2. External Factor Evaluation
‘The EFE matrix allows strategies to summarise and
evaluate economic, social, cultural, demographic,
environmental, political, governmental, legal,
technological, and competitive information’
-Fred R.David
Steps in developing a EFE matrix:
List Key External Factors (Opportunities & Threats)
Assign weight to each factor (0 To 1.0)
Weight in response to importance of a factor for a
particular industry
Sum of all weights = 1.0
3. Assign 1-4 rating to each factor
Firm’s Current Strategies Response To The Factor:
How Well Firms Response To These Factors
(Effectiveness Of The Firm)
Major Weakness 1
Minor Weakness 2
Minor Strength 3
Major Strength 4
Multiply each factor’s weight by its rating
Produces A Weighted Score
Sum the weighted scores for each factor
Determines The Total Weighted Score For The
Organization
4. Walt Disney Company
The Walt Disney Company was founded in 1922
and is one of the leading companies in family
entertainment business.
Headquarters in Burbank, California
It operates using a strategic business unit (SBU)
type of organizational structure.
Disney is huge, well-known and well managed
diversified corporation.
5. Walt Disney
Company
Disney
Consumer
Products
•Hardlines
•Softlines
•Toys
•Publishing
•Press
•Editions
Studio
Entertainment
•Walt Disney Pictures
•Touchstone pictures
•Miramax Films
•Buena Vista Home
Entertainment
•Walt Disney Records
•Buena Vista Records
•Hollywood Records
•Lyric Street Records
•Pixar Studios
Parks and
Resorts
•Walt Disney
World
•Disneyland
•Tokyo Disney
•Disneyland Paris
•Hong Kong
Disneyland
•Disney Cruise
Line
•Disney Vacation
Club
Media
Networks
Broadcasting
•Disney-ABC
Television
•ESPN Inc.
•Walt Disney
Internet Group
•ABC owned
television
stations
•ABC Radio
-
6. Media Networks Broadcasting
Accounted for 43% of the total revenues
Increase in revenue in this segment is primarily due
to growth from cable and satellite operators which
are generally derived from fees charged on a per-
subscriber base.
ABC and ESPN struck a deal with cable operator
Cox Communication whereby these companies
would offer hit shows and football games on
demand.
Disney sold its 39.5% stake in E! to Comcast for
$1.2 billion.
Unveiled Disney Extreme Digital, a networking site
aimed at children less than 14 years of age
7. COMPETITION
Major Competitor- Time Warner(AOL, Cable, Film
Entertainment, Networks and Publishing)
CBS corporation and News Corporation
Competes with other television networks,
independent television stations and other video
media.
Advertising ,major source of income competes with
other advertising media majorly internet
News Corp moving towards digital technology,
acquired Myspace.com
8. Parks and Resorts
Accounted for 29% of the revenues.
Disney revenues from parks and resorts has
increased by 10% in 2006 due to higher guest
spending due to higher average rates at parks and
resorts.
Plans to change its concept of theme parks from
masses to a more concentrated perspective
9. COMPETITION
Disney’s theme parks and resorts compete with all other
forms of entertainment, lodging, tourism and
recreational activities.
Many uncontrollable factors impact like travel industry
trends, weather patterns, business cycle, amount of
spendable leisure time, transportation and fuel prices
etc.
Attendance in international parks has continued to
increase and is projected to continue a steady growth
Due to demographic changes and increase in ageing
population, Viacom inc. has started opening adult
playgrounds with virtual reality games
10. Studio Entertainment
Accounted for 22% of the total revenues.
Decreased 1% from previous year due to lower
worldwide home entertainment.
In August 2005, Disney has entered into film
financing arrangement with a group of investers
who funded 40% of production and marketing costs
in return for 40% of the future cash flows
generated by these films to reduce its risks.
11. COMPETITION
Walt disney-11.7% of industry revenues
Some key competitors-Warner
brothers(17.1%),Twentieth century
Fox(10.3%),Viacom (6.3%),others(54.6%)
Companies also compete to obtain creative and
performing talents, story properties etc
Success of operations depend on timing and
performance of releases.
12. Disney Consumer Products
Accounted for 6% of the total revenues.
Revenues in 2006 have increased 3% from the
previous year
Growth at merchandise licensing
Increased product development spending
In 2006, Disney sold 365 of its stores to Children’s
place under a franchising agreement
13. COMPETITION
Leading competitors-Warner brothers, fox, Sony,
Marvel and Nickelodeon
Competes in character merchandising and other
licensing.
Operating results influenced by seasonal
consumer purchasing behavior and timing and
performance of releases
14. IDENTIFYING OPPORTUNITIES AND THREATS
Opportunities
1. Growing rate of consumer demand for amusement park
2. Demographic changes and increasing interest among
aging population
3. Social networking sites
4. Expanding into foreign markets.
5. Strategic alliances
15. Threats
1. Fierce competition in the market
2. High Usage of internet by all ages
3. High risk of copyright infringement and unauthorized
sharing.
4. Low consumer disposal income(unemployment interests
rates and fuel cost)
5. High operational cost
16. EFE Matrix
S.no Key externaL factors Weight Rating
Weigted
Score
Oppurtunities
1 Growing rate of consumer demand 0.1 4 0.4
for amusement park
2 Demographic changes and increasing 0.05 3.5 0.175
interest among aging population
3 Social networking sites 0.1 3.5 0.35
4 Expanding into foreign markets 0.1 4 0.4
5 Strategic alliances 0.15 4 0.6
Threats
1 Fierce competition in the market 0.2 4 0.8
2 High Usage of internet by all ages 0.05 3.5 0.175
3 High risk of copyright infringement 0.07 4 0.28
and unauthorized sharing
4 Low consumer disposal income 0.12 4 0.48
5 High operational cost 0.06 2 0.12
Total Scores 1 3.78
Editor's Notes
Revenues n operating income of media n parks growing
1)6% revenues
2)22
3)29
4)43
International association of amusement parks attractions in 2005