INTERNATIONAL OPERATIONS MANAGEMENT

IN WHAT WAYS DOES THE WALT DISNEY COMPANY’S OPERATIONS MANAGEMENT

STRATEGIES INFLUENCE ITS GLOBAL SUCCESS?

submitted at the
IMC Fachhochschule Krems
(University of Applied Sciences)

Master programme
International Business and Economic Diplomacy

by
Olakunle Kolin OTARU
Student ID: 21/1/0399/228

Supervisor: Prof. (FH) Klaus Kotek, MBA

Submitted on: 29.11.2021
Declaration of honour

“I declare on my word of honour that I have written this paper on my own and that I have
not used any sources or resources other than stated and that I have marked those
passages and/or ideas that were either verbally or textually extracted from sources. This
also applies to drawings, sketches, graphic representations as well as to sources from the
internet.
The paper has not been submitted in this or similar form for assessment at any other
domestic or foreign post-secondary educational institution and has not been published
elsewhere. The present paper complies with the version submitted electronically.”

Date: 29.11.2021 Signature :

Table of Contents
Declaration of honour........................................................................................................2
The Walt Disney Company:................................................................................................4
Introduction.......................................................................................................................4
Core processes and the Business model:.............................................................................5
MARKETING.......................................................................................................................7
Corporate Culture..............................................................................................................8
Conclusion:........................................................................................................................8
Bibliography....................................................................................................................10
The Walt Disney Company:
Introduction

The Walt Disney Company, commonly known as Disney, is one of the world’s biggest

entertainment providing companies founded in 1923, has constantly found ways to reinvent

itself and stay ahead of the competition, producing some of the most groundbreaking and

acclaimed movies of the 20th and 21st century. Disney operates in all continents with its tv

and radio channels available in nearly 165 countries and it has theme parks in France, Japan,

China, India, Hong Kong, and North America. Disney also partners with several independent

distributors in the Places where it has no stores to sell its products even though the

company manages 328 stores in North America, Europe, and Japan. (StudyCorgi, 2020)

Since its establishment it has diversified its portfolio and has evolved into a
holding company for all manner of media and entertainment properti es, opening
theme parks across the world and acquiring dozens of companies in the '90s and
2000s including ABC, ESPN, Pixar, Marvel Studios and Lucasfi lm and most recently
20 th Century Fox. (Editors, 2020) The purpose of this paper is to analyze the
company’s operational management strategies in relati on with their success
factors to see how big of a role the strategies play and how they help Disney stay
ahead of the competition on an internati onal scale. The core processes of the
company and what levels they are applied in, if they fit the criteria for a well-
managed business based on their operati on, their business process improvements
and the essential elements of the Walt Disney company’s corporate culture will all
be analyzed in an attempt to answer the research questi on:
“In what ways Does the Walt Disney Company’s Operations management strategies
Influence its Global success?”
The Working Hypothesis for this Paper is that to a large extent, the operations
Management Strategies that Disney employs Play a major role In Disney’s global success.
Core processes and the Business model:

This section delves into what The Walt Disney company does to run its daily business
activities on the respective levels and how this affects it success. Disney has a rather diverse
portfolio which will also be looked at in this section. The input-output model for each
segment will be shown and The Business model that Disney operates on will also be looked
at and how this affects its success and how the business model makes them unique. How
value is Created for the consumers and the target markets that Disney attracts will also be
briefly analyzed.

So, what exactly does Disney do? Disney has five major business segments including:
 Media networks: through tv and radio stations bringing in revenue from cable tv
subscriptions, advertising, production fees. Operating expenses include
programming and production costs, technical support costs, distribution costs, and
operating labor costs. (Visnji, 2019)
 Parks/Resorts: This includes Disney’s resorts across the globe. Revenue from sales of
tickets, food, beverage, and merchandise, hotel rooms, cruise vacation packages and
vacation club properties (rentals) operating expenses include marketing and sales
expenses, cost of goods sold infrastructure costs, labor, and depreciation. (Visnji,
2019)
 Studio Entertainment: The company produces, acquires, and distributes live-action,
animated motion pictures, stage plays and musical recordings. Revenue comes from
the distribution of films and recordings as well as tickets from stage plays. Operating
expenses include production costs, distribution expenses, and cost of sales. (Visnji,
2019)
 Consumer Products: Disney licenses its trade names, characters, and visual and
literary properties to various retailers, show promoters, and publishers throughout
the world and engages in retail, online, and wholesale distribution of
products. Revenue comes from licensing. Operating expenses include costs of goods
sold, distribution expenses and operating labor. (Visnji, 2019)
  Interactive Media: creates and delivers branded entertainment and lifestyle content
across interactive media platforms. Revenue generated from the sale of multi-
platform games, subscription to and microtransactions. Operating expenses in this
segment include the cost of goods sold, distribution expense, and product
development. (Visnji, 2019)
All these business segments are interconnected and provide Disney with a steady revenue
stream. (Liu, 2019) Since the Beginning of the fiscal year 2021, Disney has restructured
these segments and now operates primarily through two main segments namely: Disney
Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products
(DPEP). (JOHNSTON, 2021) The restructuring came most likely due to their Direct to
customer (DTC) segment and the launch of their relatively new Streaming service as well as
in reaction to any COVID-19 pandemic related woes that may have occurred in the past few
years in an attempt to manage day to day operations better. (Zenia Mucha, 2020). Their
Digital transformation and Direct to costumer segment is worth mentioning as it is a
relatively new development, and it places Disney in a new but fitting Industry segment with
other streaming services Like Netflix and Prime and it went international in Europe,
Australia, and India almost immediately and streamed in 17 countries at the launch a
number which is increasing. This also happened shortly before the beginning of the COVID-
19 pandemic towards the end of the Year 2019 in November and made its pricing very
competitive when compared to other streaming services to attract as many subscribers as
possible. Disney plus now has a total of 118.1. million subscribers worldwide as at the end
of the fourth quarter in 2021 compared to the first quarter in 2020 when it was at 26.5
million subscribers. In comparison, Netflix has 213.56 million subscribers but has been
available since 2013. (Stoll, 2021) This goes to show the initiative for innovation and
adaptation of the company and proves to a large extent that Disney has a sound operations
management on a global scale and this aids Disney in excelling in the entertainment
industry. Internationally, Disney’s strategy, especially with Emerging Markets is done
through exporting, licensing, FDI and Joint ventures which means that the only focus on
production while distributors and licensees focus on retail and selling. (StudyCorgi, 2020)
Another important thing that Disney has going for it Is its huge sums of capital,
operating with a decreased working capital of 2.58 billion as at October 2021 which was
previously 2.89 billion since 2009. (Discoverci, 2021). Aside from showing their financial
success, this also shows that changes are occurring and that their operations are being
constantly managed and most likely due to the Pandemic major changes had to be made as
their business segments were highly affected most especially the Parks, Experiences, and
products segments. (Company, 2020)

