VRIO framework is used for analyzing the internal capabilities and resources of the company in order to find the competitive advantage. There are four components of the framework: Value, Rarity, Imitability and Organization. The company which is able to meet all these four requirements is able to achieve the competitive sustained advantage. Here is the detailed VRIO analysis of Walt Disney.

Value

The first component of the VRIO analysis is the questions about the value of the resources. This answers the question of how the resources of the company adds value in the performance and how company exploits the opportunities. Resources are considered valuable if it increases the customer value. Disney is one of the biggest company across the world whose value is around $179.5 billion according to Forbes. The profit of the company ranges from $49.7 billion. Disney is the valuable company as they avail the opportunities and resources very well. The financial performance of the company is so well that they can invest in the new innovative ideas. The international capacities of Disney help the company in marketing of the company (Villa, 2015).

Rarity

The second component of the framework deals with the rarity of the resources of the company. The resources which are acquired by few companies are considered as rare. As these resources grant the company temporary competitive advantage. However, if many companies own the same resources or capability in same way, then it will lead to the competitive parity. The tangible asset of the Walt Disney company is not considered as rare because there are numerous companies with good financial performance and the international facilities. However, its organizational resources are rare. The company is one of the few media giants. The company has huge organization and human resources. Disney’s innovative and creative characters are very rare. The whole Disney adventure and experience is completely rare and amazing (Edwards, 2018).

Imitability

This deals with the imitability of the resources in the organization. Costly resources are usually difficult to imitate, and many companies switch to substitute products and affordable prices. Imitation of the resources can be done in two ways, either through duplication of the resources or substitution of the products. The characters and cartoons of the Disney are so difficult to imitate that no company since many years can copy it or created the content up to that match. Moreover, the exploitation of Disney of its diverse brands has caused the rivals to follow the suit like WB with Justice League, but it did not work. Companies found it costly and impossible to imitate the strategy of Disney (Ntmrtin2, 2019).

Organization

The resources in the company alone cannot bring any advantage in the company until and unless it is not properly organized. The company needs to organize the management system, policies, processes and organizational structure along with environment to be able to realize the valuable, rare and imitability of the resources. Disney has achieved competitive advantage in this because on interaction with customers and business associates. The company is employing over 180,000 people which are dedicated in providing unique experiences to people. Disney provides one of the best customer services. Disney is maintaining 5 resorts across the globe very well. It’s all five business segments are media networks, studio entertainment, resorts and parks, interactive media and consumer products (Villa, 2015).

Conclusion

Disney is among one of the famous companies across the globe. Disney is successfully able to add the value in the resources and the capabilities, by making it rare and difficult to imitate with the help of organized business environment.

References

• Edward, Z. 2018. VRIO Analysis of Disney. [Online], Available at: https://www.case48.com/vrio-analysis/12660-Disney, [Accessed on: 15th March, 2020].
• Ntmrtin,2, 2019. Disney and the VRIO Framework (Brand Equity) – Chapter 5 Post. [Online], Available at:
• https://ntmrtin2.wordpress.com/2019/09/29/disney-and-the-vrio-framework-brand-equity-chapter-5-post/, [Accessed on: 15th March, 2020].
• Villa, M. 2019. Disney VRIO Analysis. [Online], Available at: https://prezi.com/4sl6tf5oepyt/disney-vrio-analysis/, [Accessed on: 15th March, 2020].
• Walt Disney, 2020. About us. [Online], Available at: https://thewaltdisneycompany.com/about/, [Accessed on: 15th March, 2020].

Background and Introduction

Walt Disney (1901-1966) was an American animator, film producer, entrepreneur, and visionary who revolutionized the entertainment industry with his innovative and imaginative creations. He was born in Chicago, Illinois, and grew up in Missouri. Disney developed a passion for drawing and animation at an early age, and began his career as a commercial illustrator in Kansas City in the 1920s.

In 1923, Disney and his brother Roy founded the Disney Brothers Studio in Hollywood, California, and began producing a series of popular animated shorts featuring characters such as Oswald the Lucky Rabbit and Mickey Mouse. Disney’s creativity and technical innovations helped to transform animation from a novelty into a serious art form, and he continued to push the boundaries of animation with such groundbreaking works as Snow White and the Seven Dwarfs (1937), the first full-length animated feature film, and Fantasia (1940), a surreal blend of animation and classical music.

Disney’s success in animation led him to expand his empire into other areas of entertainment, including live-action films, television shows, theme parks, and merchandise. He was a pioneer in the concept of “synergy,” or cross-promotion of his various products and brands. Disney’s legacy continues to be felt today, with the Walt Disney Company remaining a major force in the entertainment industry, and Disneyland and Disney World being among the world’s most popular tourist destinations.

Despite his success, Disney was not without controversy. He was accused of anti-Semitism and discrimination against women and minorities, and his conservative political views and anti-communist activities during the Cold War also drew criticism. However, he remains a cultural icon and an inspiration to generations of artists and entrepreneurs.

