Disneyland: SWOT and Ansoff Matrix Analysis

Disney was founded on October 16, 1923, in Los Angeles, California, United States. More than a third of all cinema tickets bought in North America is for a Disney movie, this means that Disney is one of the market leaders within the film industry and makes a high profit. In 1955, Walt Disney opened Disneyland to the public which meant that kids and parents could experience the magic of Disney's characters in-person.

The Walt Disney Company: General Information

A mission statement is its objectives and its approach to reach those objectives. Whereas a vision statement describes where the business wants to be in the future. The mission statement of the Walt Disney Company is to entertain, inform and inspire people around the globe through the power of magic and storytelling, Disney also want people to open their creative minds and come into a new world and experience the unknown. Their vision statement is “to be one of the world's leading producers and providers of entertainment and information”, meaning that they want to be the biggest entertainment service. Disney also uses the slogan “the happiest place on earth”. They use this slogan in order to draw people to their theme park and make them want to come back more than once.

The Walt Disney Company is an American diversified multinational mass media and entertainment conglomerate (which is a company that owns a controlling stake in many smaller companies which conduct business separately) headquartered at the Walt Disney Studios. It has a cooperative multidivisional organizational structure. A multidivisional organizational structure is common in diversified companies. Disney is a public limited company meaning that they can sell shares to the public.

SWOT Analysis of Disneyland

SWOT is a business abbreviation for Strengths, Weakness, Opportunity, and Threats. It focuses on the internal and external decisions of a business. The strengths and weaknesses are considered as internal factors that can affect the business operations whereas opportunities and threats are external factors. By using SWOT analysis, we can look at the factors which affect the success or failure of our business.

Strengths

The strength of Disneyland is that they have a large cash flow since there are approximately 44,000 people visit Disneyland every day. Cash flow is the money that is flowing in and out of a business. Some of Disney’s cash inflow can include sales of products, sales of assets (the Walt Disney Company held assets over $193.98 billion), and investors who’re putting more money into the business. Whereas some of Disney’s cash outflow may include purchasing goods, paying wages and salaries for the employees, and purchasing fixed assets. Both the cash inflow and the cash outflow make Disney have a large and steady cash flow.

Another strength is that Disneyland has a good brand reputation and all the customers love their experiences there. Disney’s high brand profile makes the business successful and will continue to be a success if they meet what their customers demand as they have done since its start in 1923. Since Disney is the market leader in animation, they will continue to have a high profit and their well-known brand will continue to raise.

Weaknesses

However, there are some internal weaknesses of Disney. As it is such a big company and it keeps on expanding it might become harder to manage it efficiently. This means that there might be some diseconomies of scale. Poor communication will occur since the hierarchy might have a long chain of command and a narrow span of control. Managers may have a lack of control and experience the need for a longer amount of time to communicate with the staff. This means that the subordinates will not receive the important messages in time and this, in turn, can lead to slow decision making.

Opportunities

The external opportunities for Disney are that more people want shares since they think it is a successful business and therefore can make money. The shareholders will buy it low and sell it high. If a shareholder buys ten shares for $1.70, they can sell them for $17, by doing this the company will keep on expanding. Since there will be more shareholders, they can help Disney decide on important decisions and therefore see what the public demands, this will also help them build a brand image. Disney could invest and build new attractions in order to bring new and more customers into Disneyland.

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Threats

There are some threats to their company as well. Disney is isolated in America which can mean that there will not be as many tourists to come and see the world since it is far to travel to America and can be very expensive and time-consuming.

The customers are changing animation trends, they want it to be more life-like characters and this will cost a lot of money to change since they have to develop the technology and might have to find more experienced employees.

Another threat that the business is facing is that they have strong competitors doing similar things. Disney’s competitors have developed over the years and are now doing similar things, this means that Disney has to invest more capital into the business in order for them to keep on being as successful as they are.

Ansoff Matrix Analysis of Disneyland

Ansoff matrix is a business tool used to aid decision-making. It helps to decide whether a business should develop an existing product or a new product or aim at a new market or existing markets. Ansoff matrix includes: market penetration, product development, market development and diversification.

Market penetration combines existing products and existing markets. The growth strategy of market penetration aims to maintain or increase the market share of existing products. If Disney used the marketing penetration strategy, they could continue doing what they did before and just keep on producing movies. Disney could increase their sales since they don’t have to invest capital in something new and therefore saves profit on product creation costs. They could use this method to see what the existing customer wants and therefore build relationships with their customers as it is less expensive to maintain the already existing customers. However, nothing changes. No new products or markets. If competitors sell similar products and one of them decides to launch a new and better product for lower prices, Disney will lose some of their market shares since they aren’t producing anything new.

Whereas if Disney decided to use product development it would focus on offering new products in existing markets. Disney could produce 3D animated movies in order to increase their sales. In the world today, technology is developed and introduced at a very fast rate, more quickly than most customers can keep up with. A product line that stays the same over time may cause the customers to lose interest in the business and find another entertainment platform. A product development strategy helps Disney keep pace with the changing times and create new opportunities. On the other hand, it would increase the risks of failure since they do not know if this is what the customers want is, therefore, safer to stick with something that the consumers already like.

The market development strategy could be another idea for Disney to use. The strategy of market development focuses on offering existing products in new markets. They could introduce new movies for an older generation so that teenagers/adults could buy and see their movies as well. This means that they would gain new customers, increased revenue, and company growth. Disney would get a larger market share and sell more to the new market and increase sales and therefore profit. Although, the downside is that under such a strategy, Disney will enter into the unknown which is risky. Many companies have lost a large sum of money attempting to enter new markets. This could make Disney lose sales and fall back to where they were before.

The last strategy that Disney could use is diversification which offering new products in new markets. They can open a new Disneyland in another country/continent. This would increase the market share as well as increase the revenue, and business growth. Diversification can also allow a company to become a product leader in new markets since they are reaching out to a new market and a new product. However, developing a new product is expensive and very time consuming since they have to conduct market research, generate ideas, develop a prototype, etc.

Conclusion

I believe that Disney should open a new Disneyland in order to increase their sales the most. However, there are some forces for and some forces against this. I would recommend Disney to open a new Disneyland in another country/continent because they would increase their sales massively if we look at it from a long-term perspective. There will be both benefits and drawbacks, however, I think that there are more positive forces than negative forces. Disney will have an increased number of customers and this will increase sales by a big number. This would also mean that they get a larger market share and their business will expand. The demand is already very high since if we look at the feedback many customers are saying that it is very far, and by opening it, not only in America but in another continent, more customers will be attracted and thereby the sales will increase.