Walt Disney: Swot, Pestel and Porter Analysis

SUBJECTWalt Disney SWOT, PESTEL and porters beer compend gate focvictimization2 Pestel digest2 political agents2 stinting factors3 kindly factors3 proficient factors4 environmental factors4 Porters 5 forces impersonate5 New entrants5 Buyers5 Substitutes6 Suppliers6 Competitors6 Swot psychoanalysis7 Strengths7 Weaknesses8 Opportunities9 Improvement of client dealing schema9 Advertising Growth9 Differentiation9 The win knowledgeableness of ICT technologies9 Superior food mart segmentation10 Threats10 Economic conditions10 Winnie the Pooh trial10 Stakeholder analysis11 Conclusion12 references13 addition i Portfolio vs core competence positions14 Introduction Walt Disney is a intermiter, manufacturing channel and worldwide electrical distributor of feature films and television programs, note mesh topology programme and caseful- themed merchandise. Besides, its head position atomic number 18 the most popular in the world. The catamenia forces in the commerc ialise score real challenges for prospective triumph of the supposes ontogenesis. The presents analysis get offs with the discussion of current surroundal and intentness factors. This analysis produces the holistic consume of the macro factors that take up the perseverance players and the party.The support step comes to the analysis of the worry line environment warring environment and the way the partnership develops and maintains its competitive advantage. This analysis ca-cas a effigy of intimate capabilities of the companies. Basing on the military rating of away and internal factors the analysis of strengths and weaknesses is digested. It relieve aneselfs a theoretical account for devising accomplishable strategic endeavor of the comp whatsoever and identifies possible vulnerable points that drive out affect the feasibility of the strategy.Basing on the analysis of the environmental factors and federations capabilities the writing reviews current o pportunities and brats. Pestel analysis agree to award (1998), in order to identify the secern victor factors and the associations opportunities and threats it is distinguished to study environmental factors that do the dissipateds strategy on the industrial level. To do this, PESTEL analytical tool is applied. Political factors Political and legal factors influence the tuition of the industry.These factors shape the rules of competition, operational be (minimum wage, sanctuary requirements and consumer law) and the presence of conglomerate lobby convocations. The pregnant political factor is local legislations regarding opposed monomania, cross-ownership and concentration. For object lesson, Chinese government limits foreign ownership to 49%, when the right to control right away a subsidiary requires 51% of ownership. It sum that a smart set shall look for say-so partners to form joint ventures or strategic alliances. Hill (2002) points out these trade ac counting entranceway options translate into the inflictd control of the subsidiarys activities.Economic factors The stinting factor has a essential importance for the industry emergence. fit in to Mintel hatch (2003) the account super Cs and consumer goods atomic number 18 the most subordinate on the economic factors. For instance, US and European grocerys were belatedly fuddledly affected with recent economical downturns. The reason for such the influence is the family relationship mingled with the economic cycle and the addition of PDI. As Hill shows (2002) the PDI positively affects consumer assumption in economic health and their capableness to buy recreation instructions.Thus, the healthier the reconcile of a country the higher leave behind be the growth of a consumer market and its corresponding value. The orders theme parks and resorts argon vulnerable to ex intensify rate fluctuations, go bad industry trends, changes in available empty time, oil and transportation monetary values and weather patterns. Social factors The acquire trends argon shaped by the following study(ip) factors demographic shifts, postures and beliefs and expressive mode cycles. Demographic shifts fix unlike receding markets whereas fashion cycles together with attitudes formation take a crap necessary growth for the market.For instance, changing vivificationstyles as a allow of influences from anformer(a)(prenominal) countries and cultures, heterogeneous media, become refreshing searchations and requirements for the cognitive content of media sources. different products of the party as character-based merchandise and producer/distributors of childrens audio and film-related products gruelingly depend on accessible factors as seasonal buy behaviour and the popularity of animated releases which define the demeanor cycle of grouchy products and their return of investiture potential. Technological factors Technological factors affect t he way industry players compete.The demonstration of improved proficient solutions allows the companies to reduce cost of operations, gain the manufacturing competency and lineament. Besides, the further R&D maturement allows the introduction of unused products that can potentially break the markets of alert products (Bradley, 1995). The usings of new IT technologies premise new media deli actually solutions and change the calculator architecture certain companies value chain (Chaffey, 2002). environmental factors The environmental factors send outly impact the conk out industry trends.The weather conditions in France and japan determine the gainfulness of theme parks. The ameliorate the weather conditions the higher is the number of visitors. Environmental factors play an Copernican part in the achiever of the business enterprise as it affect input manufacturing capacity. without proper yield a company pass on be inefficient to meet the existing market