MARKETING

Disney employs several masterful marketing tactics that allow it to create high value for
its customers and constantly remain one of the most powerful companies in the world.
(Sturgill, 2019) Furthermore, the Disney brand is well-known globally and could even be said
to be the benchmark for branding and creating customer desire which leads to customer
attraction and retention (Winsor, 2015) more than likely due to their mastery of the use of
nostalgia to create brand loyalty (Sturgill, 2019). As a matter of fact, they have mastered
the art of customer retention so much so that Disney has even created the Disney Institute
to help other businesses learn Disney’s approach to retaining customers (Jones, 2013). In a
world where Consumer’s power is growing and consolidating due to improved access to
information, widening choice of goods and services and the means to share their
experiences more widely, it is highly important to create value, curate experiences and
exceed expectations of the consumers to get an edge over the competition. Consumers not
only have more power to influence what they buy but also what others buy. (Ben Perkins,
2014)This just goes to prove what Disney does right in its operations management strategies
especially regarding their Consumer target Markets. Disney Knows its Audience and its
target Market very well. These are mostly families, especially the children (4-12 years), but
really, it is almost everyone as Disney catches its consumers at a very early age and have
mastered the use of Nostalgia to keep these costumers over a lifetime. (Sturgill, 2019)
Disney also conducts Primary and secondary research like surveys and focus groups
in addition to large data analytics to collect data to better understand the tastes of its
customers and develop and launch products which are relevant to the Various markets.
They also adapt their products regularly to foreign markets to better suit their need and this
is another major reason for their international success. This is very evident especially in the
theme parks as they differ from Country to country to better attract the customers. Disney
also adapts its communication strategy to foreign markets by using local languages and
firms to make them more culturally appropriate and improve product awareness and
solidifies their brand in the respective markets. (StudyCorgi, 2020)
In terms of sustainability, Disney is no slouch either. They have a garnered a strong
reputation by reducing their environmental impact, engaging customers in volunteering,
donating to charitable organizations and maintaining fair working conditions for their
workers. (Company, Fiscal Year 2018 Annual Financial Report, 2018). Some highlights on the
Walt Disney home page from the last fiscal year include efforts to assist financially in the
COVID-19 pandemic, maintaining ethical supply chains and a diverse and inclusive culture
and environmentally conscious behavior. (Company, Disney Releases 2020 Corporate Social
Responsibility Report, 2021)

Corporate Culture

Disney’s corporate culture is one of the reasons for its success both internationally
more especially Domestically. The corporate culture at Disney makes sure the employees
ideals are in line with the target markets preferences and expectations in all their segments.
An example of this is in the employee’s ability to tell good stories which helps to a large
extent to satisfy customer expectations especially with the movies tv shows and related
products. The organizational culture has a strong focus on optimism and innovation, and it
contributes to the great business performance and global success. The culture at Disney
also promotes a community and togetherness mindset that strengthens employee morale
and motivates the workforce to ensure a very high-quality output that ultimately translates
to high quality products that are in line with the Disney Brand (Williams, 2019).

Conclusion:

In Summary, the Walt Disney Company has had outstanding success on a global scale
on every continent, the Quality had been Consistent, their processes are sustainable,
innovative, and inclusive, their corporate culture remains praiseworthy, their Brand remains
well known and untarnished and all these show in the performance of the company.
Looking forward, the company has also made pledges and set sustainable goals to be
achieved by the year 2030. (Company, Disney Releases 2020 Corporate Social Responsibility
Report, 2021) They are also sure to have consistent growing success in their new Direct to
customer platform as the numbers show a strong and steady increase of yearly subscribers
(Stoll, 2021). The proposed hypothesis seems to be true based on the evidence provided by
this paper. Even as the world Goes through a hard time in the ongoing pandemic, Disney
remains Flexible in its operations and shows strong initiative in its international
management strategies and is likely to stay a strong and reliable Brand in the years to come.

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