Competitive advantage of walt disney company

Walt Disney Company Case Study And Strategic Plan

Read the Walt Disney Company case, and from the perspective of an executive with the firm, prepare a strategic plan to grow the business over the next three years. Your strategic plan must be future-oriented and include the following:

A critique of the company’s mission statement based on the article ‘Mission Statements (Links to an external site.)Links to an external site.’
"The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world."
One- to two-sentence vision statement for the company.
An assessment of the targeting and segmentation strategy of the company within its five major segments.
An evaluation of the external environment (industry, market, and the general environment), and the internal situation (core competencies, brand reputation and loyalty, and customer-value proposition) of the company.
A SWOT analysis detailing on the strengths, weaknesses, opportunities, and threats that may affect the organization. Choose three or four areas from your SWOT analysis and explain why the areas you have chosen are essential to your strategic plan.
An assessment of the implications of digital TV and internet-based business models on the strategies of the company.
An evaluation of the factors determined Disney’s international diversification strategies. Use the analytical framework proposed for the study of global media conglomerates (fig 9.4.- page 198 of the textbook).
The final paper / strategic plan:

Must be 12 to 15 double-spaced pages in length (not including title and references pages) and formatted according to APA style.
Must use at least five scholarly sources in addition to the course text. Remember to incorporate information that you have learned from this course as well as your personal experience.
Due no later than Saturday, March 30 midnight ET.

Title：Walt Disney Company Case Study

Author(s): Anna(方榆安)，Adrien(安磊恩), Jackie(楊欣樺), Judy(洪靖雯),

Zoe(范氏黃英)

Class: 1 s t

and 2 nd

year of Department of International Business

Student ID: M0566104, M0400975, M0419066, M0401183, M0570968

Course: Global Strategic Management

Instructor: Dr. Dr. Fang-Yi Lo

Department: Department of International Business

Academic Year: Semester 1, 2016-2017

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Abstract

In an ever-changing world, we researched how a company like Disney and more

particularly the Walt Disney Parks and Resorts division can become and stay a leader

in its industry.

We analyzed the different levels of strategy, created a strategic map, applied a

five forces analysis of the company, did a group analysis, did a VRIS and

Resource/Analysis, did a BCG matrix and Synergy analysis, a value chain analysis,

explained the diversification strategy.

These researches allowed us to define the key point that makes Disney the

reference in the amusement park industry: offer a unique, immersive and positive

experience to each visitor through a great storytelling that is constantly renewed. The

future success of the company depends on its ability to innovate and keep delivering

an outstanding user experience.

Keyword： Disney parks, amusement parks, strategy

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Table of Content

Chapter 1 The Walt Disney Company ........................................................................... 8

1.1 Introduction ...................................................................................................... 8

1.2 Choosing Disney .............................................................................................. 8

1.3 Facts and Statistics ........................................................................................... 8

1.3.1 Company ............................................................................................... 9

1.3.2 Divisions: .............................................................................................. 9

1.3.3 Subsidiaries ........................................................................................... 9

Chapter 2 Strategic Level ............................................................................................. 10

2.1 Disney’s Corporate Level Strategy ................................................................ 11

2.2 Disney’s Business Level Strategy .................................................................. 11

2.3 Disney’s Functional Level Strategies ............................................................. 12

2.3.1 Research and Development ................................................................. 12

2.3.2 Human Resource ................................................................................. 13

2.3.3 Finance ................................................................................................ 13

2.3.4 Marketing ............................................................................................ 14

2.3.5 Tokyo Disney Resort ........................................................................... 15

Chapter 3 Strategic Map .............................................................................................. 16

3.1 Guest Experience ........................................................................................... 16

3.2 Telling Stories ................................................................................................ 18

3.3 Family Entertainment ..................................................................................... 18

Chapter 4 Five Forces Analysis ................................................................................... 19

4.1 Industrial Rivalry ........................................................................................... 19

4.2 Threat of Substitutes ...................................................................................... 21

4.3 Potential Entrants ........................................................................................... 21

4.4 Bargaining Power of Supplier ........................................................................ 22

4.5 Bargaining Power of Buyers .......................................................................... 23

Chapter 5 Strategic Group Analysis ............................................................................. 27

5.1 Single Location Theme-based Parks .............................................................. 28

5.1.1 Internal competition of cluster: Medium ............................................ 28

5.1.2 Mobility barriers: Medium .................................................................. 28

5.2 Single Location Mainly Theme with Few Rides Parks Cluster ..................... 29

5.2.1 Cluster internal competition: High ...................................................... 29

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5.2.2 Cluster Mobility: Low-medium .......................................................... 30

5.3 Multiple Location, Mainly Theme with Few Rides Park............................... 30

5.3.1 International competition of cluster: Low ........................................... 30

5.3.2 Mobility barriers: Medium .................................................................. 30

5.4 Multiple Location Sensation-Based Cluster .................................................. 31

5.4.1 Cluster internal competition ................................................................ 31

5.4.2 Cluster Mobility .................................................................................. 31

5.5 Global Theme and Sensation Parks Cluster ................................................... 32

5.5.1 Cluster internal competition ................................................................ 32

5.5.2 Cluster Mobility .................................................................................. 33

Chapter 6 Resource and Capability Analysis ............................................................... 34

6.1 Resources ....................................................................................................... 35

6.1.1 Tangible resource ................................................................................ 36

6.1.2 Intangible resource .............................................................................. 37

6.1.3 Human Resources ............................................................................... 42

6.2 Capabilities .................................................................................................... 43

6.3 Resources and Capabilities Analysis ............................................................. 45

6.4 VRIS Analysis ................................................................................................ 47

6.4.1 Capability ............................................................................................ 47

6.4.2 Resources ............................................................................................ 48

Chapter 7 Value Chain ................................................................................................. 49

7.1 Firm Infrastructure ......................................................................................... 49

7.2 Human Resources Management .................................................................... 52

7.3 Technology Development .............................................................................. 53

7.4 Procurement ................................................................................................... 54

7.5 Inbound Logistics ........................................................................................... 55

7.6 Operations ...................................................................................................... 56

7.7 Outbound Logistics ........................................................................................ 56

7.8 Marketing & Sales ......................................................................................... 56

7.9 Service ............................................................................................................ 60

Chapter 8 BCG Matrix and Synergies ......................................................................... 63

8.1 BCG Analysis ................................................................................................. 64

8.1.1 ESPN Inc. - Dog ................................................................................. 64

8.1.2 Lucasfilm - Star ................................................................................... 64

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8.1.3 Disney Channels Worldwide－Question Mark ................................... 65

8.1.4 Walt Disney Animation Studios - Star ................................................ 67

8.1.5 Pixar Animation Studios - Star ............................................................ 70

8.1.6 Disney Parks and Resorts - Cash Cows .............................................. 72

8.1.7 Disney Interactive – Question Mark ................................................... 77

8.1.8 Disney consumer product – Question Mark ....................................... 78

8.2 Synergy among SBUs .................................................................................... 80

Chapter 9 Vertical Integration, Outsourcing and Diversification Strategy .................. 81

