lSWOT ANALYSIS WALT DISNEY Ayse Aybike YILMAZ Strategic Management About the Company: The Walt Disney Company was founded in as a cartoon studio in 1923. Walter Elias Disney, founder of the Walt Disney Company, was a pioneer in the development of animation as an industry. Disney is one of the most famous names in the animation industry, known for providing entertainment directed to adults and children alike; with international theme parks and a world-class animation studio and business franchise, the company nearly dominates the industry.
Famous names such as Mickey Mouse began with Disney, and were the foundation of a company that has now branched out into several entertainment studios, theme parks, products, and other media productions. The Walt Disney company has a prestigous history in the entertainment industry, stretching over 75 years. It started on October 16, 1923 as the Disney Brothers Cartoon Studio, a joint venture of Walt Disney and his brother, Roy. Three years later the company had produced two movies and purchased a studio in Hollywood, Calfiornia.
Pitfalls in distribution rights nearly sank Walt and his company, but the creation of Mickey Mouse saved a sinking ship. By 1932, the Disney Company won its first Academy Award for Best Cartoon, for the Silly Symphony. 1934 marked the production of Disney’s first full-length feature film, Snow White and the Seven Dwarfs, which released in 1937 and became the highest grossing film of its time. But afterwards, the expenses of production caused difficulties with the next few animated films; then the advent of World War II halted the production of films as the Walt Disney company contributed its skills to the war effort.
After the war it was difficult for the company to pick up where it had left off, but 1950 proved a turning point with the production of its first live-action film, Treasure Island and another animated film, Cinderella. In that time period, Disney also began several television series; in 1955, The Mickey Mouse Club also made its debut. 1955 also provided another landmark moment: the opening of the first California Disney theme park, Disneyland. Disney continued its rise in popularity, and survived even the death of its founder in 1966.
His brother Roy took over supervision at that time, and then was succeeded by an executive team in 1971. Several more projects, from merchandising to the continuing production of animated and live-action films to the construction of more theme parks filled the years; in 1983, Disney went international with the opening of Tokyo Disneyland. In the past few decades, Disney has moved into a wider market, beginning The Disney Channel on cable and establishing subdivisions such as Touchstone Pictures to produce films other than the usual family-oriented fare, gaining a firmer footing on a broader range.
In the 1970s and 1980s, the company suffered from takeover attempts, but eventually recovered; the recruiting of the current chairman, Michael D. Eisner, was crucial to that. Eisner and executive parnter Frank Wells have been a successful team, leading Disney to continue its tradition of excellence into a new century. Strenghts: The Walt Disney Company’s main strength is in its resources, its experience in the business, and its low-cost strategy. Besides, the company has developed clearly a very strong and well known “brand-name” through many years.
The company has also been able to diversify its operations and products to hedge against decreasing sales in product lines. In recent years, it has categorized into Home Video, Film, merchandise, Radio broadcasting, Net-work television and in theme parks. It has also effectively diversified globally its operations from USA to Japan and Europe. The main strengths in internal resources relate to human resources and financial stability. Employees in the Walt Disney Company studies appear to be extremely creative and they have produced several box-office productions in these recent years.
A company without new ideas is bounded in today’s competitive business environment. However, the low-cost-corporate-strategy is a benefit for the company. The company can control costs, and still produce quality goods and services. Financial risks have been minimized by sharing initial investment costs with a maximum number of outside participants. 1. It is the largest media and entertainment company in the world. 2. It has become one of the biggest Hollywood studios. 3. Disney Company owns 11 theme parks and several channels. 4. Disney employees 150,000 people. 5. Innovative ideas 6. Global standardization . It is among the popular brand names in the world. 8. It has well established divisions Walt Disney Studio Entertainment, Disney-ABC Television Group, Disney Interactive Media Group, Disney Consumer Products, Walt Disney Parks and Resorts, Disney Interactive Studios. 9. Increasing trends in overall revenues and profits. 10. Disney holds US$ 62. 497 billion of assets. 11. Popular characters 12. High brand awareness among the people. 13. Differentiation 14. The Walt Disney logo is famous. 15. Walt Disney was ranked 8th in the Top 100 Global Brands. Weaknesses Corporations always have internal weaknesses.
The Walt Disney Company’s main weaknesses are the following: A very large work load, often changes in top-management, and high overhead expenditures. The company has 58,000 employees in 1991. This fact represents possible communications problems, and a high bureaucracy level through the corporation. The company’s work load will increase even larger, and the organizational structure has to be able to support an extension of the work load by varying into more businesses and niches. The company has a very frequently changes and its corporate officers makes the corporate structure even more difficult.
