This PESTLE analysis of Logitech examines some of the factors existing in the business environment that may affect Logitech's success into the future.
Logitech International S.A., informally known as Logitech, is a major producer of computer peripherals, including mice, keyboards, headsets, webcams, and more. The brand has a solid reputation for creating high-quality products at a very reasonable price point, having done so since as far back as 1981.
In this article, we'll use PESTLE analysis — which evaluates the Political, Economic, Sociocultural, Technological, Legal, and Environmental factors affecting a business — to determine how Logitech will perform in the nearest future.
Political
Here is a Political factor affecting Logitech:
Import Tariffs
Logitech manufactures the vast majority of its products in Suzhou, China. By doing so, it enjoys an inexpensive labor force and excellent accessibility to electrical components, many of which are produced in China. However, this does put Logitech at the mercy of various import tariffs which may be imposed on China by countries importing these products. In particular, the United States and China have been battling something of a trade war, which puts great uncertainty on the future of affordable import from the far-Eastern country.
Economic
Here are two Economic factors affecting Logitech:
Growing Disposable Incomes
As a manufacturer of consumer electronics, Logitech is well-placed to reap the rewards of consumers' growing disposable incomes. As consumers around the world become wealthier, their electronics spending is expected to increase — especially in poorer regions where these products were previously out of reach. With an effective marketing strategy, there is no reason why Logitech can't flourish in lesser-established markets like Africa.
Prominence of Remote Work
What with the outbreak of coronavirus in early 2020, remote work is only becoming more prominent. As employers realize they no longer need to splurge on office pace — and employees realize they can save time by avoiding their commutes — remote work was bound to grow in popularity, but coronavirus certainly sparked a push. In any case, the rise of remote work will create new demand for computer peripherals, such as mice, keyboards, and especially accessories used for online conferencing, like microphones and headsets.
Sociocultural
Here are two Sociocultural factors affecting Logitech:
Popularity of Gaming
There's no doubt about it: the popularity of gaming is only growing in society. As every new generation of gamers is born, the gaming industry continues to expand. Additionally, gaming is becoming more socially acceptable, especially with the rise of eSports. With Logitech known for its production of gaming peripherals, it can expect to see significant growth in sales as the gaming space grows. Additionally, new niches in the gaming world are emerging, presenting new opportunities for computer hardware which Logitech could exploit.
Changing Perceptions
For any consumer-facing brand, a major aspect of success is ensuring your brand is well perceived. This couldn't be truer in the gaming space, where manufacturers are held to high standards due to the tech savviness of consumers. As a result, Logitech's strong reputation for manufacturing good quality products will be vital in its continued success.
Technological
Here are two Technological factors affecting Logitech:
Virtual Reality
Virtual Reality (VR) is a new area in the world of technology. It involves placing users inside a simulated environment with the use of monitor-like goggles and headsets. Without a doubt, this growing industry shows massive potential for electronics manufacturers, especially those with track records as impressive as that of Logitech. In fact, Logitech has already made its debut into the world of VR with Logitech Ink, a stylus designed for use inside simulated environments. Perhaps the electronics manufacturer will even look to create its own VR headset.
Racing Simulators
Another new niche in the electronics industry is that of racing simulators. In recent years, the market for advanced simulators that mimic real-world driving experiences has skyrocketed. These simulators, or sims, consist of a wide range of modular parts, including some kind of display, steering wheel, and pedal set. They may also include shifters, handbrakes, and other such automotive peripherals. This new niche is a massive opportunity for Logitech, which the company has not been afraid to reach for. In fact, Logitech's flagship racing wheel and pedals, known as the G29, is rated one of the best steering wheels for sim racing.
Legal
Here is a Legal factor affecting Logitech:
Copycat Electronics
The consumer electronics industry is plagued by copycat electronics. These products, which sometimes go under fake brand names, clearly infringe on the rights of the originals. While Logitech has gone to great lengths to ensure its products are not copied, numerous counterfeits have appeared on the market. These counterfeit products devalue the Logitech brand, since they are often of much lower quality. Also, they may reduce sales for Logitech itself as they grow in popularity, especially in more price-conscious markets. Unfortunately, while counterfeits are a serious legal issue, some governments refuse to take action on those who manufacture them.
Environmental
Here is an Environmental factor affecting Logitech:
Sustainability
For any manufacturer in any industry, sustainability is a major issue. Low-quality products may be cheap to produce, but cause a major strain on the environment, since they must be disposed of and replacements must be made. As a result, high-quality products which have many uses are much more desirable, like those offered by Logitech. Another aspect of sustainability is choosing materials that cause less strain on the environment. In any case, Logitech has a public sustainability pledge, in which they explain their use of recyclable plastics and renewable energies.
Summary
Logitech International S.A. has an excellent reputation — and for good reason. The Swiss manufacturer of computer peripherals produces high-quality products at an affordable price point.
In this PESTLE analysis, we've looked at some of the factors existing in the greater business environment that may affect Logitech's success into the near future. Among these, there have been both beneficial and harmful factors. Importantly, the beneficial factors — such as growing disposable incomes, the rise of remote work, and numerous new industries — greatly outweigh the few negative factors, like uncertain import tariffs and copycat products.
