The current business climate is competitive and fraught with uncertainty. Companies must create and implement effective plans to ensure the continuation of operations and expansion. As a result, the success of firms operating in today's tumultuous business environment is heavily reliant on their strategy. Such firms encounter challenges from both internal and external settings. As a result, it is critical for a business to scan both of these settings to identify the difficulties and possibilities that exist. Furthermore, the action of studying the business's settings assists the business in identifying internal shortcomings that impede success (Fleisher & Bensoussan, 2007). After finding the issues and opportunities present in the environment, the business has to develop strong strategies that will help explore the potential opportunities and find solutions to problems facing it. According to Ireland, Hoskisson, & Hitt (2012), a strong strategy is essential for a firm planning to succeed. This paper analyzes the environments of Walt Disney Company and also tries to uncover the strategies that have helped the company succeed. Other important aspects of the company such as international influence, diversification strategies, ethical concerns, and financial position are also covered.
Background of the Company
Walt Disney Company is a global entertainment organization based in the US with operations spread across Latin America, Europe, Asia-Pacific, and North America (Market Line, 2013). The operations of the company are categorized into five segments namely: parks and resorts, interactive media, media networks, consumer products, and studio entertainment (Market Line, 2013). The parks and resort segment of the company is in operation in California, Florida, Hawaii, Hong Kong, Paris, Shanghai, among other cities. Its media networks segment comprises of both domestic and international cable TV networks. The segment also deals with digital and publishing operations, radio stations and networks, among other related operations. In regards to the interactive media segment, Walt Disney Company engages in creating and delivering lifestyle content and branded entertainment in interactive media platforms. Its consumer products’ segment mainly deals with selling licenses for third parties to publish, design, promote, design products based on the company’s media characters. Finally, its studio entertainment segment deals with the production of live action and animated pictures. It is clear that the company has numerous operations that require strong strategies.
The company came to life way back in 1923 when Roy Disney and Walt Disney created Disney Brothers Studio in Hollywood. The company grew steadily; however, exponential growth was experienced in the 1990s when it experienced successes of its animated films. The success of the company has been driven to large extent by its ability to enter into strategic alliances.
Internal Analysis
Internal analysis is vital for developing a winning strategy since it helps in identifying the weaknesses and strengths of the firm. When the strengths and weaknesses of the firm are identified, it is easier to develop strategies that fit the situations of the organization. In this regard, therefore, the internal analysis focuses on identifying and evaluating the specific features of a company including its core competencies, capabilities, and resources.
It’s mission statement is “to be one of the world’s leading producers and providers of entertainment and information” (Walt Disney, n.d). The different brands of the company enable it to differentiate its services, content, and consumer programs. The ability of the company to come up with most innovative and creative entertainment experiences underpins its success in the industry.
Leadership has been one of the major strengths of the company. The leadership of the company has been instrumental in implementing strategies that foster innovation and use of latest technology. This is done while at the same time exploring opportunities for expansion (Walt Disney, n.d). Notable characters of the management team that are behind the success of the company include Robert A. Iger, Alan Braverman, Andy Bird, among others. According to Carillo et al. (2012), Robert A. Iger, who is the company’s chairman and CEO, has, in particular, played an immense role in easing tension within the firm. In addition, he has successfully overseen the expansion of the company through the acquisition of other brands including Marvel, Lucas Film, and Pixar. Therefore, Iger, along with his management team form part of the human resources of the company that is utilized well to facilitate the success of the organization.
Given that the company is a publicly traded one, its board of directors comprises of ten members (Carillo et al., 2012). Therefore, it has a board that runs the affairs of the company on behalf of shareholders. The human resource of the company cannot be completed without the efforts of employees. According to Yahoo Finance (2016), the organization has 195,000 full-time employees that help it achieve its goals. The employees of the company are offered training and development through Disney University.
The Walt Disney Company is among the leading conglomerates in the world in regards to financial position. The revenues of the company was $55.6 billion in 2016 (Yahoo Finance, 2016) and it has continued to be on the upper trend as expansion strategies are implemented. Further details regarding the financial position of the firm will be examined later in this paper. The major strengths of the company lie in its strong brand, financial muscle, and diversification, while the volatility of business continues to be a weakness.