Disney Integration Map ....................................................................................... 81

9.1 Disney Vertical Integration ............................................................................ 82

9.1.1 Park and Resorts ................................................................................. 82

9.1.2 Movie .................................................................................................. 82

9.1.3 Merchandise ........................................................................................ 83

9.1.4 ABC Networks Group ......................................................................... 85

9.2 SIC Code of Walt Disney Cooperation .......................................................... 86

9.3 Diversification of The Walt Disney Company ............................................... 86

Chapter10 Diamond Analysis ...................................................................................... 89

10.1 Factor endowments: Disney parks and resorts USA .................................... 89

10.1.1 Location ............................................................................................ 89

10.1.2 Infrastructure ..................................................................................... 90

10.1.3 Hospitality well-educated employees: .............................................. 90

10.2 Demand Conditions ..................................................................................... 91

10.2.1 Standard Operating Procedures ......................................................... 91

10.2.2 Economic scale ................................................................................. 91

10.2.3 Copy right ......................................................................................... 91

10.3 Related and Supporting Industries ............................................................... 92

10.3.1 Rides/Attraction Manufacturers ........................................................ 92

10.3.2 Transportation ................................................................................... 92

10.3.3 Food .................................................................................................. 92

10.3.4 Tourism Industry ............................................................................... 92

10.3.5 Consumer Merchandises ................................................................... 93

10.4 Firm strategy, structure, and rivalry ............................................................. 93

10.4.1 Firm strategy ..................................................................................... 93

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10.4.2 Firm structure .................................................................................... 93

10.4.3 Rivalry ............................................................................................... 94

10.5 Government .................................................................................................. 94

Chapter 11 Conclusion ................................................................................................. 95

References .................................................................................................................... 97

Appendix .................................................................................................................... 111

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List of Figures

Figure 1. Strategic Level .............................................................................................. 10

Figure 2. Strategic Map ................................................................................................ 16

Figure 3 Five Forces Analysis ...................................................................................... 19

Figure 4. Disney Industrial Rivalry ............................................................................. 20

Figure 5. Disneyland in Anaheim ................................................................................ 24

Figure 6. Queue time for major attractions and visitors .............................................. 25

Figure 7. Strategic Group cluster ................................................................................. 28

Figure 8. Value Chain................................................................................................... 49

Figure 9. Finding Nemo /Dory attraction/ride concept art .......................................... 57

Figure 10. Finding Nemo ............................................................................................. 57

Figure 11. Iron Man Experience .................................................................................. 58

Figure 12. Taylor Swift as Rapunzel ............................................................................ 59

Figure 13. Disney wedding .......................................................................................... 60

Figure 14. Strategic Level of Disney ........................................................................... 63

Figure 15. BCG Analysis ............................................................................................. 64

Figure 16. Cable Networks Segment Market Share ..................................................... 66

Figure 17. Walt Disney Animation Studios .................................................................. 67

Figure 18. Big Hero 6, Zootopia, and Moana .............................................................. 69

Figure 19. Pixar ............................................................................................................ 70

Figure 20. Disney Parks around the world ................................................................... 73

Figure 21. Internet Users in the World ......................................................................... 77

Figure 22. The Growth of Interactive Media Industry ................................................. 78

Figure 23. Disney Integration Map .............................................................................. 81

Figure 24. Merchandise Outsourcing ........................................................................... 84

Figure 25. Consumer product revenue of the Walt Disney Company ......................... 84

Figure 26. Repartition of 2013 Global revenue ........................................................... 87

Figure 27. Diamond Analysis ...................................................................................... 89

Figure 28. The U.S. and Global populations by income in 2011 ................................. 91

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List of Tables

Table 1. The financial report for fiscal years 2015, 2014 and 2013............................. 12

Table 2. Numbers of Location and Sensation or/and Theme Park ............................... 27

Table 3. Resources ....................................................................................................... 35

Table 4. The World's Most Reputable Companies 2016 .............................................. 39

Table 5. The World's Most Valuable Brands, 2016 ...................................................... 40

Table 6. Capabilities ..................................................................................................... 43

Table 7. Departments within Disney Parks and Resorts .............................................. 44

Table 8. Resources and Capabilities Analysis .............................................................. 45

Table 9. VRIS Analysis - Capability ............................................................................ 47

Table 10. VRIS Analysis - Resources .......................................................................... 48

Table 11. The Total Consolidated Revenues of Disney Company ............................... 50

Table 12. Segment Operation Income .......................................................................... 50

Table 13. Investing Activities ...................................................................................... 51

Table 14. Social Media Platform and User Statistics ................................................... 58

Table 15. Revenue in Cable network ........................................................................... 65

Table 16. Network Viewers .......................................................................................... 66

Table 17. 2014-2016 Animated Films Total Lifetime Gross ....................................... 68

Table 18 Pixar Animation Studios ............................................................................... 71

Table 19. Worldwidw Ranking of Animation .............................................................. 72

Table 20. Disney Financial Report – the Fiscal 2016 .................................................. 74

Table 21. Operation Income ......................................................................................... 75

Table 22. Revenues ...................................................................................................... 76

Table 23. Market Share ................................................................................................ 76

Table 24. The Walt Disney Revenue and Segment Operation Income ........................ 79

Table 25. Disney Studios SIC Code ............................................................................. 83

Table 26. SIC Code of Walt Disney Cooperation ........................................................ 86

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Chapter 1 The Walt Disney Company

Disney, the kingdom of entertainment founded by Walt Disney and Roy O.

Disney in 1923, is hands down a benchmark in its industry. The Walt Disney

Company continues to bring joy and happiness to its consumers around the globe, and

would never stop surprising us with its visions.

1. 1 Introduction

Behind all the wonders that Disney has brought us, are the visionaries of

Disney’s leadership team who strive to generate creativity, foster innovation, and

utilize the latest technologies. Disney is a multinational, cross-platform conglomerate.

Their business flourish in many different domains, including parks and resorts,

consumer products, studio entertainment, media networks, and interactive media. The

company is currently operating in more than 40 countries, and they really have taken

issues such as labor, ethics, environment, philanthropy and etc., very seriously.

1.2 Choosing Disney

Upon deciding what case we want to explore in this class, we struggled quite a

bit trying to come up with something that is well-known but not cliché. Our eyes lit

up when spotting a group member’s t-shirt that has a cartoon character on it: it was

Dale, from “Chip n Dale” the Disney cartoon chipmunks. When we think of business

cases we often think of products and their brands, such as H&M in the fashion

industry, or Apple in the consumer electronics industry; rarely do we think of the

entertainment industry. We chose to look into Disney because it has been part of our,

if not everyone’s childhood. Those classic fairytales and adventures taught us about

love, about courage, and about faith. Furthermore, like we do, Disney matures

overtime, bringing more diversity and innovation into its works, connecting and

bringing happiness to people of different generations.

