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An Industry Analysis of the Walt Disney Company
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An Industry Analysis of the Walt Disney Company
The Walt Disney Company or simply "Disney" may be one of the oldest entertainment
and media organizations in the USA but still stands out as one of the most successful brands
nationally and internationally. Schmidt (2019) acknowledges that Disney has evolved
significantly, constantly transforming its business model and remaining adaptive to changes in
the industry and market to achieve its success and growth. Currently, Disney is a household
name featuring a brand that resonates with consumers of all ages worldwide. Therefore, it is
fundamental to examine how Disney has managed to be resiliently successful for almost a
century in operations (do Patrocínio et al., 2018; Robbins, 2014). Such an examination would be
valuable to existing organizations and startups seeking to achieve a similar operational and
business success level. Hence, this research paper presents an industry analysis of The Walt
Disney Company, focusing on the company's current situation, Porter's Five Forces, and the
viability and strategic potential of the company's overall business strategy.
Situational Analysis
Company Overview
Disney is a US-based global entertainment and media conglomerate. The company was
founded in 1923 by two brothers, Walt and Roy Disney, as an animation film and media
organization (Disney, 2021). With its headquarters in Burbank, California, Disney has
extensively diversified its product line from simple animation films to theme/amusement parks,
publishing television, consumer products, cruise lines, hotel resorts, and live-action film
production (Disney, 2021). The company has been on a constant transformation journey,
introducing new products and services for its customers under its family-oriented brands. The
current CEO is Bob Chapek, while Bob Iger serves as the Executive Chairman and Chairman of
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the board (Disney, 2021). In 2019, Disney reported revenue of $67.418 billion. Furthermore, the
company reported that it employs more than 223,000.
Mission Statement: "The mission of The Walt Disney Company is to entertain, inform and
inspire people around the globe through the power of unparalleled storytelling, reflecting the
iconic brands, creative minds and innovative technologies that make ours the world's premier
entertainment company" (Disney, 2021).
Vision Statement: "To be one of the world's leading producers and providers of entertainment
and information" (Disney, 2021).
Disney has a powerful mission statement that could be the driving force behind the
company's success. According to the mission statement, Disney seeks to entertain, inform, and
inspire its customers worldwide, explaining the family-oriented brands the company operates.
Hence, to achieve this goal, Disney leverages its unmatched and unique storytelling capabilities
reflected through its iconic brands, including film, broadcasting, print media, toy apparel, hotel
resorts, theme/amusement parks, and cruise lines (Disney, 2021; Robbins, 2014). All these
brands feature the creativity and innovativeness that the company employs to ensure that
customers have maximum fun and entertainment (Schmidt, 2019; Dal Maso et al., 2015). Thus,
fulfilling this mission will ultimately make Disney the world's leading entertainment company.
Conversely, Disney also has a unique vision statement that guides organizational
members and governs the organizational culture. First, through the vision statement, Disney
reaffirms that its market scope is global, as the mission statement mentions. Second, Disney
reiterates its desire to be a leader in producing and providing information and entertainment. All
brands operating under Disney are designed to achieve this goal by producing and providing
services that meet consumers' information, fun, and entertainment needs (Schmidt, 2019). This
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vision statement is viable and speaks to the company's desired goal at all levels of operation.
Thus, the guiding mark provides direction to all organizational members to ensure success across
all the brands.
Internal Analysis: Strengths and Weaknesses
Markedly, Disney is one of the most successful, famous, and recognized brands globally.
One of the key strengths the company boasts of is the broad and unmatched brand portfolio.
Through product development initiatives, acquisitions, and mergers (Disney, 2021). From the
above overview of the company, it is evident that Disney has a vast product portfolio to meet all
consumers' fun, informational, and entertainment needs. The company also enjoys a high brand
value, with its original brand name and logo acting as the main selling points. Success at the
company is also marked by substantial revenue flows and wide profit margins. Moreover, Disney
boasts of a highly-skilled, creative, and innovative workforce (Schmidt, 2019). Every product
and service by the company is deemed of high quality due to the skilled workers, giving the
company a strong brand reputation.
However, a notable weakness in the company is the overreliance on the North American
market despite positioning itself as a global brand. Disney invests more in the North American
market than any other market in the world. Another noticeable weakness is the poor financial
planning, especially in its business acquisitions. The company reported a loss of more than $1
billion in 2018 after investing in the acquisition of Hulu and BAMtech streaming technology.
Moreover, after investing in acquiring the 21st Century Fox for more than $70 billion, Disney has
its money stuck as the brand cannot compete with digital streaming services such as Netflix.
