Disney case study - The Walt Disney Company-a case study...

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The Walt Disney Company-a case study The Walt Disney Company was funded in 1922, and has became a world leader in family entertainment. Today, the company is operating on a multinational level, and has over 58,000 employees world wide, and over 189,000 share holders. What are the factors that contributed to the company's successes and failures on its way towards becoming the World's largest family entertaining company? I would like to answer the stated question by analyzing the following four factors; (1) Disney's industry in relation to Porter's Five-Forces Model, (2) the strengths and the weaknesses and the opportunities and the threats that the company is facing (a SWOT analysis), (3) the corporate-level strategy and finally, financial trend for the years 1989 through 1991. In addition, I would like to deliberate on the strategic changes and tactical changes that are needed to be made at the Walt Disney Company. Porter's-Five-Forces Model focuses on the external environment that the company has to be able to cope with. The first force to be discussed is the threat of new entrants. Since the Disney company has been able to find a very distinctive niche in the industry, the entrance barriers are relatively high. The company has been able to grow over a long period of time, and has developed from within the departments of Research and development, marketing, and finance. By relying on past experience, company officials know to a large extent what the target customer wants. As Disney pretty much dominates the family entertainment market, it will be very difficult for such a new organization to develop brand recognition/identification, and product differentiation. Disney has focused of market diversification for years and the company covers a wide array of products and services. Being a market leader has made it possible for the company to practice effective economies of scale in production. For example, over 500,000 copies of the Videocassette "Pinocchio" was sold in only two months, and has 20-30 million visitors to its theme parks every year. In addition, extremely large amounts of capital investment is required for new entrants into the industry. The capital requirements are extremely high. For instance, Disney spent USD3.6 billion in its European theme park (Euro Disneyland). Only very large companies can meet such large capital requirement. Lastly, the government policy towards the industry appears to be very favorable. The French government invested USD 1.2 billion (40%) in Euro Disneyland, provided public transportation facilities, provided a large tax relief (from 18.6% to 7%) on the cost of goods sold. The bargaining power of customers is high in the service and in the entertainment industry. Since a large number of customers are needed to make Disney's operations run smoothly, the customers have certain powers. For instance, if the price on a particular home video is too high, customers may be reluctant to spending the money needed to purchase the product. Another example is the entrance fee charged at Disney's theme
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parks. It is stated in the case that the maximum amount of money that customers are
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This note was uploaded on 06/06/2008 for the course MARKETING 02 105 taught by Professor Gierl during the Spring '08 term at Augsburg.

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Disney case study - The Walt Disney Company-a case study...

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