Term Paper: Disney Analysis the Walt

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[. . .] (Porters Five Forces)

Thus, the buying industry faces a high pressure on the margins from the industry. The bargaining power of consumers is high when there are large numbers of buyers, when the buyers are price sensitive and the product is not a necessity to the buyer. If the markets are easier for new companies to enter, competition increases and a large number of new entrants enter. This poses a threat to economies of scale, brand loyalty of customers, and scarcity of important resources that are now with the existing companies. Threats to substitutes exist when there are alternatives to a product, which are lower in cost and better in quality. They could take up a significant portion of the market volume. Finally, the competition from within the industry results in pressure on prices, margins, cost and ultimately profits.

Let us now discuss this with Disney's viewpoint. First, with aspect to the threats of new entrants, the entrance barriers are high for Disney since it has carved for itself a special place in the industry. The company has been able to develop over a long period of time, and developed outside its departments of marketing, finance, research. Over time, with past experience, Disney knows what the consumer wants, and all this will be difficult for a new organization to achieve quickly.

With Disney's penetration into a variety of products, it will also be difficult for any new organization to achieve brand identification and diversification. As stated above, the capital investment required is high, and it's not easy to practice effective economies of scale. The bargaining power of customers is high in service and entertainment industry. The customers have to be given powers since they are the direct means to get profits. Disney has to match its prices with the maximum a customer is willing to pay. Since the entertainment industry focuses on making the customer spend more, Disney's product mix also focuses on getting this. (The Walt Disney Company- A Case Study)

For Disney, the bargaining power of suppliers is moderate. Since its operating costs are high, the suppliers are mostly few companies and are concentrated. The companies also realize that Disney is an important customer they cannot lose. By ordering large volumes of unique products from suppliers, Disney creates a sort of dependency among them. Finally, the threat of substitutes is low with Disney. Other theme parks, and cartoons can enter the market but Disney has created a standard so it can face competition. However, the threat of substitutes keeps Disney constantly to upgrade its products and services. Compared to its internal strengths and weaknesses, Disney has to adopt and take advantage of the external forces and environment as depicted with respect to Porters Five Force Model. (The Walt Disney Company- A Case Study)

Stakeholder Analysis:

The next concept is Stakeholder Analysis. A stakeholder is someone who has a vested interest in the project or will be affected by its outcome. At the start of any project, a stakeholder analysis needs to be done. This helps to find out who is important to the company and how to involve them. To conduct the stakeholder analysis, we need to make a list of stakeholders, identify the interest or 'stake' in the project, find out their importance, and record all this information. Stakeholders could be within the institution or outside like users, public funding bodies, publishers and standard organizations. One needs to think why the stake is important to them, in what ways they will use it, decide how important each one is, how much one needs their support and what are the consequences if one does not get it. Once the stakeholder analysis is done, one can ensure how to affect the positive outcomes. (StakeHolders Analysis)

Stakeholder analysis in Disney's world also involves corporate acquisitions. Disney's analysis consists of its acquisition of $19billion of Capital Cities/ABC, Time's $13.9 billion takeover of Warner Communications and Viacom (Disney's partner) acquisition of Paramount Communications for $9.7 billion. In Disney's case, it is seen that the owners have more stake in the company than creditors. This can be seen by the Debt-Equity Ratio, which stands at.87. The stakeholder's analysis of Disney further shows that the Return on Assets is 7.3%, the net income is 920,000,000, and total assets are 45,027,000,000. 30% of Disney's net income comes from its ABC broadcasting operation making it an important stakeholder. Although Disney's has a large variety of holdings in the entertainment industry, its diversity of holdings is its greatest strength. Disney has also donated over $5 million through the Disney Hand: Survivor Relief fund as part of its stake. The fund also includes a matching contribution by its employees. Disney's ABC and its competing network have all been equally affected and a combined loss of $320 million in television advertising revenues.

Product Life Cycle:

Finally, there is the Product Life Cycle. A product life cycle shows the stages that products go through from the development stage to the decline stage. Each product may have a different life cycle. A product life cycle determines the revenue earned, contributes to market planning, helps in new product planning, helps the company to identify when the product needs re-designing, support, withdrawal etc. The stages in the life cycle are Introduction, Growth, Maturity, Saturation, Decline and Withdrawal. (Product Life Cycle)

Disney started off its product line, with its cartoon characters. Its introduction was through promotion and advertising campaigns, the target audience being children. Its growth can be seen in the animal kingdom theme parks, the numerous islands like Pleasure Island, Discovery Island, the Florida Walt Disney World that have incorporated these cartoons into their marketing mainstream. Rather than design, Disney includes modern elements into its business. Further, the cartoons are also the major source of motion pictures, fantasy parks and other adventures. Disney's product life cycle uses the system of integration. Integration through assimilating, producing and personalizing is the key process to its consumers. During the growth stage, Disney initiates new ideas, and does market research to identify the gaps that exist that it can fill.

Creative thinking is a big force with its employees who come up with innovations that keep changing the face of its product or service. They also think what people will want a few years from now. Disney's maturity stage is through maximum advertising and publicity at its target audience. It creates increased consumer awareness and sales are pushed to its highest pitch. Disney, however, also had to face the next stage of decline. A short time after Euro Disney was opened in April 1992; it became obvious that the plans did not match reality. When financial reports were published, in November 1992, the management had to announce a loss of $188 million. The second year was even worse. It showed that certain crucial factors like planning were not right, and general expenses exceeded.

This forced Disney to withdraw itself from certain sectors, and concentrate on core functional areas. It started a new customer strategy called Destination Disney. This involved using technology to find out customers' preferences and to capture customer data to analyze its visitors and its more frequent visitors. Previous to this, Disney had no customer database. It also created a concept called Magical Gatherings, intended to increase revenues and group bookings. This is a global strategy where it encourages customers across the globe to consolidate together and book the next big destination with Disney. Disney has also seen its video sales decline due to social changes.

Critics accuse Disney of making use of manipulation in its movies through depiction of its characters. There was also some criticism of its racial comment in some of its videos that led it to produce movies like "The Lion King," which was finally widely praised for its accurate presentation. Since Disney holds an enormous influence over children, it has to be held responsible for its content. These are the marketing techniques or analysis adopted by Disney in its corporate setup.

Conclusion:

In conclusion, it is the post modern marketing practices of Disney that have broad consumer implications. Through Disney's network of films, shows, consumer products, recordings, media sponsorships, and market research, the company is able to keep up with consumer expectations. It does this through three strategies, first, the consumer environment is totally under Disney's control, second, Disney's use of images is extensive, and third, Disney uses its icons well with the country's history to evoke a strong sense of nationalism. The future strategy of Disney would be to keep customers coming in, make its products and services more attractive, and integrate new technologies into its line. The EPCOT center, is for example, based on study of customer behavior, at Disney land and has used computer modeling methods for traffic flows and decision making.

It would also expand its global operations moving out of Europe and United States to reach Asia and other continents.… [END OF PREVIEW]

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