Case 22: The Walt Disney Company: Its Diversification Strategy in 2014. Assignment Description: Complete a Case Analysis to analyze a companies Strengths, Weaknesses, Opportunities, and Threats. – The most powerful and widely used tool for diagnosing the principal competitive pressures in a market is the five forces framework.1 This framework, depicted in Figure 3.3, holds that competitive pressures. Jan 24, 2018 Roy from continuing to build on his brother’s dream. In 1971, Walt Disney World opened its doors in Florida. Roy Disney passed away in late 1971. At that point, control of the company passed to Donn Tatum, followed by Card Walker and then Ron Miller (Walt’s son in law).6 Disney continued to expand by adding additional theme parks and media. Latest The Walt Disney Company Its Diversification Strategy In 2014 Case Analysis posts by John Miller Interview of Daria Glazko from IQ Option - July 20, 2016 IQoption Adds New Deposit Feature and Forms New Partnership - July 5, 2016.
Introduction
This report reflects some of the important findings in terms of strategy, organizational behaviour as well as recommendations that should be put in place for further growth. Walt Disney has been in the forefront of the entertainment industry especially in its four consumer markets namely: Studio and Motion pictures, media networks, consumer products and theme parks and resorts.
This report further identifies some of the strengths and weaknesses that befall Walt Disney even with such glory. There are also some threats and opportunities that face this giant company.
This report also analyzes the strategic goal of Walt Disney, especially in terms of product positioning, segmentation, pricing, channelling and also promotion. The recommendations that are outlined in the end will enable this company to prepare itself in dealing with the present threats as well as those that might come up in the future.
Company History
Walt Disney was established by Walter Elias in the early 1920’s and began as a cartoon studio until its growth to a global corporation. This company provides high class entertainment for people around the world. Walt Disney owns massive networks of media together with parks all over the world and operates mainly in North America, Asia, Europe as well as Latin America.
This company has a strong brand image that enables it to draw huge numbers of customers especially to the extended entertainment products. This is a world class entertainment company with over 180,000 shareholders and employs about 60 thousand employees.
Walt Disney has over the years relied on market diversification to achieve its main goal which is to draw more customers. This has enabled the company to grow massively developing from development, marketing as well as research (Jones 273).
Walt Disney has been able to enjoy the benefits of en masse production since it has been a market leader. An example would be when this company utilized extreme amounts of money to invest in its European theme park. It is estimated that the amount totalled to about $3.6 billion, which is a huge amount for other companies to afford. Walt Disney also enjoys the involvement of the government policy which is also demanding.
It is estimated that the French government at one point invested about $1.2 billion in this project, provided transport as well as tax relief on cost of goods estimated to be 7 percent from the previous 18.6 percent. Since the entertainment industry in Disney is designed in a unique way, suppliers are less dominated hence bringing up concentration (Jones 274). Its growth is basically drawn from its size.
The company is able to establish a dependable relationship with its suppliers since it orders products in large quantities. The Disney Company has been able to compete tirelessly with competitors by upgrading all products as well as services to fit customers’ expectations.
Internal strength and weaknesses
Walt Disney is one of the Hollywood’s largest studios, owning about eleven theme parks as well as other product channels. It owns media networks, theme parks and resorts all embedded in the company’s strong brand. However, there are other aspects like competition that affect its operations in terms of pricing, which leads to low margins.
Some of the internal strengths include widened product portfolio, well established brand image as well as well-built satellite networks. All these are favourable factors that influence the target customers positively. There are also other unfavourable internal factors which can be classified as internal weaknesses.
Walt Disney has over the years experienced frail performance of the studio entertainment which has made prospect customers to have a negative image about the company (Clark 2). There is also the negative perception of the Hong Kong Disneyland which brought mixed reactions to the public.
As stated by Media Releases (pp. 11), a greater percentage of the residents in Hong Kong stated that they were disappointed with the H.K Disneyland due to its negative problems associated with it since its opening. Some of the residents demanded that the communication system in H.K Disneyland especially with the public be improved (Lai 7).
The external factors can be classified under opportunities and threats. One of the favourable external opportunities that Walt Disney has experienced is venturing into the international markets (Clark 3).
This has enabled this company to receive new attractions, especially from the expansion of the unique and demanding cruise business. Walt Disney also has the advantage of its equipment which enables them to internalize the social shift. Unfavourable conditions include stiff competition, with other companies copying their ideas. This has promoted piracy of Walt Disney’s products, thus lowering their turnover (Clark 4).
Examples of Disney’s competitors include Universal Studios which has massive targets in Disney’s customers (Clark 5). Another weakness that Walt Disney has is the protest by some of the religious groups. Some of them claimed that the materials released by the company were offensive.
Walt Disney also lacks innovative ideas that would work towards retaining customer’s attention. There have also been some negative sexual implications especially in some animated movies such as “The Lion King” and “Aladdin”, among others.
