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Running Head: COMPETITOR ANALYSIS AND COMPETITIVE STRATEGY 1

COMPETITOR ANALYSIS AND COMPETITIVE STRATEGY 15

COMPETITOR ANALYSIS AND COMPETITIVE STRATEGY

Executive Summary

Walt Disney is an entertainment company that is established in the world under four segments of student entertainment, Parks Experiences, Media Networks, and Broadcasting. His aspects of the company place it at a significant company with other established companies in the entertainment industry in the world, such as Philo TV, Sling TV, and Amazon Prime TV. The media segment of Disney is more appropriate to enter a new country such as Turkey since the country is at rapid development, meaning it has higher opportunities for the growth of such an industry.

Competitors such as Amazon enjoy strategies such as reduced operational costs which result from online selling platform and third party selling approach. Besides, all three segments of the company complement each other. Adoption of models such as free delivery and improper launching of some products have resulted in the loss of revenues for the company. Other companies such as Sling TV and Philo have tried to implement a cost reduction by offering a wide range of channels. Sling TV is limited by lack of operations outside the US borders while Philo does not offer local and sports channels.

Amazon poses the highest threat to Disney both at the local and the international level. However, Disney has established an excellent supplier relation in addition to the good brand reputation. Compared to its competitors, Disney is at high risk of vulnerabilities since it lacks a comprehensive advertisement mechanism unless it is placing a new movie in the market.

Disney has adopted a diversified business meant to mitigate the risk that might arise, affecting a particular segment. Competitive advantage is also based on its competency in the acquisition. Disney has also employed a localized business model to meet the tastes and preferences of the customers at the local level.

Among the recommendations that Disney can consider given the level of competition in the entertainment industry is the diversification of its products. Moreover, it can consider a customer-centered approach when designing its services. Disney needs to employ rivalry detections systems so that it can prepare in advance in case of an upcoming competition.

Table of Contents Executive Summary 2 Introduction 5 Mexico Entertainment Market 6 Competitors' Strengths and Weaknesses Assessment 7 Amazon Prime Strengths and Weaknesses 7 Sling TV Strengths and Weaknesses 7 Philo TV 8 Comparison between Clients Strengths and Weaknesses to those of Competitors 9 Comparison between Strengths 9 Comparison of Weaknesses 10 Disney Competitive Advantage 10 How these Represents Differentiation or Cost Advantage 11 Competitive Strategy Recommendation 12 References 14

Introduction

Walt Disney is a company that operates worldwide in the entertainment industry. Walt Disney operates in four different segments of Studio Entertainment, Parks Experiences and Products, and Media Networks. The Media Network Segment has a cable and broadcasting television, television production and distribution operations, domestic television station and a radio network and station. These aspects put Disney at the competition with other media companies such as Amazon Prime TV, Sling TV, and Philo. This paper will evaluate the state of competition posed by these companies through evaluation of the competitiveness of each in comparison to Disney.

Media Network segment is more appropriate to enter the Turkish market. This is a great opportunity, given the fact that the country has a democratic system of government that makes it easy to grab the upcoming opportunities. Moreover, the country is growing rapidly, meaning an opportunity for investments, which is quite advantageous given the fact that the country has lower labor costs, which will imply lower operation costs and thus high returns. Moreover, Turkey has invested vastly in the information technology making one of the best opportunities Disney Company can extend its services at lower costs since it does not have to spend heavily and can use the locally available infrastructure.

These characteristics in the Turkish market make it more advantageous to invest in as compared to investing in the Indian Market, which is characterized by higher pollution due to the unregulated production activities. As a result, the costs for mitigating production related pollution are significantly lower in Turkey as compared to India. Therefore, availability of an undeveloped economy and a growing population of the young combined with a hard-working community will create high chances of the economic growth, which will mean prosperity for the investment opportunities in the country. Turkey creates a better investment opportunity for Disney to extend its Media Network than India.

Mexico Entertainment Market

Mexico being the second largest industry in Latin American provides an alternative expansion opportunity for Disney Company. It has also the largest media and entertainment market with a spending of $24.1 in the year 2013 (PwC, 2018). The fact that Mexico is among the fastest expanding economies in the Latin America, it provides an opportunity for investment in the entertainment because its expanding middle will increase the demand for the entertainment products as their incomes grow. According PWC Global the entertainment market is projected to grow at an over whelming rate of 7.3 percent annually with a corresponding increase in global demand of 5 percent, indicating the potential Mexican market entertainment market for investment. This puts Disney at a prospective edge to invest in this market given this growth.

