Company Background and History
Walt Disney Company is identified as the world’s largest media conglomerate and it was started on October 16th 1923 by brothers Walt and Roy Disney. Back then, it was known as the Disney brothers cartoon studio, but later, after establishing itself as one of the major players in the American animation industry, moved on to television, live-action film and travel industries.
In 1986 it took on its current name The Walt Disney Company, and went ahead to focus on radio, theater, online media and publishing. It also took up flagship projects aimed at marketing more adult content other than its original family based content (Sehlinger, Ridge & Testa, 2011).
The company has enjoyed some stable leadership for many decades, though in recent years there were issues of poor management that led to financial woes. Among the presidents that they have had are:
Walt Disney: 1923–1966
Roy O. Disney:1966–1971
Donn Tatum: 1968–1972
Card Walker: 1971–1977
Ron W. Miller: 1980–1984
Frank Wells: 1984–1994
Michael Ovitz: 1995–1997
Robert Iger: 2000 – to date.
The Chief Executive Officers at Walt Disney Company over the years are:
Roy O. Disney: 1929–1971
Donn Tatum: 1971–1976
Card Walker: 1976–1983
Ron W. Miller: 1983–1984
Michael Eisner: 1984–2005
Robert Iger: 2005 – to date.
The board was chaired by Walt and Roy Disney who shared the role from 1945 to 1960, but Walt stepped down in 1960 to concentrate on the innovative and creative aspects of the company (Cullen & Parboteeah, 2003).
Company Organizational Structure
It has been identified to have a rigid and conservative structure that leaves very little room for diversification as far as culture is concerned. Their adoption of bureaucracies in their culture has been the subject of great criticism over the last few years especially with the reduced productivity of the studio business that has been depending on few successful projects per year (Gupta, 2010).
International Branches and International Structure
The company has operations in over 40 countries globally that are managed under one global culture with specific customizations to the specific organizational and market needs in the particular country (Cullen & Parboteeah, 2007).
Most of their subsidiaries do not enjoy much autonomy as they have adopted a closed culture where bureaucracies are key and flow from the mother company to the particular departmental managers in the different countries they operate in. This has been the subject of great criticism over the last few years especially with the reduced productivity of the studio business in countries outside America (Miller, 2010).
Multinational Methodology and Practices
The Walt Disney Company has for some time identified high value customers as their main market, where they can charge high prices as they seek to exploit their differentiated experience and high brand value.
They are investing in the capturing of customer’s attention through their huge portfolio of products so as to gain a competitive edge over the other players in the same industry. With the huge size of the company, the management can concentrate on a global strategy which will in turn develop and improve their cost efficiency (Shapiro, 2009).
Their global strategy has been for some time consistent since they have not been facing any major pressure for local preferences. They have to, however, deal with language barriers especially since their main target market is young kids, though they have managed to adapt effectively into local preferences in the particular global markets. They have done this by adopting subtitles or creating specific products for the specific market in the specific language used by that market (Mockler, 2002).
The structure of the company as it is supported by their global strategies, gives a multinational structure that is interlinked especially in regard to the portfolio of their business units. This has enabled them to create synergies that have promoted cost reduction.
This structure is allowed by the industry and actually promoted due to the stiff competition especially by multinational entertainment companies, so that there is more focus in the industry and profit margins are managed easily. This has made them a successful multinational especially with their global strategy that has enabled them to gain a competitive edge over other multinationals in the industry (Forsgren, Holm & Johanson, 2005).
Products and Product Categories
The Walt Disney Company has over the years grown to incorporate other companies which are categorized and operated under four major divisions, which include the Walt Disney Studios or Studio Entertainment, Walt Disney Parks and Resorts, Disney Consumer Products and Media Networks.
The Walt Disney Studios concentrates on the company’s film production, the theatrical divisions of the company, and their recording label. On the other hand, the Walt Disney Parks and Resorts feature the company’s theme parks, cruise line, and other travel-related ventures (McDaniel, 2007).
The Disney Consumer Products concentrates with the production of toys, clothing, and other merchandise that is usually based on Disney-owned properties and characters. The media networks that are run by the company include their television station and their internet entertainment services (Goldsbury, 2008).
The company enjoys a huge range of entertainment features as well as business holdings that have served to increase their range of revenues. These have been the subject of their increased emphasis on innovation and creativity and they include: Walt Disney Motion Pictures Group, Walt Disney Theatrical, Disney Music Group, Disney Interactive Media Group, Disney-ABC Television Group, ESPN Inc., Pixar Studios, Radio Disney, Disney Consumer Products and Marvel Entertainment.
It also has invested in resorts and other diversified holdings that have served to increases the scope of their revenue bases, while at the same time reducing their concentration risks (Tavis & Tavis, 2009). These include the Walt Disney Parks and Resorts, Walt Disney World Resort, Tokyo Disney Resort, Disney Vacation Club, Disneyland Resort, Disneyland Paris, Hong Kong Disneyland Resort, Euro Disney S.C.A. and Disney Cruise Line (Veness, 2009).
