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III. External Environment: Opportunities and Threats

III. External Environment: Opportunities and Threats

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Published by: zsokameny on Mar 11, 2010
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III. External Environment: Opportunities and Threats
A. Societal Environment
Disney’s main product, theme parks and resorts are competing in a saturated United Statesmarket. This market is also highly competitive with four major players including BuschEntertainment – an industry giant with financial resources to match. Disney’s attempt toconglomerate and diversify has led to many government obstacles, for example, the forced saleof KCAL in Los Angeles by the Department of Justice and the limit of owning only one mean of media in a single city/state by the FCC. With recent Time Warner and Turner merger Disneyfinds more competition from other conglomerates in the entertainment field.
Task Environment
Because of the capital required to enter the industry Disney faces no threat from new entrants.Additionally, Disney’s massive production allows it to have a leverage over many suppliers.Disney’s main concern is other huge competing entertainment firms such as BuschEntertainment, Time Warner, etc. (Exhibit #2)
Internal Environment
Corporate Structure
The corporation has a generic hierarchical structure and the balance of power is stable. Thestrategic decisions are made by top management and then handed down to middle managementto be implemented. Middle management then works with lower management to carry out the projects.
Corporate Culture
The company has a quality culture and has clearly stated values that the entire workforce mustadhere to. The company culture is compatible with all backgrounds and is based on the notion of diversity.
Corporate Resources
As one of the largest multi-global companies, Disney enjoys the benefit of having tremendousamounts of resources to allocate. Disney uses its marketing arm to concentrate on the Disneyname – to make it a household name and associate it with quality. Disney then uses this leverageto advertise its other offerings such as movies and products.The financial objectives of Disney are to grow at a continuing rate to achieve a maximum returnon shareholder equity. Disney is doing this by continuing to diversify into new fields and use itsstrengths to take advantage of opportunities in these fields. After looking at the financial datafrom past years Disney is succeeding in doing this, the revenues are increasing along with net profit margin.Disney is on pace with other similar companies in the R&D department, however, this issometimes seen as a weakness. Disney must concentrate more resources to this area toeffectively outpace the competition.Disney’s operations and logistics, human resources management, and information systemsdepartments are adequate when compared with other similar firms.
Summary of Internal Factors
Top management and name recognition are the main strengths of Disney. Conglomeration anddiversification are important factors that are keeping Disney on top. In the future effective use of synergy and better employee relations will be the key to success at Disney. (Exhibit #3)
Analysis of Strategic Factors
Situational Review
Currently the effective use of diversification is keeping Disney profitable. Knowledgeable topmanagement is the key to exploiting areas of growth in China, India and Latin America. Disneyis on track to efficiently compete with yahoo and other Internet portal site with the acquisition of infoseek.
Strategic Alternatives and Recommended Strategy
Strategic Alternatives
Disney will benefit to conglomerate further into many different industries such as fast food, kidsorientated establishments. The Disney name can supply the needed attraction for the kids.Further development into the television arena can have beneficial results for them as well. A lineof children’s learning software can be hugely successful. This can be done either by allocatingresources or by acquiring a known company in the field such as The Learning Company.
Recommended Strategy
Disney should focus on emerging trends such as the Internet and computing to further itssuccess. The effective use of a portal site (Go.com) can lead to more attraction to other Disneyventures. Disney has an experienced top management that can successfully integrate the new project into existing projects. In the theme park industry Disney must focus on China and India – with growing wages and increasing population these two countries can provide a hugeopportunity for growth. Additionally, a priority must be placed on R&D in the feature film SBUof the company. With better technological development Disney can efficiently compete withTime Warner and others. 
External Factor AnalysisSummary (EFAS): TheWalt Disney Company
External FactorsWeightRatingWeighted ScoreCommen

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