There are many positive things that often changes, but the changes are also associated with resistance, and high expenses. 1. High operating cost 2. Frequent change in top management 3. The $1. 8 Billion park have only 16 attractions. 4. Religious welfare group protest against the release of material which was found offensive by many people. 5. Poor working conditions in factories that produce their merchandise. 6. Disney was also criticized by animal welfare group for their caring procedure for animals at Disney Animal Kingdom theme Park. 7.
Poor management. 8. Disney has been blamed of having sexual implication or references concealed in some of their animated movies, including The Lion King, The Little Mermaid, Aladdin, Who Framed Roger Rabbit, and Disney original releases of The Rescuers. 9. High investment with high risk involved. 10. Continuous innovative ideas are required to retain the attention of customers. 11. Limited range of target audience mainly Children. Opportunities External opportunities should be recognized, analyzed, and responded to in a very early stage.
The Walt Disney Company is facing several external opportunities. However, the external threats facing the company are out-numbering the opportunities. Opportunities include the following; positive government attitudes towards its operations, barriers of entry are significant, and include the entertainment industry itself. Legal and legislative forces are usually identified as negative external factors to the company. Furthermore, the French government contributed greatly in the Euro Disneyworld project in the Walt Disney Company’s case.
The French government invested in the project to built communication facilities, and gave the Walt Disney Company tax relief’s on cost of goods sold accounts. In addition, since the barriers of entry into the highly specialized industry in which the Walt Disney Company is still operating, competition will find it difficult to penetrate the company’s highly diversified product or service mix. Therefore, large initial capital investments are required to enter the industry accordingly. 1. Move into different segments 2. Proper inventory management 3. Market development in untapped countries. 4.
Reduction in operating costs. 5. Disney music channel 6. Benchmarking to improve management practices. 7. Disney school of management and training 8. Online Websites 9. Develop more attractions for theme park. Threats Major threats to the Walt Disney Company include the following; Over saturated markets, politics and economic aspects from a global perspective, and foreign competition. As the supply of products and services in the entertainment industry is starting to saturate the markets, competition will be more exciting, and only the most powerful companies will be able to survive finally.
The Walt Disney Company has leveraged this risk to a certain level as it has diversified and globalized its operations, but still, the company is in the service/entertainment business. The Cable-giants such as Turner Broadcasting Systems (TBS) may not be able to manage the stress on its operation such as the Network-television division. 1. Security Threats due to terrorism 2. Employee retention 3. High competition in Media Industry. 4. Facing fierce competition from Paramount Parks, News Corporation, CBS, Time-Warner, Universal Studios and Six Flags Theme Parks. . Social and ethnic groups. 6. Government policies 7. High demanding market in terms of innovation. 8. Increasing salaries and labor cost. 9. Recession 10. Maintain product differentiation. 11. Tight competition in national and international markets. 12. Searching, paying and retaining innovative people. 13. Piracy Strategies The Walt Disney Company’s corporate level strategy is based on a horizontal and scattered informal management approach. Ideas are born within the departments and are processed throughout the low hierarchy relatively from the final decisions.
The management is placed on group creativity and in teamwork. For example, the most creative employees usually met the target in the purpose of generate with new ideas and new business strategies. As seen in this example, a large emphasis is focused on employee participation, especially on the most talented employees. Furthermore, the company is always refreshing its top management with new executives. “Top-flight” managers from the entertainment corporation and the financial business think new ideas and concepts which can be applied in the Walt Disney Company.
There is however a significant increase in expense attached to attracting the very best to join the company. This increase in expense is related to special perk-packages directly, higher bonuses and escalated salaries that are offered to the top-executives. Another interesting strategy is the focal point that is focused on enhancement of the business. The corporate policy is to grow slowly instead of “impress others”. It is important for the company to meet demand with a sufficient supply of goods and/or services.
It can be accomplished by effective distribution channels and marketing department. This leads us to another corporate policy, efficiency and suppression. Recently, movie industry trend towards increase in costs rapidly, it have a direct effect on the profitability of the company. By reducing the costs involved in making and marketing Disney films, it is cheaper and more profitable movies can be produced. Efficiency enforced by tight budgets and expected high returns, Disney must be able to produce more efficiency and cheaper than its competition.
In addition, the corporate strategy is clearly focusing on diversifying its products and services. The expansion overseas rapidly and an increase in the product and service mix have created an umbrella effect. Thus, risks have been reduced and minimized. If one product line fails, other product lines have to cover for its losses. The Walt Disney Company is able to produce more and more products to the others countries which do not have Disneyland. Instead of going toward the countries that have Disneyland, the customers also can buy the Disney products in their own countries.