Walt Disney Company SWOT Analysis & Recommendations

UPDAT ED ON UPDATED ON DECEMBER 17, 2017 BY LI SA BRO WN

Walter Elias Disney’s star on the Hollywood Walk of Fame. This SWOT analysis of The Walt Disney Company shows strengths, such as brand popularity, that support business competitiveness to exploit growth
opportunities despite the company’s weaknesses and threats in the entertainment, mass media, and amusement parks industries. (Photo: Public Domain)

The Walt Disney Company positions itself as one of the leading firms in the entertainment, mass media, and amusement park industries. This position is achieved through business strengths that address
weaknesses, opportunities and threats (the SWOT factors) in the global market. Disney’s case is an example of successful management of internal and external factors, such as the ones ascertained in this SWOT
analysis of the business. The SWOT analysis tool informs managers about the internal factors (strengths and weaknesses) and external factors (opportunities and threats) pertinent to the business. In this business
analysis case, The Walt Disney Company’s SWOT factors focus on issues linked to the family-oriented entertainment branding of the business, and on the strategies for addressing international business
competition. The conglomerate needs to address the challenges identified in this SWOT analysis. Such efforts must consider changes in the global market, and the strength of the Disney brand in the long term.

This SWOT analysis of Disney sheds light on the issues that investors and management personnel must take into account when evaluating the business. For example, strengths sufficient for exploiting opportunities
in the mass media industry present potential success of strategic growth initiatives. The corporation’s strengths and weaknesses (internal factors) must suit the opportunities and threats (external factors) in its
international industries. The Walt Disney Company must possess the strengths to withstand the negative effects of weaknesses and threats in its industry environment. This SWOT analysis serves as a guide for
understanding such business issues.

Disney’s Strengths (Internal Strategic Factors)

In the SWOT analysis model, this aspect refers to the internal factors that strengthen business growth. In this company analysis case of Disney, such factors support management strategies to grow the business
amid aggressive competition in the global entertainment and mass media industries. For example, business strengths protect the company against the aggressiveness of Comcast Corporation (owner of Universal
Pictures), Sony Corporation, Time Warner Inc., and other firms. The following internal strategic factors are the strengths of The Walt Disney Company:

1. Popular and strong brand - Disney has a popular and strong brand, which is among the most easily recognizable in the world. Through this strength, the company presents itself as a decent and
family-oriented business suitable for all customers. This internal factor helps manage customers’ expectations, which tend to be positive relative to the reputation of the Disney brand.
2. Growing portfolio of popular products - This SWOT analysis also considers the company’s growing portfolio of popular products as one of the strengths of the business. For example, the variety of
the company’s movies and corresponding merchandise and amusement park services gradually increase throughout time. This internal strategic factor contributes to revenue growth, while supporting the company’s
popularity.
3. Strong cooperative growth among business segments - In addition, The Walt Disney Company’s organizational structure facilitates mutually beneficial cooperation among business segments. This
strength enables synergistic cooperation to ensure competitive advantage.

Overall, the enumerated strengths in this aspect of the SWOT analysis of The Walt Disney Company support long-term growth despite aggressive competition.

Disney’s Weaknesses (Internal Strategic Factors)

This aspect of the SWOT analysis model evaluates the internal strategic factors or weaknesses that function as barriers to business growth and development. The Walt Disney Company’s organizational culture is
partly responsible for these weaknesses. Also, branding strategies impose limitations on the multinational business. Disney’s management must address the following weaknesses of the business:

1. Limited innovation - The weakness of limited innovation is associated with Disney’s business strategies. The company does innovate through continuous product improvement. However, rapid
innovation involving advanced technologies is limited in the company’s operations.

1. For example, Disneyland theme parks tend to have a reactive rather than an aggressive approach in adopting new technologies. The Walt Disney Company’s generic strategy for
competitive advantage and intensive strategies for growth focus on quality and uniqueness of product features, with limited emphasis on rapid technological innovation. This internal factor
is a weakness because technological innovation is a differentiator and competitive advantage in the international market.
2. Limited diversification - Limited diversification is another weakness considered in this SWOT analysis of Disney. This internal strategic factor is based on the company’s aim of synergy through its
business segments.
3. Limited expansion of amusement parks

Synergy requires businesses that are closely related, and not diversified businesses in unrelated industries. This aspect of the SWOT analysis shows that addressing The Walt Disney Company’s weaknesses
require some changes in core strategies and management approaches.

Opportunities for The Walt Disney Company (External Strategic Factors)

In this aspect of the SWOT analysis, opportunities facilitate business growth. In Disney’s industry environment, these opportunities are external strategic factors that lead to higher revenues in the company’s global
entertainment, mass media, and amusement park operations. For example, expansion opportunities can improve the revenues of Disneyland operations. The following opportunities are among the main managerial
concerns in growing The Walt Disney Company:

1. Technological innovation - Technological innovation affects all industry environments. This trend is an opportunity in this SWOT analysis. The Walt Disney Company has an opportunity to adopt new
technologies to improve its global business.
1. For example, digital technology implementations can improve business efficiencies and output quality in amusement parks and resorts.
2. Growth in various industries - the external factor of growth in various industries is an opportunity to grow the corporation’s business through diversification and related managerial approaches.
3. Growth of developing markets - the growth of developing markets is an external strategic factor that creates the opportunity to expand the company’s operations, such as through market penetration
in the mass media industry.

