SWOT analysis as a part of business analysis plays significant role to get knowledge about a particular organization. By conducting SWOT analysis, an organization may improve its effectiveness through strengthening its current status, grabbing opportunities and reducing weaknesses and protecting business from threats (Hitt, Ireland & Hoskisson, 2008). In addition to this, SWOT analysis is quite appropriate to make decision to invest in a particular company by an investor. Being a mutual fund manager, this paper will discuss about SWOT analysis of Walt Disney for getting clarity about investmentdecision. In context of SWOT analysis, key strengths, weaknesses, opportunities and threats of Walt Disney would be presented to get clarity about the company’s current position. It would be quite effective to mutual fund manager to make investment decision for Walt Disney. SWOT Analysis
Walt Disney is one of the diversified well-knownbrands of Entertainment Company. Itdeals in different segments of entertainment industry in terms ofanimated films, theme parks, resorts and studios etc. (The Walt Disney Company, 2012).In context of Walt- Disney, several strengths, weaknesses, opportunities and threats are associated with the company that are presented as below: Strengths: Walt Disney is a well-known brand of entertainment industry that has unique positioning around the world. It is the key strength of the company as global customers know the company for innovation and creativity (Ungson& Wong, 2008). At the same time, the company has portfolio of diversified products and services as it deals in studios, animated films, theme parks and resorts, media networks and consumer products etc. (Grewal& Levy, 2008).With the help of diversified products and services, the company is able to generate broad and diversified revenue base by dealing in differentportfolio of products and services (Krasniewicz, 2010). The diversified products and services also strengthen to the company as the availability of diverse products and services lead to reduce risks.
Along with this, it is quite appropriate to increase customer base and market sharethrough covering diverse customers. The acquisition of Pixer Animation Studios has also strengthened to Walt Disney to make leader in the field of animated film (Grewal& Levy, 2008).Additionally, the optimization of innovative and latent technologies or imagination cum engineering is the key strength of the company that has led to create unique positioning of the company around the globein terms of a joyful entertainment place or product. The acquisition and merger also strengthen to the company as it improves its efficacy in a particular entertainment area (Barney, 2007). Instead of this, it also helps in reducing the adverse impact of competition as by acquiring leading firms, the company may increase market share, customer base and profitability. Weaknesses:Despite having strong brand image, well-known brands, portfolio of diversified products & services, use of innovative, creative and latent technologies, the company also lacks in several areas that affect organizational effectiveness. The interdependency of its products on each otheris the key weaken area of the company.It may be known as domino effect, in which sales of a particular product falls then sale of other product would be fall.
In context of the company, the sales of consumer products depend on its animated films and studio product & service. In case of unsuccessful movie, the sales of merchandise products would be decline(Grewal& Levy, 2008). Over reliance on relationships is also the weak area of the company that limits its effectiveness. It is because the expansion of its distribution network is heavily depended on its cable operators. Without them, the company could not sustain the benefits of continued growth. The natural seasonal fluctuation also affects the business operations of Walt Disney as the performance of theme park and resort operations are based on flow of tourists (Krasniewicz, 2010; The Walt Disney Company, 2010). During, holidays, summer and winter vacations, visitors rate increases, otherwise it falls. Along with this, it is quite difficult to manage diverse products and services for continuing organizational efficiency. Opportunities: In current globalized era, a huge sum opportunity can be grabbed by Walt Disney.
The company has an opportunity to sustain the competitive advantage in entertainment industry. Currently most of the revenue is generated by North America as Walt Disney is generated 74.3% of the total revenues from the US and Canada (The Walt Disney Company, 2011). Due to this, the company has a huge opportunity to expand its business around the globe including Europe and Asia Pacific regions. It is because only 17.2 and 6.1% of the total revenues are covered from Europe and Asia Pacific regions in financial year 2010 respectively(The Walt Disney Company, 2011). In addition to this, Latin American market can be covered through introducing innovative and attractive marketing strategies as the company only covers 2.4% of the total revenue in FY 2010(The Walt Disney Company, 2011). Along with this, the company has also a greater opportunity to increase its customer base through upgrading its current, innovative, creative practices and technologies (Crook, Ketchen& Snow, 2003). To cover global business market, the company also has an opportunity of introducing various franchisees around the globe to increase its customer base, market share, sales and revenue(Krasniewicz, 2010).
