Business, Management

Walt Disney PESTEL/PESTLE Analysis & Recommendations

Updated on Updated on by Lisa Brown
Walt Disney PESTEL analysis, PESTLE analysis, Political, Economic, Sociocultural, Technological, Ecological, Legal external factors entertainment business
Disney’s Polynesian Village Resort in Florida. This PESTLE analysis (PESTEL analysis) of The Walt Disney Company describes external factors in a remote or macro-environment of growth opportunities for mass media, entertainment, amusement parks and resorts, and tourism business operations. (Photo: Public Domain)

The Walt Disney Company keeps abreast of trends affecting the mass media, amusement parks and resorts, and entertainment industry environments. These trends define the opportunities and threats determined in this PESTEL/PESTLE analysis. The PESTLE/PESTEL analysis tool evaluates the external factors and corresponding opportunities and threats in the remote or macro-environment of the firm. In Disney’s case, this PESTEL analysis considers diverse market conditions. For example, the conglomerate has opportunities and faces threats linked to technological trends in the mass media industry, as well as sociocultural trends in the amusement park industry. Disney’s strategies address the effects of these industry-specific trends. The corporation’s managers exploit these remote or macro-environmental factors. Strategic approaches to the external factors determined in this PESTLE analysis support The Walt Disney Company’s mission statement and vision statement, and goals for optimized positioning and long-term business stability.

External factors are opportunities or threats that influence fiscal performance. The results of this PESTEL analysis of Disney reveal opportunities to grow the global business despite strong competition with the entertainment products of Sony and Comcast (parent company of Universal Studios), and the video streaming services of Apple TV Plus, Amazon Prime Video, Netflix, and Google’s YouTube. In this PESTLE analysis, the opportunity to grow through innovation is linked to technological factors in the remote or macro-environment. The Walt Disney Company’s strategic management recognizes how each external factor supports growth in the industry. The benefits of this external analysis depend on the effectiveness of the company’s strategies applied in its different industries, to solve challenges based on the PESTLE/PESTEL analysis framework.

Political Factors Affecting Disney’s Industry Environment

Policies and governmental actions are evaluated in this component of the PESTEL analysis framework. In this business analysis of The Walt Disney Company, remote or macro-environmental factors pertain to the political climate affecting merchandise trade and entertainment access. Intellectual property policies impact the company. In this PESTLE analysis case, the following political factors influence Disney’s strategic management:

  1. Stronger intellectual property protection (opportunity)
  2. Shifting free-trade policies (threat and opportunity)
  3. Stable political conditions in major entertainment and tourism markets (opportunity)

Political support for stronger intellectual property (IP) protection is an external factor that creates growth opportunities. In this PESTEL analysis of Walt Disney, IP protection creates a more favorable industry environment that minimizes IP violations against the entertainment business. The company can expect better IP protection for its Marvel movies and related products in the global market. On the other hand, shifting free-trade policies are an external factor that threatens to create instability in Disney’s business. However, this PESTLE analysis also views such shifts as an opportunity to grow the company by aligning strategies to current growth opportunities created through new free-trade policies. These management considerations influence the implementation of Disney’s generic strategy for competitive advantage and intensive strategies for growth. This PESTEL analysis also considers the stable political conditions of major markets as an opportunity for growth. Disney can grow in its current markets in the United States, Canada, and Europe with minimal political disruption. Therefore, political factors create opportunities to improve the conglomerate’s business performance.

Economic Factors in Walt Disney’s Business

This component of the PESTLE analysis assesses the economic trends that shape the remote or macro-environment. Disney’s case involves diverse economic conditions, considering the multinational reach of the business. Many of the relevant economic factors reflect the American industry environment, which is the company’s main source of revenues. For example, the U.S. market provides the bulk of the company’s amusement parks and resorts revenues. Walt Disney’s strategic management success depends on the economic conditions linked to the following external factors:

  1. Rapid economic development of developing markets (opportunity)
  2. Increasing levels of disposable incomes (opportunity)
  3. Slowing growth of the Chinese economy (threat)

