summarize and combine papers

Table of Contents

1. Introduction

2. List of External Opportunities and Threats

2.1. TOWS Matrix Appendix

3. Mitigation Factors for Threats

3.1. Expanding to Mexico and other Countries

3.2. Spanish Language and Culture Content

3.3. Mitigation Factors for other Threats

4. Exploiting Strategies for Opportunities

4.1. Market Size, Rise in Demand for SVOD services, Rise in Internet Users and Bundling

5. Conclusion

6. References

1. Introduction

This paper will take a closer look at our team’s SWOT matrix and determine strategies using a TOWS matrix. From there, we will discuss mitigation factors and exploiting strategies that Disney should rely on. As Disney’s entry into Mexico’s SVOD market, through their Disney+ and Hulu services, continues to develop, the company must now begin to create their competitive strategy. In order to do this, competitors within the current market space were analyzed for their advantages and disadvantages. Four companies, Netflix, Amazon, America Movil, and Blim, were all analyzed in order to develop the best path forward into the market. After the analysis, a competitive strategy, target market and price strategies were all developed in order to create the best opportunity for Disney’s first expansion into the global market. For competitive strategies our group decided to focus on our bundling power of Disney + and HULU and a flexible pricing strategy. Disney is targeting Mexico’s 82.5 million internet users. The figure is estimated to grow to 101.6 million internet users in 2023. (Statista, 2019). Our target buyer will be those who have internet connections, families with children and those viewers who are fans of Disney, Star Wars and Marvel Comics.

2. List of external Opportunity and Threats Factors

Opportunity and threat factors are external by nature (Administrator, 2017). Opportunity wise, Mexico is the largest Latin American country for SVOD services; furthermore, Disney has a unique opportunity to bundle their SVDO services with HULU (Team 1 SWOT Matrix, 2019). Other opportunities include a lack of government regulations, and Disney playing their own content exclusively (Team 1 SWOT Matrix, 2019).

The reality is Amazon and Netflix operate in 190 countries. Another primary threat is that Disney does not have material that can cater to Spanish language and culture (Team 1 SWOT Matrix, 2019). Since Netflix has a high market demand in Mexico, Disney has to take this under heavy consideration. Further threats include major corruption and lack of reliability of digital infrastructure (Team 1 SWOT Matrix, 2019). However, as more users are connected to the internet, the higher the demand will be for SVOD services.

As shown in the TOWS matrix below and introduction above, internet users are set to grow exponentially in Mexico at 101.6 million people (Statista, 2019). Couple this with SVOD markets set to grow exponentially, Disney has a significant opportunity to shine in Mexico. Primary threat organizations include Netflix and Amazon. Both platforms have plenty of Spanish language and culture material. Having a lack of Spanish language and culture materials will hurt Disney in Mexico. Another threat Disney needs to consider is Mexico’s low poverty line. If income levels are low, the less likely they can afford using SVOD services since in many countries they are considered luxuries.

2.1. TOWS Matrix Appendix

Before we move forward with this paper, we need to put forth a TOWS matrix. The point of a TOWS matrix is to determine a set of strategies for your company to follow. These strategies will help our client, Disney, to excel in expanding their product to Mexico. Please refer to the TOWS matrix below.

3. Mitigation Factors for Threats

The focus of this paper is to take our SWOT Matrix and create our TOWS matrix. A TOWS matrix lets you look at external opportunities and threats and internal strengths and weaknesses. After looking at a companies’ strengths, weaknesses, opportunities and threats, a company can start to determine general and specific strategies to pursue. Furthermore, a TOWS matrix also helps a company to determine strategies to maximize their weaknesses and counter threats in their current field of business. In this section we will discuss strategies and mitigation plans regarding Disney’s threats.

Primary general external threats that Mexico will have to deal with is economic and political in nature. When there is an economic downturn, target customers will have less to spend (Beers, 2018). Furthermore, since Mexico already has a low poverty line, this will also be an issue. A majority may not be able to afford a luxury like an SVOD service, let alone internet connection. This being said, Mexico’s fortunes and economy is slowly rising. Politically, Mexico has high rates of corruption on local and the national level. This could affect how Disney’s bottom line. This also being said, Mexico is a significant trading partner to the United States, making it easy for Disney to do business in Mexico. A change in economic and/or political policy for Mexico will change how Disney will operates in this country (Beers, 2018).

