Causes for the Decline in Disney’s Income

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Introduction

The functioning of any company is a complex process that depends on numerous factors. The modern approach to management emphasises a strong effect of both internal and external factors on the success of a company and its ability to generate income. For this reason, there are different methods to work with these aspects and create the ground for future growth. For instance, effective human resource management takes into account the current climate within a firm and workers’ ability to perform their tasks. Such issues as leadership, change and motivation management, and communication are also taken as vital components that should be given attention to avoid decline. The paper is focused on the analysis of Disney company and the recent decline in income to demonstrate the importance of factors mentioned above and outline ways how they can be improved.

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Background

Disney is a giant corporation that is the leader of the cinema industry. Today, it is mainly associated with high-quality products that attract the attention of people who live in different regions around the globe. The corporation creates movies, cartoons, and other products that are distributed to different states and are interesting to various categories of customers. In 2019, the Walt Disney Company managed to generate total revenue of $69.57 billion (The Walt Disney Company, 2019). It means that the corporation remains one of the leaders of the U.S. market with good opportunities for future development. Additionally, it owns famous franchises such as Star Wars or Marvel Comics, which can also help to generate a competitive advantage and remain the leader in the sphere (The Walt Disney Company, 2019). However, the recent changes in the company’s management introduced some problems that should be discussed.

Problem

One of the basic challenges that Disney faces today is the decline in the interest to its last projects. Research shows that the reaction to movies such as the final part of Star Wars was not so positive as it was expected (Barnes, 2019b). On the contrary, the income and box sales were not lower that it was planned (Barnes, 2019a). The reduced interest to other products, such as X-Men: Dark Phoenix also preconditioned significant financial losses (about $170 million) (Barnes, 2019a). Its streaming services also demand additional investment as in 2019, Disney reported a 66% decline in quarterly profit (Barnes, 2019b). The corporation experienced losses of about $740 million, compared to $340 million in the previous year (Gondo, 2020). The given numbers demonstrate the scope of the problem and show that Disney faces a serious challenge preconditioned by the decline in sales of the main products and services.

Response

The given problem created the basis for debates and indicated the need for action. The Walt Disney Company and Robert Iger, its executive chairman, recognise the existence of the problem and the need for change to avoid similar losses in a new year (The Walt Disney Company, 2019). The corporation also initiated the analysis of the market and the target audience with the primary goal to determine the primary causes of the reduction in income. In accordance with the data collected by the investigators, the overall tiredness from the explored franchises and lack of original ideas were taken as the main factors impacting sales and the reduction in interest to provided products (The Walt Disney Company, 2019). The company realised the fact that there is a need for a significant change in the internal environment to avoid problems in the next year and guarantee that new products will be more popular among people.

Major Causes

Investigating the selected problem, it is possible to outline several important reasons for its appearance. First, being one of the leaders in the industry, the company needs constant income and projects that will generate revenue. To achieve this goal, the company decided to employ well-known franchises and focus on the quantity of new products instead of their quality (The Walt Disney Company, 2019). It resulted in the decreased value of new movies and the decline in viewers’ interest. Second, the change in the approach was followed by the shift in HR management. It means that the company and its employees are more focused on the developing of existing franchises and creation of several products every year rather than on the introduction of a completely new project that might attract the attention of the target population. These factors contributed to the discussed decline and problems with income.

Leadership

The current course peculiar to Disney can also be associated with the new approach to leadership. The modern cinema industry can be taken as a highly competitive environment characterised by the existence of multiple strong players and the threat of a new entry (The Walt Disney Company, 2019). For this reason, for giants like Disney, it is critical to support the stable income to be able to compete. The given task can be accomplished in several ways, and one of them is the focus on the quantity of products and use of the already popular solutions (Mathis et al., 2016). For this reason, the current approach to leadership in Disney presupposes encouragement of behaviours and incentives that help to support already existing solutions rather than the creation of new risky ones (Mathis et al., 2016). This way helps to preserve leading positions and generate high income; however, it also cultivates the growing dissatisfaction in the target audience.

Decision-Making

Another important element of the internal environment that impacts Disney at the moment is the approach to decision-making. The given aspect can be determined as a complex process because of the existence of numerous factors that should be taken into account to find a sufficient solution (Noe, Hollenbeck and Gerhart, 2019). For Disney, these aspects include the high level of rivalry, and the need to reduce financial risks to avoid losses (Barnes, 2019a). Initiation of new projects along with the launching of completely new franchises might presuppose a high level of uncertainty and the existence of multiple problems that might deteriorate the outcomes (Mathis et al., 2016). For this reason, the current Disney’s approach to decision making emphasises the need to use reliable and not risky solutions to guarantee the stable development of the brand and preservation of its image. It affects the plans and the decline in interest mentioned above.

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Motivation

Finally, motivation should also be considered one more factor impacting the functioning of Disney and its current problems with sales. It can be determined as employees’ readiness to engage in specific activities and the desire to perform them at a high level (Mathis et al., 2016). The modern management recognises the important role of motivation in the functioning of companies and offers multiple ways to manage it. For the discussed case, the motivation should be taken as a vital element of the internal environment that preconditions the reduced quality of products offered by Disney and their inability to attract clients (Mathis et al., 2016). The fact is that the shift to other leadership and decision-making models also influences the levels of motivation peculiar to workers. At the moment, they experience the inability to fulfil their high-level needs which preconditions the reduced performance.