In the PESTEL/PESTLE analysis framework, rapid economic development is an opportunity for business growth. In the case of Disney, this external factor is especially pronounced in developing markets. For example, the company can expect rapid revenue growth for entertainment and mass media products in developing Asian countries. The SWOT analysis of The Walt Disney Company also considers business opportunities connected to this external factor in the global industry environment. Moreover, increasing levels of disposable incomes enable more customers to pay for the company’s products. Despite these opportunities, the trend of the Chinese economy’s slowing growth is a threat in the context of this PESTLE analysis of Disney. Nonetheless, China remains a major growth contributor in the corporation’s remote or macro-environment. Thus, in this component of the PESTEL analysis of Disney, the economic factors present challenges in managing business growth based on the strategic significance of developing markets.

Social/Sociocultural Factors that Affect Disney

This component of the PESTLE analysis focuses on social trends, which affect Disney through customers’ and workers’ behaviors. In this company analysis case, consumers’ behaviors toward movies, television programs, video games, cruise lines, and amusement parks are considered. Strategies must manage customers’ behaviors and expectations. Considering this PESTEL analysis case of multiple industries, Walt Disney experiences the effects of the following sociocultural factors:

  1. Favorable attitudes toward leisure (opportunity)
  2. Increasing online activity (opportunity)
  3. Increasing cultural diversity (threat and opportunity)

Disney strategically grows its international business by exploiting favorable attitudes toward leisure. This sociocultural factor increases customers’ likelihood of paying for the company’s leisure and recreation products. Also, this PESTLE analysis views increasing online activity as an opportunity to grow Walt Disney. For example, higher online product accessibility can grow the corporation’s revenues from online transactions. On the other hand, increasing cultural diversity threatens the attractiveness of Disney’s products, such as movies and television programs. However, this PESTLE analysis considers the same external factor as an opportunity to improve the company’s products to reflect the cultural diversity of target markets. Addressing the social factors in this PESTEL analysis can increase competitiveness in the industry, despite the tough competition determined in the Five Forces analysis of The Walt Disney Company. Overall, these remote or macro-environmental factors can help the company grow through strategic management that improves the business to satisfy changes in consumer behavior.

Technological Factors in Disney’s Remote Environment

Technologies define business capabilities and limitations. This component of the PESTEL analysis of Disney accounts for technologies used in entertainment and mass media production, as well as those used to develop Disneyland theme parks and resorts. Digital technology in film production is a factor that enables the company to compete in the international industry environment. The following technological factors determine many of the strategies and management decisions at The Walt Disney Company:

  1. High rate of R&D in the industry (threat and opportunity)
  2. Widespread mobile device usage (opportunity)
  3. Increasing popularity of augmented reality (opportunity)

In this PESTLE analysis case, the technological factor of the high rate of research and development (R&D) represents rapid technological advancement in the mass media and entertainment industries. For example, Disney increasingly uses advanced computer-generated imaging to provide better and competitive products. In this PESTEL analysis context, such a technological trend is a threat that makes competition tougher. Still, the same remote or macro-environmental factor is an opportunity to grow Walt Disney by strategically increasing its R&D rate to match or exceed competitors. Widespread mobile device usage is also an opportunity in this PESTLE analysis, in relation to e-commerce, online digital content distribution (video streaming), and similar online operations. The opportunity is based on mobile devices as a rapidly growing revenue channel for Disney’s multinational business. Moreover, the increasing popularity of augmented reality is an opportunity to improve the corporation’s performance. Disney’s strategic management can address this external factor by integrating advanced technology into products. Thus, the technological factors in this component of the PESTEL analysis of Walt Disney present growth opportunities.

