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Aspects of the General Environment Impacting the Industry

  • Category: Life
  • Subcategory: Experience
  • Topic: Impact
  • Pages: 2
  • Words: 807
  • Published: 02 April 2020
  • Downloads: 25
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The general environment is constantly evolving. New trends come into play frequently and change the macro level landscape either for the better or the worst. The specific types of trends that occur and who is impacted by them is what becomes relevant. A PESTEL analysis takes a more detailed approach and looks at the general environment from the lens of five key areas that include; political, economic, social, technological, environmental, and legal. Breaking these factors down in this way shows how these areas can impact businesses strategies as well as entire industries.

The current landscape of the U. S. economy is centered around positive growth. Unemployment and inflation remain significantly low which has helped spur a big increase in consumer spending as well as confidence. The United States GDP per capita has seen a year over year increase every year since 2009 and that trend is expected to continue on into the future. At the same time, inflation is currently sitting at 2. 7% and Statista expects a drop in that level for consecutive years until around 2021.

The consistent rise in per capita income coupled with lower inflation levels provides consumers with more disposable income and buying power. This has a direct negative impact on the industry because the typical buyer with additional discretionary income is much more likely to go and purchase a new product to replace the dysfunctional one as opposed to spending the time and effort it takes to have their damaged product repaired.

Technology has always been one of the major drivers of the United States economy. However, in today’s current society, it has become more prevalent than ever. As innovations in technology expand, the impact on the general environment widens. With technology constantly advancing, the components used to make various electronic items are becoming more rare, difficult to produce and costly. Apple’s IPhone X OLED screen and display is a specific example of this. Apple was buying the OLED part at a large premium from Samsung who up until recently was the only company able to manufacture it. This poses a significant problem to the consumer electronics and repair industry because their main advantage to the consumer is being able to fix the phone at a significant discount to the cost of attaining a new one. If a retailer such as Apple who possesses significantly more buying power is not able to secure the parts at a lower price, the repair industry is going to struggle heavily attempting to carry these products for various repairs at a price that makes sense to the end user. However, this issue can be slightly counteracted because with more advanced parts, repairs become more involved and the chances that consumers attempt to fix the products themselves decreases.

Additionally, technology is negatively impacting the industry through the emergence of products with multiple uses. IBISWorld gives a specific example of this, “For instance, the cell phone market has become dominated by devices that integrate voice communication, internet, music and media technologies. ” This is just one example of a product that is combining multiple uses; however, the market is trending that way with all products as consumers continue to demand centralization. This trend poses a direct threat to the repair industry because single use devices becoming more obsolete means less overall products to repair. This in turn directly impacts the bottom line and can contribute to a significant loss in revenue in the near future.

Another major factor that contributes to the general environment is the social aspect. Society constantly adapts to the current times and trends that occur. One new social trend relates to the age profile of the people who are predominately using electronics. The emergence of the younger generations reliance on these products has grown substantially in recent years. A study performed by Common Sense Media found that, “42% of children 8 and younger now have their own tablet devices, a steep increase from 7% four years ago and less than 1% in 2011. ” The study also found teens 12-18 years of age average 9 hours a day of media use. These statistics are vital to the industry because they show the emergence of an entirely new potential customer group that did not previously exist in this capacity. Teenagers spending 9 hours a day across TVs, computers, gaming consoles, tablets, cell phones, etc. will drive significant volume into the industry which will be a catalyst for growth.

Overall, these specific aspects of the general environment contribute in a direct and impactful way. Depending on the factor, it can carry a negative or positive effect on the industry as a whole. However, being proactive and aware of what is going on in the macro environment will allow the industry to adapt to the current times and be better suited for the near term.

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