Analysis of PESTLE factors

Prepare an international business strategy report for the management team of Disney.

International business strategy, can be defined as the strategies or the plans between different international companies or organization, which guide the process of their commercial transactions (Verbeke 2013). It is considered to be one of the important aspects of globalization and is often used by various companies as well as organizations to expand their business. The company selected in this report to study the various aspects of international business strategy is Disneyland. The particular incident under consideration here is the purchase of the Fox’s entertainment in the year 2017 (Economist.com 2018). Disneyland is an American company located in California(Forbes.com 2018). The company was founded by Walt Disney and famous for its theme parks and movies made by them like “Finding Nemo”, “Peter Pan”, “Indians Jones” series and various others (Disneyland Resort 2018). Some of the financial statistics of the company are provided by the below given figure-

Figure 1: Financial Statistics of Disneyland

Source: Factset, Bloomberg, S&P Cap IQ; Forbes.

The above provided figure clearly mentions that the company in the recent times the revenue as well as the profit margin of the company has declined significantly (Economist.com 2018). The company provides services in the broadcasting as well as the cable sector. However, the business of the company has suffered in the recent times due to the rise of companies like Netflix and others, which provides online services o the customers(Netflix.com 2018). Therefore, the company in a bid to regain its lost market purchased the company “Fox Entertainment” (Economist.com 2018). However, this move is seen by many people as a gamble into the future which might or might not pay off.

The technological advancement of the present times as well as the changing world scenario makes it important for the various companies to follow the path of globalization in order to expand their business and also to increase their annual revenue and thereby profit margin (Mowforth and Munt 2015). There are various factors, which are responsible for the process of globalization. The various factors responsible for the path of globalization followed by the company Disneyland are as following-

• Technological factors
• Political factors
• Economic factors
• Social factors
• Competitor factors
• Market factors
• Cost factors

PESTLE analysis is a framework, which gives an idea about the macro-environmental factors, which affect a particular business (Srdjevic, Bajcetic and Srdjevic 2012). Many companies often make use of this strategic tool for the analysis of the external conditions, which might affect their business growth as well as development (Srdjevic, Bajcetic and Srdjevic 2012). A PESTLE analysis of the company Disneyland will reveal the following facts-

Political	·         The company needs to take into consideration the various political factors of the country in which it is operational like America and other countries like France, Japan and others (Disneyland Resort 2018). ·         The company is a supporter of the LGBT political activities (Disneyland Resort 2018). ·         The company provides services in the entertainment sector so the company has to take into consideration the political norms of the country in which it is operations and also plans to expand its business. ·         The company enjoys a stable political condition in America. However, the political conditions in countries like China, Japan and others where has its centers are not also very stable (Disneyland Resort 2018). Therefore the company often had to modify its movies as per the political conditions of those places. Threat: It is to be noted that the political conditions often act as a threat to the company. It is often noted that the company had to edit the movies made by it as per the political situations of the nations in which it is operational. For example, recently, the company suffered a set-back in America, when it launched a movie which had a Chinese person as the lead protagonist. Therefore, it is often seen that the company needs to modify its products as per the political demands of the nation in which it is operational.
Economic	·         The company also needs to take into consideration the various economic factors of the nations in which they are operational. ·         The economic recession of the present times also adversely affects the fortunes of the company. ·         The company also needs to take into consideration the various Exchange rates of the nations in which they are operational. ·         The per capita income as well as the GDP of the countries in which the company operates also should be taken into consideration (Disneyland Resort 2018). ·         It is also noticed that the countries with high Human Development Index as well as good economic framework will be prone to the services provided by Disneyland (Disneyland Resort 2018). Threat: The economic factors often act as a threat to the company as the company needs to take those factors into consideration for the manufacture of the products and the services provided by it. The various economic factors like recession and GDP also needs to be taken into consideration by the company.
Social	·         It is seen that the modern society in more interested in the services provided by the companies like Disneyland. ·         The company also needs to take into consideration the various social factors like entertainment needs of the people and the cultural needs of the people (Disneyland Resort 2018). ·         The company also needs to depict the society as per the needs as well as expectations of the people in their movies. ·         The various amusement parks of the company should also take into consideration the various social as well as the cultural needs of the people. Opportunities: The social factors actually act as opportunities for company, which if properly utilized can lead to the overall growth as well as the development of the company. The company by making movies as per the demands of the people can increase its annual revenue and thereby its profit percentage.
Technological	·         The company needs to take into consideration the various technological advancements as well as innovations for the making of the movies. ·         The company recently announced its entry into the arena of the gaming world, which is likely to increase the annual profit of the company. ·         The company also recently announced the use of Blu-Ray technology, which will enable it to use to online platforms for the release of its movies just like the other companies Netflix, Hulu and others (Disneyland Resort 2018). Opportunities: The technological factors can be utilized effectively by the company for the increase of its annual profit percentage. The company can also reach out to greater customer base by the use of the various online platforms. Thus, the technological factors if properly utilized by the company will lead to its overall growth as well as development.
Legislative	·         The company needs to take into consideration the various legislations provided by the Federal Communications Commission (Disneyland Resort 2018). ·         The company also needs to take into consideration the various labor laws, equality laws, anti-discrimination laws and others (Disneyland Resort 2018). ·         The taxation policy of the various governments also needs to taken into consideration by the company. Threats: The legislative factors act as a threat to the company as often it is seen that the company is unable to recruit skilled as well as trained professionals because it had to follow the employment norms of the various companies. The taxation policies of the various nations are different and often becomes a cause of concern for the company. The failure to follow the guidelines of the Federal Communications Commission can lead to a penalty of $335,000. Therefore, these factors often act as threats to the company (Disneyland Resort 2018).
Environmental	·         The company also needs to take into consideration the various environmental laws as well as norms put forward by the different governmental organizations. Threat: The various environmental factors often act as a threat to the company as it is seen that if the company goes on to follow all the environmental norms it ends up losing on the productivity end.

