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Running head: THE WALT DISNEY CO. STRATEGIC CONSULTATION The Walt Disney Company Strategic Consultation Colorado State University Global MGT 545: Strategic Planning and Innovation 04 October 2020 The Walt Disney Co. Strategic Consultation 1 THE WALT DISNEY CO. STRATEGIC CONSULTATION 2 The purpose of this document is to conduct a comprehensive internal and external analysis of The Walt Disney Company’s position and current strategies to develop strategic recommendations for the executive team. Our analysis of Disney will aid in the formulation of strategic management methodology to prevent industry stagnation and maintain competitiveness. The Walt Disney Company Strategies The Walt Disney Company, alongside its holdings and conglomerates, is a principal varied worldwide family entertainment and media business with several diverse commercial segments. With access to a substantial cash reserve, Disney’s strategies often involve acquisitions and fairy tale character development. These, and various other significant moves, showcase why Disney has enjoyed a consistent revenue stream and an upward trend in stock prices. Since 2013, the company’s net income has sustained an annual 12% increase, with stocks rising 6.85% yearly; total assets have also amplified by $3 billion every year since 2013 (Cheng, Chu & Duong, 2017). The Walt Disney Company can maintain its market longevity by considering strategic recommendations and tactical approaches to expansion. At the forefront of these considerations are the vision and mission statements. Vision Statement Recommendations The vision statement announces the proposed objective and complete picture evaluation in the company’s primary industry (Beiko, Murray, Davies, Oake & Houle, 2018). The Walt Disney Company’s vision statement reads, “to be one of the world’s leading producers and providers of entertainment and information” (Williams, 2017, para. 5). The simplification of the statement allows leadership flexibility in interpretation leading to strategy exploration and new innovative processes. THE WALT DISNEY CO. STRATEGIC CONSULTATION 3 However, the vagueness may also lead to complications without specifics to outline goals and guide application. Therefore, it is recommended that Disney develop a vision statement that pinpoints a coherent set of objectives and can create rational strategies or evaluate the process (Gregory & Brierley, 2010). For example, the word ‘leading’ should accompany the context concerning its definition. Is it leading in-network viewers, revenue, or both? Determinations of this nature will aid in differentiating which strategy to employ. If the focus is purely increasing viewership, investment money can be allocated for that purpose; however, if the objective is to grow revenue, perhaps divestment is a proper approach. Additionally, through the development of a clearly defined vision, Disney can create a comprehensive mission statement. Mission Recommendations After Disney incorporates clarification in the vision statement, some mission statement adjustments may lead to a product, service, and employee enhancements. Currently, Disney’s mission statement reads,” The mission of The Walt Disney Company is to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovative technologies that make ours the World’s premier entertainment company” (Executive Leadership, 2020, para. 1). The mission statement is the driving motivation for goal accomplishment and serves as the limitation markers used for risk management evaluations. The current mission statement is valuable in assessing strategic direction but closely resembles a more comprehensive vision statement. Therefore, it is proposed that the components of the mission statement that resemble the vision statement be detached, and additional information concerning organizational values be injected. Doing so will reduce confusion between the two ideas and create a well-defined delineation for improving strategic decision-making (Williams, 2019). Also, the current mission statement neglects the employee THE WALT DISNEY CO. STRATEGIC CONSULTATION 4 perspective and fails to act as a cognitive framework to connect employee identities to the communal identity of the organization; thus, the mission statement only provides an extrinsic motivation for job performance and does not leverage an intrinsic approach though a shared identity (Desmidt, 2016). Strategy Formulation Walt Disney: External Assessment (EFE) This company competes with numerous adversaries throughout its varied industry presence, with Viacom CBS, Charter Communications, Sony, and Comcast being its prime contenders in the mass-media industry (Segal, 2019). Currently, Disney controls 7.91% of the media market, with the closest rival governing 4.94% (Cheng, Chu & Duong, 2017). However, technology is altering business practices, the market’s competitiveness is increasing and consequently applying economic pressure on Disney. For example, Netflix is crushing Disney+ in streaming; Netflix’s stock is nearly quadruple Disney’s, with NFLX at $523.89 and DIS at a humble $135.54 (Market Watch, 2020). Yet, Disney’s aggressive acquisition of numerous entertainment companies such as Hulu and ESPN can be leveraged to force competitors to adjust their streaming platform pricing. Disney+ should continue to underprice Comcast, launching its streaming venture at $12, while bundling services like ESPN and Hulu (Harvard, 2020). These strategic moves will apply pressure to its rivals, determining subscription prices. Adding an international streaming service with Star’s launch will skyrocket the company’s streaming victories by leveraging its other acquisitions ABC, FX, Freeform, Searchlight, and 20th Century Studios (Alexander, 2020). Netflix and Disney+ will likely be looking for revenue streams once subscription income slows. Advertising can be exceedingly advantageous if examined and prepared appropriately. THE WALT DISNEY CO. STRATEGIC CONSULTATION 5 Through investing early, Disney has the prospect of monopolizing any early technology to further its objectives (Patal, 2019). A company such as Pentagram could prove indispensable to the future of the company’s ventures, and it doesn’t hurt that Pentagram also represents Netflix. In the theme-park sector, major rivals involve Six Flags Entertainment, Cedar Fair, Universal Studios, and Comcast (Segal 2019). Fours of Universal’s parks were placed in the top 25 Amusement Parks in the World, while Disney only positioned 67% of its properties (Sampson 2019). Therefore, upgrades to existing facilities are a must, as well as the consideration for other parks. This company must consider the high cost of liabilities and assets, a category Disney leads its competitors in. Disney’s current ratio is lower than rivals such as Viacom and Time Warner. Still, Disney’s debt to equity ratio of 0.94, lower than other entities, suggests they have a less aggressive approach to financing (Cheng, Chu & Duong, 2017). Perhaps financing the other park and current theme park improvements is an avenue Disney can explore. Walt Disney: Internal Assessment (IFE) Disney’s internal fortification is evident immediately in the strength of its branding. The company maintains a “strategic grasp on key cultural objects, including the characters we all know and love, and how to upkeep and promote them” (Robbins, 2014, p. 14). The level of devotion associated with the branding frequently results in multiple streams of revenue for the company. In the entertainment business, a strong branding image, combined with a large purse, can lower the threat from nearly all of Porter’s Five Forces. Disney’s diversified merchandise range complicates strategic management and reduces the ability to pinpoint focus on any one market. It seems the company is everywhere and nowhere. Additionally, the price of maintaining the various ventures on its books is high and can become further problematic if the corporation continues to dump money into unbeneficial risks. THE WALT DISNEY CO. STRATEGIC CONSULTATION 6 As mentioned, Disney has a lower current ratio than its rivals, but this may be due mainly to the liabilities price tag, and assets, associated