1.3 Facts and Statistics

The rich backstory of Disney could not be easily simplified into a few pages of

writing, therefore certain facts and statistics that we found important to illustrate this

company has been cherry-picked and listed below.

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1.3.1 Company

■ Founding Date: October 16, 1923 (93 years ago)

■ Products: Theme parks, cable television, films, publishing, broadcasting,

radio, web portals, music, video games

■ Number of employees: 180,000 (2014)

■ Net income: US$8.38 billion (2015)

■ Total assets: US$88.18 billion (2015)

1.3.2 Divisions:

■ Walt Disney Parks and Resorts

─ Featuring the company's theme parks, cruise line, and other

travel-related assets

■ Walt Disney Studios

─ Includes the company's film, music recording label, and theatrical

divisions.

■ Disney Media Networks

─ Includes the company's television properties.

■ Disney Consumer Products and Interactive Media

─ Produces toys, clothing, and other merchandising based upon

Disney-owned properties, as well as including Disney's Internet,

mobile, social media, virtual worlds, and computer games operations.

1.3.3 Subsidiaries

■ Walt Disney Studios

■ Walt Disney Animation Studios

■ Disney Theatrical Productions

■ The Walt Disney Company India

■ Pixar Animation Studios

■ Marvel Entertainment

■ Marvel Studios

■ Lucasfilm

■ The Muppets Studio

■ Disney–ABC Television Group

■ ESPN Inc. (80%)

■ A+E Networks (50%)

■ Radio Disney

■ Hulu (32%)

■ UTV Software Communications

■ Maker Studios

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Chapter 2 Strategic Level

For this week’s assignment, we are attempting to describe the strategies that The

Walt Disney Company took in different levels and segments of its business. However,

Disney operates in many aspects of entertainment, including amusement parks, TV

channels, consumer products, movies, and so on. We chose to study about Disney’s

parks and resorts in further detail, making this segment of the Disney entertainment

kingdom our focus in this course.

Figure 1. Strategic Level

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2.1 Disney’s Corporate Level Strategy

As we have introduced in previous passages, Disney’s businesses flourish in

different aspects of entertainment industries, its divisions include: Walt Disney Parks

and Resorts, Walt Disney Studios, Disney Media Networks, and Disney Consumer

Products and Interactive Media. Despite their differences in operation, the core of

these businesses are united, that is Disney’s mission statement.

DISNEY'S MISSION STATEMENT

"The mission of The Walt Disney Company is to be one of the world's leading

producers and providers of entertainment and information. Using our portfolio of

brands to differentiate our content, services and consumer products, we seek to

develop the most creative, innovative and profitable entertainment experiences and

related products in the world."

These words, carefully chosen, summed up the Disney’s vision as an

entertainment tycoon. Everything that its business units carry out aim to realize

Disney’s mission statement.

2.2 Disney’s Business Level Strategy

Walt Disney Parks and Resorts is one of Disney’s most profitable business units,

currently operating in six different locations around the world, including California,

Florida, Paris, Tokyo, Hong Kong, and Shanghai. When it came to expanding

overseas, entering international markets, Disney did more than just copy its success at

home. Instead, based on past experiences and conditions of the hosting country,

Disney went with one of two ways: licensing or joint venture. Disney licensed its

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brand to a Japanese company called Oriental Land Company, Disney had not been

involved in operation, only did they receive royalties and parts of Tokyo Disney

Resort’s (TDR) revenue in return. Whereas in Paris, Hong Kong, and Shanghai,

Disney chose to collaborate with local entities and run its business in the form of joint

venture. Due to these different strategies, different functional level strategies were

then sketched out and performed.

2.3 Disney’s Functional Level Strategies

2.3.1 Research and Development

Investing Activities

According to the financial report posted on Disney official website, people can

know that Disney Company had invested in park and resorts more and more for R&D

each year until now. As a result, it is obvious that they really put emphasis on

Research and Development this part to meet this changing world.

The financial report for fiscal years 2015, 2014 and 2013 are as follows:

Table 1. The financial report for fiscal years 2015, 2014 and 2013

The main capital expenditures for the Parks and Resorts are expansion, new

attractions, cruise ships, capital improvements and systems infrastructure. The

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increase capital expenditure in domestic parks and resorts was to construct new

attractions in Walt Disney World Resort. While the higher capital expenditures are in

international park and resorts are due to the construction of Shanghai Disney Resort.

2.3.2 Human Resource

The strategy of Human resource in Disney Park and Resorts is one of the factors

make them such success. They have standard operation procedure when hiring,

training, and encouraging their employees. When recruiting new employees, the first

priority is “attitude”, then their skills.

They like to talk about the worst situation at first. Before job seekers applied the

recruitment form, they were asked to see a video, which illustrate the company's

culture and practices. For example, they have to work on weekends, holidays and at

night. For another example, they have strict restrictions on clothing. They can’t even

unveil their tattoo when they are working.

Besides, Disney asks supervisors humble themselves. When the receptionist on

the front line are busy, those supervisors will assist them directly. They can do

everything from sell popcorns to even put the merchandise on the shelfs. From an

aspect of the company, there are three benefits when they doing so. Firstly, supervisor

share responsibility of workload with staff. Secondly, front line workers know that

company pay high attention on their works. Thirdly, supervisors could have chance to

interact with customers directly.

2.3.3 Finance

Owns and operates:

 Walt Disney World Resort in Florida

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 Disneyland Resort in California

Manages and has effective ownership interests:

 81% in Disneyland Paris (recapitalization)

 47% in Hong Kong Disneyland Resort

 43% in Shanghai Disney Resort

Licenses intellectual property to a third party for the operations:

 Tokyo Disney Resort in Japan

2.3.4 Marketing

Disney puts a lot of emphasis on marketing to continually attract visitors. The

following were what they effort:

Embrace New Technology

The park has always been quick to embrace technological advantages, like

launching an app to keep visitors informed, or their new MagicBands wearables.

Use Data to Inform Decisions

The MagicBand provides tracking data on all of the park’s guests, which allows

Disneyland to optimize everything from staffing to the location of a food vendor.

Optimize User Experience

Disney always consider customer experience and work to streamline the process

of purchasing, using, and servicing product.

Balance Accessibility with Exclusivity

Design a way to make customers feel special, and they will respond with

customer loyalty.

Deliver Unexpected Moments of Magic

Disneyland capitalizes on this affinity with live characters, surprise performances,

parades, and exceptional customer service. Making an effort to surprise and

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delight customers at every turn will always pay dividends.

2.3.5 Tokyo Disney Resort

Aging trends in Japan has led to a decrease in TDR’s targeting market, TDR had

to find new ways to appeal to potential customers other than children and young

adults, their original target customers. In order to maintain attendance of its parks and

resorts, TDR attempted to motivate the Japanese population of forty or above, and

defined these people as “New Age”. The “New Age Marketing” targeted guests that

age forty to sixty, promoting that Disney’s parks were not just for kids or young adults.

