- The Walt Disney Company Its Diversification Strategy In 2014 2016
- The Walt Disney Company: Its Diversification Strategy In 2014
- The Walt Disney Company Its Diversification Strategy In 2014 Video
- The Walt Disney Company Its Diversification Strategy In 2014 Full
- The Walt Disney Company Its Diversification Strategy In 2014 Due
Autor: Sharon • October 4, 2018 • 1,842 Words (8 Pages) • 383 Views
Page 1 of 8
- RECOMMENDATION
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. View The Walt Disney COmpany Its Diversification Strategy in 2014.pdf from MAN 5422 at Universitas Gadjah Mada. The Walt Disney Company: ItS Diversification Strategy in 2014 PREPARED BY KELOMPOK. 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. The Walt Disney Company: Its Diversification Strategy in 2012. Organizational goals and objectives. Internal environment: Strengths and weaknesses. External environment: Threats and opportunities. Intellectual assets.
For further improving The Walt Disney Company’s performance, the company’s management needs to take a look on their innovative fronts. Disney must continue to strengthen operations by identifying new opportunities in the current target markets, with Disney's incredible brand recognition in market it will not be that hard. But along with that Disney also need to maintain their values and be fully compatible with either their entertainment niche or also possibly along the informational divisions.
SWOT Analysis
Strengths
Weaknesses
Strong brand portfolio.
Diversified entertainment businesses.
Brand reputation.
Competency in acquisitions.
Diversified businesses.
Localization of products.
The Walt Disney Company Its Diversification Strategy In 2014 2016
Concentration of operation.
Few opportunities for significant growth through acquisitions.
Opportunities
Threats
Increased focus on expanding presence in emerging economies.
Growth of entertainment industries in emerging markets.
Expansion of movie production to new countries.
Competitive pressure.
Increasing piracy.
Strong growth of online TV and online movie rental.
Strengths
The Walt Disney Company: Its Diversification Strategy In 2014
The Walt Disney Company’s products product portfolio provides a competitive advantage for the company over its competitors. Their brand has been known for more than 90 years and has been widely recognized worldwide, especially due to its Disney Channel, Disney Park resorts and movies from Walt Disney studios. One of the strongest sides the company has is its competency in acquisitions. The Walt Disney Company has acquired Pixar Animation Studios in 2006, Marvel Entertainment in 2009 and Lucasfilm in 2012. Those have already proved to be very successful in terms of revenue and profit growth. Few other Disney competitors have had such record of successful acquisitions. The business operates five different business segments, in many different economies and is generating their income using different business models. Due to such diverse operations, Disney is less affected by changes in external environment than its competitors are. Recently, Disney has started adapting its products to suit local tastes. Besides the parks and resorts, company’s movies and consumer products are adapted for Chinese market to attract more visitors. This is rarely initiated by the movie studio itself and is something that few other studios are doing.
Weaknesses
Heavily dependent on North America, although Disney operates in more than 200 countries, it heavily depends on United States and Canada markets for its income. More than 70% of the business the revenues come from US alone, while the major Disney’s competitor News Corporation receives less than 50% of revenues from US, making it less vulnerable to changes in US market (Market Daily News, 2013). There are few opportunities for significant growth through acquisitions. They are the largest entertainment provider in the world and has become so due to acquisition of competitors. The last Disney’s acquisition had to be approved by Federal Trade Commission so that the company wouldn’t have to deal with antitrust problems. This means that the size of the Disney’s business has become a concern for the government due to significant market concentration and that the company has very few opportunities to acquire competitors. Otherwise, Disney may become a subject to antitrust laws (Market Daily News, 2013).
Opportunities
Disney Company has already entered international markets and should continue to strengthen its position there to benefit from such high industry growth. Also, Disney has an opportunity to expand its movie production, where movie production industries have developed good quality infrastructure. This would result in lower movie production costs and more localized movies for international markets.
