The following paper provides a thorough research of The Walt Disney Company (Disney) as one of the key performers in the world of multinational entertainment corporations. Based on the recent academic developments in the fields of organizational and personal management, communication, and behavioral studies, as well as on the analysis of other secondary sources, the author highlights the peculiarities of the company’s background, leadership practices, performance strategies, and unique corporate culture. Taking into account the overall successful results in all the established sections of the analysis, the author arrives at the conclusion that Disney is one of the world’s most admired companies, whose practices may be used as good examples by any organization.
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Disney is one of the biggest names in business today. It is hard to look in any direction without seeing something Disney related. Disney is in the market of kid’s toys, cartoons, network television, sports, clothing, retail stores, and many more. How did this company start and become so dominant in today’s world? It all started with Walter E. Disney.
Walt(er) Disney was born on December 5, 1901, in Chicago, Illinois. Walt was one of five children, four boys, and a girl. At a young age, Walt showed a lot of interest in drawing and was encouraged along by his mother and older brother Roy. Walt was so good at drawing that he used to make money selling his drawings to relatives and friends. At the age of 18, Walt’s brother Roy helped him get a position at the Kansas City Film Ad Company. This is where Walt got his start in animation and lead to him opening his own business. After a failed business venture, Walt and his brother Roy moved to Hollywood, California, and started Disney Brothers’ Studio. This was the very beginning of the Disney conglomerate that we all know today (Walt Disney’s Biography, n.d.).
In the beginning, Walt started with animations and would sell shorts for $1,500 each. Once the company had steady cash flow, they started to produce more films such as Skeleton Dance (1929) and Flowers and Trees (1932) (Funk & Wagnalls New world encyclopedia, n.d.). Disney Brothers’ Studios continued to make full-length films such as Snow White and Bambi through the 1940’s. In the 1950’s Walt Disney Productions, Ltd was born, the company was now involved in comic strips, television and film, books and had started building an amusement park in Anaheim, California called Disney Land (Funk & Wagnalls New world encyclopedia, n.d.). This was just the beginning of the company’s massive expansion into all facets of the business.
As the Disney Company continued to grow, it continued to expand in many different directions. In 1955 the Mickey Mouse Club was born, a fan club for Disney enthusiasts. Disney Land also opened the same year as the first amusement park for Disney. In 1971, they expanded to Florida and opened the second theme park Walt Disney World. In 1984, Disney founded the Touchstone Pictures label. In 1989, Disney opened a film-based amusement park MGM Studios. In 1996, one of the biggest acquisitions by the Disney company acquired the television station Capital Cities/ABC for $19 Billion, in the same year Radio Disney debuts. Moving on to 1998, Animal Kingdom was born. Shortly after, in 1999, Disney expanded to the cruise business and began operations with Disney Magic. In 2001, Disney acquired another popular network, Fox Family Worldwide. These are just some of the bigger moves made by Disney. Some of their other expansions include Lucas Film Ltd., Marvel Studios, Disney Consumer Products, Disney on-line, ESPN, and Disney Vacation Club. For a complete divisional structure of The Disney Company, please refer to Appendix A. Disney started out by selling drawings to neighbors now this mega-company has expanded into many different areas and became one of the biggest companies in the United States.
The Walt Disney Company is the most famous entertainment company in the world. The Walt Disney Company’s performance is realized in five segments. These sections include Media Network, Consumer Products, Interactive, Parks & Resorts, and Studio Entertainment (Overview of the Walt Disney Company, 2015). Walt Disney founded the company in 1923 and established a new area of the entertainment industry.
The current Chairman and CEO of the company are Robert Iger (The Walt Disney Company, 2014). The Chairman, corporate, and business units present the c-suite breakdown. The corporate team comprises ten representatives. There are three females on the corporate side. Their positions include Chief Financial Officer, Chief Communications Officer, and Chief Human Resources Officer. Six authorized members represent the business unit of the Walt Disney Company. Leslie Ferraro is the only female in this sector. She holds the positions of Co-Chair at Disney Consumers Products and Interactive Media and the President at Disney Consumer Products (The Walt Disney Company, 2014).
