Report of Disney Case

Report of Disney Case

Keyan Zhao

7/23/2016

Introduction

The huge success which has been attained it by the Walt Disney Company over years pose many opportunities for any business which want to be successful.  Walt Disney Company is a multi-billionaire dollar entertainment industry. It was founded in 1923 by Walter Disney in close collaboration with Roy O Disney. From then, Disney has gone through many endeavors to gain its success. It has led in four consumer markets which include Disney Theme parks and resorts, Disney consumer products, Disney T.V channels and media networks, as well as Walt Disney Studios and motion pictures.

Like many other business firms, Disney has strengths and weaknesses. Being a huge company, it also faces threats as well as opportunities. To me, the most compelling case is how the company has maintained a high marketing profile in the competitive entertainment world over a long time. As a result, I will conduct a strategic analysis in a bid to discover areas that have been tweaked to achieve the high success profile. In doing so, a recommendation which can help to improve marketing will be drawn. To achieve this the paper will utilize tools such as Porter's Five Forces model and the SWOT analysis. These two tools will help in analyzing Disney's consumer behavior strategy, pricing strategy, targeting strategy, channel strategy, and promotional strategy among more many others.

Brief History

After its formation, Disney launched Mickey Mouse in 1928. This animation has been one of the prestigious hit. Disney made its first full-length Music animated film known as “Snow White and the Seven Dwarfs” in 1937 which have been one of the best hits for the company. The company recognizes the value of customers in their brand. Their clients appreciate the fun experience as well as simple entertainment founded on conventional family values. The company responds to these preferences by leveraging the brand within diverse consumer markets.

Porters’ Five Forces

Disney analysis using Porters’ five forces assist in evaluating the company's strategic positioning in its environment. This analysis includes evaluation of bargaining power of the buyer as well as sellers. Included in this report also is potential threats coming from new entrants, competitors and substitutes. It is vital as it assists the management to manage its operations strategically within the external environment and establish the quantity of resources needed to be committed to the company’s each venture.

1. Bargaining power of the suppliers and buyers- The bargaining power of the Disney’s customers can be rated high in both entertainment and service industries. Disney requires a huge number for customers to make its operation smooth, hence implying that consumers hold certain powers. For example, a very costly home video may result in customers being very reluctant in spending the money to purchase the film. The entertainment industry is designed such that instead of saving the buyer’s money it encourages the buyers to spend more. Most of the company’s product mixes centers on intangible returns on buyer’s finance. In a situation where some customers may be unaware of such getting such a return may increase the bargaining power.
2. On the other hand, the bargaining power of suppliers can be rated as moderate to low. Disney operates under a high differentiated as well as a unique industry which is characterized by high switching costs related to operations. A few companies suppress the suppliers and in most cases are concentrated. However, Disney is unique and a crucial customer to many suppliers. The size of the company also is advantageous. Through holding big sizes of distinctive products from exclusive suppliers can create a dependency relation in the company.
3. Threats of new Entrants- this can be rated as medium. The long experience of the company in the entertainment industry has helped it to gain a niche the industry hence entrance barriers are relatively higher. Its existence over an extended period has helped the company to grow and develop from within Research and development, financing, and marketing departments. Through this reliance on the experience, the company's officials have ample information on what the customers' needs. With the current domination in the family entertainment market, it becomes ultimately very hard for a new company to develop brand recognition, as well as product differentiation. New entrants require an extremely large amount of finance and other resources to compete effectively with Disney. For example, in its European theme park, Euro Disneyland, Disney spent over USD 3.6 billion, indicating that only large companies can meet such financial requirements. The government policies also seem favorable to the company. For example, 40% of the Euro Disneyland capital came from the French government. Additionally, the government provided a tax relief from 18.6% to 7% and public transportation facilities on goods sold. However, these attributes do not diminish the chances of smaller players with lower structures entering the market.
4.  The threat of substitutes- it can be rated as high. The current technological advances have attributed to increased chances of substitutes of Disney’s products. Through the improved technology, the company’s segments face many alternatives choices which customers can choose. There are also a lot of activities that families can do in their leisure time like going to Museums and making vacations overseas. These indirect competitors are usually characterized by lower cost than visiting Disney parks, in turn, the Disney require to have a high brand image so as to capture the consumer's preferences. Disney has a well-organized background that can help in tackling this challenge due to the presence of vacation parks in North America, Asia and Europe, the Adventures by Disney, and the Disney Cruise line which offer guided family vacation experiences.
5. Rivalry among companies- there is great rivalry due to massive competition. The major competitors in the industry such as Universal Studios, Disney, Six Flags & SeaWorld, have big marketing budgets which can influence customers’ preference. Despite the fact that these competitors offer entertainment for the entire family, they are some slight differences. To take advantage, Disney needs effectively communicate its point of difference as well as its emotional benefits to maintain its strong brand image over its competitors.

Opportunities and Threats

From the above analysis, it is clear that the company has a lot of possible opportunities. It is also characterized by threats. Among its opportunities include favorable government policies, barriers to new entrants, and longtime experience in the entertainment industry.  On the other hand, Disney faces challenges such oversaturated markets, intensified both foreign and domestic competition, global politics and economic influences. Currently, there is an increase in the supply of products and services from entertainment industry hence saturation in the market. This poses a significant threat, where only the strong companies will be able to exist.