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Conclusion & Recommendation

The recommendations made here are both on global and corporate, but mainly on a business unit level, and mainly affecting Walt Disney Pictures. This business unit is the core business of The Walt Disney Company, and where the major brands of the Disney portfolio were created.

The Disney brand has lost some of its former magic. From making hit after hit through out the 80’s and early 90’s, then they are faced by multiple unsuccessful productions from the late 90’s and up until today. In the search of being a world leader in the Movie and Entertainment Industry, they have diversified themselves into multiple media channels and have reached the size of a true media conglomerate.

Their brand names have been feeding them sustainable revenues for a long time, and the brand Winnie The Pooh, have been one of the longest and most profitable brands of the Walt Disney Company. By looking closer at their productions, then the sheer figures shows that The Walt Disney not necessarily makes the best or largest revenues directly from their productions. It might as well be all the extra sales of merchandise and licensing of brands that brings in the biggest revenues from a new or old production. And the figures have been especially favourable when it comes to Walt Disney Pictures productions.

But this has not been the case in the last couple of productions. The spin-off effect of the productions has been failing, and their strategies have not been shaped to actually take the success criteria of previous productions into consideration.

With the acquisition of Pixar they have been given a new breath of fresh air. Pixar have been winning where Walt Disney Pictures have been failing. The 3D animation business have been growing where Disney, sticking with 2D animation because it was one of their core competencies, have been loosing ground, to being almost percent of the animation productions today.

This large punch in Walt Disney Pictures, and The Walt Disney Company’s face, lasting almost a decade, should be a hint to the necessity of a strategic change in their behaviour.

Strategies on a global level, should contain a larger focus on changing trends in the entertainment industry. Technologies an products like podcasting, 3G, HD-TV, and large internet communities, plus changing distribution methods are possibilities for hitting new markets and reinvigorating the market, just as the DVD’s did in the early 2000.

Especially the possibility to release movies and other programs over the internet should be exploited. This new distribution channel could make The Walt Disney Company able to sell directly to their customers, and thereby gain increasing product margins, both due to direct sales, but also from having no directly distribution costs. The initial alliance with iTunes, and the large investor Steve Jobs, Chairman of Apple, will give good experiences for future strategic development of this new market segment, which should be exploited.

Another global focal point is the large investments in the American market. Since 77 percent of their revenues are from this market, then it have been increasingly important diversify into new markets, and thereby diminish the dependency on the development of one national economy.

On the corporate level, in the Studio Entertainment segment, then there have been great successes where TV programs have been winning a lot of awards. This is an immediate opportunity to further develop the brand awareness. Since customers/viewers have developed some form of brand/program loyalty, then it is important to exploit the opportunity, and it have to be fast, since the loyalty is only for a limited time.

On a business level, with Walt Disney Pictures as main focus point, then they need to pick up the paste. They have been resting for to long on their previous successes and their large merchandise earnings, and it can undermine their future revenues in a high degree, since a large percentage of their earnings are from spin offs from future successful productions.

The fierce competition in animation films that have come as a result of a high market growth and better and easier industry conditions. Where as Winnie The Pooh have been 80 years to build up an appeal to multiple generations, then new animation characters/brands like Shrek have been having an instant and different appeal to a much larger target audience, than Walt Disney Pictures previously have had. This alone is an important development in the industry, since there could be a lasting trend of brands having a shorter lifespan, or more brands having a longer lifespan. Both scenarios signal a more fierce competition in the future. And since Walt Disney Pictures is the basis for most of The Walt Disney Company, then it is vital to the whole company that this business unit performs well.

For Walt Disney Pictures to invigorate itself, it is necessary that they both keep an eye on competition, and start focusing on how to innovate themselves. One of the company-corner stones have been a fundamental ability to do storytelling. But this corner stone needs rebuilding, before they can be successful again. A good step in the right direction of acquiring the lost abilities is the acquisition of Pixar. If aligned in the right way into The Walt Disney Company, then it change bring along the necessary changes. And their brand power should make it easier to once again become the essence of animation films.

When looking on the signals The Walt Disney Company generally tries to send through their mission statement, then one thing becomes evident; they have already accomplished most of their their mission. With a second place in the industry they are among the worlds leaders of producing and providing entertainment. They have strong brands that make them able differentiate their content and their creativity and ability to innovate is, if not already available in-house, acquired through acquisitions of companies like Pixar. So the only thing left in their mission statement is actually being the most profitable company. But that is not a very specific mission to have, and can not act as a specific guideline for managers and employees. This could very well be why their performance and strategic objectives have been deteriorating in the last decade in some areas, and thereby making them weaker, and thereby giving space to new competitors.