The Walt Disney Company:

Its Diversification Strategy

in 2012
Overview
I. Company Profile
II.SWOT Analysis
III.External Analysis
a. Macro Environment Analysis
b. Micro Environment Analysis
IV. Current Status
Walt Disney Company
Largest media conglomerate in the
world in terms of revenue
Founded on October 16, 1923, by Walt
and Roy Disney as the Disney Brothers
Cartoon Studio
Business Units:
Media Networks
Parks and Resorts
Studio Entertainment
Consumer Products
Interactive Media
The Mission Statement of The Walt
Disney Company
The mission of The Walt Disney Company is to
be the worlds leading producers and providers
of entertainment and information. Using our
portfolio of brands to differentiate our content,
services and consumer products, we seek to
develop the most creative, innovative and
profitable entertainment experiences and
related products in the world.
Geographic Reach
Disney has properties in the US and
Canada, Europe, Asia, Australia, and
Latin America. The company gets about
77% of its revenue from the US and
Canada; followed by Europe (12%); Asia
Pacific (8%); and Latin America and Other
(3%).
Strategy
Distributing its content through
multiple channels.
Ancillary products, mostly aimed
at children.
Expanding its existing and new
businesses, including investments
in the international expansion of
business and in investing in new
business lines.
SWOT Analysis
Strengths
Diversified business
Disney has grown throughout the years. It started from a small
producer of animated series during the 1920s to its very popular
and established image today. It is one of the largest media and
entertainment company worldwide and the company has its
theme parks and resorts, media networks, studio entertainment,
consumer products, interactive media and cruise line.
Established brand reputation
Disney brand is known throughout the world. The company is
famous for its exemplary image and it caters to all ages, from kids
to the kids at heart. It has built its image for many, many years
already through their cartoons, movies and theatrical releases.
 Localization of products
Disney movies show universality. They have the Disney Character
Voices International wherein it is responsible for the translation
and dubbing for all Disney productions. Here are some of the
languages used besides English in Disney movies:
- Argentinian Spanish (Pinocchio, Fantasia, Dumbo, Bambi, The
Incredibles, Chicken Little, Cars and Ratatouille)
- Austrian German (The Little Mermaid, Chicken Little and Up)
- Kazakh (Cars 2, Brave, Monsters University, The Lone
Ranger)
- Malaysian (Tarzan, Planes, Frozen)
- Vietnamese (Finding Nemo, Brave, Wreck-it-Ralph, Monsters
University, Planes, Frozen, Moana)
 Creative and innovative process
The Disney company has great assets including the
people conceptualizing and developing their products.
They sure know how to think of great ideas and make
profit from it. For example, the Disney Cruise Line
wherein they have collaborated the sea transport
sector and the entertainment from the Disney
characters to make a single and wholesome product.
Strong financial assets
Their financial strength made them to where they are
right now. They have already expanded to a lot of
countries all throughout the world, particularly in Asia.
 Weakness
Very high cost of doing their business
Disney invests a of money for their
production costs (and other costs e.g.
maintenance costs, wages expenses etc.). In
relation to this, the high costs affects the
prices of their products and services. For
example, many people still could not afford
to go to Disneyland because of the high
ticket price. Also, they had losses in their
motion pictures due to high production costs
and advertising campaigns.
 Overcrowding at Disneyland in California
The Disney company created the Disney
California Adventure in order to lessen the
overcrowding and to distribute the number of
visitors in the Disney parks. However, due to
poor conceptualization of the Disney
California Adventure. People still opt to go to
the Disneyland.
Lesser edge to video game industry
The company had losses each year between
2009-2011 because Disney had a hard time in
competing to the video game industry.
Opportunities
Expansion to new countries
It is possible for Disney to open more theme parks and
resorts to new countries, more cruise ships to acquire
and more movies to create. There are a lot of new
emerging target markets that will benefit them all
throughout the world.
Partnerships in media platforms
Disney could invest in other new media industries in
order for them to regain the losses of cable subscribers
they have had in the past years.
Threats
Escalating competition among competitors
Although Disney has already established its image and branding
worldwide, there are other companies with great people behind it
and those companies could be a huge threat to Disney company if
they innovate and conceptualize products and services that are
cheaper but could offer some similar experience to the consumers.
Development of technology
The advancement of technology makes it easier for people to
watch Disney movies and TV shows online and it leads to the third
major threat to Disney, the
Increase of piracy
The internet world today contains a lot of websites that has movies
and TV series available to everyone who access the certain site.
Everything now is just a one-click-away and this could lead Disney
to have losses of profit.
STEEP Analysis
Social
Different local cultures adds to the experience
of the tourist in the host place given the varied
Disneys business location
Changes in the markets preferences for
entertainment
Importance of kids and familys entertainment
in the disposal income expenditure
Success is heavily dependent upon public taste
and preferences
Price sensitiveness of Asians affects the Hong
Kong Disneyland pricing strategy
Technological
Profound effects of technological advancements
on the worlds media industry
Technological development affects the demand
for entertainment as well as the cost of
production
Disney competes for viewers primarily with
other television and cable networks,
independent television stations and other
media, such as DVD and Blu-ray formats, video
games and the internet.
 Economic
Economic growth, GDP and economic development
among countries needs to be considered
Possible global financial crisis will slow down growth
Profitability of the leisure-time industry may be
influenced by various factors that are not directly
controllable, such as business cycle and exchange
rate fluctuations, travel industry trends, amount of
available leisure time, oil and transportation prices
Environmental
Theme parks and resorts as well as Disney Cruise Line
and Disney Vacation Club compete with other forms of
entertainment, lodging, tourism and recreational activities
that is affected by weather patterns and natural disasters.
Fluctuations in theme park attendance and resort
occupancy resulting from the seasonal nature of vacation
travel and local entertainment excursions. Peak
attendance and resort occupancy generally occur during
the summer months when school vacations occur and
during early-winter and spring-holiday periods.
Walt Disney Company has upheld strong commitment and
responsibility to conserve natural resources by seeking to
establish and sustain a positive environmental legacy for
Disney and future generations
Political
Political differences that prevents
International Trade
Policies on product safety
The amusement park industry can be
strongly affected by the political climate.
Especially as Disney operates in China, it is
very much dependent on government
regulations and is constantly under
governmental control (China Daily, 2011)
PESTEL Analysis
Political
The political environment is
essential in a region especially
since it has a direct effect on
the amusement and
entertainment industry.
Economic
The health of the economy is central
for the whole tourism industry as
demand depends very largely on
consumers disposable income.
Socio-cultural
The tourism industry as a whole is
strongly affected by changes in
consumer lifestyles. Especially the
Cocooning trend can affect the
industry adversely as more and more
people like to stay at home (my home
is my castle) and to be entertained by
their home entertainment systems.
Technological
Through the increasing adoption and use of
digital technology marketers can use this as
an opportunity to target customers more
directly by customizing marketing
messages.
Environmental
The travel industry can also be affected by adverse
weather conditions arising from short-term weather
patterns or long-term change or by catastrophic events
and natural disasters such as excessive heat or rain,
hurricanes, tsunamis and earthquakes (The Walt Disney
Company 2013)
 Micro
Environmen
t Analysis
Porters Five Forces
Threat from competitors
The major competitors of the
industry (Disney, Universal
Studios, Six Flags & SeaWorld)
have huge marketing budgets
to influence customer
preferences.
Threat from new
entrants
This aspect is very
low as the entry
barriers are very high
due to immense
capital requirements.
Threats of
substitutes
This aspect is somewhat high
for the whole industry as there
are a lot of other activities a
family can do in their free-time
like visiting museums, go
hiking in National Parks, going
to cinemas or making vacations
abroad.
Bargaining power
of suppliers
Relatively low because companies
which construct rollercoasters and
other rides and those who deliver
beverages or food for the parks
like Pepsi and Coke are also
corporate partners with all the
other amusement park providers.
Vertical integration of Disney, in
terms of production (they own
their own production), reduced
significantly their power.
Bargaining power
of buyers
This aspect is relatively high mainly due
to low switching costs. As consumers can
easily visit other amusement parks in
their free-time if they are not satisfied
with Disneys attractions, admission fees
etc.
Disneys services and product offering are
generated by desires rather than
necessity. Financially restricted customers
will not buy.
 Current Status of Disney