On the other hand, Mexico has an established online selling of entertainment products. However, Disney has not very embraced this business model meaning that it can start a new model as it try to invest in the new market. However, it has to be prepared to beat competition already existing in the Mexican market. Given the fact that entertainment market in Mexico is well established, it means that any external company willing to invest in this market must be prepared to face the stiff competition in the country. There are other giants such as Amazon which are already well established in this market. Disney should study the prevailing competition patterns before it can invest in this market.

Competitors' Strengths and Weaknesses Assessment

Amazon Prime Strengths and Weaknesses

Amazon has employed a strong cost management strategy characterized by a low-cost structure which is achieved mainly through using an online selling platform. This enables the company to avoid huge operational costs associated with running physical retailing outlets, which results in increased sales without a corresponding increase in marginal costs. Time for fulfilling a transaction and reduced shipping costs means that the company can sell their merchandise at low prices to their customers (Jurevicius, 2019). Besides, Amazon involves third-party sellers on their sites, which create competition by availing products through Amazon's retail division. This creates high traffic in the Amazons sites creating even higher sales. Moreover, the three segments in Amazon complement each other meaning that no segment is left out in terms of performance. Amazon has established itself in the different international market, which means that it can operate in a global market with varying policies of marketing.

On the other hand, one of the weaknesses the company is exposed is the use of a business model that can easily be imitated. Some strategies the company had adopted as competitors such as free delivery are contributing to lost margins in markets such as India. Some products have not been well launched in the market. There are claims such as tax avoidance which are creating negative publicity about the company products. Further, the fact that Amazon operates very few physical retails is a factor that may contribute to hindering customer attraction.

Sling TV Strengths and Weaknesses

Sling makes it easy to watch a wide range of channels are at relatively lower coasts anywhere you may be located if you have subscribed. These include live channels wherever you are located. Moreover, they offer free trials for their clients, enabling them to have experience with their products before they subscribe. Another strength is the fact that you can disconnect from the service without the need to worry about the disconnect fee as it is with other TV channels.

One of the weaknesses that have resulted in de-popularizing is the fact that the channels are predetermined when making payments which means that you cannot choose the package you want as a customer but what has been given at the time of subscription. Additionally, these channels are not available outside the United States and make it difficult for the company to compete with other well-established channels such as Amazon Prime which operate on a global platform. As a result, Sling cannot be able to establish itself in another country such as Turkey without incurring a considerate amount of costs. Moreover, it might be challenging to adopt the political environment of such a country, given that it has not established an international marketing platform. The company is also faced with the issue of buffering, which has resulted in a significant number of clients ditching their channels.

Philo TV

Philo TV offers online TV channels and offers explicitly streaming TV channels. It provides many channels at a low price ratio because it has specialized in providing entertainment channels. It provides high-quality HD with minimal buffering and freezing as can be found in other streaming channels such as the Sling TV. It has a smooth user interface that can be found in the market. The features of its service are excellent, given the fact that they also offer them at low prices (Cook, 2019).

However, it has not integrated local channels which can contribute to clients ditch their services. Philo also lacks sports channels which could have attracted a substantial number of clients. The greatest challenge is the fact that Philo channels can only be accessed through a limited number of apps, making it challenging to capture a large number of clients. Philo is also faced with the software rigidity meaning that it has to adopt different technology that will ensure customers in a new country such as turkey can use their products without being constriction by technological rigidities.

Comparison between Clients Strengths and Weaknesses to those of Competitors

Comparison between Strengths

Creating strong ties with the suppliers is a critical element for a company to build its competitive advantage. All the companies rely heavily on their suppliers since they are the determiners of the quality guaranteed for their clients. Reliability has been driving force behind the recent improvements in the quality of supply content.