A separate online homepage called “Disney for Adults” was set up, promoting the 45+

Passport to adults. This passport features services that aimed to bring a more

customized entertainment experience to its adult users. Tokyo Disney Sea (TDS) was

also built to provide a more “grown-up experience” for Tokyo Disney’s older

customers, where they would be less surrounded by “cuteness” such as Mickey Mouse

or its fellow characters.

Mid-Long Term Strategies

TDR had planned out its future strategies, surrounding its core plan of

maintaining a theme park attendance figure of 30 million guest per year. To achieve

that number, TDR aimed to “build stronger family entertainment” and “increase guest

comfort”. Budgets and plans were invested and planned out to be carried out through

the next decade.

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Chapter 3 Strategic Map

The main objective of Disney Parks and Resort is to create happiness for their

guests, which is supported by three goals: guest experience, telling stories, and family

entertainment.

Figure 2. Strategic Map

3.1 Guest Experience

● Meet and exceed the needs of customers

+ Customer loyalty: loyalty is generated through increasing customer

satisfaction

+ Customizing: customizing customer service allows Disney to meet the

different needs of its different customers: parents or children, young or

elder, and etc.

+ Employee training

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▪ Regulations

▪ SOP

▪ Attitude: Disney makes sure that its employees share the same

attitude and values as the company

▪ Value sharing

▪ Workload sharing: managers would supervise and help with the

work of other employees, even if it is selling hotdogs or picking

up trash. It all comes down to providing guests the best

experience in the parks.

+ High quality service standard

● Comfortable surroundings

+ Cleaning staff

+ Stroller guy: One simple yet thoughtful service makes guests more

comfortable

● Attendance control: In order to provide the guests with the best Disney

experience, Disney controls attendance number. In which the guest could be

comfortable with the park space, service quality, and plentiful time to enjoy.

+ Ticket price management: The price is much higher than other

amusement parks, especially in hot seasons. Additional payments may

be needed for premium services.

+ Special passports: some passports allows guests to enjoy the rides

without having to wait in the long queues.

● Data Collection

● Embrace new technology

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3.2 Telling Stories

● Deliver unexpected moments of magic: For example, Disney characters may

show up to entertain the guests in queues, creating an element of surprise.

● Consumer merchandise

● Live characters

● Setting atmosphere

+ Infrastructure

+ Background music

+ Restaurant (and food) designs

3.3 Family Entertainment

● Renew themes and rides

+ Creativity

+ Purchasing popular franchises: Disney acquired popular franchises

such as Marvel and Star Wars, which they can now build new

theme-based rides to attract more guests.

● Parades

● Stage shows

● Photo services

● Cruise trips

● Accessible environment

● Customize packages

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Chapter 4 Five Forces Analysis

Building on the previous parts we have discussed on Disney’s theme park

segment, Disney Park and Resorts, we continue to look into this case with a critical

eye. Using Porter’s five forces analysis, we studied what kind of external threats that

Disney might have encountered, or would come across in the future. By understanding

more about the industrial environment, the business is in, it helps the company to

navigate its way towards sustainability and success.

Figure 3 Five Forces Analysis

4.1 Industrial Rivalry

For Disney Parks and Resorts, there are four main rivalry in the amusement park

industry, they are Universal Parks and Resorts, Cedar Fair, Six Flags, Cedar Fair, and

Merlin Entertainment. These amusement parks are located mainly in the US, some

expanded abroad globally like Disney itself. Disney also competes with local theme

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parks in locations outside USA, such as China.

Each of these parks tried to out-perform their competitors in order to attract new

customers and keep their old customers coming back. Ticket prices of these parks do

not differ much from one another, so it would be the differences in themes and

experiences that makes them unique in their own way. New attractions, rides,

infrastructures and restaurants are the keys to making that “sprint” to be head in the

game. For example, Universal added the Harry Potter franchise, the Wizarding World

of Harry Potter, into its parks, and its customer visits sky-rocketed. This success of

Universal stimulated Disney’s expansion of its Magic Kingdom which began in 2012,

over one billion US dollar was invested in order for Disney to maintain its leading

position in the theme park industry.

That being said, Disney Parks and Resorts generate astronomical revenues every

year. As the chart shows, not even if all of its competitors’ revenue added together

could come close to Disney’s massive success. In general, the bargaining power of

Disney’s rivalry would be seen as medium.

Figure 4. Disney Industrial Rivalry

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4.2 Threat of Substitutes

“Substitutes can be defined as those products or services that meet a particular

consumer need but are available in other market. A substitute product is a product

from another industry that offers benefits to the consumer similar to those of the

product produced by the firms within the industry”.

“The Threat of Substitutes means the availability of a product that the consumer can

purchase instead of the industry’s product”.

In this case of Disney Parks and Resorts we think the Threat of Substitutes is

relatively high for the following reasons:

● Cheaper alternatives to active entertainment, such as: Zoo, Museum, Movie,

Concert, Sports.

Theme parks are meant for active entertainment. Consumers could choose to go

to the movies, park, sporting event or concert, just to name a few, instead of

going to a theme park.

● Disney maintains relevance because of unique experience.

Because Disney theme parks have a distinctive competency of their animated

characters and their family fun rides, consumers cannot get the Disney

experience anywhere else – making Disney relevant.

4.3 Potential Entrants

In Western countries the threat of potential entrants is low. The market of

amusement park is mature with more than 400 amusement parks and attractions in the

U.S. and about 300 in Europe.

Building a new park requires a significant capital. As example $5.5 billion have

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been invested in Shanghai Disney. In my opinion this the main limitation for potential

entrants as finding such a capital is really challenging. Adding that in the last years

some amusement parks have shown to be unprofitable. So potential investors may

consider putting their money into other businesses.

In China there are many opportunities in the amusement park market however

the competition is already intense with many new theme park projects. So it is

difficult for a newcomer to succeed.

Disney parks have by far the strongest brand and loyal customers. Another

strength that limits the threat of new entrants.

4.4 Bargaining Power of Supplier

“Suppliers are those who supply the organization with what it needs to produce the

product or service. As well as fuel, raw materials and equipment, this can include

labor and sources of finance. Suppliers can exert bargaining power on participants in

an industry by raising prices or reducing the quality of purchased goods and services.

Powerful suppliers can thereby squeeze profitability out of an industry unable to

recover cost increases in its own prices” (Michael, 1980).

In the case of Disney Park and Resorts we think the Bargaining Power of

Supplier is Medium for the following reasons:

● Limited suppliers

Not many companies are in the industry of producing, building and maintaining

amusement rides. The few major of them are Bollinger & Mabillard, Intamin,

Vekoma, Arrow, Premier Rides, The Gravity Group, and S & S Power. Their

products could be found in most of the theme parks throughout the world. Thus,

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those companies have large flexibility to bargain with Disney.

