Adobe Systems SWOT & PESTLE Analysis

Strength

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Weakness

1. Expensive pricing of adobe subscription: Although Adobe has shifted from its traditional licensing model to subscription model the prices of these subscriptions are considered very costly by many individual users. The monthly subscription price for the complete creative cloud product is $49.99 which is considered very costly in most parts of the world. Although Adobe has monopoly in these areas, many startups as well as established companies like google, Microsoft and many other companies are trying into get into these domains and the pricing of these products are less than Adobe. This can impact the preference of the users.

2. Flaws in security: Some products of adobe are considered vulnerable to security breaches, for example using adobe reader to gain access to personal computers is one of the most notorious ways used by hackers. Also there are many instances in Adobe’s history where there are data breaches and data leakages. A security researcher Mr. Alex Holden, chief information security officer of Hold Security, characterized this Adobe breach, which affected Acrobat, ColdFusion and numerous other applications, as "one of the worst in US history". According to Web analysis from January 1, 2015 to September 30, 2015, Adobe Flash Player comprised eight of the top 10 vulnerabilities leveraged by exploit kits. Other leveraged vulnerabilities affect Microsoft Internet Explorer versions 10 and 11 (CVE-2015-2419) and Microsoft products including Silverlight (CVE-2015-1671). Also a data breach on October 3rd 2013 impacted atleast 38 million users, the attackers obtained access to costumers’ IDs and encrypted passwords, as well as too many inactive Adobe accounts. The company did not make it clear if all the personal information was encrypted, such as email addresses and physical addresses, though data privacy laws in 44 states require this information to be encrypted.

3. Severe debt issues: Adobe is known to acquire a lot of competitor companies. In order to acquire these organizations a lot of free cash is necessary and the same is obtained by Adobe with the help of heavy debts, as of 2017 the interest paid by adobe towards these debts are very high and is eating into shareholders profitability. In 2017 Adobe has paid around 74 million USD as the interest expense and is 3.43% of the operating income as per the annual report and is exposed to a debt of 1881.42 million USD.

4. Poor customer service: Although Adobe has an army of extremely user friendly and advanced products; a lot of customers complain that adobe doesn’t hear to the requests of the customers. Forums are rife with consumers complaining that Adobe is very abysmal at handling timely refunds, product cancellations and upgrade supports. A lot of their products do not support upgrades or are incompatible with new releases. Customer feedback must be taken into account to develop the most popular and profitable products. The lack of robust customer support mechanism is a potent weakness of Adobe systems.

5. Lack of marketing: Although Adobe systems is the market leader in most of the product categories it serve, there are many products in adobe systems arsenal which has wide application and are least known in the market, the best example is the suite of sound editing software provided by Adobe systems is not a well versed name in the market but has wide applications and is quite an holistic offering by Adobe. Adobe Scout is such software which is used for 2D graphics and text rendering, and 3D graphics rendered via the Stage3D application programming interface (API), but the software is not famous and is rarely used in spite of its advanced features. Another such application is Adobe Muse which helps a user to create websites without writing any codes, but the lack of marketing led to the downfall of Muse and is going to be wrapped by 2019.

Opportunity

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Threat

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Political

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Economic

1. Growth in emerging markets: Emerging markets account for more than half of global GDP growth and around 40% of global GDP. By 2030, Asia will lead the global GDP share with 40%. Investments in cloud infrastructure and related technologies and application will help emerging economies grow at a significantly quicker rate compared to developed economies. Areas such as e-commerce, cloud healthcare, banking and payment ecosystems will be some of the growth drivers of emerging economies in countries such as India and parts of Africa and Middle East. Increasing software talent and adoption of online technologies by consumers will aid to the growth. Thus emerging markets present a major growth opportunity for Adobe.

2. Fluctuation of foreign Currencies: Users of Adobe systems’ products and services are present all over the world and foreign currency fluctuations are a great threat to the overall profitability of Adobe Systems. Also the revenue from the foreign locations is also affected due to the fluctuations in foreign currency. At the end of the financial year 2018, Adobe systems lost approximately 8.3 million USD due to currency fluctuations, growing oil prices along with the growth in the revenues from the APAC region can further impact the profitability of Adobe systems.

Social

1. Swelling mobile app market: Awareness regarding the importance of holding a mobile platform for carrying out day to day sales activities has increased by manifold after the outburst of the ecommerce platforms. Many corporations has realized the importance of providing mobile based services to the customers and this has set the platform for many cloud based service providers like Adobe Systems. Today, according to the latest Digital Future in Focus report from comScore, we're long past this tipping point in some countries with India, Mexico and Indonesia having more than up to 4 times higher smartphone vs desktop audience. According to PWC, 51% of all the digital ad budgets were spent on mobile. This fact is also supported by the data provided by Smart Insights which says that 80% of internet users will own a smart-phone. This Growth is expected to continue at least for a decade and is definitely positive for Adobe Systems.

2. Apprehensions about privacy and safety of data: Off late privacy has been a big concern in the software industry and Adobe Systems is no exception to it. There have been a security breaches In the Adobe systems before and these instances have sent some wrong signals to some of its clients. Adobe should come out with a robust security system and take care that the data of its clients is safe and secure. In October 2013 hackers stole the data of 38 million users of Adobe users and it is later revealed that this data is very lightly encrypted. Norton recently announced that it has found zero-day vulnerability in the Adobe Flash player which is widely distributed.

Technological

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Legal

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Environmental

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