PESTEL analysis

PESTEL analysis
Political/Legal Environment
Over the past several years, there has seen a plethora of patent lawsuits within the smartphone industry. In the highlycompetitive environment, manufacturers of handsets have been aggressive in protecting their intellectual properties by suingcompetitors by claiming infringements on patents. For example, in March 2010, Apple sued HTC for allegedly infringing on20 Apple patents (Weil, 2010). Apple also sued Nokia in 2010 for similar patent infringements("Patent wars", 2011).However, in April 2011 the International Trade Commission recommended that neither HTC or Nokia should be found liablefor any infringements. Further Microsoft reached a licensing agreement in April 2010 with HTC to pay royalties on Androidbased handsets ("Patent wars", 2011). More recently, Apple launched a lawsuit against Samsung in April 2011 claimingSamsung copied design features of the iPhone in its Galaxy line of Android phones (Quigley, 2011). These are just a fewexamples of legal challenges faced by smartphone manufacturers. Mentioning all lawsuits in the past several years isbeyond the scope of this analysis, but it is important to recognize that manufacturers are using their patent portfolio's tomake it more difficult for their competitors to gain larger market shares. Even if the majority of cases are found to be'dubious', the costs associated with legal battles can hamper or slow down the release of new handsets and hence making itmore difficult for the manufacturer to stay competitive.
Economic Environment
The North American economy is still recovering from the financial crisis of 2008. Major factors to consider are theunemployment rates, consumer spending. In September 2011 the unemployment rate in the US was 9.1% which is wellabove the national average of 5.7% between 1948 and 2010 ("United States Unemployment"). The current highunemployment rate in the US is likely having an impact on reducing smartphone sales. A 9.1% unemployment raterepresents approximately 28 million Americans out of work. In Canada, the unemployment rate in September 2011 was7.1% which represents its lowest point since December 2008 ("Canada Unemployment"). Since January 2010, Canada hasbeen experiencing a downward trend in unemployment ("Canada Unemployment").The high unemployment rate in the US has been negatively impacting consumer confidence and has resulted in a decreasein consumer spending. Bloomberg reports consumer spending dropped 0.2% in June 2011 which provides evidence thedecrease in hiring and wage increases below the inflation rate are affecting consumer spending (Chandra, 2011). Consumer spending accounts for 70% of the US economy (Chandra, 2011); any fluctuation in this area will have a significant impact onthe overall economy. In Canada, the opposite is true. Consumer spending increased by 3.8% from 1st quarter 2010 to theend of 1st quarter 2011 ("Canadian Consumer Spending"). Consumer confidence is Canada seems to be higher than theUS likely resulting from lower unemployment rates and Canada's faster paced recovery from the global financial crisis.