The Walt Disney Company

The Walt Disney Company: Its Diversification Strategy in 2012

Overview

I. Company Profile II.SWOT Analysis III.External Analysis a. Macro Environment Analysis b. Micro Environment Analysis IV. Current Status

Walt Disney Company • Largest media conglomerate in the world in terms of revenue • Founded on October 16, 1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio • Business Units: • Media Networks • Parks and Resorts • Studio Entertainment • Consumer Products • Interactive Media

The Mission Statement of The Walt Disney Company The mission of The Walt Disney Company is to be the world’s leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world.

Geographic Reach Disney has properties in the US and Canada, Europe, Asia, Australia, and Latin America. The company gets about 77% of its revenue from the US and Canada; followed by Europe (12%); Asia Pacific (8%); and Latin America and Other (3%).

Strategy • Distributing its content through multiple channels. • Ancillary products, mostly aimed at children. • Expanding its existing and new businesses, including investments in the international expansion of business and in investing in new business lines.

SWOT Analysis

Strengths Diversified business • Disney has grown throughout the years. It started from a small producer of animated series during the 1920s to its very popular and established image today. It is one of the largest media and entertainment company worldwide and the company has its theme parks and resorts, media networks, studio entertainment, consumer products, interactive media and cruise line. Established brand reputation • Disney brand is known throughout the world. The company is famous for its exemplary image and it caters to all ages, from kids to the kids at heart. It has built its image for many, many years already through their cartoons, movies and theatrical releases.

• Localization of products • Disney movies show universality. They have the Disney Character Voices International wherein it is responsible for the translation and dubbing for all Disney productions. Here are some of the languages used besides English in Disney movies: •Argentinian Spanish (Pinocchio, Fantasia, Dumbo, Bambi, The Incredibles, Chicken Little, Cars and Ratatouille) •-

Austrian German (The Little Mermaid, Chicken Little and Up)

•Kazakh (Cars 2, Brave, Monsters University, The Lone Ranger) •-

Malaysian (Tarzan, Planes, Frozen)

•-

Vietnamese (Finding Nemo, Brave, Wreck-it-Ralph, Monsters University, Planes, Frozen, Moana)

• Creative and innovative process • The Disney company has great assets including the people conceptualizing and developing their products. They sure know how to think of great ideas and make profit from it. For example, the Disney Cruise Line wherein they have collaborated the sea transport sector and the entertainment from the Disney characters to make a single and wholesome product. • Strong financial assets • Their financial strength made them to where they are right now. They have already expanded to a lot of countries all throughout the world, particularly in Asia.

Weakness • Very high cost of doing their business • Disney invests a of money for their production costs (and other costs e.g. maintenance costs, wages expenses etc.). In relation to this, the high costs affects the prices of their products and services. For example, many people still could not afford to go to Disneyland because of the high ticket price. Also, they had losses in their motion pictures due to high production costs and advertising campaigns.

• Overcrowding at Disneyland in California • The Disney company created the Disney California Adventure in order to lessen the overcrowding and to distribute the number of visitors in the Disney parks. However, due to poor conceptualization of the Disney California Adventure. People still opt to go to the Disneyland. • Lesser edge to video game industry • The company had losses each year between 2009-2011 because Disney had a hard time in competing to the video game industry.

Opportunities • Expansion to new countries • It is possible for Disney to open more theme parks and resorts to new countries, more cruise ships to acquire and more movies to create. There are a lot of new emerging target markets that will benefit them all throughout the world. • Partnerships in media platforms • Disney could invest in other new media industries in order for them to regain the losses of cable subscribers they have had in the past years.

Threats • Escalating competition among competitors • Although Disney has already established its image and branding worldwide, there are other companies with great people behind it and those companies could be a huge threat to Disney company if they innovate and conceptualize products and services that are cheaper but could offer some similar experience to the consumers. • Development of technology • The advancement of technology makes it easier for people to watch Disney movies and TV shows online and it leads to the third major threat to Disney, the • Increase of piracy • The internet world today contains a lot of websites that has movies and TV series available to everyone who access the certain site. Everything now is just a one-click-away and this could lead Disney to have losses of profit.

STEEP Analysis

Social • Different local cultures adds to the experience of the tourist in the host place given the varied Disney’s business location • Changes in the market’s preferences for entertainment • Importance of kids’ and family’s entertainment in the disposal income expenditure • Success is heavily dependent upon public taste and preferences • Price sensitiveness of Asians affects the Hong Kong Disneyland pricing strategy

Technological • Profound effects of technological advancements on the world’s media industry • Technological development affects the demand for entertainment as well as the cost of production • Disney competes for viewers primarily with other television and cable networks, independent television stations and other media, such as DVD and Blu-ray formats, video games and the internet.

