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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 States
market. This market is also highly competitive with four major players including Busch
Entertainment – an industry giant with financial resources to match. Disney’s attempt to
conglomerate and diversify has led to many government obstacles, for example, the forced sale
of 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 Disney
finds 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 Busch
Entertainment, Time Warner, etc. (Exhibit #2)
Internal Environment
Corporate Structure
The corporation has a generic hierarchical structure and the balance of power is stable. The
strategic decisions are made by top management and then handed down to middle management
to 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 must
adhere 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 tremendous
amounts of resources to allocate. Disney uses its marketing arm to concentrate on the Disney
name – to make it a household name and associate it with quality. Disney then uses this leverage
to 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 return
on shareholder equity. Disney is doing this by continuing to diversify into new fields and use its
strengths to take advantage of opportunities in these fields. After looking at the financial data
from 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 is
sometimes seen as a weakness. Disney must concentrate more resources to this area to
effectively outpace the competition.
Disney’s operations and logistics, human resources management, and information systems
departments are adequate when compared with other similar firms.
Summary of Internal Factors
Top management and name recognition are the main strengths of Disney. Conglomeration and
diversification 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 top
management is the key to exploiting areas of growth in China, India and Latin America. Disney
is 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, kids
orientated 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 line
of children’s learning software can be hugely successful. This can be done either by allocating
resources 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 its
success. The effective use of a portal site (Go.com) can lead to more attraction to other Disney
ventures. 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 huge
opportunity for growth. Additionally, a priority must be placed on R&D in the feature film SBU
of the company. With better technological development Disney can efficiently compete with
Time Warner and others.

THE WALT DISNEY COMPANY

External Factor Analysis


Summary (EFAS): The
Walt Disney Company

External Factors Weight Rating Weighted Score Commen

Opportunities
Expansion to China and India 0.15 4 0.60

Growing Internet Market 0.15 4 0.60

Disney Stores at Malls 0.10 3 0.30

Childerns Software Market 0.10 3 0.30 Co

Expansion into Latin America 0.10 3 0.30

E-Commerce 0.10 3 0.30

Threats

Growing Compitition 0.15 5 0.75

in Theme Park Industry

Warner Bros. in Animation 0.15 3 0.45

Total Score 1.00 3.60