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According to the Disney Citizenship Data, there were more than 180,000 global employees of the Walt Disney Company (The Walt Disney Company, 2014). Employee growth is slightly over 3% from the previous year. The largest amounts of Walt Disney’s employees are located in North America. The global male to female ratio of the company is 48:52, whereas the management ratio is 56:44. Minorities account for 39% of Walt Disney’s U.S. employees and 23% of its management. The salaries at the Walt Disney Company are in line with the national average, with an average salary of $68,000 (Average Salary for the Walt Disney Company Employees, 2015). Income level is based on two factors: position and years of experience.
This is a variable type of incentive pay that increases as employees move up in the organization (Thompson, 2014). For example, the salary of 3D artists varies from $49,240 to $118,239. A bus driver receives a salary of $20,000 to $48,000. An Information Technology Director’s salary ranges from $86,000 to $247,000. Most employees have more than ten years of experience. Their average salary is about $94,000. Those who have 5-9 years of experience receive an average of $75,000. An income of less than $50,000 is typical for individuals with less than one year of experience. Salaries greater than $100,000 are reserved for those with more than 20 years of experience (Average Salary for the Walt Disney Company Employees, 2015). A Bachelor of Business Administration (BBA) and skills in people management and project management are regarded as the most valuable among Walt Disney Company’s employees.
According to the Ethical standards described in the Standards of Business Conduct, “the Company and its management are committed to treating all Cast Members and employees with fairness, dignity, and respect” (n.d., para. 6). Besides, the Walt Disney Company assures that it aims at providing the best and safest opportunities for the professional development of individuals. The company adheres to the principle of multiculturalism and diversity. The Walt Disney Company is “committed to providing open, free and effective channels of communication” between and among all employees, Cast Members, and management (Ethical standards, n.d., para. 11). This is indicative of both vertical and horizontal communication styles.
The founder, Walt Disney, established the communication style at the Company. Disney’s approach to communication is believed to be one of the most vivid examples of building a successful rapport with employees. The most significant thing about Disney’s communication style was that he saw the company as a place where all people would be happy. He realized that not only money predetermine success. Walt Disney once said, “Laughter is American’s most important export” (Haussler, 2013, para. 4). After that, Disney was devoted to his idea, and that commitment was spread among his employees. Disney shared his ideas and inspired other members of his team. He was a collaborator who used an assertive communication style to engage others. According to Hanke (2009), collaborators aim at building good relationships and always try to reach consensus with others. Leaders who prefer a collaborative communication style should display a mastery of persuasion. It is a challenging task to motivate personnel with the help of words. However, Walt Disney’s communication style was visionary to some extent. He realized risks but moved on.
With the help of communication, Walt Disney achieved great success with the cartoon Snow White – the first long animated cartoon. Walt Disney created the cartoon after the Depression. Besides, most parents believed that it would be impossible to make children sit for more than hour to watch cartoons. Walt Disney displayed his best communicative and leadership skills during the shooting of the film. He showed how to act every part of the movie, bought dinners for workers, and inspired them to keep moving (Disney’s Leadership Excellence Model, n.d.).
Another vivid example of Walt Disney’s communication style appeared in 1943 when the handbook for employees, The Ropes at Disney, was published. According to Whittenberger (2013), “It was an internal communication piece meant to eliminate employee confusion and improve [the] organization while representing Disney as an ‘informal, reverent, fun employer’ that wanted to maintain a friendly relationship between the company and its employees” (para. 4). In such a way, Disney attempted to create an atmosphere of confidence and trust. Maxwell (2007) found that confidence is essential for efficient performance according to The Law of Solid Ground.
Nowadays, the communication style of the organization is mostly realized via the system of rewards. Such a system of motivation is one constituent of essential conditions for successful team performance (Thompson, 2014). Walt Disney established all these features of teamwork through an effective communication style. After his death in 1966, all other CEOs tried to manage the company in a way that Walt Disney would appreciate.
