The Walt Disney Company

Impact of Mission, Vision and Primary Disney Stakeholders

Walt Disney Company is a leading firm in the entertainment industry. The vision of the company is to make people happy (The Walt Disney Company, 2013). The company’s mission has to do with striking a balance between its operations, goals, objectives and the environment. The statement of the mission and vision of the company has had a significant impact in the success of the company over the years. In a general sense, the statements have led to enhanced innovation in a bid to make people happy. According to David and David (2003), the vision of the company helps in creating guidelines for future decisions, providing value for stakeholders, preparing business for future uncertainties, informing the action plan and channeling commitment of employees. Courtesy of its vision and mission, Disney has been able to be among the 500 fortune companies and a leader in movies production.

The general stakeholders of the company are the shareholders, customers, investors and employees. Disney has all these stakeholders, who have contributed differently to its success. By closely scrutinizing the company’s website, it appears that customers are some of the most important stakeholders of the company. They have led to increased profitability and revenues over the years. In addition, one cannot downplay the role of investors and employees. According to Rayner (2004), for instance, the management of the company made a broad decision that lead to the reduction of spending. Prior to 2002, the company separated auditing services from the consulting affairs (p. 106). Since the external audit company was no longer doing non-audit-related services, the company made more savings.

How Five Forces of Competition Impact the Company

The five forces of competition include the bargaining power of buyers, bargaining power of suppliers, threats of substitute products, threat of new entrants and the degree of rivalry among the already established firms (Hellriegel, Jackson, &Slocum, 2007). In the context of Disney, these forces have different impacts. The impact of buyers is very profound. This is because customer tastes and preferences determine what type of products Disney develops. As a result, the company is involved in research, into what the clients like or dislike and the rate, at which these likes or dislikes change.

The bargaining power of suppliers is also evident as affecting Disney’s operations. According to Hellriegel, Jackson and Slocum (2007), when choosing its suppliers, Disney Company is guided by principles of quality, service of the supplier. In other words, this force leads to intensification of the selection criteria for the suppliers. The threat of new entrants also impacts on the company’s innovation. The company is engaged in continuous innovation and re-invention of its products in a bid to making the market difficult for new entrants. They also acquire other forms in order to amass the necessary synergy for profitability.

Substitute products are the main focus of the competitors of Disney Company. As a result, these have over time weakened the company’s goals of making people happy. In a general sense, substitute products divide the target population into those that would buy from Disney and those, who would buy from the competitor. Businesses like Netflix, Wal-Mart, Amazon and Blockbuster lead to less market share for Disney. Lastly, rivalry among the already existing firms reduces the rate of industry growth, leads to high costs that are fixed and uncertainty in the market (David & David, 2003).

Disney SWOT Analysis

SWOT analysis is a tool used to determine strengths, weaknesses, opportunities and threats of a company. All companies have all the above, but in different magnitudes. Disney Company’s strengths include a strong management, use of technology, cost advantage, popular brand and financial leverage (Rohac, 2007). To begin with, since the company was started in 1923, it has continuously created a strong brand amid challenges. Today, the company enjoys that which it has created over many decades, thus giving the company more acceptability than new entrants in the entertainment industry.

The company also has its weaknesses. These include ineffective acquisitions, bad reputation, inefficient customer service and operations, large debts, old technologies and mild online presence (Rohac, 2007). With rapid changes in today’s market and customer preferences, there is a need for the company to adopt a more aggressive approach in marketing. Rohac (2007) further points out that Disney has opportunities in product differentiation, new products, apprehension of emerging markets, new products under new innovation, new technologies for animations, new services and tools, such as social networking sites and financial leverage. Although Disney has these opportunities, it is also faced with several threats, such as competition, political influences, changes in customer preferences, unstable currencies and revenue, mature products and mature markets. The latter imply that there may be little room for growth in those markets or along such product lines.

Disney SWOT-based Strategy

Following the above strengths, weaknesses, opportunities and threats, it is proposed that Disney uses focused product differentiation strategy in order to maintain profitability, market share and high revenues. According to Schermerhorn (2009), focused differentiation strategy entails concentrating on a specific segment of market and offering a unique product for that segment. In this case, it is proposed that Disney should concentrate more on children segment and mostly offer movies and animations. This would enhance the company’s strengths and opportunities and simultaneously mitigate its threats and weaknesses. For instance, focused differentiation would lead to more technological innovation that consists in strengths and opportunities, to curb bad reputation and online presence, which are its weaknesses and threats.

Levels and Types of Strategies

There are several levels or types of strategies that Disney can adopt. Since Disney is a diversified firm or publicly traded, there are three main levels of strategy that the company can adopt. According to Schermerhorn (2009), these include business-level strategies, corporate-level strategies and functional-level strategies.  Business-level strategies are those strategies that define how Disney should compete in the entertainment industry. Further, corporate-level strategies define how Disney should compete in specific businesses. In addition, business-levels strategies would be concerned with internal affairs, while corporate-levels strategies would tend to focus on affairs that go beyond the company’s daily operations. Therefore, Disney’s business-level strategies would require to be revised more often than corporate-level strategies. Functional-level strategies define how different functions of the firm, such as production, operations and communications, should work together in a harmonious manner.

