Explanation of Disney’s success
To understand how Disney could be and still is so successful I will start by using Porter’s Five Forces that shape strategy (1979). Porter distinguishes five forces that explain the competitive power in an industry. Awareness of the five forces will help a company to understand its industry and mark out a position that is more profitable and less vulnerable to be attacked by competitors.
Disney has found a very distinguishing niche in its industry and therefore the barriers to entry this industry are relatively high. Disney can rely on decades of experience, which resulted in an almost continuously growth of the company. Disney predominates the family entertainment industry and therefore it will be very hard for a firm to enter the market. As Disney is the market leader they can also benefit from term of economy of scale. Beside, entering the market will need extremely high amounts of capital and just really large firms will be able to meet this capital demands. All these factors will withhold other firms from entry. The threat of substitute products or services is average to low for Disney. Clearly, there is the possibility that other cartoon figures, theme parks and movie producers infiltrate in the family entertainment market, but this will not be of a noteworthy threat. Disney and its cartoon figures are
known and loved for decades and the possibility of the ‘Disney magic’ being replaced by another concept is almost unimaginable. In the service and entertainment industry the bargain power of customers is relative high. Customers can decide to refuse to buy a certain product if they find the price to high. Knowing that high numbers of customers are required for Disney to perform their operations steadily, the customers do have the power to disturb this. However, the Disney brand is valuable to people and therefore they are willing to spend money on it. Until now, Disney did not suffer from bargain power of...
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