The Walt Disney Company Analysis Essay Example

1300 radio and TV channels which broadcast in 53 languages. Disney it is one of the world’s largest licensor and the largest publisher of children’s literature all over the world. In Europe and Latin America Disney tops the list of video distributors. Since the moment of its foundation, Disney and all its structures have been staying faithful to their main principle - to create only high quality production in the entertainment segment with the help of use of rich experience, which was ccumulated by long years of successful work. Nowadays, Disney Company shares its power and operations between four key divisions: Studio Entertainment, Parks and Resorts, Consumer Products and Media Networks. Each of these divisions provides different market segments with distinct products and services. However, all divisions are similar in their aim “To make people happy” and creative imaginative efforts to “reach hundreds of millions of people worldwide and provide them with incredible entertainment experiences”.

Studio Entertainment

The Walt Disney Studios distributes animated films under: Walt Disney Pictures, which includes Walt Disney Animation Studios and Pixar Animation Studios; Disney Toon Studios – Touchstone Pictures, Hollywood Pictures and Miramax Films; Walt Disney Studios Motion Pictures International which serves as the studio’s international distribution arm; Walt Disney Studios Home Entertainment which distributes Disney and other film titles to the rental and sell-through home entertainment markets worldwide; Disney Music Group which distributes original music and motion picture soundtracks under Walt Disney Records, Hollywood Records, and Lyric Street Records.

Parks and Resorts

Disney’s Parks is not just home to Disney’s favorite characters but the place “Where Dreams Come True”. In 1952, Walt Disney formed Walt Disney Imagineering to build Disneyland Park in Anaheim,

California. Since then, parks and resorts have grown and spread to the world-class Disney Cruise Line, eight Disney Vacation Club resorts (with more than 100,000 members), Adventures by Disney and five resort locations (encompassing 11 theme parks, including some owned by independent entities) on three continents:

• Disneyland Resort, Anaheim, California
• Walt Disney World Resort Lake Buena Vista, Florida
• Tokyo Disney Resort, Urayasu, Chiba
• Disneyland Resort Paris, Marne La Valle, France
• Hong Kong Disneyland, Penny’s Bay Lantau Island

Consumer Products

Disney Consumer Products (DCP) is a business segment of The World Disney Company that extends the Disney brand to merchandise ranging from apparel, toys, home decor, books and magazines to interactive games, food and beverages, stationary, electronics and animation art. Disney Consumer Products appeared in 1929 when Walt Disney licensed the image of Mickey Mouse for use it on a children’s writing tablet. Media Networks. Media Networks comprise a vast array of broadcast, radio, cable, publishing and Internet business.

Key arias include: Disney-ABC television group, ESPN Inc. , Walt Disney Internet Group, ABC owned television stations and a supporting headquarters group. Marketing, research, sales and communications functions also exist within the segment. PEST As well as all companies, Walt Disney Corporation is affected by such external factors as: political factor, economic factor, social factor and technological one.

Political Factor

The government is the biggest serious aspect of a political factor as it is the one that forms the laws and tax size. Since Disney Company is international organization and it operates in different countries, governments of these countries strongly interested in and support its work. For example, in 1927 Walt Disney Studio contracted with U. S. government to produce educational films.

These projects were so profitable and interesting that studio is completely refused to continue work on film about Mortimer Mouse, which was popular at that time. During World War II commissioned by the government Disney continued to produce educational and propagandistic cartoons. “Education for death”, “Der Fuehrer’s Face”, “Commando Duck” and other anti-German and anti-Japanese films became so-called weapon to fight against fascism. Especially a lot of educational and guidance films were produced for Navy and Air Force.

Actually Disney became a military business. Despite the fact, that these works didn’t bring any high income or pleasure, they helped to become free from worries about the future and with this help to relax the creative force. Political factor as well influence another Disney Company’s division – Parks and Resorts. As the name of Disney undoubtedly creates associations with America, then attendance of Disney lands is closely connected with people's attitude to this country. For example, the attendance of European Disneyland has decreased because of two reasons, firstly, because of local reason – the new attraction was not paid off and secondly, because of global one.

America is no longer associated with “American Dream” (country with great potential, where everyone can get what he wants). Nowadays, it is rather associated with country with great ambitions, which try to influence world politics and economy. Moreover, war in Iraq strongly tainted U. S. image, so Europeans began to turn away from American brands including Disney.

Economic Factor

Being an international company, Walt Disney Company is usually affected by the economic state of the country it is operating in. For example in Russia economy is developing very fast: retail sector and the solvency

of the population are growing, cinema is reviving and these factors have a positive effect on Disney.

The commotion in the financial markets has negatively affected the economic activity in the United States and other regions of the world, where Disney operates. A decline in economic activity could negatively influence demand for some of Disney’s products and services in any of its divisions, thus reducing their overall revenue and earnings. A declining in economic conditions can reduce attendance of Disney's parks and resorts, prices for advertising on broadcast or cable networks or owned stations, prices that Cable Service Providers will pay for cable programming, performance of their theatrical and home entertainment releases, and purchases of Company-branded consumer products.