with its operations. Disney acknowledges this crisis in their annual report by stating, we must often invest substantial amounts…before we know the extent to which these products will earn consumer acceptance” (The Walt Disney Company, 2019). Based on an internal assessment, this firm suggests that Disney “adopt more flexible processes in environments of high uncertainty and conduct multiple parallel trials where the payoffs can justify the costs of this technique” (MacCormack, Crandall, Henderson & Toft, 2012, p. 36). Disney already possessed analytics from its films streaming on Netflix and understood the value of establishing its platform. Also, streaming was not brand new, and therefore most of the kinks had been worked out. Disney would also enjoy a price cut from content creation. While the leaders like Netflix and Amazon invested piles of money on creating original content, Disney has a back catalog of films dating back to the 1940s. The Walt Disney Company: The Input Stage Findings An EFE and IFE conducted on Disney revealed a total weighted score of 1.3 and 2.05, respectively. The most persistent external and internal impediments threatening Disney’s are the potential for failure with its online streaming platforms, increased rivalries, the global pandemic, liability costs, unproven investments, and its vast subdivisions. Companies such as Netflix and Universal threaten the streaming and theme park sectors. Currently, Universal is rebounding from a 64% decrease while Disney’s maintains a staggering 80% reduction; Netflix quadrupled Disney’s stock without as many divisions (Russon, 2020; Market Watch, 2020). Additionally, those various sectors cause strategic complexities and amplify the liability costs that accompany wide-ranging assets. However, the company does bode strengths, such as a strong brand, low THE WALT DISNEY CO. STRATEGIC CONSULTATION 7 threat from Porter’s Five, and an extensive budget. In 2019, Disney reported annual revenues of $69.5 billion, which increased from $59.4 billion in 2018 (The Walt Disney Company, 2019). The company has enjoyed years of increased revenue, especially after the addition of Marvel to the arsenal. BCG Matrix Considering the BCG’s advantageous approach to the matching process and what it can offer multidivisional firms with sizeable business portfolios, it is the most relevant tool for The Walt Disney Company (David & David, 2017). The matrix highlighted all Disney’s products and services across various markets, to establish whether to invest in stars and question marks or potentially terminate dogs. In Disney’s situation, the streaming department’s low market share results in high demand and lower profit, rendering platforms like Disney+ as question marks (Mohajan, 2017). From this information, the recommendation is Disney furthering growth through increasing program diversification. This can be accomplished by introducing new shows or characters to circumvent the Disney+ question mark’s degradation. Creating such a program could encourage different relationships and fortify existing ones while enabling deeper relationships with its stakeholders (Luo & Du, 2015). These new elements should display varying cultures and ethnicities written to be relatable to the target audience (Chavez & Kiley, 2016). The momentum for culturally innovative programming is also essential to increasing viewership in global markets. Checking that box will thrust Disney closer to accomplishing the objectives expressed in the vision statement. SWOT The SWOT analysis also aided in constructing recommended strategies to align Disney with its core competencies. The results highlighted Disney’s diversified portfolio and its global brand THE WALT DISNEY CO. STRATEGIC CONSULTATION 8 recognition. This firm recommends that Disney continue to grow through diversification and expand to foreign markets by using its international brand recognition. Furthermore, Disney is utilizing a versioning technique by recreating live-action movies based on its animated blockbusters. Although an excellent method of revitalizing its film market appeal, it will only entice similar crowds and fail to penetrate different target markets. The results also demonstrate the unsuitable high-risk investments Disney’s holdings produce and the absence of leadership across many divisions. Disney’s complications with integrated acquisitions fall in line with the 60% failure rates plaguing many companies (Mohajan, 2017). This firm believes that this issue’s root cause is the lack of control across Disney’s different detachments. The changeover from Bob Iger to Bob Chapek was a revelation that stunned the entertainment realm. These top-level alterations cause confusion and irregularities for staff and stakeholders and may suppress the implementation process. Disney needs to develop consistency in leadership built on a communication foundation that allows for unison across divisions. Doing so will likely increase productivity through managerial stability. Strategy Implementation: Projections & Risks Creating a projected financial statement can help Disney ensure its strategies remain feasible, especially within the pandemic’s current state. Developing this functional strategy would be subordinate to the method formed from the SWOT and BCG method and only assesses the practicable and successful implementation of those strategies (Lakyta, Matusova & Andryeyeva, 2018). The Coronavirus has crippled the income generated from Disney’s tourism sector, which houses its parks, cruise lines, and resorts worldwide. The revenue within this subdivision fell by 85%, roughly in line with analysts’ estimates, and accounts for the drastic drop in net income (Johnston, 2020). Yet, the SWOT analysis of the entity exposed its extensive THE WALT DISNEY CO. STRATEGIC CONSULTATION 9 operating budget. Over the following years, it is probable Disney will rebound by coupling its notable bank account to run advertisement campaigns to entice those tourists who have been trapped to utilize its services. In the meantime, Disney will gain momentum through the use of its many robust acquisitions, in addition to an ad campaign that leverages the company’s strong international branding. The corporation should be able to fortify its streaming platforms and the uncertainty surrounding the COVID virus. Another heightened outbreak will force the company to reconsider how it operates. The use of this projection will allow Disney to set aside money to invest for renovation necessary for the parks to become operational in the pandemic, for example, installation of multiple hand-washing stations or retrofitting bathrooms to be completely hands-free. Strategy Evaluation The balanced scorecard method (BSC) was utilized to assess Disney’s financial performance while accounting for nonfinancial measures, such as customer satisfaction and product quality (David & David, 2017). The BSC method operates well as an evaluation tool within Disney’s diversified portfolio. Currently, Disney is financially privileged. Annual revenues elevated to $68.5 billion from $59.4 billion the previous year (The Walt Disney Company, 2019). Disney’s positive return on investment, 6.33%, suggests that net returns are more extensive than its accompanying cost (The Walt Disney Company, 2019). These numbers appear to demonstrate the success of existing strategies and contradict the need for deviation for strategists. However, these numbers are just that, numbers, absent context. Fiscal measures indicate historical performance and lack of information concerning how the strategy will sustain theses returns (El Ammar, 2020). THE WALT DISNEY CO. STRATEGIC CONSULTATION 10 Therefore, it crucial to associate these statistics with non-fiscal indicators such as customer satisfaction. The BSC attempts to observe its strategies from the perspective of its consumers and stakeholders. This metric assesses Disney’s capability of providing quality products and services. The incorporation of programming for various audiences through a multi-channel strategy seems to be working well. For example, including Lucas Studios’ Star Wars drew in older generations, while the Marvel division’s institution communicates to children, millennials, and