Leadership Style/Leadership Approach
An inside view of the Disney Company revealed that most leaders take a hands off approach to management. Not to say that they are not involved they like to describe it as over-managing and not micromanaging. The Law Of The Lid states: “leadership ability is the lid that determines a person’s level of effectiveness” (Maxwell, 2007, p. 1). The effectiveness at Disney seems to have no lid because it seems they put the right leaders in the right spot at the right time. The leadership style at Disney is a transformational one. Leaders motivate their teams to work toward goals that go beyond immediate self-interest, to do more than they originally expected to do as they strive for higher-order outcomes (Thompson, 2014).
This was clearly evident in project by Disney Media Networks called Frozen. The team that developed the children’s movie Frozen went above and beyond just making a cartoon. They wanted to do more than was expected by the people. In making this movie they did more than make a children’s movie, they made a movie that was relative to female empowerment and to changing more of the lives of girls and young women in our society (Crain, 2014). The leadership style at Disney made it possible for the team to produce Frozen, the largest grossing children’s movie they have ever produced. This leadership approach stretches to all corners of the company making not only the leaders very successful at their potions but the teams they lead some of the most successful in the business world.
Margaret Thatcher said, “The true measure of leadership is influence – nothing more, nothing less” (Maxwell, 2007, p. 16). The leaders at Disney have very interesting ways of influencing their employees, which can be seen in applying creative approaches to ensuring their positive treatment. Two of the most important things a leader can teach is character. Leadership always begins with the inner person and relationships. A leader is only a leader if he/she has followers and that requires the development of relationships. A good example of Disney’s creativity can be seen in the following example. A manager at a Walt Disney World premium restaurant was teaching new employees effective leadership in very a peculiar way. On the employees’ first day he interviewed them at a table that was set. The dishes thought had not been washed. When the new employee inquired about them the manager would say, “Imagine you are a Guest who will spend $100 for that meal” (Taylor, 1998, p. 22).
This approach shows the employee the type of character they have to display when it comes to quality of work and the relationship they should form with the guest ensuring it is the best meal they have had. Because of the approach most managers have at the Disney Company, the level of influence on the employees is vast. Disney hosts training sessions on leadership by the Disney Institute. Here one can fully get an understanding of the Disney leadership strategy through their five step model of leadership excellence. The model emphasizes having a clear and compelling vision for the future, putting the right people in the right place to make that vision a reality, encouraging people to take ownership of change that is needed, being committed to achieving results, and leaving a lasting and impactful legacy (Guiney, 2014). With strategic focus on these five categories, the leaders of Disney will continue to have a profound amount of influence on their teams and continue to build on the success the company has already had.
Approach to Teamwork
At Disney, leaders and employees work together constructively to provide benefits to their Guests (customers). The literature studied provided many examples where Disney team members share responsibility, which provides them with fulfilment in their accomplishments (Taylor and Wheatley-Lovoy, 1998, p. 24). In self-managed work teams, employees are encouraged to shape their own roles and take responsibility for their actions. Disney’s frontline employees are competent in identifying issues and resolving problems so they can deliver relevant and responsive services to their customers. As they receive requirements and feedback directly from the customer, team members are able to use this first-hand information to respond appropriately to them. This allows employees at Disney parks, resorts, and restaurants to be more proactive.
The use of self-managed teams, which combine teamwork and empowerment, is a powerful method of employee involvement. Disney employees are empowered to participate in problem solving and improvements. In addition, Disney uses effective communication and coordination methodologies that promote customer satisfaction and improve overall employee performance. As we learned from Thompson (2014), if employees are provided with the tools, freedom, and encouragement to make contributions and decisions, better quality service will follow. Disney’s self-managed work teams methodology improved productivity and increased employee commitment for the organization, and being able to attract and retain the best people.
In the mid 1990’s, the organization advanced to “Performance Excellence” where Cast Members (employees) became active partners in the organization’s success (Taylor, 1998). Since then, involvement and passion have been key concepts of Disney. As described by Taylor and Wheatley-Lovoy (1998), the Disney approach to managing for creativity and innovation is based on the ability to motivate employees and connect them to the overall goal of the company. Disney employees learn in their orientation program that they are “creating happiness” (p. 24), thus developing a shared vision of what they are required to deliver to their customers.
