This is the detailed PESTLE/PESTLE Analysis of Walt Disney which explains the external factors impacting the entertainment Company and Industry; Political, Economical, Social, Technological, Environmental and Legal.
The political environment of a region is one of the essential features that have a direct effect on the entertainment and amusement industry. When a region is politically unstable, the different sectors of the country are adversely affected due to it, including the entertainment and amusement industry. Any changes in the political stability have a negative effect on the operations and revenue generated by the organization. Another area that can have a negative impact on the operations of organization is the international political and military environment (Walt Disney, 2012).
The financial crisis originating in the US has spread in other parts of the world, creating an economic decline in the various countries. Entertainment industry has also been negatively influenced due to the adverse economic conditions. The income spent by the people on purchase of entertainment related products and the consumption of amusement related services has declined. This trend shows that the economic development is a favorable condition for an organization, while economic turbulence carries negative implications for different industries, including entertainment and amusement industry. Barnes (2008) has stated that the earnings attained by the company depicted a slowdown in the profitability from its avenues of entertainment and amusement. The income generated that the Walt-Disney theme park had declined up to 4%, while the net income reported the company was estimated to be around $4.4 billion which was lower than the amount of $4.7 billion earned in 2007.
The adverse economic conditions have resulted in lower number of people traveling, thus the decline in number of tourists and visits due to adverse economic conditions created a negative business environment for the organization (Walt Disney, 2012). In addition to this, the sale of the licensed goods of Walt-Disney indicated similar trend, highlighting the way economic conditions could affect the profitability of a global organization. The exchange rate differences and the lower purchasing ability of the people is also an economic factor that can result in a decline in the sales of the company’s products in the international market.
Walt-Disney basically operates in the entertainment industry, focusing on the development of entertainment related content. Along with that, the organization manages amusement parks which depict the themes and characters included in the movies produced by the company. The entertainment and amusement related products need to be in accordance to the demands of the consumers. The company needs to identify the taste and preference of its target market and deliver the products accordingly. The main theme that the company upholds in the content it produces and the themes it illustrates across its parks indicate how the social factors shape the way a company manages its content. The theme park includes the rides and other amusement related products which can appeal to the people across different age groups.
The changes in economic solidity affect the purchasing behavior of the people and Walt-Disney has faced lower income when economic pressures propelled the people to curtail their expenses (Walt Disney, 2012). The segments of theme parks and licensed products were affected more as compared to the other segments such as interactive games produced by the organization. The ratio of tourists as a social factor also contributes in the development and growth of the entertainment industry as Walt-Disney is able to increase its earnings due to the people visiting from an international context, thus reaching out beyond the local customers.
The technological factors have a strong effect on the development and growth of the entertainment and amusement industry. The media entertainment industry needs to quickly adapt to these alterations and integrate newer versions of technology to produce content that meets the customer demand and at the same time bring the target market with the high quality content. The introduction of Blu-ray required the entertainment content producers to initiate offering the version in Blu-ray (Walt Disney, 2012). The entry of Walt-Disney in the interactive and mobile games domain is another manifestation of technology induced changes in the company.
Apart from that, the Walt-Disney world resort needs to integrate the latest forms of technologies to provide the customers with the enhanced experience and high quality of experience. Another area that has brought about significant changes in the technological area is the introduction of social media as a means of reaching the target market. Walt-Disney has been using social media tools such as Facebook and Twitter to connect with its customers and provide the followers updates about company’s products (Richwine, 2015).
The entertainment and amusement industry is heavily regulated by the laws and regulations. The Federal Communications Commission laws are central to the operations of the organization as they govern the content that is produced by Walt-Disney. The content developed for the children’s movies needs to strictly adhere the quality guidelines which prohibit the inclusion of any indecent content (Walt Disney, 2012). Failure to adhere to the guidelines can result in penalty of up to $325,000 for each case reported of indecent content displayed on air. Furthermore, the time frame for commercial breaks during the programs displayed for the young audience is also managed under the guidance from FCC. Another legal factor that can affect the entertainment industry is the copyright and intellectual property regulations. The taxation framework implemented on the industry further formulates a part of the legal factors in the macro-environment of Walt-Disney.
The environmental protection regulations guide the company in manufacturing its licensed products and the management of its theme parks. The Disney amusement parks focus on waste management by including the activities of recycling and re-use of items to protect the environment. Along with that, the company has responded to the pressures from the environmental protection agency by taking initiatives in the domain of conservation of energy and taking steps that make the theme parks more eco-friendly in nature. For instance, the environmental stewardship program strives to take support from the organizations operating in the domain of nature conservation. In addition, efficient energy solutions have been incorporated in the Walt-Disney theme parks (Disney, n.d).
Barnes, B. (2008, November 6). Slowdown Begins to Show at Stalwart Disney. The New York Times. Retrieved from http://www.nytimes.com/2008/11/07/business/media/07disney.html?_r=0
Disney (n.d). Environment. Retrieved from http://aboutdisneyparks.com/citizenship/environment
Richwine, L. (2015, June 15). Disney’s powerful marketing force: social media moms. Reuters. Retrieved from http://www.reuters.com/article/us-disney-moms-insight-idUSKBN0OV0DX20150615
Walt Disney (2012). Form 10-K. Retrieved from http://www.sec.gov/Archives/edgar/data/1001039/000119312512479027/d405160d10k.htm