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Walt Disney Company Strategy Selection Essay

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Updated: Jun 9th, 2020

The internal and external factors matrix that affect Walt Disney’s Theme Parks come from the internal factors evaluation model and external factors evaluation matrix. Walt Disney has good management structures, well thought out plans, and unbeaten brand recognition. The Universal Studios and the Six Flags are doing fairly well but cannot equal the market strength of Walt Disney.

Strengths
– Horizontal expansion by acquiring Star Wars
– Vertical expansion
– Ability to manage risk and return portfolio effectively
– Strategic business units
– Increase in net income
– Positive current ratio
– Continuous growth over five years
Weaknesses
– Loss of income to competitors because of property right violation.
Opportunities
– Market strength
– Diversified portfolio
– Customer preference
– Consistent growth rate
– Growth in its parks and resorts
– Strong stock prices
– Outperformed the industrial average in the 1stquarter of 2012
– Substantial competitive advantage
– Brand recognition
– Successful acquisition deals
– Solid theme parks
– Steady pricing
Threats
– Six Flags
– Universal Studios
– New in the business

The SWOT analysis is one of the tools the company used for strategy formulation (David, 2015). Some of the strengths, weaknesses, opportunities and threats are in the table below. The main threats were its competitors the Universal Studios and Six Flags (Harvey & Goudvis, 2007). Although they did not pose any danger to the company since their performance indicated that they had so much to do to attain Disney Parks’ success. The business was also new but manageable (Vecchio, 2007).

The Strategic Position and Action Evaluation Matrix measured Disney’s competitive advantages, industry strength, financial strength, and environmental stability as follows:

Internal Strategic Position External strategic position
Competitive Advantage Industry Strength
Product quality
Market share
Brand and Image
Product life cycle
Growth potential
Barriers to entry
Consolidation
Financial Strength Environmental Stability
ROA
Leverage
Liquidity
Cash flow
Demand elasticity
Taxation
Technology

The SWOT analysis and the SPACE matrices are the best tools for strategy selection due to their simplicity (Harvey & Goudvis, 2007). The two accommodated the most important information for decision making. The company should acquire legal property rights to prevent losses and continue strengthening itself internally. The two matrices provide the management with holistic information that help to prioritize the decision making process.

Quantitative Strategic Planning Matrix
Alternative 1 Alternative 2
Critical Factors Acquire Competitor Expand Internally
Weight Attractiveness Score Total Attractiveness Score Weight Attractiveness Score Total Attractiveness Score
Strengths
Diversified Portfolio 0.11 2 0.22 0.1 4 0.4
Successful innovation 0.08 3 0.24 0.14 4 0.56
Satellite growth 0.15 1 0.15 0.07 3 0.21
Targeted approach 0.11 4 0.44 0.11 3 0.33
Inventory reduction 0.06 0 0 0.09 3 0.27
Version effort 0.12 2 0.24 0.07 3 0.21
Weaknesses
Product differentiation 0.1 4 0.4 0.1 1 0.1
Target audience 0.11 2 0.22 0.12 3 0.36
Uncertain Theme Park Growth 0.08 3 0.24 0.06 2 0.12
Control over SBUs 0.08 1 0.08 0.14 2 0.28
sum Weights 100% 100%
Opportunities
Market strength 0.1 4 0.4 0.09 2 0.18
Diversified portfolio 0.18 4 0.72 0.1 2 0.2
Customer preference 0.15 4 0.6 0.5 4 2
Competitive advantage 0.09 3 0.27 0.28 3 0.84
Threats 0
Universal Studios 0.1 3 0.3 0.02 1 0.02
Six Flags 0.2 2 0.4 0.01 1 0.01
New in business 0.18 2 0.36 0 1 0
sum Weights 100% 100%
Total Attractiveness Score 5.28 6.09

The QSPM indicate that internal expansion is better than acquiring competitors. The attractiveness figure for domestic development is 6.09 while that of buying competitors has a smaller score of 5.28.

The best decision, according to the matrices, is to concentrate on internal development because the threats are manageable. No competitor can match a strong organization that has invested heavily in itself.

References

David, F. (2015). Strategic management concepts (15th ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Harvey, S., & Goudvis, A. (2007). Strategies that work. Portland, Me.: Stenhouse Publishers.

Vecchio, R. (2007). Leadership. Notre Dame, Ind.: University of Notre Dame Press.

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