older generations. Disney recently squandered an opportunity to deal with an executive reportedly unresponsive to concerns about diversity and inclusion in the workplace. The corporation’s strategy concerning diversity in employment and content is firm. Disney is committed to cultivating an allencompassing culture for all Disney employees, while also ensuring diverse programming “that counts in everybody” (The Walt Disney Company, 2020, para. 2). This firm suggests quarter internal evaluations to determine compliance with established regulations and strategies. The decisive element of a successful corporation is the people and the procedures that sustain them. Disney can monitor these aspects through organization capacity to ensure the organization’s strategies are appropriate. In this aspect, managers can see the employee growth rate increase by 10% and assume employee satisfaction (Macrotrend, 2020). However, the examination demonstrates the dissatisfaction of employees before unionization increased pay wages. This BSC recommends assessing the struggle employee’s encounter and making adjustments to increase employee satisfaction. The Walt Disney Company: Financial Projection & Goal Setting THE WALT DISNEY CO. STRATEGIC CONSULTATION 11 With a better than expected quarter and the unforeseen success of Disney+, there is a positive financial outlook. Income will probably surge slightly by 1.9% to $70.9 billion this fiscal year, and mature quicker to $81.1 billion in 2021, following the Disney+ and of Hulu consolidation (Trefis Team, 2020). If Disney can leverage the direct-to-consumer business model to sell advertising slots, it can begin to uptake its streaming service revenue. With ad revenue, Disney can expect $20.5 billion to Disney’s 2020 revenues, making up 29% of Disney’s $70.9 billion in total revenues (Trefis Team, 2020). This segmental income is predicted to persist through 2021, while other divisions recover post corona. It is safe to expect that Disney’s streaming platforms will provide an additional $13.7 billion over the next two years (Trefis Team, 2020). Conclusion From an external viewpoint, Disney is codependent on its numerous sectors and can benefit from strategies that incorporate all divisions. The entity is incessantly growing and creating a stable position with its strategic practices. The various directions Disney’s portfolio allows for selections and opportunities to magnify products and entertainment services. These openings must accompany top-level managerial consistencies and employee satisfaction strategies. Also, Disney must continue to push its surprise streaming success to capitalize on evolving opportunism in the technology industry. This foundation can be adapted to become an international framework and amplify shareholder worth by delivering the creative content and supreme entertainment. References: THE WALT DISNEY CO. STRATEGIC CONSULTATION 12 Alexander, J. (2020). Disney is launching a new Star-branded streaming service internationally. Retrieved August 29, 2020, from https://www.theverge.com/2020/8/4/21354712/disneystar-streaming-service-international-expansion-hulu-plus-abc-fx-fox Beiko, D., Murray, E., Davies, T. O., Oake, J. S., & Houle, A. (2018). Exploring the business of urology: Strategy and strategic planning. Canadian Urological Association Journal, 12(2), 13-17. doi:10.5489/cuaj.5083 Cheng, C., Chi, V., & Duong, V. (2017). Walt Disney Strategic Audit. Retrieved 2020, from https://static1.squarespace.com/static/599de02ba803bb1828c58d96/t/5a4dcb53f9619a322 da798c8/1515047773304/Walt_Disney_Strategic_Audit.pdf Chavez, C., & Kiley, A. (2016). Starlets, Subscribers, and Beneficiaries: Disney, Latino Children, and Television Labor. International Journal of Communication (19328036), 10, 2616– 2636. David, F. R., & David, F. R. (2017). Strategic management: A competitive advantage approach, concepts (16th ed.). Upper Saddle River, NJ: Prentice Hall. ISBN-13: 9780134153971 Desmidt, S. (2016). The Relevance of Mission Statements: Analysing the antecedents of perceived message quality and its relationship to employee mission engagement. Public Management Review, 18(6), 894–917. https://doi.org/10.1080/14719037.2015.1051573 Executive Leadership. (2020). Disney – Leadership, History, Corporate Social Responsibility. Retrieved August 21, 2020, from https://thewaltdisneycompany.com/about/ Gregory, C. E., & Brierley, G. J. (2010). Development and application of vision statements in river rehabilitation: the experience of Project Twin Streams, New Zealand. Area, 4, 468. Harvard, C. (2020). Disney vs. Comcast: Lessons Learned from the Corporate Rivalry. Graziadio Business Review, Research Gate. THE WALT DISNEY CO. STRATEGIC CONSULTATION 13 Johnston, M. (2020). Disney Earnings: What Happened. Investopedia. https://www.investopedia.com/disney-earnings-4774994 (Links to an external site.). Lakyta, G., Matusova, O., & Andryeyeva, V. (2018). The Role of Financial Strategy in the System of Ensuring Economic Security of Trading Enterprises. Public Security & Public Order / Visuomenes Saugumas Ir Viesoji Tvarka, 20, 19–31. Luo, X., & Du, S. (2015). Exploring the relationship between corporate social responsibility and firm innovation. Marketing Letters, 26(4), 703–714. https://doi.org/10.1007/s11002-0149302-5 MacCormack Alan, Crandall William, Henderson Paul, & Toft Peter. (2012). Do You Need a New Product-Development Strategy? : Aligning Process With Context. ResearchTechnology Management, 55(1), 34. Market Watch. (2020). DIS: Walt Disney Co. Annual Income Statement. Retrieved August 28, 2020, from https://www.marketwatch.com/investing/stock/dis/financial Macrotrends. (2020). Disney: Number of Employees 2006-2020: DIS. Macrotrends. https://www.macrotrends.net/stocks/charts/DIS/disney/number-of-employees. Mohajan, Haradhan (2017): An Analysis on BCG Growth Sharing Matrix. Published in: Noble International Journal of Business and Management Research , Vol. 2, No. 1 (20 January 2018): pp. 1-6. Patel, A. (2019). Three great opportunities for startups in the entertainment space. Retrieved August 28, 2020, from https://techcrunch.com/2019/07/11/three-great-opportunities-forstartups-in-the-entertainment-space/ THE WALT DISNEY CO. STRATEGIC CONSULTATION 14 Robbins, M. J. (2014). The most powerful mouse in the world: The globalization of the Disney brand. University of Tennessee Honors Thesis Projects. Retrieved from http://trace.tennessee.edu/utk_chanhonoproj/1651 Sampson, H. (2019). Universal is building a new theme park to challenge Disney’s dominance. Retrieved August 28, 2020, from https://www.washingtonpost.com/travel/2019/08/01/universal-is-building-new-themepark-challenge-disneys-dominance/ Segal, T. (2020). Who are Walt Disney’s Main Competitors? Retrieved August 28, 2020, from https://www.investopedia.com/ask/answers/052115/who-are-disneys-dis-maincompetitors.asp Trefis Team, T. (2020). Disney+: After A Stellar Debut In The Streaming Space, Has Disney’s Stock Reached Its Fair Value? Retrieved October 04, 2020, from https://www.forbes.com/sites/greatspeculations/2020/02/12/disney-after-a-stellar-debutin-the-streaming-space-has-disneys-stock-reached-its-fair-value/ Williams, A. (2019, March 02). Walt Disney Company’s Mission Statement & Vision Statement (An Analysis). Retrieved September 06, 2020, from http://panmore.com/walt-disneycompany-mission-statement-vision-statement-analysis EFE Matrix Opportunties Adding streaming advertisement Tech to improve Ads Increased ads for Parks/Recreation Add/Upgrade Parks and Resorts Threats Failure of online streaming Increased rivalry to streaming Increased theme park rivalry Inconsistency in Ad (Corona Virus) Weight Rating Wt’d Score 0.05 0.1 0.1 0.05 2 2 1 4 0.1 0.2 0.1 0.2 0.05 0.1 0.1 0.1 2 1 4 1 0.1 0.1 0.4 0.1 APPENDICES A1: EFE THE WALT DISNEY CO. STRATEGIC CONSULTATION A2: IFE IFE Matrix Weight Rating Wt’d Score Opportunities 0.1 4 0.4 Strong branding 0.1 3 0.3 Low Porter 5 threat 0.05 1 0.05 Multiple revenue 0.1 4 0.4 Acquisitions Threats 0.1 1 0.1 Corona Virus 0.1 1 0.1 Numerous Markets Presence 0.1 2 0.2 Liability Costs 0.1 4 0.4 Unproven investments Total 2.05 APPENDICES A3: BCG 15 THE WALT DISNEY CO. STRATEGIC CONSULTATION 16 The question marks within Disney’s