Walt Disney Parks and Resorts

Walt Disney Parks and Resorts Worldwide Inc.

Introduction

Managers are supposed to carry out periodical analyses of their organization to assist them in tracking progress as well as setting new targets and strategies for the successive periods. Additionally, it is important to note that organizations operate in a market setting that keeps on shifting from time to time forcing the players to constantly readjust their strategies to remain relevant and successful in their endeavors.

However, the majority of the organizations that usually ignore the warning signs and changing conditions of the market will in most cases find themselves wiped out from the system. On the contrary, the companies that are keen on the events that take place in the market will strategize and re-organize themselves, and with time, they will grow to dictate the direction of the market and cause other companies to emulate them. On the other hand, in order to correctly ascertain the position of an organization in the market, an analysis must be carried out considering the impact of both the internal and external forces on it.

Therefore, a comprehensive organizational analysis will involve examining all the aspects of the company, hence exposing its inefficiencies and problems as well as finding strategies that will seal the loopholes. Furthermore, the analysis will also identify the strengths of the organization and put in measures to exploit them to the advantage of the company. Different models of organizational analysis, such as the cognitive and rational models among others, have been developed to help managers in examining the status of their companies (Dobbs, 2014). Besides, company managers will in most cases divide an organization into different units using several criteria, including function, product, customers, process, geographic locations and matrix in order to carry out an in-depth organizational analysis. In this discourse, the focus is to conduct a comprehensive organizational analysis of the Disney theme park. This analysis aims to establish Disney theme park’s current position, uncover the issues bedeviling this giant entertainment corporation, and give alternatives that the company should ratify to successfully navigate the current turbulent business environment.

Walt Disney Parks and Resorts Background

Walt Disney Company’s history can be traced back to 1923 when two brothers, Walt and Roy Disney started the Disney Brothers Studio in Hollywood California (Johnson & Thomas, 2011). The studio business grew very steadily, and by 1955, the company had diversified its business by starting the Disney Land Theme Park as it sorted to provide an experience where the children could have fun together with their parents (Johnson & Thomas, 2011). Walt Disney Parks and Resorts Inc. is a business unit under the parks and resorts segment, which is one of the five business segments of Walt Disney Company. Besides, the segment is responsible for conceiving new concepts for parks, family-oriented leisure activities, and vacation resorts. Moreover, the Magic Kingdom Park was opened in 1971 at Florida’s Disney World (Cross & Walton, 2005). The other four segments of Walt Disney Company are media networks, consumer products, studio entertainment, and interactive media. Media networks comprise digital, publishing businesses, cable, and radio spread across two divisions, namely ESPN Inc. and ABC/ Disney Television Group. On the other hand, the studio entertainment accommodates the Disney Studios, which includes the Pixar Animation Studios and Walt Disney Animation Studios, Marvel Studios, Touchstone Pictures, Lucasfilm, and Disneynature. The consumer product segment houses the Disney Consumer Products responsible for producing and selling books, toys, and apparel. Besides, the interactive media segment is responsible for creating entertainment specifically for the digital media platforms, such as games.

The parks and resorts segment of Walt Disney Company consists of six vacation destinations with eleven theme parks, in addition to 44 resorts in Asia, North America, and Europe (Wills, 2017). Moreover, the segment also operates four Disney Cruise Line ships, twelve Disney Vacation Clubs as well as Adventures by Disney, which offers family vacation experiences to global destinations. Disney Parks and Resorts Inc. is a major contributor to the profitability of Walt Disney Company as indicated by its being the only segment that registered positive revenue in the first quarter of 2016-2017 (Wills, 2017). Besides, the parks and resorts segment managed to increase its revenue to $4.6 billion at the end of the first quarter of the financial year 2016-2017 from $4.2 billion at the end of the first quarter of the financial year 2015-2016, indicating a 6% increase (Walt Disney Co., 2017). Additionally, the Walt Disney Parks and Resorts’ operating income rose by 13% to $1.1 billion from $981 million registered in the same period of the previous fiscal year (Walt Disney Co., 2017). However, Disney Parks and Resorts Inc. also experienced dips in its revenues as a result of extreme environmental conditions, such as Hurricane Mathew, which negatively affected both the theme parks attendances and room occupancy. Furthermore, the Disney's financial report for the first quarter of 2016-2017 stated the adverse weather conditions unfavorably impacted the outcomes of the company’s domestic operations as well as shifting the timing of the New Year’s holiday (Wills, 2017).

The Disney Parks Inc. is the largest business component of the Walt Disney Company according to the employee headcount which accounts for approximately 130,000 of the company’s 180,000 employees (Wills, 2017). Furthermore, Disney Parks has expanded globally, and in the year 2016, over 140 million guests were hosted in the company’s parks, making it one of the most visited theme parks in the world (Ndalianis, 2017). The parks of Disney have become the most popular in the world with Florida’s Magic Kingdom being declared as the world’s most popular amusement park after recording over 20 million visitors in 2016 (Vogel, 2016). Besides, Disney Parks dominated the rankings of theme parks in 2016 with the parks in Japan and the US holding seven of the top 10 spots as well as 12 of the 25 spots (Wills, 2017). Thus, the success of Disney Parks comes as a result of clear strategies that focus on exceeding the expectations of the guests, top among them being the effective management of the guests. Furthermore, the amusement parks business has become very competitive over the years with other companies, such as Universal Studios, unveiling world-class parks, hence forcing Disney to continuously innovate to stay relevant, as well as the industry leader.

