Routines and Capabilities of Walt Disney - Essay Example

Routines and Capabilities of Walt Disney Introduction The Walt Disney Company is one of the largest media and entertainment corporations in the world. The company started as a cartoon studio in 1923 (Walt Disney Company, 2009). Today, together with its subsidiaries, it is a diversified worldwide company. It has operations in business segments, namely, media networks, parks and resorts, studio entertainment, and consumer products (Walt Disney Company, 2008). The paper centres on the parks and resorts business unit of the company. The theme parks and resorts continue to proudly provide quality entertainment for every member of the family, across America and around the world. The businesses in the parks and resorts segment generate revenues predominately from the sale of admissions to the theme parks, room nights at hotels, merchandise, food and beverage sales, sales and rentals of vacation club properties and vacation packages. The paper specifically evaluates the organisational resources, capabilities and routines of one of the famous theme parks owned and operated by the company, Disneyland Park and Resort in Anaheim, California. Organisational Resources The resources of Walt Disney are the firm’s most fundamental characteristics which are their tools and their personality. These are the individual assets of the firm such as items of capital equipment, employee skills, brand names, and the like. (Sadler, 2003) The resources are firm-specific assets that are useful for creating a competitive advantage which few competitors can acquire easily. A company that has resources that are valuable, rare, costly to imitate and organized to exploit resources, then the company can sustain its competitive advantage (Daft & Marcic, 2008). Organisational resources can be classified into tangible and intangible resources. Tangible resources include cash, financial assets, land and capital equipment. Intangible resources include brand reputation, technology, employee skills and goodwill. Like most firms, Walt Disney recognises the intangible resources as the most valuable and most strategically important items. They invest in training and development of workers, research of new technologies, and marketing its brand. Financial Resources At the end of 2008, the whole Walt Disney Company has generated $37.8 billion in revenues from its four business units. The parks and resorts segment has contributed $11.5 billion to the total revenues of the company (Walt Disney Company, 2008). Capital expenditures for theme parks had reached $793 million in 2008. These expenditures are principally for theme parks and resort expansion, new rides and attractions, recurring capital and capital improvements. The company’s financial condition is strong and provides adequate resources to fund the operations of all it theme parks as well as support future capital expenditures for expansion and developments of new projects. Physical Resources The company owns 461 acres of land in Anaheim, California. It has two theme parks situated in the area, Disneyland and Disney’s California Adventure. In order to attract visitors for extended stay, the company had built three hotels and Downtown Disney, which is a retail, dining and entertainment district. Disneyland consists of Main Street USA and seven principal areas: Adventureland, Critter Country, Fantasyland, Frontierland, New Orleans Square, Tomorrowland and Toontown. Disney’s California Adventure is adjacent to Disneyland and includes four principal areas: Golden State, Hollywood Pictures Backlot, Paradise Pier and “a bug’s land”. The three Company-owned and operated hotels are the 969-room Disneyland Hotel, the 481-room Disney’s Paradise Pier Hotel and Disney’s Grand Californian Hotel & Spa, a deluxe 745-room hotel located adjacent to Disney’s California Adventure. These areas include rides, attractions, shows, restaurants, merchandise shops and refreshment stands. Human Resources Walt Disney Company employs more than 150,000 full time staffs, expending billions in payroll and employee benefits each year. The theme parks and resorts segment has provided over 60,000 jobs (Walt Disney Company, 2008). These jobs include entertainers, engineers, marketers and other essential jobs for the continued operations of the company. The corporate governance quotient of the company is better than 97.8% of Standards & Poor 500 companies as well as 100% of media companies (Yahoo Finance, 2009). The human resources are the source of the company’s competitive advantage. New employees are hired with care, and continuous efforts are made to improve productivity. Employees are trained to support more sophisticated competencies of the company. (Porter, 1990) Technological Resources Disneyland has recognized that technologies are very important to the company and the guest. Thus, Disneyland developed lots of new technologies in order to attract customers to come, stay longer and spend more. The theme parks utilise state-of-the-art developments in ride technologies, theme concepts and attractions. Exploiting the benefits of the Internet, booking online is one of the most popular ways of reservations and has been used widely by customers. Disney also began to use new technology that satisfies guests by recording a caller’s information and interest. According to Jay Rasulo, president of Walt Disney Parks and Resorts said that Disneyland has announced a five-year alliance with Microsoft, HP, Life ware and home builder Taylor Morrison to showcase "integrated digital technologies for the home" in a new 5000+ sq ft. attraction dedicated to the future but rooted in the parks past. (Smith, 2009) Image and Reputation Disneyland is a unique place that can savour ultimate fantasy. Moreover, Disney has strong reputation for entertainment. The corporation is very unique because of the cartoon