Need theories are concerned with what motivates workers. Disney’s motivational approach is strongly related to Maslow’s Hierarchy of Needs – a motivational theory describing the needs that drive human behavior. Esteem needs is one particular level that includes the need for things that reflect on social recognition and accomplishment (Johns, 2005). At Disney, frontline employees are empowered to make decisions. They are able to provide high quality service to Disney customers, and this consequently motivates them to do their best.
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Disney is creating an emotional connection and is building pride in its employees that involves shaping their own roles. Another contribution to motivation that pertains to Disney’s concept is Alderfer’s ERG Theory. Relatedness needs are needs that are satisfied by open communication and interpersonal connections (Johns, 2005). One of Disney’s principles include “listening to employees’ feedback” (Baltazar, 2013, p. 18) that in turn improves customer service by giving guests what they need before they even realize it themselves.
Creativity and Innovation
Companies and organizations, like Disney, have to consistently come up with new creative and innovative ideas in order to keep up with the competitions these days. These ideas can be found in the theme parks, movies, merchandise, and even at the corporate level. In the modern rapidly developing world, Disney needs to be creative and innovative by using technology. A couple of years ago they introduced a wristband called MyMagic+. The initial thought of this wristband was to track theme park guests as they navigated through the park. Disney decided to go even further than that. They decided to add different amenities to the wristband like syncing guest’s credit cards to buy goods and have FastPass+ on the wristband, eliminating paper tickets. Along with that, guests are also able to schedule park ride times on the wristbands weeks in advance and open hotel rooms (Carr, 2015). Talk about impressive!
Although being creative and innovative involves thinking of new ideas and bringing them to life, this is not always the case. Disney believes that they are creative and innovative by just sticking to tradition (Carr, 2015). Some things do not need to be changed, like some of the classic rides at the theme parks. It seems like Disney goes with the process of creative realism. Ideas that follow creative realism are “highly imaginative and highly connected to current structures and ideas (Thompson, 2014, p. 217). They are very creative with their ideas and tend to bring their guest’s imagination to life. Along with creative realism, Disney also follows creative idealism, which represents highly original, yet highly unrealistic ideas. Disney will continuously come up with innovative ideas no matter what (Thompson, 2014). Most of the ideas they come up with never relate to real life situations, but they are original and appeal to all audience members they are attempting to reach. Disney will always continue to be creative with new ideas to keep their customers happy. This is what makes them one of the most successful companies in the world.
Key Performance Strategies
Performance strategies are the methods by which an organization gets the best out of its internal processes, external opportunities, material and human resources. The Disney organizational strategy provides a process called groupthink, which “occurs when team members place consensus above all other priorities” (Thompson, 2014, p. 316). They go through many processes to ensure what they are working on, will be successful when it reaches their consumers. Disney does so much to keep the organization moving and productive. Some of the performance strategies can be seen on its SWOT Analysis. Disney is constantly growing in the gaming market, along with online television and video (Marketline, 2015).
With a global increase in demand of technology, Disney has surpassed many companies by being one of the top technological advanced organizations. Disney also sustains a competitive advantage against other companies by constantly being on a variety of channels on cable networks. These are including, but not limited to ESPN, Disney Channel, and ABC Family. “Disney Channels Worldwide includes 100 channels available in 34 languages and 164 countries/territories” (Marketline, 2015, p. 5). This just shows how diverse Disney is and how easily it is for them to get their product out to consumers all across the globe. Disney also has competition through cruise lines, as they have their own cruise line called “Disney Cruise Line”. There are various forms of entertainment Disney has to keep track of to remain highly competitive. The company has proved its success in maintaining the competitive advantage and it should continue in the same vein.
Important Aspects of the Organization
Strong leaders from the beginning
From the very beginning, The Walt Disney Company has led in the entertainment industry and in the global community. Walt Disney himself started this rich tradition of leadership when he first chose his inner circle back in 1934. With a vision of a full-length animated feature, Disney selected talented animators who could contribute to his vision. He influenced them to join in that vision by acting the story before them so that they could see his enthusiasm, and commitment to the project. It was through the Laws of the Inner Circle, Addition, and Navigation that the motion picture “Snow White” became reality (Egler, 2015). He surrounded himself with talented people, invested in their development, and assigned them to areas aligned to their strengths (Wise, 2014).
