LG PESTLE Analysis

Political Aspects

The political arena has a huge influence upon the regulation of the businesses, and the spending power of the consumers and other businesses.

• India is politically stable which have a positive impact on their business activities in Asian sub-continent.
• There is no FDI limit for retail companies operating in India which contributes to extensive competition among the existing companies and expand in different geographic areas.
• EPCG (export promotional capital goods scheme)-zero duty scheme allows import of capital goods for production, pre production and post production.
• L.G. electronics also has to comply with the standards set by environmental protection agency.
• Setting of plants in tax incentive areas like greater Noida and Pune.

Economic Aspects

Marketers need to consider the state of a trading economy in the short and long-terms. Important economic factors are :

• Inflation in India saw a decrease from 10.5 in 2011 to 7.18 percent in 2012. The decrease in inflation see reducing of cost of raw materials and manufacturing cost which would give  LG Electronics a opportunity of making higher profits.
• GDP growth (annual %) Rounded 2011: 6% ,

Growth in GDP combined with increasing disposable income of consumers with their changing lifestyles and trends in the industry will see a rise in demand for high-end segment durables, which gives LG an opportunity to expand and invest more in its manufacturing processes.

• AC industry reversed its declining trend and grew by 20% YoY in Q3FY13.”

Social Aspects

• Penetration of white goods across all major consumer appliances categories is more than 70 % in urban areas and more than 50% in rural areas
• Increase in the employable population in the country and more nuclear families, so more potential customers.
• Number of first-time users and people upgrading to better products is been increasing at a fast rate due to increasing disposable income.
• Increasing competition among brands leads to decline in prices therefore higher affordability and greater chances of people up-grading.
• Change in consumer preferences and trends.

• They leave an impact on customer’s life by making it easy with 6thsense technology as consumers can achieve significant savings in time and power usage.

• It shows lifestyle of customers.

Technological Aspects

• With the advent of new technology, more features are being added to the existing products.
• Increasing technology has helped to enhance its manufacturing and deliver more on quality front.
• Service Centers have been opened up to provide quality services post-sale and faster addressing of customer problems.

Legal Aspects

• GST for energy efficient appliance is less than a third of the regular tax for consumer durables.
• Rules established in 2005 maintain restrictions on most existing joint ventures but allow new ones to negotiate their own terms on a commercial basis.      

Environmental Aspects

• Severe summers ranges through most part of the year which add up to the increasing demand for Air Conditioners and Refrigerators.

Delay in monsoon also supported overall demand for refrigerators and air conditioners (ACs).