Case Analysis 1
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Case Analysis Walt Disney Company Mission and Vision Porter´s Five Forces Analysis Analysis
Strategic Management Mr. Leopoldo Lopez February 5th 2012
Maria Jose Hernandez-Fu
Disney Company (Company Analysis) I.Mission and Vision Analysis
Since its founding in 1923, The Walt Disney Company and its affiliated companies have remained faithful to their commitment to produce unparalleled entertainment experiences based on the rich legacy of quality creative content and exceptional storytelling. The Walt Disney Company, together with its subsidiaries and affiliates, is a leading family entertainment and media enterprise with four business segments: media networks, parks and resorts, studio entertainment and consumer products. One of the reasons why Disney has a reputation of delivering a seamless "magical" experience to its customers in all of its operations - theme parks, hotels, restaurants, retail stores, etc. - is because it has one overriding mission for all of its business operations. Mission Statement
"The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world." The Disney Company has no particular Vision statement. Their focus is based on delivering the highest quality products and services in all of their four strategic Business Units.Nonetheless havign a clear Vision Statements could positively impact them in reaching more accurate strategic planning for their future business endeavors. We suggest Disney´s Vision statement to be the following: Suggested Vision Statement:
¨We at Disney envision to be the leading diversified international family entertainment and media enterprise.¨
II.Porter’s Five Forces Analysis – Disney Overview
Michael Porter's Five Competitive Forces Model focuses on the external environment that companies are forced to study, understand, and cope with in order to be successful. In the following analysis we will explore Porter´s Five Forces and we will apply them to one of the Largest Corporations in the World, The Disney Company. We will address the external factors that influence the Disney Company, in order to construct sound recommendations to foster potential growth, and convert threats into opportunities. Rivalry among competing Firms
Rivalry among competitors is moderate in the case of Disney Company. The entertainment Industry has high entrance barriers that limit the competition in this realm. Nonetheless competition is fierce among the small number of competitors. In the case of Disney an its main competitors DreamWorks has been trying to position itself as a different kind of entertainment company providing new forms of entertainment that appeal to more adult cutomers.Nevertheless, Disney continues to be ahead in the market by diversifying their operations and appealing to other markets through the acquisition of Sport-chain channels, and the creation of international theme parks. Disney´s key position in the market allows for them to continue diversifying and sets them apart from other entertainment companies. It is important to note that Disney´s power in the industry is so great that when a key competitor has entered the market, Disney will try to absorb it. A key example of this type of competitor was Pixar. Disney new that Pixar’s technological advances in animation posed a serious threat to them, as a result they acquired a percentage of Pixar and today under the name Disney Pixar they have produced some of the most successful animated movies ever created. ´ Potential Development of New Competitors.
The first force to be discussed is the threat of new entrants. Since the Disney Company has been able to find a very distinctive niche in the industry, the entrance barriers in the entertainment industry are relatively high. The company has been able to grow steadily in the last 20 years, especially in the Media Networks and Broadcasting Strategic Business Unit. Past New Entrants in the market as Pixar were bought by the entertainment Giant, and the power and technological advancements of their Research and development team has enable them to continue being at the top of the Entertainment Industry. By relying on past experience, company officials know to a large extent what the target customer wants. As a result, Disney dominates the family entertainment market, making it very difficult for new organizations to develop brand recognition, identification, and product differentiation. Disney has focused on market diversification for years and the company covers a wide array of products and services. Being a market leader has made it possible for the company to practice effective economies of scale in production. It would be very hard for new market entrants to try and compete with Disney. In addition, extremely large amounts of capital investment are required for new entrants into the industry. The capital requirements are extremely high. For
instance, Disney spent USD3.6 billion in its European theme park. Only very large companies can meet such large capital requirements. The Bargaining Power of Customers
The bargaining power of customers is relatively high in the service and in the entertainment industry. Disney is clearly dependent on satisfying their customers in order to succeed in their four business units: Consumer Products, Studio Entertainment, Parks and Resorts, and Media Networks Broadcasting. Since a large number of customers are needed to make Disney's operations run smoothly, the customers have certain powers. For instance, if the price on a particular home video is too high, customers may be reluctant to spending the money needed to purchase the product. If prices or particular expectations by the customers are not met, Disney could easily be affected. We should remember that the entertainment industry is an industry based on consumption and emotional experiences, therefore its products are not a necessity for life; such as food, shelter or clothing. The Bargaining Power of Suppliers
The bargaining power of suppliers is also important, although more moderate. The Disney Company is operating in a highly differentiated and unique industry with high switching costs associated with operations. Disney´s suppliers are dominated by a few numbers of companies. However, Disney is a unique and important customer for these particular suppliers. Furthermore, the size of the company may certainly be of great advantage. By being able to order large volumes of unique products from unique suppliers, Disney creates a dependency relationship in the industry. This allows for lower supplier costs. On the other hand, more highly skilled suppliers due pose a particular threat to the company. It is essential that Disney is able to retain the highly skilled and imaginative workers. It is the technological advances and changes in the Entertainment segment what keeps Disney fresh unique, and successful. Potential Entry of New Competitors
The threat of substitute products or services is moderate to low. Other cartoon figures, theme parks, and movies can penetrate the market in which Disney is operating, but recent studies have proven they do not represent a significant threat. The Disney Company has already placed price ceilings on many of its product lines, and should be able to compete with new competitors. However, the threat alone of new entrants into the market requires Disney to hedge against such risk by concurrently upgrading products and services.