Threats
The intense competition in very competitive industries is the biggest threats. The competitive landscape changes quite drastically in the industry and new competitors with new business models compete more successfully than incumbent media companies. Disney’s parks and resorts business segment also receives strong competition from local competitors who can offer better-adapted product. This results in growing competitive pressure for Walt Disney Company. Disney also faces the bad side of advancements in technology, piracy. Copying, transmitting and distributing copyrighted material is much easier and this poses a great risk to Disney’s income, as fewer people would go to watch movies in a cinema or buy its DVD, when it’s freely available online.
The SWOT Analysis indicates that Disney must pay close attention to the potential threats that can inhibit the company’s continued growth and threaten its financial security.
REFERENCES
Carillo, C., Jeremy C., Kendree, T., & Jeffrey S. H. (2012). The Walt Disney Company: A corporate strategy analysis. University of Richmond: Robins School of Business.
Gamble, J., Peteraf, M. A., & Thompson, A. A. (2013). Essentials of strategic management: the quest for competitive advantage 4th Ed. New York: McGraw-Hill Education.
Market Daily News. (2013). The Walt Disney Company: A Fairy Tale Growth Story. Retrieved from http://marketdailynews.com/2013/05/20/the-walt-disney-company-nysedis-a-fairy-tale-growth-story/.
Download: txt (12.5 Kb) pdf (58.9 Kb) docx (16.7 Kb)
Continue for 7 more pages »Only available on Essays.club
Blog Post #1: Critical Thinking for Business Decisions
- Disney: Strategy Annual Report Media Networks, Experiences, and Product
- Application: Explain how critical thinking for decision making is applicable to the scenario. Use evidence to support your explanations.
- What makes critical thinking crucial for decision making?
- Analysis: Explain how information (such as facts, opinions, and published reports) is used to determine or establish the context. Use evidence to support your explanations.
- Why do you think the company reached the decision to diversify?
- What steps do you believe were taken? Explain your response using sources found during the research of your selected company.
- Conclusion and related outcomes: Describe the role of logic, evidence, and arguments in the company’s decision-making process.
- Was the decision to expand products, services, or value chain successful? Why or why not?
Walt Disney Corporation
The Walt Disney Corporation has long been a worldwide entertainment giant that now “operates in four business segments: Media Networks, Parks Experiences and Products, Studio Entertainment, and Direct-To-Consumer and International” (Reuters, 2020). Their movies, products, and theme parks have a worldwide appeal to people of all ages and backgrounds, as their consumer base does not have any limitations or hinderances. “The mission of the Walt Disney Company is to entertain, inform and inspire people around the world through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovate technologies that make ours the worlds’ premier entertainment company” (Walt Disney, 2020).
Analysis–Critical Thinking Application
Now that we see the mission statement of Walt Disney and the restructuring they went through in order to strategically position their business for the future, the reason behind the company restructuring can be examined. As a company looks to restructure their business and diversify, they are searching for ways to add customer value to their products and services while entering into new industries. To realize that restructuring is a company objective, critical thinking plays a role in the formation of this idea and how to implement such an aggressive and potentially profitable strategy. “Critical thinking skills help you identify the problem or goal, brainstorm solutions, interpret data correctly, weigh the options logically, and efficiently organize the implementation and revision of your plan” (Soomo Learning, 2020). Disney viewed their restructuring as a business operations goal and not a problem. The stated objectives for the diversification efforts from Walt Disney CEO were focused on “creating a more effective, global framework to serve consumers worldwide, increase growth, and maximize shareholder value” (Walt Disney, 2018). The overall theme remains adding customer value. These business objectives are very specific and deliberate decisions aimed towards maximizing customer value. Critical thinking skills are crucial for the decision making process because as you gather information about the stated problem or goal, your focus and priority become choosing the best path for implementing ways to reach specific business objectives.