Philo and Sling market seems not to be very competitive in the market; however, Amazon generates quite large cash flows compared to Disney which is not only used to diversify its investments locally but also internationally in the upcoming markets such as Turkey. This means that companies such as Disney also have to extend their strong negotiation skills in the new markets such as Turkey in their pursuit of reaching their distribution in such countries to leverage completion posed by companies such as Amazon which are already established globally.

All the companies aim at improving the quality of giving the best to their clients, and this has resulted in the recruitment of the most skillful and experienced team. Disney also has the advantage of High Brand Profile which is easily used for marketing its products in the market using their symbol D. All the companies have their strengths though depending on their market coverage, which forms competitive edge while marketing their brands.

Comparison of Weaknesses

Disney Company has employ complex training programs for its employees, which results in high attrition rates but is still yet to improve despite this spending. This puts it at a disadvantaged position when compared to companies like Amazon, which scale on expenditure without compromising on quality. However, Disney is better placed compared to companies such as Sling and Philo since its scale of operation is still limited and less diversified.

Disney is also at high risk of vulnerability by competitors. Disney does not have marketing and promotion tools unless they are introducing a new movie. Moreover, they do not use ads since most of their adverts are mainly done visually, which means they are likely not to reach their sales growth target. Moreover, the company does not take advantage of coiling up campaigns because their designers have poor judgment on the next big idea, which results in insufficient product demand scaling.

Disney Competitive Advantage

Disney is among the leading international media companies that are performing well in the entertainment industry. Disney is endowed with various skills that help the company create a competitive advantage over its rivals companies. One of the factors that are contributing towards a competitive edge is the fact that the company operates in five different business segments which are operational in different economies (Güçdemir & Selim, 2015). Besides, the company is employing different business models in these economies, leading to generate income. The diversified business model is critical since it enables the company to withstand any changes in the external environment.

Another critical source of competitive advantage is its competency in the acquisition. Disney has engaged in quite successful acquisitions like the Pixar Animation Studios in 2006, Marvel Entertainment in 2009 and Lukas Film in the year 2012. These acquisitions have indicated that Disney is quite capable of making wise choices of their acquisition, which have resulted in significant revenue and earnings growth.

Media and entertainment industry is becoming quite competitive, requiring the players to adopt new strategies that will improve their competitive advantage. For instance, the Asian sector is growing rapidly, and this means that this industry is becoming more and more competitive each day. However, Disney has started to adapt to this threat by designing products that suits the local tastes and preferences, a strategy that other competitors seem not to have realized. Disney has, therefore adapted its product portfolio to the local demands. These factors have played a critical in the building of the brand reputation for Disney products, which is quite essential to build a competitive advantage. Brand reputation is very crucial since it enables the company to withstand tension created by the competitors. The fact that Disney's brand has been known for more than ninety years makes customers request exclusively Disney branded and not any other product, especially in the Asian Countries such as Turkey. This brand reputation is quite essential for the entire product portfolio of Disney to compete favorably in the market.

How these Represents Differentiation or Cost Advantage

Operating in different market segments enables the company to withstand any waves that might be created by the competitors since it is hard to be hit from all the sectors at once. This has enabled the company to remain in constant revenue flow, even when some segments are performing poorly. Unlike other competitors that have not adopted such a business model, Disney is, therefore, able to compete favorably and remain in business even when other competitors operating in a single segment are performing poorly. This diversification is enhanced by the high capital investment employed by the company that ensures quality products that attracts customer appeal. Another critical tactic that has created a competitive edge is its acquisition strategy that provided high-quality products through specialization done through the acquired companies. Besides, this specialization enables the company to produce at relatively lower costs meaning that the company will sell its products at lower prices.

The company has also strategized on modification of products so that they can fit the local tastes and preferences, making it possible to beat the competition by companies which offer similar products. This is important to the company brand given that the competitors have not realized such strategies making the company remain ahead of competitors.

Competitive Strategy Recommendation

Disney has a reliable employee base meaning that the company might run into a crisis, especially when these suppliers fail to meet their targets. The company is, therefore supposed to employ a diversified supplier base so that in case of such a crisis, they can continue with their operations optimally.

