The Walt Disney Company
Walt Disney Company is one of the world recognized media providers, being unequivocally considered as a leader of the industry during the latest decade. The company successfully operates on the domestic United States market, as well as it is reported to have strong presence in Europe and is rapidly expanding on the highly promising Chinese in particular and Asian in general markets. The company is indeed assuming global significance nowadays.
The objective of this report is twofold in its nature. First, the report seeks to outline the threats that can hypothetically jeopardize the company business activity domestically and internationally. The second part of the report is focused on the discussion of the strategic goals defined by the company, the problems faced by the company on strategic level and the solutions utilized by the company management and most viable recommended solutions to succeed in the discussed objectives.
Threats and their Management
The aim of this part of the paper is to outline the most threat susceptible areas of the company business paradigm and to speculate over the particular threats that can hypothetically affect the company in question. Before the review is commenced, it is necessary to stress the fact that Walt Disney is merely a brand name and the company operates as separate and independent business entities. Neither single rights nor single liabilities are attributed to the company as a unified legal entity. However, for the needs of this report the company is positioned as a single company in order to avoid confusion and excessive complication of the empirical findings.
Media Network of the Company
Having analyzed the annual financial statements of the company, it has been empirically found out that media campaigns launched by the company shape 59% of the entire revenues generated by the company. Therefore threats detection and timely obliteration thereof is among the tasks of the most prioritized importance for the company management.
The first important issue in this regard is the potential and existing copyright and other intellectual property violations. This issue is of dramatic practical importance for the company due to the fact that in accordance with the contemporary business rules copyright violation inevitably results in a lawsuit that in its turn culminates in impressive indemnification paid by the company to the aggrieved party. As far as this very company is concerned it seems relevant to stress the fact that the nature of the violations is twofold. In other words the violation can be perpetrated either by the Disney agents or by the competitors of the company against Disney and its assets. The high possibility of the problem is generally attributed to the fact that the sphere of intellectual property and contiguous rights has evolved to be excessively complicated and almost any company action can be classified as a violation (Hollis, Ehbar, 2006).
The second imminent threat to the company internal and external mass media network growth and development is the rapid intensification of the technological evolution and in particular gaining importance of internet, which solutions are nowadays extensively embraced by the competitors of the company.
Parks and Resorts
The main threat in this section of the company activity is the decline in demand reported to be taking place in the nearest future. Moreover, the 7 % decline is annual visits of the company most frequently visited park installation in Paris, France can be reasonably attributed to the intensified activities of the company major competitors and to the general entertainment re-orientation of the consumers visits nowadays. In order to deter the decline ( since 2009 the company is losing about 1-2% of the visitors annually) the company even announced the cancellation of the annual increase of the adults entrance fee.
This graph defines the annual vacillations in adults admission fee charged by the company.
Studio Entertainment Management
In this regard the findings precisely indicates that the company continues to remain among the unchallenged leaders of the market. The only threat that can hypothetically inhibit the growth of this industry is the rise of internet based technology.
That graph depicts the annual vacillations of the book values.
The findings of this graph clearly suggest that the company is relatively stable, although significant market downturn was reported to have taken place within the period between 2008 and 2010, in the heyday of the global economic recession.
The most probable threat in this section of the company operational framework is constant need of modifications in order to address the needs of the market. To be more exact, the needs of the customers are reported to be a very changeable subject nowadays and in order to retain competitive advantage in this field the company is forced to exercise constant monitoring of the market activity and to be particularly vigilant over the activity of the competitors. Moreover, the activity of the company competitors in the field is reported to be particularly strong nowadays, especially due to the technical solutions timely embraced by them.
The second hypothetical problem in this paradigm is the imminent decline in demand of the products produced by the company. This problem is of particular strategic significance to the company and shall be resolved by the synergy of the technical teams and their colleagues from the company analytical department.
This area of the company operational activity is reported to be the most stabilized and capable of withstanding internal and external threats of financial and non-financial origins. The only threat that can affect the company negatively is the unforeseen technological solution employed by the company competitors. Provided that due measures are taken by the company management team, the problem can be effectively tackled and shall anticipated in beforehand.
Strategic Problems and Solutions
The Issue of Chinese Expansion
Chinese expansion is of predominant importance for the company due to the fact that the market is still unexplored, although already saturated with the local producers, who can be easily supplanted from the market, provided that the due managerial approaches and techniques are followed by the company sales management team. The major strategic solution that shall be taken here is the market attractiveness of the company commodities, that shall be adapted for the Chinese market specifically.
Strategic Goals and Issues of the Company
The data collected indicates that the firm operates in 54 countries, having opened 494 retail stores. The retail strategy of the company has been also expanded to online markets Disney Store. The digital data files can be purchased by the customers in iTunes store. The company continues its growth and expansion irrespective of the global financial recession and decline in demand for the output produced by the company (Stewart, 2005).
The annual statements of the company evince that the entire activity of the company can be conditionally divided into six interactional areas. These groups are the customers interaction, retail sales, manufacturing, development and research, promotion and Human Resources. Professional management of these areas conditions the market adaptability of Disney and enables prompt and correct reaction of the company sales and advertising departments to the vacillations of the market.
