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SUBMITTED BY: VAIBHAV AGARWAL (SEAT NO: 26) URVASHI DUGGAL (SEAT NO: 25) SAURABH (SEAT NO: 51)
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INDEX
Topic 1. Industry Overview & Analysis 2. Aggregate Market Factors 3. Category Factors 4. Environmental Factors Page No. 3 4-6 7-8 9-12
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Category Size:
A Laptop which is, a small personal computer designed for mobile use, is getting very popular these days. Originally, it was designed to entrap a small niche market for specialized field applications such as the military and education. But today, the slim, secure, stylish and savvy laptops have ruled out desktops from office and home work space because of improved style, functionality and space taken. More so, the laptop developers are offering consumers with ultrasleek, ultra-mobile and ultra-portable machines at genuine prices so that nobody can neglect this tiny machine from being attracted and computer makers are gearing up for that future. According to a recent market report, the total laptop market size in India is currently estimated at 1.5 million units and is thereby considered to be a large market segment having a high market potential and being an attractive and lucrative market for the PC manufacturers.
Category Growth:
A Laptop is nothing but a consumer electronic good. The overall Consumer Electronics Industry will grow at an estimated 5.9 percent in India this year, two points higher than previously projected in January. The CE industry is offering what consumers want during these uncertain economic times: innovation and value, said Consumer Electronic Association President and CEO Gary Shapiro. Consumers desire for connected devices is pushing projected revenues higher than originally anticipated, but the long-term health of our industry relies on a strong and growing Indian economy. Laptop sales continue to increase as consumers demand mobility in computing solutions. Led by the introduction of ultra books, overall laptop sales to dealers are expected to reach $14.9 billion, with 21.3 million laptops shipping to dealers.
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Sales Cyclicity:
Many categories experience a substantial inter year variation in demand. High capital intensive business gets affected through peaks and valleys of sales as there is a change in the gross domestic product of the economy. Similarly the sales of laptops, which are consumer electronic does not get affected by the change in the GDP or climatic conditions. Basically laptops being an electronic good, the sales would be affected based on the varieties entering in the same segment and the demand for the same.
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Seasonality:
Intra year cycles in sales based on seasons is not viewed positively. Taking into consideration the Indian scenario it comprises of buying electronic items on the auspicious occasion of Diwali and laptops pose to be an ideal gift for near and dear ones, thereby increasing the sales and revenue generated from it during these festive occasions. Also colleges in India commence their academic sessions between the months of May and June encouraging students to invest in laptops which would provide them with the ease of storing their study material which in turn leads to a fluctuation in demand of laptops.
Profits:
Profits vary across products or brands in a category. The difference lies in profitability because of various underlying factors. It can also be different based on the factors of production, cost attached to the same and also working capital invested. The profitability attached specifically to laptops produce relatively steady if not high due the high research and development costs involved which form a part of the operating expenses. Products chronically low in profitability are less attractive than those that offers higher returns.
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3. CATEGORY FACTORS:
Although the aggregate factors just described are important indicators of the attractiveness of a product category, they do not provide information about underlying structural factors affecting the category. A classic developed by Porter (1980) considers five factors in assessing the structure of Industries. These are explained as follows:
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Threat of Substitutes:
The laptop industry faces a significant threat from new trends such as cloud computing, which potentially will reduce the need for high computing power in portable laptops.Moreover, advances in computing power and as well as communication technologies (3G, WiMax, etc.) have enabled devices such as smart phones (I Phone, Blackberry, etc.) to compete with laptops by providing similar capabilities. For instance, I Phone apps reduce the need for laptops by providing similar functionality.
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4. ENVIRONMENTAL FACTORS:
PEST analysis
Political Factors:
The political arena has a huge influence on the way any business is being conducted in a country. Therefore, the various political factors that affect the Laptop Industry are: 1. Government Stability: The Indian Government has been stable for a considerable time period now which has enabled the un hindered growth of the Laptop industry. Stable government allows the manufacturers to invest large sums of money in the Research & Development and production of the latest and improved versions of the laptops. 2. Taxation, Employment and Safety laws: Although the stable political scenario acts as an incentive to upgrade the investments and production in the laptop industry but the number and the strength of the unions existing in Indian Market makes it difficult to carry on a smooth functioning of this industry. Besides the unions, the taxation policies and laws levied upon this industry by the Indian Government are very stringent, which in turn is the cause for the increasing prices of the laptops. 3. Foreign Trade Regulations: Post liberalization in 1991, the Indian market has now become more open towards the foreign market which has in turn enabled for the manufacturers to procure the parts necessary for the production of the laptops at a very low import duty. This has helped the manufacturers to import the spare parts of the laptops and produce the final product at a considerable lower rate.
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With the Indian government being stable for the last decade, it has showed a positive trend on the market. The only cause of concern is the lack of employment and safety law. Problems arise in countries were the political stability is not guaranteed, no matter how efficiently the companies try to operate any instability on the political grounds of a country can ruin the entire scenario. Many countries still have restrictive policies which are maintained to protect the domestic players, but doing so only pushes off any foreign company interests in further developing and upgrading the standards of the technology being used.
