External Factor Evaluation (EFE) Matrix

External Factor Evaluation (EFE) Matrix Key External Factors Opportunities 1. Expansion due to rising incomes globally 2. Technological innovation and change in norms 3. Increase in streaming activity 4. Growing movies and entertainment industry 5. Expansion of video gaming industry 6. Improving conditions of the leisure attractions market 7. Growing global broadcasting and cable TV market Threats 1. Changes in consumer tastes and preferences 2. Increasing competition in all markets 3. Movement towards isolationism 4. Rising pay level 5. Increasing digital content piracy 6. Increasing interest in technology for children 7. Decrease in travel because of COVID-19 Total Weight Rating Score 0.08 0.10 0.12 0.09 0.02 0.08 0.07 3 3 4 3 1 3 4 0.24 0.30 0.48 0.27 0.02 0.24 0.28 0.10 0.10 0.02 0.02 0.06 0.07 0.07 1.00 3 2 3 1 2 3 3 0.30 0.20 0.06 0.02 0.12 0.21 0.21 2.95 Opportunities 1. Due to its already global reputation as a premier entertainment company, The Walt Disney Company has the opportunity to expand into more countries, and with worldwide income increasing each year, this will lead to an even larger market for them to capitalize on. Improvements in economic conditions and increasing consumer spending after being shut down due to the pandemic is an opportunity for The Walt Disney Company to capture new customers and increase its market share. According to the Transportation Business Journal (2021), rising disposable income is leading to increased demand in all markets, which is a great opportunity for The Walt Disney Company and all the segments they operate in. This received a rating of 3 because The Walt Disney Company is already very well-known worldwide and has a presence in 45 countries. 2. The Walt Disney Company already relies heavily on technological advancements to offer new and exciting entertainment opportunities to its consumers, but it should consider creating virtual entertainment experiences for its consumers. This would be in line with the new worldwide trend of staying at home that came out of the restricted situations from COVID-19. This received a rating of 3 as well because they are actively looking for more engaging ways to interact with the consumer through more advanced technology. 3. The Walt Disney Company should also consider taking advantage of the increase in streaming activities around the world in order to increase their revenue. They have already made an entrance into this industry, but this would be a great opportunity for them to capitalize on because of the quarantine which was key to the increase of streaming activities. This received a 4 because The Walt Disney Company is already working to capitalize on the increase in streaming activities around the world. 4. The Walt Disney Company could benefit from the positive outlook for the movies and entertainment industry. Because they are already so dominant in this industry, improvements in the market conditions will be a great way for The Walt Disney Company to capitalize on this opportunity. According to MarketLine (2021), the industry is predicted to slowly grow over the next few years, which is a good thing for The Walt Disney Company. This received a rating of 3 because they are very dominant in the movies and entertainment industry and have been for many years prior. 5. The Walt Disney Company also has opportunities in the video gaming industry. The rising popularity of video games and virtual experiences, and the increase in consumer expenditure on video games could be captured by The Walt Disney Company. According to Schaaf and Mohan (2014), a vast majority of the world plays video games as a past time or a hobby. This received a rating of 1 because The Walt Disney Company has not made much of an effort to enter into this industry, despite consumers shifting their preferences towards more technologically advanced past times. 6. The Walt Disney Company is already one of the leading providers of entertainment and leisure attractions around the world, and with the predicted increase in consumer spending in this industry, they could capitalize on this and increase their revenues. Their reputation as a premier entertainment company will also help them to capitalize on this opportunity. This received a rating of 3 because they are dominant in the entertainment industry, and they already provide great entertainment in a variety of market segments. 7. The Walt Disney Company has recently expanded its hold on the global broadcasting and cable TV market, but because this segment is growing globally, this is an opportunity for The Walt Disney Company to increase their market share and revenue. This market has seen steady growth over the last few years, and will continue to do so, which is why this is a huge opportunity for the company. This received a rating of 4 because of the time and money that they have put into acquiring several different cable and broadcast networks. Threats 1. In recent years, consumers have shifted their preferences towards more virtual and technologically advanced forms of entertainment. The Walt Disney Company tends to capitalize on their traditional family fun, but consumers are now preferring other forms of entertainment that are much different from what has been sought out in the past. This received a rating of 3 because they are trying to find creative and innovative ways to integrate technology into the Disney experience. 2. The Walt Disney Company has seen increasing competition in all markets. They compete in many markets now from their products, parks, and experiences to their media and entertainment segments to their streaming and cable TV services. They have always been dominant in the entertainment industry, but other companies are now threatening their position as the world’s premier entertainment company. This received a rating of 2 because even though they continue to be dominant in the entertainment industry, they are still competing with many other companies in many other industries. 3. Recently, we have seen the world gradually moving towards isolationism. Because of the shutdowns that came with the COVID-19 pandemic, people started getting used to being isolated, and now that the world is starting to open back up, not everyone is willing to get out like they used to. This threatens The Walt Disney Company’s revenue for physical product industries as well as their parks. This received a rating of 3 because The Walt Disney Company is still finding creative ways to engage with consumers even in isolation. 4. The increasing pay level is also threatening to The Walt Disney Company’s revenue. If they have to increase their employees’ pay in order to stay competitive and boost morale in the workplace, this will ultimately lead to more expenses and less revenue for the company because of the large amount of people they employ. This received a rating of 1 because even though this is a problem that they will face, it does not have a huge impact on them at the moment. 5. Because The Walt Disney Company is now in the online streaming industry, this makes them especially susceptible to piracy and the theft of other intellectual property. The Walt Disney Company can face major losses of revenue and decreased sales because of people who illegally copy their content. This received a rating of 2 because while they are actively trying to prevent this from happening, there will still be people who steal the intellectual property. 6. In recent years, children have taken more of an interest in technology. Many children in today’s world have access to smartphones and tablets before they learn to walk and talk, which was not the case twenty years ago. More children are interested in technology than in the more traditional Disney experience, threatening their revenues for their parks, experiences, and products. In Schaaf and Mohan’s book (2014), they show how children are now considered the digital generation because these kids have never experienced a world without advanced technology. This received a rating of 3 because The Walt Disney Company is trying to find ways to engage the children of today’s world through the use of technology. 7. Another threat to The Walt Disney Company is the decrease in travel due to COVID-19. Because of the travel restrictions that people faced around the world, less people were visiting their parks, which hurt their revenues. There are still some restrictions in place today that could continue harm The Walt Disney Company. This also received a rating of 3 because they had to find new ways to reach consumers because the more traditional ways were not really an option when travelling was restricted.