demand, creating a voiceless opportunity for its competitors. Porters Five forces model The following model shows the macro analysis of the business conditions downstairs which Walt Disney operates. Adopted from Porter (1990) New entrantsThe deregulated land of the market provides certain opportunities for new entrants to start the business. The company operates in a be on market, divided between existing extended companies. The regular change of life style preferences pretend unhomogeneous(a) opportunities for the media content. The ad, film-making, character-based merchandise and theme parks beas bring austere entry barriers, particularly for small players, as the existing leaf blades have strong reputation, develop economies of pillow slip and continuously invest in new technologies. Buyers The world(a) operations, especially on the U.S. and Asian-Pacific markets shows that consumers have a very strong bargain power. Strong competition between world(a) and regional nic he players and constant change of preferences for diverse content of importly reduce life cycles of various products. Substitutes Internet, other types of media have serious substitute threats to current media statistical scattering channels. According to Mintel report (2003) the further increase of Internet proliferation with coarse electronic media opportunities create is likely to reduce drastically the consumption of hard copy products. SuppliersThe scale of operations, the size of the company and highly recognised strong brand identity provide the company with bargaining power against local and planetary suppliers. Competitors The company competes with such powerful competitors as AOL Time Warner Inc. , Viacom Inc. , The News Inc, Comcast Corp. , Canal + etc. The presence of powerful competitors with established brands create a threat of intense price wars and poses s strong requirement for product differentiation. The other measurable feature of the media industry is a continuous shift of competitors market power.This notion takes place as the result of various strategic alliances and industry consolidation. For instance, the go of Time Warner with America Online Inc. created powerful internal capabilities. If they were met with market demand, it would have boosted the companys profit margin. The other threat goes from the continuous education of The News Inc. which uses very competitive expansion strategy. It plays a gate sustainmenter theatrical role in the development of digital air and has already been developing long-term technical capabilities to build its internet presence.At the analogous time, the global media industry is very fragment due to various cultural differences. Thus, the durable change of consumer trends and the market fragmentation create a lot of niche markets. Today, the major theatre for fierce competition is US and EU markets. The company has to compete with other entertainment companies, broadcasters and cont ent providers, who mesh very aggressive customer-switching strategies. Swot analysis According to Wit & Meyer (1998) the analysis of capabilities shall focus on the analysis of core competence or portfolio assessment (see Appendix I).Applying this table to the national of Walt Disney it must be admitted, that the global nature of operations and high intensity of competitive environment create importance for using both types of analysis. Strengths From the core competence perspective, one of the main strengths of Walt Disneys strategy is a cap faculty of extravagant and intensive broadcast of operational capabilities across the markets, which allow the company to benefit from learning curve, operational and other cost reduction benefits.The other important capability is the ability to develop new innovative solutions to meet changing demand. The development of Mission SPACE is the good example of the application of latest digital technologies to conjure the entertainment fami liarity of theme park visitors (Datamonitor, 2004). From the portfolio perspective, the companys strength is in its experience of international operations. According to bennet (1999) the development of local knowledge on with learning curve strength create potential synergies over different strategic business units.The other strength is a diversified portfolio. Walt Disney is involved in various areas of the media distribution, including television and cable, book publishing and take entertainment, character merchandise and internet content words. The companys wide-ranging interests protect it somewhat from the effects of adverse market conditions in any one of the sectors within which it operates. Its presence in a large number of markets gives the company a more braced and stable portfolio of assets, and therefore a more ensure business.The diversity of the media portfolio creates a strong advertising potential. The company operates with six domestic sports channels, stre tching 85 million viewers, and has several brand extensions including ESPN Radio, which is the largest radio sports network in the US. Its A idiot box Networks, featuring cultural and entertainment computer programming such as The History Channel, come across 77 million homes. Lifetime Television is devoted to womens lifestyle programming and reaches 83 million cable subscribers.Its Toon Disney channel, targeted at 2-11 division olds, is available in 26 million homes and began carrying advertising in 2000. Disneys SoapNet channel was as well as launched in 2000, and now reaches more than 18 million homes (Datamonitor, 2004). Weaknesses One of the strong weaknesses of the company is the addiction of theme park distribution on seasonal component. All of Disneys theme parks and associated operations are spread all year round. However, there are extreme fluctuations in park attention and resort occupancy, caused by the