Bertelsmann SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

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Threat

1. Intense Competition: Bertelsmann being a mass media organization has interests in a lot of sectors. Thus, it faces immense competition from global companies as well as local firms. Its principal competitors include Axel Springer, Lagardere, ProSiebenSat.1 Media, and R.R.Donnelley. Competition pressures greatly impact prices and thereby impacting the company’s profit and market share.

2. Increase in cost of paper: One of the core businesses of Bertelsmann is the publication of books, printing of newspapers and magazines, and as such its competitiveness depends on the cost of paper. The price of paper is on a rise, and as such will increase the final price of its products as well. This is a major threat for Bertelsmann, as it could mean decrease in the sales of its products, there by driving down profit margins.

3. Fall in e-book industry: Only 5 years ago; experts predicted a decline in the book industry, with the rise of I-pads, Kindle and other online reading devices. But, actually there is an opposite trend now. With the increase in rise of e-books and in the US alone, the share of e-books sales fell to 20%. While, the physical books’ sales rose over 4.8% to $2 billion. Bertelsmann has over 115,000 audio-books and e-books in its rank, and this could be less important than many people predicted. The Global sales of e-books will account for less than 25% of the industry turnover in 2020, whereas for books will be $46 billion for the next three years.

Political

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Economic

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Social

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Technological

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Legal

1. Regulatory restrictions in major markets: Media and entertainment industry is subject to several regulations in markets which are tightly controlled by the government. This is especially true for the People’s Republic of China where foreign direct investments are severely bound by regulations. This has forced Bertelsmann to place several of its activities I China under the care of trust structures with only agreements protecting the company’s rights. This is a high risk model as any changes in the People’s Republic’s policies towards foreigners can potentially prevent Bertelsmann from fighting out the agreements in courts.

2. Implications of General Data Protection Regulation (GDPR): EU's General Data Protection Regulation has changed the EU data protection landscape significantly. Enforced since May 2018, this regulation mandates that all European Union members comply fully with the GDPR. The Bertelsmann Group is also bound by this regulation in that it has to increase data security especially for all the data processing activities of EU-based data controllers. The new regulation also brings all BPO customers under its purview. If Bertelsmann’s violates data protection requirements then it will face the risk of severe liability.

Environmental

1. Focus on environmentally sustainable business practices: Daily office life has now become impossible without the use of modern technology like Computers and laptops. Over the years Bertelsmann has gone increasingly digitized, thus reducing its dependence on nonrenewable natural resources. However, this has also simultaneously caused an increase in the company’s energy use for data management. The large number of devices being used in Bertelsmann’s offices across the globe all contributes to the company’s carbon footprint. In order to achieve environmental and climate protection, it is necessary for all to reduce energy use. With this goal in view, Bertelsmann has developed an eco-label that will make PCs, notebooks and screens more energy efficient. In November, Berlin’s Arvato CRM Solutions became the first Bertelsmann office to use energy-efficient IT equipment, making it a significant step towards fulfilling its environmental goals.