Decision for Diversification
In order to reach the decision of diversification, Disney used critical thinking in order to identify what their company can do better than other company’s within the new industries they would be entering into. The steps takes to achieve this included exploring just how they would be able to gain and maintain a competitive advantage. “Before diversifying, managers must think not about what their company does but about what it does better than its competitors” (Markides, 1997). I think that Walt Disney realized that within their global entertainemnt corporation, they already had the infrastructure and the competitive advantages to be able to enter into different industires without really disrupting their own internal business operations. Our text states that this type of a diversification strategy is called related diversification. “Related diversification occurs when a firm moves into a new industry that has important similarities with the firm’s existing industry or business lines” (Soomo Learning, 2020). Instead of continuing to house the different business opportunities like media, theme parks, and products under one corporate umbrella, it made sense financially to diversify into the corresponding industries. This decision has enhanced and also solidified the sustainability of Walt Disney as the company moves forward with its mission statement of using innovatite technology and their brands to remain a world leader in entertainment.
Conclusion
Pandemic aside, the decision for Walt Disney to diversify their entertainment corporation has been the right decision financially. Because of the pandemic we are currently experiencing, “Walt Disney’s diversified entertainment and media portfolio hit a major snag in the latest quarter, as the coronavirus pandemic impacted practically every business that Disney operates in around the globe” (Jasinski, 2020). Movie production came to a halt, theme parks and cruises were forced to cease operations, and retail sales of product were way down. The only area where Disney saw any gains financially was in their streaming platforms, but that did not makeup for the gigantic losses in their other sectors. “Management estimated that Covid-19 took a nearly $3 billion bite out of Disney’s operating income in the [third-quarter] period” (Jasinski, 2020).
Before the pandemic, we can point to Walt Disney’s year over year revenue growth to support the company’s decision to reorganize. The reorganization of the company was announced in March of 2018. If we look at some historical data of year to year revenue growth, we can see that the decision has been profitable.
“Disney annual revenue for 2017 was $55.137B, a .89% decline from 2016” (“Disney Revenue”, 2020).
“Disney annual revenue for 2018 was $59.434B, a 7.79% increase from 2017” (“Disney Revenue”, 2020).
“Disney annual revenue for 2019 was $69.57B, a 17.05% increase from 2018” (“Disney Revenue”, 2020).
Each business under the Walt Disney corporation is serving a different market and customer. Making the theme parks and products into one business has been the best decision financially as “combined, consumer products and theme parks would overtake television to become Disney’s largest business” (Fritz, 2018). By reorganizing their company, Walt Disney successfully diversified their company portfolio and better positioned themselves in the markets and industries in which they already served.
References
Disney Revenue – 58 Year Stock Price History: DIS. (2020). Retrieved from https://www.macrotrends.net/stocks/charts/DIS/disney/stock-price-history
The Walt Disney Company Its Diversification Strategy In 2014 Video
Fritz, B. (2018, March 14). Disney Overhaul Sets Stage for Succession Race. Retrieved from https://www.wsj.com/articles/walt-disney-co-unveils-strategic-reorganization
Jasinski, N. (2020, August 05). Disney Earnings Were Better Than Feared. Its Stock Is Jumping. Retrieved from https://www.barrons.com/articles/disney-stock-earnings-them-parks-streaming-movies-sports-espn-51596576584
Markides, C. C. (1997, November/December). To Diversify or Not To Diversify. Retrieved from https://hbr.org/1997/11/to-diversify-or-not-to-diversify
Reuters. (2020). DIS.N – Walt Disney Co Profile. Retrieved from https://www.reuters.com/companies/DIS.N
Soomo Learning. (2020). Critical business skills for success. https://www.webtexts.com
The Walt Disney Company Its Diversification Strategy In 2014 Full
The Walt Disney Company. (2020, August 28). The Walt Disney Company. Retrieved from https://thewaltdisneycompany.com/
The Walt Disney Company Its Diversification Strategy In 2014 Due
The Walt Disney Company Announces Strategic Reorganization. (2018, June 27). Retrieved from https://thewaltdisneycompany.com/walt-disney-company-announces-strategic-reorganization/