The Walt Disney Company's BCG Matrix | Free Essay Example

The Walt Disney Company’s BCG Matrix

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Topic: Business & Economics
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Generic business level strategy determines the organization’s position and helps in positioning the company in a competitive position. McDonald and Subway are two companies that are in direct competition with one another. The companies use cost leadership and differentiation to broaden the target market in a cost efficient manner and unique strategies. For example, the management of Subway varies the menu of the products in different countries in consideration of religious and cultural requirements.

For example, a newly opened Subway in the suburb of Cleveland, Ohio had no pork products in the menu due to the high number of Muslims in the region. A Subway restaurant in India does not serve beef products due to the regional cultural practices. The differentiation strategy gives a competitive advantage over the McDonald’s because it firmly targets customers in all places focusing on the religion and cultural background (Ketchen & Short, 2011). The strategy creates a new perspective in making profits over little alterations of the food menu without decreasing the prices.

On the other hand, McDonald restaurant uses focused cost leadership strategy to create competitive advantage over the Subway restaurants. McDonald restaurants have varying prices in different regions in regard to the public events or ceremonies. The major targets of the restaurant are the travellers, tourists on leisure, and corporate business associates. Majority of the McDonald products advertisements regarding the McDonald Products are on the sports billboards, websites, and magazines (Hitt, Ireland & Hoskisson, 2008).

The category of the society that has special interest in sports is the only group that will have the current updates on the products present in McDonald restaurants. The focused cost leadership generic strategy gives McDonald a competitive advantage over the Subway because majority of the target market segment relies on the new perspective of the restaurant products rather than the prices. The prices of McDonald products get achieved through the level of output per restaurant and the number of customers (Hitt et al., 2008).

The BCG matrix is also known as growth share matrix and involves analysis of the current business units toward allocation of resources. The BCG matrix places the business in a competitive position relative to its competitors. The matrix reveals the market growth rate and the market share of the company (Ketchen & Short, 2011). In this case, Walt Disney Company has five divisions that are depended on each other for success of the business of cash generation and cash usage. According to Wall Street Journal, the largest competitor of Walt Disney Company is NBC-Universal media (Leeds, 2014). The company’s annual revenues, incomes and profits were applicable in calculating the BCG matrix of Walt Disney Company. The diagram below shows the BCG matrix as per the Walt Disney Company, annual report of 2010.

The BCG matrix as per the Walt Disney Company, annual report of 2010.

The matrix has four quadrants: cow, star, question mark and dog. Each quadrant represents the resources and revenues of each of the divisions in the company. The star represents division that has high market share and market growth. Walt Disney star is media networks; this means that the company has to spend money on the division in order to generate more revenue (Hitt et al., 2008). Studio entertainment division belongs to the question-mark quadrant, meaning that it has a high market growth and a low market share. Walt Disney needs to invest on the division in order for it to become a star. Dog quadrant contains divisions that have low market share and growth. The last quadrant is the cow that contains divisions that have high market share but no growth toward business development (Ketchen & Short, 2011).

References

Hitt, M. R., Ireland, D., & Hoskisson, R. (2008). Strategic Management: Competitiveness and Globalization, Concepts and Cases. New York, NY: Cengage Learning.

Ketchen, D., & Short, J. (2011). Mastering Strategic Management. New York, NY: Cengage Learning.

Leeds, S. (2014). One Direction to Star in Their Own NBC Holiday Special. The Wall Street Journal. Web.