As unemployment lingers and economic growth slow, people tend to spend discretionary funds
on what they need rather than what they want � including entertainment and vacations. Given that, what
are Disney�s opportunities and threats, strengths and weaknesses? What are the implications of your
findings on strategy development?
Walt Disney Strategic Analysis
From the time it was founded by Walt Disney in 1923, Disney Corporation has remained
to be one of the global leaders in entertainment and media industry. The company specializes in
a number of market segments including: resorts and parks, studios, Media Networks, consumer
products, and Disney Interactive. Its product portfolio consists of books, magazines, television
programs, and music and movie recordings (Disney 2016).
To remain relevant and obtain a sustainable growth, Disney Company focuses on cost
leadership and differentiation strategies. As a large organization, the company can derive
economies of scale and offer products and services at a lower cost compared to competitors.
Additionally, products are customized in such a way that they satisfy the targeted market. When
a firm can offer quality and differentiated products at lower prices, its market share increases
leading to an increase in profits. Rampant changes in macroeconomic environment adversely
2
WALT DISNEY STRATEGIC ANALYSIS
affect the company’s earnings structure forcing management to develop new strategies (Mas et
al. 2012). For instance, a rise in the rate of unemployment and a decline in economic growth
cause consumers to spend their income on basic commodities such as food and forgo
entertainment and vacations which are the main products offered by Walt Disney. Through the
application of Porter’s five models, it is possible to analyze the strengths, weaknesses,
opportunities, and threats that are faced by the firm, and how the factors change its strategies for
profit sustainability especially during adverse conditions.
Strengths
- Highly acclaimed product portfolio
Disney’s products command a high market share that is unbeatable by most of the
competitors. Broadcast Television Network, ABC, cable networks such as Disney has a lot of
followers and viewers. Moreover, a combination of the company’s network cables generates
more than 500 million subscribers thus giving the company a higher competitive edge compared
to Fox, and CBS which are some of the firm’s main competitors. - Strong brand reputation
Having been in the industry for more than 90 years, Disney Walt is highly accredited in
U.S., and in the international market. Disney Park Resorts, Disney Channel, and a high volume
of movies produced by Disney Studios are some of the brands that have a high reputation thus
making the company remain atop the competition. According to reports, Disney Walt is
considered to be the main producer of entertainment for family viewing, and in 2012, its brands
3
WALT DISNEY STRATEGIC ANALYSIS
were position 13 in the list of most valuable brands internationally. The brands were valued at
more than $27 billion thus creating a name for the company.
- Financial strength
To successfully run a business, financial strength is critical. While most firms in the
entertainment industry struggle to produce and sell their products due to limitations in finances,
Disney Walt is already making net profits of more than $5 billion making it possible to run its
operations successfully. As such, the company has managed to acquire some of the firms in the
industry that have led to more income generation. Some of the acquired businesses are Pixar
Animation Studios, Marvel Entertainment, and Lucasfilm (Disney 2016). - Diversification and localization of operations
The company offers a variety of products including resorts and movies. Moreover, one of
the firm’s primary strategies is localizing a product to fit the tastes of a certain market. For
instance, some movies are custom made to attract the Korean or African viewers. As a result of
localization and diversification, the firm is rarely affected by adverse conditions making it
sustain its growth over time.
Weaknesses
- The company highly depends on revenue generated from U.S market, yet it operates
globally. By focusing most of its resources on one market, the firm becomes susceptible to
changes in that market. It is highly recommendable for the company to increase operations in
other nations to reduce market risks.
4
WALT DISNEY STRATEGIC ANALYSIS
- Disney’s large size makes it difficult to manage operations thus giving room for
embezzlement of funds. The company may not be getting its optimal revenue due inability to
standardize its operations in all its outlets.
Opportunities
- There is a rapid growth in paid TV subscriptions, especially in Asian markets. With the
company already commanding a global presence, it is supposed to gain from the growth of paid
TV industry. - An opportunity exists for the company to start production in countries that require low
production costs. For instance, China is a major market segment that is yet to be exhaustively
tapped by Disney and other firms, yet it requires low production cost which translates to higher
profits for the company.
Threats
- The entertainment industry is characterized by high competition and drastic market changes.
With the increase in technology advancement, businesses that are still applying traditional
business models are getting challenged by online firms that allow consumers to stream movies
thus reducing market share for Disney. - Piracy has intensified due to increase in internet accessibility making it hard for the
company to get viewers in their cinemas or get consumers to buy their DVDs.
Implications of the SWOT analysis to strategy development
5
WALT DISNEY STRATEGIC ANALYSIS
Disney and other successful firms analyze all the possible strategies and determine their
effects on the firm in the form of benefits and costs. Moreover, a strategy should liaise with firms
internal and external environmental needs for it to be successful in implementation. Thus,
carrying out SWOT analysis is crucial in understanding a firm so that the alternative that
generates profits at low costs is adapted (Wayne 2011).
Disney Walt’s success is attributable to its ability to apply cost leadership and
differentiation strategies that have seen its strong brands and diverse product portfolio command
a high market share in the competitive entertainment industry. By analyzing the internal and
external environment of the firm through the use of SWOT model, managers can understand the
needs of the firm and come up with strategies that enable it to attain a competitive edge.
References
Mas, B., Madi, B., & Lai, W. (2012). Hybrid Strategy: A new Strategy for Competitive
Advantage. International Journal of Business and Management, 20(7).
Wayne, G. (2011). Strategic Planning and SWOT Analysis. Health Administration Press, 7(5).
Walt Disney, (2016). About. The Walt Disney Company.
