Walt Disney Company External Factor Evaluation Essay

Exclusively available on Available only on IvyPanda® Made by Human No AI

The following are the primary external variables affecting the competitive position of Disney based on the Porter’s 5-force Analysis. First, Disney enjoys high barriers to the new entrants’ business of its hybrid business model that presents it with many distinctive competitive advantages.

With a global presence and strategic partnerships for content distribution and development, the company is also well protected against increases in rival practices. However, the dynamic nature of the entertainment industry globally that is caused by technology changes can disrupt the business and cause the existing competitors, and new entrants have added advantages at serving customer needs.

Based on this fact, a five force analysis of Walt Disney reveals that the company has a significant threat from substitutes; there are alternatives to cable TV subscriptions presented through various Internet delivery channels. A notable alternative is a video on demand option available through renting services or podcasts. Many independent content producers are cumulatively eating into Disney’s ability to service its market needs competitively.

On the other hand, Disney has significant bargaining power against its suppliers as a major player in the entertainment industry, with exclusive rights to its theme parks around the world. Its exclusive content creation agreements and capabilities also increase its power against other suppliers (The Walt Disney Company, 2015).

Reliance on suppliers of merchandise to reach into the Disney character’s market gives Disney an upper hand in licensing matters, which increase its power against suppliers. On the contrary, consumers are not organized, with many industries offering liberalized access to television, Internet content, and merchandise business.

Therefore, Disney only faces mild threats of buyer power in cases of government regulation and reliance on resellers for its content distribution. Reseller services can dictate the terms of content purchase and distribution in their networks and online content delivery channels.

Disney EFE Matrix

The following is a table representing the external factor evaluation for Walt Disney. It is a summary of the weights posted by the strengths of the company against its threats. The positive figure outcome shows that the company is in a good position to counter its threats and make use of its opportunities.

It also has a compelling business case to keep on with its growth plans. The EFE matrix introduces additional external variables affecting Disney that were left out in the introductory part of the paper, given that the matrix arises from the variables identified in SWOT analysis.

Table 1: EFE Matrix.

External factorsWeightRatingWeighted score
Opportunities
Expansion into different market segments0.240.8
Technologies to improve inventory and operation efficiency0.130.3
Increased localization of products0.0520.1
Expansion of movie production to other countries0.0520.1
Growth in paid TV and paid internet content in emerging economies0.1540.6
Increase attractions in Disney land0.0520.1
Threats
External Security issues for persons0.130.3
Security issues for assets (piracy)0.140.4
Increased rivalry both direct and in substitutes such as online movie renting0.130.3
Cultural backlash0.0520.1
Brand consistency0.0510.1
Total13.2

Source: (Author).

With a total score of 3.2, Walt Disney has been successful at utilizing its opportunity to negate threats facing its business. The key highlights of the EFE matrix are as follows. First, Walt Disney faces expansion prospects for many of its current product portfolios in new markets and the existing ones.

Technological advances offer an opportunity for cutting coordination costs and other international management operations. There are various possibilities for the company to embrace local aspects of its various international businesses, including the introduction of new characters to the Disney family (Nielson, 2014).

Disney Competitive Profile Matrix

Disney’s main competitors, CBS and Time Warner, were considered in developing the competitive profile matrix. The table shows that Disney is at a better competitive state than its main competitors, with the main contributions being the advertising and financial position variables. One fundamental assumption of the data below is that conditions have remained the same and will do so in the medium term.

Table 2: Competitive profile matrix for Walt Disney, based on the author’s findings and The Walt Disney Company (2015).

Walt DisneyTime WarnerCBS
Critical success factorsWeightRatingScoreRatingScoreRatingScore
Advertising0.2030.6020.4030.60
Product quality0.1040.4040.4030.30
Customer loyalty0.1530.4520.3020.30
Global expansion0.1540.6020.3020.30
Financial position0.2030.6020.4010.20
Content portfolio0.1040.4020.2020.20
Market share0.1040.4020.2020.20
Total3.452.202.10

Strategic recommendations

Piracy is a major threat facing the company while online movie renting options may also upset the ability of the company to scale its growth. Nevertheless, the advancements in technologies provide numerous opportunities for the enterprise to become protective of its content and address the two major threats highlighted in the analysis.

An increase in advertising expenditure across its global operations should help with brand consistency and improve customer loyalty, as well as augment the current strategies for global expansion. Adopting the strategies would be the right thing to do because they have had a significant effect on the company’s competitiveness. However, Disney must be careful to expand only in areas that increase its financial bottom line, as that is an important factor in its competitiveness (Team, 2015).

References

Nielson, S. (2014). . Market Realist. Web.

Team, T. (2015). Forbes. Web.

The Walt Disney Company reports second quater and six months earnings for Fiscal 2015. (2015).

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2020, April 9). Walt Disney Company External Factor Evaluation. https://ivypanda.com/essays/walt-disney-company-external-factor-evaluation/

Work Cited

"Walt Disney Company External Factor Evaluation." IvyPanda, 9 Apr. 2020, ivypanda.com/essays/walt-disney-company-external-factor-evaluation/.

References

IvyPanda. (2020) 'Walt Disney Company External Factor Evaluation'. 9 April.

References

IvyPanda. 2020. "Walt Disney Company External Factor Evaluation." April 9, 2020. https://ivypanda.com/essays/walt-disney-company-external-factor-evaluation/.

1. IvyPanda. "Walt Disney Company External Factor Evaluation." April 9, 2020. https://ivypanda.com/essays/walt-disney-company-external-factor-evaluation/.


Bibliography


IvyPanda. "Walt Disney Company External Factor Evaluation." April 9, 2020. https://ivypanda.com/essays/walt-disney-company-external-factor-evaluation/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
Privacy Settings

IvyPanda uses cookies and similar technologies to enhance your experience, enabling functionalities such as:

  • Basic site functions
  • Ensuring secure, safe transactions
  • Secure account login
  • Remembering account, browser, and regional preferences
  • Remembering privacy and security settings
  • Analyzing site traffic and usage
  • Personalized search, content, and recommendations
  • Displaying relevant, targeted ads on and off IvyPanda

Please refer to IvyPanda's Cookies Policy and Privacy Policy for detailed information.

Required Cookies & Technologies
Always active

Certain technologies we use are essential for critical functions such as security and site integrity, account authentication, security and privacy preferences, internal site usage and maintenance data, and ensuring the site operates correctly for browsing and transactions.

Site Customization

Cookies and similar technologies are used to enhance your experience by:

  • Remembering general and regional preferences
  • Personalizing content, search, recommendations, and offers

Some functions, such as personalized recommendations, account preferences, or localization, may not work correctly without these technologies. For more details, please refer to IvyPanda's Cookies Policy.

Personalized Advertising

To enable personalized advertising (such as interest-based ads), we may share your data with our marketing and advertising partners using cookies and other technologies. These partners may have their own information collected about you. Turning off the personalized advertising setting won't stop you from seeing IvyPanda ads, but it may make the ads you see less relevant or more repetitive.

Personalized advertising may be considered a "sale" or "sharing" of the information under California and other state privacy laws, and you may have the right to opt out. Turning off personalized advertising allows you to exercise your right to opt out. Learn more in IvyPanda's Cookies Policy and Privacy Policy.

1 / 1