Business Strategy: Walt Disney - Assignment Example

Business Strategy: Walt Disney Part 1: Analysing Scenarios The Walt Disney Company is a notable investment established in 1923 by Walter Elias Disney. It has its headquarters in Burbank, CA. The company has a reputation in delivering seamless magical experiences to its customers, within all units of operation. The venture encompasses several units and services, both locally and in foreign markets. The company operates all its activities along the guidelines of its objectives, visions and mission. The company mission statement is that it should among the leading producers and providers of information and entertainment (The Walt Disney Company SWOT Analysis, 2013, p 2). Thus, the company uses its portfolio of brands in the endeavour to differentiate its content, services and consumer products. It seeks to establish the most creative, innovative and profitable experiences in entertainment and other related products in their field of operation in the world. The vision of the company aligns with the mission, as it supports the criteria for success of the company. The vision is for the company to work towards making the people happy. The values and ethics of Walt Disney are another essential and notable element in the success factors of the company (Goldsmith, 2013, p 5). The company operates on components featuring the following. The first is innovation, as it commits itself to innovation and technology. Second is striving to set high excellence standards and maintain them and the third being commitment to positive, inclusive ideas encompassing the entire family and entertainment for all ages (Ahmed, 2013, p 24). The fourth element is that it continues the tradition of timeless delightful and inspiring storytelling and lastly, is dedication to honour and respect decency, inspiring trust in the company. Thus, along these elements, vision and mission, the company continues to diversify its operations. Particularly, in china, the company is establishing itself as a reckoning figure in the industry it operates. However, with the developing trends in her industries, there are issues that necessitate formulation of strategic plan that will foster the company success in the next 20 years. Scenario 1: The emerging business discipline and values issues Walt Disney prevails in the element of innovativeness and technology advancements. The company is quick to keep the emerging technological advancements in track, to foresee the success of its units. For instance, the company introduced the strategic unit incorporating interactive platforms. However, due to challenges in the technical management of these interactive platforms, various issues are emerging within the operations of the company, leading to dire consequences. Recently, the company suffered image blow, which resulted in some partners and supporters withdrawing, leading to loss up to 5% funding, and decline of 4.7% in membership within China. This image effect resulted when some explicit content, which featured some sexual images and messages appearing on the interactive platforms of both children and adults. These are factors that impact the security of the customers, their decency and beliefs as a people. China consists of remarkably conservative and traditional people. Thus, most of the customers do not hold views as the Western people, a factor that can result in the failure of the company in the market when it allows such technological challenges to affect its operations. The fifth element of the ethics and values of Disney state its commitment to keep honour and respect decency, to inspire trust in the customers. Therefore, to incorporate an aspect of culture and diversity, the company already employs procedures such as editing the content made in the Western countries before airing the content and products in the Chinese market (Shankar & Carpenter, 2012, p 45). The violent and seemingly explicit content allowed in the Western country is not suitable for the China attitudes and values. Therefore, editing the content, and producing content specifically based for Chinese market, maintaining the decency and adhering to the strict regulations of production in China (Ingelsson, Eriksson & Lilja, 2012, p 7). However, it should create an addition of other strategic plans to protect her consumers and secure the interactive platforms from hackers and malicious people (Gerry, Kevan & Richard, 2009, p 120). It should establish guidelines for reviewing the security of its platforms to maintain a decent reputation in China. Scenario 2: Competition Competition is a universal challenge in all markets of operation for any business. Similarly, Walt Disney does not operate in isolation. Within the various operating units, other companies provide similar and related services and products. In china, there are other foreign and local facilitators of products as the company offers and with the increasing market prospects and opportunities in the country, the company will certainly face remarkable competition, a factor that it needs to consider prior to the happening. Such competitors include operating companies such as SeaWorld and Six Flags both, which are considering expanding into the China market. Moreover, local Chinese productions, although currently they are not as active threats, in the coming years, the will pose rising challenge to the business strategies of the Walt Disney Company (Vizard, 2013, p 6). Therefore, in view of these foreseeable competitive challenges that the company will encounter in the coming years, it is essential to employ mechanisms of addressing the challenges strategically. There are various proposals for Walt Disney to incorporate in stemming the prospective competition in the coming years. Although the company already has a brand name and considerable control over the market share in China, practices such as further diversification of the operations and marketing strategies will help to embed its brand name in control over the market (Robert, Bo, & Duncan, 2013, p 283). Moreover, looking at the financial analysis and trends of the company, it is observable that, in China, the profit margin though small is considerable from the establishment of diversified operating units. Therefore, the strength of the company is in diversification and innovation, such as the current plans to establish the Disney theme park in Shanghai, expected to generate $550 million in revenue, and attracting 15 million visitors. These strategic practices, encompassed with other strategic plans in other scenarios will put the company in competitively advantageous position, to concur the challenges that will arise from competition in the future. Scenario 3: Establishing partnerships and encouraging merging with other business The company, after its introduction in the China market, it sought support from the local media facilitators in the country to gain market ground. This strategy worked initially, resulting in the various Chinese based media groups’ adoption and airing some of its contents, including the English based lessons among other learning and entertainment content in the country. However, due to economic events and changes in the business environment the company establishment itself individually. It created platforms to provide directly the services and products to the consumers. Nevertheless, with the shifting dynamics in the marketplace, the company realizes the need to establish and grow support from the local media and other companies that support its vision and mission (Kjær & Slaatta, 2007, p 87). Therefore, in this endeavour, the company should seek to establish relational partnerships and mergers with other companies. This