Use the work you completed for Parts, I, II, and III with your CLC group to inform your analysis for this assignment.
Write a 500-750-word analysis of the significance of these three matrices regarding their relevance for strategic planning. Describe the key information for each and how information from each will influence recommendations for strategy selection, planning, and implementation.
Without prematurely determining and formalizing strategic goals and objectives, begin thinking about possible strategies to capitalize and add value to the organization based on the analysis of this information.
Be sure to cite three to five relevant and credible sources in support of your content. Use only sources found at the GCU Library, corporate websites, or those provided in the topic Resources. (I have attached the subject for analysis)
Use the work you completed for Parts, I, II, and III with your CLC group to inform your analysis for this assignment. Write a 500-750-word analysis of the significance of these three matrices regardin
CLC- SPACE, GRAND, & QSP MATRICES 14 CLC-Space Matrix, Grand Matrix, and Quantitative Strategic Planning Matrix Part I- SPACE Matrix: A Strategic Position and Action Evaluation (SPACE) matrix is a valuable tool that assesses a company’s current position and competitive position. The SPACE matrix has two axes and four quadrants that reveal potential strategies for a company (David et al., 2020). The strategies that are revealed fall under four categories: aggressive, conservative, defensive or competitive (David et al., 2020). The axes represent an internal assessment of the financial position (FP) and competitive position (CP) of a company. As well as an external assessment which includes the stability position (SP) and industry position (IP) of a company (David et al., 2020). Below a SPACE matrix was conducted on The Walt Disney Company. Competitive Aggressive Conservative Defensive IP IPIP CP SP FP Walt Disney Universal Times Warner X Axis 4.4 3.0 1.0 Y Axis 2.8 2.0 -1.0 Walt Disney Universal Times Warner X Axis 4.4 3.0 1.0 Y Axis 2.8 2.0 -1.0 Internal Analysis: Financial Position (FP) Current Ratio 6 Revenue 5 Debt to Equity 4 Net income 5 Return on investment 5 Financial Position (FP) Average 5.0 External Analysis: Stability Position (SP) Rate of inflation -2 Barriers to entry into market -1 Price Elasticity of Demand -1 Competitive Pressure -2 Technological changes -5 Stability Position (SP) Average -2.2 Internal Analysis: Competitive Position (CP) Product quality -2 Customer Loyalty -1 Variety of products offered -3 Control over suppliers and Distributors -1 Market share -1 Competitive Position (CP) Average -1.6 External Analysis: Industry position (IP) Financial stability 6 Ease of entry into Market 6 Resource utilization 5 Profit potential 6 Growth potential 7 Industry position (IP) Average 6.0 SPACE Matrix Analysis: After plotting the internal and external factors on the matrix, the analysis reveals that Disney results in the aggressive quadrant (David et al., 2020). The aggressive strategy quadrant reveals that Disney should take advantage of external opportunities, improve internal weaknesses, and reduce external threats (David et al., 2020). Disney has a stronger average financial position (FP) of 5.0 due to its current ratio, revenue, and return on investment. The stability position (SP) is based on the expected impact of changes from external factors such as technology, economy, and seasonality (David et al., 2020). The average SP of Disney was -2.2 which shows that Disney has a strong defense to competitive pressure, technological changes, and barriers to entry into the market. Disney’s competitive position (CP) averaged at -1.6 which indicates that they have a strong competitive advantage. The lowest ranking score would be a -7 whereas the highest score would be a -1. The average industrial position (IP) scored at 6.0 which indicates that they have a strong potential for growth and profits. When assessing Disney’s performance in comparison to their top two competitors Universal and Times Warner’s, it shows that Disney’s in a position to act aggressively. Universal does fall into the same aggressive quadrant as Disney, however, due to lack of their overall strength and global recognition they fall behind. The SPACE matrix gives Disney further insight into their current position so they can mitigate potential threats such as the rising costs of merchandise, goods, and services. Since Disney is a globally iconic brand, they can use their financial and competitive strengths to further expand into the market by adding innovative features at their parks and resorts. They can also focus on developing stronger relationships with their suppliers and distributors to ensure reliable production for their consumers. 