Ecological/Environmental Factors

The natural environment imposes limits, threats, and opportunities, highlighting business dependence on ecological factors. In this PESTLE analysis of The Walt Disney Company, concerns include resource availability and climatic conditions that affect amusement parks and resorts, film production, and merchandise production. Disney’s management faces strategic challenges related to the following ecological factors:

  1. Changing and worsening cyclical weather (threat)
  2. Increasing availability of renewable energy (opportunity)
  3. Increasing industry support for sustainability (opportunity)

Changing and worsening cyclical weather is a macro-environmental factor that threatens Disney’s theme parks and resorts operations. In contrast, this PESTEL analysis considers the increasing renewable energy availability as an opportunity for improving the entertainment and tourism business. Disney can improve its brand image by increasing its renewable energy utilization. This ecological factor depends on available technologies for generating and storing energy. Also, this PESTLE analysis presents the increasing industry support for sustainability as an opportunity. Disney has the opportunity to improve its corporate image and operational efficiencies through sustainability measures. Communicating such measures to the target market can help manage customers’ expectations. This external factor influences The Walt Disney Company’s corporate social responsibility strategy, which considers the ecological issues shown in this external analysis. Overall, the industry environment has opportunities for corporate enhancement by addressing the external factors in this component of the PESTEL analysis of Disney.

Legal Factors in Disney’s Macro-Environment

The legal factors evaluated in this component of the PESTEL analysis pertain to the rules and regulations that apply to the business. In this case of Walt Disney, such external factors are based on the legal systems that define leisure, recreation, entertainment, mass communication, and tourism. The company’s managers address regulations based on different countries and regions involved in the macro-environment. For example, American regulations and European regulations in the mass media and entertainment industries are among the strategic influences considered in this external analysis. This component of the PESTLE analysis points to the following legal factors that impose limits and requirements on Disney’s global business:

  1. Environmental protection law (opportunity)
  2. Improving legal protection for consumer rights in developing markets (opportunity)
  3. Broadening intellectual property protections (opportunity)

Relevant to this PESTEL/PESTLE analysis is the increasing implementation of restrictive environmental protection regulations. The main effect of this external factor on Disney is in amusement parks, theme parks and resorts, and cruise line operations, which have significant environmental impact. For example, new park or resort construction leads to changes in the ecology of the site. Regulatory restrictions minimize the negative consequences of such changes, but also impose a restrictive industry environment for The Walt Disney Company. Also, this PESTEL analysis considers better legal protection for consumer rights. This protection provides a strategic opportunity to enhance customer satisfaction, which is a success metric in managing the global business. Furthermore, broadening protections for intellectual property rights is a legal factor that makes Disney’s industry environment more favorable to businesses that capitalize on intellectual properties, such as the company’s patents and copyrights for its trademarks, movies and movie characters, and merchandise. The remote or macro-environment illustrated in this component of the PESTLE analysis of Disney strengthens the need for strategies to improve business sustainability, customer experience, and intellectual property utilization.

Summary & Recommendations – PESTLE/PESTEL Analysis of The Walt Disney Company

Summary. This PESTLE analysis shows that the remote or macro-environmental factors determining Disney’s operations open opportunities for growth in spite of competition and other threats. For example, opportunistic strategies can target potential business growth in developing countries. The majority of the external factors are opportunities in this PESTEL analysis, but some of these factors are threats to Walt Disney’s multinational entertainment and media business operations. For instance, free-trade policies threaten the company’s licensing profits involving merchandise sales. Nonetheless, this PESTLE analysis describes an industry environment where Disney benefits through strategic management initiatives for further market penetration, as well as innovation to enhance product quality and customer satisfaction.

Recommendations. Considering the threats discussed in this PESTEL analysis of Walt Disney, recommended strategic approaches are for proactive business growth. Strategic management efforts should mitigate the possible effects of the identified threats. The corporation can establish new parks and resorts in high-growth economies while mitigating business threats. The Walt Disney Company’s current strategies support regional market penetration of this kind. In addition, considering the external factor of high R&D rate evaluated in this external analysis, it is recommended that Disney continue its R&D investments for competitive and high-quality movies, parks and resorts, and related products. This PESTEL analysis also prompts strategies to consider challenges in strengthening Disney’s brand image. These strategies relate to competitive threats and changing consumer demands in the international industry environment. Thus, another recommendation based on this PESTLE analysis is to develop new alliances with other firms that complement Disney’s business. For instance, new alliances with local merchandise manufacturers can boost the company’s growth involving goods sold at its amusement parks or resorts.

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