Introduction
Identifying the key strategies of a successful business venture help the managers know and understand the excellent ideas that they can apply in their own businesses. It also enable the mangers determine the useful as well as the ineffective strategies that need to be modified or simply removed. The managers are able to plan for appropriate actions to achieve goals and objectives, thrive in the industry, and beat competition after assessing strategies and industry/market conditions.
This paper will discuss the organizational background of The Walt Disney Company and its strategies that made it successful as well as the industry analysis of the sectors of its businesses. The analysis revealed that the sustainable growth/reinforcement strategy is the key factor to the successes of The Walt Disney Company. The last section provided recommendations on how the company can further lead in the industry and how strategies can be properly evaluated.
Comprehensive Written Analysis
Organizational Background
The Walt Disney Company and its Financial Performance
The Walt Disney Company’s (2015) website stated that it is engaged in the entertainment business in five various areas including amusement themed parks and resorts, television, cable, and radio networks, film entertainment, interactive media and mobile, and consumer goods. It was established in 1923 and is headquartered in New York, United States (The Walt Disney Company, 2016).
The company has successfully grown over the decades starting from a comedy program producer to a large multi-national and multi-segment entertainment business (The Walt Disney Company, 2016). The brothers, Walter and Roy Disney opened the Disney Brothers studio in 1923, and they had the first themed park in 1955 (Carillo, et.al. 2012).
The children of the founders took over after the death of the brothers, and they had the following expansions: launched the first Disney Channel in 1983, opened Disney Tokyo in 1983 and Euro Disney in 1992, purchased Miramax Film Corporation in 1993, acquired Capital Cities in 1995, purchased Pixar in 2006, acquired Marvel Entertainment in 2009 and Lucasfilm in 2012 (Carillo, et.al. 2012). The most recent popular film it produced is Star Wars which became another hit in the global film industry.
Bob Hill (2010) attributed the company’s success to the strategies of providing unique entertainment experience, outperforming expectations, instilling passion in business that consequently provide revenues and profits, putting mission and vision into practice, and providing unique products. It also provides good corporate example, breaks traditions, and builds business segments with goal for greatness (Hill, 2010).
In 2015, The Walt Disney Company (2015) performed well registering USD 52.5 billion revenues and USD 8.9 billion net incomes which are 7.5 percent and 10.6 percent increases respectively from the previous year. Increased fees of its multichannel video programming distributor, more resilient revenues from the subscription video on demand to the studio and media entertainment products, higher consumers’ average spend in themed parks, and increased merchandize licensing drove the growth of the company according to its annual report (The Walt Disney Company, 2015).
Key Strategies of The Walt Disney Company
Corporate Strategy
The Walt Disney Company (2016) aims to be the leader in the industry by providing the most creative and innovative entertainment products and experiences, by using the most advance technology, and growing global presence. The mission/goal is set to result to high corporate revenues.
Diana Budds (2015) stated in her article in Fast Co Design that the company’s strategy is interconnecting the sales of the business segment by producing impactful products. Such is done, Budds said (2015), by producing few but quality and impactful films a year and further strengthening and promoting its products by creating related products about the film such as television program, merchandize products that are based on the films, adding the character in the film in its theme park, and others. The strategy creates strengthened and lengthened feedback about the film and related products which drives sales growth.
Functional Strategy
Todd Zenger (2013) of the Harvard Business Review agreed to what Dina Budds explained and named the said strategy to sustainable growth. The tradition of leadership and excellence, culture of free share of ideas, care for employees to achieve good customer service and satisfaction, and repeat business are the key internal strategies of the company to achieve high and sustainable growth according to the article of Caitly Coverly in Financial Post (2013).
Business Strategy
The Walt Disney Company’s (2016) website stated that the company applied the strategies of merger and acquisition since 2005, evaluated new structure of commerce, and adding technology and growing sectors to its areas of business.
Strategies elaborated
The company historically had good performance despite the presence of negative external factors such as the global economic recession and the terrorism. It is able to launch new products in a timely manner and is able to attract and entice its target markets as it reinforces the popularity of its studio products through its correlated offerings.
The company is able to hire and retain employees with excellent creativity in story writing, drawing and animation, and music and sound. Its theme parks serve not only as an amusement centers but also as living memories of its quality films. It was able to beat competition through intense brand recall and reinforcement strategy, and by acquiring film companies with huge growth potential in the industry. It invests only on quality films that can further provide content to its media networks.
