strategic mgmt 3
Shinum 
finalassessmentstrategic.docx“WALT DISNEY “
WHATEVER YOU WISH
WHEREEVER YOU DREAM
Executive Summary
The Report is presented to develop the strategy used to analyse the current market position using Porter’s Five forces model. The report contains problem solving and decision making in today’s context. It also justifies the proposed strategy used in the Porter’s Model for the current situation evolving in the Business firms. It shows about the application of 5 models to the firms leading the organization in the market through proper way of making decision in the competitive rivalry, opportunities and threats of new entrants, power of buyers and suppliers. This report explains how the firm has played an innovative role to develop its reputation in the market. The report finds that the firm is strategically strong among the competitors and the economic condition of Disney is still in lead. It justifies the proposed strategy of cost leadership or product differentiation so; we analyse this strategy through the porter’s model to develop its future success. It talks about the technological changes and adoption of new technology for the development of the firm in the market.
Current Market Status for the Firm
Walt Disney, the Kingdom of Entertainment founded by Walt Disney and Roy O. Disney in 1923, is a benchmark in its industry. Walt Disney brings happiness and joy around the globe and continuously never fails to amaze us with its visions (Disney, 1923). Disney creates safe environment for all the people, Inspiring kids and communities to be more creative and think the world in another way of joy and bringing the positive changes. Likewise, Disney is nature conservative and actively involves in protecting the habitats around the world. It develops different ways in reducing the environmental impact through investing in reforestation to reduce the electricity consumption for the preservation. Integration of different cultures and traditions helps in the market or in the community to form the diversification. Walt Disney succeeded to rank top position on theme parks, according to TEA 2016, with a market share 2.35% and revenue of 31.53% globally. Its net income in the fourth quarter of 2015 was increasing year by year, however Disney’s competitors has experienced contraction on net income.
In today’s Market Scenario, Disney is the top company involving all the business such as media and technology, the key area of success to get in the market. Due to the higher demand in the market, Disney is rapidly increasing its market value. Disney has owned TV’s top 3 telecast and 5 of the Top 6 live-action telecasts. Disney has indirectly own 80% of highest rated sports network in the world – ESPN, and also it owns US most popular commercial lifestyle channel ABC Television Network. It also has great success in the film production and release where some of them are available on iTunes, it is taking place in the market with the touchstone animations and Pixar. Over the past Nine decades, Disney has become successful in box office. Snow white and the seven Dwarf became the highest grossing film on 1939 (Gabler, 2007).
Similarly, Disney has its own different theme parks, amusement parks where “Disneyland Paris” and “Disneyland Tokyo” have the massive success and still continue every day which brings in around $27 billion in revenue each year.
Application of Porter’s Five Forces Model to the Firm
Porter views strategy as competition and defines competition as a struggle for profits marked by five distinct forces. He argues that “competition and profitability are always driven by structure of industry, not whether an industry is rising or old, high or low tech, similarly regulated or unregulated (Porter, 1985). Porter’s Five Forces Model helps to analyse the company for the better development in the market using the external environments. External Environment helps to analyse the ratio of developing or developed market for a new company or to enter into the new market and maintain the position. It also helps in the external threats in the market and the threats that Disney has already encountered or can face in the near future. Well, it is good to know where and what position the company is in and manage to overcome all the threats by analysing the five forces of Porter’s. (Porter, March-April 1979)
Fig: Porter’s Five Forces Model
1. Industrial Rivalry:
Rivalry among the existing competitors takes many forms such as price discounting, introduction of new products, advertising campaigns, and service improvements. High rivalry limits the profitability of an industry. Walt Disney is one of the most leading company in the world which has numerous theme and amusement parks, networks, broadcasting and also get customer satisfaction. With the big dream there is also high chances of competition for Disney to maintain the stability in the market. There are universal parks and resorts, Cedar Fair, Six Flags. Disney also competes with local theme parks outside the USA and China. Every Business tries to attract the new customers and also wants their old customer to be with them. Universal added the Harry potter franchise into its theme parks and there is huge queue of the customer to visit those parks which stimulates Disney’s expansion of Magic Kingdom began on 2012. More than one billion US dollar was invested for Disney in order to maintain its position in the theme park.
