Walt Disney Company PESTEL/PESTLE Analysis & Recommendations

Walt Disney Company PESTEL/PESTLE analysis, Political, Economic, Sociocultural, Technological, Ecological, Legal external factors entertainment business case
Disney’s Polynesian Village Resort in Florida. A PESTEL/PESTLE analysis of The Walt Disney Company describes external factors in a remote or macro-environment that have many growth opportunities for mass media, entertainment, and amusement parks and resorts business operations. (Photo: Public Domain)

The Walt Disney Company keeps abreast with trends affecting the mass media, amusement parks and resorts, and entertainment industry environments. These trends define opportunities and threats, such as the ones determined in this PESTEL/PESTLE analysis of the international business. The PESTEL/PESTLE analysis tool evaluates the external factors that are opportunities or threats in the remote or macro-environment of the firm. In Disney’s case, this external analysis considers various conditions relating to diverse market conditions. For example, the conglomerate has opportunities and faces threats linked to technological trends in the mass media industry environment, as well as sociocultural trends in the amusement park industry environment. Thus, Disney’s strategies must address the effects of these various industry-specific trends. The corporation’s managers must exploit the most significant of these remote or macro-environmental factors. In using strategic approaches suitable to the external factors determined in this PESTEL/PESTLE analysis, The Walt Disney Company optimizes its position for long-term stability.

Business managers must consider external factors as potential opportunities or threats that influence fiscal performance. The results of this PESTEL/PESTLE analysis of Disney reveal many opportunities to grow the global business despite strong competition with firms like Time Warner, Viacom, Sony, Universal Studios, and Comcast. For example, the opportunity to grow through innovation is linked to technological factors in the remote or macro-environment. The Walt Disney Company’s strategic management approach recognizes how each external factor supports growth in the media and entertainment industry environment. 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 PESTEL/PESTLE framework.

Political Factors Affecting Disney’s Industry Environment

Policies and governmental actions are evaluated in this component of the PESTEL/PESTLE analysis framework. In this business analysis of The Walt Disney Company, such remote or macro-environmental factors pertain to the political climate affecting merchandise trade and entertainment access. For example, intellectual property policies impact the global business. In the entertainment, mass media, and amusement park industry environment, the following political external 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 markets (opportunity)

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

Economic Factors in The Walt Disney Company’s Business

This component of the PESTEL/PESTLE framework 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 external 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. The Walt Disney Company’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 views this external factor as an opportunity in the global industry environment. In relation, 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 external 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/PESTLE analysis of Disney, the economic external factors present challenges in managing business growth based on the strategic significance of developing markets.

Social/Sociocultural Factors that Affect Disney

The focus of this component of the PESTEL/PESTLE analysis framework is on social trends, which affect Disney’s remote or macro-environment through customers’ and workers’ behaviors. In this company analysis case, consumers’ behaviors toward products like movies, television programs, video games, and amusement parks are considered. For example, strategies must manage customers’ behaviors and expectations regarding the global business. Considering the situation of its multiple industry environments, The Walt Disney Company experiences the effects of the following sociocultural external 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 external factor increases customers’ likelihood of paying for the company’s leisure and recreation products. Also, this PESTEL/PESTLE analysis views increasing online activity as an opportunity to grow The Walt Disney Company. 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 external analysis considers the same social external factor as an opportunity to improve the company’s products to reflect the cultural diversity of target markets. Addressing the social external factors in this PESTEL/PESTLE analysis can increase competitiveness in the industry environment, despite the tough competition determined in the Porter’s Five Forces analysis of The Walt Disney Company. Overall, these social remote or macro-environmental factors can help the company grow through appropriate strategic management that improves the business to satisfy changes in consumer behavior.

Technological Factors in Disney’s Remote Environment

Available technologies are among the remote or macro-environmental factors that define business capabilities and limitations. This component of the PESTEL/PESTLE 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. For example, digital technologies’ effects on film production are among the factors that enable the company in the international industry environment. The following technological external factors determine many of the strategies and management efforts at The Walt Disney Company:

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

The technological external factor of high research and development (R&D) rate represents rapid technological advancement in the mass media and entertainment industries. For example, companies like Disney are increasingly enhancing their use of advanced computer generated imaging to provide better and competitive products. In this PESTEL/PESTLE analysis context, this technological trend is a threat that makes competition tougher. Still, the same remote or macro-environmental factor is an opportunity to grow The Walt Disney Company by strategically increasing its R&D rate to match or exceed competitors. Increasing mobile device use is also an opportunity in this external analysis. The opportunity is based on mobile devices as a rapidly growing revenue channel for Disney’s multinational business. Also, 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 the technology into products, such as video games. Thus, the technological external factors in this component of the PESTEL/PESTLE analysis of The Walt Disney Company present growth opportunities in the industry environment.

Ecological/Environmental Factors

The natural environment imposes limits, threats, and opportunities in the remote or macro-environment, highlighting business dependence on ecological external factors. For example, in this PESTEL/PESTLE analysis of The Walt Disney Company, the relevant global industry environment concerns resource availability, and climatic and weather conditions that affect amusement parks and resorts, film production, and merchandise production. Disney’s management faces strategic challenges related to the following ecological external 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, the increasing renewable energy availability is an opportunity for improving the global business. For example, Disney can improve its brand image by increasing its renewable energy utilization. In the remote environment, this ecological external factor is dependent on available technologies for generating and storing energy. In relation, this PESTEL/PESTLE analysis presents the increasing industry support for sustainability as an opportunity. Disney has the opportunity to further improve its corporate image and operational efficiencies through sustainability measures. Also, 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/PESTLE analysis of Disney.

Legal Factors in Disney’s Macro-Environment

The legal factors evaluated in this component of the PESTEL/PESTLE analysis pertain to the rules and regulations that apply to the business and its industry environment. In this case of The Walt Disney Company, such external factors are based on the legal systems that define the leisure and recreation remote environment. The company’s managers must 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. Thus, this component of the PESTEL/PESTLE analysis points to the following legal external 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 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 external analysis considers better legal protection for consumer rights. This protection provides the 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 external 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 PESTEL/PESTLE analysis strengthens the need for strategies to improve business sustainability, customer experience, and intellectual property utilization.

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

Summary. The remote or macro-environmental factors determining Disney’s operations open opportunities for growth in spite of competitive and other threats. For example, opportunistic strategies could target potential business growth in developing countries’ industry environments. The majority of the external factors are opportunities in this PESTEL/PESTLE analysis, but some of these factors are threats against The Walt Disney Company’s multinational entertainment and media business operations. For instance, free trade policies threaten the company’s licensing profits involving merchandise sales. Nonetheless, this external 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. Despite the threats discussed in this PESTEL/PESTLE analysis of The Walt Disney Company, recommended strategic approaches are for proactive business growth. Strategic management efforts should mitigate the possible effects of the remote or macro-environmental threats. For example, the corporation could 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 industry R&D rate evaluated in this external analysis, it is recommended that the company continue its R&D investments for competitive movies and related products, and high quality parks and resorts. This PESTEL/PESTLE analysis also prompts for other strategies to consider challenges in strengthening the Walt Disney brand image. These strategies relate to competitive threats and changing consumer demands in the international industry environment. Thus, a recommendation is to develop new alliances with other firms that complement Disney’s business. For instance, new alliances with local merchandise manufacturers could boost the company’s growth involving new amusement parks or resorts.