External environment surrounding Walt Disney
External Environment (p 1) states that Walt Disney is surrounded by competitors who are mainly saturated in the market especially in the U.S. Examples include Busch Entertainment which has equivalent financial resources to Walt Disney. However, with the demanding capital to enter the entertainment industry, Walt Disney finds itself comfortable with less competition.
The corporate hierarchical structure of Walt Disney is stable, with decisions made from top to bottom management. The middle management is the one responsible for carrying out the available projects with the help from the lower management. The culture of the corporation is well defined where all employees must adhere to (External Environment 4).
Disney has remarkable quantity of resources that are available for allocation. This is where Walt Disney associates with its brand name and quality to promote their products and services. The main financial objective of Walt Disney is to diversify in a tremendous rate so as to maximize their shareholder equity returns.
Another strength that Walt Disney boasts about is the proper organization of its logistics operations, HR management, as well as Information Systems. Walt Disney has been able to grow over the years because the management has been in a unique position in the industry. They have been able to relate to past experience, thereby identifying the customers’ expectations.
SWOT Analysis of Walt Disney
Though Walt Disney has since grown to be a successful company, it is clear that there are market forces that drag or affect its performance. This analysis will focus on strengths of this company as well as weaknesses, not forgetting the possible opportunities and threats that befall this company.
Strengths
The main strength of Walt Disney is stored in its brand name. This company has a famous brand that is known to almost every one around the world. This strength is basically drawn from the company’s objective to be the world’s leading entertainment provider, differentiating its products and services from the competitors’.
The Disney brand focuses on vibrant characters like Mickey Mouse, Pooh, just to mention a few, to attract customers especially children. Marimax studios together with that of Pixar have been beneficial to the company in reaching a large base of characters as well as attracting more brands (Clark 2).
Disney has always focused on low-cost strategy which has enabled them to stay in the market for a while. It is clear that a company must have new and fresh ideas to stay in the current environment of business. This company is able to control costs and at the same time provide goods and services of high quality.
Weaknesses
The large workforce in the corporation has been one of the setbacks of this company, not forgetting lofty overhead expenses. Frequently changing the management system interferes with company’s operations because sometimes it becomes more complicated. One should also not forget that this change will always be associated with unwanted expenses.
Threats
The main threat that faces Walt Disney is within its television network. TBS (Tuner Broadcasting System) has mounted much pressure that Walt Disney cannot handle. It is also important to note that in the business environment, competition is inevitable even if there are high costs involved. There are small companies that risk it all in order to fit in the market (The Walt Disney Company 9).
One threat in the Disney’s cartoon industry is the introduction of new cartoon characters. There are quite a number of new characters that are seen everyday in the Television Network. This brings us to the question, “will the characters like Mickey Mouse hold the pressure internationally?”
This can only be determined by observing the industry carefully. Walt Disney also faces major threats of its security system due to issues of terrorism. Employees also have the threat of losing their jobs because the company frequently engages in acts of introducing new executives.
Opportunities
Focusing on this SWT analysis, it is evident that Walt Disney uses demographic segmentation as its strategy. In today’s market, it would be important for this company to conduct psychographic strategy in order to increase the volume of customers.
Corporate and Business Level Strategy
Walt Disney is currently using an informal management approach which is horizontal and decentralized. The available departments are responsible for bringing up new ideas which are considered in the low hierarchy awaiting final decisions. The main focus of the management is on collective creativity of the groups as well as team work.
Walt Disney has set aside a special Sunday when all the creative individuals meet in order to share their ideas (The Walt Disney Company 16). Every employee in this meeting is supposed to participate and pass on his or her ideas to the rest of the team. Walt Disney has also benefited from the services of the executives that are brought in by employees of the top management.
These executives bring with them significant ideas and experience earned from previous entertainment industry to Walt Disney (The Walt Disney Company 19).
Walt Disney uses emergent strategies which are not specifically planned. In this strategy, ideas come from the lower to the top management without the intervention of the seniors. This is one of the best strategies to be used by companies because many people can combine ideas to come up with a concrete strategy.
Since Walt Disney has the intention of targeting families that love entertainment, it is strongly recommended that they cater for the ever changing trends as well as people’s life-styles.
The success of Walt Disney has been in the vision of customers’ value. Walt Disney has been able to visualize the expected results and work upon achieving the best. The other principle of Walt Disney’s success is the ability to demonstrate leadership courage.
Disney was able to portray his visions which inspired other people’s ambitions. He operated by trading values for values with those who felt the need to benefit from the corporation (Linetsky 3). Walt Disney also operates to provide the best quality. This is one of the ways that enables a company to establish long-term relationships with customers.
The third principle used by Walt Disney is to be perfect in all possible ways without compromising the quality of the products and services. Disney is a profound perfectionist and wanted his ideas to work in every means. All his standards are set high because they demonstrate high moral value. Along with his standards, he also considered the costs of achieving as well as failing to achieve them.
Disney maintained his high standards because they were the guide to his success. In some cases, Disney had to engage in some arguments with his employees and even family members in order to preserve the integrity of his standards.
