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.
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).
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). Travel back in time to learn more about the Walt Disney Company. Market Realist. Web.
Team, T. (2015). What will drive Disney’s U.S. theme parks operations?Forbes. Web.
The Walt Disney Company reports second quater and six months earnings for Fiscal 2015. (2015).