Company Information

Political Factors

The political environment of a region is one of the essential features that have a direct effect on the entertainment and amusement industry. When a region is politically unstable, the different sectors of the country are adversely affected due to it, including the entertainment and amusement industry. Any changes in the political stability have a negative effect on the operations and revenue generated by the organization. Another area that can have a negative impact on the operations of organization is the international political and military environment (Walt Disney, 2012).

Economic Factors

The financial crisis originating in the US has spread in other parts of the world, creating an economic decline in the various countries. Entertainment industry has also been negatively influenced due to the adverse economic conditions. The income spent by the people on purchase of entertainment related products and the consumption of amusement related services has declined. This trend shows that the economic development is a favorable condition for an organization, while economic turbulence carries negative implications for different industries, including entertainment and amusement industry.

Barnes (2008) has stated that the earnings attained by the company depicted a slowdown in the profitability from its avenues of entertainment and amusement. The income generated that the Walt-Disney theme park had declined up to 4%, while the net income reported the company was estimated to be around $4.4 billion which was lower than the amount of $4.7 billion earned in 2007.

The adverse economic conditions have resulted in lower number of people traveling, thus the decline in number of tourists and visits due to adverse economic conditions created a negative business environment for the organization (Walt Disney, 2012). In addition to this, the sale of the licensed goods of Walt-Disney indicated similar trend, highlighting the way economic conditions could affect the profitability of a global organization. The exchange rate differences and the lower purchasing ability of the people is also an economic factor that can result in a decline in the sales of the company’s products in the international market.

Social Factors

Walt-Disney basically operates in the entertainment industry, focusing on the development of entertainment related content. Along with that, the organization manages amusement parks which depict the themes and characters included in the movies produced by the company. The entertainment and amusement related products need to be in accordance to the demands of the consumers. The company needs to identify the taste and preference of its target market and deliver the products accordingly.

The main theme that the company upholds in the content it produces and the themes it illustrates across its parks indicate how the social factors shape the way a company manages its content. The theme park includes the rides and other amusement related products which can appeal to the people across different age groups.

The changes in economic solidity affect the purchasing behavior of the people and Walt-Disney has faced lower income when economic pressures propelled the people to curtail their expenses (Walt Disney, 2012). The segments of theme parks and licensed products were affected more as compared to the other segments such as interactive games produced by the organization. The ratio of tourists as a social factor also contributes in the development and growth of the entertainment industry as Walt-Disney is able to increase its earnings due to the people visiting from an international context, thus reaching out beyond the local customers.

Technological Factors

The technological factors have a strong effect on the development and growth of the entertainment and amusement industry. The media entertainment industry needs to quickly adapt to these alterations and integrate newer versions of technology to produce content that meets the customer demand and at the same time bring the target market with the high quality content.

The introduction of Blu-ray required the entertainment content producers to initiate offering the version in Blu-ray (Walt Disney, 2012). The entry of Walt-Disney in the interactive and mobile games domain is another manifestation of technology induced changes in the company.

Apart from that, the Walt-Disney world resort needs to integrate the latest forms of technologies to provide the customers with the enhanced experience and high quality of experience. Another area that has brought about significant changes in the technological area is the introduction of social media as a means of reaching the target market. Walt-Disney has been using social media tools such as Facebook and Twitter to connect with its customers and provide the followers updates about company’s products (Richwine, 2015).

Legal Factors

The entertainment and amusement industry is heavily regulated by the laws and regulations. The Federal Communications Commission laws are central to the operations of the organization as they govern the content that is produced by Walt-Disney. The content developed for the children’s movies needs to strictly adhere the quality guidelines which prohibit the inclusion of any indecent content (Walt Disney, 2012). Failure to adhere to the guidelines can result in penalty of up to $325,000 for each case reported of indecent content displayed on air.

Furthermore, the time frame for commercial breaks during the programs displayed for the young audience is also managed under the guidance from FCC. Another legal factor that can affect the entertainment industry is the copyright and intellectual property regulations. The taxation framework implemented on the industry further formulates a part of the legal factors in the macro-environment of Walt-Disney.

Environmental Factors

The environmental protection regulations guide the company in manufacturing its licensed products and the management of its theme parks. The Disney amusement parks focus on waste management by including the activities of recycling and re-use of items to protect the environment. Along with that, the company has responded to the pressures from the environmental protection agency by taking initiatives in the domain of conservation of energy and taking steps that make the theme parks more eco-friendly in nature.

For instance, the environmental stewardship program strives to take support from the organizations operating in the domain of nature conservation. In addition, efficient energy solutions have been incorporated in the Walt-Disney theme parks (Disney, n.d).

References

• Barnes, B. (2008, November 6). Slowdown Begins to Show at Stalwart Disney. The New York Times. Retrieved from http://www.nytimes.com/2008/11/07/business/media/07disney.html?_r=0
• Disney (n.d). Environment. Retrieved from http://aboutdisneyparks.com/citizenship/environment
• Richwine, L. (2015, June 15). Disney’s powerful marketing force: social media moms. Reuters. Retrieved from http://www.reuters.com/article/us-disney-moms-insight-idUSKBN0OV0DX20150615
• Walt Disney (2012). Form 10-K. Retrieved from http://www.sec.gov/Archives/edgar/data/1001039/000119312512479027/d405160d10k.htm