PESTEL Analysis of Panasonic
Panasonic is a Japan based world famous brand of consumer electronics. However, its business is not confined to a single area and it has diversified into housing as well as automotives and B2B. The brand is in a financially strong position and has been doing very well in the Asian countries where it has seen faster growth. Panasonic is not as aggressive in terms of marketing as its nearest competitors but it invests heavily in Research and development. The focus of the brand is on innovation for faster growth and international expansion. Panasonic offers a large range of products and services. To find growth internationally, it is further reorganizing its business. However, there are several challenges in the international environment that can affect its growth. This is a PESTEL analysis that evaluates the political, economic, social, technological, environmental and legal factors which affect Panasonic’s business globally.
Political forces have become all the more important in the context of international businesses where governments are keen and aggressive about regulation of businesses and oversight. On the one side while it is the geopolitical factors that have brought about this change, on the other it is the increasing financial clout of the businesses that gave rise to this need. Business oversight and regulation grew in the aftermath of the terrorist attacks. However, as technological growth brought faster economic growth, it also made necessary for governments to watch the business organizations and their methods of business. However, while in some areas of the world, the political environment is business friendly, in the others the political landscape can be somewhat complex. The Red tape in India and China has particularly been making the situation difficult for both domestic and foreign businesses. Moreover, unstable political environment in some areas of the world also kept doing business there difficult for international business. A stable political situation is a good sign for the international businesses. Such an environment helps businesses flourish because political disruption disrupts supply chain as well as sales and distribution channels. Moreover good political relationships or trade agreements between two or more countries helps their businesses. Like a trade agreement between Japan and India aids the Indian and Japanese countries do business with each other without much difficulty. Governments have taken stronger steps in this decade towards establishing long lasting trade relationships with their neighbours or countries and markets of importance. However, government over sight has also grown requiring businesses to be more transparent and accountable in the 21st century. Overall, the global political environment has remained stable and profitable for Panasonic except for a few isolated markets.
Economic factors are also of great importance in the business world. They can affect the business environment of a market directly and in this way affect businesses both small and large ones. The global economy was through a bitter recessionary period some years ago and it was a time when big businesses were severely hit and were forced to cut costs down and to retrench people in order to save. Now, the global economy is back on track and both employment and level of spending have gone up. The sales and revenue of consumer electronics brands have also risen in the light of the recent economic changes. In this way, economic factors can affect the international businesses directly by affecting people’s income and ability to spend. Panasonic’s performance was best in its domestic economy and the Asian economies which are growing at the fastest rate. Economic stability leads to higher employment giving the people more purchasing power. In such conditions people spend more on consumer electronics. Except from some economies, the economic situation globally has remained stable during the recent years. This has led to higher revenue and therefore Panasonic is investing more in R&D. The impact of economic factors is direct on international businesses and must be taken into account before investing into foreign markets.
Social factors too can have a direct or indirect effect on the international businesses. Changing social trends can affect changes that can lead to higher or lower sales of certain products. Moreover, the changing demographics of the global population are affecting international businesses. They are investing more in technological innovation because the millenial generation is more technologically inclined and likes additional convenience. More of the shopping now takes place online because a very large number of youth shop from their smart-phones, tablets and laptops. The sales of consumer technology brands have also increased in the light that people have adopted faster lifestyles and need more convenience. Sustainability trends have also affected businesses since more people want sustainable products or shop from brands having invested in sustainability.
Technology has affected so many things in this world and apart from having changed people’s lifestyles is changing the way brands marketed or sold their products. It has affected people’s lifestyles and more people are using technological solutions to make their small and big tasks easier in their daily lives. Panasonic is not so aggressive about marketing as its competitors but when it comes to marketing, it utilizes social media efficiently. There are separate social media accounts of Panasonic to deal with different markets on different social media channels from Twitter to Facebook. Technological innovation has become very important to remain competitive and therefore Panasonic makes large investments in R&D so as to remain ahead of its competitors. It is investing on sustainable innovation and some of its products have acquired quite high level of popularity based on their technology and quality. Technological factors are affecting businesses in many other ways too and especially, it is Information Technology that is affecting businesses in all aspects.
Environmental factors are now playing a more central role in the context if business which is because of increased awareness and oversight in this area. It is why businesses are now more cautious about their environmental impact and not just in their business processes, they are also focusing on sustainable development down their supply chain. Panasonic has increased its focus on sustainable innovation and framed strict rules and regulations for its suppliers too regarding their environmental impact. Moreover, based on sustainability trends, it is investing in sustainable products and services like sustainable housing.
Legal issues have also increasingly become a cause of worry for the international businesses which is because of increased interference by government and law enforcement agencies. From labor to environmental and quality related laws, there are several that affect international businesses. Several technology companies have also become targets of anti competitive laws in Europe. Panasonic also faced legal tussle in its avionics section last year where it had to be through an investigation under the Foreign Corruption Practices Act. It has established a special compliance department that takes care of legal compliance in various areas of the world. The legal framework differs from country to country and from market to market. This makes the situation difficult for the global businesses and missing on compliance can result in hefty fines and financial loss.