, it is also investing in recycling and sustainable business practices. Environmental factors have also become important for the reason that governments and legal agencies are concerned about the environmental impact of businesses. There are several laws concerning environment that businesses must abide to or remain ready to face large fines.
Law and legal factors also play an important role in the area of international business. Governments and legal agencies have adopted a stricter stance regarding how businesses operate and their impact upon the environment. From product quality to labor and environment, there are a large number of laws in each of these areas that affect businesses globally. Moreover, the level of fines that governments can impose upon businesses has also grown. Now, the fines can be a larger percentage of the net revenue of businesses. It’s why companies like Intel have special compliance teams to take care of compliance issues for them. Still, compliance issues can erupt from time to time. It can be related to product quality or labor dispute or some other related matter. An year ago, the company faced several lawsuits over security flaws in its products. Such issues can prove costly and the losses can be in billions. It is why businesses need to be highly cautious in their operations since any type of legal dispute can cause heavy losses.