Industry Analysis

Industry Analysis Model for the Arts, Entertainment and Recreation Industry For the purpose of this report, the Arts, Entertainment and Recreation Industry is chosen, mainly because, almost everyone has something to do with this industry – either as a part of it, or as viewers. No matter what the economic, political or social scenario of the nation, the Arts, Entertainment and Recreation Industry is bound to have its patrons, and quite possibly even thrive. Even in the most depressed of times, it is obvious – people need their entertainment.

The Arts, Entertainment and Recreation Industry mainly comprises of establishments that operate or provide services that are entertaining to their patrons on a cultural or recreational level. They are usually involved in all stages including production, promotions and participation of such activities. (Definition Arts, Entertainment and Recreation, 2011). This definition or perspective of the industry was supported by Benedict (2011) who stated practically any activity that occupies a person's leisure time, and gives him/her recreation are part of the arts, entertainment, and recreation industry.

Not only this industry service or cater to the general public, it also provides employment and livelihood to a sizable population, with that proportion increasing year-by-year. This fact was validated in the official Canadian website, Service Canada (2012) which provided figures of how around 9 percent of the population are employed in the arts, entertainment and recreation sector. This industry was selected because it will be very insightful as well as interesting to study the various shortfalls that this industry could have in times of negative economic, and political as well as social times.

Let us take this industry through the Industry Analyses – PESTEL Analysis and Porter’s Five Forces Model to understand the stability of the Arts, Entertainment and Recreation Industry in Canada. NAICS Industry Profile The North American Industry Classification System helps to classify business establishments in North America – covering Mexico, Canada and the United States of America. Under this classification system, the Arts, Entertainment and Recreation industry has been given the code of 71 and broadly covers Performing Arts, Spectator Sports and Related Industries; Heritage Institutions; and Amusement, Gambling and Recreation Industries.

(North American Industry Classification (NAICS) 2007, 2010). We have data available of the growth of the Arts, Entertainment and Recreation Industry from 2002 to 2011 that shows that the Gross Domestic Product went from $10. 4 billion in 2002 to $11. 2 billion in 2011. (“Gross Domestic Product (GDP) Arts, Entertainment and Recreation (NAICS 71). ” 2012). Even taking into consideration economic factors such as inflation, it is fair to say that the industry is performing at a fairly constant rate.

Throughout the 10-year period, there is no major growth or fall in the Gross Domestic Product of the industry. This helps reiterate the prior point that when it comes to the entertainment industry, there cannot be a large dip in demand even in bad economic scenarios. People have a psychological need to be entertained no matter what the economic scenario. PESTEL Analysis Political factors When it comes to political factors, governments of the respective country including Canada play mainly an overseeing role, without direct involvement in the affairs of the industry.

Although, their policies and rules will dictate the functioning of the organizations in that sector, as it operates in the private sphere, there will be basic influence. This perspective was pointed out by Department of Canadian Heritage's Policy Research Group, which stated governments and its bodies expect the organizations in the industry “to conduct their affairs in a more open, transparent manner that incorporates public opinion and feedback into decision-making. ” (“Environmental Scan 2010”, 2011). Economic Factors Speaking of economic factors, as the trend elsewhere, the Canadian economy is

also going through tough times, and it is being felt in the arts, entertainment, and recreation industry as well. The natural event of massive floods in Alberta coupled with strike in the construction sector in Quebec also contributed to the economic slowdown. Thus, in the month of June, the growth rate in the arts, entertainment and recreation plunged to 4. 3 per cent, with attendance at sporting events particularly hit. (Beltrame, 2013). Despite these slowdowns, it does not appear bleak due to the fact that common people view this industry as a solace in tough times.

Social Factors The socio-cultural factors have a great impact on the growth and prosperity of an industry. For the arts, entertainment and recreation industry for example, Canada’s complicated laws about serving alcohol, and the legal drinking age in its various districts is an issue. Entertainment and alcohol very often go hand-in-hand and one industry is bound to take a fall without the other. Even though it may not be okay to promote the consumption of drugs and alcohol, they are usually an integral part of the art, entertainment and recreation industry.

(“Social issues in Canada”, n. d. ) Technological Factors Technological problems also create tension in any industry, for instance, when the Interac e-transfer was having problems in Canada. The art, entertainment and recreation industry thrives on money being spent on the spot. If people cannot access their funds, then how are they going to purchase tickets and confectionaries at these events? (“Interac e-Transfer having technical problems”, 2013) Environmental Factors The natural environment of a place plays a very important role in its functioning.

The entertainment industry often has programs that take place outdoors. And an unpredictable weather will not be of any help. Canada is so widespread geographically as well as climatically, that its weather is different in different regions, meaning that the industry must be prepared for anything. Legal Factors Many legal factors play a role in the success of an industry. The copyright laws for instance. No one wishes his or her work to be copied. But sometimes, extremely strict copyright laws do no good to any of the parties concerned.