8Part II Grand Strategy Matrix: Analysis of Grand Strategy matrix on Disney: Disney is located in Quadrant I since it has a strong competitive position as well as significant market expansion. Disney’s position in Quadrant I, as defined by the Grand Strategy Matrix, indicates that it has a good strategic position. Specifically, the rank of the X-axis is at 8.0. A score of 1 indicates an extremely weak competitive position, whereas a score of 9 indicates an extremely strong competitive position (ScienceDirect, n.d.). The Y-axis is at 7.4. The scores for the Y-axis range from 1.0 which would indicate an extremely slow market growth and a score of 9.0 which would indicate a rapid market growth ( ScienceDirect, n.d.). The following are some relevant tactics considered: Market development, market penetration, product development, forward integration, backward integration, horizontal integration, and related diversification are all examples of market development. Despite their strong competitive edge, Walt Disney’s total market grows modestly. Part III- Quantitative Strategic Planning Matrix (QSPM) Increase Disney+ marketing budget by 15% in order to attract more subscribers. Increase marketing budget for movie releases by 15% in order to attract more box office sales. Strengths Weight AS TAS AS TAS Premium Brand Strategy- ranked #7 in the world in most valuable brands. ESPN was #58 (The world’s most valuable brand, 2022). 0.12 0.00 0.00 Diversification of Revenue Streams- theme parks, resorts, broadcast networks, movies releases, and TV show streaming (Johnston, 2022). 0.05 0.00 0.00 Human Resource Management- won award for Most Admired HR for 2020 beating out Apple, Netflix, Toyota, and Amazon (Clarke, 2022). 0.04 0.00 0.00 DTC growth rate- 4.7 billion in Q1 2022, up 33.8% from same 3-month period in 2021(Johnston, 2022). 0.07 0.28 0.07 Per Guest Spending at Disney Parks in Q2 2022 Increased by 40% compared to 2019 (Niles, 2022). 0.05 0.00 0.00 Disney+ annual subscribers up from 73.3 million in 2020 to 118.1 million in 2021 (Iqbal, 2022). 0.06 0.24 0.06 Expansion in media & entertainment-Disney plans to roll out Disney+ to 53 new markets across Europe, Africa, and West Asia (DuBois,2022). 0.03 0.12 0.03 Environmental Impact- Directed $150 million of the Company’s annual charitable giving to programs directly serving underrepresented communities (The Walt Disney Company, 2022). 0.06 0.00 0.00 Disney has a strong Creative Talent Development & inclusion team with sourcing over 350 targeted requests from producers & executives and hosting 150 networking events (Reimagine Tomorrow, n.d.) 0.02 0.06 0.08 10 Strong Negotiation Skills- Bob Iger, CEO, continually proves his strong negotiation skills especially following the strong acquisition of Lucas Film for $4.05 billion in 2012 (Elsey, 2018). 0.02 0.04 0.06 Increase Disney+ marketing budget by 15% in order to attract more subscribers. Increase marketing budget for movie releases by 15% in order to attract more box office sales. Weaknesses Weight AS TAS AS TAS Cybersecurity issues- theft of Disney’s Pirates of the Caribbean in 2017 and credential stuffing of Disney+ during launch (Bukzpan, 2017)(Lindsey, 2020). 0.09 0.09 0.18 Large debt from March 2019, $71 billion acquisition of 21st Century Fox (The Walt Disney Company, 2019). 0.12 0.12 0.12 Labor disputes- Disney workers have a well-organized union that is represented by Master Services Council (San Roman, 2021). 0.03 0.00 0.00 Seasonality of Major Revenue Streams- Parks, Resorts, and Cruises all have high seasons (summer) and low seasons (winter). Advertising revenue also peaks in the fall and lowers in the spring (Disney 2022 Annual Report). 0.02 0.02 0.06 Media Network TV channels losing subscribers- ESPN lost 14 million subscribers from 2010 to 2018 (Palmer, 2018). 0.05 0.15 0.05 Use of Assets (Parks and Resorts) Asset Turnover at 1013 days compared to industry average of 648 (ReadyRatios, 2021). 0.06 0.00 0.00 Employee Shortage- Only 33,000 of more than 41,000 members of the Services Trade Council Union returned to work (Tayeb, 2021). 0.03 0.00 0.00 Poor financial planning- In 2020, Disney shut down on their most profitable segment causing a 58% drop in operating income from its parks, experiences, and consumer products franchise (Tully,2020). 0.03 0.00 0.00 Lack of bargaining power with advertisers and cable companies- Operating income dropped 11%, 54 percent of segment is generated from advertising (David, 2020). 0.03 0.06 0.06 10 Too much “Good Will” which is approximately 1/3 of Disney’s assets are in the form of goodwill (David, 2020). 0.02 0.00 0.00 Increase Disney+ marketing budget by 15% in order to attract more subscribers. Increase marketing budget for movie releases by 15% in order to attract more box office sales. Opportunities Weight AS TAS AS TAS Expansion into new market segments, as over the next five years to 2026, the global hotels, resorts, and tourism industry are expected to have strong growth (Le, 2022). 