With an annual revenue of £348 million, Cineworld Cinemas Ltd. is one of the leading movie theatre companies in the UK. To conduct a strategic study for Cineworld, see this project. It will use Porter’s Five Forces, SWOT, and SPENT analysis to determine a strategic challenge that Cineworld is now facing before making the necessary recommendations for Cineworld Plc’s future strategic plan. Additionally, the report will outline Cineworld’s CSR challenges and how the company addresses them. This report aims to conduct a strategic study of Cineworld and pinpoint its advantages, disadvantages, opportunities, and threats. The final suggestion made in this report to Cineworld Cinemas Ltd. is product development.
Introduction of Cineworld
This study will provide Cineworld with a strategic analysis. An orientation to the Cineworld organization will take place first. The research will then conduct an external examination of the UK film industry to determine the primary environmental influencing factors and competitive forces. Following that, the project will make an announcement.
Its internal analysis reveals its strengths and flaws. The initiative will also present Cineworld’s corporate social responsibility challenges and how the corporation responds to them. Finally, the project will offer recommendations as well as an overall conclusion. This study aims to do a strategic analysis of Cineworld Plc. and analyze the firm’s strengths, weaknesses, opportunities, and threats to identify a strategic issue facing the company and then offer appropriate suggestions on Cineworld Plc’s future strategic plan.
Steve Wiener founded Cineworld Cinemas Ltd. in 1995. The company now owns 80 theatres and has an annual revenue of £348 million, making it one of the top cinema groups in the UK. Over the last eight years, Cineworld Group has bought UGC cinemas, the O2 movie at Greenwich, and the Picturehouse movie network. In May 2007, Cineworld debuted on the London Stock Exchange. Cineworld Group is the only cinema company in the United Kingdom with a subscription business model and unlimited membership card. The total membership card grants customers free admission for a specified amount of money per month as well as nine discounts on all drinks and food.
Its mission is to provide a welcoming environment and modern theatres that produce a smooth, entertaining, and memorable experience that will entice audiences to return time and time. Cineworld aims to strengthen and expand its current position as one of the leading cinema groups in the UK by offering a diverse selection of films and high-quality customer service (Cineworld, 2011).
External Analysis of Cineworld
According to Campbell, Edgar, and Stonehouse (2011), scanning and monitoring the macro-environment (SPENT) for potential changes and analyzing their influence on the market and industry is critical. Porter’s Five Forces study enables the development of a competitive strategy by doing an industry analysis.
Expenditure analysis of Cineworld
According to UK Film Council (2010), research, teenagers and young adults aged 15-24 were the most frequent cinema visitors in 2009, followed by adults aged 45 and above, whose number increased dramatically from 14% in 1997 to 30% in 2008, while adults aged 25-34 decreased significantly from 29% to 18% (see Appendix A). Furthermore, YouGov (2010) found that 61% of moviegoers go to see the big screen and have a different social experience.
Given that local laws governing development, the environment, health and safety, and licensing apply to the company’s operations. Cineworld works closely with the UK government on political matters (Cineworld, 2011). It will face fines if it fails to comply with these laws. Furthermore, any regulatory changes will incur additional costs for the organization. The UK film industry relies mainly on independent filmmakers to facilitate the continuous development of UK production in UK theatres (Grove, 2012).
(“UK film industry,” 2012) anticipated that the UK film industry would contribute £4.6 billion to the UK GDP in 2011. The number of cinema admissions in the United Kingdom in 2012 was 172.5 million, the second highest in the last ten years. According to research conducted for this paper, the UK film business is growing despite economic conditions. However, Cineworld may still face issues because of the ongoing economic crisis, increased competition, and a predicted increase in inflation from 2.7% to 3% by the Summer of 2013 (“Inflation to stay above target,” 2013). The ongoing recessionary impact on consumer spending may decrease demand for movie admissions, which could have a detrimental influence on Cineworld’s financial status.
Technology is essential to the movie industry, allowing Cineworld to remain competitive. Recently, cinemas have had to embrace the digital transition and the advent of 3D theatres, contributing to increased movie income. Film distribution through the Internet is becoming more popular. Introducing new technologies, such as 3D television and online movies, which provide consumers with easy access, convenience, and potentially competitive pricing, may impact cinemagoers’ attitudes towards Cineworld.
Cineworld opened a new £70 million term loan and a £100 million credit facility in 2011 to finance additional expansion. It reported a tremendous financial performance in 2011, with a 4.8% increase in dividend payouts. Cineworld has generated new revenue streams by renting out screening rooms for special events and through its screen advertising company Digital Cinema Media, a joint venture with Odeon UCI Cinemas (Cineworld, 2011).
Cineworld now operates 80 locations, with 77 being multiplex cinemas (those having five or more screens). It has embraced the digital transition and the introduction of 3D films, trying to remain at the forefront of technological innovations to provide a better service than the competition. Cineworld is capitalizing on its competitive position to develop further, with new cinema openings planned for 2012 and 2013. To improve capacity utilization, Cineworld has made screening rooms available for rent.
In Europe, how big is Cineworld?
Ireland, the United Kingdom, and the United States are three of the ten nations where it operates sites. Aside from the English-speaking globe, the company has a significant presence in Eastern Europe, with 18 locations in Hungary, 13 in the Czech Republic, three in Slovakia, seven in Bulgaria, 28 in Romania, and 34 in Poland.
The Cineworld Group is a publicly traded company on the London Stock Exchange that owns 127 cinemas in the United Kingdom after acquiring Picturehouses Cinemas in 2012.
Last year, the company raised funds through the stock market, taking advantage of a massive increase in its share price as it became engulfed in the frenzy surrounding so-called meme stocks. Its stock increased sixfold in January 2021, then doubled in May and June.
Amateur investors drove the increases, with some referring to themselves as ‘apes,’ determined to hold the stock regardless of whether professional Wall Street called it a bad buy.
Finally, the resources described in this research have enabled Cineworld to be one of the
top cinemas in the United Kingdom. According to the internal analysis, It has vast material and intangible resources that allow it to appeal to mainstream consumers while also targeting specialist markets. Its resource pool also assists the organization in differentiating itself from competitors and responding to changes in the external environment. It has a robust portfolio of venues nationwide and the financial resources to compete with larger cinemas like the Odeon.
According to this study’s findings, one of the primary strategic issues Cineworld faces is the growth of online streaming and downloading of films. Furthermore, Cineworld faces tremendous rivalry in the cinema industry as well as the issue of illicit downloading.