The Business Model of the Walt Disney Company

Evaluating the potential of the business model in terms of its competitiveness


Term Paper, 2017
20 Pages, Grade: 1,5

Excerpt

Table of content

1 List of figures

2 Introduction

3 The Walt Disney Company
3.1 Financial and management information
3.2 Market segments and target groups
3.3 Company environment and public interest

4 About the founder

5 Description of the revenue model

6 SWOT Analysis
6.1 Strengths
6.2 Weaknesses
6.3 Opportunities
6.4 Threats
6.5 Solutions to Disney´s weaknesses and threats

7 Evaluation

8 Reference list

1 List of figures

Figure 1: APCO survey that names Disney the most be-loved brand in the world (Heine, C., 2013).

Figure 2: Disney´s business segments revenue and revenue share (Miglani, J., 2015).

1 List of figures

Abbildung in dieser Leseprobe nicht enthalten

2 Introduction

The Walt Disney Company is one of the biggest entertainment and media conglomerates around the world. The primary driver of the company´s business success is the wide range of entertainment experiences that Disney delivers through its five major business segments. Multiple channels like television, music, film, parks or toy stores are important parts of the merchandising and distribution activities that bring value to the company as a component of the total revenue machinery. Disney´s growth strategy follows international expansion activities including investments in new business, companies or business and product lines (Vault.com., 2017).

The paper begins with an overview about the Walt Disney Company and its principal financial and management information. Afterwards there will be a brief outline about Disney´s business segments, target groups and markets that the company is currently operating in. Particularly interesting is the huge network of cross-branding partners that allows Disney to communicate its content marketing messages directly to the target groups. Subsequently there are detailed information about the current market share in Disney´s different business segments compared to its competitors in the respective industry. The paper also reveals a study that ranked Disney according to its popularity and reputation around the world. Then there are some information about the founder of Disney and how he established the company from a startup to a recognized global company. In the main part there will be a description and explanation of the company´s revenue model and afterwards a SWOT analysis that exhibits in detail which strengths, possibilities, weaknesses and threats the company is facing right now. Finally the paper reveals some solutions on how Disney could approach its weaknesses and threats and entails some suggestions on how to refine the current strategy of Disney. At the end there will be an evaluation of Disney´s business model and its potential concerning its competitiveness within the industry.

3 The Walt Disney Company

3.1 Financial and management information

The Walt Disney Company is an American based international family entertainment and media enterprise that is currently, with a total revenue of 52,47 billion U.S. dollars in 2015, the second largest media and entertainment company in the world (Statista.com., 2016). The company is led by Chief Executive Officer Robert A. Iger and Andy Bird as the Chairman of Walt Disney International, both carry responsibility for about 185.000 employees around the world. Robert A. Iger leads the company in a team and consensus orientated manner although he is known to be a reserved person who drove the company for the last 12 years in a very smart way. Next year Walt Disney could have a new CEO as experts suppose Sheryl Sandberg as a former facebook manager as the most promising prospect in the supervisory committee. The company was founded on October 16, 1923, by Walt Disney and Roy O. Disney who diversified their business units into five major business segments: Disney media networks, Walt Disney Parks and Resorts, Disney Consumer Products and Interactive Media and Walt Disney Studio Entertainment which includes the Walt Disney Motion Pictures Group and the Disney Music Group. The company exhibits revenues of 52.47 billion U.S. dollars in total with a profit margin of 8,86 billion U.S. dollar in 2015. If these data get compared in direct proportion to the five major business segments, then the most profitable sector are Disney´s Media Networks which show a revenue of 13 billion U.S. dollars, followed Disney´s Parks and Resorts with a revenue of 9 billion U.S. dollars (Goda, A., 2017). The current share price of Disney shows $ 111,12 per share and the earnings per share increased in 2016 by 11% from $5.15 in the prior year to $5.72 (Zenia, M., 2016). The R&D department of Disney is called “Disney Research” and contains a broad network of research labs that operate in the fields of video processing, communication, robotics and wireless communications. The purpose is to provide the company with scientific and technological innovation that gives the Walt Disney Company the opportunity to differentiate its products and services from its competitors (Disneyresearch.com., 2017).

