International Business of Walt Disney - Case Study Example

International Business of Walt Disney Abstract Walt Disney is an American International company with branches across the globe. It has branches in the United States, Europe, and Asia. The company is on a globalization mission focusing on emerging markets such as Latin America, Middle East, Africa and Russia. On the other hand, the company has been very successful by utilizing its media presence and by acknowledging that cultural values and attitudes influence the success of a company in the international market. However, its success had not been smooth due to certain failures like assuming they know a new market better. On the contrary, the study focuses on analyzing the organization, marketing, history, and culture of the company using relevant theories to support the arguments. It also explores the problems it encountered by venturing into the international market. History of the Walt Disney Company The Walt Disney Corporation is a prominent American diversified transnational entertainment and media conglomerate. Its headquarters is in Burbank California. It was the establishment was done on October 16th, 1923 by the Disney brothers Walt and Roy as a small cartoon studio. The enterprise struggled over years of unproductive creations; however, its turn-around came after the introduction of Mickey Mouse, the official symbol of the corporation. Disney, now under the leadership of CEO Robert Iger, is one of the leading entertainment companies globally with approximately 166,000 personnel and annual returns approaching the $45 billion spot (Sutcliffe & Disney, 2009).For over eighty years, Walt Disney has provided entertainment for the globe through its theme gardens, resorts, trips, movies, TV shows, radio programs, and souvenirs. The enterprise went public in 1940 and was reincorporated under its present title in 1986 and extended operations and in addition initiated divisions intensive on drama, radio, music, publication, and online media (Sutcliffe & Disney, 2009). The objective of The Walt Disney Corporation is to be one of the global prominent producers and sources of entertainment, as well as information. Using its collection of brands to distinguish content, facilities, and consumer merchandise, the company seeks to develop highly artistic, inventive as well as lucrative entertainment involvements and associated products on the planet (Ball, 2012). Globalization of Walt Disney Walt Disney Goods and Services are present globally in diverse forms and fields. Disney has focused on global growth in the last few decades. As a global trademark, Walt Disney International offers oversight of the firm’s activities outside the United States and targets to enhance the corporation’s globalization to certify its local relevance to the global level. The enterprise’s recent attention has been on instituting the basis for long-term development in the evolving markets of Latin America, Russia, and the Middle East. Recently more emphasis positions itself in Europe, Japan, Asia, and Africa, where the business is properly established. As Walt Disney continues to grow, they hope that the failures they experienced in Paris and Hong Kong would lead them to pursue new measures that would promote their growth (World View, pg. 97). The organizational structure of Walt Disney With regards to the Organizational Structure, Walt Disney operates using a tactical business. It is an organizational structure that contains five separate entertainment sections. The Walt Disney Firm’s globally famous consumer products include Disney, Pixar, ABC, ESPN, Marvel and Lucas Films (Sutcliffe & Disney, 2009). Disney’s Media Networks segment under the organizational platform comprises of local television broadcast and production and distribution procedures, local television stations, transnational and domestic cable systems, local radio transmission systems and stations and publication and digital operations. The Disney/ABC Group includes Disney’s worldwide entertainment and news television assets, owned television channels and radio and printing businesses. Disney/ABC Networks develops programming and license benefits for all of Disney’s companies. Disney also creates and dispenses live action and cartoon television show under the ABC Production Workshops label. ABC Workshops produces and distributes entertainment content across program and cable and digital platforms (Ball, 2012). A couple of Disney’s key TV systems; ABC and ESPN, have an agreement with Cox Communication where the firms then offer hit programs and football games upon demand. In this accord, Cox, the country’s third leading cable dealer, agreed to discontinue the fast forwarding of advertisements to obtain access to the content (Sutcliffe & Disney, 2009). Disney considers studio entertainment as the most discernible operation within the Corporation. Disney creates live action and cartoon, through to video, musical programming, and live phase plays. Disney offers the rights to develop and dispense feature movies to third party workshops. The company earns a certifying fee on the films because the third-party workshop suffers the cost to produce and distribute the movie. Disney’s cable system group offers local programming networks and certificates television programming both locally and transnationally. Most of the profits come from changes made to satellite and telecommunication service sources operating on multi-year contracts. The program supports Disney to sell time for advertisements (Ball, 2012). The company’s Interactive Media section produces and delivers entertainment