Obviously, one of the key elements of Disney market success is the innovative character of the manufactured products. Whatever the opinions of the critics may be, the market trends are being determined by the contracted software producers, and then the design and the technological content is replicated by the competitors of the company, which engenders never ending patent wars between Disney and its competitors. Moreover, the research and development departments of this company are the most heavily financed unit of the company, hereby making the production of unique. However, in order to retain the competitive advantage the company has to respond to the demands of the consumer groups promptly and appropriately. One of the most important indicators, which is used by the economists and financial analysts to determine whether the company performs successfully is the state of financial performance of the company. The analyzed annual statements of the company manifest that in 2012 the aggregate revenue of the company was $ 156, 6 billion, with operating income fixed on the point $ 55 billion. The total assets of the company have been evaluated to be $ 177 billion. Although a slow decline has been reported, during the 2012 fiscal year the net sales were increased on 4% and net aggregate income on 3% respectively. Hereby, it can be inferentially concluded that since the profit generated by the company is rising, the strategy currently employed by the company fits the parameters of the customers although comparative decline suggests that the strategy shall be reviewed in the upcoming years and the top-management strategy of the company shall be re-considered if the company is intending to remain among the leaders of the industry. Disney is ranked the fifth global company in terms of market capitalization.
Officially, Disney Stores have been opened in fourteen countries, although practically the production of the company is exercised to all countries of the European Union, Latin and North America, Asia and Middle East. The African market is still being conquered, although obvious achievements are have already been reported to have taken place, especially in the light of the first sales in 2011 in Kingstown, the SAR. However, the process of the company international expansion and domination is still underway, with the accent made on the total domination in Europe and Asia and penetration to the Asian and Middle East countries (Greene, 2001). With regard to the United States market, it can be recapitulated that the market can be considered as partially conquered, since Samsung, the most heavily combated competitor of the company has almost lost its presence in the region.
The globalization and internationalization of the business is an important aspect of the business process on the way to diminish the assembly costs of the production . To illustrate, while the development and construction of the production of the digital devices, as well as the software development is primarily exercised in Silicon Valley and company research hubs across the United States of America, the assembly lines and production centers are located either in China or in Brazil. That is one of the ways the company tackles a complicated United States taxation policy and minimizes costs of sales. The supply partners’ location is strategically lucrative for the firm, since raw material required for the assembly of the I-stuff is easily imported to the production centers with a maximum term of 2 days.
Another important feature of the company internationalization is the parallel and untargeted advertising. The scholars suggest that the countries, in where the company has its production presence are more prone to purchase the production and the software of the company.
The way Disney Inc. organizes its supply chain management is one of the most significant accomplishments of the company managerial department. The supply chain relationships are built on the number of important principles, which has been elaborated through decades lasting business practices of this giant. First and foremost, the market positions of Disneyenables the company to contact only those company, whose outstanding and exceptional market reputation provide sufficient grounds to consider them reliable to act as a trading and supply partner of Apple(Baloon, Walravens, 2008).. Secondly, the prices paid by Disneyfor the raw materials are generally insignificantly higher than those currently dictated by the market. Hereby, the company achieves top-quality and absence of prolongations and delays. Considering the fact that the electrical content of the company production is being delivered from the different parts of the world, it becomes vitally important to ensure that all the due deliveries will arrive promptly and in full accordance with the provided specifications (Armelio, Simon, 1999). Logistically, the management of Disneyand suppliers contribute significantly to choose the most optimal customs points and shipment strategies to deliver the requested supplies when they are necessitated by the production departments of the company. One of the most essential factors to be considered in this paradigm is the fact, that the output of Disneyis often subjected to seasonal vacillations. For instance, extra shipments of the production are organized during Christmas time and other holidays, since I-gadget is globally considered as one of the most admired and desired present.
The second element of the paradigm is the supply of the software developed by the numerous official and randomly contracted partners of the company. No physical inhibitions do exist in this field, whereas the technological constituent shall be particularly and carefully stressed. The source codes of the developed software applications are meticulously reviewed by the company software engineers to conclude whether the supplied programs are fully consistent with the standards prescribed by the company (Greene, 2001).
Moreover, it shall be specifically accentuated that the company is currently promoting an aggressive policy in terms of multinational teams composition, the approach which is seen to be among the most effective ones for the company internal and external business paradigms. This factor is of predominant practical importance, especially considering the Chinese expansion of the company discussed before. Most importantly, cultural awareness of the company sales department shall be raised.
Having aggregated the main findings on the financial and non-financial facets of the Walt Disney Company several important conclusions are to be made. First and foremost, the company is rather stable financially. The firm has completely recuperated from the repercussions of the recent global financial recession, which has significantly shattered the financial positions of the company major competitors.
However, a vast paradigm of threats permanently jeopardizes the activity of the company. The most formidable hypothetical threat that is common for all areas of the company growth and development is the rapid and most importantly uncontrolled technological revolution of the mass media and entertainment sectors. the situation can be used to the favor of the company, or when the instruments are leveraged by the closest competitors to the detriment of the company as well.
As far as the strategic objectives and solutions are concerned, it is worth highlighting in this report that the main goal of the company for the upcoming period is its Chinese expansion and the installation of the 300 new shops across the country. Provided that all due measures outlined in the second part of this paper are implemented by the company managerial divisions, it is reasonable to assume that the competitive advantage of the company will be significantly intensified.
- 2008-2012 Walt Disney Company Financial Statements
- Greene, K. & Greene, R. (2001). Inside the Dream: The Personal Story of Walt Disney , Pullman Publishing House
- Hollis , T. & Ehrbar, G. (2006) Mouse Tracks: The Story of Walt Disney Records
- Stewart, J. (2005). Disney war. New York: Simon & Schuster.