nature and patterns of vacations. top side attendance and o ccupancy occur during the domesticate holidays in summer, early-winter and spring. These fluctuations cause natural operational difficulties, but overly make the business more vulnerable as it relies heavy on a few cardinal months. If economic downturns, poor weather or other outside influences occur during the crucial periods, the effect on annual results is magnified. The analysis of pecuniary data for the last 10 years (www. hoovers. com) show that despite overall healthy growth f its gross revenue and winnerful penetration into new markets, the company had very high operation costs and unbalanced bullion flows along different SBUs. The pecuniary figures show that only cable broadcasting and television create become profit. The situation with filmed entertainment requires reflexion regarding the future strategy of running this business area as the companys certain failures seriously affected the profitability of this area. Opportunities Improvement of customer relations strategyAccording to DAgostino (2003) Walt Disney has a strange opportunity of developing strong customer relations strategy based on database merchandising capabilities. It predicts that the introduction of these technologies will enable the company to target and tailor the media delivery to active and prospective customers. However various analysts strongly advise to find the balance between macrocosm digital and homophile (DAgostino, 2003). Advertising Growth The analysis of tender factors influence shows the strong impact of various social events on the content requirements. mixed social events as summer holidays or adventure trips ability create significant a potential for advertising growth what can bring great financial benefit. Differentiation The continuous change of global lifestyles and attitudes create niche markets for specific quality products. The ongoing diffusion of new proficient solutions creates new possibilities to capture these markets. Thus the cabal of these factors provides a practicable opportunity to expand. However, the success will strongly depend on the ability to react quickly to keep abreast of fast-changing market requirements.The further introduction of ICT technologies As Datamonitor (2003) recommends, the ICT technologies shall be further employ in the business process. The further proliferation of broadband technologies on the EU market efficiency create various opportunities for Walt Disney providing its extensive development of online applications. Besides, it will enable the company to pink various internet media channels that will enable the company to use various e-marketing tools to create stronger relations with its customers.. Superior market segmentationThe company has the opportunity to develop stronger demographic segmentation in order to anticipate the further market trends. The Mintel report (2003) shows that there are significant differences in preferences across different demographic and psycho graphic groups. prone the importance of content as a strong pull and differentiating factor, the further success might depend on the ability to spot the requirements of niche markets and meet them. Threats Economic conditions The Walt Disneys media production and distribution collaterally dependent on advertising for their revenue.Changes in US, global or regional economic conditions may affect the advertising market for broadcast and cable television programming, which in turn may affect the account book of, and price for, the advertising on Walt Disneys cable networks and shows and the volume of, and price for, the programming that the company is able to sell. Winnie the Pooh trial According to Datamonitor (2004) a one-billion-dollar lawsuit against Walt Disney over the cash generated by the Winnie the Pooh character is likely to in the long run go to trial in 2005. The case centres on the US marketing rights to he character, created by British author A. A. Milne and popularize d by the Disney entertainment empire. Among the issues at stake, are revenues from computer software, DVDs and videotapes, merchandise that mostly comes in formats that came into being after the agreement was signed. Pooh revenues, said to be the most of any character that Disney markets, are estimated to be in the region of tether billion to six billion dollars a year, and the lawsuit represents a considerable threat to the companys doing in the future. Stakeholder analysisStakeholders are persons, groups or institutions with interests in a chore or programme. According to McLarney (2002) there are two types of stakeholders primary or signalise stakeholders, and secondary ones. patriarchal stakeholders are those ultimately affected, either positively (beneficiaries) or negatively (for example, those involuntarily resettled). Secondary stakeholders are the intermediaries in the aid delivery process. McLarney (2002) suggest that the group of primary stakeholders consist of shar eholders, employees and customers.Shareholders Shareholders can be considered as one of the most potent type of primary stakeholders as they might exert direct or indirect control over the strategic reach of the company. That is why one of the Disneys overriding objectives is to create shareholder value by keep to be the worlds premier entertainment company from a creative, strategic, and financial standpoint. Shareholders evaluation of the companys current and future performance has a direct effect on the companys bet value.The recent bidding of Comcast Corporation for The Walt Disney come with ( logical argument Week, 2004) exemplified the way market evaluation might determine the bidding process during the possible merging. This group expect the company to deliver consistent sound financial performance what will be a establishment that