Macro-Environment Analysis of ‘A Horror Show at the Cinemaplex’ Using PESTE Approach

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Introduction
Macro-environment analysis
Summary of Macro-Environment Analysis
Future Direction
References

Introduction

Macro environment analysis remains to be one of the basic initial steps in any strategic analysis (Williams& Adrian, 1997). Therefore, this paper provides a PEST Analysis of a movie industry while using ‘A Horror Show at the Cinemaplex’ as a case study in its analysis.

PEST approach is an analysis of the macro environment that involves scanning the external environment of a business entity. It helps to understand the political, socio-cultural, economic and technological environments.

It is a useful tool that is used to evaluate the market by determining whether there is decline or growth in business activities. Therefore, it provides the organization with various options that the organization can implement to direct its business activities.

Macro-environment analysis

Political/Legal factor

Order of Importance	Issue	+/- Effect on Growth
1	Change of policy: The policy that was adopted by FCC which required all broadcasters to change to digital technology by mid of 2009 is ascribed to have had a high impact on the film industry.	+ (for expansion of movie theater industry)
2	Price Changes: Price wars at retail level that occurred during the Christmas period of 2008 resulted to a drop of HD players below 200 dollars.	-(Enabled potential customers to acquire their own home theater)
3	Home theater competition: Rivalry of the home theaters systems with movie theater industry	-(theater industry) +(potential customers)
4	Programming Issues/ Policy Issues: Unbalanced show of the advertisements and movies during Movie Theater sessions.	-(potential customers) +(for theater industry)
5	Large screen policy: The sole value proposition that is offered by large screens of movie theaters.	+(overall)
6	Technology changeover policy: The theater industry was slow in adopting new technologies.	-(overall )
7	Court Rulings: The supreme court ruling of 1948 against the studios encouraged competition in the industry	+(for customers) -(for the theater industry)
Overall Rating: +/-BALANCED

Economic factor

Order of Importance	Issue	+/- Effect on Growth
1	Revenue turnover: Revenues have maintained to be high.	+(theater industry)
	Sales of alternative products: Massive sales of DVDs and subsequent expansion of their technology.	+(potential customers) -(theater industry)
2	Slow income growth rate: Its growth has been slow. For instance, for a period spanning from 1997 to 2007, revenue increased only by five percent.	-(Overall)
3	Slow market growth rate: Stagnation of the consumer market despite increase in population	-(overall)
4	Production costs: The movie investment required a large capital base. This formed some basis as to why the industry experienced some decline as the success formula for this industry became elusive.	-(theater industry)
5	High production costs: The cost of making a typical feature was too high in the current times as it has increased by 25 percent.	-(overall)
6	High auxiliary costs: A part from production costs; other associated costs such as marketing remained to be high as they even accounted for a third of the entire production costs.	-(overall)
Overall rating: – NEGATIVE

Socio-cultural factor

Order of Impact / Importance	Issue	+/- Effect on Growth
1	Growth of theaters: Numbers of theaters have declined	-(overall)
	Growth of screens: The screens numbers have over the time remained constant.	+(overall)
2	Entertainment demography: Demographic data shows that customers in the market spends substantial amount of time on entertainment in a year since an average American dedicates 3500 hours for entertainment annually but only spends 12 hours watching movies.	+ (overall)
3	Theater as a necessity: It is also noted in the case study that the ability of the audience being provided by what they do not have in their homes is highly diminishing since they can get the same from the comfort of their homes.	-(theater industry)
4	Ancient social imbalance: Television technology that was believed to be a preserve of the rich only is now available and accessible to all classes of people which provide cinema experience to them.	+(overall)
5	Taste varieties: Little differences in services offered in the movie industry since they show almost the same movies and other services such as food remain identical.	-(overall)
6	Appeal for Movie Theater: A good opportunity to go out of the house; An ideal location for a date.	+(overall)
Overall rating: + POSITIVE

Technological factor

Order of Importance	Issue	+/- Effect on Growth
1	Technological changes: Technological revolutions in the cinema since digital technologies have resulted to high resolution of digitized images on the screen.	+(overall)
2	LCD technology: Decline in manufacturing costs as a result of LCD technology for television screens and computers.	+(overall)
3	Fall in television prices: Decline in prices of televisions which fell by 65 percent in the year 2007. This has resulted to more purchasing power on the part of the potential clients for their home theaters.	-(theater industry) +(potential customers)
4	Packages at lower cost: DVD Players, large television screens and speaker components are currently packaged at a low cost.	+(potential customers) -(theater industry)
5	DVD technologies: Penetration of the market by DVD players that are highly defined	+(potential customers) -(theater industry)
6	high percentage content of HD: Provision of high percentage content of HD to customers by cable and satellite television providers.	+(potential customers) -(theater industry)
Overall: + POSITIVE

Environmental factor

Order of Importance	Issue	+/- Effect on Growth
1	Environmental disruptions: Disruptions such as cell phones, unending adverts during the show, rude patrons which characterize the environment of operation of the theater industry.	-(overall)
2	Environmental relevance of theater movies: Movies as a source of entertainment in the operating environment are still popular.	+(theater industry)
3	Environmental opportunities for movie viewing: Opportunities that facilitate viewing movies outside the theaters have increased tremendously.	+(overall)
4	Environmental popularity of movie theaters: Few people are going to theaters to watch movies	+(theater industry)
5	Environmental segment of movie theater popularity: The core audience of the movie theater is young people between the ages of 12 years to 24 years old.	-(theater industry)
6	Environmental attractions of movie theaters: Theatrical value of sound systems in movie theaters	+(theater industry)
Overall: + POSITIVE

Summary of Macro-Environment Analysis

Macro-environment analysis of ‘a horror show at the cinemaplex’ using PESTE approach covers five aspects of the external environment of operation. Therefore, the analysis covered political, economic, societal, technological and environmental factors surrounding the organization in its business operations.