Section 1

Mission Statement, Vision Statement, and Values

The Walt Disney Parks and Resorts Inc. is guided by the overall values, vision, and mission of its parent company, Walt Disney Company, as a move to achieve organization-wide success. Thus, the vision and mission statements as well the values provide the foundation upon which the company rests while helping it to remain true to the main purpose that it was created. Moreover, the Disney theme park's mission and vision statements were guided by the values, mission, and vision of the parent company (Johnson & Thomas, 2011).

• Mission Statement

Walt Disney Company. “To be the top producers and providers of entertainment in the world, by using our brands to differentiate our consumer products, services, and content. The company’s main financial goals are to maximize earnings and cash flow and to allocate capital towards growth initiatives that will drive long-term shareholder value” (Walt Disney, 2017).

Walt Disney theme parks. “We create happiness by providing the best in entertainment for people of all ages everywhere” (Walt Disney, 2017).

Therefore, by evaluating Walt Disney’s mission statement, it can be found that the company pushes for a product-oriented statement. Moreover, the company focuses primarily on the products and services that it offers and works on continuously improving them as a way of satisfying its customers.

• Vision Statement.

“To be a place where people find happiness and knowledge” (Walt Disney, 2017).

• Values

Walt Disney states its values as follows:

· No cynicism;

· Nurturing and promulgation of "wholesome American values;"

· Creativity, dreams, and imagination;

· Fanatical attention to consistency and detail;

· Preservation and control of the Disney "magic" (Walt Disney, 2017).

Industry Analysis

The theme parks industry is one of the sectors that recovered at a faster rate from the recession period of 2008-2011 compared to various leisure segments in the hospitality industry (Lillelstol, Timothy, and Goodman, 2015). Additionally, since the year 2013, the industry has continuously received record numbers of visitors as a result of the operators creating new attractions as well as implementing attractive pricing strategies (Vogel, 2016). Currently, various theme park companies are rolling out massive budgets to be used to upgrade and expand their parks as well as to build new ones to satisfy the market demand (Milman, 2008). Furthermore, the majority of the parks are diversifying their products by embracing dynamic technology by introducing the internet and gaming sessions for their guests. There are over 400 amusement parks and attractions in the United States of America, while additional 300 amusement parks have been established in Europe (Vogel, 2016). Furthermore, it is estimated that over 360 million customers visit amusement parks in the Asia Pacific annually, while Europe, Africa, and the Middle East record over 160 million customers annually (Vogel, 2016). Moreover, Latin America receives over 30 million guests annually, while North America receives over 375 million customers annually (Vogel, 2016).

Several services are offered by theme parks top among them: water parks, theme, and amusement parks, zoos, attractions, family entertainment centers, science centers, aquariums, resorts, and museums. Thus, the theme park industry is believed to have a huge impact on the economy of the US estimated to be more than $200 billion annually (Vogel, 2016). Furthermore, amusement parks are a major employer globally. They employ over 1.3 million people directly and one million jobs indirectly (Vogel, 2016). The industry establishments are well distributed across the United States; however, Florida and California command the biggest market share in the country. Major industry players include Universal Parks and Studios, Merlin Entertainment, and Walt Disney Parks and Resorts among others. Additionally, the State of Florida contains only 10.1% of the industry's theme parks in 2016 while it pays an estimated 39.5% and 33.1% of the industry's employment and wages respectively (Walt Disney Co., 2017). On the other hand, California hosts just 9.9% of the total industry’s parks and yet it accounts for 49.5% and 42.1% of the industry’s employment and wages (Walt Disney Co., 2017).

The theme parks industry is highly competitive with numerous players doing everything they can to attract more visitors to their establishments. Therefore, major theme park operators are increasingly using their intellectual property rights to major entertainment and film franchises to create a competitive advantage (Vogel, 2016). Thus, big players will showcase beloved characters and films into exciting rides and new features to increase their profit margins and propel their revenues. Furthermore, most of the operators continue to venture into new frontiers globally in such countries as China and the United Arab Emirates as a strategy to increase their customer base as well as their market share. Additionally, the majority of the major success factors that characterize the industry include proximity to key markets, carrying regular maintenance of the facilities to keep them in good condition, as well as access to a multi-skilled and flexible workforce.

By the year 2020, the global market for amusement parks is projected to reach $44.3 billion driven by the rise in international tourism, the growth of the middle class in developing countries, as well as the recovery in leisure spending (Vogel, 2016). On the other hand, more retired baby boomers are increasingly embracing new leisure and recreational trends; hence, they will contribute significantly to amusement parks. Furthermore, while the United States represents the largest market of amusement parks in the world, the Asia-Pacific region led by China is expected to grow at a much faster rate of 12.2% per annum (Sylt, 2017). The rising disposable incomes, the rise of middle-income park guests, as well as the improving conditions of international trade that attract more international investors to develop parks will accelerate the growth of theme parks. Furthermore, the Middle East, especially the Gulf Cooperation Council (GCC) states will emerge as the major destination for theme parks as a result of increased investments by international investors who are keen on developing entertainment and leisure destinations.

