Previously, we decoded the success of Amazon by conducting a SWOT analysis. This time, we will look at another entertainment giant and understand more about it and the reasons they are succeeding, ie., we are going to tackle the SWOT analysis of Walt Disney.
The Walt Disney Company is one of the most well-known companies in the entertainment, media, and amusement park industry. The case of Disney exemplifies excellent management of internal and external elements, and the being a constant crowd favourite by being bold in its business moves.
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In this blog, we will focus on the SWOT Analysis of Walt Disney, covering its strengths, weaknesses, opportunities, and threats.
Yet, before we simplify the company’s position into 4 aspects, let us learn more about Walt Disney – the company, its history, services, competitors and financials.
About Walt Disney
The Disney Brothers Cartoon Studio was formed on October 16, 1923, by brothers Walt Disney and Roy O. Disney. It started with the release of its first animated short-lived series called Alice Comedies. In 1929, the company launched Steamboat Willie, where the most famous mythical character Mickey Mouse was first introduced to the world. Before extending into live-action film production, television, and theme parks, these endeavours established the company as a leader in the American animation business.
The company is most famous for the legendary cartoon characters they created, especially by its founding storyteller, Walt Disney. Mickey Mouse is synonymous with the company and even considered their mascot. He’s a children’s favourite and still continues to be one of the entertainment sector’s more recognisable characters.
The Disney Company also operated under the names The Disney Studio and then Disney Productions. Currently, it expanded its existing operations and also started divisions focused upon Over The Top (OTT) Web series, theatre, radio, music & publishing.
|Chairman||Walt Disney, Roy O. Disney|
|Year Founded||October 16, 1923|
|Origin||Burbank, California, U.S.A.|
|No. of Employees||223,000 (2019)|
|Market Cap||$292.62 billion (2021)|
|Annual Revenue||$67.42 billion (2021)|
|Net Profit||$1.99 billion (2021)|
Products of Walt Disney
Since 1926, Disney has been entertaining the world is multiple mediums and formats, such as:
- Amusement parks
- Film, Music and Video games
- Broadcasting and publishing
- Streaming Services
Competitors of Walt Disney
Walt Disney has its hands in multiple industries on a global stage, it faces competition from many sides such as:
- Fox Entertainment
- Universal Studios
- Amazon Prime
Now that we have learnt about the company’s different aspects, let us now start delving into the SWOT analysis of Walt Disney in full detail.
SWOT Analysis of Walt Disney
SWOT Analysis is the most widely used method for auditing and analyzing a company’s overall strategic position and its environment. Its main objective is to develop ways for creating a firm-specific business model that best aligns an organization’s resources and competencies with the needs of the environment in which it operates.
SWOT is an effective tool that stands for Strengths, Weaknesses, Opportunities, and Threats. So, let’s go through with the SWOT Analysis of Walt Disney.
Strengths of Walt Disney
The Walt Disney Company’s internal strategic factors are as follows.
- Reliability: The company is related to the simplest suppliers who provide high-quality raw materials. It also keeps quality in mind while buying its raw materials.
- Large Cash Flow: Walt Disney has a strong cash flow mechanism in place that allows the company to invest in high-quality, high-budget initiatives. The company’s financial strength stems from its diverse business portfolio. The company made USD 69.57 billion in revenue in 2019, a significant rise from USD 59.43 billion the previous year in 2018.
- Proficient Team: Walt Disney has a number of the foremost creative teams that contain story scriptwriters, artists, and graphic designers. The qualified teams are experienced in all professionals with extensive years of experience in the mass media industry.
- High Brand Value: The company has a strong brand reputation, and its name and logo are easily recognizable. The brand name became powerful after the acquisition of other reputed companies like 21st Century Fox. As of 2019, Walt Disney was found to be the 7th most valuable brand, with a brand value of USD 61.3 billion. This indicates that every product of Disney is highly popular among the customers. Furthermore, a strong brand image aids the company in gaining a competitive advantage through differentiation.
Weaknesses of Walt Disney
Walt Disney, despite its many strengths, also suffers from many open fronts such as:
- Sky-High Attrition Rate: The company spends an enormous amount on training. For a firm like Disney, this can be a serious flaw. It should also be noted that the streaming services of Disney under the direct-to-consumer segment, have performed poorly. Regardless of the growing popularity of subscription-based content streaming.
