Published by MBA Skool Team, Last Updated: February 28, 2021
PESTLE Analysis of Bosch analyses the brand on its business tactics. Bosch PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Bosch, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Bosch PESTLE Analysis can be explained as follows:
Bosch is an international engineering and technology company, operating across 40 countries. It is thus subject to the laws related to taxation of the respective companies it operates in. Any changes in the taxes like customs, duties, tariffs on imported goods, etc could reduce the profitability of the company. Also, the company has to abide by the legislations of various companies. Any non-compliance to those laws may lead to litigation. Being a global supplier, Bosch has to abide by the laws & political governance of that country as well. Cases in future can lead to significant litigation costs and hurt the profitability of the company.
Below are the economic factors in the PESTLE Analysis of Bosch:
A global brand like Bosch is influenced by many financial factors.
The spread of Covid-19 has adversely affected the financial and operational performance of the business. Governments across the world have imposed national lockdowns, affecting the supply chain and financial performance of the business due to reduced sales. The company is still trying to estimate the possible impact of coronavirus pandemic on its business. Also, the operations of the company are affected by changes in interest rates and exchange rate risks. Any fluctuations in foreign currency could make imports of certain raw materials costlier in the company of manufacturing. Even though the company uses forwards contracts to hedge its transactions, there is no guarantee that it can completely eliminate the risk. Secondly, any changes in interest rate of loans, may make borrowing more costly for the company, hurting profitability if the business. Apart from this, any recession or high inflation in the country it operates, could affect its profitability. The company has cited a slowdown in the automobile sector due to less demand and liquidity constraints.
Following are the social factors impacting Bosch PESTLE Analysis:
Bosch continually strives to tap the opportunities due to changing preferences of consumers. For example, it set up a plant in Chennai. The move is part of its strategy to sell innovative products in the electrical drives segment. The plant has a huge capacity of over 2 million window lift motors, 7 lakh wiper system motors, 5 lakh thermal system motors, etc. In 2016, Bosch Household appliances in India also launched a new marketing campaign for their new range of washing machines. The campaign was called ‘No Damage’ and it derived its development based on deep consumer insights. During their research, they found that many consumers did not like their expensive clothes being damaged in a washing cycle. Thus, the consumers chose to handwash or dry clean their clothes. This way they could keep their expensive clothes free from any damages. This insight enabled the company to come up with washing machines in the range of 6.5 to 8kg category.
The technological factors in the PESTLE Analysis of Bosch are mentioned below:
Bosch is adapting fast to the technological developments taking place in its environment. It also aims to be one of the global Internet of Things (IoT) companies. Thus, it has set up its own platform, called Bosch IoT Suite and IoT Cloud. With few additional features, the company also allows its users to sign in just once to avail services. Also, the company is producing many web-enabled e-products to allow better connectivity solutions for its business clients. Some of these solutions are in the area of mobility, manufacturing, logistics, smart homes and agricultural applications. In continuation with its progress in IoT technology, the company has also installed the Bosch.IO GmbH subsidiary. This unit even sells solutions to customers in certain areas. The company is also working in expanding its Artificial Intelligence solutions. For example, the company has a Robert Bosch Center for Data Science and Artificial Intelligence in Chennai and Bengaluru.
The company is working on many areas related to mobility, manufacturing, smart homes, agriculture, etc.
Following are the legal factors in the Bosch PESTLE Analysis:
There are many legal cases filed against the company, which could have financial implications in the future. The company faces many class and individual civil lawsuits, particularly in the US and Canada. Moreover, the company is also bound by antitrust lawsuits. Bosch’s French subsidiary BSH Hausgerate also are governed by antitrust laws. Although the company makes all possible efforts to abide by these laws, it still faces risks of litigations. These litigations could have a material impact on the company, and affect its financial performance. The company had lawsuits related to diesel vehicle emissions as well.
In the Bosch PESTLE Analysis, the environmental elements affecting its business are as below:
The company has a separate sector called Energy and Building Technology, which generated a healthy 7% of total revenue for Bosch Group. For example, this sector provides services across the value chain like design, engineering, procurement, project management, installation, commissioning and maintenance of Solar plant for its clients. In India, alone, the company has installed 200 MW of solar power projects. Additionally, the company provides innovative energy efficiency solutions. For example, the company has HVAC Efficiency Improvement Solution which helps businesses in generating, distributing and consuming cooling system at an optimum level. This results in energy savings close to 15%. Then, there is also the Waste Heat Recovery Solution.
This solution recovers exhaust gas from high temperatures and uses it to reduce energy utilization of other sources. This process again results in energy savings and reducing utilization of fuel. Thus, the company has taken advantage of the opportunities in its external environment and is able to sell innovative, energy-efficient solutions.
To conclude, the above Bosch 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. 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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