Research Paper on Disney's Low-Cost Integrated Differentiation Strategy

Introduction

Walt Disney uses a low-cost integrated differentiation strategy. The company strives to serve consumers with products with relatively low costs but with distinguished characteristics. This strategy can be an alternative in the current global economy, an economy where more companies can develop the core competencies needed to be able to produce diverse products at relatively low costs. Disney's localization strategy is used in carrying out its operations. Disney tries to find out the tastes of the domestic community where it operates in innovating and creating new products. Besides, Disney uses local resources in carrying out its operations.

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Walt Disney Company (WDC) is able to combine the two corporate strategies namely the Related Differentiation Strategy and the Unrelated Strategy (a combination of the two strategies), companies operating in a number of industries and their businesses are interconnected with each other through operational synergy and the degree of interrelation referring in essence the synergy relationship between operations across business units based on core competencies and the sharing of common resources (Brown, 2019). This is done so that WDC can survive amid competition in the business world, and be able to achieve optimum profits by relying on receipts from tickets and concessions as well as income from other supporting facilities.

SWOT Analysis of Walt Disney Company

Strengths

One of the major strengths of Walt Disney is that it is a world-renowned global brand. It is a brand that is recognized throughout the world because of its theme parks and the films it releases. Since it has a very powerful brand, it uses some of its animated characters, for example, Winnie the Pooh, Mickey Mouse, Cinderella, and Minnie Mouse to attract more customers (The Walt Disney Company SWOT & PESTLE Analysis, 2020). All these animated characters are popular throughout the world. Disney has also expanded tremendously and has purchased properties such as Mirimax movie studio (Kohler, 2013). Walt Disney also purchased the animation company Pixar, all these companies provide Walt Disney with a greater access to many characters and brands.

An organizational and administrative restructuring is usually carried out, motivated by the skills and abilities of management groups or employees in common, to distribute the positions equitably and gain productivity in any activity. Economic and labor resources are usually allocated in the new corporate image, this without having to hire new services, nor increase salaries, simply managing efforts so that it is not heavy or badly seen by employees. Moreover, Disney, after many decades in the market has its own and external distribution network of physical, digital and audiovisual products difficult to match for the rest of the contestants.

Disney is much more than movies. It is much more than theme parks. It is also much more than the sum of its parts. "Disney is Fun" and the brand is aware of its influence in the children's world, in the "holistic" (Magic Kingdom) perception of it. After ending its relationship with McDonald's, the company announced its commitment to healthy eating, which affected both its theme parks and the products that use its licenses (Kohler, 2013). Disney said that in their parks restaurants trans fats will be eliminated, and skim milk or juices will be offered in addition to soft drinks, and applesauce or carrots in addition to chips. As for the licenses, those products that do not comply with strict health rules will be gradually eliminated, limiting calories, fats and sugar. The Disney Fun experience has to be positive and beneficial for children, which are their main reason for being.

Weaknesses

Walt Disney highly depends on income from North America. Although Disney is operational in more than two hundred countries, almost all its revenue comes from the U.S. and from Canada. More than 70% of the revenue business comes from the US alone, while Disney's major competitor News Corporation receives less than 50% of revenue from the US, making it less vulnerable to changes in the US market (Carillo, Jeremy, Kendree, & Jeffrey, 2012). Although it may surprise many to say that the size of Disney is small and that this can be a weakness after the many purchases made recently, the truth is that it must be seen in relative terms. A company like Netflix, created 20 years ago, has surpassed a hundred-year-old company like Disney in stock market value. The audiovisual sector is being brutally consolidated in recent years and to avoid possible Disney takeover, the company has to keep increasing.

Opportunities

There are many great opportunities for resorts and theme parks or amusement parks. One opportunity is through the application of Disney Imagineering. The concept of Imagineering is about combining engineering and imagination. Imagineering is the ability and capability of developing innovating and new attractions that provide life color and in the imaginary world. Imagineering offers Walt Disney with the ability of creating attractive and innovative attractions that attract more and new customers.

With the desire to gain more followers and train new potential employees, Disney should make available to different audiences, especially students, the technologies of animation and production of feature films arguing the social responsibility for eradicating problems such as unemployment and promoting education and innovation within children, youth and professionals, thus gaining presence as a company with a more human approach.

Threat

Disney operates in highly competitive industries such as media, tourism, parks and resorts, interactive entertainment and others. Changes in the competitive landscape are quite drastic in the media industry, where news and TV online and new competitors with new business models compete more successfully than incumbent media companies (Brown, 2019). Disney parks and resort business segments also receive strong competition from local competitors who can offer products that are better adapted. This caused increased competitive pressure for the Walt Disney Company. Advances in technology have made copying, transmission and distribution of copyrighted material much easier. With the increasing number of internet users and the speed of the internet, this poses a big risk to Disney's income, because fewer people will go to watch movies in theaters or buy their DVDs, when it is freely available online.

Conclusion

Walt Disney needs to implement strategic management, specifically to help reduce operating costs and maintain its competitive advantage in similar industry markets. Disney must continue to innovate and produce a different type of entertainment and have special characteristics that distinguish Disney products from similar products from competitors. Disney's position as the most powerful company in the entertainment industry is no doubt, but Disney must remain aware of the threats that may arise from the external environment and from its competitors. Walt Disney should perform actions that generate positive branding by associating the Disney brand with actions to support children, and sustainability of the planet. The company should not dilute the Disney umbrella brand among the other powerful brands of the group (Pixar, Marvel, and Star Wars). The idea is that there is an ecosystem of brands that live mutually benefiting each other.

References

Brown, L. (2019). Walt Disney Company Five Forces Analysis (Porter's) & Recommendations. Retrieved from http://panmore.com/walt-disney-company-five-forces-analysis-porters-recommendations

Carillo, C., Jeremy, C., Kendree, T., & Jeffrey, H. (2012). The Walt Disney Company: A corporate strategy analysis. Case Study. University of Richmond: Robins School of Business. Retrieved from https://scholarship.richmond.edu/cgi/viewcontent.cgi?article=1010&context=robins-case-network

Kohler, I. (2013). Strategic marketing analysis of Walt Disney's Parks and Resorts. Retrieved from https://www.grin.com/document/271362

The Walt Disney Company SWOT & PESTLE Analysis (2020). Retrieved from https://www.swotandpestle.com/walt-disney-company/