Disney has achieved huge success through its innovative and creative ideas of entertaining the customers over the world. To attract the customers Walt Disney continues to build and upgrade their attraction to stay a step forward then their competitors. Many firms in the market is an external factor which directly emerge as a competition that the Walt Disney Company experiences. Likewise, the companies that produce high animated films aggressively competes against Disney’s Pixar Animation Studios. Overall, Disney has faced by many competitors but has maintained its leading position in the market. (Christensen, 1997)
2. Threat of Substitute Products:
Disney parks, Disney world has made great influence in people’s life, the joy, the happiness that no one wants to ignore. In the market, if one product is not gaining much profit then there is the substitute product available. Likewise, Disney parks and resorts has also the threat of substitute for example Zoo, Museums, Movies, Sports but not as satisfying as Disney world’s and Movies. It depends on the customer’s choice as they want to go to the Disney land or want to enjoy in local parks and movies. Higher varieties of the products can manipulate customer’s choice, they feel easy to go where their choices and the quality meets rather than staying or paying high amount for the similar kind of activities or the products. However, Walt Disney has done an excellent job of attempting to find alternatives to the substitutes. As parks and resorts, Disney offers its guests a broad variety that includes four fantastic parks, retail shops, unique hotels having a great dining experience and two water parks. Loyal customers of Disney support the firms by purchasing the new products available in the market, Disney has various loyal customers that if they don’t produce new products then there will be a threat for them of losing their customers. It also focuses on customers quality of the products as they pay moderate price ration then there will be moderate customer satisfaction.
In Porter’s Five forces Model relating to Walt Disney, Walt Disney has their own unique way of attracting their customers and maintaining their old customers by providing them high product quality with no regrets, they must have the strategic approach that the customer will not select the substitute products or substitute way of happiness, instead the customers support them and Disney managed to keep their customer away from the substitute products in the market. (Hubbard, 2011)
3. Threat of New Entrants:
Porter’s five forces model explains that the potential of the new entrants for Walt Disney is comparatively low. For the new entrants in the market, it is way too difficult to get in the position where Walt Disney is now, as they need to invest high amount to get started as a local theme parks, where Disney has already occupied its amusement and theme parks all over the world, not just the theme parks but also in the mass media Disney has owned its reputable image all over the world. New entrants find it more difficult to compete with the brand based upon Low switching cost, high capital cost and high cost of the brand development. Disney has maintained its leading position in the market with high quality of movies/ animated movies, TV Broadcasting, parks and resorts and also mass media industry environment. (Johnson, 2008)
Though there are low threats of new entrants but also Disney can face some of the threats as technological disruption, digital content piracy while developing it in another new cycle. Disney need to keep an updated technological system so that if there is the new entrant’s threat, then also they have the potential to overcome in just a switch difference. Analysing SWOT, the threats of technology can also hamper the firm as technology is number one at the current phase, technological changes in the online product delivery in the entertainment and mass media can shift the profit to the loss. Company can face weak legal protection threats if the potential revenue decrease in the market. (Porter, 1985)
4. Bargaining Power of Suppliers:
The power of suppliers is moderate in the case of Walt Disney, Disney has limited number of suppliers. There are the large population of suppliers which faces weak intensity of supplier’s bargaining power. Thus, “Powerful suppliers can thereby squeeze profitability out of an industry unable to recover cost increases its own prices” (Michael, 1980).
