Disney Case Analysis

The Walt Disney Company Analysis

The Walt Disney Company is one of the leading players in the entertainment industry in the US. Its units and projects are also present in Europe and Japan. The company successfully operates in the spheres of production of films and TV shows, the international development of the Disney brand, and the creation of theme parks that are known worldwide. At the same time, Disney faces serious strategic issues that accompany it due to the specifics of the area of its operation. There are several approaches to the solution of these issues, which include the implementation of the big data methodology and the production of a new type of product, namely TV series.

Strategic Issues of Disney

The Walt Disney Company, which was established in 1923, is one of the leading businesses in the sphere of entertainment in the world. During its development, the company introduced various entertainment goods and services to the market. The company’s diversified business structure allows the enterprise to limit the possible risks associated with the conduction of business operations at different venues. At the same time, the case of Disney shows that diversification is not the universal method that can help a big company prevent all financial problems. To reach its current state, the company had to devise and implement a range of strategic issues that remain relevant nowadays.

Disney’s main strategic issue is defined by its sphere of activity. Being an active player in the entertainment market, the company should strive to offer its customers a totally unique and creative product. It is the only way for Disney to achieve customer retention and competitive advantage in the industry. The reason for such a conclusion is that in the entertainment industry, the level of creativity can be associated with the level of quality. In Disney’s case, one of the reasons for the decline in the development was the lack of employees who were ready to offer a fresh perspective and new ideas. For example, the crisis after the death of Walt Disney was associated with the lack of creativity among the personnel (Rukstad, Collis, & Levine, 2009, p. 4). Since a large part of the company’s revenue comes from the distribution of films and media network (Rukstad, Collis, & Levine, 2009, p. 15), the creative approach to the developed products becomes important. The position of Michael Eisner, the former Disney’s CEO, on the necessity to improve the creativity of the products proves this argument (Rukstad, Collis, & Levine, 2009, p. 4). For example, when Disney failed to generate income through creative products in the period of 1983-1991, it managed to profit from amusement parks (Rukstad, Collis, & Levine, 2009, p. 15). At that time, the revenues from theme parks overwhelmed the other sources of profit significantly. In its contemporary state, the company’s revenues cannot be limited by the income from theme parks. Consequently, the company should search for the opportunities to improve the attractiveness of its projects and try to design innovative products.

Another strategic issue that affects the performance of Disney is the level of its product profitability. The enterprise’s growth was facilitated by its success in the production of popular TV shows and movies, the costs of which were relatively moderate. Disney established itself as the company that can create moderate-budget films and cartoons that are in high demand. For example, Disney achieved significant success due to its films in the1980s. The main problem here is that it is frequently difficult to predict the level of product attractiveness. In case the company produces a high-budget film or show that does not gains popularity, Disney will face losses that will negatively affect its financial state. Such a situation becomes possible since the management made a decision to introduce the company’s products to foreign markets in an attempt to increase the popularity and profitability of the brand (Rukstad, Collis, & Levine, 2009, pp. 11-12). The lack of knowledge about the cultural and historical specifics of certain foreign countries can lead to the failure of the products abroad. For example, such movies as Ellen and Aladdin caused perturbation among Christians and Arabs respectively (Rukstad, Collis, & Levine, 2009, p. 13). Therefore, it is necessary for the Walt Disney Company to integrate customer preference analysis into its strategic management system.

The third significant issue that impacts the Walt Disney Company’s operations is the high diversification of its products. Diversification itself does not contribute to business risks, but the associated factors negatively affect the company’s performance. One of them is the presence of contradictions among the divisions engaged in the development of various commodities. In such conditions, it becomes difficult for the management to create the synergy atmosphere among the employees. The fact that the ABC Company began to experience problems after Disney had purchased it proves this. The leadership of ABC did not manage to lead a constructive dialog regarding its functions with the leaders of Disney, which contributed to the failure of some perspective projects (Rukstad, Collis, & Levine, 2009, p. 9). Although the company undertakes serious actions to improve the synergy, it seems that more effective decisions have to be made. The failure of one division of the enterprise may not only reduce the annual revenues of Disney but can also damage the reputation of the brand as a whole.