3.1. Expanding to Mexico and other Countries

Disney is late to the game of SVOD services. Currently, Amazon and Netflix have spread their services to 190 countries. There is very little Disney can do, other than to start their SVOD service and perfect it and their offerings. If their product catches on and becomes more popular, they will have more of a reason to start expanding to other countries like Mexico. Like Netflix, Disney should start expansion slowly. Once in a country, it is easier to move to parallel markets, thus slowly expanding. This is why Mexico is a prime target for Disney expansion. Mexico is a neighbor to the United States and a major trading partner. Given this partnership, Disney can use this to expand not just to Mexico, but also use it as a spring board to other Latin American countries.

Expanding into foreign markets is not new for Disney. Disney has spend the last part of a decade expanding their theme parks, cruises, resorts to Paris, Tokyo and even China (Mulligan, 2016). Since Disney has the experience on expanding their business to emerging foreign markets like China; it means they have the knowledge to spread their SVOD services internationally. This is a clear advantage for Disney to exploit on their end.

3.2. Spanish language and Culture Content

One major advantage Netflix has in Mexico is that they have access to Spanish language and culture material. There are two mitigation strategies that Disney could employ here. First, Disney can acquire the rights to non-original Spanish language and culture content. Netflix currently does this as well. One drawback with this strategy, is that Disney could be forced to pay obscene amounts of money for many of these titles. The second options, is that Disney, like Netflix, needs to put more money in producing original Spanish language and culture content. This can also be costly, however, there is a high demand for original content world-wide. Recommended strategy for Disney should include a fusion of acquiring non-original content and creating their own original content for Spanish language and culture.

There is evidence that Disney should be paying attention to this, as they expand to other markets. According to Rubin (2019), “digital originals” are in demand, followed by native language content. IF Disney plans on cutting into Netflix demand in Mexico, they need to focus on this area, otherwise, business will be minimal. For example, according to Rubin (2019), Mexico has a high demand for content like “telenovelas”, which are essentially Spanish language drama tv shows. Even though there may be some demand for their current original material in America, that same demand might not be the same in Mexico. In order to acquire non-original content, Disney will have to make deals with local partners- production, film companies etc. in order to show their content on Disney’s or HULU’s platform. Furthermore, if they pursue creating original content, they will also have to make similar partnerships with those companies to create original content within Mexico.

3.3. Mitigation Factors for other Threats

As mentioned earlier, Mexico has a high level of corruption, has a low poverty line, and unstable internet infrastructure. These threat factors are not primary, but Disney needs to think about this. Being a guest in Mexico, Disney cannot do much about corruption, other than avoid it as much as possible.

As Statista (2019) points out, internet users will grow from the current 82.5 million users to 101.6 million users. Adding more users to their internet infrastructure means that Mexico will be fully funding to create a reliable internet infrastructure. As internet reaches more people in Mexico, demand for SVOD services will gradually increase. This being said, due to the low poverty line, there are many Mexicans that are being paid low wages and may not be able to afford an SVOD service, let alone 2 SVOD services. This is where Disney’s strategy of bundling comes in. First, Disney needs to price their individual services at $6.99, undercutting Netflix’s current price in Mexico. Furthermore, Disney can take it a step further with bundling their services with HULU and even ESPN services. Prices for these diversified bundling plans will be slightly more expensive than Netflix, however customers will be getting 2 or 3 SVOD services in one overall low price. Pricing will be a crucial strategy for Disney to pursue in Mexico. Another cause for concern, our group found in our analysis, is that Mexico has a low level; with only 18% of Mexicans own a credit card. Currently that is the only way to pay for SVOD services in Mexico. Disney/HULU will have to find alternative, easier methods of payments that they will accept.

4. Exploiting Strategies for Opportunities

Disney has plenty of opportunities and strategies to exploit them. As discussed, primary opportunities include- being the largest market in Latin America, SVOD services demand being on the rise, a significant increase in internet users over time, the ability to bundle multiple services into one or more packages, major brand recognition, and prior experience with global expansion in regards to their brand in other markets.

