Merlin Entertainments SWOT and PESTLE Analysis

Strength

1. Portfolio of world class brands and iconic assets: Merlin Entertainments has a large number of elite brands in its portfolio. These include well-known names like Legoland, Peppa Pig, Little Big City, Madame Tassauds, and adventure parks like Thorpe Park and Heide Park. These brands are moreover diversified based on geography, customer demographics and attraction type. The revenues gained by the company are well balanced in different geographies around the world with the UK generating 31%, followed by North America, Europe and the APAC region at 27%, 25% and 17% respectively. Keeping climate disparities throughout the year in mind, the company has also maintained a fair amount of indoor and outdoor attractions with outdoor attractions generating 62% of its total revenue and indoor attractions earning 38%. The excellence of its portfolio brands is also evident through its 2018 records which show that tourists form the majority of customers for the company with 72% of its total revenues being generated through tourist visits to its attractions.
Merlin is uniquely placed, given its global reach and multi-format expertise, to exploit the growing opportunities to partner with leading owners of Intellectual Property content. These partnerships provide Merlin with additional ways in which to deliver memorable experiences, whilst offering those partners opportunities to increase engagement with their customers.

2. Strong Brand Reputation: Merlin Entertainments is the world’s second most visited attraction group after Walt Disney. But Merlin has purely engaged in the business of entertainment unlike Walt Disney. So, in terms of pure play, Merlin Entertainments has grabbed the top spot. Although there were a series of problems like the 2015 accident at Alton Towers and terrorist attacks in Europe in 2016, the company has been strong enough to leverage the brand reputation and deliver a substantial high operating profit margin. It has proved itself to be a market-leading brand with significant potential for growth. Merlin Entertainments has invested their maximum dedication towards LEGOLAND Parks Attraction and rightly so, because they deliver the maximum revenue. They are located in Europe, UK and US and strategically moved to locations like Japan, Malaysia and UAE as they aimed to tap into the growth in the middle-class segment of these countries. China has been their focus in terms of expansion and they have grown rapidly with launch of attractions like Peppa Pig World of Play. They have tactically opted for multi-brand expansion which has worked for them so far.

3. Broad consumer target segment: Merlin Entertainments has purely focused on family entertainment based on strong brands and a global portfolio. The brand is a global leader in location-based entertainment and ranked as number 1 in Europe and number 2 in the world. They have positioned themselves in a way to appeal across various target demographics. The Midway Attractions is positioned across all key target demographics. They have created clusters in order to spread across geographic markets. Example – The Dungeons is clustered as “Scary Fun”, Shreks Adventure is clustered as “Hilarious Misadventure”, SeaLife is clustered as “Amazing Discoveries” and so on. LEGOLAND Parks are targeted towards a demographic of families with children within the age of 2 to 12. Their tagline is “Playful Learning”. The Resort Theme Parks cater to various target demographics. The creation of new products has helped them to tap new markets across the geography and they have invested in a large number of outlets in many countries.

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Weakness

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Opportunity

Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Ecological products building sustainability: Sustainable communities is the buzzword. Government agencies at local, state and country level are working together to build sustainable communities. Lean and green technologies lead to win-win benefits. Merlin Entertainments switched to 100% renewable electricity for UK attractions since 2018. The deal was signed with green power firm Ecotricity. This was specifically done to make the business more sustainable to reduce carbon footprints and energy costs. They also operate rooftop solar array and geothermal facility at their resorts. All the steps have been done to align themselves to the most ambitious aim of Paris Agreement. In today’s world, the term “green” has to be well understood because the decisions taken by organizations will have a significant impact on the footprint of the products generated by the team. They have phased out plastic straws at all of their owned tourist destinations as part of efforts to reduce unnecessary packaging and environmentally harmful products from its retail stores and beverage outlets.

2. Initiatives to combat climate change: Merlin Entertainments is a company that is devoted to achieving sustainable means of operations. The company has made its self a part of the UK Carbon Reduction Commitment (CRC) energy efficiency scheme as a step towards combating climate change. Its ‘We Care about our Planet’ annual event is aimed at planning and implementing several activities like beach cleans, collecting plastics and other waste, staff cycling and walking to work.
It has also recognized several factors that need to be addressed in order to become sustainable. These are energy use, energy price and waste management. In December 2018, Merlin Entertainments successfully achieved 100% renewable energy dependence for powering all of its UK attractions. All power is derived from wind and solar energy. This was achieved after the company signed a supply deal with Ecotricty, a renewable energy supplier. This was a major achievement for the company as it owns around 32 venues across the country including major attractions like the London Eye, Thorpe Park, Alton Towers and Chessington World of Adventures. The move has enabled it to improve its sustainability index considerably and even cut down greatly on energy costs. Apart from energy sourced through Ecotrcity, the company also has four of its biggest theme parks powered by energy generated through waste recycling. It has also invested in a number of systems which help it in reducing its overall energy consumption. With fossil fuels being one of the major causes of climate change, the company’s shift to renewable energy will become a notable step in combating climate change for Merlin.