Economic Factors
Economic environment refers to the aggregate of the nature of the economic system of the country, the structural anatomy of the economy to economic policies of the government, the organization of the capital market, the nature of factor endowment, business cycles, the socioeconomic infrastructure etc. The various economic related factors that affect the Laptop Industry are: 1. GDP and GDP growth rate: Laptop being a product more of luxury is highly affected by the GDP and the GDP growth rate of the developing nations. Post Independence, the Indian GDP has steadily risen, except for a few fall backs, this has led to the increase in the focus of usage of better technology and therefore increase in the usage of laptops. 2. Inflation: The Indian market has been adversely affected by the fumingly high rate of inflation. This has had its impact on the growth of the laptop industry as well because laptop is still considered to be a product of luxury rather than necessity in India and therefore, purchasing of the laptops was held aside during the time of inflation touching new heights. 3. Consumer Expenditure and Disposable Income: With increasing GDP there has a considerable increase in the employment level of the country. Increase of the employment meant more disposable income in the hands of the households. This disposable income has been consumed in getting more technologically sound in terms of upgrading the level of gadgets being used. From PCs to laptops, the transition has been very fast in comparison to when the personal computers were first time launched in India. 4. Interest Rates: Earlier purchasing a personal computer was a big deal as it was not only expensive but also no credit was being provided by the retailers and the banks for such an expenditure. However, with the change in time more and more financing facility has been made available to the customers for the purchase of such products and that too at very low interest rates. This factor has further pushed the usage and availability of the laptops in the Indian Market.
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Just like the Indian government, the Economy too has shown a fair amount of stability. In 2008 when the world started to face the worst ever financial meltdown, Indian Economy stood out and Information technology sector were one of the biggest contributors to the Indian economy.
Socio-Cultural Factors
The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business. The social environment includes all factors and trends related to groups of people, including their number, characteristics, behavior, and growth projections. 1. Shifts in values and culture: The Indian culture is under a great influence of the western culture wherein time has become money and all the necessary steps are being taken to ensure the minimum of time wastage is possible. This cultural shift has been more prominent in the urban society of the country which is why the sale and usage of laptops has reached to a saturation point in most of the metro cities in the country where laptops have become a status symbol and is being possessed even by the children in the Indian houses. 2. Change in lifestyle: The usage of the laptops has highly increased, a far cry from the earlier times. Today in the urban areas of the country usually every member of the house possesses a laptop irrespective of the age and the occupation. 3. Education: Education in India has taken a new turn, no more of black boards and books. The education pattern in India has adopted the western style of teaching wherein the laptops and computer based teaching has taken the place of the books. The Indian government has been spending huge sums towards making the education sector of the country more technologically sound. Besides, computer education has become a part of a normal curriculum of the academics in the Indian schools and colleges which also has led to the increase in the use of the laptops. 4. Distribution of Income: With more and more employment opportunities arising the Indians have managed to secure better positions and earn considerably much better than their fathers and forefathers. This change has led to the change in the distribution of the income levels of the country. Earlier the wealth was accumulated by only 5-10% of the population but now the situation has changed and more than 50% of the Indian population lies under the upper middle class who can afford a better and affluent lifestyle for themselves.
Over the last decade the Indian consumerism has been on the rise, this has been evident with the fact, that the average consumer in India knows everything about the product they want to buy, this makes it tricky for companies in the Laptop industry. Coupled with the knowledge that today the buying capacity of an average consumer has also increased, it is even more challenging for a company to keep itself at the top of the market.
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Technological Factors
Technology has always been the key driving factor to give the companies a competitive edge. The various technological factors affecting the Laptop Industry are: 1. Government spending: The technology keeps on changing at a very fast pace and in order to keep up with the constant upgraded level a lot of investments in the research field for technology has to be made. This is done by the Government of India who has been allocating huge sums of money for bringing out a better and a newer version of the existing technology. Ex: Akash Tablet which costs around only Rs. 3500. This is 1/4th of the price one has to pay in order to use better technology rather than paying Rs. 25000 or more for similar products. 2. Speed of change and adoption of new technology: The newer products being introduced and their deliverability by the various Laptop producing companies has captivated and captured the imagination of the average Indian consumer. The Indian consumer with increasing disposable income is becoming more and more gadget freak and is willing to try out the new models of the Laptops available rather than just sticking onto the one purchased years back. 3. The Impact of the Internet: With the advent of the internet consumerism has been high as the people are able to access the internet and get to know about the various products being launched. The increasing usage of internet has also increased the demand for laptops in particular because laptops offer convenience and with a smooth internet connection on a laptop it becomes like the world is at your feet.
Over the years, the pattern of consumerism has taken a sharp turn wherein its the technology being used is of more importance than the number of years a particular product has been put to use. This change in the behavior of the Indian consumers coupled with the advent of the technology has led to the forceful growth of the Laptops in India.
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