External Analysis
The external analysis of an organization looks at the factors outside the organization that influences its operations. It is important to note that the business in not always in control of what takes place on the outside. However, it has to be aware of the happening in the environment in order to come up with strategies that address challenges present. This means that external analysis is a necessary undertaking, especially for those organizations operating in the international market environment. According to Cadle, Paul, & Turner (2010), Porter’s Five Forces and PESTLE are techniques employed in analyzing an organization’s external environment. This paper uses PESTLE analysis:
Political
Given that Walt Disney Company is an international organization, political temperatures in many regions around the world affect its operations to some extent. An unstable political environment means different sectors in that region are adversely affected. According to Cadle, Paul, & Turner (2010), the development of regional bodies like the EU has influenced the scope of political activity. In Europe, for example, it is necessary for the company to comply with EU provisions.
Economic
For Walt Disney, the economic factors that affect its operations may be limited to the US only. However, with recent expansions, global economic factors affect its operations too. When one nation develops economic difficulties, the operations of the company can be negatively affected not only in that country but also in other nations. If an economic crisis occurs in the US, for example, its adverse effects will be felt all over the world. It is important to note that economic crisis affects the spending capacity of the customers of the company. Given that Walt Disney Company deals mainly with entertainment products and services, incomes of customers in case of an economic crisis are channeled towards most urgent and basic needs.
Socio-cultural
According to Cadle, Paul, & Turner (2010), these are factors that arise from customers or potential customers of a company. Socio-cultural factors are subtle and are not easy for a company to predict. For the continuity of the operations of the company, it is essential that it delivers products and services according to the taste and preferences of its customers. The content it provides; movies and the park themes are shaped by the preferences and tastes of customers. Therefore, it is a priority for the company to be aware of the aspects characterizing the cultures and social environment of its customers.
Technological
As determined earlier, utilization of latest technology is a major strong point for Walt Disney Company. Therefore, the operations of the firm are largely driven by technology. Given that innovation is a key competency for the firm, coming up with new ways to deliver content to customers is among its primary priorities. If Walt Disney Company fails to adopt new technologies, it risks losing market to competitors. It is important to note it is technology that that is behind the success of the company. In addition, the company has been on the forefront in utilizing social media platforms such as Twitter and Facebook to boost its engagement with customers.
Legal
Cadle, Paul, & Turner (2010) point out that a company must consider factors that come about as a result of changes in the law. The authors also note that there has been a rise in depth and breadth of legal regulations that firms must comply with. The different countries in which Walt Disney Company has operations in have laws that the company has to comply with. In the US, the firm must comply with laws by the Federal Communications Commission. In addition, it is crucial that the company is familiar with intellectual property and copyright laws.
Environmental
As determined earlier, Walt Disney Company operates parks in major cities in the world. The amusement parks have to comply with environmental laws in their different environments through the use of efficient waste management system. According to the website of the company, it is committed reducing greenhouse gas emissions as a way of tackling climate change.
Strategies of Walt Disney
Excellence in Leadership
As determined previously, the management team headed by Robert A. Iger has been successful in guiding the company to more profitability year in year out. According to Coverly (2013), communication is a key attribute behind successful leaders. It is the strategy of Walt Disney Company to foster effective communication throughout the different levels of the organization. The role of the leader is to create an environment in which employees feel safe and free to share ideas. Since leaders are responsible for their environment in the company, there is employee satisfaction and high retention (Coverly, 2013). In addition, when employees are satisfied, their productivity increases and the customer is satisfied. Therefore, the leadership of the company has managed to keep employees happy which has translated to improved productivity.
Diversification
Walt Disney Company derives success from diversification of its products and services. As seen in the overview of the company, the company has categorized its operations into different segments dealing with different types of goods and services. Diversification, therefore, emerges as a major strength for the company because when one segment experiences losses; there are other segments that make up for them.
Strategic Alliances
Another strength of the company lies in its ability to form strategic alliances. Throughout history, the company has entered into alliances with other companies in order to boost relationships and control the market. Example of companies that the firm has built strategic alliances with include Hewlett-Packard, Pixar, Children Place Retail Stores, Comcast, Dreamworks Studios, among others (Market Line, 2013). The company has also formed strategic alliances with Kimberly-Clark, Siemens, and Panasonic. It is such alliances that have been instrumental in its success.