Current Status of Disney

Disney is still currently
involved in a multitude of
business ventures both in
the worlds of media and
technology, as well as
minor involvements in
many other business
projects.
such as
merchandising, theme
parks, film, digital
media, music, live
productions and other
things such as
television.
Along with having
paramount success in
the world of television
media Disney also
play a substantial role
in the film production
and release.
Disney is affiliated with
many corporations in
order to create their
films such as Touchstone
animations and Pixar,
which as now in fact
owned by Disney.
Over the past nine
decades Disney is
probably most well
known for its
success in box
office
Snow white and the Seven
Dwarfs the film premiered in
December 1937 and became the
highest-grossing film of that time
by 1939. After this, the company
seems to skyrocket in to the box
office creating hit after hit, up
until modern day in which Disney
is still very much at the forefront
of box office success.
Disney Channels original
motion pictures have also
gone on to make millions
and in some cases billions

- High School Musical 1,2,3

- Camp Rock
 Theme Parks
Walt Disney used his
Disneylandseries to unveil what
would become Disneyland Park, an
idea conceived out of a desire for a
place where parents and children
could both have fun at the same
time.
Disneyland was a straight off success
almost instantly attracting people
from around the globe to go visit its
wonders and delights and was almost
instantly branded a place of magic.
The new Disney
management have create
new theme parks such as
Disneyland Paris and Disneyland Paris

Disneyland Tokyo these

have both also had
massive successes; such
as their predecessors and
they all still continue to Disneyland Tokyo
each day, all of the parks