carrying Disney brands across social media platforms, mainly via betting and online platforms. The division functions as the online, mobile and social media opening. The company’s interactive Games produce and dispenses console, online and portable games globally built on Disney features. They also develop online and collaborative games for social websites and Smartphone boards (Sutcliffe & Disney, 2009). Teenagers are switching to gaming earlier; for this reason, video games market is rising. In 2010, Disney acquired Play-dom, Inc., one of the leading designers and producers of online interactive games. The initiation was set to improve the brand’s formerly irrelevant presence across interactive media avenues since they became an essential content of interactive entertainment. The company’s online operation creates and distributes content carrying Disney brands online services mainly meant for family entertainment. The online platforms include Disney Family Network and Disney.com. Disney Online develops lifestyle and childcare websites, online fundamental worlds for worldwide viewers and entertainment content for the Website (Sutcliffe & Disney, 2009). In 2006, a creation of a new division of the online sector initiated upon the purchase babyzone.com, kaboose.com, and six other parent sites. The company recently launched Disney Xtreme Digital, an interacting site for children under 14 years. The platform contests against websites such as MySpace. On the other hand, Disney has invested heavily in the hospitality and tourism industry. It has created parks which attract tourists as well as families and their children. They have hotels that offer accommodation and restaurants for their visitors (World View, pg. 96). Such an investment is a source of income to the company hence its continuous growth. Strategic Management Plan As people progressively use their media over online platforms, the company made a twist its model to adjust to demand; customer expenditure on DVDs and household videos fell by 2% in the previous year. Disney lately began dispensing its content through different means, for instance, video on demand and online and television programs structured for iPod users. In 2012, it retailed exclusive streaming privileges to Netflix to show Disney programming. But then, Disney’s CEO says they are enthusiastic to work with new Internet TV providers (Sutcliffe & Disney, 2009). Even though, supply through the new channels comes with greater risk of piracy, the relocation of Disney’s primary younger viewers to the Internet makes finding alternative means to reach out this demographic dire (Sutcliffe & Disney, 2009). Disney’s main goal is being achieved in an operational manner by one of their subsidiaries in the film industry known as Lucas film. Disney has committed $1 million to support Star Wars: Force for Change, and will raise funds for the United Nations Children’s Fund’s (UNICEF) projects. The impacts that these goals will have on the company's stakeholders is both positive and negative. Employees, contractors, and customers will have the benefit of having a positive impact on the environment because they are invited to join Disney in the environmental and charitable projects. The shareholders will also benefit from increased profitability as the company’s public image is improved. Factories, suppliers, distributors, and retailers will all be negatively impacted by Disney’s goals as they must also reduce their carbon footprint upon the planet through indirect pressure applied by Disney. It is necessary for these stakeholders also to become responsible stewards of the world's resources as well as leaders in charitable giving if they want to continue doing business with Disney (Ball, 2012). Partnering with local companies in their global market has proved effective in penetrating the market. For instance, in Japan, they partnered with a local company that made them learn about the local knowledge. “Disneyland has therefore been successful beyond forecast” (World View, pg. 97). Problems faced by Walt Disney The main problems encountered by Disney problems was financial and cultural errors (World View, pg. 97). Their assumption of knowing their international markets were ineffective leading to losses. For example, in Europe, Disney assumed that all “Europeans would demand cheap fast foods available in self-services” (World View, pg. 97). It was a grievous error because it led to low attendance and high losses (World View, pg. 97). Disney’s opponents differ in every section of the business. However, in the Media System section, Disney contests openly with Time Warner, Inc. as well as, News Corporation. Time Warner is a core challenge to Disney and involves of three parts: Cable, Film Entertainment systems, and Printing. It also owns Time Inc., Warner Brothers, and TBS Nets. Like Time and Disney, News Corp is an expansive international media and entertaining firm that operates in numerous segments. The Corporation also faces rivalry from NBC Universal that is owned by Comcast. Although the Walt Disney Corporation is an entertainment frontrunner, the other contestants pose conclusive difficulties since they are all diversified corporations with a compact existence in the global market. In numerous occasions, Disney deals with fresh competition by buying and incorporating emerging participants. Disney made purchases of companies such as Pixar in 2006 since it was like an extremely commercial animation giant. However, with the growing achievement of ESPN, additional stations are drawing into the sports industry as competitors. If this tendency remains consistent