Easy Cinema

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Industry Analysis

Industry Overview
The cinema industry is primarily engaged in operating movie theatres and/or exhibiting videos at film festivals. The major products and services in this industry in the UK are single screen theatres, multiplex theatres (8 to 15 screens) and megaplex theatres (more than 16 screens). Cinemas in the UK typically operated at 20% capacity. Admissions in 2001 were at the highest level in decades – 156 million admissions generated £974 million in ticket sales – and were expected to continue to rise at an annual rate of 4% between 2003 and 2010.

Key Success Fators
The key success factors are ability to quickly adopt new technology. Indeed, customers expect latest digital visual and audio equipment, which increase entertainement. In addition, it can attract increased revenue. Cinema operators must have access to multiskilled and flexible worforce such as young casual workers who agree to work daily, weekly and annual demand peaks. Another key success factor is to be part of a group buying, prmotion and marketing scheme in order to obtain cost advantages and access to big-budget releases. Then, cinema operators have to guarantee supply of key inputs, that is, on-going supply of quality movies in line with local audience tastes and demand. Finally, they have to be close to key markets and offer easy access. For instance, shopping and town centres are the preffered locations for cinema operators since they are known as leisure destinations.

PEST Analysis
Macro Forces
Political/Legal
Blair’s centre-left Labour administration comfortably returned to power in June 2001. The business community has praised Blair’s administration for its macroeconomic policy framework including the transfer of interest rate policy to the Bank of England in 1997. However, some people have criticised its labour market policies including the adoption of European legislation governing working hours and the adoption of national Minimum Wage legislation in 1999. In addition, the imminent increase in National Insurance contributions early in 2003 caused concerns. The UK has been member of EU since 1973. The Blair’s administration tried to play a more pro-active role in the European decision-making. The UK also enjoys strong security ties with the US. In a nutshell, EU, NATO and G7 allow it to maintain a strong presence on the international stage. The United States continued to be the UK’s largest single trading partner in 2001, with exports to the US accounting for over 15% of total UK exports. The other 14 EU member states accounted for 58% of total UK exports. Implications for the cinema industry: Staff costs accounted for 21% of the expenses of cinema operators. This is the second highest source of expenses behind film rental. Legislation governing working hours and national Minimum Wage can significantly increase staff costs in the future since minimum wages usually increase with time.

Economy
The UK’s economic performance has been strong since the recession of the 1900’s. Its real GDP growth has been of 2.9% per annum over the 1993/2001 period. In the UK in 2002, nominal GDP in dollar terms grew by 8% to reach US$1,548 billion. The economic expansion of UK has led to significant improvements in labour market performance; indeed, unemployment has been the lower ever seen in three decades. In fact, unemployment in the UK increased by 0.9% in 2002 to reach 4.2%, although this is down from 5.7% in 1997. In addition, inflation was low due to low world inflation and effective monetary policies. However, economic growth was imbalanced between the South East (Capital: London) and the North East of the country due to the strength of sterling against Euro, which has led to the stagnation of manufacturing exports, and to long term structural problems in parts of the country. Finally, despite its superior economic growth performance of the UK’s productivity gap remains compared to other advanced industrial...
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