Economic Segment

The theme parks and resorts industry, alongside many other entities in the entertainment sector, was one of the hardest-hit industries by the 2008-2011 economic downturns. Besides, the adverse economic conditions negatively influenced the income spent by potential customers on the products related to entertainment, thus reducing the consumption of amusement-related services. Therefore, the economic conditions have a direct impact on the performance and life of the theme park industry in that economic development is a condition that favors the growth of the amusement parks industry. On the contrary, economic turbulence carries negative implications for the theme parks industry, eventually decreasing their market performance.

Walt Disney Parks saw its revenues decline by up to 4% during the recession period in 2008 by reporting a net income of $4.4 billion down from $4.7 billion in 2007 (Milman, 2008). Moreover, the company recorded a lower number of visitors over the recession period as more people could no longer afford to access the services of amusement parks. Additionally, the industry was negatively impacted by the exchange rate differences, reducing the number of foreign tourists who were attracted to the parks. Furthermore, the reduced purchasing power also contributed to the dipping sales of the Walt Disney Parks.

On the other hand, Walt Disney Parks and Resorts Inc., like the majority of the companies in the theme park industry, was among the few companies that registered a swift turnaround and started attracting more revenues. Moreover, the company recorded an increased net income of $4.8 billion by the end of 2011, this being a 21% increase (Vogel, 2016). Furthermore, the revenues of the same financial year increased by 7% to a record $40.9 billion at a time when a majority of businesses across several industries in the US and globally were still struggling with inflation. The share per earning rose by 24% to a record high of $2.52 (Walt Disney Co., 2017). Therefore, as more people started to regain their purchasing powers, Walt Disney Parks and Resorts Inc. started to register an increased demand for its services (Walt Disney Co., 2017). Thus, the new trend prompted the company to spring into action to find ways through which the company would effectively meet growing demand. Therefore, Disney Parks and Resorts embarked on a massive expansion plan by clearing new lands and developing more theme parks both locally and abroad. The continuously improving economic times enabled the completion of Shanghai Disney Resort, which was built on 930 acres of land. This resort was finally opened in the year 2013 attracting a large number of tourists from the Asia-Pacific region (“It's a Small, Small World,” 2016).

Political / Legal Segment

Political. The political stability of the United States that has endured for decades has greatly favored the growth of parks and resorts of Walt Disney. Furthermore, the strict adherence to the rule of law by the political class makes it difficult for everyone to try to manipulate the law to suit one’s selfish agendas, hence ensuring that all kinds of businesses thrive under an orderly political environment. Besides, the parks and resorts are under the Department of Tourism, a major economic contributor to the United States, that have forced the government to put measures in place that will help make the country an attractive tourist destination (Milman, 2008). The economic recession of 2008-2011 hurt the tourism of the United States to a point that in 2011 former President Obama had to personally visit Walt Disney World in Orlando Florida to promote tourism (Johnson & Thomas, 2011). Additionally, the President’s visit was a move to reassure tourists and operators of the Federal government’s commitment to oversee an economic turnaround as well as to make the United States a top tourist destination.

Walt Disney Parks and Resorts Inc. has grown over the years to a point that it has managed to venture into other countries, such as Japan, China, and France. The politics of the day play a very critical role in ensuring that American business entities in other countries are protected and thrive in their new settings. Thus, bilateral agreements between several other countries and the United States play a leading role in attracting the country's top companies to establish themselves in foreign markets. In the last 10 years, the relationship between the United States and Asian countries, such as China, as well as several other Middle East nations, has significantly improved, hence attracting Walt Disney to move into such countries and establish their businesses (Vogel, 2016). On the contrary, the majority of the country's top companies had a hard time penetrating China 15 or 20 years ago due to increased friction between China and the United States, and these were purely dictated by politics (Vogel, 2016). On the other hand, the Parks and Resorts industry enjoys tax benefits in an effort to attract more players into the industry and to increase its profitability.

Legal. The biggest concern about amusement parks that has posed numerous challenges to the operators of the parks is their safety. Numerous cases have been reported of people getting injured while recreation in the amusement parks; some of which turned fatal. Walt Disney Parks and Resorts Inc has been involved in several suits that have been filed against it as a result of guests being injured while enjoying its services and products (Cross & Walton, 2005). Several cases, like the incident where a toddler was killed by an alligator on Disney property in Florida, as well as that where the scalp of a girl was ripped off while on an amusement ride in Omaha, Nebraska, and several girls falling from a raft in Greenville, Tennessee, have hurt the company (Vogel, 2016). Besides, when such cases arise, Disney has been forced to spend huge sums of money not only on court cases and compensation but also on publicity and the acquisition of new equipment.

The American premises liability laws place the responsibility of ensuring the safety of people in the management of the amusement parks. Thus, the management has the responsibility of guaranteeing the safety of their parks at all times. Moreover, the law requires the management to actively inspect for unknown dangers and immediately fix them. In addition to the Federal legislation, the State governments are also empowered to regulate parks and resorts within their territories. For instance, the state of California demands that its officials conduct accident investigations and inspect rides regularly. Furthermore, in Illinois, the state’s officials in the Department of Labor have the authority to close down rides that are not safe (Cross & Walton, 2005). Additionally, the closed parks can only be re-opened after they have obtained new permits as well as provide proof of a million-dollar liability insurance policy. Kansas and Florida require annual inspections of permanent theme park rides whereby the inspections are random. Thus, All the Disney Parks are directly affected by the set legislations and at times incur heavily as a result of court cases and publicity campaigns to sanctify the image of the company and reassure customers, especially after an incident has occurred in one of the parks.

