GSBS6060 Strategic Management | External Environment of Disney
Answer:
Introduction
The purpose of the following paper is to determine the various levels of business strategies for the business organizations. The business organization that has been chosen here for this paper is Disney. The company is regarded as one of the leading companies in the mass media and entertainment industry (Disney.com, 2018). The company was established 95 years ago in the year 1923. It is very important to note that the business decisions are very important for the organizations to flourish in the competitive business environment.
It should be considered that Disney has been a pioneering company for the fun and amusement of the children and their family members. It is indeed very important to make a thorough analysis of the external environment of the company to understand what things should be included within the business operations for the achievement of the strategic vision of the company (Disney.com, 2018).On this note the external environment of Disney will be highlighted with the help of the Five forces analysis. The business level analysis of the organization will be conducted here in this section as well. Apart from these analyses, the strategic intent of Disney regarding their business expansion in the other countries will be discussed.
External Environment of Disney
The external environment analysis of Disney will be conducted. Disney operates in the mass media and environment industry and the headquarters of the company is located in the United States of America.
Political
The political factors are very important for the success of the organization. It is very important that the political stability must be there in the organization in which the organization will operate (Jurevicius 2013). Due to this reason, Disney is quite safe. It is only because USA one of the most powerful countries in the world and the political condition of the country is quite stable. The several rules and policies of the government are very much essential for the Walt Disney. The policies of the government have direct impacts on the company since they operate in the entertainment industry and provide amusement to the people. The import policies of the several regions will surely play a vital role for the operations of the industry. These policies will be important variables for the success of the company. As they will look to expand into other countries, the political implications will have a huge significance.
Economic
The foreign exchange rates are indeed very important for the overall success of the company (Woodford 2012). The recession and inflation can be considered as very important components for the success of the company in as well. The economic components will provide huge opportunities for the overall growth of the company (Jurevicius 2013). Another factor for the overall success of the organization is the per capita income of the people in the country and state. The interest of the people in the entertainment industry will be higher in the regions will be higher where the per capita income is high. All of this will depend on the GDP of the country (McAuliffe 2015). This is very important for the luxury entertainment brands like Disney. The states will take part in the activities of Disney in which the Human Development index is high with a good amount of economic improvement. These areas and these people will likely to impact on a positive note for the success of the company (Bernanke et al. 2018).
Social
The technical trends of the society are very much important for the overall success of the society. The high income modern societies will be much interested in taking their children to the various amusements parks of Disney (Theaker 2017). The Walt Disney will be able to provide the proper level of fun and amusement ti these people only. The comfortable and luxurious modes of amusement are their desire and Disney can provide it the best. The high society is always in favor of enjoying the contemporary trends of amusement through Disney Camisón, C. and (Villar-López 2014). The ethical issues like using the characters for the fun and amusement will also come into the practice in this context.
Technological
The implication of technology has been very significant for the life. This is why Disney has also used the technology to satisfy the desire of the customers. The innovation factors have played a major role in the success of the company and the technological aspects have been seen with the utmost focus (Theaker 2017). The company is always in favor of the innovation and has always been up to date with the contemporary trends of innovation (Baden-Fuller. and Haefliger 2013). They use the technology to spread their innovative designs to their customers through the social media. The people with the modernist mindsets for luxury and comfort will surely purchase their products instantly. Thus the innovation process through the use of technology will be the most important factor for their future success (Yüksel 2012).
Environmental
The environmental factors are very important things for this as well. They are working on using the bio-fuel products and presenting a pollution free world to the people. Walt Disney will look to promote the campaigns that will cater for the environmental safety of the world (Yüksel 2012).
Legal
The legal factors will be very much integral for this process as well. They should cater to fulfill all the legal issues within the constraints of the state (Kogan et al. 2017). If the company does not abide by the legal aspects it can even be able to ruin their reputation. They are very concerned about putting the legal things at its proper place (Padilla?Walker et al. 2013).
Five Forces analysis
Competitive rivalry
The competitive rivalry is very high for the company Walt Disney since the entertainment industry is flourishing all over the world. Many firms have come into this market. The competition in the industry has become very much intensified indeed. Many firms have produced high quality animated films and they have become quite popular as well. Some strategic management issues have also been noticed in this section as well. This will be a major challenge for the organization in the future (Khanna 2014).
Bargaining power of Disney
The switching costs for Disney are very low indeed. It will be quite easier for the target audience to shift from the Disney movies to movies produced by the other firms. The bargaining power of the customers is very string indeed. The price sensitivity of the customers is moderate and Walt Disney must go on to utilize this section. The company must think about the pricing strategies once again for their future success. Disney will have to retain their customers by contributing moderately to the intensification of the customers’ needs (Khanna 2014).
Bargaining power of suppliers
The total population of the suppliers is huge in terms of the needs of the customers. The number of the suppliers is abundant so it will be very much useful for the company to provide the customers with their desired products through the suppliers (Hitt, Ireland and Hoskisson 2012). If the number of suppliers was limited it could have affected the business decision in a wide manner. The varieties should not be moderate because it will affect the supply of the products immensely. The suppliers should be empowered to provide the best products with large varieties by following the modern trends.