For that matter, all these factors through the analysis done, it has been established that they have immense impacts on the business operations of the movie theater industry in either a positive or negative manner.

To begin with, political factors have been found to offering both palatable and non palatable factors in a balanced form for the industry. For instance, since politics concerns crafting of policies in societies, there have been several policies that have been passed in the operating environment that have been both friendly and unfriendly to the movie theater industry.

For example, a policy was adopted by FCC that required all broadcasters to change to digital technology by June of 2009. This policy promoted home theater to the disadvantage of the movie theater industry.

In respect to societal analysis, the results of the case study indicates that the socio cultural factors in the environment offers more positive factors for movie theater industry as compared to its negative related factors. On the other hand, economic analysis indicates that there have been slow rate of growth in respect to revenue turnover of the film industry.

For example, for the period of ten years, the revenue had only grown by five percent which is relatively low compared to that long span of time. Nonetheless, management of the film industry also became a challenge to the players in the industry since it required substantial amount of capital compared to other alternative sources of entertainment.

Moreover, concerning technological analysis, it was established that there have been various technological changes that have taken place which have impacted on industry performance. For example, there have been revolutions in the cinema industry since digital technologies which have resulted to high resolution of digitized images on the screen.

This has made players in the industry to embrace the digital technologies as opposed to the traditional technology. Nonetheless, technological environment offer more positive factors to the theater industry as compared to negative factors.

Lastly, concerning the environmental analysis, it was established that there was widespread complaints from customers concerning the environment from which they were subjected to view these movies.

For example, it was affirmed by several customers that the environments were disorderly and some activities usually took place that acted as disruptions during move viewing. However, environmental factors still provides more positive factors for the theater industry as compared to negative attributed factors.

Future Direction

The movie theater industry is in future characterized by several developments that are likely to revolutionize the entire industry. Nonetheless, this revolution is likely to revolve around digital technology.

The digital technology is likely to turn and revolutionize the movie theater industry by packaging these movie products into new digital media (Nelmes, 2001). For that matter, Movie Theater products are likely to expand and reach more potential clients than it is the case in the current times.

Moreover, the future trends of the film industry is leading to an online showcasing where movie theater products will be marketed and exhibited using online technology. For instance, the technological players’ are shaping the industry towards this direction.

The best example is the YouTube technology which is an online service supported by Google. This technology enables viewing of movies and other films online. Therefore, it is evident that the future direction of the film industry is heading to online viewing which will enable film lovers to view their preferred film and film stars in any place irrespective of the geographical location.

Internet technology will also turn out the film industry into a virtual film industry which is directly opposite to the current arrangement of the industry.

The requirement that one needs to be in a certain physical location to entertain himself or herself from Movie Theater is likely to change due to amalgamation of internet technology.

Consequently, due to faster development of internet technologies such as wireless devices and mobile technologies, several remote locations will be connected which were not covered with physical movie theaters (Kerr, 1986). As a result this is likely to increase the rate of people appreciating film industry as a resource for entertainment.

Moreover, in respect to social aspects of the societies, there is a drastic shift in respect to social media and networks. The new and future pattern is the application of web 2.0 technologies which have been entrenched in diverse social networks (Pendakur, 1990). Therefore, the film and movie theater industry have no option but to appreciate this technologies and apply them in their operations.

In addition, the traditional film technology had been characterized by large sizes and bulkiness. However, technology is now transforming this approach by coming up with ubiquitous gadgets. This is going to shape the future of the film industry. It can be proved from the use of potable ICT devices that are already in use today and therefore, film industry is likely to take the same route.

In addition, the trend of the technological improvement is going towards avatars and seamless standards which will be capable to move from one platform to another.

As a result, the auxiliary technology will go through enhancements to have a better and improved 3 dimension visualization. Moreover, this will also help in saving substantial amount of capital since transfer from one format to the next will be highly valued in the film industry.

Furthermore, economics will influence the film industry in a number of ways. For instance, due to economic crisis that constantly affect the world, it is likely to have adverse effects on the film industry.

Therefore, the industry is likely to face some scarcity of resources in the near future since recession and ever declining consumer purchasing power is also likely to have some adverse effects to the industry (Benshoff n& Sean, 2004).

References

Benshoff, H. & Sean, G. (2004) America on film. UK, Blackwell Publishing.

Kerr, P. (1986) The Hollywood film industry: a reader. New York, Routledge& Kegan Paul plc.

Nelmes, J. (2001) An Introduction to film Studies. New York, Routledge.

Pendakur, M. (1990) The Political Economy of the Canadian Film Industry. Canada, Wayne State University Press.

Williams, T. & Adrian, G. (1997) The Business Approach training. England, Gower Publishing Ltd.

Click Here To Order Now!