Practice Exercise: Building Case Analysis Skills ✓ Solved

Practice Exercise Building Case Analysis Skills complete A Ca

Complete a Case Analysis to analyze a company's Strengths, Weaknesses, Opportunities, and Threats. Read Case 22: The Walt Disney Company: Its Diversification Strategy in 2014 (pages C119 - C134). Complete a short Written Case Analysis (3-5 pages, not including a title page and references page). Choose a model from chapter 3 to perform an external analysis. Choose one of the techniques from chapter 4 to perform an internal analysis. Present your findings as a SWOT report including components of Strengths, Weaknesses, Opportunities, and Threats. Propose an action plan and set of recommendations addressing the issues you have identified.

Paper For Above Instructions

The Walt Disney Company, known for its expansive reach in the entertainment industry, has established itself not only as a leader in animation and theme parks but also as a formidable player in various other markets through its diversification strategy. As we analyze Disney’s strengths, weaknesses, opportunities, and threats (SWOT), we will draw insights from the external and internal analyses, culminating in actionable recommendations for the company’s continued success.

External Analysis

To conduct an external analysis, we will utilize the PESTEL model, which examines Political, Economic, Social, Technological, Environmental, and Legal factors that can influence the company’s operations.

Political Factors: Disney operates in a highly regulated industry impacted by various government policies. Its global operations necessitate compliance with different regulations, such as trade restrictions and labor laws. Political stability in regions where Disney operates, particularly its international theme parks, plays a critical role in its profitability.

Economic Factors: Economic conditions, including recession periods, can significantly impact consumer spending on entertainment. Variations in exchange rates also affect Disney's international operations. Furthermore, the rise of digital streaming services has reshaped the entertainment landscape, pushing companies like Disney to innovate and adapt.

Social Factors: Societal trends often dictate consumer preferences. With the rising demand for inclusive and diverse content, Disney has made strides in promoting multiculturalism in its productions. Additionally, the shift toward family-oriented entertainment still aligns well with Disney’s brand image.

Technological Factors: The rapid evolution of technology has transformed the entertainment industry. Disney has embraced digital advancements, particularly with its introduction of Disney+, a streaming service catering to changing consumer behaviors. Investments in technology for its theme parks, like virtual reality experiences, highlight the company’s commitment to innovation.

Environmental Factors: Sustainability is becoming crucial for consumers. Disney has committed to reducing its environmental impact and increasing sustainability efforts across its operations, from renewable energy use in parks to sustainable sourcing in its merchandise.

Legal Factors: Compliance with entertainment rights, intellectual property rights, and international trade laws is vital for Disney. Legal challenges can arise, impacting content distribution and licensing agreements.

Internal Analysis

For the internal analysis, we can utilize the VRIO framework, which examines the company’s resources and capabilities based on Value, Rarity, Imitability, and Organization.

Value: Disney’s extensive portfolio of intellectual property (IP), including iconic characters like Mickey Mouse and franchises like Star Wars and Marvel, provides significant competitive advantage and customer loyalty. This value is further amplified through Disney’s efficient marketing strategies.

Rarity: The brand equity associated with Disney is rare. Few companies possess the same level of global recognition and customer affection. The unique combination of entertainment experiences offered in parks, films, and merchandise creates an equally rare position in the market.

Imitability: While competitors can replicate some aspects of Disney’s operations, the unique brand identity, legacy, and emotional connection Disney holds with its audience are challenging to imitate. The ability to create memorable experiences cannot be easily duplicated by competitors.

Organization: Disney’s organizational structure supports its broad diversification strategy, allowing flexibility across various business segments. The integration of various channels, from media networks to parks and consumer products, showcases effective organizational synergy.

SWOT Analysis

Strengths: Disney’s strong brand equity, diverse content library, and innovative technology integration position it for continued success. The synergies between its film, theme parks, and merchandise enhance profitability.

Weaknesses: High operational costs and dependency on the American market expose Disney to risks. Disruptions in content distribution channels, as witnessed during the pandemic, can also affect revenue streams.

Opportunities: Expanding international markets, particularly in Asia, and developing original content for streaming platforms present significant growth opportunities. Additionally, further enhancing park experiences can attract more visitors post-pandemic.

Threats: Increasing competition from streaming services like Netflix and Amazon Prime, as well as potential economic downturns, pose significant threats. Moreover, changing regulations and global economic instability can impact international operations.

Action Plan and Recommendations

Based on the SWOT analysis, it is essential for Disney to implement strategic measures that capitalize on its strengths and opportunities while addressing weaknesses and threats.

  • Enhance Streaming Services: Continue to invest in original content for Disney+ while leveraging existing IP to attract subscribers. Increased marketing efforts can help position Disney+ as a leader in family-oriented content.
  • Global Expansion: Focus on expanding operations in growing markets, particularly in Asia, by adapting content to local cultures. Partnerships with local media companies can aid in this expansion.
  • Diversify Revenue Streams: Develop new avenues for profitability beyond traditional media and parks, such as direct-to-consumer merchandise sales and virtual experiences.
  • Sustainability Initiatives: Strengthen sustainability efforts across all operations to enhance corporate social responsibility and appeal to environmentally conscious consumers.
  • Cost Management: Implement strategic cost management measures to streamline operations and reduce dependence on the American market, diversifying revenue sources.

In summary, The Walt Disney Company, through its diversification strategy, holds a significant position in the entertainment industry. By leveraging its strengths and addressing areas of improvement, along with embracing innovative opportunities, Disney can continue to thrive in the evolving market landscape.

References

  • Barney, J. B. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99-120.
  • Disney. (2015). Annual Report 2014. Retrieved from https://thewaltdisneycompany.com/annual-report
  • Grant, R. M. (2019). Contemporary Strategy Analysis. Wiley.
  • Kotler, P., & Keller, K. L. (2016). Marketing Management. Pearson.
  • McCarthy, E. J. (1960). Basic Marketing: A Managerial Approach. Richard D. Irwin.
  • PESTEL Analysis on Disney. (2021). Retrieved from https://pestleanalysis.com/disney-pestel-analysis
  • Roe, J. (2020). The Disney+ Effect: How Disney's Streaming Strategy Will Change the Game. Entertainment Weekly. Retrieved from https://ew.com/tv/disney-plus-effect
  • Rumelt, R. P. (2011). Good Strategy/Bad Strategy: The Difference and Why It Matters. Crown Business.
  • Smith, A. (2018). The Global Expansion of Disney: A PEST Analysis. Journal of Business Case Studies, 14(1), 54-66.
  • Thompson, A. A., & Strickland, A. J. (2008). Strategic Management: Concepts and Cases. McGraw-Hill/Irwin.

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