Disney has also employed strategies that might be very risky to the firm and can be mitigated by using alternative procedures. For instance, among the most strategic mitigation that Disney has employed is acquiring competitive firms. Besides, the firm is highly diversified into different units, which are not profitable. Given the fact that the company is mainly dependent on income from the entertainment industry and is used to feed the less profitable departments, and also, it might be difficult for some competitors to accept their offer when they approach them for an acquisition (Esser, 2016). Disney can use ads based techniques inside their movie, which can reach many potential clients across the globe, instead of depending on buyouts.

Besides, Disney can focus on diversifying its products rather than employing the strategies that are used by the acquired firms. This will help minimize costs involved in the acquisition and at the same time evade the risk of substitution since the customers cannot obtain a similar product from any of the existing competitors. By so doing it will enhance the profitability of the firm and improve its competitive position of the firm by attracting new customers. Competitors like Amazon have employed a diversified technique, yet all the segment of the company complement each in such a manner that they are unlikely to be beaten by the competition. As a result, such companies have continued to command a large proportion of the entertainment industry. Consumers are known to be attracted to products that stand out as unique in the market, and this is also true in the entertainment industry. Lewin et al. (2015) found product loyalty is gained through consistency and uniqueness throughout the market. This might also apply in the entertainment industry and result in remarkable loyalty from the consumers and therefore, create a competitive advantage for the company. However, this might not be applicable for a competitive advantage over all the clients since some of the competitors such Philo have already employed a similar strategy in their product portfolio.

Also, Disney has adopted a customer based approached by tailoring their products to meet tastes and preferences at the local level. Since this is can easily be imitated by other entertainment companies, it is essential to use a customer when designing their products (Lyon & Koerner, 2016). This can be done by evaluating the possibilities of the buyers to switch to other similar products offered by the competitors. Also, the evaluation of the customer capabilities will be critical since this will dictate the terms that the supplier is to adopt. The customers can then prescribe the conditions which the company to apply while selling their products. Therefore, the company can make a customer-centered approach when making sales to their clients. This has the possibility of attracting more clients since the clients are convinced that their demand and specifications have been met. This can be achieved by listening to their requirements primarily through the online platforms and email conversations where the products cannot be delivered physically.

The issue of rivalry means that competition is bound to be there, and the rivals are offering different versions of a similar product. Disney operates in the entertainment industry, which is full of rivalry, and the company can withstand such rivalry by employing early detection systems. This enables the company to prepare and outdo such competition before it turns out to be a significant threat. Despite the high level of competition that Disney is exposed to in the entertainment industry, it has maintained a good brand reputation in the entertainment industry that has enabled the firm to redirect the competition before it turns out to be a threat. The excellent reputation has enabled Disney to sell any movie it puts on the theatre.

References

Cook, S. (2019, June 06). Philo Review 2019 – The Low-Cost Leader in Streaming TV. Retrieved from Flix: https://flixed.io/philo-review/

Esser, A. (2016). Challenging US Leadership in Entertainment Television? The Rise and Sale of Europe's International TV Production Groups. International Journal of Communication (19328036), 10.

Goodman, J. K., Cryder, C. E., & Cheema, A. (2013). Data Collection in a Flat World: The Strengths and Weaknesses of Mechanical Turk Samples. Journal of Behavioral Decision Making, 26(3), 213-224. Retrieved from: http://onlinelibrary.wiley.com/doi/10.1002/bdm.1753/full

Güçdemir, H., & Selim, H. (2015). Integrating Multi-Criteria Decision Making and Clustering for Business Customer Segmentation. Industrial Management & Data Systems, 115(6), 1022-1040. Retrieved from: http://www.emeraldinsight.com/doi/abs/10.1108/IMDS-01-2015-0027

Jurevicius, O. (2019, January 10). SWOT analysis of Amazon (5 Key Strengths in 2019). Retrieved from Strategic Management Insight: https://www.strategicmanagementinsight.com/swot-analyses/amazon-swot-analysis.html

Lewin, J., Rajamma, R. K., & Paswan, A. K. (2015). Customer loyalty in entertainment venues: The reality TV genre. Journal of Business Research, 68(3), 616-622.]

Lyon, A. R., & Koerner, K. (2016). User‐centered design for psychosocial intervention development and implementation. Clinical Psychology: Science and Practice, 23(2), 180-200.

https://www.pwc.com/gx/en/global-entertainment-media-outlook/segment-insights/assets/mexico-summary.pdf