Situational Analysis
Undeniably, Disney is, by far, the largest conglomerate in the world entertainment industry. Disney has four operational divisions comprising of Disney parks and resorts, Disney studios, Media Networks, and Disney consumer products. Branding to Disney entails the promise consumers place on Disney products. Arguing that people go to Disney because their slogan says, “the Happiest Place on Earth,” will be misinformation but rather people go to Disney because of their feelings and priori regarding Disney. Therefore, the brand drives Disney’s business. Due to its reputation, any item sold under the Disney brand is sure to become a hit and generate sales. This is evidenced from the case study with the release of the hit movie Cars. Other than generating $500 million in sales world, other Cars merchandise generated upwards of $2 billion in sales in addition to opening up avenues for other franchising opportunities such as TV series, Games, and Cars land among others.
Other than the Cars, Disney is also associated with other award winning movies such as the Pirates of the Caribbean, Toy Story, Happy Montana, and High School Musicals. From the case study, it is evident that the business model for Disney is franchising. For instance, the television broadcast platform comprises of ESPN, Playhouse Disney, Disney Channel, and Disney XD while the consumer division has Hollywood Records music label, theme Parks, and Disney Publishing arm. The CEO, Bob Iger, has used the franchising strategy to open up more opportunities for Disney provided they fit into Disney’s brand and more opportunities are still to be exploited.
SWOT Analysis
The internal strengths and external opportunities are important aspects that guide Disney into achieving sustainable competitive advantage. Particularly, the use of the cross-franchising platform ensures that Disney capitalizes on the strengths and opportunities while minimizing on the weaknesses and threats. This can be represented below.
Strengths
A strong brand image.
The franchising model and well established Disney studios. The cross-franchising model enables Disney to venture into different operating divisions and markets thereby generating huge sales and minimizing risks due to diversification.
Expansive product portfolio and product differentiation enables Disney to stay ahead of its competitors in different operating segments.
Strong product performance from different operating divisions.
Exceptional and excellent leadership from Bob Iger.
Weaknesses
Large investments could mean high risks.
The nature of business operations translates to high operating costs.
Few attractions in theme parks despite the high investment costs.
Focusing on only family friendly programs makes Disney less willing to venture into other broad markets.
Opportunities
Expansion into emerging market economies and developing markets in untapped countries.
The ability to move into different market segments.
Capitalize on the franchising model and develop more attraction sites.
The Disney music channel is yet to reach its full potential.
Threats
Intense competition in the media industry.
Dependency on the franchising strategy might fail to deliver in future.
Lack of willingness to venture into broader markets that satisfy the Disney brand.
Monotony in sticking to only family friendly focused programs.
Problem Statement
Although Disney continues to provide exciting programs and products using the franchising model, its product portfolio largely is focused on the family-friendly markets thereby limiting its growth opportunities. The Disney brand is still open for a broad range of opportunities, and it is subject to face challenges if it fails to capitalize on the opportunities. Based on the situation analysis of Disney, coupled with the analysis of the strengths and weaknesses, the following alternatives can enhance the competitive advantage of Disney.
Capitalize on the franchising strategy
Largely, Disney’s turn around and successes can be attributed to the franchising strategy adopted by the CEO, Bob Iger. The major component of this strategy is the identification of a successful product within the product portfolio and using its successes to market other products. Adoption of this strategy in new venture activities can enable the company to capitalize on existing and emerging opportunities in diverse markets.
Pros
the strategy has worked in several products from different operating divisions
availability of room for expansion
assists in brand refocus
Cons
might fail to work in international markets and other expansion initiatives
high dependency on successful products
Expand the Sports-based program (ESPN Sports programing)
Expending on the current sports broadcasting through the creation of an independent sports program under ESPN can enable Disney to access greater market opportunities. This is in part due to the expanding sports market across the globe and as well, the massive advertisement deals that can be generated from advertising sports activities.
Pros
Disney will be able to leverage on the growing sports market
Enables Disney to diversify from the family based style
Enable Disney to have an independent sports-based program
Expand the client base due to increased covered of different sports across the globe
Cons
High costs of airing live sports
High competition from already established sports channels
Strict restrictions from different leagues
Develop more attraction sites
The Disney world is known to be the happiest place to live on earth but despite investment millions of dollars, most theme parks have few attraction sites. This shortcoming can be solved by investing in more attraction sites
Pros
It will attract more visitors who will in turn get value for their money
Increase income generating streams for the company
Cons
More funds will be needed
High cost of maintenance and more workers
Expand into Emerging Markets
Most emerging markets particularly those in Asia and Southern Africa hold huge untapped opportunities for Disney.
Pros
Increased growth opportunities and access to wider markets
Compatible with the franchising strategy
Enhances sustainable advantage
Cons
Volatile international markets
Failure of other international operations of Disney in Europe
High operation costs
Inconsistent cultures and economic activities in international markets
Recommendation
Capitalization of the franchising strategy is the most important and efficient alternative for the company. It is has worked for the company and is applicable to the options presented in other alternatives. Therefore, it is recommended that Disney use this alternative in enhancing its competitive advantage and in realizing diversification of its goals and objectives. Undeniably, expansion into emerging markets, development of a full-sports program and developing more attraction sites do fit in the franchising strategy. Finally yet indispensable, Disney should consider customizing the model to fit each investment initiative to avoid failure and hence, making Disney to be the happiest brand on earth.
