Accounting
PESTEL ANALYSIS FOR THE WALT DISNEY COMPANY
Political
- Cable television industry is impacted by government regulation.
- Government regulate business conduct to avoid monopoly
- Government eliminated laws that permit own subscription fee.
- Ruling authority fluctuations within the industry.
- Consolidation within the industry has placed a great problem for the company.
- International regulation make it hard for American company to expand e.g. European countries
- Foreign ‘block’ policies e.g. in Asian countries. This has an effect of causing the company to incur extra advertising charges as it thrives to survive in the industry.
Economic
- poor economic situation
- Poor global economic performance result to poor revenue.
- Unfavorable GNP and GDP trends
- Declining interest rates makes the company realize minimal profits than the expected.
- Insufficient funds in emergent countries
- Fluctuations in exchange rates
Socio-graphic/ demographic
- Change in life styles and influence on children
- Effect on children behavior and actions.
- Creates employment thus increasing disposable income
- Agencies that enact law and regulate children content
- Enhances creativity on children. They utilize the lessons learnt from the films.
Technological
- Research and development spending
- Increase in production technology
- Development of better software that make production easy, faster and better
- Increase in e-commerce and plastic money
- Online streaming e.g. YouTube
- Increase in consumer technology such as Smartphone, tablets, laptops.
Environmental
- Power waste and pollution from data warehouse must be avoided as it risks the company’s existence
- Environmental awareness e.g. through films that advocate for environmental conservation
LEGAL
- Intellectual property protection protects the company films from piracy and copyright
- Consumer protection law e.g. restricting adult scenes in children content
- Employment law and trade unions. This law allows the company to employ people from the locality
Market analysis
Online advertisement
- There are a high number of internet users. This increases the number of people that are reached by the adverts.
- Evenly distribution of internet users even in developing countries
- High internet usage in America and Europe
- YouTube and other social media have been used for online advertisements effectively
- Internet advertisement on websites and in their products.
- Use of the company products as Characters in online games
Mobile advertisement
- Technologically advanced mobile phones that have software that support video clips
- Use of the company product as mobile phone wall papers
- Use of the company products for characters in mobile games applications
- Rise in global mobile market increases the product advertisement
- Expectation of increased mobile users in the US and Latin America
Critical success factors
- Competitive prices of its products
- Product range and innovation including various products and services such as consumer products, studio entertainment, parks and resorts and media networks broadcasting
- Customer service and support
- Usability and content
PORTER’S FIVE FORCES
Threat of entry
- Joining the industry requires heavy capital
- Highly differentiated products
- Big companies own and control more than 57% of market share
- Rapid growth in legislations requiring paying of more license fee and tightening of copyright protection
- Limitation of frequencies that are available for licensing by state government
- Sheer volume of channels available through modern methods of cable vnad satellite programming
Threat of substitution
- High number of substitutes that include:
- Playing video games
- Computer gaming
- Surfing the website
- High cost of switching to substitutes
- Substitute products are superior
The Power of buyers
- Higher amount of market candidness
- Transactions are comparatively effective and efficient
- Ability to attract a large number of service providers
- Low cost of obtaining products either from Disney or elsewhere
Power of suppliers
- Suppliers have a large number of needy producers
- Low costs of switching from company to company or brand to brand
- Company’s high leverage
- Determinants of sellers’ privileges and thus constrain many of the company’s decisions
This makes the suppliers a strong force
Competitive rivalry
- Innovative features and products have been introduced recently
- Competitors have a high market shares
- Barriers to exiting the industry are so high
- Newly founded companies with high efficiency
- High number of subscriptions entering the industry each year
OPPORTUNITIES AND THREATS
Opportunities
- Recently the Walt Disney Company announced its acquisition that it has made from Lucas films; from 2 billion in cash while approximately 2 billion in stocks. This includes the iconic Indiana Jones franchises and Star Wars.
- There is gradually growth in entertainment industries in current and emerging market
- Another opportunity is expansion of movie production to new and developing countries.
- The company has great plans that expressed new production of episode seven, eight and nine of Star Wars which are being planned to be released in the year 2015 therefore the acquisition seems to be promising to pay massive dividends in the future.