These conditions can also harm those with whom Disney does business to satisfy their obligations to Disney. Because of changes in exchange rates for foreign currencies the international demand for Disney products and the dollar value of revenue received from non-United States markets can be also reduced while the labor or supply costs in these markets can be increased. The world economical crisis is also a good example of how the economic factor influences the company. For example net loss of European Disneyland, which owns and operates Disneyland Resort Paris, which includes Studios theme park Disneyland and Walt Disney World, Disneyland trading village, play area, and 7 hotels, increased and at the end of the period 31 March 2010 reached € 114. million, when with a year earlier, they accounted for € 85. 4. Revenues from the theme parks have fallen because of the annual decrease of visitors to 8. 5%, which is partially covered by an increase of

the average amount left by the guests in the park. The decreasing of attendance was influenced by decreasing of number of visitors from the UK and the Netherlands. Revenues of hotels and Disneyland villages declined because of reduced congestion but it was partially covered by increasing of amount per room, left by guests. By the way, last year income was not so badly affected by economical crisis and one of the reasons was that people reserved their visits in advance.

It is interesting that economical crises as well has an influence on content of films and create new “movie stars”. During the period of Great Depression Mickey Mouse has gained worldwide fame. Cartoons about Mickey Mouse and his friends, which were produced every month, were full of optimism and hope for the best and it was exactly those feelings, which Americans were trying to save. As a result Mickey became incredibly famous and hundreds of products with his name, from T-shirts and watches to jewelry and books, appeared. Politicians and journalists of that time highly appreciated the Mickey Mouse’s "work" which helped to save the spirit of the American nation.

Social factor

After many years of operation in the entertainment industry The Walt Disney Company realized that its products’ target audience is not only children. Their love for Disney comes under the influence of decision makers – parents, who take their kids to the movies and buy goods, produced by the company. Disney knows that it is one thing to make a great movie and to attract kids but it goes without saying that the efforts will fall short if parents will not approve of it. That is

why people’s interests and views have a great influence on the Disney operations and the success of each of Disney’s businesses depends on their ability to adapt to these changing consumer tastes and preferences.

So, The Walt Disney Company is in a business with the aim to entertain families with children who are looking for fun, interactive and safe vacation place both with resorts, parks and cruise lines. Moreover, it is very important to consider cultural and social differences. For example, European Disneyland faced with several problems because of lack of wine offered with meal and small number of smoking arias, while these factors are considered as European necessities. What is more, Disney has to produce family oriented and family friendly production, to create products and toys which will be entertaining and safe for children who are existing customers and to produce new goods which must be enough attractive for new target customers.

For example, nowadays, video games are very popular among age-range of people who are a little older than kids, and the company can attract new teenager audience with this new production. As generations change, views and goals of life also become different. New generation is more family oriented than their parents’ generation is and these people are ready to easily get a quick decision to give money for spending holidays somewhere for fun. As a result, these people become interested in companies which provide vacation resorts and especially theme parks. On the one hand, this factor raises revenue of the company by increasing of visitors, but on the other hand, it creates a great competition. Most of Disney’s competitors provide people with places for

vacations as well as with other entertainment production.

The most serious Disney’s competitors are: Universal Studios, which is a global organization and, like Disney, has theme parks in the different parts of the world: United States, Japan, Singapore, Dubai, and Korea; Paramount Parks is a more local example with many parks situated in the United States and one in Canada; and Disney’s most adverse competitor, the leader in the industry of theme parks and amusement parks, is Six Flags Theme Parks which is also associated with Warner Brothers Studios. However, Disney’s name and its history in the entertainment industry create a lot of advantages over all its competitors. Finally, the entertainment industry is continuously growing and developing because of the changes in demographics and orientations of today’s generation. Walt Disney Company’s roots in the American culture and recognition all over the world created a strong foothold for this company in this industry.

Technological factor

In the modern world, technological development plays huge and important role. All organizations directly depend on innovations and all kinds of new technologies. Disney Company is not an exception. Technological advance takes part in the development of each Disney’s division. Firstly, the success of Disney Company highly depends on use of latest technologies in the home entertainment market, which include DVD players, personal video recorders as well as web-based delivery of entertainment offerings. So, if Disney offers any entertainment products but it has not fully developed entertainment options, which are more used by customers, it can lead to loosing of customers and as a result sales will decrease.

Secondly, the developing of computing, communication, and entertainment technologies and the low prices for use these technologies,

easy access to the internet lead to that company need to spend more money for protection of its intellectual property against unauthorized use. Growing popularity of 3D technologies among audience also has an influence on Walt Disney Corporation. Company has to transit to a digital format and to translate classic two-dimensional pictures in 3D in order not to fall behind competing companies and to satisfy people’s expectations. Technological development influences emergence of a great amount of new attractions in the Disney Parks.

For example, new attraction- Disney Quest, which is situated in The Walt Disney World Resort, it is a building with five interactive levels, where you can become a member of a virtual reality, take part in various sport events, go to space travel, climb the stairs to the sky and to play the best computer games, so everything depends on imagination. CONCLUSION In the 1923 future millionaire Walter Elias Disney came to Hollywood with 40$ in his pocket and unfinished cartoon. Today annual revenue of The Walt Disney Company is about 35 billion dollars. Except a production of movies and cartoons, company controls five resorts, 11 theme parks, 2 water parks, 39 hotels, 8 studios, 11 cable TV channels, 6 record companies and one national broadcasting company. The aim of this work was to analyze the indirect external factors which have an influence on this company. There are some important things which become clear after this analysis.

First of all The Walt Disney Company it is a global leader in the entertainment industry, which extends its influence on various sectors. Moreover, Disney it is a growing company and it has strong market positions in the

domestic market in the United States and outside. However, as well as all organizations, Disney is not protected from the negative influence of environmental factors, which may undermine the popularity of the company, to decrease its revenue, put in jeopardy the intellectual property. But despite all the above, the positive impact of external factors and the main achievement of the company “To make people happy” moves the company on the top position in the entertainment market and makes it more recognizable and attractive to existing and new customers.