Best Buy is a retail chain consumer electronics American company. James Wheeler and Richard M Schulze founded the retail chain company in 1966. The company has established a network of approximately 1125 retail chain consumer electronics stores across the USA and Canada. Today, we’ll discuss the PESTLE analysis of Best Buy; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Best Buy
Some of the main political factors in the Best Buy PESTLE analysis are as follows;
I-Trade Policies
The US government has always had a very tense and tight relationship with China and other Asian countries. Best Buy outsources most of the production and manufacturing work from Asian countries to gain a cost advantage. However, the regional political conflicts disrupt the supply chain and distribution of finished goods; and it is causing production and distribution delays and negatively impacting the user experience of end consumers.
II-Political Instability
A stable political environment plays a key for the growth of businesses and companies. For instance, the raw material sourcing, parts, tools, and components come from various countries and regions across Asia. The political environment of Asian countries is highly unstable, and it results in the form of riots, roadblocks, energy shortages, and other issues. The disrupted supply chain would negatively impact the production and manufacturing processes, and delivery of finished goods to the retail chain stores of Best Buy.
III-Waste Policies
Consumer electronics products are one of the main causes of environmental waste and higher carbon emission rates. Governments and countries are developing strict regulations for consumer electronics brands to control and limit environmental waste. For instance, the EU has recently passed the law of mandatory type-C charger for all types of electronics devices. Such types of laws and regulations are negatively impacting the sale of Best Buy.
Economical Factors Affecting Best Buy
Some of the main economic factors in the Best Buy PESTLE analysis are as follows;
I-Taxes
The government has been increasing significant taxes on consumer electronics products. Higher taxes negatively impact the sales, revenue, and profitability of Best Buy; because the target customers can’t afford to buy electronics products when the prices are high. They would switch to other cheaper sources of devices, instead of buying the new one.
II-Exchange Rate
The currency exchange rate of different countries keeps on fluctuating due to various political and economic factors. Best Buy procures products, supplies, parts, tools, and components from various countries in different currencies. The fluctuating currency exchange rate makes the product’s prices fluctuate; the affordable products and goods become out of budget due to changes in prices.
Social Factors Impacting Best Buy
Some of the main social factors in the Best Buy PESTEL analysis are as follows;
I-Online Shopping Trends
The online shopping trends have increased significantly over the past few years. In order to keep up with the growing customer market trends, Best Buy has built an e-commerce platform and online store to offer electronics products online.
II-User Experience
The consumer market has spent a significant amount of capital on electronic products and gadgets to gain a better user experience. For instance, the spending on consumer electronics products like smartphones, smartwatches, and other smart devices has increased a lot; it amplifies the growth, sales, and productivity of the brand Best Buy.
III-Changing Trends
The thing about consumer market trends is that they are always changing. No business or company can accurately predict the right trend of upcoming products; they are always dealing with uncertainty. They don’t know the reaction of the consumer market; if the market doesn’t accept the particular gadget, then it will fail and increase the inventory carrying cost of the dead stock.
Technological Factors Affecting Best Buy
Some of the main technological factors in the Best Buy PESTEL analysis are as follows;
I-Data Analytics
Best Buy invests a significant amount of capital resources in data analytical tools, equipment, and technology. It helps the company to accurately the demand and supply of particular products and goods in the upcoming season based on the previous data. As a result, it decreases the higher inventory carrying cost without any risk of understocking and overstocking.
II-Latest Technology
The thing about the latest technology is that it becomes obsolete and outdated very quickly. Whenever a technological update or new device is released, then it decreases the value and price of the previous model. It makes the Best Buy business high risky.
Legal Factors Impacting Best Buy
Some of the main legal factors in the Best Buy PESTEL analysis are as follows;
I-Regulatory Compliance
Best Buy should comply with privacy laws, IPR, trade policies, import and export regulations, and tax laws. The government regulations when it comes to the safety and data privacy of individual customers. It may cost billions of dollars.
Environmental Factors Affecting Best Buy
Some of the main environmental factors in the Best Buy PESTEL analysis are as follows;
I-Environmental Sustainability
Best Buy has a very poor track record of environmental sustainability. In fact, the consumer electronics brand is one of the leading companies that are causing significant environmental pollution and higher carbon emission rates. Along with non-compliance with the environmental sustainability requirements, it is negatively impacting the brand reputation of the company.
Conclusion: Best Buy PESTLE Analysis |PESTEL Analysis of Best Buy |External Environmental Analysis of Best Buy | Strategic Analysis of Best Buy
After an in-depth study of the pestle analysis of Best Buy; we have realized that Best Buy is the world’s leading consumer electronics retail chain brand. If you are learning about the Best Buy PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