● Switching costs

The unique products and service is not only unique but also popular among

Disney’s customers. For the industry of producing toys or character related

products, they had lower bargaining power. Disney has the pattern right on it,

so it can ask any company to produce merchandise. However, in amusement

rides industry, Disney can only buy specific rides from limited company. If

Disney wants to change the supplier, the switching cost would be high.

● Supplier sustainability

The company size may be an advantage to Disney. Suppliers do not control the

bargaining power strongly because Disney they would want to keep their

business. Suppliers know that Disney is a stable company that could provide

business for many years to come.

4.5 Bargaining Power of Buyers

In the parking and entertainment industry, there are four big bosses that are

Disney, Six Flags, Seawood and Universal. While Disney is the leader in this

Oligopoly service industry, buyers’ bargaining power is much lower.

The buyers group is non concentrated: Disney park and resort has three competitors

in their amusement park operate. For the 7 billions population in the world, they have

no many choices for this kind of entertainment and the fact that, Disney Park and

resort still stand steadily at first rate.

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The buyer group demand is higher suppliers

Figure 5. Disneyland in Anaheim

During special events, it's common to see thousands of people on Main Street, U.S.A.

at Disneyland in Anaheim. Here, they celebrate the park's 60th anniversary with a

24-hour party that began at 6 a.m.

There are fun facts about Disneyland:

● 0-25 minutes: 0-25 minutes is the average waiting time in line in low attendance

day in Disneyland. But this is rarely happened, and you might have to wait for an

hour + often.

● Forecast rain: It might be larger attendance days before rain forecasted days.

● Busy days: Week days are the least busy days. Saturdays are busier than Sundays.

Long Weekends can be 3 times busier.

● Discount ticket: Disney rarely offers discounts on single ticket. Because Walt

Disney focuses on middle class, its prices are reasonable. The price changes are

based on season which is high when the market is good and reduced during low

season. For Knott's and Six Flags, their tickets are lower than Walt Disney (in

range of $40-50 ). However, Six Flag has discounts frequently (bringing Coke

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cans to get 50% off), and Knott's ticket price promotion can be found at

supermarkets. Unlike some of its competitors, Disney not often give discounts on

single ticket purchases. They said that when the lower price, the quality is also

affected.

● Raising pass price and parking price: Some people speculated that Walt Disney

ticket price raising is needed way to reduce that large crowds during weekends

and hot season the recent ticket increases are a much-needed way to reduce the

large crowds that occurs at Disneyland during some weekends and high-demand

seasons.

Parking prices at the Disneyland Resort also raised. New prices for annual

passholders increases from $169 to $199. Theme park parking raised $1, to $18.

Downtown Disney now only offer two hours of free parking, the hourly parking price

now is doubled from $6.

Figure 6. Queue time for major attractions and visitors

This graph is for US Disney Resorts, which include Disneyland, Disney

California Adventure & Walt Disney World, Florida (WDW includes: Magic Kingdom,

EPCOT, Disney Hollywood Studios & Animal Kingdom) and is very generalised. The

http://www.ocregister.com/sections/entertainment/ocdisney/
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Tokyo Disneyland, Disneyland Paris and Disneyland Hong Kong theme park

attendance patterns will differ due to holidays that don't match with the USA.

The products is differentiated: Disney park and resort has their own

spaciality and so are competitors. The feeling and experience is not the same for every

kind of theme park so may be visitor will consider before making decision.

Many switching costs on the part of the buyer: althought there is different

among substitues but switching cost is not very high, because for the entertainment

service, different experience is necessary.

Summary

The amusement park industry is a mature and profitable market in western

countries. Most of Disney’s established competitors are in North America. The

company also faces competition in China where they recently opened a new park in

Shanghai. The threat of substitutes to amusement parks is relatively high however

Disney has a strong brand and offers a unique experience making the visit of a park

still attractive. Disney parks are relatively free of potential entrants as opening a park

requires a huge capital. The bargaining power of suppliers is medium because there

are only a handful of attraction makers and switching may cost a lot of money; once

Disney makes a company build an attraction they have to stick with them several

years for the maintenance. The visitors have very low bargaining power as the entry

ticket prices are fixed and cannot be negotiated. Finally, Disney Park and Resorts has

many strengths, its future success will be determined by its ability to innovate and

keep offering a unique experience to its visitors.

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Chapter 5 Strategic Group Analysis

In this strategic group analysis, first we discussed and found some popular theme

or sensation parks and resorts in the world, which is Disney, Six Flag, Lego land,

Universal, Puy du fou, Europa Park, Tivoli, Wanda city and HK Marine Park. And we

chose the two variable is Numbers of Location and Sensation or/and Theme Park.

Table 2. Numbers of Location and Sensation or/and Theme Park

Numbers of location Sensation/Both/Theme

Disney 6 Both

Six Flag 13 Sensation

Lego land 8 Both-theme

Universal 4 Both

Puy du fou 1 Theme

Europa Park 1 Sensation

Tivoli 1 Both-Theme

Wanda city 2 Sensation

HK Marine Park 1 Theme

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Figure 7. Strategic Group cluster

5.1 Single Location Theme-based Parks

5.1.1 Internal competition of cluster: Medium

There is a competition in this category of parks as they need to differentiate from

others by storytelling, immersive experience and quality of shows. Innovation is also a

critical factor in this cluster. To attract returning visitor and build customer loyalty, the

parks have to offer new shows and experiences. For example, when people get into

YehLiu Ocean World, s/he can not only see fish exhibition but also see ocean theater

performance by sea lion and dolphin. During the performance, those performers can

even interact with audiences. Thus, it become a special experience for customers.

5.1.2 Mobility barriers: Medium

These parks can attract a larger audience by adding some rides, however their

current customers are not visiting because of rides but to live the themed experience.

These parks can expand internationally if they manage to build a strong enough brand.

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5.2 Single Location Mainly Theme with Few Rides Parks

Cluster

5.2.1 Cluster internal competition: High

In the cluster of “Multiple location sensation-based”, there are two Parks

including Tivoli Garden and Europa Park. Tivoli Garden was opened in 1843 in

Denmark. Operation for 173 years, it is the second oldest amusement park in the

world. Tivoli is famous for its pleasure garden and some amusement rides such as one

of world's oldest wooden roller coasters built in 1914 that is still operating today.

While Europa Park was opened in 1975 in Germany. This park is themed as thirteen

European countries combine with Grimms' Fairy Tales. With plenty of stories and

high capacity rides, people like to go there spending their vacation.

Both of two parks are located in Europe and have highly reputation. In 2015, the

visitor number of Tivoli Garden and Europa Park are 4.733 million and 5.5 million.

As a result, they are quite competing in Europe due to their similar characteristics.