Opportunities and threats faced by Disneyland

The above analysis clearly lists the threats as well as the opportunities faced by the company. The company currently is facing strong competition from its rival Netflix, with whom it had a collaboration in the past (Economist.com 2018). Moreover, the market value of the company had decreased considerably in the recent times. This might be attributed to the decline in the use of the cable services provided by the company and the increased use of the online services by the customers (Disneyland Resort 2018). According to an estimate, the company Netflix is going to spend around $8.5-$10 billion on its content(Netflix.com 2018), whereas the company Amazon is going to spend around at $4 billion (Economist.com 2018). In comparison the company Disneyland is intending to spend around $4 billion in the same sector. According to Rich Gelfond, the chief executive of IMAX, “There is a huge battle going on between Silicon Valley and Hollywood. For the big studios, they need to decide whether they want to go big or go small or go out” (Imax.com 2018).  Moreover, in a bid to overcome the market competition the company has also decided to launch its own streaming service by 2019, which is expected to give competition to Netflix. The company, on top of that, owns about 60% of the shares of the company Hulu along with the 30% shares of Fox (Hulu 2018).

The purchase of Fox Entertainment by Disneyland can be seen as a business strategy, which will allow the company to regain some of its lost glory and enable it to capture the present market (Foxcareers.com 2018). The purchase will enable the company to reach out to a greater number of viewers through the use of the platform provided by the company Fox Entertainment. This purchase as well as the collaboration of the company with Hulu (Hulu 2018) and the British company “Sky” will change the fortunes of the company (Sky 2018). Moreover, the purchase will enhance the media influence exerted by the company. The present deal between the companies of Disneyland and Fox Entertainment reveals the fact that the landscape of the media world is changing fast and soon some of the biggest companies of the world will have to decide whether they should follow the path of Disneyland or go small and exit out of the industry after a certain period of time (Economist.com 2018).

The company can follow various strategies for its overall growth as well as the development. The first thing that the company can do is the effective use of the company of Fox Entertainment and the platform provided by it. The company can also follow the path shown by companies like Netflix, which uses the process of online streaming to reach out to a large number of viewers. The company can analyze the cultural dimensions of the various countries in which it is operational and make movies as per the needs as well as the demands of the people out there. This will enable them to reach out to a larger number of viewers and also to increase its profit margin.

Disneyland’s response to competition

Conclusion

Therefore, from the above discussion it becomes clear that international business strategy is an important for the various business organizations and needs to be taken into consideration by the companies willing to follow the path of globalization. The recent event of the purchase of Fox Entertainment by the company Disneyland is an example of an effective international business strategy. The strategy is particularly useful in the context of Disneyland as the company is hoping to turn its fortunes through this particular business. The company Disneyland in the recent times had not much well in terms of profit margin as well as the customer base. Therefore, in order to recapture the customer base lost by it and also to increase the amount of profit earned by it annually the company acquired the company Fox Entertainment. The purchase of the company Fox Entertainment by Disneyland is a reflection of the changing landscape in the media industry and shows the path which the other industries needs to follow in order to survive the stiff competition faced by them.

References

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