• Socio-cultural Segment

Walt Disney Parks and Resorts Inc. has played one of the leading roles in shaping the American culture by establishing itself as a top middle-class pilgrimage center in the United States. Besides, such characters as Donald Duck and Mickey Mouse are central US icons, and many identify with them right from childhood. Moreover, the luminosity and utopian themes of Disney’s cross-cultural strongly appeal to the needs of the capitalist society (Johnson & Thomas, 2011). Disney has therefore taken advantage of social media and established a strong presence and connection with its clients. The company reaches over 300 million people on Facebook, Twitter, and Instagram, which are now the primary communications platforms for the organization (Sylt, 2017). On the other hand, Disney has played a leading role in transforming its surrounding society by engaging in social drives to create awareness of several issues that plague the society. Additionally, Walt Disney has actively created awareness campaigns on childhood obesity as it seeks to inspire a healthy nation (Wills, 2017). However, there have been some instances where the employees at Disney parks have been accused of racism, forcing the company to review its stance against racism.

The biggest socio-cultural challenge that Disney Parks and Resorts Inc. has encountered is when establishing itself in overseas markets, such as China and Japan whose cultures are considered quite conservative (Wills, 2017). Disney has been forced to allocate huge budgets, especially on international marketing to achieve the desired response. Therefore, the company spends more on learning the dominantly traditional Asian cultures and develops advertisements that the customers identify with. On the other hand, the wide wage disparity in China significantly reduces the purchasing power of the middle-class who makes the biggest share of the market; hence, the products and services are forced to be offered at lower prices (“It's a Small, Small World,” 2016). Thus, the company creates different packages that attract all the economic classes in the country.

• Technological Segment

Walt Disney Parks and Resorts Inc. has significantly capitalized on dynamic technology to introduce revolutionary products, services, and business systems that have greatly favored its operations. Technology has played a central role in designing theme parks worldwide, as well as in creating new concepts most of which are ancient and futuristic. Thus, many of Disney’s innovations are strongly driven by technology to create exciting new experiences (Wills, 2017). Furthermore, concepts, such as the ‘Toy Story Mania’ at the Tokyo Disney Sea and the ‘Mickey’s Fun Wheel’ heavily use technology as their main driver.

The technological innovations have also been extended to other areas of Disney’s Parks other than the different concepts and experiences created at the parks. In 2016, for example, Disney Parks and Resorts Inc. has issued a patent by the US Patent and Trademark Office that covers a scene projection technology that is capable of turning a hotel room into a multimedia interactive experience (Ndalianis, 2017). The ‘Image Projecting Light Bulb’ Patent No.9405175 uses video projections to turn an ordinary room into an immersive environment that features fantasy worlds from popular Disney television shows or movies. In 2015 Disney was ranked 158th overall in terms of the US Patents grants earned after having taken over 200 patents that year (Wills, 2017). Moreover, in 2014, the company earned 177 patents, and the majority of them referred to virtual environments and virtual spaces. Furthermore, Disney has used technology to raise its guest experience and simplifies and quicken its services at the parks. The introduction of the ‘Magic Bands', attractive wrist bands that are embedded with microchips that are linked to the guests' credit cards and hotel rooms, are usually given to the guests and their kids, hence allowing them to walk with less luggage in the parks (Wills, 2017). Furthermore, the ‘Magic Bands’ work hand in hand with the “My Disney Experience,’ a mobile application that enables visitors to book and plan their Disney vacations online in advance.

Ordering Process

Push the button “Order Now”

Make the payment. No additional charges will be applied

Detailed verification for grammatical errors and uniqueness

Provide us with a detailed description of your assignment

Our expert starts to write your paper

Download your custom paper from your personal account

Push the button “Order Now”

Provide us with a detailed description of your assignment

Make the payment. No additional charges will be applied

Our expert starts to write your paper

Detailed verification for grammatical errors and uniqueness

Download your custom paper from your personal account

Order now

• Global Segment

Walt Disney Parks and Resorts Inc. has spread across the world with Disneyland Shanghai being the latest addition. The increasing demand for Disney products, especially from the developing nations, has been incredible over the years prompting Walt Disney to explore these markets. Walt Disney Parks and Resorts Inc. has establishments in Paris, Tokyo, Hong Kong, and Shanghai, and the response from the public has been very positive. Tokyo Disney was the first-ever Disneyland outside the US and consists of two parks; Tokyo Disney Sea and Tokyo Disneyland. Besides, the Tokyo resort also has a shopping complex and nine hotels (Johnson & Thomas, 2011). Hong Kong Disneyland consists of a recreation center, two resort hotels, and one Disney Park. Disneyland Paris offers the cheapest packages of all of the Disney Parks and consists of two theme parks: Walt Disney Studio Park and Disneyland Park. Additionally, the resort also accommodates a campground, shopping district, as well as six Disney-operated hotels. It is regarded as one of the most visited tourist attractions in Europe. Disneyland Shanghai consists of an entertainment district, Disneyland Park, a recreation center, two hotels, and a lake (“It's a Small, Small World,” 2016).