- Poor Financial Planning: Walt Disney is suffering because of its poor financial planning. The corporation is said to be losing more than $1 billion, according to reports. Studio Entertainment and Direct to Consumer and International, on the other hand, only brought in USD 11.13 billion and USD 9.35 billion, respectively. This means that the company’s studio entertainment, direct to consumer, and foreign segments are underperforming.
- Vulnerable To Competitors: The company does not engage in proper marketing and promotional activities and this can be a significant weakness of a company that needs to survive in a highly competitive market.
- Insufficient Product Demand Scaling: The company spends a lot on its merchandise and other products and to overcome this the company needs to plan its manufacturing unit based on the demand obtained from market research.
- Dependent: The primary weakness of Walt Disney is its dependence on the revenue generated from parks and resorts and media networks. As of 2019, Media Networks, Parks and Resorts brought in USD 24.83 billion and USD 26.23 billion, respectively.
Opportunities for Walt Disney
Like Weakness, to find opportunities organizations must have to identify and analyze prevailing opportunities in the market to be able to proactively exploit those opportunities. Such strategies give a company a competitive advantage while also allowing it to achieve its long-term growth goals.
- Gear Up for Marketing: The company is financially stable and well-equipped, hence the firm can improve its marketing techniques, which will support its growth. Therefore, the company has the opportunity to diversify its genre of entertainment to attract a much wider range of demography. while shedding its “kids” only image.
- Core Competencies: Walt Disney can bring in new technologies to the market using innovation which attracts everyone, and this can be a trump card for the company. Since the firm has financial stability, the company can use it to invest in the cloud gaming sector as its growing popularity can be leveraged by the company by developing its cloud gaming portal to compete with the likes of Google Stadia and PlayStation Now.
- Big Names Are Worth It: Since Walt Disney is a recognized brand, it can be a perfect branding source that any business can use for its promotion. Maintaining a company’s reputation online has become a crucial aspect of today’s digital marketing strategies. If you are interested in learning the latest, check out IIDE’s Online Reputation Management Course to learn more about this rising field.
- Online Streaming Service: Walt Disney has a strong team of artists, scriptwriters. Hence, the firm can work on its online streaming service, namely Disney+Hotstar, which is an excellent opportunity for the company to challenge other services like Amazon and Netflix.
Threats to Walt Disney
Threats are external or outside factors that negatively impact business & outside the control of the business, that can come in many forms — supply chain problems, financial downturns, stringent government regulations or shifts in market requirements, etc. These are the threats to Disney’s business hegemony:
- High Expense Toll: Walt Disney has always spent large amounts on its employee development, workforce, and training. The company has a problem with its core competency and hence fails to use its resources properly. The economic bubble collapse can lead to a fall in price, causing severe effects on investment & it is a significant threat to the company.
- Isolation in America: The company only has play stores in developed countries. The firm should not underestimate the buying capacity of developing countries, especially Asian countries.
- Better Products & Technology: The main threat to the company is its non-specificity as it is a jack of all trades and master of none. Walt Disney has a wide range of products which makes it difficult for the firm to work upon. Also, the organization needs to bring in new products and technologies to retain its position in the competitive market.
- Dependence on Parks in COVID-19 Pandemic: As previously discussed Walt Disney earns most of its revenue from its parks & Resorts but because of this pandemic revenue is drastically reduced. Moreover, the company was forced to lay off several employees from its parks due to a lack of revenue.
This part of the SWOT analysis highlights external strategic considerations that force Walt Disney’s executives to improve competitive advantages while safeguarding the company against technological disruption and piracy.
We are now at the end of our in-depth SWOT analysis of Walt Disney Company, let us conclude the blog and our learnings below.
In conclusion, The Walt Disney Company can plan its expansion only by working on its threats. The firm has some weaknesses, but planning can help the company prevent its weakness from impacting its growth. It is unlikely that Walt Disney will vanish anytime soon because it is in high demand for its products and especially its animated movies. It has enough cash flow & has acquired enough companies to sustain the company for the years to come.
Even the best brands can suffer at the hands of increasing competition in the market. In the face of rising competition, impactful marketing becomes a necessity for the company. Hence, gaining a professional understanding of digital marketing is essential if you wish to work in highly competitive industries such as entertainment. If marketing is something that interests you, you should definitely check out the Post Graduation Programme in Digital Marketing offered by IIDE that will help you transform into the managerial candidate in the marketing department of companies.
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