BCG matrix revolve around its streaming ventures and also include the company’s attempts at Disney interactive, an app based service. These services require a large R&D budget and offer little in the way of return. However, this is common for a company attempting to enter an elevated growth market with a prevailing market share (Mohajan, 2017). Yet these endeavors offer the potential for growth into stars, as evident by the success of competitors such as Netflix. However, networks such as ESPN have become a dog for Disney. The ineffective marketing and transitional strategy at ESPN has resulted in the network losing subscribers since 2011, down 23 million consumers (Next Level Finance, 2020). As a result, Disney may look to trim the budget and reinvest in question marks or stars. THE WALT DISNEY CO. STRATEGIC CONSULTATION 17 The cash cows are obviously the theme parks. The substantial cost of infrastructure and operating expenses coupled with low attendance at Euro Disney and Shanghai Disney have offset recent revenue. However, Disney still owns a 25% market share with its closed competitor, Carnival at 20.9% (Watson, 2019). Through capital reinvestment and competitive maneuvers, Disney can sustain this current market share (Mohajan, 2017). The stars obvious within the corporation have largely been due to acquisitions. The procurement of Lucas Films alone grossed $7.5 million and that division nearly 28% (Watson, 2019). Disney’s finances place them in a position to acquire more already established stars, considering their ability to develop them. APPENDICES A4: Financial Projections DISNEY Actual Year 2019 Projected 2020 Projected 2021 Projected 2022 THE WALT DISNEY CO. STRATEGIC CONSULTATION 18 Sales $69.39B $65.5B $72.5B $84.30 Costs of goods Sold $46.11B $45.5B $50.75B $59.01B Gross Margin $23.27 $20B $21.75B $25.29 Selling & Admin $11.54B $8.8B $10.5B $12.4B Other Operating – – – – EBIT $10.48B $6.6B $9.1B $14B Interest $1.26B $1.28B $1.3B $1.5B Other Income – – – – EBT $13.9B ($3B) $5.2B $10.1B Taxes $3.03B $800M $2B $3B Net Income $10.91 ($3.8B) $3.2B $7.7B Dividends $1.7B $88M $1.2B $1.6B Retaining Earnings $9.21B ($3.88) $2B $6.1B (2019 numbers adopted from MarketScreener, 2020) 1 Comprehensive Written Case Analysis: Tesla Inc. Warren Bubb (MGT 545-1) Colorado State University – Global Campus Dr. Ondracek April 4, 2021 2 Comprehensive Written Case Analysis: Tesla Inc. This paper will look at the organization known as Tesla Inc and its current vision, mission, objectives, and strategies as well as recommendations for improvement of vision and mission. Then, the paper will address the input stage which consists of Competitive Profile Matrix (CPM), External Factor Evaluation Matrix (EFE), and Internal Factor Evaluation Matrix (IFE) as well as the matching stage which will include SWOT analysis, the grand strategy matrix, and the Boston Consulting Group (BCG). Then the paper will look at strategy implementation and evaluation as well as risks and projections. Finally, the paper will show a projection of the financial statement and goals needed to achieve projections. Tesla Inc. The current mission of Tesla Inc. is “to accelerate the world’s transition to sustainable energy, (Tesla, 2021).” As of right now, Tesla Inc. is working on this through their electric vehicles (EV’s) as well as their solar panels. As for their vision, this would be the ability to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles, (Tesla, 2021).” Therefore, the main objective of Tesla Inc. is to further the sustainability of the planet through the use of technology. Tesla Inc. is currently trying to strategize on how to make their cars even more affordable for the masses as well as to better their technology so that it is safer and more advanced than the competitors. While the mission and vision and statement for Tesla Inc. are unique in that they are not filled with the same language as many other companies use such as respect, client, innovation, teamwork, and improvement, (Anderson & Jamison, 2015), Tesla Inc. could still work on these statements. For example, including their goal of making their products more important should be in their mission or vision 3 because if they desire to have the world sustainable, then consumers need to be able to afford them. Input Stage A competitive profile matrix (CPM) is a strategic analysis tool that is used by organizations to help make better decisions. The CPM allows business owners, stockholders, and other interested parties to see the strengths and weaknesses of all major competitors in an industry to help visualize and communicate the competitive landscape (Capps, Cassidy, Gravois, & Warner, 2019). The CPM compared Tesla Inc. against two of its competitors, Nio which is an EV maker in China for competition, and Volkswagen which is stateside competition for Tesla Inc. An External Factor Evaluation (EFE) matrix is a strategic analysis tool used to evaluate a firm’s external environment and to reveal its strengths as well as weaknesses, like a SWOT analysis (Sridharan, 2021). The EFE helps identify areas in the organization that are strong and doing well, while also identify areas that can threaten the company and need to be focused on. The next assessment that will be looked at is the Internal Factor Evaluator (IFE). Like the EFE, the IFE is used to determine the strengths and weaknesses internally, which is different from the EFE that was looking at opportunities and threats (Jurevicius, 2014). The synthesized findings from stage one, the input stage, which includes the EFE (Appendix A), IFE (Appendix B), and the CPM (Appendix C), show Tesla Inc’s. areas where they are excelling and other areas that need improvement. The first strength for 4 Tesla Inc. is its quality products and the technology that goes into them. According to Consumer Reports magazine (2020), Tesla Inc. was not only the only American car on the list but also the only EV (Tesla Model 3 the Only U.S.-made Model in Top 10, 2020). One of the main focuses to be in the top 10 was safety features, which Tesla Inc. excelled in due to its technology. The next 4 strength for Tesla Inc. would be its brand reputation. Long, Axsen, Miller, and Kormos (2019), noted that the reason for this is because pioneer (new brands) advantage has helped Tesla Inc. as more people can recall pioneer brands, have a more favorable attitude towards them, and more trustworthy as they have little negative history to be compared to. For example, in 2020, Tesla Inc. ranked highest on J.D Power’s 2020 APEAL Study with a score of 896 when the industry average is ranked at 861 (Light, 2020). The Next strength for Tesla Inc. is innovation is through its use of technology. For example, Tesla Inc.’s cars have self-driving capabilities, can be updated virtually, and monitored via the owner’s phone, and has free charging on the nationwide Tesla Supercharger network, (Tesla, 2020). The last strength that will be discussed will be customer retention. For example, Field (2019), noted that feature requests are 85% of the reason Tesla Inc. will add additional features and that it takes all input very seriously as they want to continue to improve their vehicles. Next, the synthesized findings from the input stage also showed weaknesses as well which would consist of price, supply chain, CEO, and marketing. Tesla Inc. is priced high when compared to non-EVs. Due to the technology needed for the vehicle, this makes the price higher and makes it less affordable for those looking for a more affordable vehicle. The next weakness would be the supply chain due to constant delays and overpromising and underdelivering on products. For example, the Model 3 production was delayed numerous times and CEO Musk claimed it would build 10 thousand vehicles a week in 2018 when instead it was struggling to build less than 5 thousand during that same period (Bloomberg, 2017). Next is the CEO, Elon Musk who is the sole face and image of Tesla Inc. As stated previously, Musk tends to overpromise and underdeliver on his promises to the consumer. This along with his social media presence and his wild tweets on the social media platform Twitter has many critics questioning 5 his ability as a CEO (Furr & Dyer, 