Venturing into the global market by Walt Disney Parks and Resorts has not been without challenges that forced the company to adjust some of its programs to suit new cultures. For example, in China, the higher prices that Disney charges, have raised numerous discontented voices as many people view this strategy as American cultural imperialism and social divisiveness forcing the company to make some adjustments. Furthermore, there are fears that the Chinese market will soon be infiltrated with numerous theme parks by copycats, which will stiffen competition and reduce profitability (Ndalianis, 2017). Moreover, China’s culture, which is more traditional than that of the USA, is claimed to be under attack by Western companies, such as Disney Parks, which are accused of their ‘westernizing influence.’ A Chinese national newspaper has recently accused Disney’s children's blockbuster, Zootopia, of infiltrating the Chinese community with ‘western values (Ndalianis, 2017).’ Thus, Disney Company is forced to review its content to reflect more of the surrounding communities' values while at the same time not losing its originality. On the other hand, Disney still has more opportunities to increase its global presence, especially in the untapped markets of the Middle East, Africa, Latin America, and Europe. However, the business of developing theme parks is capital intensive, meaning that it will take longer periods to establish them.

Industry Environment Analysis: Porter’s Five Forces Analysis

Threat of the new entrants. The threat of new entrants for Disney is considerably low. It takes quite large investments to erect a park while at the same time it will take an even much longer time for the investment to break even and start to pay back, thus putting off many investors. Disneyland Shanghai was developed for $5.5 billion (“It's a Small, Small World,” 2016). Furthermore, other than the large amounts needed for the development of infrastructure and skilled human resources, more will be needed for the daily operations of the parks. On the other hand, there is a slim possibility of smaller players venturing into the industry and establishing smaller parks that would increase competition for Disney. However, even when such a scenario occurs, the smaller brands will face intense competition from big players forcing them to quit the industry.

The threat of substitutes. Walt Disney Parks and Resorts Inc. faces high threats from the different options that the consumers have other than its products. Theme parks, such as Disneyland, are created to offer active entertainment to their visitors. Thus, sporting events, movies, or music concerts pose a threat to Disney Parks as consumers can opt to engage in either of them instead of visiting Disneyland Parks. However, the family fun rides and animated characters make Disney Parks more relevant (Lillestol, Timothy, & Goodman, 2015).

Bargaining power of the suppliers. The bargaining power of the suppliers who deal with Disney Parks and Resorts Inc. is medium largely due to the company’s vertical integration which significantly reduces the powers of the suppliers (Dobbs, 2014). Additionally, Disney operates in a highly differentiated market that is characterized by high switching costs. Furthermore, Disney uses unique materials that are quite rare for the construction and maintenance of its parks; hence, the company usually has direct access to the producers (Lillestol, Timothy, & Goodman, 2015). Moreover, the stability of Disney as a company provides assurances to suppliers for future businesses; hence, they do not have to push the company for deals.

Bargaining power of the buyers. Disney consumers hold moderate bargaining power mainly because of the incredible reputation of the company (Dobbs, 2014). On the one hand, Disney can charge inflated prices at its theme parks and be confident that its consumers will still pay for its products and services as a result of its incredible reputation. Currently, a day’s park hopping ticket at Disney is charged $125, which is extremely high (Lillestol, Timothy, & Goodman, 2015). On the other hand, Disney offers the desired product as opposed to necessities, hence pushing away financially restricted consumers. Furthermore, the bargaining power of consumers in the entertainment and hospitality industry is considerably high, thus directly affecting Disney Parks.

Rivalry among the existing firms. The effect of rivalry among the firms in the theme parks industry is medium. Disney controls the majority of the market share. However, other theme park operators, mainly Universal, are constantly adding attractions to keep up with Disney (Lillestol, Timothy, & Goodman, 2015). The addition of ‘Wizarding World of Harry Potter’ by Universal has significantly raised the profile of the company, leading to gaining profits in the first FY of the theme park’s opening, which is rare in the theme park industry. Despite the successes of its competitors, Walt Disney Parks and Resorts Inc. still commands a majority share of the industry.

Competitor Analysis

Walt Disney Parks and Resorts Inc. faces intense competition from a few big industry players even though it holds the biggest markets share in the world. The main competitors are Universal Studios, Six Flags Entertainment, and Cedar Fair. Universal has recently risen to pile up more pressure on Disney with the introduction of the Harry Potter-themed parks that have attracted many followers of the series (Lillestol, Timothy, & Goodman, 2015). Furthermore, the development of the ‘Wizarding World of Harry Potter’ attracted many visitors to the park, leading to it making profits during the first year of operations, something Disney has never achieved. Moreover, Universal has further stepped up competition by adding 3-D-themed rides, as well as ‘Spider Man’ and ‘Transformers’ themes to its parks. In the spring of 2017, Universal decided to counter the unveiling of Disney’s ‘Pandora - The World of Avatar’ in Florida by unveiling on the same day a new water park named ‘Volcano Bay’ in Orlando (Wills, 2017). The two parks were both unveiled on Memorial Day Weekend to cash in on the summer holidays underlying the stiff competition the industry continues to witness.

More competition in the industry comes from Six Flags, which has been Disney Park's rival since the seventies. Six Flag started by purchasing Magic Mountain in Valencia, California, which is near Disneyland in Anaheim expressing its intention to get into Disney’s market share. Furthermore, Six Flag is ranked the second theme park operator in the world attracting more than 20 million tourists a year to its 20 theme parks in North America (Lillestol, Timothy, & Goodman, 2015). Additionally, the Six Flags Fiesta in Texas continues to pile more competition to Disney in the south. Six Flags licenses characters from DC Entertainment and Warner Bros, such as Batman and Looney Tunes, making it more competitive. Across the borders, Wanda Group in China presents Disney Parks with stiff competition following its announcement of plans to develop much bigger amusement parks and resorts across Asia (Lillestol, Timothy, & Goodman, 2015). Wanda Group is a multinational conglomerate property developer, which has the financial might to develop numerous theme parks across the globe, hence subjecting Shanghai Disneyland to high competition (“It's a Small, Small World,” 2016). Furthermore, Wanda Group, using its Chinese influence and dominance, is developing a park in Nanchang, which will be bigger than Shanghai Disneyland.

