Carry out a PEST analysis of the computer industry and discuss the main external factors that affect firms in the industry.
The PEST analysis stands for Political, Economic, Social and Technological. These four factors have a great impact on all businesses. The reason for carrying out a PEST analysis is to discover what external factors' effect a business and to determine the success of a business.
The political issues that revolve around the computer industry is that firstly, the increase in taxes on import and fuel by the Government would result in an increase in production and transportation costs. To minimise the impact of this problem, computer manufacturers could attempt to adopt alternative methods of production and transportation. However, this may increase additional costs as manufacturers maybe under contract with a transport firm. Another option would be to pass on the costs to consumers through increased prices. The success of this would be dependent on the elasticity of the product and brand loyalty. For example if Dell's consumers have brand loyalty for Dell, then consumers may not mind purchasing the computer at a higher price. In contrast, if the Government were to decrease taxes, then the computer industry would benefit from lower production/transportation costs thus a maximising profit.
In addition to this, computer firms need to ensure that they comply with all current legislation and that they are aware of future legislation. Firms in this industry may be faced with increased costs if for example, the packaging of computers contravenes the consumer safety act of 1978, whereby the packaging may be harmful to the consumer.
In relation to the computer industry, fluctuations in exchange rates will effect those firms who are involved with importing/exporting computers and the consumers. For example, if exchange rates rise, then those who are exporting will find that the price of exporting has also increased.