Media trends, amusement park and resort environments, and entertainment industry trends are kept under close scrutiny by the Disney Company. This PESTEL/PESTLE analysis determines opportunities and threats based on these trends. Using the Disney PESTEL analysis tool, the remote or macro-environment of a firm can be evaluated for opportunities and threats. A PESTEL analysis of Disney’s market conditions takes into account a variety of market factors.
Technology trends in the mass media industry and sociocultural trends in the amusement park industry, for instance, offer opportunities and threats to the conglomerate. These industry-specific trends are addressed in Disney’s strategies. These macro-environmental factors are exploited by the corporation’s managers. Optimum positioning and long-term business stability are objectives of Disney’s mission statement and vision statement, as well as the strategies determined in this PESTLE analysis.
Introduction
The entertainment industry offers endless possibilities. Businesses have to deal with the ever-changing tastes of audiences and diversity along with its endless pros very frequently. Audiences are one of the most important factors for a show’s biz. It is therefore essential to analyze external macro factors that directly impact the growth of a company with strategies such as PESTEL analysis.
Macro-environmental factors are evaluated through the framework. The factors include those pertaining to politics, economics, society, technology, the environment, and law. The Disney PESTEL analysis allows a firm to devise strategies that will increase profitability. Companies need to identify their strengths and weaknesses to meet the challenges posed by powerful rivals in the increased competition for subscribers and viewers.
Background of Disney
Since its establishment in 1923, Walt Disney has established a benchmark for the entertainment industry. Throughout its history as a cartoon studio, the company has set an example for others to follow.
A number of companies have branched out of the company over the years, including television, broadcasting, streaming media, theme parks, etc. The reality is, however, that Disney is being challenged by companies like Sony, Fox, CBS, and AMC Network. In order to identify potential market opportunities and threats, Disney conducts PESTEL analysis.
Basic Information of Disney
| Company Name | The Walt Disney Company |
| CEO | Bob Chapek |
| Company Type | Mass media entertainment |
| Year Founded | 1923 |
| Number of Employees | 223,000 (2019) |
| Annual Revenue | US $65,388 Billion (2020) |
| Founder | Walt Disney, Roy O. Disney |
| Area Served | Worldwide |
| Headquarters | Team Disney Building, Walt Disney Studios, Burbank, California, United States |
| Operating Income | The US $ 8.108 billion (2020) |
Disney PESTEL Analysis
External factors influence fiscal performance by offering opportunities or posing threats. In spite of strong competition from Sony and Comcast (parent company of Universal Studios) in entertainment products, and Apple TV Plus, Amazon Prime Video, Netflix, and Google’s YouTube video streaming services, the results of this PESTEL analysis of Disney show opportunities for growth. As a result of the PESTLE analysis, the opportunity for a company to grow through innovation is determined by the remote environment or macroecosystem.
It recognizes the importance of external factors in supporting the growth of the Walt Disney Company. PESTLE/PESTEL analysis benefits the company in solving challenges based on its strategies applied across its different industries.
Factors affecting Disney’s industry environment
As part of the PESTEL analysis framework, policies and governmental actions are evaluated. The political climate affecting merchandise trade and entertainment access is considered a remote or macro-environmental factor in this business analysis of The Walt Disney Company. A company’s intellectual property policies affect its operations. According to this PESTLE analysis, Disney’s strategic management is influenced by the following political factors:
Growth opportunities are created by stronger intellectual property (IP) protection. IP protection creates a more favorable business environment for Walt Disney by minimizing IP violations. As a result, Marvel movies and related products can expect better IP protection on the global market. As an external factor, shifting free-trade policies threaten Disney’s business with instability. As a result of the new free-trade policies, such shifts may also be seen as opportunities for the company to grow by aligning the company’s strategies to those opportunities.
Disney’s generic competitive advantage strategy and intensive growth strategies are influenced by these management considerations. Besides considering stable political conditions in major markets as opportunities for growth, this PESTEL analysis also takes the economic environment into account. There is minimal political disruption in Disney’s current markets, which include North America, Canada, and Europe. A conglomerate’s business performance can be improved because of political factors.
Factors affecting Walt Disney’s business
The macro-environment is shaped by the economic trends in this component of the PESTLE analysis. The economic conditions in Disney’s case are diverse, considering the company’s global reach. Economic factors relevant to the company’s main revenue source, the American economy, are prevalent. Amusement parks and resorts generate most of the company’s revenues in the U.S. In order for Walt Disney’s strategic management to succeed, the following factors must be in place:
Rapid economic development can lead to business growth in the PESTEL/PESTLE analysis framework. Developing markets are particularly affected by this external factor in Disney’s case. Entertainment and mass media products can be expected to generate rapid revenue growth in developing Asian countries, for example.
It is also necessary to take into account the opportunities associated with this external factor in the global industry environment when analyzing the SWOT analysis of The Walt Disney Company. The company’s products are also more affordable due to the increase in disposable incomes. This PESTLE analysis of Disney finds that China’s slowing economic growth is a threat despite these opportunities. In the remote or macroenvironment of the corporation, China continues to be a major contributor to growth. Based on the strategic significance of developing markets, Disney faces challenges in managing business growth in this component of the PESTEL analysis.