Manufacturing and Distribution
The company has invested heavily in the research and development of superior products. They have adopted effective and precise quality standards for their manufacturing and distribution channels that have enabled them to increase customer loyalty over the years. The company, however, doesn’t produce most of its products directly due to the general costs related with production and more so distribution (Young & Glinow, 2005).
This has led them to result to outsourcing of their manufacturing and distribution activities to external contractors with a whole list of guidelines that make sure they conform to the specific requirements of the Walt Disney Company. This has worked to increase their footprint in the market and to grow their brand especially in the global markets where there is a need for heavy investment (Andersson, 2010).
The company has enjoyed relatively stable revenue flows over the years that have helped it to grow to its current size in the global market. Its revenues in the last few years have been specifically impressive especially in the year 2011 where their revenues increased to US$ 40.893 billion, their operating income in the same year also increased to US$ 8.043 billion, while their net income increased to US$ 4.807 billion.
They have been identified to currently hold total assets to the tune of US$ 72.124 billion by the end of the year 2011 which was also identified to have increased from the previous financial year. Their total equity was also identified to have increased in the 2011 financial year to US$ 37.385 billion. The company currently employs over 156,000 employees globally, which just goes to show their huge capacity as a global player in the entertainment industry.
The Walt Disney Company has managed to weather through the tribulations in the entertainment industry over the last decades due to its ability to exploit its strengths and opportunities and by carefully managing its weaknesses and threats in the market. The company’s ability to withstand market forces as well as industry forces is based on the following strengths, weaknesses, opportunities and threats:
Global standardization has been identified as one of Walt Disney Company’s strengths in the entertainment industry. This is because their adoption of a global strategy has given them the capacity to increase their market penetration in different countries and increase their portfolio of customers.
This translates to increased revenues from their global operations as well as a competitive edge in the market. They have also identified a niche market by targeting a particular segment, that is, the children and maximized their acceptability in that particular market. They also have a superior creative process that has allowed them to come up with innovative products.
They have a popular brand name that has made them famous over the world. This has ensured that any new products that they launch are accepted quickly in the market and they also save marketing costs as the brand practically markets itself. With their diversification, they have acquired the ability to stay relevant in all market segments as well as to secure their income inflows (O’Sullivan, 2007).
Their excessive research and development programs have proved to be a weakness due to the wastage of resources in terms of both time and money. They have in the past found themselves losing out in the market after their competitors have launched products that are still in the research and development stage in their company.
With the high capacity of their products in terms of investment costs such as the production of films, they have always found themselves staring at high risk projects that have heavy financial consequences especially if they fail. The limited range of their target market is also a weakness since they have over the years concentrated only on children as their primary customers.
They have in previous years suffered under poor management and though they are currently trying to rectify this, they still have a long way to go to eliminate the accumulated weakness. This is further worsened by the inherent cultural imperialism that exists in the company. The competition from media networks has weakened them especially their previous market domination in their target market.
The company enjoys a wide range of opportunities that if they continue to tap into, may increase their profitability and competitive edge in the market. Among these opportunities is the merchandise market. This is primarily boosted by their brands that are mainly promoted through their characters such as Mickey Mouse.
This could be used to increase their profits as these characters are known and accepted globally. Global localization gives them an opportunity to serve particular markets more efficiently while employing their global resources so as to reduce operating costs. Since they have been accepted as characters of national and regional appeal especially in the North American market, they have a competitive edge over their competitors and any product they launch is readily accepted in the market.
The introduction of the Disney music channel gives them an opportunity to exploit one of the biggest income earners in the entertainment industry, which is music. Their introduction of the Disney School of Management gives them an opportunity to nature great talent that will be of great use not only to the company, but to the industry in general.
While the company may seem to be thriving, it is faced by many threats that may weaken it in future if they are not addressed accordingly. One of the threats is the rampant piracy in the movie industry that has served to greatly reduce the revenues of the industry in general they also face a huge threat from the increasing competitors who are joining the industry as it seems lucrative.
They currently have a problem with employee retention as some of their best talent seems to be poached by their competitors in the industry. There is the eminent threat posed by the nature of the industry whose demands in terms of creativity, innovation and sales seem to be increasing. Product differentiation is also one of the threats facing the company as they are currently facing competition from other companies with products that are similar to theirs (Cullen & Parboteeah, 2006).
The Walt Disney Company is identified as a world leader in the media and entertainment industry and it is a model multinational in the industry. It has been identified to have exploited superior multinational strategies that helped it to attain a global image, but this has not been without challenges. Their increased multinational activities have ensured the strengthening of their brand to give them a competitive edge in the market.
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