- The company bares in mind that it’s always possible to have additional acquisition, therefore it has proven that thy are willing to pay a large amount of money to acquire its targets
Threats
- Recently the company has faced challenges for instance increase of online movies rental and growth of online TV that offer movies programmes.
- There is intense competition in its market.
- Another major threat is success of the company which is fading away because of current market stagnation. This is because consumers do not have money to spend on company’s vacations and products.
- The company has faced threats in market such as increasing piracy
- The company’s Strategic position is not quite effective as considered to other close competitors
POSITION STRATEGY
- Life style behavior.
Research was conducted by Walt Disney to determine how its products reach its customers. They were looking at;
- Interest
- Opinion
- Market segmentation
- Perceptual mapping
- Product characteristic
- Product efficient and effective
- POSITION ON PRODUCT FEATURES
- For every product have its own features and key ingredients in the product.
- Disney Company can also categorize its products on the basis of their characteristics to their board consumers.
- Position on product features
Resulting are the products and their particular prices that I would recommend Walt Disney should introduce to expand product line of Kim Possible.
- Possible Stationery (Range: $10 -$100)
- Possible Outfits and clothing (Range: $35 -$400)
- Possible Skate boards (Range: $20-$80)
- Possible Video Games (Range: $40 -$350)
- Possible Board Games (Range: $10 -$30)
- Possible playing cards (Range: $05 -$10)
- Possible Dummy cell phones (Range: $35 -$60)
- Possible Funky Hair sprays (Range: $25 -$55)
- Possible Cosmetics (Range: $20 -$250)
- Possible Dummy cell phones (Range: $35 -$60
FUTURE STRATEGIES
SELECTION OF FUTURE STRATEGIES
Screening Text of Future Strategies
- Suitability test
- Options 1, 3, 4 and 6 were scrutinized and successfully passed the suitability test.
- Acceptability test
After analysis, option 1 and 5 passed the acceptability test.
- Feasibility test
Option 5 passed the acceptability and practicality test. This is due to the fact that the company can meet the financial requirements needed to implement the strategy. It also has in place resources that can effectively be used to make the strategy a success. High returns are also expected from option 5. The healthy status and high profitability of the business will too not be compromised. Additionally, effective implementation of option 5 will lead to expulsion of the other decadent and less appealing options and render the other option irrelevant with time.
DESCRIPTION OF THE RECCOMMENDED STRATEGY
Disney Inc. is one of the major companies in the entertainment industries. It is therefore obligated to ensure that it continuously meet the divergent needs, tasters and preferences of the consumers. With its high customer base, the company must stand firm to protect the interests of the consumers as well as protect its own interests. This strategy will allow Disney to increase its share in the market and become a major service provider. It will also assist the company to not only uphold but also improve its competitiveness in the global market.
RISK ASSESSMENT AND MANAGEMENT
Below are the risks identified with regard to the winning strategy and possible ways of addressing them.
Change management is a major factor when completing integration. For Disney to complete the change, it has to take into consideration the following implementation strategies:
- Estimate the cost that will be incurred in introducing and sustaining the change.
- Management team must remain the main inducers of the change.
- Acquire new technologies, facilities and infrastructure that will ensure the success of the business.
- Management must concentrate on developing new skills and impart new skills onto the employees.
- Hire more employees to manage the change as the current employees will not be able to handle the change effectively.
Bibliography
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Capodagli, B., & Jackson, L. (2009). The Disney way: Harnessing the management secrets of Disney in your company. New York: McGraw Hill.
Darity, W. A. (2008). International encyclopedia of the social sciences. Detroit, Mich: Macmillan Reference USA.
Disney, Walt, and Et Al. Peter Pan. Burbank, CA: Walt Disney Home Entertainment, 2007.
Disney, Walt. Walt Disney the Aristocats. New York, NY: Derrydale Books, 2008. Print.
Disney, Walt. Your host, Walt Disney TV memories, 1956-1965. Burbank, Calif: Distributed by Buena Vista Home Entertainment, 2006.
Walt Disney Company Analysis and Marketing. StudyMode.com. Retrieved 09, 2005, from http://www.studymode.com/essays/Walt-Disney-Company-Analysis-And-Marketing-65074.html
Walt Disney Company. Contemporary Disney. [United States]: Walt Disney Music Co, 2001.
Warner, A. G. (2010). Strategic analysis and choice: A structured approach. New York: Business Expert Press.