However, the Leofoo Village Theme Park (六福村主題遊樂園) was opened in

Taiwan in 1979 as a Wildlife Park. Now Leofoo Village divide the theme into four

areas, Arabian Kingdom, African Safari, South Pacific, and Wild West. They combine

wildlife park and amusement rides together. That’s why they could attract 1.65 million

people in 2015, which is the highest among Taiwan amusement parks. The target

visitors include family, couples, students and those who want to experience various

attractions in one day. So the visitor flow is different from above two amusement

parks due to the location and type.

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5.2.2 Cluster Mobility: Low-medium

The mobility of single location theme park is low-medium. Tivoli Garden and

Europa Park are in specific theme such as its history or national and story

characteristics that attract visitors around the world. There are two ways to think about

it. One is that if they move to the other cluster, their attractiveness might be cut down.

Then stay in their original cluster would be better for them. However, in such a

competitive environment, they have to try harder and harder to keep their customers.

Thus, they could improve their rides and equipment to enhance attention. And

gradually move toward both theme and sensation park.

5.3 Multiple Location, Mainly Theme with Few Rides Park

5.3.1 International competition of cluster: Low

Competition in this kind of park is relatively low because they have special

theme that is Lego and they differentiate from others. Therefore, they can hold a

certain customer of their own.

Remaining high visitor attendance and building customer loyalty are the biggest

mission of this cluster. While existing competitor continuously expand and innovate

their appearance all over the word as well as more and more rivalry of new

amusement parks, Legoland need to renew audience experience by adding more

shows, games,…

5.3.2 Mobility barriers: Medium

The mobility barriers of this kind of park is medium, Legoland has diversified

activities such as waterpark, Lego bricks, shows, rides and so on. So that they can

serve and satisfy various groups of customer. Visitors also find specific experience in

these kinds of recreation in Lego theme. These parks can strengthen their

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globalization if they expand their appearance in more nations buy building more

amusement parks next stage.

5.4 Multiple Location Sensation-Based Cluster

5.4.1 Cluster internal competition

In this cluster, which we named “Multiple location sensation-based”, there are

two firms: Six Flags and Wanda City. Six Flags operates all over USA, with a total of

eleven different locations and numerous parks; outside of USA it also have parks in

China and Dubai. Six Flags is heavily sensation-based, almost no themes or

background stories are incorporated into its rides. Wanda City is an emerging theme

park business in China, it operates in two locations, one is Nanchang (南昌) and the

other one is Hefei (合肥). In the parks, they are equipped with thirty-three set of

world-class rides. The most eye-catching ride is the 白龍飛天 roller-coaster. It

stretches over one kilometer, with a height of fifty-six meters, and the speed can reach

125 kilometers per hour. It is the highest and fastest roller-coaster in the world. Wanda

City is quite the new comer comparing to Six Flags, but it has great ambitions and is

expanding and investing aggressively.

Even though Six Flags and Wanda City are in the same cluster, they had little

competition with each other due to their difference in location, Six Flags mainly

operates in the US and in China, Wanda City. They would become direct competitors

once they expand to more international sites, but as for now, they are more likely to be

competing with other amusement parks from other clusters which operate in the same

regions.

5.4.2 Cluster Mobility

For cluster mobility, it would be fair to say that this cluster’s entry barrier is

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relatively low. One would need to invest a great deal of capital to acquire land and

facilities (eg. rides, restaurants, infrastructures, etc.), and that would be about it. Less

creativity and innovation would be needed then coming up with an attractive and

successful theme for theme-based parks.

However, for Six Flags and Wanda City to move towards being more

theme-based, it would be more challenging. First of all, these parks are already

well-known for providing highly sensational entertainment, to add new themes and

stories to its rides might not be beneficial, as this would undifferentiated them from

their competitors such as Universal and Disney. Sometimes visitors just want to

experience the excitement without having to process the story behind it. Secondly,

when merging a story-based theme to a ride, the appearance of the ride would need to

be specifically designed for its purpose of telling the story. These parks already has

their rides in place, either replacing them or altering them would be a huge

investment.

Overall, we believe that entering this cluster would be relatively easy if one

invests time and capital into it. On the other hand, exiting this cluster would be more

challenging and risky, due to reasons mentioned above.

5.5 Global Theme and Sensation Parks Cluster

5.5.1 Cluster internal competition

In this cluster, which we named “Global theme and sensation Parks Cluster”, one

is Disney, Disney has six locations in the world, which is California (1955), Florida

(1971), Tokyo (1983), Paris (1992), Hong Kong (2005) and Shanghai (2016).

Disneyland is distributed all over the world. Inside the Disney parks, there have

sensation and theme parks. Another is Universal, Universal has four locations in the

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world, which is California, Florida, Tokyo, and Singapore. Universal is distributed all

over the world. Inside the Universal, there have sensation and theme parks. I think

Disney and Universal are competitors in these cluster, and they will be complement

each other forever. They have different rides and theme in their parks, so they will

attract different visitors to enter the park.

5.5.2 Cluster Mobility

I think the mobility of the Global theme and sensation Parks Cluster is low,

because Disney and Universal are distributed all over the world, and they have

different sensation and theme parts, they will attract different visitors to enter the park

and play in the park. I think Disney and Universal do not need to remove single theme

park or single sensation park, because they use their attraction, creation and

innovation to let their visitors make them happy and enjoy their selves. If Disney or

Universal remove to single theme or sensation parks, they will lose their number of

visitors who prefer to the theme or sensation parks is their reason to enter the park. It

is not a wise choice at all.

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Chapter 6 Resource and Capability Analysis

Introduction

“It is important to distinguish between the resources and the capabilities of the

firm: resources are the productive assets owned by the firm; capabilities are what the

firm can do.” (Robert M.Grant,2007.)

In the entertainment industry, Disney must compete in a complex and

challenging environment to maintain its position as the master of globalization. Hence,

the importance of understanding the firm’s capabilities and resources, finding out the

firm’s competitive advantages, is unneglectable. On one hand, it is beneficial to

understand and enhance those capabilities, and reinforce on weaknesses - it helps to

increase customers’ satisfaction and strengthens customer relationship. On the other

hand, competitive advantages help Disney to be sustainable over time, generate

revenues and profits year by year.

Therefore, in this report, we’ve carried out an analysis of capabilities and

resource of Disney Parks and Resorts to find out how Disney has reached its success.

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6.1 Resources

Below are some tangible and intangible resources of Disney, including financial

and physical resources, technology, reputation, patents, entertainment and culture, and

human resources.