3.2 Market segments and target groups

As one of the major business segments Disney´s media network is concentrated on many supporting marketing functions like research, digital and social media, distribution, sales groups and communications. Its main distribution is focusing a global entertainment through television or radio broadcasting. Therefor the company owns television channels like ABC, ESPN and Disney Channel or A&E networks like Hulu or Fusion. As the second major business segment the Walt Disney Parks and Resorts are responsible for the conception, building, and managing of the company's 11 theme parks and 44 vacation resorts in North America, Europe and Asia. The third business segment Disney Consumer Products and Interactive Media comprises Licensing, Publishing of consumer products and the Disney Store as a separate business unit. Disney´s Interactive Media is focusing interactive entertainment experiences with mobile, social and console games like Club Penguin or Playdom (Reuters.com., 2016). As a part of the Walt Disney Studio Entertainment the Disney Music Group division´s subsidiaries consist of two affiliated record labels: Walt Disney Records and Hollywood Records which are both working with celebrities like Selena Gomez, Demi Lovato, American Idol finalist Stefano, Coco Jones and more for new soundtracks of the Disney movies and cartoons (Goda, A., 2017). The other part of the Walt Disney Studio Entertainment is responsible for the process of film production and is called The Walt Disney Motion Pictures Group. Their main subsidiaries are Marvel Studios, Touchstone Pictures, Disneynature, Pixar Animation Studios, Walt Disney Animation Studios and Lucasfilm (Plunkett, J. W., 2011). Every division has its own unique mission and function in supporting the company as a whole. Pixar for example is an animation studio which is known for creating PhotoRealistic RenderMan. Therefor the subsidiary received financial success for thirteen of fourteen films in total. A different target has Touchstone Pictures that is mostly producing films for a mature target group due to their darker tones and themes in comparison to Walt Disney cartoons or movies. Marvel Studios is a division which concentrates its efforts on the comic book empire to create mostly superheroes like X-Men, Spider-Man, Captain America, The incredible Hulk, Iron Man or the Avengers. On December 31, 2009, The Walt Disney Company purchased Marvel Entertainment for $4 billion U.S. dollars in order to enlarge their business sector and to get access to the library of over 8.000 Marvel comic characters (Gutenberg.us., 2016).

Disney does not focus any specific target market due to the bunch product and service offerings around the world but it is obvious that the company aims major target segments involving Europe, Japan, India, and of course the United States. The key customer group includes family members of any age from children that are interested in Disney´s games, toys or videos up to elderly family members that are willing to visit Disney´s theme parks across the globe. Major target segments are typically located in urban areas where the company has its major Disney stores and key sales and distribution platforms (Thewaltdisneyco.blogspot.de., 2011). There are five major sales channels by which Disney is distributing its products, these are movie rental stores, retailers like Best Buy, Disney´s own retail centers, Disney´s online store or other online distributers like Amazon (Askalany, A., 2016).

3.3 Company environment and public interest

The market share of Disney can also be divided into different segments since the company is operating in many different business sectors. In the Media Networks Walt Disney is currently holding the second largest market share with 7,91% after its competitor Directv with 11,50% market share. In the Park and Resorts segment Disney is market leader with a total market share of 25,09% followed by the Carnival Corporation with a market share of 20,9%. Regarding the Studio Entertainment Disney faces several competitors as the Twenty-first Century Fox Incorporation with 6,06% market share, Comcast with 7,2% and Warner Brothers with 10,48% market share which is highly competitive for Disney as they are only exhibiting a market share of 6,49%. The consumer products segment is currently dominated by the Mattel Incorporation with a total of 11,55% market share, followed by Disney with 10,94% and Hasbro with 9,14% market share. The last segment Interactive Media is largely dominated by Microsoft with 37,53% in total whereas Disney represents merely 1,24% of the market (Csimarket.com., 2017)

The main competitors of Disney are especially those from the media and telecommunication industry including companies like Viacom, TimeWarner, 21 Century Fox or Comcast which compete mainly through video games, DVD/Blue-rays, movies or the Internet. But there are different competitors in each market segment, this is why Disney is continuously pressured with any kind of competitors or new market entrants due to the broad range of products and services the company offers (Investopedia.com., 2015).

[...]

Excerpt out of 20 pages

Details

Title
The Business Model of the Walt Disney Company
Subtitle
Evaluating the potential of the business model in terms of its competitiveness
College
Cologne Business School Köln
Grade
1,5
Author
Year
2017
Pages
20
Catalog Number
V417282
ISBN (eBook)
9783668678828
ISBN (Book)
9783668678835
File size
739 KB
Language
English
Tags
SWOT, Disney, Walt Disney, Walt Disney Dompany, Competitiveness, Business Model, Market Segments, Target Group, The Walt Disney Corporation, Revenue Model
Quote paper
Paul Petersen (Author), 2017, The Business Model of the Walt Disney Company, Munich, GRIN Verlag, https://www.grin.com/document/417282

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