Section 2

Resources

Walt Disney Parks and Resorts Inc. requires significant amounts of resources for both operations and expansion. Furthermore, Disney’s tangible resources include financial, physical, and technological ones. Besides, the company’s intangible resources include innovation, reputational and human resources.

1. Physical resources. It is the expectation of different guests that amusement parks have different themes to aid in the creation of a different time and place. Besides, a single-themed attraction is not enough to create a unique experience for the visitors; hence, there is a need for a variety of raw materials that will help create the different themes (Weisnstein, 2008). Thus, raw materials, most of which must be sourced from the source where the concept was developed, must be sourced. Therefore, most of the raw materials are usually expensive as they require licenses to excavate and source them from historical sites to prevent exploitation. Most of the raw materials used for constructing as well as for making costumes usually come from indigenous woods, glass fiber, and rare stones. Therefore, the company’s reputation has earned it opportunities to have direct access to the source of valuable materials across the world, thus enabling it to continuously improve the experiences at its seven parks.
2. Technological resources. Technology has formed a crucial factor in enabling the operations and enhancement of guests' experiences. Disney receives close to 200 patients annually which indicates how much it values technology in its operations (Johnson & Thomas, 2011). Furthermore, the company has moved further in using technology in its daily operations with the introduction of the “My Disney Experience” to enable easy booking and vacation planning. Furthermore, the introduction of the “Magic Bands” enables the guests to link their hotel rooms and credit cards to the bands for easier operations within the parks.
3. Finances. As theme parks business is a capital intensive, it requires huge financial investments to successfully develop and operate one park. Thus, the net working capital of all the companies must be positive as these funds will be largely used for operations and development of new parks. The net working capital for Disney has been positive over the last five years, thus enabling the company to acquire the Star Wars franchise and Lucasfilm for $4.05 billion in stock and cash (Wills, 2017). Furthermore, Disney’s current ratio of the FY ending September 2016 was 1.01, indicating that the company may find it a bit difficult to meet its current obligation (Wills, 2017). However, the low values do not indicate a critical problem as Disney has good long-term prospects as it is in a position to borrow to meet its future obligations.
4. Human resource. People form the most valuable resources at Walt Disney Parks and Resorts Inc. The big numbers of visitors that the company's parks receive annually indicate that more people must be employed to effectively serve the guests. Furthermore, a single Disney park employs close to 70,000 people, making Disney one of the biggest employers in the world (Weinstein, 2008). Thus, taking care of its staff is quite a challenge and the company has for long been in numerous conflicts with its employees over low wages and tough working conditions. In July 2017, Disney workers in California and Florida issued a strike notice to demand better pay and working conditions (Ndalianis, 2017).
5. Innovational and reputational resources. Endless innovations at Disney Parks and Resorts have been the main driver of the business as they have attracted over 700 million visitors since the organization’s inception. In 2010, Disney introduced the “Worlds of Color,” an innovation that uses a submersible platform that incorporates close to 20,000 points of control and evolutionary lighting that infuses over 1000 fountains with color (Johnson & Thomas, 2011). Besides, in 2012, the company opened its "Car Land," indicating that it is capable of innovating and enhancing the experience at its parks (Vogel, 2016). On the other hand, the company has a strong brand name that many customers associate with right from childhood as well as a good reputation with both customers and suppliers.

Capabilities

The integration of specific intangible resources and tangible resources to attain the desired business goal creates an organization's capabilities. Walt Disney Parks and Resorts’ main goal is to provide unique experiences and entertainment to its guests. Thus, the company comes up with themes and ideas that are rare and attractive to guests and further uses the technology, physical resources, and people to actualize them. In 2016 during its fiscal earning call, Disney indicated that it would invest significantly into its parks across the world using technological innovations and human resources to enhance the parks' experiences (Ndalianis, 2017). Furthermore, it was reported that in 2016, almost half of the visitors used the “Magic Bands” to access theme park attractions as well as to make purchases, thus being a key factor in increasing guest attendance and spending in the parks.

Core Competencies

Core competencies are the capabilities and resources that combine to create an organization’s competitive advantage. Animation characters, such as Mickey Mouse as well as the Star Wars, Marvel and Pixar characters among others, create a competitive advantage for Disney Company (Calandro, 2010). Furthermore, efficient park operations that eliminate all the bureaucracies using efficient technologies and hospitable staff make guests choose Disney Parks over the others. Additionally, the story creation, storytelling, and themed atmospheric attractions serve as a major attraction to the guests.

Criteria of Sustainable Competitive Advantage

Disney Parks and Resorts Inc. has incorporated all the four criteria of sustainable competitive advantage to create an edge over its competitors.

