Introduction
Strategic management in an invaluable component of planning the company’s functioning. Creating a successful corporate strategy helps the organization’s management to set the most suitable and achievable goals and find the ways of achieving them. Whereas the managers make the final decision, it is the input of each employee that makes the resolutions the most effective. One person or a few people cannot know everything about the company, and they need to discuss the strategic solutions with all the stakeholders. Moreover, external and internal environments are taken into consideration, along with SWOT analysis. Strategic management s particularly crucial in the organizations the operation of quality in which directly impacts the performance success.
Disney Management & Decision-Making
According to Franklin (2013), the decision-making process in business is of utmost importance since it has the direct impact on the company’s performance and the way it reaches its goals. In order to establish the expertise in strategic management, two components are needed: experience and the model connecting the experience to the company’s reality. In the areas other than business, mental processes are combined with the physical ones. However, in an enterprise, the focus is on mental characteristics (Franklin, 2013).
The author discusses the rational decision-making and explains why it is insufficient for modern business. Further, Franklin (2013) emphasizes the significance of a systemic approach to making decisions. It is impossible not to agree with this opinion since this approach is considered rather useful in management (Carroll, Primo, & Richter, 2016). Franklin (2013) suggests the following elements of this method: perceiving the opportunity presented by the decision, developing the right objectives, establishing the stakeholders, arranging the appropriate framing of the decision, setting up the alternatives, choosing the opportunities, and learning for the enhancement of further decision making. Thus, this framework is formed of the following interdependent components: opportunity, objectives, stakeholders, framing, alternatives, choice, and learning (Franklin, 2013).
While analyzing the systemic cooperation of processes, Franklin (2013) remarks that such an analysis starts with the identification of the opportunity. Further, it is recommended to avoid making a decision immediately, particularly if it is a significant one. Franklin (2013) notes that with the process’s evolvement, every element can cause changes in the other components of the framework. As a result, the new frame necessitates the modifications in the statement of the objective and opportunity. The involvement of the new stakeholders will also require some changes to the framework.
The significance of strategic management is emphasized by the fact that it is considered to bear the corporate social responsibility (Carroll et al., 2016). That is why scholars suggest a variety of decision-making methods of using the systemic approach that may be employed by the organizations to enhance their benefits. Kabir, Sadiq, and Tesfamariam (2014) propose multi-criteria decision-making that enhances the systemic approach by providing access to cost/benefit information.
According to the authors, the process of decision-making is divided into two categories in accordance with the objective preferred by the decision-maker: individual and group (Kabir et al., 2014). In the second category, participatory decision-making is possible. Moreover, multi-criteria decision-making can be divided into multi-objective and multi-attribute (Kabir et al., 2014). Thus, scholarly papers dedicated to the issue of decision-making emphasize the significance of this process and the role of strategic management in it.
Disney Strategic Management
One of the organizations whose strategic management is known to be at a high level is the Walt Disney Company. Recently, the corporation announced a new move that involved strategic decision-making. In August, the company’s CEO Bob Iger announced that Disney was going to adapt its business to internet due to the changing environment in media enterprise (Kafka, 2017). In particular, Iger said that they would begin selling two types of streaming services: a Disney-branded movie channel and an ESPN-branded service. According to the CEO, that was supposed to be a “major strategic shift” in the way the company distributed its content (Kafka, 2017).
The decision was made at the marketing level since Disney established the needs of customers in the area where the company had a competitive advantage. Also, the organization emphasized the significance of giving its customers’ interests the priority (Fritz, 2017). The changes are planned to be implemented in 2018 and 2019. Meanwhile, the corporation is currently reported not to experience its most prosperous period. According to Fritz (2017), Disney hopes to save its weak fiscal situation with the future innovations.
Over the past year, the company’s performance was not the most advantageous one. Serious losses were noticed in several areas such as cable, broadcast, and television revenues (Fritz, 2017). The revenue of the movie studio dropped as much as 21%, leading to the decline of the operating income by 43% (Fritz, 2017). When evaluating the decision to make a shift in its strategy, it seems that Disney made the right choice. A radical change can save the situation for the corporation and raise the revenues that have dropped radically within the last months.
Wheelen, Hunger, Hoffman, and Bamford (2012) suggest that the decision-making process should involve eight steps. The analysis of Disney’s work in accordance with these steps is the following:
- assessing the current performance outcomes: Disney’s profitability has fallen, but there is a mission focused on regaining the previous achievements;
- a review of corporate governance: the company’s top management constantly works on the development of the most effective strategies;
- scanning and evaluating the external environment: the biggest opportunities are the increase of media network share and growth through diversification; the threats are posed by the changes in consumer consumption and uncontrollable shifts in tourism;
- scanning and evaluating the internal environment: the strengths are the brand name and diversification; the weaknesses are large research and development costs and the high risk factor;
- analyzing the strategic SWOT components: the marketing strategy is to perform consumer research and digitalize the content;
- choosing the best alternative approach: the company decided to adapt to internet;
- implementing the strategies: Disney is planning to do that in the nearest two years;
- assessing the implemented strategies: the company will perform this step after it has launched the new strategy.
Conclusion
Strategic management is a vital element of the organizations’ success. Company managers should not underestimate the importance of taking into consideration a variety of issues before making great changes. In case of the Walt Disney Company, the decision-making process is arranged at a good level. The CEO announces the resolution that was made by the whole body of managers upon the investigation of revenues and other internal and external factors. Disney is a positive example of how strategic management should be employed to reach the most beneficial outcomes both for the corporation and its customers.
References
Carroll, R. J., Primo, D. M., & Richter, B. K. (2016). Using item response theory to improve measurement in strategic management research: An application to corporate social responsibility. Strategic Management Journal, 37, 66-85.
Franklin, C. L. (2013). Developing expertise in management decision-making. Academy of Strategic Management Journal, 12(1), 21-37.
Fritz, B. (2017). Disney flashes out its streaming plans. The Wall Street Journal. Web.
Kabir, G., Sadiq, R., & Tesfamariam, S. (2014) A review of multi-criteria decision-making methods for infrastructure management. Structure and Infrastructure Engineering: Maintenance, Management, Life-Cycle Design and Performance, 10(9), 1176-1210.
Kafka, P. (2017). Disney wants to make a huge shift in its business model – But it’s not ready to do it yet. Recode. Web.
Wheelen, T. L., Hunger, J. D., Hoffman, N. A., & Bamford, C. E. (2012). Strategic management and business policy: Toward global sustainability (13th ed.). Upper Saddle River, NJ: Pearson.