characters they withhold. Disneyland is an environment in which architecture, landscaping, characters, food, merchandise and the costumes the employees all blend together in one harmonious whole. All that matters is that it feels perfectly natural, as long as you could almost believe like you’re somewhere else in magic. Meanwhile, everything experienced in Disneyland is special and memorable that it has its own culture, systems and rules. Its own culture is also tightly related to everyone who loves Disney cartoon characters and every single story. Organisational Routines and Capabilities Organisational capabilities refer to the firm’s ability to achieve particular tasks and activities. It is by working together that resources perform productive tasks and establish competitive advantage (Sadler, 2003). The organizational capabilities are a subset of resources that enable the company to take full advantage of full resources. They are the result of complex pattern of coordination between number of employees offering a range of specialist skills and knowledge as well as integrating them with other resources of the firm (Norman & Ramirez, 1993). Organisational routines describe the patterns of coordinated behaviour within firms which are repeated over time (Nelson & Winter, 1982). Marketing According to ‘5 Secrets to Walt Disney World’s Success’ (Drew, 2006), Walt Disney has five marketing strategies which make Disney successful in business. These secrets are selling more to existing customers, expending marketplace, continuous promotion, improving or adding its offerings and tracking business. First of all, Disney knows current customers are the easiest customers to up sell and therefore Disney takes every opportunity to sell more to existing customers. Secondly, Disney has attempted to expend their business internationally. Tokyo, Europe and Hong Kong Disney are the examples. Thirdly, Disney advertises continuously on TV, in print publications, on the internet and even direct mail to deliver their message to audiences around the world. Fourthly, Disney tries to be continuously growing, building, expanding and improving. Disney has improved their existing theme parks, built new theme parks in new marketplaces and created new products to sell. Employee Skills Disney’s human resource system underlines four main factors for their employees and Cast Members (who are dedicated to maintenance and engineering such as horticulturists and painters) which are talent acquisition, learning & development, employee services & events, and communication. The aim for Disney’s human resource system is to reinforce its commitment and responsibility to the people in the organisation. Firstly, Disney’s human resource system is designed to employ high talented people for its organisation. Secondly, Disney Company created an innovative learning environment that encourages employees to learn and develop in engaging and empowering ways. Accordingly, the company provides a menu of training programs and learning opportunities, designed to build the capabilities of its employees and Cast Members around the world. This program includes Disney programs, new hire orientation, an executive development program, Disney ethics, integrity and diversity programs, professional development, management/leadership development and computer skills. The company also provides educational reimbursement for full-time employees and Cast Members. Technological Innovations Disneyland has worked hard to be an innovative organisation in the entertainment industry in order to keep up with high guests’ standard. According to Digital and wireless innovation at the Walt Disney Company (2003), the Walt Disney Company has been known as an innovator in the entertainment industry. Walt Disney introduced the idea of feature length cartoons to Hollywood and pioneered the use of sound as well as Technicolor to enhance these cartoons. Mickey Mouse and other animated features were created to establish Disney as one of the premier entertainment companies in the world. Disney’s continuous effort on creating and developing its online environment created Disney’s first website, Disney.com. In 1999, Disney then decided to compete head-on with other web portals and launched the Go Network, Go.com. It became a web mega-portal that integrated search capabilities, entertainment, content and news. It provided broadband access to Disney’s archives of films and cartoons and other offline properties. Bibliography Daft, R., & Marcic, D. (2008). Management: The New Workplace (6th Edition ed.). South Western, Australia: Cengage-Learning. Drew, A. (2006, May 11). 5 Secrets to Walt Disney Worlds Success. Retrieved November 8, 2009, from DEMC: http://www.demc.com/artman/publish/article_130.shtml Nelson, R., & Winter, S. (1982). The Evolutionary Theory of Economic Change. Cambridge: Belknap Press. Norman, R., & Ramirez, R. (1993, January-February). From Value Chain to Value Constellation: Designing Interactive Strategy. Harvard Business Review . Porter, M. (1990). New Global Strategies for Competitive Advantage. Planning Review; , 18 (3), 4-14. Sadler, P. (2003). Strategic Management. Sterling VA: Kogan Page Limited. Smith, T. (2009, October 27). Mobile Magic – First Disney Parks Mobile App Details, Screen Shots Unveiled. Retrieved November 8, 2009, from Disney Parks Blog: http://disneyparks.disney.go.com/blog/2009/10/mobile-magic-first-disney-parks-mobile-app-details-screen-shots-unveiled/ Walt Disney Company. (2008). Annual Report. California: Walt Disney. Walt Disney Company. (2009, March 9). Company History. Retrieved November 8, 2009, from The Walt Disney Company and Affiliated Companies: http://corporate.disney.go.com/corporate/complete_history_1.html Yahoo Finance. (2009, November 8). Profile for Walt Disney. Retrieved November 8, 2009, from Yahoo Finance: http://finance.yahoo.com/q/pr?s=DIS Read More