International Influence in Foreign Market
As Walt Disney Company continues to expand into new markets, the international influence on its products and services cannot be overlooked. The foreign markets in which the company sets up new operations have different cultures and social norms from that present in the US. Therefore, it is essential for the company to incorporate cultural elements of the destination country of its products. The company cannot sell products and services in foreign countries the same way it does in the US. According to Sylt (2015), when the company designed log-flume ride Splash Mountain in Japan, the customs of the nation had great influence on the process. The author also notes that there is a big Alice in Wonderland since there it was anticipated that there would be an influx of British visitors. As seen, there is an international influence in delivering the products and services of the company in the foreign market.
Diversification Strategies
Diversification of operations of Walt Disney Company has helped it grow exponentially. The company’s diversification strategies have been directed mainly in the entertainment industry. The company has set foot in every exploitable opportunity in the entertainment industry. This is evidenced by its five segments that are primarily entertainment-based. Therefore, it is clear that the strategy of the firms surrounds investing in opportunities in the entertainment sector.
One major factor that characterizes the diversification strategy of the firm is selling products and services in new markets. The company is continually looking for markets to set up new operations especially amusement parks. Recent expansion strategies have seen the firm open amusement parks in Asian cities such as Shanghai, Hong Kong, and Tokyo. The products and services that have proven successful in the US have been offered in the Asian market and have contributed immensely to cultural exchange.
Walt Disney Company also diversifies its operations through the selling of new products and services. As determined in this paper, the leadership of the company provides an environment where employees are encouraged to share ideas for improving the operations of the company. In addition, the company considers innovation one of its core competencies. Such environment leads to the development of new services and products which in turn increases the diversification present in the company.
Ethical Concerns
Ethics is increasingly becoming important for business organizations (Frederick, 2008). There are ethical concerns surrounding Walt Disney Company. One of such ethical concern is laying off of workers. In 2015, 250 employees of the company faced being laid off (Preston, 2015). They were replaced by immigrants who were considered more technically skilled. However, critics say that the immigrants were hired to work for less money than the American workers. Such issue raises ethical concerns that can affect the company to a great extent.
Another ethical concern comes as a result of the company having operations in foreign countries. This means that the employees of the company are made up of members from diverse cultural backgrounds. For the company to be ethically right, it has to provide equal opportunities for all in every aspect of the human resources including training, compensation, and career development. In addition, every employee of the company deserves to be respected by everyone. The workplace policies, therefore, have to take into consideration the diversity present.
Walt Disney Company has also received criticism for displaying secret sexual messages in its animations. Given that content produced mainly targets children, presence sexual messages raise serious ethical concerns. For continuity of operations, it is necessary for the company to ensure it operates in an ethical manner with respect to the expectations of the society.
Financial Statement Findings and Recommendation
A three-year income statement of Walt Disney Company indicates that the company is performing well. As shown in the Appendix, the revenue of the company was $48.8 billion, $52.5 billion, and $55.6 billion in 2014, 2015, and 2016 respectively. This shows that the expansion strategies of the company are yielding fruits. The gross profits as well the net income of the company have also been increasing steadily. It is evident that the company is healthy financially and still has the capacity to expand further into new markets.
One recommendation for Walt Disney company is to use its financial muscle to enter countries that it has not yet set operations in. Given its big brand name, the company has the ability to succeed in new markets if it decides to explore.
Conclusion
Walt Disney Company operates in a very competitive environment that requires exquisite strategies in order to succeed. The success of the company to date has been possible through addressing challenges present in both the internal and external environments of the firm. The internal analysis of the company has shown that the strengths of the company lie in its financial background, strong brand, and diversification. In the external environment, the company’s ability to utilize latest technologies has helped it stay ahead of the competition.
The strategies that the company applies in order to succeed include excellence in leadership, diversification, and strategic alliances. Walt Disney throughout history has been entering into strategic alliances with different firms for mutual benefits. In addition, diversifying into different segments in the entertainment sector and new markets has been crucial to its success. As it expands into foreign markets, the international environment has affected its products and services to some extent. Despite the successes of the organization, there are ethical concerns that it has been facing. The company managed to deal with the concerns to ensure they do not affect its continuity.
References
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