External environment factors affecting Telecom Industry - Indian Context
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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 Opportunities
Weight
Rating
Weighted Score
Commen
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
Expansion into Latin America
0.10
3
0.30
E-Commerce
0.10
3
0.30
0.15
5
0.75
Warner Bros. in Animation
0.15
3
0.45
Total Score
1.00
Threats Growing Compitition in Theme Park Industry