Economic • Economic growth, GDP and economic development among countries needs to be considered • Possible global financial crisis will slow down growth • Profitability of the leisure-time industry may be influenced by various factors that are not directly controllable, such as business cycle and exchange rate fluctuations, travel industry trends, amount of available leisure time, oil and transportation prices

Environmental • Theme parks and resorts as well as Disney Cruise Line and Disney Vacation Club compete with other forms of entertainment, lodging, tourism and recreational activities that is affected by weather patterns and natural disasters. • Fluctuations in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel and local entertainment excursions. Peak attendance and resort occupancy generally occur during the summer months when school vacations occur and during early-winter and spring-holiday periods. • Walt Disney Company has upheld strong commitment and responsibility to conserve natural resources by seeking to establish and sustain a positive environmental legacy for Disney and future generations

Political

• Political differences that prevents International Trade • Policies on product safety • The amusement park industry can be strongly affected by the political climate. Especially as Disney operates in China, it is very much dependent on government regulations and is constantly under governmental control (China Daily, 2011)

PESTEL Analysis

Political • The political environment is essential in a region especially since it has a direct effect on the amusement and entertainment industry.

Economic The health of the economy is central for the whole tourism industry as demand depends very largely on consumers’ disposable income.

Socio-cultural The tourism industry as a whole is strongly affected by changes in consumer lifestyles. Especially the ‘Cocooning’ trend can affect the industry adversely as more and more people like to stay at home (“my home is my castle”) and to be entertained by their home entertainment systems.

Technological Through the increasing adoption and use of digital technology marketers can use this as an opportunity to target customers more directly by customizing marketing messages.

Environmental The travel industry can also be affected by adverse weather conditions arising from short-term weather patterns or long-term change or by catastrophic events and natural disasters such as excessive heat or rain, hurricanes, tsunamis and earthquakes (The Walt Disney Company 2013)

Micro Environmen t Analysis Porter’s Five Forces

Threat from competitors The major competitors of the industry (Disney, Universal Studios, Six Flags & SeaWorld) have huge marketing budgets to influence customer preferences.

Threat from new entrants This aspect is very low as the entry barriers are very high due to immense capital requirements.

Threats of substitutes This aspect is somewhat high for the whole industry as there are a lot of other activities a family can do in their free-time like visiting museums, go hiking in National Parks, going to cinemas or making vacations abroad.

Bargaining power of suppliers • Relatively low because companies which construct rollercoasters and other rides and those who deliver beverages or food for the parks like Pepsi and Coke are also corporate partners with all the other amusement park providers. • Vertical integration of Disney, in terms of production (they own their own production), reduced significantly their power.

Bargaining power of buyers • This aspect is relatively high mainly due to low switching costs. As consumers can easily visit other amusement parks in their free-time if they are not satisfied with Disney’s attractions, admission fees etc. • Disney’s services and product offering are generated by desires rather than necessity. Financially restricted customers will not buy.

Current Status of Disney

Current Status of Disney

Disney is still currently involved in a multitude of business ventures both in the worlds of media and technology, as well as minor involvements in many other business projects. 

such as… •  merchandising, theme parks, film, digital media, music,  live productions and other things such as television.

Along with having paramount success in the world of television media Disney also play a substantial role in the film production and release.

Disney is affiliated with many corporations in order to create their films such as Touchstone animations and Pixar, which as now in fact owned by Disney. 

Over the past nine decades Disney is probably most well known for its success in box office

Snow white and the Seven Dwarfs’ the film premiered in December 1937 and became the highest-grossing film of that time by 1939. After this, the company seems to skyrocket in to the box office creating hit after hit, up until modern day in which Disney is still very much at the forefront of box office success. 

Disney Channels original motion pictures have also gone on to make millions and in some cases billions - High School Musical 1,2,3 - Camp Rock

Theme Parks • Walt Disney used his Disneyland series to unveil what would become Disneyland Park, an idea conceived out of a desire for a place where parents and children could both have fun at the same time. • Disneyland was a straight off success almost instantly attracting people from around the globe to go visit its wonders and delights and was almost instantly branded a place of magic.

The new Disney management have create new theme parks such as ‘Disneyland Paris’ and ‘Disneyland Tokyo’ these have both also had massive successes; such as their predecessors and they all still continue to each day, all of the parks

Disneyland Paris

Disneyland Tokyo