Besides the burdening acquisitions, Disney also has inadequate product demand scaling, where
content creators have a considerably poor judgment of the "next big idea" that takes the market
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by storm and fends of competition (do Patrocínio et al. 2018; Robbins, 2014). Above all, Disney
has also been a victim of negative publicity, with employees complaining of poor and unsafe
working conditions
The Internal Factor Evaluation (IFE) Matrix below describes the strengths and
weaknesses to determine Disney's relative strength vis-à-vis the competition. The weighted score
of 2.849 implies that Disney is performing exceptionally above average and in an excellent
competitive position. However, there is still a need for strategic measures to overcome the
weaknesses.
Strengths
Weaknesses
Total
Critical Success Factor
Weight
Rating
Score
Total Weighted Score
Strong brand portfolio
Strong brand reputation
High brand value
Huge revenue flows
Highly-skilled workforce
Overreliance on the N/American market
Poor financial planning
Burdening acquisitions
Inadequate product demand scaling
Negative publicity
0.19
0.1
0.089
0.1
0.09
0.1
0.08
0.1
0.1
0.051
1.00
4
4
3
4
4
2
2
1
1
2
0.76
0.4
0.267
0.4
0.36
0.2
0.16
0.1
0.1
0.102
2.187
0.662
2.849
An examination of Disney's net income in the last ten years is one of the best financial
analysis strategies to determine the company's success and competitiveness. From the financial
table below, one can quickly notice that Disney's net income has been increasing steadily in the
last decade except for the last two financial years (2020 and 2021), when the company reported
an income loss of more than $2 billion. Disney attributes the losses to the effects of the COVID19 pandemic. Mainly, Disney's experiences, parks, and products segments brought it $10 billion
less compared to the previous years. However, the company maintains its growing dominance
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through acquisitions and looks forward to increased profitability as the effects of COVID-19
lessen and people get back into enjoying the Disney experience.
External Analysis: Opportunities and Threats
The entertainment industry's expansion primarily marked by the increased popularity of
online streaming is one of the newest opportunities for Disney. The company should consider
investing in streaming services to overcome competition and enhance its brand appeal (Schmidt,
2019). Besides, there are new emerging markets for theme/amusement parks and experiences in
new countries. Besides global expansion, the organization has an opportunity to establish new
acquisitions to spur its competitive advantage. The company should also invest in new
technologies and innovations across its brands to improve contemporary customers' appeal
(Callender, 2016). This understanding implies that Disney should invest in new digitized
marketing strategies to attract more customers and maintain its strong brand appeal.
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One of the greatest threats Disney has to deal with is the economic downturn following
the adverse effects of the COVID-19 pandemic. COVID-19 pandemic led to the closure of
almost every physical business associated with the Disney brand, with only a few exceptions.
Furthermore, customers took precautions by avoiding such crowded areas, leading to significant
losses. Second, Disney faces stiff competition from other entertainment companies and rival
brands in almost every business segment (Dal Maso et al., 2015). Companies such as Netflix are
significant competitors in the online space. Increased piracy and hacking also affects the
organization as it thwarts maximal revenue flows. Above all, Disney faces significant challenges
complying with stricter laws and regulations governing the entertainment and media industries.
The External Factor Evaluation Matrix below describes the opportunities and threats to
determine Disney's relative strength vis-à-vis the competition. The weighted score of 3.35
implies that Disney is strategically positioned to defend against threats and exploit opportunities.
Critical Success Factor
Weight Rating Score
Opportunities Venturing in online streaming segment
Innovation & technological advancement
Global expansion
New acquisitions
New marketing strategies
The COVID-19 pandemic
Threats
Stiff competition
Piracy and hacking
Stricter regulatory environment
0.2
0.1
0.09
0.06
0.1
0.2
0.1
0.05
0.1
Total
1.00
4
4
3
3
4
4
3
2
1
0.8
0.4
0.27
0.18
0.4
0.8
0.3
0.10
0.1
Total Weighted
Score
2.05
1.3
3.35
Porters Five Forces
The Threat of New Entrants: The threat of new entrants for Disney is moderately low,
considering how it has significantly diversified its product line. New entrants can pressure the
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company due to the potential of lower pricing, new value propositions, and reduced operational
costs. However, Disney buffers against this threat by constantly innovating and diversifying the
product line (Schmidt, 2019; Callender, 2016). The company also builds capacity and enhances
its economies of scale for maximal output.