There are several types of specific strategies in each level of strategy formulation. Examples of business-levels strategies that Disney could adopt are cost leadership, differentiation, focused differentiation, focused cost leadership and integrated cost leadership and integration (Schermerhorn, 2009). It is proposed that Disney adopts focused strategies with regard to differentiation and cost leadership. There are also various corporate-level strategies at the disposal of Disney. These include strategic alliances and diversification of services and products. Furthermore, Disney could adopt several functional-level strategies, such as recruiting and retaining the best employees and designing the best information systems among others.

Disney Communications Plan

Strategy must be effectively communicated to stakeholders. However, for communication to be effective, it must be well planned and structured. The communications plan is simply a structure, mechanism, path or process for the relaying of information to the stakeholders of business.

In developing a communications plan for any firm, one considers the type of audience, objective of communication, communication activity, communication path and measures of success (Melton, 2011). Therefore, the first step is to segment stakeholders and establish the needs for each segment of stakeholders. According to Melton (2011), the nature of the communication is a key determinant of investor’s confidence in the company because it is a reflection of the firm’s abilities.

Currently, Disney has an elaborate communications plan that entails seeking information from all people, meeting the communication needs of each person, creating Smartphone applications for employees and a fair use of social media. Moreover, this plan would make information flow to the stakeholders more effectively. Firstly, define the type of stakeholders, to whom the communication is intended. Separate shareholders from customers. Secondly, define objectives for the communication. Third, determine the best channel for each segment of the stakeholders. Buyers today are online shoppers, while shareholders may require communication in the form of emails.

Disney Corporate Governance Mechanisms

Corporate governance entails procedures and policies that lead to the protection and control of the interests of stakeholders (Rayner, 2004). Generally, there are internal and external governance mechanisms. Internal mechanisms include: board of directors, balance of power block holders, audits, founding family and CEO stock ownership. External mechanisms are centered on market control forces.

Disney uses various corporate governance mechanisms. According to the Walt Disney Company (2013), the company is run by the Board of Directors. The necessary following documents exert different kinds of control: Disney Code of Conduct and other governing documents, such as bylaws, certificate of incorporation and guidelines for corporate governance. The Code of Conduct consists of the Code of Business Conduct and Ethics for Directors and the Standards of Business Conduct. Analysts write that a firm that uses the board of directors has a stronger emphasis on the promotion of the shareholders’ rights. The Board of Directors consists of 10 members. In addition, the board has established at least three committees that specialize in different functions. These committees include the Compensation Committee, the Audit Committee and the Governance and Nominating Committee. The Board is headed by the Chairman.

The second mechanism of Disney’s corporate governance is the use of CEO. The Chief Executive is mandated with the professional implementation of the corporate strategy. Therefore, the aforementioned Board gives oversight to the CEO and the entire management as well as the staff. These two mechanisms at Disney, as well as most firms, are not necessarily opposed to each other, but are meant to complement each other in a bid to achieve the wider goal. The two systems also serve to fulfill the divergent interests of different stakeholders. For instance, the CEO is likely to push for the interests of employees, while the Chairman of the Board would largely push for the interests of shareholders.

Leadership Effectiveness and Recommendation

Leadership forms a key ingredient in the success of any company. This is because leadership determines the pace, at which the goal is achieved. Disney Company has been able to survive decade-long challenges because of effective leadership. Disney leaders are categorized into two groups: management and the Board of Directors. However, the leadership of the company has been variously criticized.

Disney has a unique approach to leadership. Through the company’s leadership, important principles are instilled into the leaders of the company. There have been about 8 presidents since 1923, 6 CEO’s, 9 Chairmen, 3 Vice-Chairmen and several Chief Operating Officers. There is a rigorous process of selection followed by thorough training of those that are selected. There are also programs for continuous engagement of the leaders of the company. The leadership of the company is criticized or accused of incorporating near-pornographic literature in the children movies. There have also been concerns that the Board pushed for interests of investors at the expense of the customers.

Disney has been a successful player in the entertainment industry since 1923. Although the existence of the company to-date is an indication of successful leadership, there is a need to entrench the interests of buyers as the priority. Family interests should not prevail over business interests. The company should devolve its powers to the board that is not responsive to unreasonable family demands but to corporate needs as well as business goals.

Disney Corporate Citizenship

Disney is an effective corporate citizen. In its website, the company expressly states that citizenship is incorporated in all the decisions that the company makes. According to the Walt Disney Company (2013), the company’s corporate citizenship is founded on three principles. These include champion, act and inspire. The ‘act’ principle entails making ethical decisions that are conscious of future consequences. The company also champions and inspires kids and families to make useful decisions in their lives.

The above three principles have helped in the success of the company. As seen earlier, the company’s decision prior to its 2002 annual general meeting to separate auditing from consulting services gave the company a facelift. According to Rayner (2004), the company was able to secure positive headlines in the news as having taken a bold step in spite of later consequences that would come from politicians and regulators. The other effect of these kinds of ‘action’, ‘championing’ and ‘inspiration’ has been the promotion of positive investor confidence. It also promotes the confidence of the shareholders. This way, the company’s first-mover convert approach to citizenship turned threats into opportunities.

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