It was Walt Disney’s commitment and drive that allowed production to continue. He took calculated risks to ensure the project continued and succeed. He risked exposing the project by allowing a banker a full viewing before the release of the film to acquire the funds needed to continue work (Egler, 2015).
He also used cutting edge technology to enhance the value of his project and the value of those who were chosen to work on his team. He accomplished this by choosing the Technicolor Process, still new in the motion picture industry at that time. This process was a first for animation. It took studio artists and technicians over fifteen hundred shades of color to create the lifelike scenes needed for the film (Egler, 2015).
Leader in technology
Walt Disney’s experimentations did not stop with colors or processes. He considered and tested names such as Deafy, Awful, Burpy, and as many as twenty-three others before settling on the seven names that are now engraved as cinematic icons (Egler, 2015).
It is with these leadership characteristics that The Walt Disney Company continues its business today. The spirit of experimentation is alive and well in form of the company’s innovative arm, Imagineering. Created by Walt Disney himself, Imagineering was brought into being some six decades ago (Lev-ram, 2015). It is this element of the company that innovated multi-plane cameras to create the perception of depth in animation, life-like robots to give a feel of realism on the rides at Disney Land, and the life like snow in the film “Frozen” (Lev-ram, 2015).
Disney’s leadership is not limited to the industries in which it operates. The company takes its role as a globally responsible company to heart. One of the ways it leads globally is in a commitment to the environment. In 1990, the company trademarked the term Environmentality, the attitude and commitment to think and act with the environment in mind. It also created a department in charge of the company’s environmental policies, called the environmental policy department (Atzori, 2012).
To encourage employee participation at the company’s theme parks, Disney used contests where teams of custodial characters competed to see which team collected the most recyclable bottles. The contest was enhanced by the fact that some bottles were intentionally planted throughout the park. These special bottles contained prizes that rewarded participants instantly (Atzori, 2012).
The Walt Disney Company uses its influence to encourage Environmentality, beyond the realm of only its employees, but to all of its stakeholders. This is particularly true of a focus on the leaders of tomorrow, as it engages elementary and middle school students in creating projects to help company management develop practices that protect the environment (Atzori, 2012).
In 2005, The Walt Disney Company expanded its role as the leader in the entertainment industry through its acquisition of Pixar (Wise, 2014). The merger of the two companies illustrates the Disney commitment to the Law of the Inner Circle on a corporate level. By selecting a company with complex technical abilities, Disney revitalized its animation department and reclaimed its position as the leader in full length animated films (Wise, 2014).
From Snow White to Frozen the company has had many ups and downs. It is through dedication, influence, and innovative talent, that the company has positioned itself to continue as an industry leader.
One of the World’s Most Admired Company
The conducted research gave us the opportunity to take a closer look at The Walt Disney Company as one of the greatest and the most influential players in the world of global entertainment. Having started with a small cartoon production company, Disney nowadays is one of the key players in the markers of media, interactive entertainment, and consumer products. Such enormous success was made possible by the company’s elaborate and creative strategy of business development.
Established yet by Walt Disney at the beginning of the XX century transformational leadership style works towards the attainment not only of financial indicators and the increased cost-effectiveness but also for the development and motivation of the company’s most valuable resource, its people. Employees of The Walt Disney are equally committed to its successful performance and get the opportunity to realize their full potential and ideas. At Disney, employees and leaders are one big inspired team where no strict subordination takes place. Employees at any level can participate in the decision-making process if they are ready to work out their ideas and show excellent results.
Disney’s performance strategy focuses on constant improvement of the quality of its products and services, as well as on innovation and creative approach towards any goal be it a development of a new cartoon character or building of a new entertainment park.
Thus, it can be stated that The Walt Disney is definitely one of the most admirable entertainment companies in the world whose philosophy and practical tips for the strategy development and resource management may be used as role models for any organization aiming to reach the stars in the field of entertainment as well as in other industries.