Table 3. Resources

Resource Details Indicators

Tangible

Resources

Financial Income Ticket sales, restaurants

income, hotel revenue

Physical

Parks Asset

Rides Many attractive rides

Land

Intangible

Resources

Technology

Technological know-how

Animation technology

Reputation

Brand equity

Brand names 13 rank

Customer’s attendance large number visitor

every year

Patents Media Technology

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Entertainment Characters and plots (from

Films and TV series)

Culture Organizational Culture

Human Resources Loyalty of employees Good salary rate,

restrictions, welfare

6.1.1 Tangible resource

Financial

 Income:

Disney park and resort has sustainable and large income every year from park

Tickets, restaurants, hotel and resort service. The revenue of Disney Park and Resort

increased yearly (14.087M $ in 2013 and 15.099M S in2014), while the profit is also

high (2.220M$ in 2013 and 2.663M$ in 2014). (By Walt Disney). As we know,

capital is one of the most important factor which contribute to the success of a firm,

and Disney has strong advantage in this factor.

Physical

 Parks:

Disney has six park and resorts in different location including California, Florida,

Tokyo, Paris, Hong Kong, and Shanghai, which can attract visitors around the world.

People from America to Asia, and even Europe can enjoy Disney atmosphere.

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 Rides:

The rides in Disney fit almost every age level person. There are many rides in

Disney park with Disney characters or icons. The top three Disney classic rides are

Dumbo, Peter Pan’s Flight, and Its’s a small world.

 Land:

The land area of Disney is an advantage especially when comparing to other

amusement park. The largest one is in Florida, the USA, which has 12228 hectares

with four theme parks, two water parks, some other attractions, and thirty-four resorts

and hotels. The second largest is in Paris, which has 1951 hectare with five themed

land. The third is large location is located in Shanghai with 700-hectare land with

seven themed lands. California and Tokyo has similar area of land, one is 206 hectares

and the other is 201 hectares. The smallest Disney is in Hong Kong with 126 hectares

of land, but still larger than many other parks.

6.1.2 Intangible resource

Technology

 Animation technology:

Disney is famous for its work of art in the field of animation, numerous films and

TV series are the results of Disney’s hardworking animation artists. They constantly

develop new technology to bring their creation to the next level; for example,

animated hair/fur on human/animal characters has become more and more realistic

overtime, from Monster Inc. to this year’s Zootopia.

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 Technological know-how:

Being technologically advanced is crucial for Disney Parks and Resorts, as it

helps operation around the parks, providing better guest experiences. For example, the

introduction of the Magic Band. Magic bands are small, wearable bracelets that has an

RFID chip connected directly to your credit card, hotel room, and park tickets. A

super easy way to get around the parks and resorts without any hassle. Fast Pass+ is

also a great example, Disney use crowd projections to allocate a certain number of

spots per ride per time frame, so that the guests can pre-select when they want to ride.

And then, having those reservations made and tied directly to your MagicBand makes

it that much easier.

Reputation

 Brand Equity:

The Walt Disney was ranked 2nd in the world’s Most Reputation Companies,

2016, because of the citizenship and governance categories. Nielsen said: “The Walt

Disney Company is number one in the world when it comes to being perceived as a

good corporate citizen and also as a company with fair and ethical business

practices.”

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Table 4. The World's Most Reputable Companies 2016

Company Rank

Rolex 1

The Walt Disney Company 2

Google 3

BMW Group 4

Daimler (Mercedes-Benz) 5

LEGO Group 6

Microsoft 7

Canon 8

Sony 9

Apple 10

 Brand names:

The brand of Disney is well-known all over the world for many decades. It was

also ranked 13rd in the World's Most Valuable Brands, 2016. This is the most

valuable and rare advantage of Disney.

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Table 5. The World's Most Valuable Brands, 2016

Rank Brand Brand

Value

1-Yr

Value

Change

Brand

Revenue

Company

Advertising

Industry

#1 Apple $154.1 B 6% $233.7 B $1.8 B Technology

#2 Google $82.5 B 26% $68.5 B $3.2 B Technology

#3 Microsof

t

$75.2 B 9% $87.6 B $1.9 B Technology

#4 Coca-Co

la

$58.5 B 4% $21.9 B $4 B Beverages

#5 Faceboo

k

$52.6 B 44% $17.4 B $281 M Technology

#6 Toyota $42.1 B 11% $165.1 B $3.6 B Automotive

#7 IBM $41.4 B -17% $81.7 B $1.3 B Technology

#8 Disney $39.5 B 14% $28 B $2.6 B Leisure

#9 McDona

ld's

$39.1 B -1% $82.7 B $719 M Restaurants

#10 GE $36.7 B -2% $92.3 B - Diversified

Note: Brand values are calculated as the net present value of future earnings generated

by the brand.

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 Customer’s attendance:

Disney has strong customer’s loyalty, it can be seen by the huge attendance in

every single theme park especially in USA. They have long queue of visitors, you

even have to wait hours even in weekdays, this number of visitor in hot season is

much higher and raising ticket price is considered to be needed measure to control the

crowd.

Patent

Media Technology: Disney thrives to bring the best experience to its millions of

guests every year, new technology is being developed and put into use continuously.

The brilliant engineers and artists of Disney put their minds together to introduce the

world to the newest entertainment experience and services. Patents of Disney covers a

wide range from control systems to artificial intelligence, from image projection to

user application, and much more.

Entertainment

Characters and plots (from Films and TV series): One of Disney Parks and

Resorts’ biggest strategy is telling stories, and people goes to Disney’s theme park for

the “theme”, the fairy tales they enjoyed as a kid (eg. Cinderella), the TV series (eg.

Tinkerbell) and films they watched and love (eg. Toy Story), and etc. These beloved

characters and stories are Disney’s biggest attraction, what all other parts of Disney is

built upon. This is what makes Disney special and different from other theme parks,

and cannot be easily imitated.

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Culture

Disney’s core value is to bring happiness to everyone. To reach this goal, they

always immerse corporate value and organizational culture into new employee

orientation training. If someone who cannot fit into the culture, then s/he would not be

hired. And now they even treat this training process as a product. They sell to others

who are willing to learn and like Disney culture and value.

6.1.3 Human Resources

 Loyalty of employees:

Disney gets the loyalty of employees by good salary rate, welfare and company’s

culture and environment. In Disney US, Average Walt Disney Parks and Resorts

hourly pay ranges from approximately $7.25 per hour for Planner to $20.31 per hour

for Host/Hostess. The average Walt Disney Parks and Resorts salary ranges from

approximately $14,500 per year for Greeter to $85,045 per year for Project Manager.

How much does Walt Disney Parks and Resorts in United States pay?

Average Walt Disney Parks and Resorts hourly pay ranges from approximately

$7.25 per hour for Planner to $20.31 per hour for Host/Hostess. The average Walt

Disney Parks and Resorts salary ranges from approximately $14,500 per year for

Greeter to $85,045 per year for Project Manager.

Employees level:

Disney has talented labor force that are experts in their fields. This can be seen

by their job experience and certification in many areas.

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6.2 Capabilities

Below are the capabilities of Disney, including acquisition, management, innovation,

and services.

Table 6. Capabilities

Capabilities

Acquisition Purchasing successful companies (Pixar, Marvel Studios, Lucas

film), bringing in new contents

Management In addition to conventional function-based departments, also

includes more specialized departments.

