Walt Disney Company’s Strategy
The company plans to become the leading player in the business market. Walt Disney Company expanded its market in cable networks, music publishing, product retail, book publishing, and media distribution to mention a few (La Monica, 2006). The company’s corporate strategy is based on three objectives.
- Provide quality services.
- Exploit innovations in technology.
- Business expansion.
Walt Disney Company complements the objective of acquiring innovations from underused firms and new capabilities to improve consumer satisfaction. The team of experts prepares a framework to utilize every sector of the market. When a product is acquired from a business firm, Walt Corporation transforms the asset into a gold mine. When new capabilities are acquired, the company’s engineers and production unit invent different ways to reach its target and amaze consumers.
Long-term Attractiveness of the Company
The expansion of an organization is a product of organizational change. The need for advanced technology will keep the company in business. The company’s business strategy will provide a competitive advantage to improve its services (Mycoted, n.d.). The attractiveness of Walt Disney is influenced by innovation and brand differentiation. Five factors affect the long-term attractiveness of an organization. The factors include:
- Power of the supplier.
- Strength of the consumers.
- The competitive strength of the company.
- The threat of substitution.
- The threat of new entry.
Walt Disney controls Porter’s factors of power. The development of innovations and advanced capabilities positioned the company above its rivals.
Disney’s Competitive Strength
The growth of an organization is influenced by its business strategy. The competitive strength of Walt Disney Company is built on five variables.
- Brand differentiation.
- Successful acquisitions.
- Strong business portfolio.
- Diversified market.
- Product localization.
Brand differentiation: Walt Disney films are recognized globally. Disney’s brand reputation is valued at $28.5 Billion. Brand reputation is a competitive strength for the company.
Successful acquisitions: The transformation of its acquired companies influenced its growth. The challenges faced by many companies during acquisition can affect their growth. The acquisition of Marvel and Pixar studios indicates its competence in acquisitions (Reso, 2010).
Strong business units: Disney’s business units generate daily income, which indicates a strong business portfolio. Subscribers of its television broadcast were equal to 300 million in 2012 and 450 million in 2013. The competitive advantage in the business portfolio influenced the sales of its products. The competitive strength of the company is influenced by its strong product portfolio (The Walt Disney Company, n.d.).
Diversified market: Walt Disney diversified its business units into five categories, which include parks, media broadcasts, studio networks, interactive media, and products. Market change or a decrease in demand will not affect the organization. For example, when the demand for products drops, the company will have four business units to sell. The diversified business portfolio is a competitive strength for the company.
Product localization: The company transforms its product to suit the local consumer. Business firms find this strategy tasking. Walt Disney subtitled its film to suit the Chinese market. It improved the sales of its consumer products in China. Thus, a company with these qualities will sustain its presence. The company has performed well in its corporate strategy and its long-term attractiveness.
Disney’s 9-Cell Attractiveness Matrix
Disney’s 9-cell attractiveness matrix displays three variables. The variables include individual, relative and collective matrices. These variables influence the company’s competitive strength. The individual variation includes market size, growth, risk, capital requirements, threats, competition, and environmental factors to mention a few. The relative attractiveness measures the company’s ratings relative to its rival. Disney’s competitive strength is measured by its market-share price, price regime, leverage, fits, capabilities, brand reputation, and profit. Six cells are rated high while 3 cells are medium.
Strategic Fit Analysis
The company’s portfolio reveals a good strategic fit because the business units align with its long-term strategy. The strategy fit analysis identifies the value match in the company’s value chains. The company’s potential will be maximized. The analysis is based on logistics, distribution, sales, and technology. Thus, its value chain strategy fits all the segments of its business portfolio. The company’s reputation is built on corporate strategy and its relation to rival market is limited. Skill transfers, cost-sharing, and brand sharing will not attract a significant growth for the organization (Time Warner Corporate, n.d.).
Disney’s Financial and Operating Performance
Disney improved its fiscal revenue in 2011.
- Revenue increased by 9%
- Disney’s net income increased by 33%.
- The projected revenue was $5.4 billion.
- Disney’s EPS increased by 33%.
The increase in the company’s EPS in 2011 reflected the growth in cable networks, revenue from the parks and resorts, advertisements, and reduced cost of production. The contribution of SBU increased the financial strength of the company. The operational strength of the SUBs contributed to the financial strength of the company.
The recommendations will cover two segments.
- Sustained brand reputation: Innovation motivates consumer demand for a product.
- New products and services must be invented to meet market demand.
La Monica, P. (2006). Disney buys Pixar. Web.
Mycotic. (n.d.). Disney creativity strategy. Web.
Reso, P. (2010). House of the mouse to sell homes: Disney hawks multi-million-dollar properties near Walt Disney World. Web.
The Walt Disney Company. (n.d.). Investor relations. Web.
Time Warner Corporate. (n.d.). About us. Web.