1. Valuable resources.  Disney Parks and Resorts Inc. uses dynamic technologies and innovations to create experiences that are unique and attractive to the guests. Furthermore, the company uses technology in its day-to-day operations with applications, such as ‘My Disney Experience’ and ‘Magic Band,’ which have had a positive impact on the company’s turnover (Wills, 2017). Furthermore, the acquisition of Star Wars, Marvel, and Pixar among other, valuable brands that many identify with, has also helped in building sustainable competitive advantage.
2. Rare resources. The concepts and themes at Disney parks require the use of rare stones and indigenous woods to bring out a concept. Therefore, Disney, while banking on its strong reputation and brand, has acquired licenses to excavate as well as obtain rare stones from the ancient ruins (Johnson & Thomas, 2011). Furthermore, the company has been able to acquire several rare artifacts to enhance the experience at the parks.
3. Imperfectly imitable resources. Disney obtains patents on all its innovations, making them impossible to imitate. Furthermore, the company has obtained the rights to use the concepts and characters of top movies and TV shows, such as Marvel and Star Wars, which cannot be used by its competitors. Furthermore, the company’s interpersonal relationship has helped to build trust and confidence with guests, hence making it the number one choice in the industry (Calandro, 2010).
4. Non-substitutable resources. Disney’s organizational culture is very diverse and is crucial in creating enjoyable working conditions; hence, it cannot be substituted elsewhere. Furthermore, the superior execution of the company’s business model has been a major factor that has held Disney firmly as the market leader (Wills, 2017). The company, being the first entrant into the theme parks industry, holds specific knowledge, concepts, and ideas that have revolutionized the industry and granted it an edge over its competitors.

Value Chain Analysis

A value chain analysis gives an organization an opportunity to understand the parts of its operations that create value and those that do not. Primary and support activities are the two main types of value activities;

1. Primary activities comprise the collection of inbound logistics combined with operations and outbound logistics, sales and marketing as well as service form the primary activities of a value chain model. Moreover, competitive industry like theme parks is a mix of some or all primary activities. Thus, these activities will help to lead an organization to success. Disney applies the primary activities in the operations of its parks, thus enabling it to successfully advance its ideas (Weistein, 2008). Strategic asset management has provided Disney with an overview of its assets as well as prevented inefficient use of its human resources. Oracle databases, like the central shop's database, integrated improvements, and engineering services database, have been central to Disney's park operations. Furthermore, the institution’s theme parks and resorts control inspections, capital movements, new development, renovations, repairs, replacements, and upgrades by using Maximo strategic-asset software (Weinstein, 2008). Besides, with the software, Disney can assemble historical and trend data as well as establish the cause and analyze reports to enable work orders. Orlando Disney World, for example, uses the software to service repairs for vehicles, identify and fix plumbing problems, and even locate life-sized costumes.
2. Support activities. Procurement, human resource management, technology development, and firm infrastructure are the main support activities. Besides, human resource management and technology development form the main support activities at the company. Walt Disney, in collaboration with American Express, has efficiently used technology to streamline its purchasing activities with its suppliers by initiating a purchase card program, which has significantly improved the relationship with suppliers (Wills, 2017). Furthermore, the purchase card program has helped to reduce the cost of doing business for the company.

Section 3

Customers

Walt Disney Parks and Resorts Inc. offers family products meaning it targets customers at all levels right from little children to the elderly. Thus, as Disney has been in operation since the seventies, the majority of the market is connected to its parks right from childhood. Therefore, the company has put in several strategies to ensure that it attracts and retains as many customers as possible. Disney’s customer retention rate is at 70%, which is above the American rate of 60%, thus indicating the extent to which the company has laid programs to drive customer loyalty and retention (Dobbs, 2014). Since its inception, Walt Disney Parks and Resorts Inc. has sought to train its staff on offering excellent customer service by interacting with the guests while at the park and creating a moment of magic out of the blues. Thus, such programs as ‘Take 5’ has been around for a long and requires the cast members to take at least five minutes of their day to create a moment of magic for the guests (Wills, 2017). Furthermore, the company believes that ‘little wow’ lead to ‘bigger wow,’ hence making the customers even more loyal to the brand. The company treats the guests as royals and ensures that it offers as many options as possible to avoid saying ‘no’ to its guests.

Business-Level Strategies

Differentiation. Disney Parks and Resorts Inc. uses differentiation to create a competitive advantage. Besides, by using differentiation, the company can provide value-added services to its customers via its distinct features and attributes as opposed to using lower prices. Furthermore, friendly staff, a wide range of entertainment offerings, extremely clean facilities, and a unique customer experience are some of the features of Disney Park's product differentiation (Van & Kranenburg, 2015). Disney customers can access numerous services and products as well as decide how much of the parks’ experience they want to enjoy. Thus, Disney offers numerous park services such as transportation, meal plans, and resort accommodation (Cross & Walton, 2005). Consequently, resort hotels and restaurant businesses come as a result of a wider product mix being offered. Besides, Disney’s connection to kid movies was instrumental to the development of theme parks, and the different movie characters, the majority of whom are from kid movies, form an integral part of the park's themes. Thus, featuring different characters and experiences from movies and television series has helped Disney to create a competitive advantage.