Innovation They apply new tech into their rides and all surrounding

Services The entire park has free wifi for all guests.

Acquisition

Disney has been generating classic fairy tales for decades, but now creating a

popular and profitable story is harder than ever. Therefore, why not just directly

harvest stories that has already generated its large fan base? Disney’s acquisition of

Marvel Studios and Lukas film (Star Wars) not only requires capital, but also a great

vision and boldness to execute. This can be considered as one of Disney’s strongest

capabilities: knowing when to take a leap of faith.

Management

Instead of the conventional hierarchical management style, Disney Parks and

Resorts had its organization structure designed around specific functions and project.

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Each department has its main objective, if needed, collaboration between departments

could be direct and straight forward.

Table 7. Departments within Disney Parks and Resorts

Finance Design and Project Delievery

Legal Marketing and Sales

Asia Managment Disneyland Resort

Walt Disney Imagineering Walt Disney World

New Vacation Operation and Disney Cruise

Line

Disney Vacation Club and Adventures by

Disney

Human Resources and Diversity and

Inclusion

Operations and Next Generation

Experiences

Worldwide Public Affairs Communication

Innovation

New things are always eyes catching. To attract customers in the competitive

amusement industry, Disney always has new program or surprising performances. For

example, they held Halloween party parade this year to fit in the atmosphere. And

another example is that they use new technology to collect data in the park to know

customers’ preferences products or rides.

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Services

At Disney World, the entire park has free wifi for all guests. Consider how big

the resort is, and the capacity that the system must support, and where they hide all the

camouflaged wifi routers. The free wifi for all guests is actually a pretty innovative

and awesome technological feat.

6.3 Resources and Capabilities Analysis

A company’s resources and capabilities analysis is critical and can clearly show

its strengths and weaknesses.

Table 8. Resources and Capabilities Analysis

Superfluous Strengths Key Strengths

Rides Brand

Operations

Global immersive user experience

Human resource

Service

Inconsequential Weaknesses Key Weaknesses

Limited number of location Waiting time for some attractions

Key strength:

Disney park and resort have key strengths such as brand, operations, global

immersive user experience, human resource and service that make them have

comparative advantage to competitors. In detail, the strong brand which specialize the

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quality of them make customers distinguish and think of Disney as the master of

theme park.

Disney also has strong team that are expert in their field and make sure to bring

customers best quality and service. Such a good team makes the company really

strong in operations, managing its different pars efficiently. Finally, all these strengths

work toward the main strength of Disney that offering a global immersive experience.

Superfluous strengths:

Rides, the rides in Disney theme park can bring customers good experience, but

it is not unsubstituted. Customers can use the rides of others with almost same

satisfaction.

Inconsequential Weaknesses:

limited number of location is really a weakness but it doesn’t much affect to

Disney theme park. Customers from all over the world is willing to go for long

distance, even oversea to use Disney service and entertainment.

Key weakness:

Waiting time for some attractions. The service of Disney theme park is

sometimes overload and guests have to wait hours to buy some ticket attractions.

Especially in hot season, they might be hustled and jostled. In the end, some of them

refuse to go to Disney in that period. It is the most weakness of Disney that might

cause customer satisfaction and decrease their loyalty.

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6.4 VRIS Analysis

6.4.1 Capability

Below are the capabilities, acquisition, management, innovation, and international

capabilities of Disney.

Table 9. VRIS Analysis - Capability

V R I S Competitive

consequences

Performance

implication

Acquisition O X O O temporary

competitive advantage

above average

to average

Management O O O O sustainable

competitive advantage

above average

returns

Innovation O X O X Competitive

consequences average returns

International O O O O sustainable

competitive advantage

above average

returns

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6.4.2 Resources

Below are the resources of Disney, including land, rides, brand, technology, capital,

and park.

Table 10. VRIS Analysis - Resources

V R I S Competitive

consequences

Performance

implication

Land O O O O sustainable

competitive advantage

above average

returns

Ride X O X O competitive parity Average

returns

Brand O O O O sustainable

competitive advantage

above average

returns

Technology

(animation,

know-how)

O O O O sustainable

competitive advantage

above average

returns

capital

(finance) O O O O

sustainable

competitive advantage

above average

returns

Park O X O X competitive parity average

returns

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Chapter 7 Value Chain

Looking into Disney Parks and Resorts’ value chain may allow us to analyze the

success of Disney, how they create synergy among its different departments, and bring

out the best of them, presenting to their guests.

Figure 8. Value Chain

7.1 Firm Infrastructure

Financial

Revenue

The total consolidated revenues of Disney company are 52,465 million.

According to Disney fiscal 2015 report, Parks and Resorts earn 16,162 million at the

same year, which is one third of total revenue. And they increase 7% from 2014 to

2015.

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Table 11. The Total Consolidated Revenues of Disney Company

(in millions)

Segment operating income (loss)

The total Disney segment operating income is 14,681 million in 2015. Park and

Resorts accounting for 3,031 million, it is almost one-fifth of total. Compare to fiscal

2014, 2,663 million, they have about 14% growth.

Table 12. Segment Operation Income

(in millions)

Investing Activities

For domestic market, Disney invest from 1,184 million (2014) to 1,457 million

(2015) for expand new attractions, systems infrastructure, cruise ships, capital

improvements. For International market, Disney invest from 1,504 million (2014) to

2,147 million (2015) largely because the construction of Shanghai Disney Resort.

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Table 13. Investing Activities

(in millions)

Organization

Disney has six Park and Resorts around the world which are managed in three

ways: sole property, partial ownership, and licensing. Disney owns and operates in

two location in USA. One is Walt Disney World Resort in Florida, and the other is

Disneyland Resort in California. For its international parts, Disney has 81% interest in

Disneyland Resort Paris (recapitalization), 47% in Hong Kong Disneyland Resort.

Disney practiced joint venture with French Government and the Government of the

Hong Kong Special Administrative Region, but Disney can wholly manage those two

parks. The situation is somehow different in Shanghai Disney Resort, where Disney

company has 43% ownership interest, the other 57% is owned by Shanghai Shendi(上

海申迪集團). Disney company has 70% interest of management right, the other 30%

right belongs to Shendi group. Tokyo Disney Resort in Japan is the exception, where

Disney licenses intellectual property to them instead.

Legal Affairs

Disney Park and Resorts is a huge organization. To manage this international

business well, Disney had formed a group to deal with business affairs, contracts,

privacy, country law, patents, copyrights, etc. This group plays an important role

The Walt Disney Company Case Study

52 FCU e-Paper (2016-2017)

because it protects and solves any problem related to Disney comprehensively from

park construction to operation. For example, they investigate in people who infringed

trademark rights and copyrights, as well as the stores that use “Disney Store” name

without authorized. Another example is that this group negotiate with joint venture

partners when Disney entering into international market such as land lease, cost, and

capital to meet the win-win situation.

7.2 Human Resources Management