2020). Lastly, the final weakness from the synthesized findings would be marketing. Tesla Inc. does not market, nor do they use traditional dealerships. Tesla Inc. uses stores in high traffic areas such as malls and uses this space for a limited amount of show cars (Johnson & Reed, 2019). However, this could also be considered a weakness as customers, especially older generations, may not know where to shop for them. Matching Stage The three tools that were selected in the second stage are the SWOT analysis (Appendix D), the grand strategy matrix (Appendix E), and the Boston Consulting Group (BCG) growthshare matrix (Appendix F). SWOT stands for strengths, weaknesses, opportunities, and threats and is a valuable strategic management tool that incorporates both internal and external factors (David, Creek, & David, 2019). The SWOT analysis will help show what the organization does well, will help address what is lacking to help minimize risks, and to help take the greatest possible advantage of chances for success (David, Creek, & David, 2019). This is incredibly important for any organization, especially Tesla Inc. which focuses heavily on innovations and risk as part of their image and attraction for consumers. The next tool selected is the grand strategy matrix. The grand strategy matrix is a newer strategic tool comparatively and it is used to look through alternative strategies for companies and is gaining popularity since the launch in 2017 as it can be used for any organization (Ingram, 2020). Within this matrix, four quadrants exist, and based on the criteria of the organization, depends on where the matrix they fall. For example, quadrant one means the company has a strong competitive position, the second quadrant means a weak competitive position but has room to improve, the third quadrant means weak market position and weak market growth, and the fourth quadrant means a strong competitive situation, but the market is slow (David & David, 2017). Finally, the last tool to be 6 used will be the Boston Consulting Group (BCG) growth-share matrix. The BCG matrix is a planning tool that uses graphical representations of a company’s products and services to help the company decide what it should keep, sell, or invest more in (Hayes, 2020). The synthesized findings from the matching stage show that Tesla Inc. is performing well, however, there are still numerous areas for improvement. For example, the SWOT analysis showed strengths such as best-in-class electric cars and leading EV sales in the United States but also showed weaknesses in manufacturing complications and unable to meet consumer demand. While the opportunities showed that Tesla Inc. could capitalize on a less expensive vehicle and continue to expand into other countries, while the threats show a shortage of materials as well as the competition that is arising. The grand strategy matrix places Tesla Inc. in quadrant I, which means the organization has a strong competitive position and the market is in rapid growth., meaning this is the best quadrant to be in, with opportunity high and the position strong for the organization (Ingram, 2020). Telsa Inc. is in quadrant because they are a new company that is showing large growth potential in a new market. Finally, the BCG matrix would place Telsa Inc. in the star category which means that they have a high growth rate, and are generating a large amount of cash, however, a majority of that money is going out as they are consuming a large amount of cash (Genoveva & Siam, 2017). The goal would be for Tesla Inc. would be to become a cash cow according to the BCG matrix, which means it would be a market leader that brings in more cash than it consumes (Genoveva & Siam, 2017). Strategy Evaluation For Tesla Inc. to continue to be the number one EV maker in the world, they need to look at recommendations on how to continue to do so. The first recommendation would that Tesla Inc. needs to manufacture a cheaper vehicle as even their base entry vehicles are more expensive 7 than many consumers want to pay. Beatrix and Kitti (2019), noted that while EV sales are increasing in many countries, feedback was consistent that sales would be higher if more consumers could afford them. The strategy for making a cheaper vehicle would be to find resources that are cheaper to use, or find an alternative for them, to mass-produce more cars for a lower price. Cobalt is needed for lithium batteries, which are mainly supplied from the Democratic Republic of the Congo, meaning that Tesla Inc. needs to invest resources in other battery power options (Beatrix and Kitti, 2019). As Tesla Inc. is built around innovation, this would not only allow them to capitalize on the market more, but the technology would also put them ahead of their competitors. This is a long-term objective and vital to Tesla Inc.’s success if they want to attain their goals of being the manufacture to transfer the world towards EVs. The next recommendation would be to penetrate more markets in other countries and to be globally diverse within these counties as each one is unique. While Tesla Inc. is popular in the United States and China, they still need to branch out into other countries as well to gain ground in the market. Szymkowski (2021), noted that Tesla Inc. is working on building a Gigafactory outside of Berlin, Germany as well as potentially entering the market in India as well shortly. The objective to break into these markets, as well as the hesitation towards EVs in general, would be to continue to show how the products are not only better compared to other EVs, but also how they are compared to their ICE counterparts. For example, Tesla Inc. is breaking into the working class by the addition of the Cybertruck to compete against trucks from other competitors (Szymkowski, 2021), Therefore, Tesla Inc. strategy should be to show how this is better than the competition, but to also show the price difference as well as the gas savings compared to ICE’s. Tesla Inc. needs to continue to show their vehicles are for everyone, and to understand what that culture wants and needs to deliver based on that. This is a long-term 8 objective because once the novelty of EV’s wears off and there are more competitors in the market, Tesla Inc. will need to know how to stand out. Risks Tesla Inc. will encounter numerous strategy implementation risks such as cultural, operational, systems, and financial. First, culture is a risk as many consumers are not looking to switch over to an EV due to limited range, or they are considered too expensive due to their technology (Bobeth & Kastner, 2020). While social and moral motives were shown to be a large indicator for the purchase of an EV, millions of individuals do not believe that EV’s are better, and they do not believe in sustainability (Bobeth & Kastner, 2020). The next risk is operational, which includes a breakdown of machinery and repairs. When the Model 3 was in high production, numerous issues arose such as machinery not working to making errors on vehicles as the goal was to produce as many cars as possible (O’Kaine, 2021). This leads to a lack of consumer faith towards Tesla Inc. because if customers are going to spend their money on a product, they expect the product to meet their expectations. The next risk would be systems, which would consist of quality assurance. For example, from 2016 to 2020, over 125 thousand cars have been recalled due to issues such as loose bolts, power steering, as well as the glass roof of the Model Y coming off while driving (Reid, 2020). Not only does this risk hurting Tesla Inc.’s image, but this also could lead to injuries and deaths. Finally, the last risk would be financial. For example, Isidore (2021), found that if it were not for regulatory credits being sold to other automakers, showed that Tesla Inc. would have posted a net loss in 2020 if it was not for the $1.6 billion in credits. This is worrisome because it shows that Tesla Inc. is losing money selling cars. Recommendations 9 The recommendation for strategy review would be to be realistic and clearly defined goals for the future and to share that with the employees. First, Tesla Inc. should define the business process and engage the employees