Appendix A: Disney Company Divisional Sturcture
Film and Theater
- Disney Theatrical Productions
- Touchstone Pictures
- Marvel Entertainment
- Walt Disney Pictures
- DisneyToon Studios
- Walt Disney Animation Studios
- Pixar Animation Studios
- Walt Disney Studios Motion Pictures International (Distribution)
- Walt Disney Studios Home Entertainment
- Disney Music Group
- Walt Disney Records
- Hollywood Records
- ABC-Owned Television Stations Group
- KFSN (Fresno, CA)
- WLS (Chicago, IL)
- KTRK (Houston, TX)
- KABC (Los Angeles, CA)
- WABC (New York, NY)
- WPVI (Philadelphia, PA)
- WTVD (Raleigh-Durham, NC)
- KGO (San Francisco, CA)
- Disney ABC Television Group
- ABC Family
- ABC Television Network (ABC Daytime, ABC Entertainment, and ABC News)
- ABC Studios
- A&E Television Networks (50%)
- The Biography Channel (50%)
- Disney ABC Domestic Television
- Disney ABC International Television
- Disney-ABC-ESPN Television
- Disney Channel Worldwide (Disney XD, Playhouse Disney, Jetix, and ABC Kids)
- History (formerly The History Channel) (50%)
- H2 (50%)
- Lifetime Entertainment Services (50%)
- Disney Junior (Flanders and the Netherlands)
- ESPN, Inc. (80%)
- ESPN (and ESPN.com and ESPN360.com)
- ESPN 3D
- ESPN Classic
- ESPN Deportes
- ESPN Enterprises
- ESPN Interactive
- ESPN International
- ESPN Mobile Properties
- ESPN on Demand
- ESPN PPV
- ESPN Regional Television
- Longhorn Network
- WDWD AM (Atlanta, GA)
- WDDY AM (Albany, NY)
- WMKI AM (Boston, MA)
- WGFY AM (Charlotte, NC)
- WRDZ AM (Chicago, IL)
- WWMK AM (Cleveland, OH)
- KMKI AM (Dallas-Fort Worth, TX)
- KDDZ AM (Denver, CO)
- WFDF AM (Detroit, MI)
- KMIC AM (Houston, TX)
- WRDZ FM (Indianapolis, IN)
- KPHN AM (Kansas City, MO)
- KDIS FM (Little Rock, AR)
- KDIS AM (Los Angeles, CA)
- WMYM AM (Miami, FL)
- WKSH AM (Milwaukee, WI)
- KDIZ AM (Minneapolis, MN)
- WQEW AM (New York, NY)
- WDYZ AM (Orlando, FL)
- WWJZ AM (Philadelphia, PA)
- KMIK AM (Phoenix, AZ)
- KDZR AM (Portland, OR)
- WDZY AM (Richmond, VA)
- KIID AM (Sacramento, CA)
- KWDZ AM (Salt Lake City, UT)
- KRDY AM (San Antonio, TX)
- KMKY AM (San Francisco, CA)
- KKDZ AM (Seattle, WA)
- WSDZ AM (St. Louis, MO)
- WWMI AM (Tampa, FL)
- ESPN Radio
- KESN (Dallas-Fort Worth, TX)
- WMVP (Chicago, IL)
- KSPN (Los Angeles, CA)
- WEPN (New York, NY)
- WDDZ AM (Pittsburgh, PA)
- Hyperion Books
- ABC Daytime Press
- Jump At The Sun
- Mirimax Books
- Disney Publishing Worldwide
- Disney English
- Disney Digital Books
- Disney Global Book Group
- Global Children’s Magazines
- U.S. Magazines
- ESPN The Magazine (50% with Hearst)
- ESPN Books
Parks and Resorts
- Disney Cruise Line
- Adventures by Disney
- Disneyland Resort
- Disneyland Resort Paris (51%)
- Disney Vacation Club
- Hong Kong Disneyland (48%)
- Shanghai Disney Resort (43%)
- Tokyo Disney Resort (Owned and operated the Oriental Land Company)
- Walt Disney Imagineering
- Walt Disney World Resort
- Club Penguin
- The Baby Einstein Company
- Disney Consumer Products
- Disney Apparel
- The Disney Store
- Disney Accessories & Footwear
- Disney Fashion & Home
- Disney Food
- Disney Health & Beauty
- Disney Stationery
- Disney Toys
- Disney Interactive Media Group
- Disney Online (Disney.com)
- Disney Interactive Studios
- Disney Online Studios
- Disney Mobile
- El Capitan Theatre
- The Muppets Studio
- Rocket Pack
- UTV Software Communications
Appendix B: SWOT Analysis
To complete this SWOT Analysis we have reviewed the company’s last three SWOT Analyses (2013, 2014, and 2015). Our findings are as follows:
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Extensive reach of cable network operations
The Walt Disney Company has a strong presence in the cable industry. They operate several families of channels that cover a large portion of the entertainment spectrum from sports, to family, to mature programming. They control 16 sports channels under the ESPN umbrella. With it, they reach, customers in 62 countries in four different languages. ESPN Radio is carried on over 450 stations and is the largest network of its kind in the United States. (The Walt Disney, 2014)