business strategy is notably substantial for Walt Disney, considering that both partners will gain from such establishments. For instance, the company sought to establish a merging relation with Shanghai Media GROUP Pictures (SMG Pictures) in order to collaborate in providing films and movies tailored specifically for the Chinese market. Such a strategic establishment will establish the foundation for existence of the company in the Chinese market for the next 20 and over years. The strategic move to merge and collaborate with local film and media companies will assist the company in meeting the film censorship guidelines in China, such as licence to air foreign content and the budget restrictions that seek to protect the local industry (Sehlinger & Testa, 2011, P 115). Therefore, in view of the expectations and projective plans of the company, planning for the next 20 years should incorporate the strategic move to encourage collaboration, amalgamation and partnerships with the local operating units that are in line with those of Walt Disney Company. Scenario 4: Advancing technological changes Technology in the production industry is a factor that will determine the future for most of the companies in the industry. Similarly, Walt Disney as a leading operator in the industry, it faces various and accumulating challenges due to the continuing evolution of technology (Michel & Yu, 2013, p 1). For case in point, in the precedent few years, the company developed operational failures due to the incorporation of advanced technology that saw increased scenarios of cyber crimes, including espionage, piracy and malicious hacking. These are but examples of the vast challenges that come with managing the evolving technical challenges in the industry. The company due to its traditional approach to issues, the management strategies and incorporation of traditional operations, it faces technological incorporation challenges in the production industry (Piercy, 2009, p 56). Although this is among the leading essential values for its success, technology presents, challenge that will determine the position of the company in 20 years to come. Therefore, in view of these emerging technological trends, and considering that China is among the leading technologically advancing countries, the company ought to adopt plans that incorporate the advanced technology in the units it operates. Such technological expectation includes owning the latest technologies in the film production industry, adopting the media structures for its media networks, incorporating technologically secure interactive platforms and technologically operational entertainment parks and resorts (Sehlinger & Testa, 2013, p 32). Moreover, security is a factor that advances with technology, thus, it should institute measures of securing the consumers from technological threats that will challenge the company within the coming 20 years. Part 2: Evaluating the strategic business units of Walt Disney and recommendation Walt Disney alongside its affiliates remains the leading diversified multinational family entertainment and media enterprise. It consists of strategically five business-operating units, which include media networks, studio entertainment, parks and resorts, consumer products and interactive media (Lilien & Grewal, 2012, p 112). The operational units constitute various transaction costs and management strategies that the company applies in its endeavour to remain competent and productive in the industry. Diversification is a remarkable strategy to employ in operating within the international markets. With reference to Porters Generic Competitive Strategy, the company applies both cost leadership and differentiation. The cost leadership allows the company to focus on low production costs, depending on the vast application of technology and economies of scale. The differentiation strategy allows the company success in the segmentation it operates. With respect to these aspects, Disney in China faces cost estimates in revenue amounting to $3.6 billion, with expected 15 million guests in its segment of parks and resort, with respect to the construction of the Shanghai Theme Park. The China market accounts for 27% of the market for Walt Disney. It enjoys brand reputation valued at $27.4 billion (The Walt Disney Company SWOT Analysis, 2013, p 4). However, with differentiation and cost leadership strategies, the company will increase its market share by 27% bringing its growth to above 55% by 2018. Thus, such strong product portfolio will grow the company to remarkable successes in years to come. Another aspect for consideration is the management strategy the company employs in its operations, in China. Transaction costs remain a leading tool for determining competition within the market of operation. Therefore, although diversification of products is a considerable factor of success for Walt Disney in China, there is a need to major on selected operating unit (The Walt Disney Company SWOT Analysis, 2013, p 7). This introduces the recommendation for applying differentiation focus in the firm. This will target the Walt Disney Studios segment in China. This segment accounts for roughly 7.5% of the share price of Disney in China, a factor that provides opportunity for future growth. The segment received boost from purchase of Marvel at $4 billion, giving it potential for growth. Therefore, with differentiation focus in the Studios segment, the company will grow with a margin above 8% bringing contribution of this segment to above 15%. Therefore, diversification as a strategic business trend is among the recommendations for the company. Further diversification, within the next five years in its operations, in China, is a factor for the success of the company (Kessler, 2013, p 29). The aspect of regarding each unit independently in the portfolio will enable the managers to perform effectively. The BCG model is among the effective tools to facilitate the managers in the process of diversification. It gives grounds for the company leadership to incorporate a vast continuum of investment needs. It will guide the managers in understanding the growth rate and market share. Further, the segment units require varying management styles, thus, adopting this guiding strategy will guide the leadership of Walt Disney towards future success. For instance, the Studio segment of the company in china incorporates the market ranging across all ages, the children, young and adults. It also features both genders, thus, this will tap into the vast population of China, growing the market to over 20 million customers annually (Robert, Bo, & Duncan, 2013, p 286). This is relative share of the market, constituting over 20% of the total market. The expected growth rate yearly is 6.5%, which means a further potential growth of up to 35 million customers annually in five years to come. Thus, the revenue proportion from this segment will grow, from the mark of 7.5% to over 15% of the total company revenue annually. This guidance to investment will foster the company growth in China within stipulated period of achieving set goals. Bibliography Ahmed, SU 2013, ‘What can we learn from Mickey Mouse. (The Safer Campus)(Walt Disney Co.’s management principles)’, College Planning & Management, 7, p. 24, General OneFile, EBSCOhost, viewed 1 April 2014. Gerry, J, Kevan, S, & Richard W, 2009, ‘Fundamentals of Strategy’, Financial Times, Prentice Hall. Pearson Education Limited. Goldsmith J, 2013, ‘Disney high on Iger: bold strategy earn topper $40 mil. (Walt Disney Co.’s Robert Iger)(Brief Article)’, Daily Variety, 10, p. 5, General OneFile, EBSCOhost, viewed 1 April 2014. 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