The opportunities in this aspect of the SWOT analysis show that The Walt Disney Company can grow its revenues through innovation, diversification, and expansion.

Threats Facing The Walt Disney Company (External Strategic Factors)

In the SWOT analysis model, this aspect focuses on the external strategic factors that have potential to reduce business performance. In Disney’s case, these factors are the threats that come with trends related to
entertainment firms and other players in the international industry environment. For example, competitive forces involving Viacom Inc. and CBS Corporation can bring down business performance. The Walt Disney
Company’s management efforts must tackle the following threats to the business:

1. Competition - Competition remains the most significant threat relevant in this SWOT analysis of the Walt Disney Company
1. Aggressive competition is especially observable in the international mass media and entertainment industries. For example, aggressive firms compete by offering movies similar to the
ones from Disney’s Marvel Studios.
2. Technological disruption - the external factor of technological disruption has potential to reduce the company’s profits.
1. For instance, technological changes in online product delivery in the entertainment and mass media markets continue to shift some profits to businesses that offer online media channels
and networks.
3. Digital content piracy
1. Moreover, digital content piracy reduces the company’s potential revenues, especially in markets with weak legal protections against this threat
 This aspect of the SWOT analysis points to external strategic factors that require Disney’s managers to increase competitive advantages while protecting the business against technological disruption and piracy.

Summary & Recommendations – SWOT Analysis of Disney

Summary. The internal factors enumerated in this SWOT analysis underscore Disney’s strengths to continue growing its business and maintain one of the leading positions in the global market. For example, the
company’s strong and popular brand is a major competitive advantage. However, weaknesses impose limits on potential growth. The corporation’s limited diversification is an internal strategic factor that prevents
new business ventures in high-growth industries. This SWOT analysis also identifies external factors that present barriers to the company’s growth. Managers need to address the external strategic factor of growth
in developing markets, such as through market penetration, to improve The Walt Disney Company’s financial performance. Moreover, adjustments in strategies can address issues linked to competition and digital
content piracy in the entertainment and mass media markets.

Recommendations. The recommendations based on this SWOT analysis of Disney are focused on improving business competitiveness and long-term success in the international market. Changes in the
company’s management and strategies must focus on using its strengths as internal strategic factors for ensuring growth despite the company’s weaknesses. These strategies must also address the impacts of
threats, while exploiting opportunities based on the external strategic factors in the conglomerate’s industries of operations. Focusing on the most significant issues in the industry environment, it is recommended
that The Walt Disney Company:

1. Further penetrate markets, especially developing markets, to benefit from their high growth rates.
2. Further diversify the business, even in limited ways, to increase product scope.

3) Internal Analysis of Starbucks Corporation:

3.1) Starbucks Core Competence: The core competence of Starbucks has been its ability to effectively leverage their cornerstone product differentiation strategies by offering a premium product mix of high quality
beverages and snacks. Starbuck’s brand equity is built on selling the finest quality coffee and related products, and by providing each customer a unique “Starbucks Experience”, which is derived from supreme
customer service, clean and well-maintained stores that reflect the culture of the communities in which they operate, thereby building a high degree of customer loyalty with a cult following. Its other core competence
is its human resource management's valuesbased approach for building very strong internal and external relationships with suppliers, which drives the successful deployment of its business strategy of organic
expansion into international markets, horizontal integration through smart acquisitions and alliances that maintains their long-term strategic objective being the most recognized and respected brands in the world.

3.2) Starbucks SWOT Analysis:

Strengths:  Strong Market Position and Global Brand Recognition: Starbucks has a significant geographical presence across the globe and maintain a 36.7% market share in the United States (Appendix 1) and
has operations in over 60 countries. Starbucks is also the most recognized brand in the coffeehouse segment and is ranked 91st in the best global brands of 2013.8 Starbucks effectively leverages its rich brand
equity by merchandizing products, licensing its brand logo out. Such strong market position and brand recognition allows the company to gain significant competitive advantage in further expanding into international
markets and also help register higher growth in both domestic and international markets. Over the years, they have achieved significant economies of scale with superior distribution channels and supplier
relationships.  Products of the Highest Quality: They give the highest importance to the quality of their products and avoid standardization of their quality even for higher production output.9