Alternative Courses of Action

There are several alternatives that can minimize the negative effects of the existing strategic issues on the Walt Disney Company. Regarding the issues of the company’s products creativity and profitability, particular alternative decisions can contribute to the solution of both of these problems. Since the creativity of the goods is the main factor of their profitability in the sphere of entertainment, the company should conduct a thorough customer preference analysis. The times when TV and film studios found it challenging to identify the current trends in the society passed. A scientific approach makes it possible to analyze the preferences of the audience. This method is referred to as the big data analysis methodology. It allows researchers and managers to evaluate the existing trends in the society according to ample statistical data on the activity of the population in the Internet, at work, and in personal life. Internet surveys and other tools collect all the necessary information about people every day. Therefore, Disney can effectively use these data. The knowledge about the interests and hobbies of various categories of people can help the company to provide goods and services that could be attractive to specific categories. Such technology is already being used by such big companies as Google and Facebook (Grassegger & Krogerus, 2017). This approach helps to form the psychological portrait of the potential auditory and create a TV show or film according to the target audience’s preferences. The usage of big data analysis technologies is not as expensive as it is effective. The implementation of this technology can also help to study the relationships between employees and solve the issue of synergy. Information about Internet users allows to employ the services of contractors to collect and process data. Even if Disney incurs considerable expenses in the process of the conduction of the big data analysis, it will be worth it (Savitz, 2012). A limited staff of experts participating in such a project allows achieving the desired result without prejudice to the company’s finances.

Another decision that can contribute to the creativity of the personnel and the attractiveness of the brand is the orientation of the company on TV series. Television series are currently popular in the world. The number of existing series is increasing every year, and their audience is constantly growing as well. For example, the most successful contemporary project, HBO’s “Game of Thrones”, achieved global popularity and is recognized as one of the most profitable TV projects of modernity (Ingram, 2015). The secret of such financial success, despite the high costs of episodes’ production, lies in the high revenues from the media network, on-demand viewing, and streaming presentation services. Thus, the development of a high-quality product that is based on an appealing scenario, combined with the contemporary broadcast technologies, can be a catalyst for the financial growth of Disney. However, at the same time, the company will have to find the niche in the market, as well as develop a unique scenario and concept of the series. The conditions of high competitive rivalry in this sphere will require Disney to thoroughly consider and design such a project.

Both of the aforementioned alternatives have potential to improve Disney’s position, but their realization can require significant investments, as well as the need to accept change and introduce innovations. At the same time, the simultaneous implementation of both proposals can be quite difficult. The TV series project will definitely require the implementation of the big data management project, since the management will analyze customer preferences to develop a creative and attractive scenario of episodes. Therefore, the realization of the alternatives should be conducted in the form of a hierarchical order, in which the big data analysis system is integrated during the first stage, while the series project follows it.

The Potential Course of Action

From the point of the alternatives discussed above, it is quite easy to define the potential plan of their realization. The project of big data management tools implementation has the most potential for the company at its current development level. The project may help Disney to solve the issues of developing creative products and improving their profitability through the study of customer preferences. At the same time, such an approach allows to study Disney’s internal climate, providing solutions for the issue of operational synergy. In the conditions of the growing interest to foreign markets, Disney will definitely require an innovative approach to the study of cultural and economic conditions of foreign societies. The project of big data analysis will help the company to find solution for most of the described strategic issues.

Regarding the alternative of TV series production, the company will have to analyze the current trends in the society in order to develop an optimal series idea. In addition, the necessity to adapt its activity to the conditions of the highly competitive market will force the company to find new approaches to the organization of production activities.

Conclusion

The specifics of the entertainment industry define the strategic issues that affect the Walt Disney Company’s reputation, income, and performance. In such conditions, the problem of the provision of a creative and profitable product becomes one of the main tests for the business. Disney also faces the issue of cooperation between the segments of the diversified production system. In this case, the methodology of big data analysis becomes useful for the company in studying its internal and external environment. The production of a new TV series could help the company boost its income, increase reputation, and retain customers.