the company can fulfil its missionary posts objectives. Employees Employees have a direct influence over the quality of the business concep t delivery.According to Drucker (1998) employee possess important tacit and explicit knowledge, which can significantly contribute to the learning capability of the company, especially during business process reengineering and continuous value activities. They expect to work for the socially liable company, which is adherent to its mission and brand promise. They also expect certain degree of affair in decision making, personal development and adequate performance appraisal. Customers Customers have a direct influence over companys profitability.According to Kotler et al. (1999) the direction of customers attitude formation may determine the success and failure of particular goods or brand. Customers expect the company to deliver the quality promised by the brand, and communicated to them through various promotion mix activities. The issue of companys social responsibility, especially in the case of Walt Disney is crucial, as the company is involved in characterbased merchandise which is heavily dependant on the proliferation of specific image of particular characters. ConclusionThe analysis of the current PESTEL factors identify the particular importance of socio-cultural, political and legal, economic, proficient and environmental factors on the environment. All of these factors determine the success of operations. If socio-cultural and economic factors affect the demand patterns and vulnerability of strategic development, other factors create the conditions for value chain architecture. The review of environmental factors identified the opportunities to improve financial health, trespass on the growth of advertising market and develop further ifferentiation using expert solutions. At the said(prenominal) time economic conditions and copyright issue create serious threats to the company. The analysis of five forces identified the strong power of buyers and the analysis of strategic capability defined the following strengths diversified portfolio, fas t and intensive transfer of operational capabilities and the experience of running the international operations. At the same time the current portfolio trouble and the dependence of certain business units on various external factors were defined as major weaknesses.The paper identified various feasible opportunities. The analysis of current capabilities along with the further development of technological solutions create strong case for the development of customer relations management based on database marketing techniques. Besides the company might pursue the development of new ICT technologies. The current success of Mission SPACE attractions show vast market opportunities with regards to the introduction of new entertainment experience. The company may develop outstanding market segmentation.The high influence of social factor and the influence of fashion trends on market demand and product life cycles create the space for niche market strategies. The stakeholder analysis defin ed three types of key out stakeholders, as shareholders, employees and customers, who might exert fit influence on the strategic development of the company. references Bennett, R. (1999) bodily strategy 2nd ed. capital of the United Kingdom Financial times Bradley F. (1999) global marketing strategy 3rd edn. Addison-Wesley Publishing Calton J. nd Kurland N. (1996) A theory of stakeholder enabling fully grown voice to an emerging postmodern drill of organizational discourse, Boje D. M. , Gephardt R. P. , Thatchenkey T. J. Postmodern counseling and Organizational Theory Sage, Thousand Oaks, CA. Chaffey D. (2002) E-business and e-commerce management strategy, implementation and practice Harlow Financial Times Prentice Hall Datamonitor (2003) Global media industry profile, Datamonitor, June Datamonitor (2004) Walt Disney Company profile, Datamonitor DAgostino D. 2003) Walt Disney World Resorts and CRM Strategy, eWeek, 01/12 Drucker P. (1998) warinesss new paradigms, For bes, 05/10. Grant, R. M. (1998) Contemporary strategy analysis concepts, techniques, applications 3rd ed. Malden, Mass. Oxford Blackwell Hill C. (2002) International business competing in the global market 4th edn. Irwin McGraw-Hill London Kotler P. , Bowen J. , Mak J. (1999) Marketing for cordial reception and tourism 2nd edn. Upper gable roof River Prentice Hall Mintel (2003) Leisure care UK, Mintel International Group Limited, AugustPorter M. (1990) The competitive advantage of nations London Macmillan, Wit B. and Meyer R. (1998) Strategy process, content, context an international perspective 2nd edn. London International Thomson trading Hoovers Online Official site www. hoovers. com Appendix i Portfolio vs core competence perspectives Portfolio Core competences tension on Responsiveness over synergy Synergy over responsiveness bewitch of competition Firms compete within a business Corporations compete across business Competitive strategy at Business leve l Corporate level draw success factors Responsiveness to business demands Competence leverage Corporate composition potentially unrelated (diverse) Shared competence base (focused) Mulitibusiness synergy Cash flow optimisation Rapid competence building Primary task corporate centre great(p) allocation to SBUs Competence development & application Position of Business units exceedingly autonomous (independent) Highly comprised (interdependent) Co-ordination between SBUs commencement, incidental High, structural Corporate control style Setting financial objectives Joint strategy development variegation acquisitions Simple to accommodate Difficult to integrate Adopted from Witt and Meyer (1998) Competitors High New entrants Low Buyers (bargaining power) High Substitutes High Suppliers