The Bargaining Power of Suppliers: The suppliers in the entertainment industry, who are
primarily content creators, have a considerably high bargaining power due to their limited
number. Although suppliers in other business segments such as hotels and resorts and theme
parks may have low bargaining power, those in Disney's main business segments, including film
production and media broadcasting, have relatively high bargaining power. Thus, Disney should
invest in an efficient supply chain and acquire dedicated and loyal suppliers (do Patrocínio et al.
2018).
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The Bargaining Power of Consumers: Consumers have considerably high bargaining power
because they constantly desire the best at the minimum price possible. Hence, the switching costs
for these buyers are considerably lower because other entertainment brands have been almost
similar product offerings (Callender, 2016; Hacklin et al. 2018). The pressure is on Disney to
maintain a delighted and loyal customer base without losing market share. This understanding
explains why Disney invests in constantly expanding its market share globally.
The Threat of Substitution: Within the entertainment and media industry, most products and
services supplement each other. Thus, the threat of substitutes is increasingly high. However,
Disney lowers this threat by diversifying its product line and offering as many experiences as
possible to eliminate the possibility of rival firms coming up with new substitute products or
service ideas (Castaldi & Giarratana, 2018).
Competitive Rivalry: Competition in the entertainment and media industry is highly intense,
considering the significant number of rival brands and players in the sector. Some of the most
formidable competitors include Netflix, Six Flags Entertainment, Time Warner, Discovery
Communications, CBS Corp, Universal Studios, Sony, AMC Studios, and Comcast. These
brands employ an almost similar business model with limited differentiation. Disney must be
strategic enough to stay ahead of the pack.
The Viability and Strategic Potential of Disney's Current Strategy
From the above analysis, Disney is well-positioned in the industry and maintains a solid
competitive advantage over its rival firms. From when it was started, Disney has maintained a
transformative approach to business, constantly revitalizing its brands and introducing new
business segments to appeal to its target customers' different needs and preferences (do
Patrocínio et al. 2018). The outcome has been a high level of product diversification that allows
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spontaneous growth in global markets. With the current product offering, Disney appeals to a
broader market audience with a correspondingly high market share. The broad brand portfolio
also maintains its family-oriented inclination to ensure that everyone, regardless of their age, has
something available for their fun, entertainment, and information needs (Callender, 2016).
However, despite the increased success, one cannot ignore the intense competitive rivalry
the firm faces in the industry, primarily in the wake of the adverse effects of COVID-19. In the
last two years, Disney has suffered significant income losses due to the closure of some of its
primary revenue generation sources. Thus, as part of the strategic recovery plan, Disney must
invest more in digital content, including online streaming, to fend off Netflix and other streaming
services (Callender, 2016; Hacklin et al. 2018). Disney must also invest more in product
innovation, using the opportunity to expand its product portfolio and operations to new markets
globally (Castaldi & Giarratana, 2018; Schmidt, 2019). More importantly, the company should
expand its digital marketing to maintain its strong brand appeal. These strategies will ensure
Disney maintains its leadership position and business success despite the tumultuous operating
environment.
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References
Callender, D. S. (2016). Innovating the Walt Disney Company for Competition: Strategy
Recommendations By Bonnie Aylor Capella University For BMGT 8016/Summer
2016/Unit5a1. DOI:10.13140/RG.2.2.27947.44324
Castaldi, C., & Giarratana, M. S. (2018). Diversification, branding, and performance of
professional service firms. Journal of service research, 21(3), 353-364.
https://doi.org/10.1177/1094670518755315
Dal Maso, C. B., da Silva, W. M., de Mello, P. C., & de Paula Arruda Filho, N. (2015).
Integrating Project Portfolio With Business Strategy: Imagineering. Future Studies
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do Patrocínio, R. F., de Almeida Souza, J. L., Santos, C. T. O., & Martins, K. S. (2018). The
vision of the Disney World: an experience marketing study at The Walt Disney
Company. Archives of Business Research, 6(9). DOI:
https://doi.org/10.14738/abr.69.5067
Hacklin, F., Björkdahl, J., & Wallin, M. W. (2018). Strategies for business model innovation:
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https://doi.org/10.1016/j.lrp.2017.06.009
Robbins, M. J. (2014). The most powerful mouse in the world: the globalization of the Disney
brand. Global Journal of Management and Business Research, 14(1), Online ISSN: 22494588 & Print ISSN: 0975-5853
Schmidt, G. (2019). Walt Disney Company. In The SAGE International Encyclopedia of Mass
Media and Society (p. 1877-1878). Sage.
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The Walt Disney Company (Disney) (2021). About the Walt Disney Company. The Walt Disney
Company. Retrieved from https://thewaltdisneycompany.com/about/