in the future, according to anticipations, it can raise programming charges (Ball, 2012). It could appear that Disney’s objective audience is principally children, but then with its infinite properties Disney’s products hit the full scale of viewers from pre-schoolers to adults. Disney merchandises comprise of television programs, journals, books, musical records and films (Sutcliffe & Disney, 2009). Disney global channels consist of 94 teen and family entertainment stations available in 169 nations. The ABC Family is an assortment of television series and films that target teenagers and parents. Disney’s Consumer Products section includes Global licenses, producers and retailers who enterprise and sell a range of products carrying Disney characters. Merchandise Accrediting Disney Consumer Products is the corporate licensing division of Walt Disney and its associates. Disney provides licenses for retail traders of dolls, clothing, home decoration, stationery, fittings, food, footwear, and electronics. These include numerous major brand titles for which payments are made, comprising Marvel assets, Spiderman, and Iron Man. The licensing trade associates with five trademark priorities (Ball, 2012). Disney Publishing Worldwide, prints books, journals, and digital merchandise in 85 nations and 75 dialects. The corporate prints a variety of teen magazines and books internationally, mostly allied to Disney’s characters. Disney Publishing Worldwide also dispenses digital merchandises like eBook names and unique apps. This division includes Disney Book Group in the United States and Disney Libri in Italy. Disney English is Disney Publishing World wide’s English language education corporate, that consist of Disney English learning points in China and a global retail-licensing plan (Sutcliffe & Disney, 2009). Marketing plan of the Walt Disney Company The Disney marketing chain debuted in 1987. Disney possesses and operates various stores all over the world and online. It is the marketing outlet of Disney client Merchandise, the business section of Disney and its associates, extending the trademark to product affiliation merchandise. Administration Strategies Media incorporation is one of the unique aspects of the movie industry over the previous years. Disney has made progress in its investment both locally and in the global scale through commercial incorporation. Like their contestants, Disney has belligerently acquired other film organizations using their massive capital resources. To substitute lost profits and respond to business changes, movie studios have shifted their critical focus from display quality and content to circulation, licensing, advertising and marketing arrangements (Ball, 2012). Disney unleashed a massive marketing plan by ensuring that it increases the number of seats in its parks. More seats meant a higher attendance by visitors be they local or international. In Hong Kong, they increased more seats because research showed that Chinese people seat long while taking their meals than Americans (World View, pg. 97). Walt Disney possesses numerous studio entertainment outlets, consumer product corporations, and media systems. Disney explores smooth integration to sponsor products, obtain extra interest and isolate itself from contestants. In addition, the company continually develops outside the family entertainment scope, to several other conventional outlets. Walt Disney’s numerous sub-enterprises allow it to strategize, produce, publicize, and dispense all of its goods on its own, without depending on other corporations’ services, thus better monitoring quality, content and charges. Association amid business segments with the same company culture & significance make the communication and manufacture more resourceful. Through the businesses owned by Disney, it can produce as well as distribute its products at the same time. Additionally, Disney generates media that extends beyond one product into several other connections, for instance, online games that play off their article films. A significant aspect of its success is the cohesive nature of its products with interactions amid movie, television, theme gardens and resort setups (Ball, 2012). Diversification-Disney has been intensive on market modification for years. The firm covers a broad diversity of products and amenities Distribution-Via its licensing and advertising and diverse commercial outlets, when Disney creates a new brand, for example, a film character, it consistently capitalizes on the characters a while after it leaves the box office. Afore the movie exits the theatres, Disney already issues a streak of dolls and products via its stores and other channels. With respects to the Financial Situation, Disney has $80.5 billion of properties (E*trade). The corporation’s general revenue continues to increase yearly from 2008. Media Systems makes up the biggest part of the business financially (Ball, 2012). The primary sources of income for the firm stem from marketing spending, principally driven by the economy, and the existence of large-scale Television events. Disney’s accomplishment here is driven by the value of programming on its multiple stations and the audience magnitude. A steady source of returns also stems from associated charges for chain and satellite programming, and they are anticipated to propagate in practically any economic atmosphere. The company generates the maximum affiliate levies in the industry, fundamentally due to the reputation of ESPN (Sutcliffe & Disney, 2009). Market Performance Disney is a publicly thought corporation active on the New York Stock Exchange