with the goals to show their importance while focusing on accountability if goals are not being met (Ronan, 2018). Next, would be to continue to take customer feedback from the vehicles, but to also get employee feedback and value it as well. By doing this, Tesla Inc. would listen to the experts that are working for them to let them know if a product will not be ready or if they cannot produce as many cars based on their size. This would save Tesla Inc. overpromising and underdelivering to customers who must wait longer for their vehicle. This would also provide a better customer experience which can be used to retain customers. Finally, as mentioned above, reducing the cost by finding a way to make the process more efficient. While Tesla Inc. has already innovated ways to buy cars by purchasing them online, or in the showroom, they can still implement processes to get the vehicles out faster for customers. However, building a process in a disciplined fashion will improve the quality of the data on the orders, reduce mistakes on product shipments to the customer, reduce the cost of quality and improve shipping times and make customers happier (Thomas & Maine, 2019). This is needed as Tesla Inc. has had not only issues with cars being made too fast and have issues, but also has led to numerous vehicle recalls as well. Financial Statement The projected financial statement (Appendix G) is designed to predict the years until the end of 2023. Looking at the financial statements of Tesla Inc. for the past 5 years, the company was not a large success or competitor until the past few years which made it difficult to follow a pattern for an income statement. For example, when looking at the income statement in 2014, Tesla’s revenue was $3,198 billion compared to $31.5 billion at the end of 2020 (Tesla Inc, 10 2020). However, as Tesla grew as a company, so did its operating expenses. In five years operating expenses went from over $400 million to over $1 billion. As Hess and Andiola (2018) noted, Tesla Motor’s operating expenses have gone up as the demand for their vehicles has gone up as well, meaning that Tesla had to continuously add more people to the payroll, get more equipment, as well as more inventory. Therefore, to show this growth in the income statement as Tesla Inc. is projected to sell more vehicles, especially now that they are the most selling vehicle in China, as well other countries in the future (Wozniak, 2021). Tesla Inc. is also a business in the red as they have been struggling to make a profit due to costs until recently, which as stated prior is largely due to regulatory credits. Looking for trends, Yahoo! Finance (2021) showed that their retained earnings were in the red and that they have no dividends on income statements. The projected trends are based on the growth of the past year and projected that for the next 3 years and would keep Tesla Inc. on its current trajectory. This is also based on their stock prices which rose to unpredicted levels in 2020, even with COVID, which worries investors as people are buying into future products and promises (Ngwakwe, 2020). According to the projections, for Tesla Inc. to make this, as well as many of their other goals, to be obtained, they need to manufacture and sell more vehicles. Hull, Rathi, and Coppola (2020), that Tesla Inc. plans to have fully autonomous vehicles by 2023 for a price of $25 thousand. This is needed to raise their vehicle sales for where they need to be in the future to stay based on the projection. Next, to make these production goals happen, Tesla Inc. will need to put a lot of resources into not only making batteries but also look for another option as lithium is limited to a few supplies worldwide (Lithium’s Potential, 2014). The more batteries Tesla Inc. can produce, the more cars they can sell, which will lead to more income to build cheaper vehicles. Lastly, the next recommendation would be to accept that the company is currently 11 overvalued and that it will take more to be where CEO Musk wants to be. Zahn and Serwer (2020), made note that Tesla Inc.’s market cap of $440 billion is currently unrealistic with their current sales to justify its heightened valuation they would need to generate $204 billion in annual revenue by 2030, which would amount to 3.5 million electric vehicles sold at $58,000 each. Also, as Tesla Inc. is built around making the world sustainable, they need to make sure they continue to make this clear with their processes and to not cut corners for the sake of competition. Same with ethics and innovation, with more competition entering the market, Tesla Inc. needs to maintain what made them unique to start with. Conclusion Tesla Inc. is a business that is focused on EV’s and other ways of sustainability for the planet. Their current vision, mission, objectives, and strategies are unique but could use improvement. Next, the CPM, EFE, and IFE showed the strengths and weaknesses of Tesla Inc. as well as what should be improved. Next, Tesla Inc. needs strategies and long-term objectives such as much cheaper car and battery alternatives, while also overcoming risks such as cultural, operational, systems, financial. The projected financial statement is to show the growth that is predicted based on current data and what needs to be done to achieve those goals. 12 References Beatrix, V., & Kitti, F. (2019). Electric Vehicles and Critical Raw Materials. Annals of the University of Oradea, Economic Science Series, 28(2), 444–455. Bobeth, S., & Kastner, I. (2020). Buying an electric car: A rational choice or a norm-directed behavior? Transportation Research: Part F, 73, 236–258. Capps III, C. J., Cassidy, C. M., Gravois, R., & Warner, J. A. (2019). Expanding the Competitive Profile Matrix: Introducing the Production/Operations Management, Marketing, Human Resource Management, Finance/Accounting, Research and Development, and Information Systems Competitive Profile Matrices. Journal of Business Strategies, 36(1), 59–69. Collins C Ngwakwe. (2020). Effect of COVID-19 Pandemic on Global Stock Market Values: A Differential Analysis. Acta Universitatis Danubius: Oeconomica, 16(2), 255–269. Field, B. K. (2019, February 23). Tesla Depends On Owner Feedback For New Feature Ideas. CleanTechnica. https://cleantechnica.com/2019/02/23/tesla-depends-on-owner feedback for-new-feature-request-ideas/. Furr, N., & Dyer, J. (2020, February 18). Lessons from Tesla’s Approach to Innovation. Harvard Business Review. https://hbr.org/2020/02/lessons-from-teslas-approach-to-innovation. Genoveva, G., & Siam, S. T. (2017). Analysis of Marketing Strategy and Competitive Advantage. International Journal of Economic Perspectives, 11(1), 1571–1579. Hall, D., Rath, A., & Coppola, G. (2020, September 23). Elon Musk sets goal for $25,000 car by 2023 with Tesla-made batteries – but investors aren’t impressed. financialpost. 13 https://financialpost.com/transportation/autos/musk-says-tesla-plans-new-25000-ev-inabout-three-years. Hess, M. F., & Andiola, L. M. (2018). Fraud Risk Brainstorming at Tesla Motors. Issues in Accounting Education, 33(2), 19–34. Isidore, C. (2021, February 1). Tesla’s dirty little secret: Its net profit doesn’t come from selling cars. The Mercury News. https://www.mercurynews.com/2021/02/01/teslas-dirty-littlesecret-its-net-profit-doesnt-come-from-selling-cars/. Jurevicius, O. (2014, October 20). Why you need to know about IFE & EFE Matrices. Strategic Management Insight. https://strategicmanagementinsight.com/tools/ife-efe-matrix.html. Long, Z., Axsen, J., Miller, I., & Kormos, C. (2019). What does Tesla mean to car buyers? Exploring the role of automotive brand in perceptions of battery electric vehicles. Transportation Research Part A, 129, 185–204 Lithium’s potential. (2014). Chemistry & Industry, 78(6), 36–39. O’Kane, S. (2021, February 4). Don’t buy Teslas during a production ramp, Elon Musk says. The Verge. https://www.theverge.com/2021/2/3/22265351/tesla-paint-quality-productionelon-musk. Reid, A. | N. (2020, November 28). Ouch, That Hertz: Tesla recalls almost 10,000 vehicles for quality control issues. Driving. https://driving.ca/tesla/auto-news/news/ouch-that-hertztesla-recalls-almost-10000-vehicles-for-quality-controlissues#:~:text=Tesla%20has%20issued%20a%20recall,fall%20off%20at%20high%20spe 14 eds.