There has the limited number of suppliers for Disney to supply all the products for amusement rides, where some of them are The Gravity Group, S&S Power. These companies have the large flexibility to bargain with Disney. Disney has its own unique products and it has been famous among the loyal customers of Disney so, Disney has lower bargaining power to the industry producing the unique toys and the character related products and ask for any merchandise company for the products. Likewise, for the amusement rides Disney has the limited options of companies for the specific rides and the switching cost will be higher if Disney wants to switch with other companies. Disney is a long-term business and many suppliers want to be a part of Disney to serve their products, so the company size can be an advantage for Disney. Suppliers know that Disney is the way of making profit for them and Disney can provide them business for future. Hence, Suppliers can make an effort of bargaining power on the participants by raising the product prices or by reducing the quality of the goods and services purchased. (Slater, 2002)
5. Bargaining Power of Buyers:
The power of buyers in the context of Walt Disney is strong. The customers have their own choices of entertainment, they can switch from one entertainment provider to the another with the low cost. Walt Disney has its record of having large number of people in the weekends especially on Saturday’s and 3X times busier in the long holidays instead of weekdays. There are no many options for population of the world for this kind of entertainment but still Disney parks and resorts stand steadily at first rate. The customers who are financially restricted may not buy the tickets and go for the low-price ticket of other entertainment providers. Disney tickets are reasonable, but the price changes based upon the season when the market is good and reduce the price when the market is low. To Reduce the crowd during the time of weekends and hot seasons, the price of ticket increases in areas like parking prices, pass price. Disney offers only two hours free parking where; the hourly parking price is doubled.
Disney has world renowned products and they have the reasonable prices for all the entertainment or the products they provide. They have the high quality and safe handling activities which drags the customers towards them. Customers are the kings, they have their choices on varieties of entertainment providing companies, Disney provide quality products with the reasonable prices but some customer wants the lower price entertainment so such customers can switch to the other provider in the low switching cost.
Hence, the Disney world has its own pace and uniqueness through its varieties of characters as Micky Mouse, Donald Duck, Snow White, Cinderella, and many more character which resembles the world of the joy and happiness.
Proposed Strategy- Differentiation
The Walt Disney company has the Differentiation Strategy. Disney has various products and services for its customers. Disney is on the leading position through its various entertaining products in the market. They have their loyal customers who believes on the quality product to gain the competitive advantage. Disney has vast range of clients and the company has diversification and has maintained the customer need and wants so, their products and services has also diversified in various countries, online products and many more which increases the sales and revenue of the Disney. Hence, Disney has made many improvements in their product design, productions, and distribution through the entertainment that blows the mind of the customers. Disney have various product brand related to Media and entertainment where the Media brands are ESPN, Disney ABC Television. Walt Disney has multiple studios of production, distribution, Disney Music Group, Theatrical Group, Studio Services all to serve the customers. They have multiple parks and resorts as a product of entertainment in different countries as California, Florida, Tokyo, Paris, Hong Kong, Shanghai. (Kotter, 1996)
Disney has also gained the loyal employees who loves to entertain and while serving their customers they have always a smile on their faces, which makes the customer friendly environment and makes it easier for the product distributions. They have trained their employees in Disney style. Disney entertainment packages brings the price of the ticket worthwhile by providing different activities or different attractions among the world and bring in the new customer with proper advertisement of the product differentiation. Disney’s has the strategy of storytelling and the adult parents also enjoys the theme of the Disney and remembers the characters they watched e.g Cinderella, Toy Story which makes Disney theme parks more attractive and special then other entertainment products. It also has Consumer products and interactive media such as Disney Publishing Worldwide (DPW), Disney Consumer Products (DCP), Disney Interactive (DI), DCPI Labs. It is the expertise in differentiation, by actively participating employees in the theme parks in the Disney style, dressing up in the character of mickey mouse and other character in the real world. Thus, Disney itself is a different word for the joy and entertainment where no one could ever find in the world.
Hence, Disney is the world-renowned company for its product differentiation, and it is one of the most successful business in its history and in the future to come.
Justification for Choice of Strategy
Disney has always been very unique and creative so as their products are also the same. It is expertise in product differentiation with positive impact on the environmental sustainability. Product Differentiation of Disney has staff friendly environment various range of entertainment offerings and unique customer experiences. The entertainment offerings include the transportation, accommodations, and meal plans. Differentiation strategy of Disney has proved by providing numerous magical vacations for the kids and parents of all ages where the kids will not be left out of this experience. Disney has the renewable Electricity and can generate the power from the sun to operate for two of four theme parks in Orlando in a year. There products are fuel conserving on steam trains and the Mark Twain Riverboat in Disneyland Resort in California which runs from biodiesel made up from cooking oil. They have the strategy of reducing the waste and controlled the waste of the products by reducing the use of plastics products by 60%. They have various other environmental sustainability which fosters the young generation to develop healthy product quality approach in the coming future.