There are a few ways Disney can go about exploiting opportunities. First, Disney should capitalize on those opportunities by making the right decision; if wrong decisions are made, they will end up creating risk (Hillson, 2001). Second part to making good decisions based on a project scope baseline, is removing uncertainty where possible (Hillson, 2001). This ensures Disney will be able to exploit the obvious opportunities as they arise. Lastly, there will be times where Disney will experience unforeseen opportunities. If management is paying attention and making right decisions, Disney will also be able to exploit those unforeseen opportunity.

4.1. Market Size, Rise in Demand for SVOD services, Rise in Internet Users and Bundling

The reality is Mexico is one of the largest Latin American market, SVOD demand is expected to rise world-wide and internet users in Mexico are expected to go from 82.5 million users to 101.6 million (Statista, 2019). Coupling this these opportunities show, that it is prime time for Disney to enter the SVOD market, with their 2 or 3 in one bundling service. Due to bundling of multiple services, Disney can multiply the content they currently have by themselves to potentially increase market demand. Also like Netflix, they need to leverage advertising using their major brand recognition to convince customers to add Disney+/HULU to their SVOD experience. These combinations of opportunities are all linked to create a larger opportunity for Disney. This is also dependent on Disney investing in varying Spanish language and culture content, whether non-original and original content.

Lastly, Disney will be able to use Mexico as a spring board to enter other parallel markets within Latin America and Central America by slowly expanding to those markets. This will help in Disney’s overall expansion goals. And as mentioned earlier, Disney has significant experience in franchising their brand of theme parks, cruise lines and resorts to countries like France, Japan, and China. These countries would can also be future targets for expansion of Disney’s SVOD market.

Per our groups research, by 2025, 30% of Mexicans will be on SVOD services (Roshan, 2017). Disney should focus on, we should be focusing on attracting that 30% of SVOD customers of the population of 129 million Mexicans, which roughly comes to 38 million subscribers. Furthermore, Mexico should be targeting families, given their family friendly content. Adding to this, currently HULU already has 7% market demand in Mexico, which will only add value and eventually potential customers (Parrot Analytics, 2019).

5. Conclusion

Even though Netflix has very high market demand in Mexico, Disney combined with HULU at the pricing structure could propel demand in the long run. In order to do this, Disney needs to follow a few key strategies as outlined in this paper. Disney has a series of opportunities they need to take advantage of- starting with significant rise in internet usage in Mexico, increasing demand world-wide for SVOD services, and using Mexico as a spring board to expand to other parallel markets in Latin America. Naturally, as internet users rise in Mexico, the more demand there will be for SVOD services. Using these opportunities, Disney needs to start advertising in Mexico regarding the perks of joining their services using their major brand recognition. Adding to this, Disney needs to let Mexican customers know about their cheaper, more flexible, 2 in 1 services regarding bundling of Disney+ and HULU. Bundling will allow Disney to showcase more original content as it comes out on both platforms.

On the threat factor front, Disney has to contend only being available in the United States, a lack of original and non-original Spanish language and culture content, high corruption, low poverty line, and a currently unstable internet infrastructure. Unfortunately Disney cannot do much on things like corruption. However, Disney can do more to mitigate other threats. As internet users in Mexico continue to climb, so will reliability on their infrastructure. Given Mexico’s low wage income in general, Disney needs to price their bundling services just right. If a customer only wants just Disney+ or HULU, Disney should focus on pricing individual platforms at $6, undercutting Netflix’s current price. If customers want to bundle these two platforms, they should focus price between $8 or $9. Followed by this, Disney needs to implement flexible payment options due to low ownership in debit and credit cards.

Disney should implement dynamic management to make the right decisions to exploit opportunities and mitigate risks. Most opportunities and risks can be identified by a dynamic management team. However, there will be times where unexpected and unforeseen opportunities and threats may arise. Disney’s management team need to be sharp to spot these factors and make the right decisions to exploit or mitigate as needed.

Furthermore, management should take steps to advertise their product adequately by implementing flexible and cheaper prices for their services compared to Netflix. Keep in mind this will only work if Disney takes similar steps to Netflix, by investing in acquiring non-original and original Spanish language and culture material. This is key, in order for Disney and HULU+ to attract customers to their platforms. If Disney does this well, they can give further justification for either adding Disney+ and HULU to their rotation or completely switching to them.

Ultimately, Disney has a lot to work with in terms of mitigating risks as they arise and exploiting strategies, seen and unforeseen.

6. References