Strategic Analysis Of Starbucks Corporation

 Location and Aesthetic appeal of its Stores: Starbucks has stores in some of the most prime and strategic location across the globe. They target premium, high-traffic, high-visibility locations near a variety of
settings, including downtown and suburban retail centers, office buildings, university campuses, and in select rural and off-highway locations across the world.10 This has earned them a significant competence and
advantage to be able to penetrate prime markets and tap into customers convince factor. Their stores are visually appealing and have a ‘cool’ factor attached to it with being designed to reflect the unique character
of the neighborhood they serve in and environmentally friendly. They provide free wifi, great music, great service, warm atmosphere and provide an environment of community meeting spot, which forms a wider part
of the ‘Starbucks Experience’. The main aim for the firm is to make their stores a ‘third place’ besides home and work.11  Human Resource Management: Starbucks is know for its highly knowledge base
employees. They are the main assets of the company and they are provided with great benefits like stock option, retirement accounts and a healthy culture. This effective human capital management translates into
great customer services. It was rated 91st in the 100 best places to work for by Fortune Magazine.12  Goodwill among consumers due to Social Responsibly Initiatives: Their stores are community friendly, focused
on recycling and reducing waste. They build goodwill among communities where they operate.13  Diverse Product Mix: Starbuck portfolio of products given in Appendix 8, that caters to all age groups demographic
factors.14  Use of Technology and Mobile Outlets: Starbucks efficiently leverages technology with its mobile application “Starbucks App’ in both apple and android software’s. They make significant investments in
technology to support their growth every year.15  Customer base loyalty: Starbucks has cult following status among consumers and they have also implemented loyalty-based programs to drive loyalty with the
Starbucks Rewards programs and Starbucks Card. The Starbucks Card is a value card program that provides convenience, support gifting, and increase the frequency of store visits by cardholders and integrated
with their mobile application.16

Weaknesses:  Expensive Products: While Starbucks does differentiate their products with being highly quality couple with the whole ‘Starbucks Experience’, in times of economic sluggishness, consumers to have
so switching costs to competitor’s products with lower prices and forgo paying a premium. These premium prices could also pose some weakness for it to succeed in developing countries.  Self-Cannibalization
through overcrowding: By aggressive expansion and high saturation due to overcrowding in the market leads to self cannibalization and diminishes long term growth targets of Starbucks. This is happening especially
in the United States where Starbucks operates 8078 stores.17  Overdependence in the United States market: In line with self-cannibalization of the US market with 8078 stores, Starbucks generates a huge
percentage of their total revenue from the US and this makes it very sensitive to prospects of the US economy and growth.  Negative large corporation image: Like any large corporation, Starbucks does come
under increased scrutiny and have to invest in corporate social responsibility activates and maintain tight control over labor practices.  American/European coffee culture clash with that of other countries: Starbucks
coffee culture may not widely accepted in some countries as part of their international expansion strategy.

Opportunities:  Expansion into Emerging Markets: The increase saturation and self-cannibalization of the US market makes its international strategy even more important. Starbucks has made good inroad into
many countries, with India recently joining the list with a joint venture entry.18 Starbucks has a great growth potential in further expanding into the emerging and developing markets. They can leverage their size,
experience, financial prowess and efficiencies to make new market share.19  Expanding Product mix and offerings: Starbucks recently started to expand their product mix by venturing into the Tea and fresh juice
product offerings with a smart acquisition strategy.20 This provides significant opportunities for Starbucks.

Strategic Analysis Of Starbucks Corporation

 Expansion of retail operations: Starbucks currently sell its packed coffee products, iced beverages and merchandizes through large box retailers. This market’s potential is yet to be fully realized and this provides
Starbucks great opportunities for the future to future monetizes their brand.  Technological advances: Starbucks has leveraged the use of mobile applications and has an investment partnership with Square, a
mobile payments app that is integrated with its Starbucks app. This creates an ease of use process for customers, aligns customer loyalty through reward programs. Starbucks has already set the bar in the industry
with this advancement and about 10% of its transactions in the US have been made using mobile applications.21 This is a growing field and would drive more business to their stores as technology advances.  New
distribution channels: Starbucks introduced a beta version of a delivery system called Mobile Pour. This presents a great opportunity for the future by expanding their end product distribution systems and could drive
more revenue if the implementation is successful.22  Brand extension: Starbucks carries a powerful brand image and it can leverage it to extend into horizontal lines of its business and also venture into product
diversification with keeping brand dilution risk in check.

Threats:  Increased Competition: This is by far the biggest threat that Starbucks faces with the market being at a mature stage, there is increased pressure on Starbucks from its competitors like Dunkin Brands,
McDonalds, Costa Coffee, Pete’s Coffee, mom and pop specialty coffee stores. Dunkin Brands had at its main threat in the US market by trailing Starbucks with a 24.6% share. (Appendix 1)  Price Volatility in the
Global Coffee Market: There has be significant fluctuations in the market prices of high quality coffee beans, which Starbucks can’t control.  Developed Countries Market Saturation: Starbucks derives a significant
amount of its revenue from the development markets and there is increased market saturation currently.  Developed Countries Economy: In an increasingly economically integrated world, an economic crisis like
the one in 2008 could have a trickle down effect from the developed markets to the developing markets. This threat would hurt revenues for Starbucks as consumers shift away from premium product mix to stay in
limited budgets during economic hardships.  Changing Consumer tastes and lifestyle choices: The shift of consumers toward more healthy products and the risk of coffee culture being just a fad represent a threat
for Starbucks going into the future.