&text=An%20additional%20401%20Model%20Y,the%20control%20arms%20to%2 0detach. Ronan, S. (2018, April 1). bizjournals.com. https://www.bizjournals.com/boston/news/2018/04/01/5-ways-to-improve-your-businessprocesses.html. Sridharan, M. (2021, February 8). External Factor Evaluation (EFE) for competitive analysis. Think Insights. https://thinkinsights.net/strategy/efe analysis/#:~:text=External%20Factor%20Evaluatio n%20(EFE)%20Matrix,the%20availa ble%20opportunities%20and%20threats.&text=According%20to%20the%20author%2C %20both,external%20and%20internal%20environment%20analyses. Szymkowski, S. (2021, January 28). Tesla 2021: What we expect to see from Elon Musk and company. Roadshow. https://www.cnet.com/roadshow/news/tesla-elon-musk-model-splaid-cybertruck-semi-gigafactory/. Tesla, Inc. (2021). Form 10-K 2019. Retrieved from https://ir.tesla.com/static-files/07bfcb70aba1-4a27-af09-4f101678320c Tesla Model 3 the Only U.S.-made Model in Top 10. (2020). Quality Progress, 53(4), 13. Thomas, V. J., & Maine, E. (2019). Market entry strategies for electric vehicle start-ups in the automotive industry – Lessons from Tesla Motors. Journal of Cleaner Production, 235, 653–663. Yahoo! Finance (2021). Retrieved from https://finance.yahoo.com 15 Wozniak, K. W. (2020, March 28). Tesla U.S Sales Figures. carsalesbase.com. https://carsalesbase.com/us-tesla/. Zahn, M., & Serwer, A. (2020, September 2). Billionaire investor Mario Gabelli explains ‘problem’ with Tesla stock. Yahoo! Finance. https://finance.yahoo.com/news/billionaireinvestor-mario-gabelli-explains-problem-with-tesla-stock-125040865.html. 16 Appendix A External Factor Evaluation Matrix for Tesla Motors Inc. External factor Weight Rating Weighted score Greenhouse gases emission .10 3 .3 Expansion to international market (China, .20 4 .8 .25 4 1 Competitors’ electric vehicles .10 1 .1 Technology .15 2 .3 Economic Downturn .20 2 .1 TOTAL 1.0 Opportunities Europe) Increased demand for products Threats 2.9 17 Appendix B Internal Factor Evaluation Matrix for Tesla Motors Inc. Internal factor Weight Rating Weighted score High sales and revenue .10 3 .3 High quality products .15 4 .6 Brand Reputation .15 4 .6 Shortage of supply .15 3 .45 Image of CEO .15 2 .3 Lack of dealership .10 2 .2 Expensive products .20 2 .4 TOTAL 1.00 20 3.05 Strengths Weaknesses 18 Appendix C Competitive Profile Matrix CPM Tesla VW NIO Critical Success Factor Weight Rating Score Rating Score Rating Score Brand reputation 0.13 4 0.52 4 0.52 1 0.13 Level of product 0.08 4 0.32 2 0.16 4 0.32 Range of products 0.05 3 0.15 3 0.15 2 0.1 Successful new 0.04 3 0.12 3 0.12 3 0.12 Sales per employee 0.08 2 0.16 3 0.24 3 0.24 Low-cost structure 0.05 1 0.05 4 0.2 1 0.05 Customer retention 0.02 3 0.06 1 0.02 1 0.02 Strong online presence 0.15 2 0.3 4 0.6 4 0.6 Successful promotions 0.08 2 0.16 3 0.24 3 0.24 Total 1 integration introductions 1.84 2.25 1.82 19 Appendix D Internal Factors Strengths Weaknesses Top employer company Manufacturing complications Leading automotive company Unable to meet demand Best in class electric cars Lack of high-volume production U.S. electric vehicle sales Shortage of batteries Innovative company Elon Musk as CEO External Factors Opportunities Threats Sales expansions and untapped markets Liability claims Less expensive car Competition Creation of own battery cells Product defects Cybertruck Customer adaptation Market confidence Shortage of materials 20 Appendix E Rapid Market Growth Quadrant I Quadrant II 1. Market development 2. Market penetration 3. Product development 4. Forward integration 5. Backward integration 6. Horizontal integration 7. Related diversification 1. Market Development 2. Market penetration 3. Product development 4. Horizontal integration 5. Divestiture 6. liquidation Weak Competitive Market Strong Competitive Market Quadrant III Quadrant IV 1. Retrenchment 2. Related diversification 3. Unrelated diversification 4. Divestiture 5. liquidation 1. Related diversification 2. Unrelated diversification 3. Joint ventures Slow Market Growth 21 Appendix F 22 Appendix G Income Statement Sales Percentage Increase Cost of Goods Sold Gross Margin Selling & Administrative Other Operating EBIT Interest Other Income EBT Taxes Net Income Dividends Retained Earnings 2020 31.5b 29% 24.9b 6.6b 2021 36.5b 14% 29b 8.6b 2022 41.5b 14% 34b 10.6b 2023 46.5b 12% 39b 12.6b 4.6b 4.6b 1.9b 748m 748m 1.11b 292m 690m N/A (-5.3b) 5.2b 5b 2.5b 808m 27m 1.6b 500m 790m N/A (-4b) 5.8b 5.5b 3.1b 868m 30m 2.1b 700m 890m N/A (-2.5b) 6.4b 6b 3.1b 926m 25m 2.6b 900m 990m N/A (-1b) 1 Module 4 Portfolio Milestone: Comprehensive Case Analysis: The Walt Disney Company Colorado State University Global Campus MGT 545 Strategic Planning and Innovation Dr. Corey Mathis, Ph.D. April 17, 2022 2 Module 4 Portfolio Milestone: Comprehensive Case Analysis: The Walt Disney Company Walt Disney has been the leading provider of entertainment and information since its conception in the 1920s. Walt Disney Company has made milestone development progress due to its substantial brand equity. Several external and internal factors have played an imperative role in the Walt Disney Company’s success. High brand worth has played a crucial role in the company’s overall success. The company’s strengths also lie in the type of strategies adopted. The company engages differently with various stages of strategic management. An organization can achieve its future advantages and compete favorably with other players in the market if it applies its strategies effectively (Kreft et al., 2019). Disney applies the acquisition and tale character development strategy to offer its users varied worldwide family entertainment and media business. Applying these two strategies explains Disney’s consistent revenue stream in the recent past. Despite Disney’s weaknesses, the company has made these milestones successful (Havard, 2020). Current Vision, Mission, Objectives and Strategies Developing both a vision and mission statement forms the basis of the first stage of the strategic management process. Only strategies that align with the vision and mission statement can be formulated, implemented, and evaluated in an organization (David & David, 2017). Walt Disney Vision Statement The Walt Disney’s vision statement is “to be one of the world’s leading producers and providers of entertainment and information” (MSA, 2022). The vision statement mainly focuses on leadership as strategic management in ensuring the company operates globally. The vision statement also allows for strategy exploration and the development of new innovative processes due to its simplicity. As the Vice President of Walt Disney, I believe Disney’s vision statement lacks some elements around a strong vision statement. A good vision statement needs to be future-focused, clear, pinpoint specific set objectives, reflective of the company culture and core 3 values, and motivational and inspirational (David, & David, 2017). Disney’s vision statement misses the target as it is vague as does not outline specific goals and guide application. It does not pinpoint the organization’s particular set of objectives. Lastly, Disney’s vision statement does not invoke inspirational and motivational emotions (Desmidt, 2016). Walt Disney Mission Statement Walt Disney’s mission statement is “to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds, and innovative technologies that make ours the world’s premier entertainment company” (MSA, 2022). The mission statement acts as a motivating factor for achieving the company’s long-term objectives and goals. Objectives To be leading in the production and provision of information and entertainment globally. Strategies Building of consumer market for each of its products. Vision and Mission Statement Recommendations Vision Statement Recommendations Disney needs to restate its vision statement to reflect specific objectives to differentiate which strategy to use. For instance, the word ‘leading’ needs to be elaborated to capture terms such as revenue and or in-network to allow for the application of a strategy that will either increase in-network viewers or increase the company’s revenue base. For example, Disney