Disney have the product differentiation as they promote their product with an informative way that brings a smile on every parents of the kids with the Nutrition guideline policy of Disney promotions and sponsorships. According to the Disney by 2020, all the advertising on kid-focused media platforms will be with foods that comply with the Nutrition Guideline Criteria. They have their uniqueness in every way of giving the product information or distribution.
The Disney company announces the Strategic reorganization of its media and entertainment business where the new structure is designed to accelerate the strategy of Direct-to Consumer for the rapid success of Disney. It has the well-designed structured delivering the product services with the primary focus on the company’s streaming services as Studios, General Entertainment and Sports.
In every way, Disney never stops in providing better product/services for the customers, it still struggles in making the company more and more systematic to attract the new customers in their world of joy. (M, 1980)
CONCLUSION
The mission of the Walt Disney Company is to be one of the World’s leading producers and Providers of the Entertainment and Information. It seeks to develop the most creative, innovative and profitable entertainment experiences and related products in the world. Disney’s has its own uniqueness of creating happiness among the people, the character which they made are just mind blowing as well as the product differentiation involves all the services need to fulfill to the loyal customers. Disney has been always a renowned company since its history, it has been a diversified and family-based entertainment and media enterprise. Disney has multiple market segments and many products which are incomparable to any other products such as Disney’s Theme parks, video games, music’s and many more. It is the most famous entertainment in the World.
In the current scenario, Walt Disney has its own different world of joy which is increasing as the number of people getting towards the technology and knowing the life of it. Walt Disney has a competitive advantage; it provides the charm and life of prosperity among the people through the online delivery and Mass Media. The Porter’s five forces model helps to analyse the external environment in the firms which includes the industry rivalry, threat of substitute products, bargaining power of buyers, bargaining power of suppliers and threat of new entrants.
Thus, Disney has the differentiation strategy which provides all the products and services to the consumers. The product differentiation has included all the major products that helps Disney to increase its sales and revenue in the current market scenario. Disney has respected all the customers and its employee members too, so that they have the loyal employees and loyal customers.
Disney has earned a huge reputation in past history and even now it’s been in the leading position which is only possible through the support and loyalty of the customers and their employees. It has never returned any customer upset with its product promoted in the market. It has also faced different problems in its way to the success, it was also in the declining phase in the past, but it has the willingness and power to overcome such problems and maintain its stability in the market. Hence, Walt Disney is the top leading companies in the entertainment world of joy and happiness.
REFERENCES
1. https://disneyssinct.wordpress.com/disney-current-situation-and-future-plans/
2. https://thewaltdisneycompany.com/app/uploads/FY10Disney_2010_CC_Report.pdf
3. https://thewaltdisneycompany.com/app/uploads/2020/01/2019-Annual-Report.pdf
4. http://panmore.com/walt-disney-company-five-forces-analysis-porters-recommendations
5. https://thewaltdisneycompany.com/environmental-sustainability/
6. https://thewaltdisneycompany.com/app/uploads/2020/02/CSR2019Report.pdf
8. https://www.slideshare.net/aditisehgal2/walt-disney-strategy-management
10.Christensen, C. (., 1997. The innovators dilemma: When new technologies cause great firms to fail. Harvard Business School Press.Disney, W., 1923. Gabler, 2007. 11. Hubbard, G. &. B., 2011. Strategic Management: Thinking, analysis, action. Pearson Education Australia, Volume 4th Ed. 12 Johnson, G. S. K. &. W. R., 2008. Exploring Corporate Strategy. Researchgate, Issue text and case. 13.Kotter, J., 1996. Leading change. Harvard Business School. Michael, 1980. 14. M, P., 1980. Competitive Strategy, New york: Free Press. 15. Porter, M., 1985. Competitive Advantage: Creating and sustaining superior performnce.. New York: Free Press. 16. Porter, M., 1985. On Competition. Harvard Business School Publishing. 17. Porter, M., March-April 1979. How Competitive Forces Shape Strategy. Harvard Business Review. 18. Slater, S. &. O. E., 2002. A fresh look at industry and market analysis.. Business Horizons, Volume 45(1), pp. 15-22.