The company offers one of two worldwide cable network channels that cater specifically to children. The Disney Channel, Disney Junior and 100 others are available to viewers in 34 languages and 166 countries. The Disney Channel alone had 271 million subscribers in FY2013. (The Walt Disney, 2013)
These offerings and the A&E Television networks combine to give Disney a competitive advantage over its completion in the cable entertainment industry. To copy this vast structure and variety of programming would be difficult and costly to duplicate. (The Walt Disney, 2013)
Strong brand recognition
The company owns some of the world’s most recognizable brands. Disney, ESPN, ABC, Marvel, Lucasfilm, and Pixar are all names that are readily identifiable by the general public. Each elicits strong emotion and childhood memories in adults and children of all ages. This helps the company retain current customers and draw new customers to them. (The Walt Disney, 2015)
High diversification in the entertainment business
Disney captures large volumes of consumer disposable income with its various entertainment operations. Media networks, parks and resorts, studio entertainment, consumer products, and interactive software all contribute to the Disney revenue stream in a relatively balanced fashion. This ensures undue dependence upon any one-business segment. (The Walt Disney, 2014)
Dependence upon North American operations
The Walt Disney Company generated approximately 75% of its FY2013 revenues in the United States and Canada. This is in spite of operations in Europe, Asia, and Latin America. This places the company at risk, as it is dependent upon the political and economic environments of that one region. This is while its closest competitor had a balanced income stream from North America and the rest of the world, with only 43% of their revenues being generated in the North American Region. (The Walt Disney, 2014)
Growth in emerging economies and markets
The company has focused energies in the development of markets in emerging economies such as India and China. Disney is investing in theme parks in China with a 48% share of the currently operational Disneyland Hong Kong, and 43% share of the soon to open park in Shanghai. They have also expanded into India with a Viacom joint venture to bring Disney programming channels to local multi-channel video service providers. (The Walt Disney, 2015)
According to industry estimates, the gamming industry is expected to grow at a compounded annual rate of 13% between 2013 and 2018. 65% of this growth is expected in the Asian market. To take advantage, Disney increased its focus on the gamming industry. It has taken up several initiatives through it interactive segment through the development of console games, gamming applications and interactive toys. (The Walt Disney, 2015)
Video and software piracy
Piracy of intellectual property such as television, motion picture and video content poses a continuing threat to several segments of the company. Technological advances allow easy production of high quality unauthorized copies of this content, which is easily distributed. This has serious effects on company revenues from streaming and DVD sales. (The Walt Disney, 2015)
High levels of competition
The Walt Disney Company must compete at many strategic levels in all of its business segments. Its network media segment must compete for quality content, licensing fees for sporting events, and advertising time on local multi-channel video service providers. The parks and resorts segment must compete with other activities as well as other resort firms for the customer’s disposable income. Competition in these areas can divert customers from the company’s services and effect revenues.
Changing customer tastes
The taste of the consumer plays a major role in the company’s ability to sustain its business. It is only through the satisfaction of those tastes that customers are attracted and retained. Disney must continuously create and distribute films, park attractions, programming, games and hotel facilities that meet the changing preferences of the consumer market. Many of these require large capital investments with no guarantee of any return. (The Walt Disney, 2015)
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