program using the icon DIS. The corporation has a robust balance sheet containing above $6.5 billion liquid cash, $80.5 billion in cumulative assets against just $37 billion in overall liabilities, leaving it with a net value of $43.5 billion (E*Trade). In addition to elevating its dividend each year for the past eight years, DIS has affected a share buyback plan to repurchase 400 million profits that has allowed it to maintain its quantity of shares exceptional (1.8 billion) equitably stable. Using company cash to secure corporate stock is seen as good for current stakeholders as it aids to reduce the supply of shares through raising the demand (Sutcliffe & Disney, 2009). The growth and success of Walt Disney Disney continues to grow to fresh markets and progress globally. In 2011, the business initiated a free-to-air Disney station in Russia, reaching over 40 million households, about 75% of Russian audience. The initiative is tracked by free satellite Disney station in Turkey, growing the audience from 1.5 million families in the nation to 11 million. The company also continues to exploit new prospective markets in India to become the country’s leading movie studio and Television producer and making it one of India’s leading newscasters reaching 100 million audiences weekly. This covenant also amplified Disney’s benefit in the digital broadcasting scope, which has been a lagging segment, with the addition of India games, a leading mobile gaming business in the market. There are currently 108 Disney Networks in 34 dialects reaching 426 million households in 166 diverse markets across the globe. With the stretched scope of the corporation’s associates around the planet, Disney and Marvel branded teenage television content is currently accessible in close to one billion homes (Sutcliffe & Disney, 2009). Another contributing factor to the growth and success of Disneyland; is that production managers realized cultural values and attitudes influence the acceptability of a new product in the market as well as new production methods (World View, pg. 96). This is why Disneyland Tokyo has been successful. Understanding the market’s culture is a breakthrough for the company hence, very effective. The initial tactical design in the wake of Disney procurement of Marvel Entertainment was to recover its growth in the long-term more quickly. On the other hand, Disney to a considerable extent relies on the revenue by way of advertisement; as a result, the entertainment business is not readily foreseeable. If there is a constant decrease in ad revenue, Disney’ results and investor enthusiasm may be dampened. Disney takes into account further existing factors and financial risk associating with the plan to safeguard a competitive edge and profitability (World View, pg. 97). For instance, the upsurge in piracy, for this reason, the company dealings are reliant on protecting its intellectual property. In addition, The Walt Disney Company is currently rated as having Conservative Accounting & Governance Risk. It then places them in the 91st percentile among all companies, indicating higher Accounting & Governance Risk than 9% of enterprises. The strategic initiative acquisition between Walt Disney and Marvel Entertainment attracts more teenage boys and young males instead of mostly appealing to female audiences. The acquisition crosses age, gender, geographic barriers, and culture drawing in larger audiences making the acquisition more promising by allowing Walt Disney, Marvel Entertainment, and shareholders to generate more profits and remain to be prosperous in the future. The purchase between Disney and Marvel Entertainment has had positive effects on the cost, which in turn will raise Disney’s and Marvel Entertainment value of their stocks and bonds. Disney safeguards the risks of the acquisition to protect profits, economic constraints, and Conservative Accounting & and Governance Risk indicating the company rates high when protecting risks (Sutcliffe & Disney, 2009). Walt Disney Company commits itself to shareholder involvement and collaboration as a means to enhance operational conditions in workshops. These shareholders have their anticipations, and Walt Disney Company is meeting their needs. For the workforce, the company offers fair salaries as well as benefits, productive framework and opportunity for career development. For the stakeholders, Disney provides timely premiums. For Disney’s present and future customers, they access a place of endless entertainment with favorable pricing (World View, pg. 96). With regards to the community, Disney is focused on the social welfare and growth by making fiscal as well as non-monetary contributions. Conclusion The Walt Disney Company has seen many adjustments, good and bad during its development and life of the business. After conducting the SWOT analysis, it is identified that Walt Disney Company is a well-recognized brand in the United States that operates its business worldwide. The firm has diversified merchandise, and services that are essential to increase consumer base, market share, and profitability. Even with Disney’s weaknesses, management continues to reduce its weaknesses and strengthen the company’s performance. As a result as the fund manager, Walt Disney Company would be a sound and positive investment opportunity. References Ball, D., Geringer, M., McNett, J.(2012). International Business: The Challenge of Global Competition. McGraw-Hill. Sutcliffe, J., & Disney, W. (2009). Walt Disney. Minneapolis: Lerner Publications. World View. (pg. 96-97). Disneyland: Success and Failures, One after Another. Read More