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The Walt Disney Company Case Solution
Walt Disney was founded in 1923- since then it has earned tremendous success in the entertainment industry worldwide. SWOT, Porter’s Five forces, PESTEL analysis and VRIO are tools that can be used to analyze the internal and external environment of Walt Disney. The internal analysis comprises of the strengths and weaknesses of the company. To ensure the growth of the company, it should identify its key assets and the shortcomings that hinder the growth. The strength of Disney is its Diversified Portfolio, Strong brand name, Strong financial position, Human resource and customer loyalty. The weakness of the company include concentration of revenue in North America, Acquisition led growth strategy, TV networks as major source of profit, high cost of operations, and minimal share of online presence in the business portfolio. The external analysis comprises of Opportunities and Weaknesses. The opportunities for Disney are Technology, The increasing demand for movies, videogames and apps, Expansion opportunities in new economies, consumer perception of Disney and the trend of consumers desire to watch familiar characters and franchises. The recommendation on the basis of this internal and external analysis is that Disney should expand in emerging economies through virtual reality and traditional mediums.
Following questions are answered in this case study solution:
External Analysis of the Walt Disney Company
Internal Analysis of the Walt Disney Company
Alternatives and Recommendations
Case Study Questions Answers
The Walt Disney Company, formerly known as the Disney Cartoon studio, was established in 1923 by Walt and his brother in Hollywood. With its strategic leaders, creativity and innovation, the company has earned phenomenal success as a worldwide entertainment company with four business segments: Media network segment, Parks and resort segment, the studios entertainment segment and Consumer products and interactive media segment (Inamdar, R. King, & T. Rothaermal, 2020).
3. External Analysis of the Walt Disney Company
SWOT analysis is one of the most popular tools to analyze the external environment of a company. It provides important insights about the opportunities and threats in the external environment of the business and how to utilize or counter act them respectively according to the company’s strength and weaknesses (Klenton, 2021). In addition to SWOT, PESTEL analysis (examines the effect of economic and environmental factors as well as other Political factors, regulatory factors, social and technological factors present in the microenvironment of a company) and Porter’s five forces (how easy it is for new entrants to enter the market, existing competitors, buyers power, suppliers power and substitute products/services) are other useful tools and technique to understand the influence of external factors on a company
Opportunity 1- Technology
The advancement in technology is one of the biggest opportunities for Disney. The company can integrate technology in its products and services to acquire consumers from its competitors by providing a differentiated experience and decreasing the buyer pressure. As discussed in strengths, the Company holds a huge financial muscle to invest in and leverage on technology for better customer acquisition, brand image and marketing and promotions.
Opportunity 2- The Increasing Demand for Movies, Videogames and Apps
Disney has various potential opportunities in the entertainment industry. There is a rise in consumer expenditure on videogames, movies and apps (Bothun, 2012). Considering the strong financial resources, technical expertise and a strong global brand name, Disney can use these strengths to leverage on the wide growth opportunities in the entertainment industry
Opportunity 3- Expansion Opportunities in New Economies
With global brand recognition, Disney has immense opportunities to expand in to new regions of the world. The developing economies are growing at the fastest rate with an increase in consumption of streaming services and Pay- TV (Team, 2012). This is a tremendous opportunity for Disney to enter the less concentrated and competitive markets with shows tailored to local socio economic culture and establish its foothold. Many politically and economically stable markets like Turkey, Colombia and fast growing markets like India are attractive locations for the expansion of Disney Theme parks.
Opportunity 4- Consumer Perception of Disney
Disney has cultivated an emotional connection with its consumers. Disney is the favorite brand of the population who grew up during the era of Walt Disney. This emotional connection and social belongingness is an opportunity for Disney to diversify in to new business. This perception is a tremendous opportunity for Disney’s online streaming service to pose a tough competition to the well established players and to the new entrants in the market with its huge collection of critically acclaimed movies and shows.
Opportunity 5 – Consumers Desire to Watch Familiar Characters and Franchises
The familiarity and the connection Disney fans have with Disney characters, movies and shows is unparalleled. Research shows that the plethora of new content to consume everyday overwhelms the consumers and creates confusion about what to watch (Trainer, 2019). This state leads them to gravitate to familiar characters and shows. Disney can cash on this opportunity by producing new content, shows and movies using publically acclaimed Disney characters, strengthening their relationship with the consumers, decreasing the buyer pressure and winning the steaming war.
Threat 1 – Changing Consumer Preference
The technological changes have influenced the preference of consumers. Attracted by lower prices, convenience and enormous variety of content and features, Consumers are now making the switch from traditional cable to its substitute – watching content online through online streaming services such as YouTube, Netflix, Apple TV+ etc. (Team, 2021). The TV networks of Disney, contributes the largest to its profits. This drastic change has led to Disney channel and Disney’s ESPN losing viewership. Despite heavy investments in Disney’s ESPN that made it 2018’s most expensive TV subscription channel, Disney is bearing losses to the online streaming service providers, as consumers are canceling their TV cable subscriptions or not subscribing at all.
Threat 2 – Rise of New Competitors in Streaming Services
The increasing technological disruption in the entertainment industry has increased the threat of new entrants. Entering into the streaming service industry recently with Disney +, Disney was already facing fierce competition from well-established market players like Netflix, when new entrants like Apple TV +, HBO Max, AT&Ts, NBC Universal’s Peacock, has added to it. To stand out among the sea of competitors and differentiate their services in the mind of consumers, each of the companies are investing huge amounts to produce original and exclusive content, intensifying the streaming wars more than ever before. Disney’s strategy to enter the market with lower subscription fee as compared to Netflix is under threat by a new entrant Apple TV + who is offering even lower prices than Disney +.
Threat 3- Competitive Pressure
Since Disney has diversified into various media segments of the industry, it faces severe competitive pressure from major players in the each segment. The pressure from existing competitors, substitute industries and new entrants puts the company in tremendous pressurizing environment to continuously invest in producing creative content, acquisitions, licensing, publishing and retail.
Threat 4 – Socio- Cultural Differences in International Countries
Disney has a strong foothold in terms of products, services and brand recognition in 45 countries of the world. Disneyland has been one of the most visited amusement parks worldwide attracting people of all ages, making it one of the most successful ventures of Disney. However expanding to international countries brings itself with the threat of socio-cultural differences and clashes influencing the business relationships and profits. Companies need to adopt careful strategies while expanding in to a new country especially with a strong culture. In the past Disney struggled in expanding to Paris because the French believed it to be a part of “American Imperialism” resulting in huge losses. In the future, Disney can face similar problems in expanding to new countries where the culture does not resonate with the culture of America, especially in countries that are protective of the perseverance of their own culture and concerned about culture imperialism. Additionally, due to the socio- cultural differences, Disney might face cut throats competition from existing local players.
Threat 5 – Political Wars
The political wars and government clashes pose a threat to Disney’s strategy to expand in to new emerging economies with its products and services. For example, while expanding in to China, Disney being an American company was under threat by the negative influence of US - China trade wars. The changing political relationships of America especially with emerging economies can lead to resistance from the population of these countries, increasing the pressure from buyers and influencing the business of Disney.
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