Threat of the substitutes
The customers do have a good number of substitute options for Disney. The performance-to-ration factor has been very much important in this case since they will need to get rid of the threats for the substitute companies (Doz 2017). If the Walt Disney provides the large number of products with wide varieties it will impact positively on the strategic success of the organization.
Threat of the new entrants
The capital cost is very high and brand development costs are high as well. If the competitor firms can provide the customers with the various types of products and services at a lower cost it will surely be a threat to Disney. Disney is a huge brand all over the world and this will have a huge impact on the success of the rivals. The rival companies will find it very hard to compete with such brand like Disney.
Disney Business level analysis
The business unit that will be focused in this section will be the Disney movies. The Disney movies are regarded as the most incredible fantasy movies all over the world. Some of the best movies being produced by the Disney movies are the Sleeping Beauty, The Little Mermaid, Beauty and the Beast and many others. One of their greatest strengths is the display of the graphics for the movies made for the children. The Disney movies are always very fascinating to watch for the children of different ages. The various characters like Goofy, Donald Duck, Mickey Mouse, Ariel and many others are very approachable to the children (Gamble, Thompson and Peteraf 2013). The several marketing strategies have always catered to the success of the company in various ways.
Disney brand has always given the proper value for the ethical measures in the best ways. No unethical shows or movies have been shown by them that could hamper the childhood. The box office revenue of the organization is so huge and this has catered to the overall brand success of the company. The innovation strategy of presenting their films and make the advertising properly has been the most important thing for the catch the attraction of the target audience (Campbell, Coff and Kryscynski 2012). They have also catered to the needs of the target audience by providing them with the opportunities to view the best animated movies possible. The theme parks of Disney have also provided the support for the company as most parents take their kids to those parks for the purpose of amusement.
Disney strategic intent
As per the question of the strategic intent goes, Disney has signed the amended acquisition deal with 21st Century Fox for providing the better services to the customers. The acquisition had been made as for $38 per share in modes of cash and stock. The customer satisfaction has been their primary choice. The original businesses of the 21st Century Fox Entertainment will be the same as it was earlier as per the agreements (Gamble, Thompson and Peteraf 2013). This acquisition program will have a direct impact on the satisfaction of the customers. Both these companies have a great number of market shares and this acquisition program will place them way above their competitors. The entertainment business will get a huge boost. They had raised the bid for the acquisition of the 21st Century Fox much higher than their rivals Comcast. This had been one of their masterstrokes to capture the audience for the retaining of the customers and the increase in the number of the customers as well. The various TV shows, toys, theme parks and Disney merchandise have been the key things for the success of the organization (Campbell, Coff and Kryscynski 2012). The management issues will have to be decreased in order to maintain the proper and smooth operations of the organization. This acquisition of the Fox will lead the company to make the ir advertisements in a better manner and the production of their Disney movies also be done in the grandest manner of them all. This will surely lead to the strategic success.
Conclusion
As per the discussion of the paper, it can be concluded that Disney’s brand value will lead them to acquire the highest number of consumers in the entertainment industry. This will be the most effective thing for their strategic success. The company has also decided to make acquisitions of the 21st Century Fox for the better distribution of their films and better marketing. However, these things would be the most effective things for retaining of the customers. The external environment of the company suggests that they will need to comply to the legal guidelines of the country.
References
Baden-Fuller, C. and Haefliger, S., 2013. Business models and technological innovation. Long range planning, 46(6), pp.419-426.
Bernanke, B.S., Laubach, T., Mishkin, F.S. and Posen, A.S., 2018. Inflation targeting: lessons from the international experience. Princeton University Press.
Camisón, C. and Villar-López, A., 2014. Organizational innovation as an enabler of technological innovation capabilities and firm performance. Journal of business research, 67(1), pp.2891-2902.
Campbell, B.A., Coff, R. and Kryscynski, D., 2012. Rethinking sustained competitive advantage from human capital. Academy of Management Review, 37(3), pp.376-395.
Disney.com. (2018). Disney.com | The official home for all things Disney. Retrieved from https://www.disney.com/
Doz, Y.L., 2017. Strategic management in multinational companies. In International Business (pp. 229-248). Routledge.
Gamble, J.E., Thompson, A.A. and Peteraf, M.A., 2013. Essentials of strategic management: The quest for competitive advantage. McGraw-Hill/Irwin.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases: competitiveness and globalization. Cengage Learning.
Jurevicius, O., 2013. Pest & pestel analysis. Strategic Management Insight, 13, p.2013.
Khanna, D., 2014. Disney Movies Based On The Public Domain.
Kogan, L., Papanikolaou, D., Seru, A. and Stoffman, N., 2017. Technological innovation, resource allocation, and growth. The Quarterly Journal of Economics, 132(2), pp.665-712.
McAuliffe, R.E., 2015. Gross Domestic Product. Wiley Encyclopedia of Management, pp.1-1.
Padilla?Walker, L.M., Coyne, S.M., Fraser, A.M. and Stockdale, L.A., 2013. Is Disney the nicest place on earth? A content analysis of prosocial behavior in animated Disney films. Journal of Communication, 63(2), pp.393-412.
Theaker, A., 2017. What is public relations?. In The Public Relations Strategic Toolkit (pp. 17-27). Routledge.
Woodford, M., 2012. Inflation targeting and financial stability(No. w17967). National Bureau of Economic Research.
Yüksel, I., 2012. Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), p.52.
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