will allocate more resources as a strategy to increase viewership if Disney aspires to be the leader in the number of in-network viewers globally (Pace, 2017). Mission Statement Recommendations The Walt Disney company’s mission statement is clear, strong, commanding, and focuses on the values their people bring to the organization. The mission statement also focuses on their 4 value in entertainment, in how this can improve people’s lives. Competitive Profile Matrix (CPM) Competitor Analysis (Ayodele, 2015) External Factor Evaluation (EFE) Matrix The Walt Disney Company can also identify the available opportunities and threats through an external factor evaluation (EFE). Emerging markets such as China provides the company with a chance to increase its market share. Europe and US form the company’s greatest demand for its entertainment and information products. Venturing into such an emerging market provides the company with an opportunity to expand its market (Havard, 2020). Table 1: EFE Matrix KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE Opportunities Using brand equity to leverage digital marketing 0.02 4 0.08 5 Considerable and vast resources of the parent 0.08 3 0.240 0.2 4 0.8 0.1 4 0.4 Economic recession in the US and Europe 0.10 3 0.03 Government regulation in host countries 0.08 2 0.240 Competition rendering Walt Disney 0.12 2 0.24 The rising cost within urban areas 0.05 2 0.10 Total Weighted Score 1.00 2 3.10 company to draw on. Taking advantage of the emerging market such as China Technological advancement Threats undesirable (Disney, 2022b) A series of government regulations additionally act as a threat to the organization’s success in terms of reduced profit margin. Intense competition from Universal studios forms the company’s highest threat, with a weighted score of 0.24. Based on table 1 above, rating 1 represents a poor response, two (2) represents an average response, three (3) represents an aboveaverage response, and (4) represents a superior response. Internal Factor Analysis (IFE) Matrix An organization can identify its strengths and weaknesses through Internal Factor Evaluation (IFE), evaluating the top 15 strengths and weaknesses (David & David, 2017). The company can assess the importance of each factor from the weighted score. On a rating scale of 1-4, the major weakness is one (1), while minor weakness is indicated by two (2). Based on table 2 below, the Walt Disney Company has a 3.10 as its weighted score. 6 Table 2: IFE Matrix KEY INTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE Strengths Strong Brand Equity 0.15 4 0.6 Diverse portfolio 0.1 4 0.4 Exceptional customer service 0.2 3 0.6 Joint ventures with strategic partners 0.2 4 0.8 The constant need for innovation 0.10 3 0.03 High increasing costs of operation 0.08 3 0.240 Lacking in development property 0.12 2 0.24 Lack of R & D technological Department 0.05 2 0.10 Total Weighted Score 1.00 Weaknesses 3.10 (Disney, 2022b) A total weighted score of 3.10 above indicates that the Walt Disney Company has a strong position internally since it is above the average. Three (3) and four (4) indicate minor and major strengths, respectively. Joint ventures with strategic partners form the highest potency for the Walt Disney Company. In contrast, increasing costs with operations and lack of development property develop the most increased weakness for Walt Disney Company. Both EFE and IFE assessments reveal that the company has a share of its strengths, such as strong brand recognition globally. The increased volume of revenue also acts as a strength for the organization. Matching Stage Tool Outputs Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix Boston Consulting Group (BCG) Matrix 7 Internal-External (IE) Matrix Strategy and Long-term Objective Recommendations Market development strategies: Geographic expansion Market penetration strategy: Changing its subscription rate. Market expansion Strategies: Products diversification Product development strategies: Innovate new product/service areas outside its core product Strategy Implementation Risks The Impacts of Covid-19 on Walt Disney’s strategy implementation. Projected Financial Statement with Assumptions Disney projects to increase the number of its subscribers from the current 12 million subscribers to 230 million in 2024. Disney also projects its revenue to increase to $ 13.6 billion (Disney, 2022b). Recommendations for Annual Goals The organization’s annual goals need to aim at product development while factoring in innovation and sustainability. The organization’s goals need to factor in market expansion strategies. **Include Disney’s need to support sustainability, ethics, and innovation to support strategy recommendations. Strategy Review, Evaluation, and Improvement Process Recommendations Walt Disney company needs to adopt the use of a Balanced Scorecard (BSC) method in evaluating its strategic decisions. The organization also needs to adopt the use of BSC method in assessing its ability to provide quality products to its consumers. 8 Conclusion Argyres, N., & McGahan, A. M. (2002). An interview with michael porter. Academy of Management Perspectives, 16(2), 43–52. https://doi.org/10.5465/ame.2002.7173495 • Reason: Will help in competitive analysis of the organization Chavez, C., & Kiley, A. (2016). Starlets, Subscribers, and Beneficiaries: Disney, Latino Children, and Television Labor. International Journal of Communication (19328036), 10, 2616– 2636. • Reasons: Will help in strategic analysis of Disney Havard, C. T. (2020). Disney vs. Comcast Lessons learned from the corporate rivalry. Graziadio Business Review, 23(1). • Reasons: will be critical in the competitive analysis of Disney’s competitors. Kreft, J., Boguszewicz-Kreft, M., &Żurek, P. (2019). Myth in modern media management and marketing: The case of the Walt Disney Company (1st ed.). IGI Global. • Reasons: This will be helpful in recommending suitable marketing and management strategies for Walt Disney company. 9 References Argyres, N., & McGahan, A. M. (2002). An interview with michael porter. Academy of Management Perspectives, 16(2), 43–52. https://doi.org/10.5465/ame.2002.7173495 Ayodele, B. (2015). Choosing a arrowhead strategic options for Walt Disney. Academia. https://www.academia.edu/9648608/Selecting_a_Strategic_Option_for_Walt_Disney_A mended_on_16_10_2015_ Cheng, C., Chi, V., & Duong, V. (2017). Walt Disney strategic audit. Squarespace. https://static1.squarespace.com/static/599de02ba803bb1828c58d96/t/5a4dcb53f9619a322 da798c8/1515047773304/Walt_Disney_Strategic_Audit.pdf David, F., & David, F. (2017). Strategic management: A competitive advantage approach, concepts and cases (16th ed.). Pearson. Disney. (2022a). Investor relations. The Walt Disney Company. https://thewaltdisneycompany.com/investor-relations/ Disney. (2022b). 2021 Annual financial report. The Walt Disney Company. https://thewaltdisneycompany.com/app/uploads/2022/01/2021-Annual-Report.pdf DnB. (2022). The Walt Disney Company. Dun & Bradstreet. https://www.dnb.com/businessdirectory/companyprofiles.the_walt_disney_company.42cf1f7156420b0a5454d50d9a70043f.html Havard, C. T. (2020). Disney vs. Comcast Lessons learned from the corporate rivalry. Graziadio Business Review, 23(1). Hossain, H., & Kader, A. (2020). An analysis on bcg growth sharing matrix. International Journal of Contemporary Research and Review, 11(10). https://doi.org/10.15520/ijcrr.v11i10.848 10 Kreft, J., Boguszewicz-Kreft, M., & Żurek, P. (2019). Myth in modern media management and marketing: The case of the Walt Disney Company (1st ed.). IGI Global. https://doi.org/10.4018/978-1-5225-9100-9.ch002 MarketWatch. (2022). DIS Disney financials. https://www.marketwatch.com/investing/stock/dis/financials MSA. (2022). Disney mission and vision statement analysis. Mission Statement Acacemy. https://missionstatement.com/disney/#:~:text=Disney%20vision%20statement%20is%20%E2%80%9Ct o,Disney%20underscores%20its%20leadership%20qualities. Pace, S. (2017). Shaping corporate brands: From product features to corporate mission. International Studies of Management & Organization, 47(2), 197–205. https://doi.org/10.1080/00208825.2017.1256167
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