Disney Question 1

1. Why has Disney been successful for so long?

There are many reasons for Disney’s success or rather Disney’s success today has been shaped by a combination of factors. For Disney it is not about adding up competitive advantages to the company’s value. Its value is created as a result of a system of interacting company characteristics. These characteristics include the industries it has entered, its competitive advantages, and how its unique corporate strategy leverages these circumstances.

Firstly, we can evaluate the main industry that Disney has entered: the entertainment film industry.

5 Forces | Ratings |

Barriers of Entry | Low: Entry into the industry is fairly easy. There are low capital requirements, low economies of scale, and very little government intervention. |

Buyer Power | Medium: Sources of entertainment are not homogenous. Subjective consumer preferences means buyer power cannot be high. However, low switching costs and wide selection means it is not low either. |

Supplier Power | Low: Does not have many external inputs, relies on human capital. |

Threat of Substitutes | Medium: Entertainment consumers depend heavily on entertainment content. It is highly addictive. However, there are other sources of domestic activities that can serve as individual entertainment. eg. Playing sports. |

Rival Competition | High: There are many competitors in the entertainment industry. |

Figure 1: Film industry - Porter’s Five Forces

Without going too deep into the industry analysis we can see that threat of new entrants, supplier power and industry competition are the areas of main concern. One way Disney used to decrease direct competition was by selecting its niche market: family friendly entertainment. To increase organizational effectiveness, Disney developed a unique corporate strategy and drew on its internal resources.

VRIO | Disney Human Resources |

Value | Extremely valuable |

Rarity | Talent is extremely rare |

Imitability |...