0.07 0.00 0.00 Theme and amusement parks are prepared to integrate new technologies into their customers’ experience. Many have introduced touchless technology, artificial intelligence, and virtual reality offerings. 0.09 0.00 0.00 Enhancements of new food selections. Creating enriched meal options at parks and resorts to cater to Millennial customers and adapting with trends. 0.05 0.00 0.00 Shorter-theatrical release window times or skip theater entirely. Decreasing the number of days to air on streaming services 0.05 0.20 0.05 Strategic acquisitions like Fox, to enable the company to expand and offer products and services into different niche segments (Mendelson, 2020). 0.04 0.12 0.16 Launch Disney Genie and Disney Genie+, the former free and paid add on, that will help maximize guests’ day, equating to $31.3 million in new income (Bilboa, 2021). 0.05 0.00 0.00 The global box-office is expected to rebound strongly to $33.2 billion in 2022, roughly 5% increase from 2021. With new releases such as a sequel to hits like the 2009 Avatar movie (Sharma, 2022). 0.03 0.03 0.12 Increase localization of products and create more product diversification. 0.04 0.00 0.00 Increased availability of sustainable energy, with the usage of products such as solar panels. Reduction of carbon footprint. 0.07 0.00 0.00 10 Attention of new and current customers by the creation of new resorts and rides, such as the Star Wars Galaxy Edge Land. Costing customers around $1,200 per person, per day (Whitten, 2022). 0.01 0.00 0.00 Increase Disney+ marketing budget by 15% in order to attract more subscribers. Increase marketing budget for movie releases by 15% in order to attract more box office sales. Threats Weight AS TAS AS TAS As the economy reopens, 35% of people globally have stopped their streaming subscriptions. 36% of Americans are currently debating to stop subscriptions as well such as Netflix, and Disney+ (Mellor, 2022). 0.03 0.03 0.12 Increasing cultural diversity- can negatively impact movie production, books, and even theme parks. The popularity of ‘cancel culture’ can destroy a company’s reputation. 0.04 0.00 0.00 Compensating employees adequately while remaining profitable. Currently, theme parks in the U.S. are paying their employees at very low rates (Linchpin, 2022). 0.07 0.00 0.00 Global internet usage has been the culprit of increased piracy. Piracy hinders corporate objections and can reduce the customers’ viewing content. 0.03 0.03 0.06 Loss of customers in U.S. amusement parks due to Covid as 30% of people said they would attend an amusement park with unvaccinated requirements, whereas 47% said they would not attend (Statista, 2021). 0.05 0.00 0.00 Inflation causes less disposable income, impeding recreation activities and could result in a decrease in profits for the entertainment industry. 0.03 0.00 0.00 Russa-Ukraine ware could cause conflict with travel across the U.S. and Europe. 0.05 0.00 0.00 Over the last few years, the U.S. has had difficulty releasing movies into China, as Beijing regulators have made restrictions on Hollywood’s access to the Chinese market (Hellerman, 2022). 0.02 0.04 0.02 Governor Ron DeSantis of Florida and state lawmakers revoked a 55-year-old arrangement from Disney, which gave the company a special tax status and essentially allowed self-govern of its 25,000 acre Disney World Complex (Heyward, 2022). 0.10 0.00 0.00 10 Worldwide decreased demand for cinema attendance, as consumers are gravitating toward at-home viewership of movies and TV shows. 0.08 0.32 0.08 TOTALS 1.95 1.38 The Walt Disney Company already has a powerful brand presence compared to many of its rivals as a result of its capacity to evoke warm feelings of nostalgia and happiness (Pereira, 2021). Based on the results of the QPSM, Walt Disney should put a priority on increasing the marketing budget for Disney+ by 15% to get more subscribers and increasing the marketing budget for new movies by 15% to get more people to buy tickets at box offices. If The Walt Disney Company chooses to use these two strategies, then the company will be able to expand and grow into new areas and increase its position in existing ones. References: David, F., David, F., & David, M. (2019). Strategic management concepts and cases: A competitive advantage approach (17th ed.). New York, NY: Pearson Education. ScienceDirect. (n.d.). The end of global strategy. Retrieved June 26, 2022, from https://www.sciencedirect.com/science/article/abs/pii/S0263237301000354 The Walt Disney Company. (2021, November 10). The Walt Disney Company reports fourth quarter and full year earnings for fiscal 2021. Retrieved June 28, 2022, from https://thewaltdisneycompany.com/the-walt-disney-company-reports-fourth-quarter-and-full-year-earnings-for-fiscal-2021/ Pereira, M. (2021, December 16). How disney+ is giving Netflix Goosebumps: The marketing strategy decoded. Spiceworks. Retrieved June 27, 2022, from https://www.spiceworks.com/marketing/customer-experience/articles/disneyplus-marketing-strategy/