PEST Analysis of the BBC
Brief history of BBC
The British Broadcasting Company (as it was originally named) was established in 1922 and started its national broadcast coverage throughout the UK by 1925 without any political influence. The organisation was named as British Broadcasting Corporation in 1927, when it was granted its first Royal Charter. The organisation earned its reputation of “honesty and accuracy in the news broadcast” during World War II. The BBC is a public funded organisation which is funded by a license fee charged by all UK house holds, the 1970s was a golden era for the organisation due to a high number of sales of television sets. The 1990s was the year of technologically advancements for the BBC with the launch of its digital services such as ‘BBC news online’ which was one of the leading websites across Europe (The BBC story 2009).
PESTEL analysis of BBC
The BBC is an independent and self-regulated organisation. The organisation’s public sector responsibilities, functions and financial operations are stated by a Royal Charter. The Royal Charter is reviewed by the respective governments every 10 years. However, governments have used the ‘review of Royal Charter’ as a process of application of control over the broadcasted content; in particular the news and current affairs. As a result of which, the Thatcher government proposed an absolute privatization of the BBC in 1986. This proposal was inspired by the regime of “liberalization, market competition and media convergence” (Harris and Prosser 2007, p.292). However, in the 1990s it was ruled out in favor of independent producers contributing towards 25% of the broadcasted output. On the other hand, John Major’s government supported the BBC’s retention of public funding for the organization’s entrance into the competitive market (Harris and Prosser 2007).
By the mid 1980s, British market saw a shift in market and economic trends. The organisational structures were changing from ‘centralised’ to ‘decentralised’ in favour of mitigating the bureaucracy that was normally exercised in the organisations in those days. The reformation of organisational structure was now seen as radical to economic management, and was dominantly dictating the public sector. In order to save the organisation, the response was phenomenal. The BBC decided to inherent an organisational cultural change with an aim of responding to environmental, political and regulatory shifts of the times. Decentralisation of the BBC was identified to be the pivotal factor for its survival, where cultural change was central towards achieving a decentralised structure (Harris and Prosser, 2007).
Political gains were targeted towards the BBC that doubted the continuation of public funds. Decentralisation of the organisation was then considered as an immense significance to reduce the bureaucracy. The British public was aware of the highly bureaucratic organisational structure and analysts had their doubts that the public funds could be discontinued upon which the organisation is mainly dependent. Post-bureaucratic organisation also meant the BBC will prove itself to be the eligible recipient of public funds (Harris and Prosser, 2007). The BBC had always maintained its reputation as an honest news broadcaster with a significant number of viewership. (See SWOT analysis)
The mid 1980s saw a radical shift in technology. Internet then was dominantly an American defense technology that was designed for the purpose of communicating messages if a nuclear weapon or an atomic bomb went off. At this point of given time i.e. mid 1990s, John Brit was the Director General of BBC who took an initiative of taking BBC online, though it was a little too late to grasp the implications of technology as he said. The BBC was a highly bureaucratic organisation, therefore there was a fight for resources. Brit was also the key person who provided the leadership to bring in the cultural change. In order to broadcast the BBC’s digital services, the resources have to be put in to technology, where as the producers and managers would support the investments made in TV and Radio programs at that time. Along with airing its digital services, the organisation also went under other business technologies such as Business Process Reengineering (BPR) for reducing the cost of doing business to support the agenda of decentralisation of the organisation and capitalising on the allocated resources (Connor, 2007 BBC internet blog).
The technological, political and regulatory changes that influenced the cultural change in the organisation were followed by “globalisation of infotainment industries”. This means growing dependence of businesses on alliances and “flexible form of digital production” (Harris and Prosser 2007, p. 293). Under Brit’s leadership, the environmental influences were managed through earning the bid for programme funding. This decision liberated the TV producers and more job accountabilities were formed. The environmental changes implied the concepts of ‘marketisation’ or creating an internal market and a new trading system. An internal market was formed by reducing subsidiaries, reconstruction of organisational structure, decentralisation of the structure and so forth. The new trading system was formed by programs bidding for the resources for the production by offering competent and agreed strategies and practicing managerial controls on programme commissioning.
The organisation is self-regulated and independent of political or government influence. Nonetheless, due to the deregulatory environment that surfaced in the mid 1980s, the BBC needed to adjust its internal environment / culture to meet the market shift.
References and Bibliography
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3. McKinsey (1968), Improving the Management of Resources, BBC Written Archives Centre, Caversham, September.
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