Factors affecting Disney’s social/cultural image
PESTLE’s social trend component examines how social trends affect Disney’s customers and employees. As part of the analysis, consumers’ behavior towards movies, television shows, video games, cruise lines, and amusement parks is examined. Customers’ expectations and behaviors must be managed by strategies. Walt Disney experiences the following sociocultural effects as a result of the PESTEL analysis of multiple industries:
As a result of favorable attitudes toward leisure, Disney’s international business grows strategically. Leisure and recreation products are more likely to be purchased by customers because of this sociocultural factor. Furthermore, this PESTLE analysis sees an opportunity for Walt Disney to grow online. The corporation’s revenues from online transactions can grow, for example, if its online products are more accessible. In contrast, growing cultural diversity threatens Disney’s ability to attract audiences to its movies and television shows. Nevertheless, this PESTLE analysis considers these external factors as opportunities to improve the company’s products to address market diversity.
As determined in the Five Forces analysis of The Walt Disney Company , addressing the social factors can increase competitiveness in the industry. The company can grow through strategic management that improves the business to meet consumer behavior changes caused by such remote or macro-environmental factors.
Factors affecting Disney’s Technological Remote Environment
There are limitations and capabilities associated with technologies in business. Among the technologies considered in the PESTEL analysis of Disney are those related to entertainment, mass media, and the development of Disneyland theme parks and resorts. As a result of digital technology, the company can compete in the international film industry. Many of The Walt Disney Company’s management decisions and strategies are influenced by technological factors:
PESTLE analysis depicts the rapid technological advancements that are occurring in mass media and entertainment industries as a result of high R&D rates. As an example, Disney is increasingly using computer-generated imagery to enhance the quality of its products. As such a technological trend affects PESTEL analysis, it increases competition.
Walt Disney can still grow by strategically increasing its R&D rate, however, to match or exceed its competitors as a result of the same remote or macro-environmental factor. Using mobile devices to distribute digital content (video streaming) and conduct e-commerce are also opportunities in this PESTLE analysis. The opportunity is based on Disney’s multinational business’s rapid growth in mobile devices. A corporation’s performance can also be improved by using augmented reality, which is becoming more popular. This external factor can be addressed by Disney’s strategic management by incorporating advanced technology into its products. Walt Disney’s PESTEL analysis presents growth opportunities due to the technological factors in this component.
Factors related to the environment and ecology
Natural environments impose limits, threats, and opportunities on business, highlighting the importance of ecological factors to success. The Walt Disney Company is analyzed using the PESTLE model in terms of resource availability, climatic conditions, and the production of amusement parks, resorts, and films. There are a number of ecological factors that pose strategic challenges for Disney’s management:
Disney’s theme parks and resorts are threatened by changing and worsening cyclical weather conditions. By contrast, this PESTEL analysis looks at the increasing availability of renewable energy as an opportunity to improve entertainment and tourism. In order to improve its brand image, Disney can increase the utilization of renewable energy. Energy generation and storage technologies determine this ecological factor. Furthermore, PESTLE analyses present sustainability as an opportunity because of the increasing industry support for it. The adoption of sustainability measures at Disney has the potential to improve the company’s corporate image and operational efficiencies. Customers’ expectations can be managed if such measures are communicated to them. Considering environmental issues is a part of The Walt Disney Company’s corporate social responsibility strategy, which takes into account this external analysis. As a result of addressing the external factors in this component of Disney’s PESTEL analysis, the industry environment offers opportunities for corporate enhancement.
Legal Factors in Disney’s Macro-Environment
During this PESTEL analysis component, legal factors are evaluated that relate to the business’s rules and regulations. A legal system, such as that defining leisure, recreation, entertainment, mass communication, and tourism in this case of Walt Disney, is one of these external factors. Managers of the company consider regulations based on the macro-environment of different countries and regions. Among the strategic influences considered in this external analysis are American laws and European laws in the mass media and entertainment industries. PESTLE’s legal factors component identifies the following factors that restrict Disney’s global business:
The implementation of increasingly restrictive environmental protection regulations is relevant to this PESTEL/PESTLE analysis. There is a significant environmental impact of these external factors on Disney’s operations at amusement parks, theme parks and resorts, and cruise lines. The construction of new parks or resorts, for instance, changes the ecology of the site. The Walt Disney Company faces a restrictive environment as a result of such regulations to minimize the negative consequences of such changes. In addition, more legal protection for consumer rights is considered in this PESTEL analysis.
Customer satisfaction, one of the key success metrics in managing a global organization, is enhanced through this protection. The company’s legal environment is also more favorable to businesses that utilize intellectual property, including patents and copyrights for its trademarks, movies, movie characters, and merchandise, as a result of the broadening of protections for intellectual property rights. PESTLE analysis illustrates that business sustainability, customer experience, and intellectual property usage are affected by the macro-environment portrayed here.
FAQs
By revenue, Disney holds the largest market share of all competitors in the media industry. A total of $52.465 billion was generated by Disney last year, equivalent to 31.82% of the revenue generated by the company’s ten closest competitors.
Disney’s brand power and extensive content library stand out as strengths. Streaming profitability and operational expenses are challenged due to weaknesses. Technological innovation and international expansion are the main opportunities. Changing consumer behaviors and intense competition pose threats.
According to this SWOT analysis of Walt Disney, competition is the biggest threat. It competes with major companies like Netflix, Apple TV Plus, Prime Video, and YouTube, which provide on-demand video streaming services.
Conclusion
We have been able to examine Disney’s macro factors on a global scale through a PESTEL analysis.
Disney’s top managers should consider these opportunities and threats when planning for the future when making strategic decisions.
If you want to fully understand your business’s environment, you must complement the Pestel framework with other analyses.
In addition to Michael Porter’s Five Forces model, you can also use VRIO to examine your company’s capabilities and resources.
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