Case study, Walt Disney

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Case study, Walt Disney

Casestudy, Walt Disney

Casestudy, Walt Disney

SWOTanalysis

Strengths

  • Large and diverse portfolio: Over the years, Walt Disney has been able to create a wide range of products and impressive collections. The company has countless characters that star in different films. Some of the most successful characters include Mickey Mouse, Minnie Mouse, Aladdin and dale among others. This is arguably the most important strength at Disney.

  • Excellent customer service: although Disney is know for it incredible characters such as Mickey Mouse, the company have an excellent customer service. Disney management demands that its employees should give the client and customer stellar and world class customer service.

  • Merger and acquisition of Pixar: Although Disney has acquired other entertainment companies such as Lucasfilm and UTV Software Communications, the long term Business Corporation and eventually acquisition of Pixar is a critical aspect of Disney strengths. Collaborations with Pixar over the years have resulted into successful films, for example the Toy Story.

  • Diverse products: Disney has diversified the products it offers in the entertainment industry. Although the cartoon oriented product is as major product for Disney, it is also involved in production of other feature films. It also has a media network division which is a major source of revenue. Disney owns a number of television networks through the ABC Television Network. Theme parks are also an important aspect of Disney operations. Since the opening of the first theme part, Disney is no longer a media company but an entertainment company. Other products include interactive media and consumer products.

Weaknesses

  • Increased cost of operations: Disney operates in an industry characterized by high costs and expenses. The diminishing returns and economic challenges that have increased cost will therefore have an impact on its operations.

  • Limited developmental property: Disney has limited prospect of expanding its theme parks and resorts due to limited land. This is an important aspect due to the fact that Disney success is founded on new innovations.

  • Poorly performing consumer products segment: The consumer products division is the smallest division in the company lagging behind the revenue. Although there has been reported growth in revenue, it is performing poorly compared to other Disney divisions.

  • The need to constantly create materials: The success of Disney operations is determined by its ability to constantly create new and successful materials. A flop or negative review of its products may be disastrous.

Opportunities

  • Tapping into the music industry: Disney has over the years concentrated in children and young adults stars. To expand its market, Disney can venture into the rapidly growing music industry.

  • Geographical expansion: although Disney is present in different parts of the world, geographical expansion, especially the theme parks and resorts is an important opportunity.

  • Reuse of portfolio: the most important strength at Disney is a diverse and large portfolio. This diversity is a huge opportunity for Disney since it can continuously use past characters as cash cows. For example, Mickey Mouse character has been used for over 80 years.

  • Adoption of new technologies: Disney operates in an industry that is largely influenced by emerging technologies. Adapting to new and emerging technology in production as well as marketing will have an influence on Disney performance in the near future.

Threats

  • Unstable and struggling economy: Although the economy has significantly recovered from the recent financial crisis, the impacts of a struggling economy are an important threat to the operations of Disney. A further decline in the economy will have an impact in the income statement of Disney.

  • Rapidly changing technology in the entertainment industry: There have been unprecedented changes in technology in the recent past. Although there is a positive side it, emerging technology can transform the entertainment industry at the expense of enterprises such as Disney.

  • Intense competition in the industry: Disney is faced with competition from all aspect of its operations. Increased competition in the theme parks and resorts is one of the most important threats to Disney operations.

SWOTanalysis looks at the internal and external environment of anorganization to identify the strengths, weakness, opportunities andthreats of an organizations operation. It gives information on theinternal and external factors that have an influence on theorganization success or failure. Strengths are factors that puts theorganization at competitive advantage, weakness are aspects that areharmful if capitalized by competitors, opportunities are situationthat are favorable to increase competitive advantage and threats aresituations that are not favorable and can impact negatively on theorganization.

Space Matrix

7

6

5

4

3

2

(2, 2)

1

-2

-1

1

2

3

4

5

6

7

-1

Spacematrix (strategic position and action evaluation matrix) is astrategic management tool that suggests which strategic plan theorganization should pursue an increase it competitive advantage. Thespace matrix is based on four basic positions that include thefinancial, stability, competitive and industry position. Y axiscoordinates is determined by adding the industry position score andcompetitive position score. The x axis coordinates is obtained byadding the stability position score and financial position score.

BCG Matrix

HIGH

Market growth rate

LOW

HIGH Market Share LOW

  • Media networks and broadcasting

Stars

  • Studio entertainment

Question

Mark

  • Parks and resorts

Cash cows

Dogs

  • Consumer products

TheBCG matrix is a strategic management tool that rates an entityaccording to its market share and market growth rate. Dogs representan entity with low market share and low market growth rate, forexample the consumer products at Walt Disney. Question marksrepresent entities consuming more cash than they are able to generatedue to rapid growth but low market share. Studio entertainment isquestion marks in Disney. In stars generate huge cash due to strongmarket share but consumer a lot of cash due to rapid growth. A starin Disney operations is media networks and broadcasting. The themeparks and resorts are cash cows at Disney. While they generate hugecash due to relatively large market share, the grown rate isrelatively low and thus consumes less cash.

IEMatrix

4.0

High

Strong 3.0

Average 2.0

Weak 1.0

3.0

Medium

(3.05,2.55)

2.0

Low

1.0

IEmatrix (internal external matrix is a combination of the internalfactor evaluation and the external factors evaluations. It containsnine boxes representing three quadrants. Quadrant 1, 2 and 4represents “grow and build”, 3, 5 and 7 represent “hold andmaintain” while 6, 8 and 9 represents “harvest or divest”. Thetotal score for the internal factors evaluation is plotted on the xaxis while the external factors evaluation is plotted on the y axis.The IE matrix indicates that Walt Disney is in the “grow and build”section.

CompetitiveProfile Matrix

Walt Disney

CBS Corp.

Time Warner

News corp.

Carnival corp.

Paramount Pictures corp.

Lucas film

Critical success factor

Weight

Rating

Score

Rating

Score

Rating

Score

Rating

Score

Rating

Score

Rating

Score

Rating

Score

Market share

.15

3

.45

2

.30

3

.45

2

.30

2

.30

3

.45

3

.45

Advertisement

.15

4

.60

4

.60

3

.45

2

.30

3

.45

3

.45

3

.45

Global expansion

.15

4

.60

3

.45

3

.45

3

.45

2

.30

3

.45

3

.45

Technology

.18

3

.54

3

.54

3

.54

2

.36

3

.54

3

.54

3

.54

Customer loyalty

.12

4

.48

3

.36

2

.24

2

.24

2

.24

3

.36

3

.36

Brand awareness

.15

4

.60

2

.30

2

.30

2

.30

2

.30

3

.45

2

.30

Creativity

.10

3

.30

4

.40

3

.30

3

.30

3

.30

3

.30

3

.30

Total

1

3.55

2.95

2.73

2.25

2.43

3.00

2.85

Inorder to have a better understanding of its market position, it isimportant for Disney to look at the external environment andcompetitive advantage. A competitive profile matrix identifies whoare the key competitors in the market and where they are stronger.The competitive profile matrix is based in the critical successfactors in the industry. The matrix will enable the company toidentify its strengths and weakness in the market compared to thecompetitors. It also points into areas where the company can improveas well as critical success factors that need to be protected.

References

David.F. R. (2013).Walt Disney Company, 2013, case8,p 441-450.