Another factor that makes the Walt Disney Company more successful is the fact that it is one of the oldest companies in the entertainment industry. It has witnessed several generations that can pass their childhood favorite cartoon characters to their children resulting to repeated sales of its products and merchandizes from generation to generation. Such successful trade mark and brand product recall make it easy for the company to accumulate large profit over time. As it produces few but memorable or remarkable films every year, the characters continue to add to its product portfolio that can also become popular for several decades.
Industry Analysis
The Walt Disney Company’s key sectors
As the company is involved in five sectors, the succeeding sections will discuss the current industry conditions of each sector. According to the report of Marketers Media (2016), the global theme park industry exhibited a healthy growth in 2014, thanks to the higher visitors spending in the regions of Latin America, Asia, and Europe, growing number of population and middle class, and increasing number of cities. The main players include The Walt Disney Co., Merlin Entertainment & Six Flags, and Universal Studio, and the latter registered the fastest/double digit growth owing to its new added section, Harry Potter, which drove high number of visitors (Marketers Media, 2016).
The theme park industry has an annual average number of visitors of 934 million globally, and it employs about 2.3 million people in the United States according to the data of the International Association of Amusement Parks and Attractions (2016).
A PWC (2016) report revealed that the media network and entertainment industry was valued USD 1.74 trillion in 2014 and is expected to grow at an average of 5.1 percent annually in the next five years. The report also added that there is a growing patronage of consumers in the digital media, although the non-digital media continue to account bulk or about 80 percent of the industry’s revenue as the content continues to be the main factor of consumption (PWC, 2016). Advertisers also increasingly place ads in the digital media (PWC, 2016).
The Walt Disney Company’s competitors in the media network industry include Viacom Inc., Time Warner Inc., Twenty-First Century Fox, and Comcast Corp (Nielson, 2014). The Comcast Corp had the largest enterprise value, while The Walt Disney Company ranked second, and the Twenty-First Century Fox placed third (Nielson, 2014).
The global film industry’s value in 2015 was USD 88.3 billion and the United States garnered the huge pie of the sales amounting to USD 20 billion (The Statistics Portal. 2016). The major players with high shares include Warner Brothers, The Walt Disney Company, and the Twenty-first Century Fox, and the latter two companies tied up in the blockbuster releases in 2014 (The Statistics Portal. 2016). A Research and Markets (2012) report stated that the industry is challenged with the issues of privacy, royalties and intellectual property rights violation, and increasing cost of talent fees.
The Walt Disney Company is considered as smaller player in the interactive and consumer products sectors as both generate only 3 percent and 8 percent of its total revenues respectively in 2013 (Nielson, 2014).
Recommended Strategies
After understanding the corporate background and the applied strategies of The Walt Disney Company, the current conditions and sizes of the various industries it is involved, and its key competitors, the report will discuss the recommended strategies to take advantage of the market conditions and opportunities and to maintain leadership and overcome the competitive threats.
Business Goals
First, the company should have related short and long term goals. The recommended short-term goals should be to obtain and maintain market leadership in all industries it is involved as it expands its product portfolio and global presence, while the long term goal is to be the world’s leading provider of entertainment and related products.
Objectives
The company should have a five-time frame for its short-term objectives adding product portfolio and expansion specifically in the emerging markets in Asia and Africa regions. The Walt Disney Company needs to evaluate its financial performance every quarter and make necessary improvements execute such improvements every six months of the year.
Strategy
It recommended for the company to further develop of its pool of talents for innovation of film masterpieces, media network programs, and interactive software programs. The company can occasionally acquire exceptional companies in the said industries or engaged in joint venture for a promising project. The leaders and its employees should always be updated of the newest and best technology to use for the entertainment product.
It is advisable to expand theme parks in the South East Asia, West Africa, and Brazil as these are the regions and country with fast economic growths. Thailand is among the most visited countries which can be potential expansion location. Nigeria is among the fastest growing economy and can be among the largest economy in 20 years, while Brazil also registers a strong economic growth.
The company also needs to create quality merchandize at a reasonable cost in all country of presence to be more competitive in the merchandize sector. It should continuously apply excellent advertising and marketing model with improvements of tapping new and promising but underserved international markets to achieve both of its short and long-term goals.
Tactics
The recommended specific tactics of the company are the provision of regular developmental training for its pool of talents, maintaining a technology and equipment research department or team for technology breakthroughs, conduct smooth internal and external organizational communication flow, and regularly conduct market research studies for each industry it is operating. It must exert more efforts and products in the interactive segment due to the growing trend on digital media.
The company needs to list specific schedules of theme parks expansion plans including the necessary resources, manpower, funding, and execution for countries such as Thailand, Nigeria, and Brazil. It must also be fast in identifying projects and film companies for its joint venture and acquisition plans.