Canada has very strict copyright laws that are also confusing for the people, and this has a negative impact on them. (Thestar. com) Porter’s Five-Force Model Supplier Power Suppliers have the power. In any industry, suppliers have control. Even in the entertainment industry, which has many players from computer graphics creators to AV equipments suppliers, etc. , contributing to the final product or service, it is clear that the suppliers have the power based on the uniqueness they bring to the table in terms of their services. Buyer Power

Buyers have the power when it comes to the arts, entertainment, and recreation industry because based on their interests, tastes and response, most the content and services are designed and offered in the industry. “Establishments that operate facilities or provide services that enable patrons to participate in recreational activities or pursue amusement, hobby, and leisure-time interests. ” (“Arts, Entertainment, and Recreation: NAICS 71”). Competitive Rivalry This is a problem only if the services provided by the industry could be easily found elsewhere.

In that direction, being neighbor to one of the largest as well as well-known arts, entertainment, and recreation industry, in the form of US industry, Canadian industry face tough rivalry from them. Even it negatively affects the industry because “so much Canadian talent leaves home for the greater allure of Hollywood and the larger American market. ” (“American Influence”, n. d. ). Threat of substitution Just like competitive rivalry, for any kind of services that can be easily substituted, there will be someone doing it.

On those lines, with many American companies operating strongly in this sector, providing optimal content, there is clear threat of substitution. Threat of new entries For every agency there is in an industry, there is a new one forming and working on the most tactical way to take it down, and that is particularly visible in this industry particularly through the outsourcing route. As creation of content as well as service of this industry is being outsourced to Third World countries as part of undercutting costs, local players face threat (Wilding, 2012).

Conclusion Based on the analyses done above on the art, entertainment and recreation industry in Canada, few things are clear. Even though the country has a few shortcomings, as long as people are willing to work hard and bring something unique to the table, they do have the possibility to thrive. Sure, there seem to be negative political as well as economic aspects, but the biggest truth here is that this industry will most definitely thrive due to its omnipresence and the favorable social factors.

The best part is that this industry supports people with unique visions, and so even if there is threat from competitors and new entries from across the border, if the local players provide optimal content and services, they can survive and succeed. The more unique is the offering, the greater are the chances that the new player might thrive as well as succeed. The bottom line here is that when it comes to the art, entertainment and recreation industry, while it has its shortcomings, there is definite scope for development. References “American Influence. ” Film Reference.

Retrieved from: http://www. filmreference. com/encyclopedia/Academy-Awards-Crime- Films/Canada-AMERICAN-INFLUENCE. html “Arts, Entertainment, and Recreation: NAICS 71. ” (n. d. ). Bureau of Labor Statistics.. Retrieved from: http://www. bls. gov/iag/tgs/iag71. htm Beltrame, J. (2013). Canada's Economy Shrank 0. 5 Per Cent In June, But Still Up Overall In 2nd Quarter. Retrieved from: http://www. huffingtonpost. ca/2013/08/30/canada-gdp-june-2013_n_3842686. html Benedict, S. L. (2011). Celebrating Your Journey, Lifeskills in Synergy: 12 Dimensions of Practical Daily Living. Author House.

“Definition Arts, Entertainment and Recreation (NAICS 71). ” Industry Canada. Retrieved from: http://www. ic. gc. ca/cis-sic/cis-sic. nsf/IDE/cis-sic71defe. html “Environmental Scan 2010. ” (2011). Department of Canadian Heritage. Retrieved from: http://www. mtc. gov. on. ca/en/sport/sport/EScan_SportCanadaFinal. pdf “Gross Domestic Product (GDP) Arts, Entertainment and Recreation (NAICS 71). ” (2012). Industry Canada. Retrieved from: http://www. ic. gc. ca/cis-sic/cis-sic. nsf/IDE/cis-sic71vlae. html “Interac e-Transfer having technical problems. ” (2013). Canadian Press.

Retrieved from: http://www. cbc. ca/news/canada/interac-e-transfer-having-technical-problems- 1. 1875519 “North American Industry Classification (NAICS) 2007. ” Statistics Canada. Retrieved from: http://stds. statcan. gc. ca/naics-scian/2007/ts-rt-eng. asp? criteria=71 “Service Canada. ” (2012). Professional Occupations in Public Relations and Communications. Retrieved from: http://www. servicecanada. gc. ca/eng/qc/job_futures/statistics/5124. shtml “Social issues in Canada. ” (n. d. ). Canadian Guide. Retrieved from:http://www. thecanadaguide. com/social-policies Wilding, R.

(2012). Animation Outsourcing: the Bottom Line According to the Pros. Retrieved from: http://www. animationcareerreview. com/articles/animation-outsourcing-bottom- line-according-pros statcan. gc. ca: “North American Industry Classification (NAICS) 2007”, page viewed on: November 2, 2013 http://stds. statcan. gc. ca/naics-scian/2007/ts-rt-eng. asp? criteria=71 thecanadaguide. com: “Social issues in Canada” page viewed on: November 2, 2013 http://www. thecanadaguide. com/social-policies cbc. ca: “Interac e-Transfer having technical problems”, page viewed on November 2, 2013