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Xbox PESTLE Analysis

Published by MBA Skool Team in Companies category Last Updated: January 03, 2024Read time:

Here is a detailed PESTLE analysis of Xbox which examines political, economic, social, technological, legal & environmental factors.

Political Factors:

The political factors in the Xbox PESTLE Analysis can be explained as follows:

The parent company Microsoft launched the Xbox in various countries across the world and so is subject to the various political conditions prevailing in these areas. Various political factors such as the US-China trade war in recent times have affected the sale of the product in those regions. Microsoft to have an upper hand in policies related to gaming consoles, sometimes bends in favor of the political parties or candidates. A recent example was when Xbox played a political ad on the consoles for limited days in limited regions, supporting a particular candidate. This received some negative feedback from the users and the company decided to let go the ads. The gaming industry does not face much wrath in the political world. Thus, the company & Xbox may face changes in political parties causing the cost of the product to increase or decrease, but overall the product, its process, and manufacturing do not get much affected, except in places where it is manufactured. In its operating units, all the political pressures need to face and overcome to keep making and selling the product. Thus, diplomatic relations are very important in those regions.

Image: pixabay

Economic Factors:

Below are the economic factors in the PESTLE Analysis of Xbox:

Xbox is still a luxury item and does not form a part of the basic needs in most middle-class houses. The changing trends among the youth have somewhat changed these dynamics.

With more people getting involved in playing video games, more value is associated with the product. The youth is willing to expend the money of these luxury products and also on future upgrades. Xbox also has the opportunity to sell various specific add ons for video games, thus expanding its market and profitability. The sale of the product depends on disposable income. Higher the disposable income among the population better will be the sale. It also depends on the market rate of the various competitive products and services available in the market. The company also faces loss due to fluctuating rates of the currencies. If the fluctuations are high, then the profitability also gets affected. Various other changes in the monetary policies, such as GST or duties, will increase or decrease the cost of Xbox, thus affecting the sales directly.

Social Factors:

Following are the social factors impacting Xbox PESTLE Analysis:

The youth today is very dynamic. This is the reason why trends are changing at an exponential rate. If Xbox wants to stay in business, it needs to update its products to keep creating value for the money the customer is willing to pay. The company needs to keep a tab on what its competitors are doing to gain an advantage over the existing products, to stay ahead of the market. Various social and cultural factors also play a part in the sales of the products. This needs to be kept in mind when marketing in countries that are very stringent with its rules and regulations. The sale of Xbox games that may be prohibited in these countries will further attract lawsuits, which needs to be avoided. Demographics using the games need to be considered. According to various data, approximately 51% of women are involved in casual gaming and people over the age of 35 are major players compared to young people. Another data suggests that people play games more with their family and friends, thus the games must be designed accordingly. Focusing on all these points is of utmost importance to the company, to stay profitable and ahead in its game.

Technological Factors:

The technological factors in the PESTLE Analysis of Xbox are mentioned below:

The gaming industry is expanding at an exponential rate and technological changes will have a profound effect on the sales of the products. There is a high pressure created by other players like the PlayStation. With high amounts of money invested by Microsoft in continuous research and development of Xbox, the company seems to have an upper hand so far. The company has quickly utilized cloud-based technology and saved huge amounts of money in the past few years. It has tried to stay ahead of the game with the launch of a motion-sensing game, that will keep the entertainment and health of the player, both in focus. By providing hands-free games and eradicating even the wireless controller the company can achieve a major feat. The use of AI and virtual reality that the company should focus on.

The demand for virtual games that teleport a person to a different world and AI that can create an even more realistic experience can be a major feat for the company.

Following are the legal factors in the Xbox PESTLE Analysis:

Xbox has managed to capture a significant area of the market and has further plans of expanding its reach. To do so, Xbox needs to stay updated with all the international patents and copyrights existing in the region it is willing to enter. Since gaming is a segment where any small part of the game is similar to others may also classify as infringement, the company needs to be careful about all its products. Since the company has a large number of employees working, there is a high chance of data leak or software leak that may affect the company on a massive scale. Antitrust and various lawsuits and violations are what the company may face if it fails to comply with the legal requirements associated with its operations and products. Xbox also needs to follow the various labor laws and act accordingly. The company also needs to take care of the various anti-bribery laws that are in place in various countries of its operations. In case any of these are violated, the costs associated with compliance will be huge. The removal of any sort of contamination in the system and any changes to the operations mandated by new or amended laws may be significant.

Environmental Factors:

In the Xbox PESTLE Analysis, the environmental elements affecting its business are as below:

Microsoft and Xbox believes in accelerating global progress to a more sustainable future. The company has undertaken certain, goals, that it wishes to accomplish. One of them is to reduce their carbon emissions by 75% by 2030. The company is doing so through carbon neutrality and the use of various renewable energy sources. Microsoft is on its way to meet the goals set by the Paris climate agreement by 2030. The various cloud-based programs used have reduced the resource consumption by 20% along with a reduction in the electricity bill, which was again a benefit to the company. With all major developed and developing countries around the world, supporting the cause of a sustainable future, the company has various opportunities, to work and support these initiatives, taken up by the different countries.

The company has also been working towards preserving the forest areas on the Mount Rainier, along with saving the orangutans in Indonesia. Xbox and the parent company has established the largest solar park in Virginia, USA, that generates enough electricity to power up about 100 million led lights. With these strategies in place, the company has been utilizing its resources appropriately to identify new areas of development and create a more sustainable environment.

To conclude, the above Xbox PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team which comprises of MBA students, management professionals, and industry experts. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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