Obtaining huge discounts from raw materials suppliers through bulk buying, observing energy efficiency in the process of production, and outsourcing affordable but quality services are helpful measures to produce and offer quality products at a reasonable cost.
Blockbuster films and television programs will always attract high number of viewers and advertisers. Therefore, it is very critical to always produce high quality with new concepts of entertainment products. Likewise, it is also necessary for the company to produce advertising portfolio in its cross-sector products to further strengthen its advertising and marketing model.
Recommended procedures for strategy review and evaluation
The company needs to have a department that will be focused on creating and evaluating strategies. The recommended procedures for strategy review and evaluation is tracking of quarterly and yearly financial performance and market share. If the financial performance reversed due to the strategy, the department should apply immediate correction and adjustments. However, if the strategies were quite effective in increasing revenues, achieve customer satisfaction, and high retention of employees, the leaders need to seek similar or enhanced version of the strategies to further strengthen results.
The team should also evaluate the funding viability of the strategies and see if they are in line with the company’s financial objectives. There must be assessment on the funding of the strategies and the expected returns from it as well as the viable period of time for the implementation of the strategies.
Summary
The paper discussed the beginnings of the Walt Disney Company and how it grew as a multinational entertainment company operating in five key sectors including media network, film, interactive, theme parks, and merchandize products. The company mainly used its sustainable growth strategy by reinforcing the feedbacks of its film products through its other related business segments that resulted to repeated sales and royalties. The company also engaged in merger and acquisition and use advance technology. It is recommended that the company expand its product portfolio and presence in the emerging markets such as Thailand, Nigeria, and Brazil. It must also observe providing quality products at reasonable costs. The strategies are best evaluated through quarterly and annual tracking of financial performance, funding and profit ratio of the strategies, and viable period of time for its implementation.
References
The Walt Disney Company. 2015. The Walt Disney Company Fiscal Year 2015 Annual Financial Report and Shareholder Letter. Retrieved from https://ditm-twdc-us.storage.googleapis.com/2015-Annual-Report.pdf
The Walt Disney Company. 2016. About The Walt Disney Company. Retrieved from https://thewaltdisneycompany.com/about/
Hill, B. 2010. Walt Disney’s 8 Secrets to Success. Business Brief. Retrieved from http://www.businessbrief.com/walt-disneys-8-secrets-to-success/
Budds, Diana. 2015. The Secret To Walt Disney's Corporate Strategy. Fast Co Design. Retrieved from http://www.fastcodesign.com/3048046/infographic-of-the-day/the-secret-to-walt-disneys-corporate-strategy
The Walt Disney Company. 2016. Kevin Mayer. Retrieved from https://thewaltdisneycompany.com/leaders/kevin-mayer/
Zenger, Todd. 2013. The Disney Recipe. Retrieved from https://hbr.org/2013/05/what-makes-a-good-corporate-st
Coverly, Caitly. 2013. The business lessons behind Disney’s magical experiences. Financial Post. Retrieved from http://business.financialpost.com/executive/business-education/the-business-strategy-behind-disneys-magical-experiences?__lsa=2af8-a232
Carillo, C. et.al. 2012. The Walt Disney Company: A Corporate Strategy Analysis. Robins School of Business. Retrieved from http://robins.richmond.edu/documents/cases/WaltDisney.pdf
Nielson, Samantha. 2014. Must-know guide to the Walt Disney Company’s competitors. Retrieved from http://marketrealist.com/2014/01/disneys-competitors/
Marketers Media. 2016. Theme Park Industry Global 2015 Opportunities & Trends Research Report. Retrieved from http://marketersmedia.com/theme-park-industry-global-2015-opportunities-trends-research-report/101539
International Association of Amusement Parks and Attractions. 2016. Amusement Park and Attractions Industry Statistics. Retrieved from http://www.iaapa.org/resources/by-park-type/amusement-parks-and-attractions/industry-statistics
PWC. 2016. Beyond digital: Empowered consumers seek out tailored, inspiring content experiences that transcend platforms. Retrieved from http://www.pwc.com/gx/en/industries/entertainment-media/outlook/global-data-insights.html
The Statistics Portal. 2016. Filmed entertainment revenue worldwide from 2015 to 2019 (in billion U.S. dollars). Retrieved from http://www.statista.com/statistics/259985/global-filmed-entertainment-revenue/
Research and Markets. 2012. Global Movie and Entertainment Industry 2012-2017: Trends, Profits and Forecast Analysis. Retrieved from http://www.researchandmarkets.com/reports/2172264/global_movie_and_entertainment_industry