The fourth principle was about money. Disney believed that money was not an end but rather a means. He valued money as a source of financing his ventures and this made him achieve meaningful results (Linetsky 4). The fifth principle is exceeding the expectations of the customers.
The Walt Disney Company Its Diversification Strategy In 2014 2016
Disney ensured that his company created a positive customer experience so as to achieve great results. He believed that the most important achievement a company could have is have highly satisfied customers.
The other principle was to create experiences that are much valued through the design of the entire business. This can be witnessed by the success and design of Disneyland. Its design took much planning techniques that later contributed to the present relaxing and refreshing experience. The excellent designs are also clearly demonstrated in Walt Disney’s film and park industries (Linetsky 5).
The seventh principle was all about treating minds with total respect. In this aspect, Disney made use of the ideas of his employees to achieve his intended goals. He created a favourable working environment that enabled people to exchange ideas for better growth of the company.
The eighth principle was all about treasuring creativity. Disney believed that dreams were creative and that it is important to translate them in real life. The last principle that worked for Disney was to think from all direction. Walt encouraged his workers to think and come up with developing ideas.
At some point, he used sketches to implement his thoughts and dreams so that his workers could have a clear understanding of his ideas. He was actually comprehensive of those contributing ideas as well as insights (Linetsky 7).
Structure and Control Systems
Walt Disney has been profitable due to its use of diversification. Disney also uses synergy effectively as well as employee relation (Kirkman 1). These aspects have made this corporation to stay on top of the niche market. According to the analysis and prospects of Disney, it is clear that they are on the verge of competing with giants like Yahoo and the rest.
The ability of Walt Disney to link innovative creativity to meet customer expectations is what makes him prevail in the entertainment industry. Converting imagination to real life or physical existence positively influences other people. Disney has been on the list of people who are responsible for technological and organizational innovations in animation as well as film industry (Dilts 1).
Recommendations
The first recommendation that I would strongly suggest is that Walt Disney should expand their line of production by engaging in market segmentation. This can be done through psychographic as well as observing the lifestyle characteristics of the customers. I strongly believe that Walt Disney can greatly benefit if it ventures into other industries like fast foods.
Using the brand name Disney, they can attract a large group of customers especially kids. Walt Disney can as well consider introducing online learning software where children can learn more about animation.
Walt Disney should as well analyze all the financial capabilities as well as policies that are implemented in the organization. This can be done through trend analysis in order to determine the financial growth of the corporation. There is also another aspect to be monitored further which is liquidity. This can be used to indicate the capability of the firm to meet its obligations; both short term and long term.
Another change that would be necessary for the company’s profitability is to avoid the frequent change of the management. Though new executives bring with them new concepts, this posses a great risk in terms of communication efficiency within the organization.
It is important that Walt Disney should focus on promoting the existing employees. This is simply because they understand the rules and the regulations of the company as well as capabilities of the other employees. It would also be important for Walt Disney to specialize in providing consumer products as well as rely on its marketing strategy.
They should not only think of diversifying into a new line of products, but concentrate on the existing products and services as well. Walt Disney should put much emphasis on divisions such as the theme parks as well as film entertainment. This will avoid the risk of engaging in those markets that do not address customers’ needs in terms of products and services.
I would also recommend that the company increases its asset requirements and maintain them under strict control. In terms of product delivery, it would be wise for Walt Disney to establish its own distribution channels. This can be done through channel strategy, delivering services and products to its esteemed customers.
Promotional campaigns are also important which would see products expanded all over the market (Ali 19). Since Walt Disney is a multinational corporation, I strongly believe that they have the capability to financially promote their campaign programs.
The Walt Disney Company Its Diversification Strategy In 2014 Full
They can have large promotional budgets since they have their own line of media, hence saving costs of running ads on other media. The issue about pricing can as well be closely monitored so as to cater for a large number of customers. The pricing strategy should in fact focus on the Kim line of products (Ali 21).
The Walt Disney Company Its Diversification Strategy In 2014 2017
Works Cited
Ali, Shabir. Analysis of case: Walt Disney. 2009. Web.
Clark, Wendel. “Walt Disney world SWOT analysis.” Demand Media Inc., n.d. Web.
Dilts, Robert. Walt Disney: Strategies and genius, volume 3. Santa Cruz, CA: Meta Publication, 1996. Print.
External Environment. Opportunities and threats. Scribd Inc. 2012. Web.
Jones, R. Gareth. Case 21: Walt Disney Company 1995-2009. p. C273-C283, 2009. Print.
Kirkman, Christopher. Strategy analysis of the Walt Disney Company. 2001. Web.
Lai, Wilfred. Mixed opinions and less support persist with Hong Kong Disneyland. 2008. Web.
Linetsky, L. Barry. Nine principles of Walt Disney success. 2007. Web.
Media Releases. Residents have mixed opinions towards Hong Kong Disneyland. The Hong Kong Polytechnic University, 2006. Web.
The Walt Disney Company. A case study. 1996. Web.
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