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.
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)
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.
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.
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.