Distribution agreement would also be beneficial for the company for distributing its DVDs and other products to global customers.Instead of this, the company can improve its efficacy in optimizing latent, innovative and creative technologies to cover global customers through attractive and animated films. Threats: In modern scenario, stiff competition may affect the profitability and sales of the company. It is because several competitors like television networks, satellite networks;print & electronic media, internet etc. are available in the market. The business of parks and resorts may affect from the US based amusement parks (Hubka, Hovdestad&Tonmyr2009). Additionally, proliferation of piracy is also the key threat for the company that affect consistent growth of the company.The unauthorized copies of Disney’s content may affect the revenue, sales and profitability of the company (Grewal& Levy, 2008). The regulatory risks like rules and regulations associated with entertainment industry may affect the business operations of Walt Disney. Stakeholders and their Needs and Wants
As similar to other business organizations, Walt Disney has several stakeholders that are directly or indirectly affected from company’s business operations. The internal and external stakeholders include employees, shareholders, suppliers, customers;government and community etc. (The Walt Disney Company, 2012). The needs and wants of each stakeholder are quite different than others. It is because employees concentrate to get fair wages, supportive work environment and career development opportunities. In contrast,shareholders focus on getting higher return on investment. Suppliers’ need concentrate towards getting timely payment against qualitative product and service delivery. In contrary, customer focuses to get qualitative, attractive and innovative product/ service at competitive rates. Instead of this, excellent service is also the major focus of the customer. At the same time, government concentrates towards getting corporate tax from a particular organization as well as also focuses to follow certain rules and regulations, while continuing business operations(The Walt Disney Company, 2012). Society or community also demands that the company should share a part of their earning in social development and welfare programs. Organizational Contribution towards Stakeholders
For sustaining longer period, Walt Disney contributes towards stakeholders’ well-being. For fulfilling the needs of its employees, the company provides fair wages, supportive workplace and space forcareer development etc. Along with this, employee stock purchase plan, pension plan etc.are also provided to increase the level of employee satisfaction for increasing their efforts for organizational sustainability for longer period(The Walt Disney Company, 2012).For satisfying shareholders’ needs, the firm provides timely dividend to them. The huge sum public shares are purchased with consistent increase in average rate of per share such as paid rate of per share in August, September and October 2010 was $ 32.89, $33.46 and $33.98 respectively(The Walt Disney Company, 2010). In modern scenario, it is quite challenging to business organizations for satisfying needs and wants of their current and prospective customers. But, most of business companies provide their maximum efforts for customer satisfaction to sustain longer period in competitive business environment.
In concern of fulfilling customer needs and preferences, Walt Disney provides a place of attraction, innovation and creativenessproducts and services(The Walt Disney Company, 2010). In other words, the company provides a place of full entertainment to its current and prospective customers that increase their satisfaction level. Along with this, competitive price is also charged against the services provided to its customers. In context of government needs, Walt Disney pays a part of its earning in the form of income tax and corporate tax. Despite of this, several rules and regulations including environment conservation and more are followed by the company(The Walt Disney Company, 2010). For social welfare and development, the company contributes effectively in the form of monetary and non-monetary contribution. As per the above discussion, the company uses effective strategies for fulfilling needs and wants of its respective internal and external stakeholders. To fulfil the needs of its stakeholders, the company has set its objectives towards its different stakeholders. It is presented as below:
(Source: The Walt Disney Company, 2012)
Instead of this, the company has an effective corporate responsibility strategy team that concentrate to make effective strategies for satisfying overall stakeholders as well as also focuses over environmental affairs, international labour standards etc. The initiative of board of directors also plays significant role in the effectiveness of the company as they focuses over stakeholder satisfaction(The Walt Disney Company, 2010). In favour of this, board of directors receives periodical reports about efforts and performance towards corporate responsibility. The efforts of corporate responsibility strategy team are presented as below:
(Source: The Walt Disney Company, 2012)
Business Analysis by Mutual Fund Manager
By conducting SWOT analysis, it is identified that Walt Disney is a well-recognized brand of US that operates its business around the globe. The company has diversified products and services that are appropriate to increase customer base, market share and profitability. At the same time, limited weaknesses are associated with the company that may limit its effectiveness. But, the company’s effective management assists to reduce its weaknesses and also leads to strengthen its business performance. Instead of this, from the SWOT analysis, it is also discovered that a huge sum opportunity can be grabbed by the company for expanding its business around the globe, while concentrating towards North America like the US and Canada. From the data, it is also inferred that the company is also grabbing market opportunities via generating revenue from European and Asia Pacific regions. But, stiff competition, proliferation of piracy, regulatory risks etc. are threatening areas that may affect business operations of the company.
Being a mutual fund manager, it is decided that the company has positive brand image around the globe with diversified products and services. Due to this, there would not be loss of investing in Walt Disney. In contrary, an investorwould get higher return against the investing in the company as previous data presents the continuous hike in average rate of paid per share. Along with this, from the data, it is also identified that Walt Disney provides optimum efforts for satisfying needs and preferences of its respective stakeholders. Due to this, it is clarifies that the company focuses towards all stakeholders’ needs that is the positive sign for investing in the company. Conclusion
From the above discussion, it is identified that Walt Disney is a quite appropriate company in which an investor can invest to get higher return or dividends. It is because the previous data indicates about the consistent growth of investor as average rate of paid per share hikes by continuation of the month. On the basis of above discussion, it is concluded that a mutual fund manager can decide to invest in Walt Disney for getting higher and secured return.
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