Question

What are the strategically relevant factors in GoPro’s macro-environment? What does a PESTEL analysis reveal about the action camera in 2017? Does the external environment of the drone industry present attractive opportunities to GoPro?

Answer 1

Go Pro's macro environment :

The strategically relevant factors in GoPro’s macro-environment includes economic, social, technological, environmental, legal and political factors. Changes in the macro-environment can have an impact on the company’s competitive advantage and profitability. The economic factors that affect GoPro are inflation rate, savings rate, interest rate and foreign exchange. The competition will affect the competitive advantage of the firm.

PESTEL Analysis :-

P-Political

E- Economical

S- Social

T- Technological

E- Environmental

L- Legal

P- Political :

The political factors that may impact the profitability or chances of survival of the company are quite diverse. The political risks vary from sudden changes in existing political regimes to civil unrest to major decisions taken by the government. In cases of possible multinationals, one may also include political factors that take place/ affect not only the host country but also all countries that contain business operations, or that may engage in trade with GoPro Inc

E- Economical :

Economic factors are all those that pertain to the economy of the country that GoPro Inc, such as changes in the inflation rate, the foreign exchange rate, the interest rate, the gross domestic product, and the current stage of the economic cycle. These factors, and their resulting impact on aggregate demand, aggregate investment and the business climate, in general, have the potential to make a company highly profitable, or extremely likely to incur a loss. The economic factors in the PESTEL analysis are macroeconomic.

S- Social :

The social factors that impact GoPro Inc are a direct reflection of the society that GoPro Inc operates in, and encompasses culture, belief, attitudes and values that the majority of the population may hold as a community. The impact of social factors is not only important for the operational aspect of GoPro Inc, but also on the marketing aspect of the organization. A thorough understanding of the customers, their lifestyle, level of education and beliefs in a society, or segment of society, would help design both the products and marketing messages that would lead to a venture becoming a success.

T- Technological :

Technology can rapidly dismantle the price structure and competitive landscape of an industry in a very short amount of time. It thus becomes extremely important to constantly and consistently innovate, not only for the sake of maximizing possible profits and becoming a market leader, but also to prevent obsolescence in the near future. There are multiple instances of innovative products completely redesigning the norm for an entire industry: Uber and Lyft dominate the taxi cab industry; smartphones have left other phones an unviable option for most et cetera.

E- Environmental :

Different industries hold different standards of environmental protection in their head as the norm. This norm then dictates what every company should aim for, in the least, to prevent becoming the target of pressure groups and boycotts due to a lack of environmental conscientiousness. A company in the textile industry, for example, is not expected to incur the same level of pollution and environmental degradation as an oil company. The new consumer, armed with the interest and the knowledge it carries, prefers to give its business to companies it views as more ethical, particularly about the environment in the wake of global warming.

L- Legal :

The government institutions and frameworks in a country, while technically also political and thus subject to whichever political party holds the majority in a government body, are also legal and thus should be considered in a PESTEL analysis. Often GoPro Inc policies on their own are not enough to efficiently protect GoPro Inc and its workers, making GoPro Inc appear an undesirable place of employment that may repel skilled, talented workers.

External environment of the drone industry :

GoPro is cutting more than 250 jobs and leaving the drone industry  in an attempt to return to profitability by the second half of this year. The maker of action cameras said it is reducing its global workforce from 1,254 employees to fewer than 1,000.

"Despite significant marketing support, we found consumers were reluctant to purchase HERO5 Black at the same price it launched at one year earlier," Woodman added. "Our December 10 holiday price reduction provided a sharp increase in sell-through."

GoPro also announced that Woodman would reduce his 2018 cash compensation to $1. Woodman received $1.1 million in 2016, according to Bloomberg.

The company estimated fourth-quarter revenues of $340 million, including an $80 million charge from price cuts. The forecast is down from its prior estimate of $460 million-$480 million, according to Bloomberg.

GoPro is exiting the drone business amid strong competition and "a hostile regulatory environment in Europe and the United States." GoProrecalled about 2,500 units of its Karma drones in November 2016, shortly after launch, when some of them lost power during operation.

The company halted trading of its stock pre-market ahead of the news. It fell 17% in the year