The current situation with motivation can be analysed by using Maslow’s hierarchy of needs. It states that there are basic, psychological, and self-fulfilment needs that are vital for every individual (McLeod, 2020). Basic ones include physiological and safety demands; the second category has esteem and love needs when the last cohort presupposes self-actualisation needs (McLeod, 2020). In such a way, the motivation of a person depends on his/her current state and the degree to which the outlined requirements are met. At the moment, because of the Disney’s approach to creativity and the focus of the company on the support of existing products, the most important, or self-esteem needs are not fulfilled as the workers are not able to achieve their full potential working on projects created by other people. It impacts the functioning of the company and the decline in the interest to the final products.

Motivation can also be analysed by using Locke’s theory related to this aspect. He assumed that individuals who are offered specific, challenging, and hard-to-achieve goals show better results and performance levels than those who work on easy and too general goals (Mathis et al., 2016). For this reason, task complexity, commitment, and clarity become the major factors that can guarantee the achievement of desired outcomes (Mathis et al., 2016). Applying the model to Disney’s work, it is possible to see that the bigger part of employees does not have complicated or specific goals as their primary activity is the support of already existing franchises. They have to follow the course outlined by the company’s CEO and contribute to the creation of new standardised products. Only a limited part of specialists works on completely new projects and have a chance to show their creativity and fulfil self-esteem needs.

Another problem related to the Walt Disney Company is that they use mainly extrinsic methods to work with motivation levels. It means that a behaviour of a person is motivated by an external factor such as additional payment, possible benefits, or the ability to avoid some penalties (Mathis et al., 2016) The given way is considered less effective if compare with the intrinsic motivation presupposing that a desire to perform some activity comes from the internal desire of a person as it will guarantee joy, development of skills, and improved self-esteem (Noe, Hollenbeck and Gerhart, 2019). Because of the problems mentioned above, such as limited opportunities for creativity, Disney uses mainly extrinsic methods such as high salaries, payments, and opportunities for career growth. At the same time, it becomes less effective than the ability to realise their ideas and create movies or products that will be associated with them in the future.

Possible Solutions

From the discussion above, it becomes clear that one of the basic causes for the decline incomes and failure of last movies is the absence of fresh ideas that also reduce motivation levels among workers and their creativity. For this reason, there is a critical need for the improvement of this aspect to avoid further deterioration of the situation. One of the possible methods is the creation of new tasks that might help employees to fulfil their esteem needs and feel motivated to work harder as it will help them to demonstrate their creativity and be able to launch a new project or service (Noe, Hollenbeck and Gerhart, 2019). Introduction of completely new incentives can also have a positive impact on the work of the corporation in general.

Moreover, in accordance with Locke’s theory, complex goals are fundamental for the achievement of high performance levels. That is why Disney should be ready to reconsider its approach to goal-setting and guarantee that the bigger part of specialists will work on complex and creative projects as it is critical for their motivation levels. At the same time, the use of this approach will help to shift to intrinsic motivation as the ability to achieve hard goals will make workers feel better and believe in their ability to contribute to the evolution and rise of the company. Disney needs to leave the practice of employing old franchises and launch new ones as it will improve the image of the company and inspire its workers.

Conclusion

Altogether, Disney is a giant multinational company that is also one of the leaders in the cinema industry. However, in 2019 it experiences a certain reduction in sales and a decline in the level of interest from its target audience. It can be associated with the tiredness from the old projects and inappropriate internal environment peculiar to the corporation. For this reason, to resolve this problem, it is vital to motivate members of tams to work harder and offer new projects that will also help them to demonstrate their creativity and meet self-esteem needs. Moreover, the improved goal-setting is also critical for the achievement of positive outcomes and the ability to overcome the crisis.

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Reference List

  1. Barnes, B. (2019a) ‘Disney earnings disappoint in first full quarter after Fox deal’, The New York Times. Web.
  2. Barnes, B. (2019b) ‘Disney’s ambitious streaming plans take big bite out of profits, The New York Times. Web.
  3. Gondo, N. (2020) ‘Is Disney stock a buy right now, as analysts take action amid coronavirus crisis?’, Investor’s Business Daily. Web.
  4. Mathis, R. et al. (2016) Human resource management. 15th edn. Thousand Oaks, CA: Cengage Learning.
  5. McLeod, S. (2020) Maslow’s hierarchy of needs. Web.
  6. Noe, R., Hollenbeck, J. and Gerhart, B. (2019) Fundamentals of human resource management. 8th edn. New York, NY: McGraw-Hill Education.
  7. The Walt Disney Company (2019) Fiscal year 2019 annual financial report. Web.

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BusinessEssay. (2022) 'Causes for the Decline in Disney’s Income'. 8 January.

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BusinessEssay. 2022. "Causes for the Decline in Disney’s Income." January 8, 2022. https://business-essay.com/causes-for-the-decline-in-disneys-income/.

1. BusinessEssay. "Causes for the Decline in Disney’s Income." January 8, 2022. https://business-essay.com/causes-for-the-decline-in-disneys-income/.


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BusinessEssay. "Causes for the Decline in Disney’s Income." January 8, 2022. https://business-essay.com/causes-for-the-decline-in-disneys-income/.