Business-Level Strategy and the Industry Cycle

• Mature industry.  Walt Disney Parks and Resorts Inc. operates in the parks industry that has reached the maturity stage. Additionally, the company has continued to experience increased revenues and earnings every year over the last decade. Thus, the company has only managed to add one new park, Shanghai Disneyland, in the last ten years, but it has managed to control a bigger share of the market by enhancing the experience in its existing parks. Furthermore, by using differentiation as the main business-level strategy, Disney Company has managed to enhance the experience in its parks through continuous expansion and the introduction of new concepts (Vogel, 2016). Moreover, Disney has introduced even more fairy characters through business deals with Star Wars and Marvel, which command significant followings, thus being able to increase its customer base. Furthermore, while in the maturity stage, Disney has put its considerable focus on customer service by using technology to enhance the guest experience at its parks as well as friendly and caring service from its staff to create that moment of magic.
• Aggressive competition. Aggressive competitors will use every available resource to suppress each other and maintain a bigger market share. Disney Parks and Resorts Inc. uses the most talented workers and advanced technology to develop themes at its parks and later floods the market with promotions and advertisements just to maintain the lead in the industry. Furthermore, Disney pursues world-class entertainment and high-tech innovative rides based on Disney characters as well as feature films to appeal to young people and families (Vogel, 2016). The aggressive competition requires massive resources and Disney has also incredibly taken advantage of its strong brand name through recruiting and training the staff who offer cheap labor. Furthermore, superior market and financial positions, as well as exclusive contracts and possession of patents and trade secrets are some of the resources Disney has used to advance its aggressive competition strategy.

Corporate-Level Strategies

1. Value-creating strategy.  Disney has used diversification to continuously create value at its parks and resorts as well as to take competitive advantage against its competitors by gaining more market share. Furthermore, the company’s renewed focus on excellent customer service by using technology as well as hiring friendly and caring staff contributes positively to its value (Enz, 2010). On the other hand, Disney Parks and Resorts Inc. ventured into the luxury cruise industry by introducing the Disney Cruise Line. Besides, the luxury cruise industry being different from the theme park industry, Disney has further managed to introduce the amusement park experiences on board with the introduction of a few characters from Disney films. Furthermore, the company's acquisitions of Pixar, Marvel, and Star Wars contributed to introducing more characters and products at the parks, hence attracting more young customers.
2. Market power. Disney Inc. has managed to gain market power by selecting the parks and resorts segment to build its market power upon it and further overlap all the other segments and allocate resources from a unitary philosophy. Furthermore, through its film segment, the company has succeeded in creating exciting characters in movies and TV series that the market fondly associates with and proceeded to use the same characters in creating new themes at its parks. Therefore, by having full control of all its parks, Disney can use its film characters to attract millions of guests to its parks and further take advantage of no competition within its facilities to charge higher prices for the products it offers. In 2016, Disney introduced a pricing model that was based on market demand at its parks, meaning guests will have to pay 20% more during holidays and weekends than during slower periods (Walt Disney Co., 2017). Furthermore, since Disney provides almost all the services within its parks from food, to hospitals, it can price all these products and services above the market price with ease.

Resources and Diversification

• Technological and human resources.  Disney uses its sophisticated technology to advance its diversification agenda at all its theme parks. Besides, with technology, Disney was able to introduce computer gaming in its parks after it had been boosted by the parent company's acquisition of Playdom. Thus, the company was able to offer its visitors inside the parks more options other than the adventure in the theme parks (Enz, 2010). Furthermore, the introduction of gaming inside the parks was central to attracting more teenagers, a demographic group that has for long been sidelined by the company to its theme parks. Furthermore, the company uses technology to streamline its operations inside the parks. On the other hand, Disney uses the services of highly talented people to develop programs, concepts, themes, and systems that are revolutionary and steer the agenda of diversification. Thus, the organization has been able to obtain necessary patents that will protect its diversification goal from being infiltrated by competitors.
• Financial resources. Diversification requires huge financial investments, which are a resource that Disney has used to create a competitive advantage over its competitors. Disney Parks and Resorts Inc. diversified further by introducing its luxury cruise line, which is another capital-intensive investment, to its business. Furthermore, the company has been able to use a strong brand name to establish a travelers club that organizes tours and trips across the world (Calandro, 2010). Furthermore, the company has managed to add more value by acquiring Marvel, Pixar, Playdom, and Star Wars characters over the last ten years.

Merger and Acquisition Strategies

Horizontal integration. Organizations usually choose horizontal integration as an avenue for growth when they specifically want to gain economies of scale, as well as get access to new markets or customers among other reasons. Therefore, the horizontal integrations that Disney Inc. has conducted over the last 10 years have had a direct impact on its operations in that it has managed to gain access to new markets. The acquisition of Marvel and Lucasfilm did not only have a positive impact on the film segment but also the parks and resorts segment's customer base and performance. Thus, the characters of these movies and TV series were introduced at the parks, leading to increased business over the time they were introduced (Calandro, 2010). However, Disney’s main goal for merging and acquiring these franchises was to increase its customer base. Before the acquisition of Marvel and Lucasfilm, Disney had gone through rocky times as the company just managed to emerge from the economic recession of 2008-2011.

Vertical integration. Vertical integration is a strategy that many companies choose to reduce their production costs or strengthen their supply chain. Disney’s main agenda for acquisition and merger was to reinvent its business back to profit-making ways. Thus, the vertical integration with Pixar in 2004 was pursued to help Disney in getting back on track as well as be an avenue to market its animation films and characters that were then declining (Enz, 2010). Before that, Disney had been wracked with internal turmoil that forced the company to play catch up in the entertainment industry. Thus, after the merger with Pixar had taken place, the company experienced rejuvenation, leading to it outperforming its peers. The merger helped to transform its film and park segments as a result.